<PAGE>
Filed Pursuant to Rule 424(b)(3)
Registration File No.: 333-50445
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS TO WHICH IT RELATES
SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 31, 1998
PRELIMINARY PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 31, 1998)
$1,018,589,000 (APPROXIMATE)
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
Depositor
NATIONAL REALTY FINANCE L.C.
PRUDENTIAL MORTGAGE CAPITAL FUNDING, LLC
CIBC INC.
Mortgage Loan Sellers
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-C1
The Commercial Mortgage Pass-Through Certificates, Series 1998-C1 (the
"Certificates"), will consist of 19 Classes of Certificates, designated as the
Class A-1A Certificates, Class A-1B Certificates, Class A-2MF Certificates,
Class A-EC Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates, Class F Certificates, Class G Certificates,
Class H Certificates, Class J Certificates, Class K Certificates, Class L
Certificates, Class M Certificates, Class N-1 Certificates, Class N-2
Certificates (collectively, the "Regular Certificates"), the Class R-I
Certificates and the Class R-II Certificates (collectively, the "Residual
Certificates"). Only the Class A-1A, Class A-1B, Class A-2MF, Class B, Class C,
Class D and Class E Certificates (the "Offered Certificates") are offered
hereby.
--------------
THE OFFERED CERTIFICATES DO NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE
DEPOSITOR, THE MORTGAGE LOAN SELLERS, THE MASTER SERVICER, THE SPECIAL
SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE
OFFERED CERTIFICATES NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE
UNITED STATES GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
See "Risk Factors" commencing on page S-25 of this Prospectus Supplement
and on page 12 of the Prospectus for a description of certain factors that
should be considered by prospective investors in the Offered Certificates.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INITIAL CERTIFICATE PASS-THROUGH RATINGS SCHEDULED FINAL WEIGHTED
CLASS BALANCE (1) RATE MOODY'S/S&P DISTRIBUTION DATE(2) AVERAGE LIFE
<S> <C> <C> <C> <C> <C>
Class A-1A .......... $258,548,000 % Aaa/AAA September 15, 2007 5.500
Class A-1B .......... $384,826,000 % Aaa/AAA July 15, 2008 9.503
Class A-2MF ......... $176,673,000 % Aaa/AAA July 15, 2008 9.565
Class B ............. $ 57,548,000 % Aa2/AA July 15, 2008 9.900
Class C ............. $ 63,303,000 %(3) A2/A May 15, 2010 11.067
Class D ............. $ 60,426,000 %(4) Baa2/BBB January 15, 2013 13.155
Class E ............. $ 17,265,000 %(5) Baa3/BBB- January 15, 2013 14.400
</TABLE>
- --------------------------------------------------------------------------------
(1) Approximate, subject to an upward or downward variance of up to 5%.
(2) The "Scheduled Final Distribution Date" with respect to any Class of
Certificates is the Distribution Date on which the related certificate
balance or notional balance would be reduced to zero assuming no delays
in the collection of Balloon Payments or liquidation, no exercise of
defeasance options or prepayment (including at Anticipated Repayment
Dates), no early termination of the Trust, no defaults, no condemnations,
no modifications and no extensions.
(3) Initial Pass-Through Rate. The Class C Certificates accrue interest at
the Weighted Average Net Mortgage Rate less %.
(4) Initial Pass-Through Rate. The Class D Certificates accrue interest at
the Weighted Average Net Mortgage Rate less %.
(5) Initial Pass-Through Rate. The Class E Certificates accrue interest at
the Weighted Average Net Mortgage Rate less %.
The Offered Certificates will be purchased by the Underwriters from the
Depositor in the manner described under "Plan of Distribution," and will be
offered by the Underwriters to the public from time to time in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. Proceeds to the Depositor from the sale of the Offered Certificates are
anticipated to be approximately $ plus, with respect to the Class A-1A,
Class A-1B and Class A-2MF Certificates, accrued interest thereon at the
applicable Pass-Through Rates from August 1, 1998, before deducting expenses
payable by the Depositor, estimated to be approximately $3,300,000.
The Offered Certificates are offered by Prudential Securities Incorporated
and CIBC Oppenheimer Corp. (the "Underwriters"), subject to prior sale, when,
as and if delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part.
It is expected that delivery of the Offered Certificates will be made in
book-entry form through the Same Day Funds Settlement System of The Depository
Trust Company ("DTC"), on or about August 21, 1998 (the "Delivery Date"),
against payment therefor in immediately available funds.
--------------
PRUDENTIAL SECURITIES INCORPORATED CIBC OPPENHEIMER CORP.
AUGUST , 1998
<PAGE>
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Commercial Mortgage Pass-Through Certificates, Series 1998-C1
Geographic Overview of Mortgage Pool
WASHINGTON
5 properties
$24,322,656
2.1% of total
OREGON
3 properties
$6,404,707
0.6% of total
NEVADA
8 properties
$25,695,518
2.2% of total
CALIFORNIA
43 properties
$176,102,682
15.3% of total
IDAHO
3 properties
$12,979,055
1.1% of total
NEBRASKA
2 properties
$8,725,620
0.8% of total
MISSOURI
10 properties
$28,993,082
2.5% of total
MINNESOTA
4 properties
$11,025,769
1.0% of total
ILLINOIS
10 properties
$56,742,069
4.9% of total
WISCONSIN
2 properties
$6,520,331
0.6% of total
MICHIGAN
4 properties
$13,676,174
1.2% of total
OHIO
27 properties
$77,893,701
6.8% of total
PENNSYLVANIA
12 properties
$38,380,408
3.3% of total
NEW YORK
16 properties
$70,717,153
6.1% of total
NEW HAMSPHIRE
1 properties
$5,473,911
0.5% of total
MAINE
3 properties
$14,032,014
1.2% of total
MASSACHUSETTS
4 properties
$20,610,873
1.8% of total
RHODE ISLAND
2 properties
$6,271,556
0.5% of total
CONNECTICUT
5 properties
$32,413,508
2.8% of total
NEW JERSEY
18 properties
$44,446,678
3.9% of total
MARYLAND
6 properties
$29,151,615
2.5% of total
VIRGINIA
6 properties
$48,850,998
4.2% of total
NORTH CAROLINA
3 properties
$13,945,993
1.2% of total
SOUTH CAROLINA
2 properties
$3,683,625
0.3% of total
ARIZONA
6 properties
$37,266,245
3.2% of total
NEW MEXICO
2 properties
$3,991,437
0.4% of total
COLORADO
5 properties
$17,577,819
1.5% of total
KANSAS
4 properties
$17,199,642
1.5% of total
TEXAS
47 properties
$138,726,765
12.1% of total
OKLAHOMA
5 properties
$8,803,725
0.8% of total
LOUISIANA
1 property
$1,708,197
0.2% of total
MISSISSIPPI
1 property
$1,141,465
0.1% of total
ALABAMA
2 properties
$9,931,437
0.9% of total
KENTUCKY
5 properties
$27,028,691
2.4% of total
GEORGIA
6 properties
$32,125,535
2.8% of total
FLORIDA
16 properties
$65,197,219
5.7% of total
TENNESSEE
4 properties
$13,195,581
1.2% of total
less than and/or equal to 1.0%
of Initial Pool Balance
1.1% - 5.0%
of Initial Pool Balance
5.1% - 10.0%
of Initial Pool Balance
greater than 10.0%
of Initial Pool Balance
<PAGE>
The Certificates will represent beneficial ownership interests in a trust
fund (the "Trust Fund") to be created by Prudential Securities Secured
Financing Corp. (the "Depositor"). The assets of the Trust Fund will consist
primarily of a pool (the "Mortgage Pool") of fixed-rate mortgage loans (the
"Mortgage Loans") secured by first liens on commercial and multifamily
residential properties (each, a "Mortgaged Property"). The Mortgage Pool is
comprised of two separate groups of mortgage loans, Loan Group 1 and Loan Group
2 (each, a "Loan Group"). "Loan Group 2" will consist of 42 Mortgage Loans,
representing approximately 18.03% of the Initial Pool Balance, each of which is
a Multifamily Loan (as defined herein) and as of the Cut-Off Date has a
remaining term to scheduled maturity or Anticipated Repayment Date (as
described herein) of ten years or less. "Loan Group 1" will consist of the
remaining 214 Mortgage Loans representing approximately 81.97% of the Initial
Pool Balance. The principal component of Balloon Payments and Unscheduled
Payments of Principal paid in respect of the Mortgage Loans in Loan Group 2
(the "A-2MF Principal Distribution Amount") will be paid first to the Class
A-2MF Certificates. All remaining payments in respect of principal (including
the principal component of Balloon Payments and other scheduled payments and
Unscheduled Payments of Principal on the Mortgage Loans in Loan Group 1 and
scheduled payments (other than the principal component of Balloon Payments) of
principal on the Mortgage Loans in Loan Group 2) will be paid sequentially to
each Class of Certificates as described herein. See "Description of the Offered
Certificates--Distributions."
The Mortgaged Properties consist of properties improved by (a) office
buildings; (b) health care-related properties; (c) assisted living facilities;
(d) hotels and motels; (e) industrial properties; (f) office/warehouse,
warehouse, mini warehouse and self-storage facilities; (g) mobile home parks;
(h) apartment buildings or complexes consisting of five or more rental units or
a complex of duplex units; (i) cooperative apartment buildings; (j) nursing
homes; (k) office/retail properties; (l) anchored retail properties; (m) single
tenant retail properties; (n) unanchored retail properties; and/or (o) other
commercial real estate properties, multifamily residential properties, and/or
mixed residential/commercial properties. One hundred and thirty-eight of the
Mortgage Loans were originated by National Realty Funding, L.C. ("NRF"). Six of
the Mortgage Loans were purchased by NRF from KeyBank National Association
("KeyBank") and one of the Mortgage Loans was purchased by NRF from another
unaffiliated seller in the secondary market. The Mortgage Loans originated or
purchased by NRF subsequently were sold thereby to National Realty Finance L.C.
("NRFinance"), a wholly-owned subsidiary of NRF, and will be sold by NRFinance
to Prudential Securities Credit Corp. ("PSCC" or the "Transferor") on or before
the Closing Date. Seventy-one of the Mortgage Loans were originated by
Prudential Mortgage Capital Company, LLC, or a wholly-owned subsidiary thereof
(collectively, "PMCC"). The Mortgage Loans originated by PMCC were sold thereby
to Prudential Mortgage Capital Funding, LLC ("PMCF"), and will be sold by PMCF
to the Transferor on or before the Closing Date. Twenty-nine of the Mortgage
Loans were originated by CIBC Oppenheimer Corp. ("CIBCOPCO") and sold thereby
to CIBC Inc. ("CIBC"). CIBC thereafter sold such Mortgage Loans to the
Transferor. Eleven of the Mortgage Loans were originated by a real estate
financial services company, and sold to the Transferor. NRFinance, PMCF and
CIBC are the "Mortgage Loan Sellers," as such term is used herein.
The Mortgage Loans will be sold to the Depositor by the Transferor on or
prior to the date of initial issuance of the Certificates (in each case, with
certain repurchase obligations relating to breaches of representations and
warranties being enforceable by the Trustee and the Depositor directly against
the Transferor). The characteristics of the Mortgage Loans and the related
Mortgaged Properties are described under "Risk Factors" and "Description of the
Mortgage Pool" herein.
The Class A-1A, Class A-1B, Class A-2MF, Class B, Class C, Class D, Class
E, Class F, Class G, Class H, Class J, Class K, Class L and Class M
Certificates (the "P&I Certificates"), the Class A-EC and the Class N-2
Certificates will be entitled to distributions of interest on their respective
Certificate Balances or Notional Balances, as the case may be, at the
applicable Pass-Through Rate for each such Class. The Class N-1 Certificates
are principal only certificates and will not be entitled to distributions of
interest. See "Description of the Certificates--Distributions" herein.
Distributions of principal and interest, as applicable, on the Regular
Certificates will be made, to the extent of Available Funds, on the 15th day of
each month or, if any such day is not a Business Day, on the next succeeding
Business Day, commencing on September 17, 1998; provided that no such day shall
be fewer than four Business Days after the related Determination Date described
below (each, a "Distribution Date"). Distributions allocable to interest on the
Certificates will be made as described under "Description of the
Certificates--Distributions" herein. The rights of the holders of the Class B,
Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class
L, Class M, Class N-1 and Class N-2 Certificates (the "Subordinate
Certificates") to receive distributions of principal and/or interest, as
appropriate, will be subordinate to such rights of the holders of the Class
A-1A, Class A-1B, Class A-2MF and Class A-EC Certificates (the "Senior
Certificates"); the rights of the holders of the Class C, Class D, Class E,
Class F, Class G, Class H, Class J, Class K, Class L, Class M, Class N-1 and
Class N-2 Certificates to receive such distributions will be subordinate to
such rights of the holders of the Class B Certificates; the rights of the
holders of the Class D, Class E, Class F, Class G, Class H, Class J, Class K,
Class L, Class M, Class N-1 and Class N-2 Certificates to receive such
distributions will be subordinate to such rights of the holders
S-3
<PAGE>
of the Class C Certificates; the rights of the holders of the Class E, Class F,
Class G, Class H, Class J, Class K, Class L, Class M, Class N-1 and Class N-2
Certificates to receive such distributions will be subordinate to such rights
of the Class D Certificates; the rights of the holders of the Class F, Class G,
Class H, Class J, Class K, Class L, Class M, Class N-1 and Class N-2
Certificates to receive such distributions will be subordinate to such rights
of the Class E Certificates; the rights of the holders of the Class G, Class H,
Class J, Class K, Class L, Class M, Class N-1 and Class N-2 Certificates to
receive such distributions will be subordinate to such rights of the holders of
the Class F Certificates; the rights of the holders of the Class H, Class J,
Class K, Class L, Class M, Class N-1 and Class N-2 Certificates to receive such
distributions will be subordinate to such rights of the holders of the Class G
Certificates; the rights of the holders of the Class J, Class K, Class L, Class
M, Class N-1 and Class N-2 Certificates to receive such distributions will be
subordinate to such rights of the holders of the Class H Certificates; the
rights of the holders of the Class K, Class L, Class M, Class N-1 and Class N-2
Certificates to receive such distributions will be subordinate to such rights
of the holders of the Class J Certificates; the rights of the holders of the
Class L, Class M, Class N-1 and Class N-2 Certificates to receive such
distributions will be subordinate to such rights of the holders of the Class K
Certificates; the rights of the holders of the Class M, Class N-1 and Class N-2
Certificates to receive such distributions will be subordinate to such rights
of the holders of the Class L Certificates; and the rights of the holders of
the Class N-1 and Class N-2 Certificates to receive such distributions will be
subordinate to such rights of the holders of the Class M Certificates. In
addition, each Class of Regular Certificates will have the benefit of
subordination of the Residual Certificates to the extent of any distributions
to which the Residual Certificates would otherwise be entitled. See
"Description of the Certificates--Subordination" herein.
The Residual Certificates are not entitled to any regular or scheduled
distributions of interest or principal.
The yield to maturity on each Class of the Regular Certificates will be
sensitive, and, in the case of the Class A-EC, Class N-1 and Class N-2
Certificates, will be very sensitive, to the amount and timing of debt service
payments (including both voluntary and involuntary prepayments, defaults and
liquidations) on the Mortgage Loans, extensions of the maturity dates thereof,
and payments with respect to purchases or repurchases thereof that are applied
in reduction of the Certificate Balance of such Class (or, in the case of the
Class A-EC or Class N-2 Certificates, which reduce the Class A-EC Notional
Balance or the Class N-2 Notional Balance, respectively). The yield to
investors in the Class A-2MF Certificates will be particularly sensitive to the
rate and timing of receipt of the A-2MF Principal Distribution Amount. No
representation is made as to the rate of prepayments on or liquidations of the
Mortgage Loans or as to the anticipated yield to maturity of any Class of
Certificates.
Prepayment Premiums and Yield Maintenance Charges, to the extent
collected, are distributable to the holders of the Regular Certificates as and
to the extent described under "Description of the
Certificates--Distributions--Prepayment Premiums" herein. Seventy-six of the
Mortgage Loans, having aggregate principal balances as of the Cut-off Date
representing approximately 32.64% of the Initial Pool Balance, provide that for
a specified amount of time a prepayment may not be made at all, and that at any
time when a prepayment is permitted, it must be accompanied by payment of a
Prepayment Premium. Thirty-nine of the Mortgage Loans, having aggregate
principal balances as of the Cut-off Date representing approximately 20.93% of
the Initial Pool Balance, provide that after a period of approximately two
years and 15 days after the Closing Date (a "Defeasance Lockout Period"), the
applicable borrower may obtain the release of the lien on the related Mortgaged
Property (a "defeasance") by substituting for such Mortgaged Property, as
collateral for the related promissory note, direct, non-callable obligations of
the United States of America that provide for payments on or prior to each Due
Date and on the maturity date of the Mortgage Loan (or, in the case of the ARD
Loans, through the related Anticipated Repayment Dates) in amounts equal to or
greater than the amounts payable under the related promissory note on each such
date and upon satisfaction of certain other conditions. Four of the Mortgage
Loans, having aggregate principal balances as of the Cut-off Date representing
approximately 1.87% of the Initial Pool Balance, that have a defeasance feature
also provide for prepayment of the Mortgage Loan (with an accompanying Yield
Maintenance Charge), and afford the related borrower the option either to
prepay or to exercise the defeasance feature. The remaining Mortgage Loans that
have a defeasance feature do not permit any other method of prepayment except
in specified circumstances (such as casuality or condemnation) or except during
specified periods beginning not more than one year prior to the maturity date.
See "Description of the Mortgage Pool--Certain Terms and Conditions of the
Mortgage Loans--Prepayment Provisions" and "--Yield Maintenance Provisions"
herein.
The yield to investors on each Class of the Regular Certificates will also
be very sensitive to the timing and magnitude of losses on the Mortgage Loans
due to liquidations to the extent that the Certificate Balances of the Class or
Classes of Certificates that are subordinate to such Class have been reduced to
zero. Losses on Mortgage Loans included in the Mortgage Pool will be allocated
to the Regular Certificates that have Certificate Balances (other than the
Senior Certificates)
S-4
<PAGE>
in reverse sequential order, until the Certificate Balances thereof are reduced
to zero, and then among the Class A-1A, Class A-1B and Class A-2MF Certificates
on a pro rata basis. Realization of losses therefore could result in
significant losses, and in some cases a complete loss, of an investor's
investment in Certificates. No representation is made as to the rate of
liquidations of or losses on the Mortgage Loans.
The Certificates are being issued pursuant to a Pooling and Servicing
Agreement dated as of August 1, 1998 (the "Pooling and Servicing Agreement"),
by and among the Depositor, NRF, as master servicer (in such capacity, the
"Master Servicer") and special servicer (in such capacity, the "Special
Servicer"), and The Chase Manhattan Bank, as trustee (in such capacity, the
"Trustee"). The obligations of the Master Servicer with respect to the
Certificates will be limited to its contractual servicing obligations and the
obligation under certain circumstances to make Advances with respect to the
Mortgage Loans. See "The Pooling and Servicing Agreement" herein.
It is a condition to the issuance of the Offered Certificates that the
Class A-1A, Class A-1B and Class A-2MF Certificates each be rated "AAA" by S&P
and "Aaa" by Moody's; the Class B Certificates be rated "AA" by S&P and "Aa2"
by Moody's; the Class C Certificates be rated "A" by S&P and "A2" by Moody's;
the Class D Certificates be rated "BBB" by S&P and "Baa2" by Moody's; and the
Class E Certificates be rated "BBB-" by S&P and "Baa3" by Moody's.
Elections will be made to treat designated portions of the Trust Fund
(such portions of the Trust Fund, the "Trust REMICs"), and the Trust REMICs
will qualify, as two separate "real estate mortgage investment conduits" (each
a "REMIC" or, alternatively, "REMIC I" and "REMIC II") for federal income tax
purposes. As described more fully herein, the Class A-1A, Class A-1B, Class
A-2MF, Class A-EC, Class B, Class C, Class D, Class E, Class F, Class G, Class
H, Class J, Class K, Class L, Class M, Class N-1 and Class N-2 Certificates
will constitute "regular interests" in REMIC II, and the Class R-I Certificates
and the Class R-II Certificates will each constitute the sole Classes of
"residual interests" in REMIC I and REMIC II, respectively. See "Material
Federal Income Tax Consequences" herein and in the Prospectus.
There is currently no secondary market for the Offered Certificates of any
Class. The Underwriters intend to make a secondary market in the Offered
Certificates, but have no obligation to do so. There can be no assurance that
such a market will develop for any Class of Certificates or, if it does
develop, that it will continue or will provide investors with a sufficient
level of liquidity of investment. See "Risk Factors--Limited Liquidity" herein.
THE OFFERED CERTIFICATES CONSTITUTE A SEPARATE SERIES OF CERTIFICATES
BEING OFFERED BY THE DEPOSITOR PURSUANT TO ITS PROSPECTUS DATED JULY 31, 1998,
OF WHICH THIS PROSPECTUS SUPPLEMENT IS A PART AND THAT ACCOMPANIES THIS
PROSPECTUS SUPPLEMENT. THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE
INFORMATION ABOUT THE OFFERING OF THE OFFERED CERTIFICATES. ADDITIONAL
INFORMATION IS CONTAINED IN THE PROSPECTUS AND INVESTORS ARE URGED TO READ BOTH
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE OFFERED
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS
ACTING AS UNDERWRITERS TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS AND SUBSCRIPTIONS.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act of 1933, as
amended (the "1933 Act"), with respect to the Offered Certificates. This
Prospectus Supplement and the accompanying Prospectus, which form a part of the
Registration Statement, omit certain information contained in such Registration
Statement pursuant to the rules and regulations of the Commission. The
Registration Statement and amendments thereof and exhibits thereto can be
inspected and copied at the Public Reference Room of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and the Commission's regional
offices at Seven World Trade Center, 13th Floor, New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1500, Chicago, Illinois 60661.
Copies of such materials can be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W, Washington D.C.
20549. Electronic filings made through the Electronic Data Gathering Analysis
and Retrieval System are publicly available through the Commission's Web Site
(http://www.sec.gov).
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Certain documents filed with the Commission by or on behalf of the Trust
Fund are incorporated by reference herein. See "Incorporation of Certain
Information by Reference" in the Prospectus.
S-5
<PAGE>
EXECUTIVE SUMMARY
Prospective investors are advised to read carefully, and should rely
solely on, the detailed information appearing elsewhere in this Prospectus
Supplement and the Prospectus relating to the Offered Certificates in making
their investment decision. The following Executive Summary does not include all
relevant information relating to the Offered Certificates or the Mortgage
Loans, particularly with respect to the risks and special considerations
involved with an investment in the Offered Certificates and is qualified in its
entirety by reference to the detailed information appearing elsewhere in this
Prospectus Supplement and the Prospectus. Prior to making any investment
decision, a prospective investor should review fully this Prospectus Supplement
and the Prospectus. Capitalized terms used and not otherwise defined herein
have the respective meanings assigned to them in this Prospectus Supplement and
the Prospectus.
<TABLE>
<CAPTION>
INITIAL
CERTIFICATE APPROXIMATE
BALANCE OR APPROXIMATE PERCENTAGE OF
NOTIONAL AMOUNT RATINGS PERCENTAGE OF INITIAL SUBORDINATED
CLASS ($000'S) MOODY'S/S&P POOL BALANCE SECURITIES
<S> <C> <C> <C> <C>
Offered Certificates
Class A-1A $ 258,548 Aaa/AAA 22.46% 28.75%
Class A-1B $ 384,826 Aaa/AAA 33.44% 28.75%
Class A-2MF $ 176,673 Aaa/AAA 15.35% 28.75%
Class B $ 57,548 Aa2/AA 5.00% 23.75%
Class C $ 63,303 A2/A 5.50% 18.25%
Class D $ 60,426 Baa2/BBB 5.25% 13.00%
Class E $ 17,265 Baa3/BBB- 1.50% 11.50%
Private Certificates (1)
Class A-EC(2) $1,150,953 Aaa/AAA N/A N/A
Class F $ 25,897 Ba1/BB+ 2.25% 9.25%
Class G $ 28,774 NR(3)/BB+ 2.50% 6.75%
Class H $ 8,633 Ba2/BB 0.75% 6.00%
Class J $ 11,510 Ba3/NR(3) 1.00% 5.00%
Class K $ 17,265 NR(3)/B+ 1.50% 3.50%
Class L $ 14,387 B2/NR(3) 1.25% 2.25%
Class M $ 8,633 B3/NR(3) 0.75% 1.50%
Class N-1(4) $ 17,265 NR(3)/NR(3) 1.50% N/A
Class N-2(5) $ 17,265 NR(3)/NR(3) N/A N/A
</TABLE>
- --------
(1) Not offered hereby.
(2) Interest only strip with Notional Balance equal to the aggregate of the
Certificate Balances of Classes A-1A through Class N-1.
(3) Rating not obtained by Depositor from such Rating Agency.
(4) Principal only certificates.
(5) Interest only strip with Notional Balance equal to the Class N-1
Certificate Balance.
S-6
<PAGE>
<TABLE>
<CAPTION>
EXPECTED
AMORTIZATION
WEIGHTED AVERAGE PERIOD
CLASS PASS-THROUGH RATE LIFE (YEARS) (1) (MONTH/YEAR) (1)
<S> <C> <C> <C>
Offered Certificates
Class A-1A % 5.500 9/1998 - 9/2007
Class A-1B % 9.503 9/2007 - 7/2008
Class A-2MF % 9.565 4/2005 - 7/2008
Class B % 9.900 7/2008 - 7/2008
Class C %(2) 11.067 7/2008 - 5/2010
Class D %(3) 13.155 5/2010 - 1/2013
Class E %(4) 14.400 1/2013 - 1/2013
Private Certificates
Class A-EC %(5) N/A N/A
Class F %(6) 14.414 1/2013 - 2/2013
Class G %(7) 14.538 2/2013 - 4/2013
Class H %(8) 14.650 4/2013 - 4/2013
Class J %(9) 14.685 4/2013 - 5/2013
Class K %(10) 14.836 5/2013 - 9/2013
Class L %(11) 16.070 9/2013 - 9/2015
Class M %(12) 18.266 9/2015 - 12/2017
Class N-1 N/A 19.501 12/2017 - 7/2018
Class N-2 % N/A N/A
</TABLE>
- --------
(1) Assumes a prepayment scenario of 0% CPR, with each ARD Loan prepaying in
full on the related Anticipated Repayment Date, and no defaults. See
"Yield and Maturity Considerations--Weighted Average Life" herein.
(2) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate less % (such percentage
the "Class C Strip").
(3) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate less % (such percentage
the "Class D Strip").
(4) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate less % (such percentage
the "Class E Strip").
(5) Initial Pass-Through Rate. The related Pass-Through Rate will be a per
annum rate equal to a fraction, the numerator of which is the sum of (i)
the excess of the Weighted Average Net Mortgage Rate over the weighted
averages of the Pass-Through Rates of the Class A-1A, Class A-1B and Class
A-2MF Certificates multiplied by the sum of the Class A-1A, Class A-1B and
Class A-2MF Certificate Balances, (ii) the excess of the Weighted Average
Net Mortgage Rate over the Pass-Through Rate of the Class B Certificates
multiplied by the Class B Certificate Balance, (iii) the Class C Strip
multiplied by the Class C Certificate Balance, (iv) the Class D Strip
multiplied by the Class D Certificate Balance, and (v) the Class E Strip
multiplied by the Class E Certificate Balance, (vi) the Class F Strip
multiplied by the Class F Certificate Balance, (vii) the Class G Strip
multiplied by the Class G Certificate Balance, (viii) the Class H Strip
multiplied by the Class H Certificate Balance, (ix) the Class J Strip
multiplied by the Class J Certificate Balance, (x) the Class K Strip
multiplied by the Class K Certificate Balance, (xi) the Class L Strip
multiplied by the Class L Certificate Balance, (xii) the Class M Strip
multiplied by the Class M Certificate Balance, and (xiii) the excess of
the Weighted Average Net Mortgage Rate over the Pass-Through Rate of the
Class N-2 Certificates multiplied by the Class N-1 Certificate Balance and
the denominator of which is the Class A-EC Notional Balance.
(6) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate less % (such percentage
the "Class F Strip").
(7) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate less % (such percentage
the "Class G Strip").
(8) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate less % (such percentage
the "Class H Strip").
(9) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate less % (such percentage
the "Class J Strip").
(10) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate less % (such
percentage the "Class K Strip").
(11) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate less % (such
percentage the "Class L Strip").
(12) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate less % (such
percentage the "Class M Strip").
S-7
<PAGE>
Securities:
Distribution Dates. The 15th day of each month, or if such 15th day is not
a Business Day, the Business Day immediately following such day, commencing
September 17, 1998; provided that no such day shall be fewer than four Business
Days after the related Determination Date. See "Description of the
Certificates--Distributions" herein.
<TABLE>
<CAPTION>
SCHEDULED FINAL
CLASS DISTRIBUTION DATE
- ----------------------------- -------------------
<S> <C>
Class A-1A ................ September 15, 2007
Class A-1B ................ July 15, 2008
Class A-2MF ............... July 15, 2008
Class B ................... July 15, 2008
Class C ................... May 15, 2010
Class D ................... January 15, 2013
Class E ................... January 15, 2013
</TABLE>
The Scheduled Final Distribution Dates set forth above have been
determined on the basis of the assumptions described in "Description of the
Certificates--Scheduled Final Distribution Date" herein.
Early Termination...... The Trust Fund is subject to early termination upon
purchase of the Mortgage Loans by any holder of the
Class R-I Certificates representing more than a 50%
Percentage Interest of the Class R-I Certificates, the
Master Servicer or the Depositor on any Distribution
Date on which the outstanding aggregate Scheduled
Principal Balance of the Mortgage Loans is less than
1.0% of the Initial Pool Balance. See "Description of
the Certificates--Early Termination" herein.
Master Servicer........ National Realty Funding, L.C.
Special Servicer....... National Realty Funding, L.C.
Trustee................ The Chase Manhattan Bank.
Mortgage Loan Sellers... National Realty Finance L.C., Prudential Mortgage
Capital Funding, LLC and CIBC, Inc. NRFinance is an
affiliate of NRF, the Master Servicer and Special
Servicer of the Mortgage Loans. PMCF is an affiliate
of Prudential Securities Incorporated, an Underwriter
of the Offered Certificates, and of the Transferor and
the Depositor. CIBC is an affiliate of CIBC
Oppenheimer Corp., an Underwriter of the Offered
Certificates.
Federal Tax Status..... Elections will be made to treat designated portions
of the Trust Fund as two separate "real estate
mortgage investment conduits" (each a "REMIC").
S-8
<PAGE>
ERISA.................. As described under "ERISA Considerations" herein and
in the Prospectus, the Class A-1A, Class A-1B and
Class A-2MF Certificates may be purchased by employee
benefit plans that are subject to ERISA. The
Subordinate Certificates may not be purchased by
employee benefit plans that are subject to ERISA
except as provided herein.
SMMEA.................. The Offered Certificates will not be
mortgage-related securities pursuant to the Secondary
Mortgage Market Enhancement Act of 1984. See "Legal
Investment" herein and in the Prospectus.
DTC Eligibility........ The Offered Certificates are being delivered through
the facilities of The Depository Trust Company
("DTC").
Closing Date........... On or about August 21, 1998.
Structural Summary:
Interest Payments...... On each Distribution Date, each Class of
Certificates (other than the Class N-1 Certificates
and the Residual Certificates) generally will be
entitled to receive interest distributions in an
amount equal to the Class Interest Distribution Amount
for such Class and Distribution Date, together with
any unpaid Class Interest Shortfalls remaining from
prior Distribution Dates, in each case to the extent
of Available Funds remaining after payment to each
outstanding Class of Certificates bearing an earlier
sequential Class designation of (i) the Class Interest
Distribution Amount and any unpaid Class Interest
Shortfall for such Classes, (ii) the Pooled Principal
Distribution Amount for such Distribution Date for
such Classes and (iii) payment of the unreimbursed
amount of Realized Losses previously allocated to such
Classes. See "Description of the
Certificates--Distributions" herein.
With respect to the Senior Certificates, on each
Distribution Date prior to the date on which the
Certificate Balance of all Classes of Subordinate
Certificates are reduced to zero, interest payments
with respect to the Senior Certificates will
generally be made concurrently, (a) from Available
Funds for Loan Group 1, to the Class A-1A and Class
A-1B Certificates, pro rata in accordance with the
Class Interest Distribution Amount of each, up to an
amount equal to the Class Interest Distribution
Amount of each such Class for such Distribution Date
plus, for each such Class, an amount equal to the
aggregate unpaid Class Interest Shortfalls previously
allocated to such Class on any previous Distribution
Dates and not paid, (b) from Available Funds for Loan
Group 2, to the Class A-2MF Certificates, up to an
amount equal to the Class Interest Distribution
Amount for such Class for such Distribution Date,
plus an amount equal to the aggregate unpaid Class
Interest Shortfalls previously allocated to such
Class on any previous Distribution Dates and not
paid, and (c) from Available Funds for both Loan
Groups, to the Class A-EC Certificates, up to an
amount equal to the Class Interest Distribution
Amount for such Class for such Distribution Date,
plus an amount equal to the aggregate unpaid Class
Interest Shortfalls previously allocated to such
Class on any previous Distribution Dates and not
paid; provided that if, with respect to any
Distribution Date, such Available Funds are
insufficient to make any such distribution, then
Available Funds for both Loan Groups will be
allocated among such Classes pro rata, in proportion
to their respective Class Interest Distribution
Amounts without regard to Loan Groups.
On each Distribution Date on or after the date on
which the Certificate Balances of all Classes of
Subordinate Certificates are reduced to zero,
distributions in respect of interest accrued will be
made to each Class of Senior Certificates pro rata.
S-9
<PAGE>
Principal Payments..... Generally, the Pooled Principal Distribution Amount
for each Distribution Date will be distributed first
to the Senior Certificates (other than the Class A-EC
Certificates) in the order described below until their
respective Certificate Balances have been reduced to
zero and thereafter, sequentially to each other Class
of Regular Certificates (other than the Class N-2
Certificates), until their respective Certificate
Balances have been reduced to zero, in each case, to
the extent of Available Funds remaining after (i)
payment of the Class Interest Distribution Amount, any
unpaid Class Interest Shortfalls remaining from prior
Distribution Dates, the Pooled Principal Distribution
Amount and the unreimbursed amount of Realized Losses,
if any, up to an amount equal to the aggregate of such
unreimbursed amount previously allocated to each other
outstanding Class of Certificates having an earlier
sequential Class designation, and (ii) payment of the
Class Interest Distribution Amount and any unpaid
Class Interest Shortfalls remaining from prior
Distribution Dates to such Class (other than the Class
N-1 Certificates) and, in the case of the Class A-1A,
Class A-1B, Class A-2MF and Class A-EC Certificates
(the "Senior Certificates"), to any other of such
Classes, because such Senior Certificates are pari
passu in respect of such interest amounts.
With respect to the Senior Certificates, on each
Distribution Date prior to the date on which the
Certificate Balance of all Classes of Subordinate
Certificates are reduced to zero, the A-2MF
Distribution Amount will be distributed to the Class
A-2MF Certificates in reduction of the Class A-2MF
Certificate Balance until the Class A-2MF Certificate
Balance has been reduced to zero. The remainder of
the Pooled Principal Distribution Amount will be
distributed to the Class A-1A, Class A-1B and Class
A-2MF Certificates in sequential order until their
respective Certificate Balances have been reduced to
zero.
On each Distribution Date on or after the date on
which the Certificate Balances of all Classes of
Subordinate Certificates are reduced to zero,
distributions in reduction of the Certificate
Balances of each Class of Senior Certificates will be
made on a pro rata basis.
The Class N-1 Certificates will be entitled to all
distributions of Excess Interest subject to the
limitations set forth in the Pooling and Servicing
Agreement. Additionally, the holders of 100% of the
Class N-1 Certificates will have the option to
purchase at the purchase price specified herein any
ARD Loan on or after its Anticipated Repayment Date
under the circumstances described under "Description
of the Mortgage Pool--Certain Terms and Conditions of
the Mortgage Loans."
Credit Enhancement..... The sole source of credit enhancement for each Class
of Certificates is the subordination of the
Subordinate Certificates. Each Class of Regular
Certificates is protected by the subordination offered
by the other Classes of Regular Certificates that bear
a lower sequential designation. No Class of Senior
Certificates is subordinated to any other Class of
Certificates.
Realized Losses on Mortgage Loans will be allocated
to the Regular Certificates that have Certificate
Balances (other than the Senior Certificates) in
reverse sequential order, until the Certificate
Balances thereof are reduced to zero, and then among
the Class A-1A, Class A-1B and Class A-2MF
Certificates on a pro rata basis. Realized Losses
allocated to the Class N-1 Certificates will reduce
the Class N-2 Notional Balance. Realized Losses
allocated to the Class A-1A, Class A-1B, Class A-2MF,
Class B, Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K, Class L, Class M or Class
N-1 Certificates will reduce the Class A-EC Notional
Balance.
S-10
<PAGE>
Collateral Overview;
Loan Details........... See Annex A hereto for certain characteristics of
Mortgage Loans on a loan-by-loan basis. All weighted
average information regarding the Mortgage Loans
reflects weighting of the Mortgage Loans by their
Cut-off Date Principal Balances. The "Cut-off Date
Principal Balance" of each Mortgage Loan is equal to
the unpaid principal balance thereof as of the
Cut-off Date, after application of all payments of
principal due on or before such date, whether or not
received. See also "Description of the Mortgage Pool"
for additional statistical information regarding the
Mortgage Loans.
GENERAL CHARACTERISTICS
<TABLE>
<S> <C>
Aggregate Cut-off Date Principal Balance ....................... $1,150,953,450
Loan Group 1 .................................................. $943,452,384
Loan Group 2 .................................................. $207,501,066
Number of Mortgage Loans ....................................... 256
Loan Group 1 .................................................. 214
Loan Group 2 .................................................. 42
Number of Mortgaged Properties ................................. 303
Weighted Average Mortgage Rate ................................. 7.42%
Weighted Average Remaining Term to Maturity .................... 132.280 months
Weighted Average DSCR (1) ...................................... 1.407
Average Cut-off Date Mortgage Loan Balance ..................... $4,495,912
Number of Balloon Mortgage Loans ............................... 190
Balloon Mortgage Loans as a percentage of Initial Pool Balance . 69.90
Number of ARD Loans ............................................ 47
ARD Loans as a percentage of Initial Pool Balance .............. 25.92
Aggregate Cut-off Date Balloon Loan Principal Balance .......... $ 820,242,687
</TABLE>
--------------
(1) The Debt Service Coverage Ratio ("DSCR") for each Mortgage Loan
is calculated based on the ratio of the related Underwritten Cash
Flow to the related Annual Debt Service. For more information on
the Debt Service Coverage Ratios, see "Description of the
Mortgage Pool--Certain Characteristics of the Mortgage Pool" herein.
S-11
<PAGE>
CUT-OFF DATE PRINCIPAL BALANCES
<TABLE>
<CAPTION>
% OF INITIAL NUMBER OF
CUT-OFF DATE PRINCIPAL BALANCE POOL BALANCE MORTGAGE LOANS
- ------------------------------------------- -------------- ---------------
<S> <C> <C>
$ 500,000 to $1,000,000 .......... 0.87% 11
$ 1,000,001 to $2,000,000 .......... 7.79% 60
$ 2,000,001 to $3,000,000 .......... 11.62% 54
$ 3,000,001 to $4,000,000 .......... 11.95% 39
$ 4,000,001 to $5,000,000 .......... 7.82% 20
$ 5,000,001 to $6,000,000 .......... 6.24% 13
$ 6,000,001 to $7,000,000 .......... 6.33% 11
$ 7,000,001 to $8,000,000 .......... 7.12% 11
$ 8,000,001 to $9,000,000 .......... 5.13% 7
$ 9,000,001 to $10,000,000 ......... 8.29% 10
$10,000,001 to $11,000,000 ......... 3.58% 4
$11,000,001 to $12,000,000 ......... 3.04% 3
$12,000,001 to $13,000,000 ......... 2.13% 2
$13,000,001 to $14,000,000 ......... 2.38% 2
$14,000,001 to $15,000,000 ......... 3.80% 3
$15,000,001 and over ............... 11.91% 6
------ --
Total .............................. 100.00% 256
</TABLE>
DEBT SERVICE COVERAGE RATIOS
Debt Service Coverage Ratios ("DSCRs") for each Mortgage Loan are
calculated based on the ratio of the related Underwritten Cash Flow to the
related Annual Debt Service. See "Description of the Mortgage Pool--Certain
Characteristics of the Mortgage Pool" herein for more information relating to
the calculation of debt service coverage ratios.
<TABLE>
<CAPTION>
RANGE OF DEBT
SERVICE COVERAGE % OF INITIAL NUMBER OF
RATIOS POOL BALANCE MORTGAGE LOANS
- ------------------------------- -------------- ---------------
<S> <C> <C>
1.00 to 1.05 x .............. 1.81% 3
1.16 to 1.20 x .............. 1.61% 2
1.21 to 1.25 x .............. 3.58% 11
1.26 to 1.30 x .............. 19.82% 49
1.31 to 1.35 x .............. 22.39% 49
1.36 to 1.40 x .............. 11.90% 37
1.41 to 1.45 x .............. 11.87% 32
1.46 to 1.50 x .............. 6.13% 20
1.51 to 1.55 x .............. 6.97% 17
1.56 to 1.60 x .............. 3.80% 5
1.61 to 1.65 x .............. 2.02% 8
1.66 to 1.70 x .............. 2.20% 6
1.71 to 1.75 x .............. 1.30% 5
1.76 to 1.80 x .............. 0.39% 2
1.81 to 1.85 x .............. 2.50% 4
1.91 to 1.95 x .............. 0.49% 2
1.96 to 2.00 x .............. 0.12% 1
2.11 to 2.15 x .............. 0.16% 1
2.41 to 2.45 x .............. 0.87% 1
2.56 and above .............. 0.05% 1
------ --
Total ....................... 100.00% 256
</TABLE>
S-12
<PAGE>
LOAN TO VALUE RATIOS
<TABLE>
<CAPTION>
% OF INITIAL NUMBER OF
RANGE OF LOAN TO VALUE RATIOS POOL BALANCE MORTGAGE LOANS
- --------------------------------- -------------- ---------------
<S> <C> <C>
10.01% to 15.00% ......... 0.10% 1
30.01% to 35.00% ......... 0.20% 1
35.01% to 40.00% ......... 0.12% 1
40.01% to 45.00% ......... 0.30% 2
45.01% to 50.00% ......... 0.46% 3
50.01% to 55.00% ......... 2.47% 10
55.01% to 60.00% ......... 0.52% 3
60.01% to 65.00% ......... 9.62% 31
65.01% to 70.00% ......... 19.97% 46
70.01% to 75.00% ......... 36.35% 100
75.01% to 80.00% ......... 27.06% 53
80.01% to 85.00% ......... 1.12% 3
85.01% to 95.00% ......... 1.71% 2
------ ---
Total .................... 100.00% 256
</TABLE>
PROPERTY TYPES
<TABLE>
<CAPTION>
% OF INITIAL NUMBER OF
PROPERTY TYPES POOL BALANCE MORTGAGED PROPERTIES
- ----------------------------------------- -------------- ---------------------
<S> <C> <C>
Assisted Living ................... 2.36% 5
Hotel ............................. 6.58% 17
Industrial ........................ 6.99% 28
Mixed Use ......................... 3.02% 10
Mobile Home Park .................. 0.88% 4
Multifamily ....................... 24.97% 64
Nursing Home ...................... 1.37% 4
Office ............................ 16.68% 53
Office/Industrial ................. 0.89% 3
Retail -- Anchored ................ 17.07% 32
Retail -- Single Tenant ........... 4.94% 20
Retail -- Unanchored .............. 10.62 % 49
Retail -- Shadow Anchored ......... 1.23% 4
Self-Storage ...................... 0.20% 1
Warehouse ......................... 2.20% 9
------ --
Total ............................. 100.00% 303
</TABLE>
S-13
<PAGE>
MATURITY/ARD YEARS
<TABLE>
<CAPTION>
% OF INITIAL NUMBER OF
YEAR POOL BALANCE MORTGAGE LOANS
- ---------------------- -------------- ---------------
<S> <C> <C>
2002 ............... 1.25% 1
2004 ............... 1.16% 2
2005 ............... 1.44% 4
2007 ............... 14.22% 36
2008 ............... 52.05% 129
2009 ............... 1.45% 9
2010 ............... 4.24% 10
2011 ............... 0.34% 1
2012 ............... 1.21% 4
2013 ............... 15.75% 37
2015 ............... 1.75% 3
2016 ............... 0.38% 2
2017 ............... 0.81% 3
2018 ............... 3.95% 15
----- ---
Total .............. 100% 256
</TABLE>
S-14
<PAGE>
PREPAYMENT LOCKOUT/PREMIUM ANALYSIS
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL POOL BALANCE BY PREPAYMENT RESTRICTION OR DEFEASANCE FEATURE
ASSUMING 0% CPR(1)
- -----------------------------------------------------------------------------------
8/98 8/99 8/00 8/01
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Lockout/Defeasance(2) ................ 54.1% 54.2% 36.5% 35.5%
Greater of Yield Maintenance or
Percentage Premium of:
5.00% or greater .................... 25.7 25.7 25.6 25.5
4.00% to 4.99% ...................... 0.3 0.3 0.3 0.3
3.00% to 3.99% ...................... 9.7 9.7 9.7 9.6
2.00% to 2.99% ...................... 2.5 2.5 2.5 2.6
1.00% to 1.99% ...................... 7.5 7.5 24.3 25.4
0.00% to 0.99% ...................... 0.1 0.1 0.1 0.1
Total Yield Maintenance .............. 45.9 45.8 62.6 63.6
Total of Yield Maintenance and
Lockout/Defeasance: 100 100 99.1 99.1
Percentage Premium:
5.00% or greater .................... 0.0 0.0 0.0 0.0
4.00% to 4.99% ...................... 0.0 0.0 0.0 0.0
3.00% to 3.99% ...................... 0.0 0.0 0.9 0.0
2.00% to 2.99% ...................... 0.0 0.0 0.0 0.9
1.00% to 1.99% ...................... 0.0 0.0 0.0 0.0
Total Percentage Premium ............. 0.0 0.0 0.9 0.9
Open (no Call Protection) ............ 0.0 0.0 0.0 0.0
Total all Categories ................. 100.0 100.0 100.0 100.0
Current Pool Balance ($ millions) 1,151.0 1,135.9 1,119.6 1,101.7
Pool Factor(3) ....................... 100.0 98.7 97.3 95.7
<CAPTION>
8/02 8/03 8/04 8/05 8/06 8/07
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance(2) ................ 32.1% 21.7% 20.9% 21.2% 21.2% 11.7%
Greater of Yield Maintenance or
Percentage Premium of:
5.00% or greater .................... 25.8 25.5 25.4 25.9 12.4 10.0
4.00% to 4.99% ...................... 0.3 0.0 0.0 0.0 0.1 0.0
3.00% to 3.99% ...................... 9.3 9.4 8.9 8.7 4.6 3.6
2.00% to 2.99% ...................... 2.8 2.3 2.0 2.0 0.5 0.3
1.00% to 1.99% ...................... 27.4 38.7 39.1 40.0 38.3 30.5
0.00% to 0.99% ...................... 0.1 0.1 0.1 0.1 0.1 0.1
Total Yield Maintenance .............. 65.7 76.0 75.4 76.7 56.0 44.4
Total of Yield Maintenance and
Lockout/Defeasance: 97.8 97.7 96.3 98.0 77.3 56.1
Percentage Premium:
5.00% or greater .................... 0.0 0.3 0.0 0.1 11.5 1.1
4.00% to 4.99% ...................... 0.0 0.0 0.3 0.0 0.1 0.0
3.00% to 3.99% ...................... 0.0 0.0 0.0 0.5 3.2 0.7
2.00% to 2.99% ...................... 0.0 0.5 0.0 0.0 0.8 0.0
1.00% to 1.99% ...................... 0.9 1.4 1.5 1.5 5.2 0.4
Total Percentage Premium ............. 0.9 2.3 1.8 2.0 20.7 2.2
Open (no Call Protection) ............ 1.2 0.0 1.9 0.0 2.0 41.7
Total all Categories ................. 100.0 100.0 100.0 100.0 100.0 100.0
Current Pool Balance ($ millions) 1,082.4 1,039.8 1,017.7 967.3 942.1 891.4
Pool Factor(3) ....................... 94.0 90.3 88.4 84.0 81.9 77.4
</TABLE>
- --------
(1) This table sets forth an analysis of the percentage of the declining
balance of the Mortgage Pool that, on the Distribution Date in August in
each of the years indicated, will be within a Lockout Period or in which
Principal Prepayments must be accompanied by the indicated Prepayment
Premium or Yield Maintenance Charge. See "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans--Prepayment
Provisions" and "--Defeasance".
(2) After the related Defeasance Lockout Period, Mortgagor may obtain the
release of the lien on the related Mortgaged Property by substituting for
such Mortgaged Property, as collateral for the related promissory note,
direct, non-callable obligations of the United States of America which
provide for payments on or prior to each Due Date and on the maturity
date of the Mortgage Loan (or, in the case of the ARD Loans, through the
related Anticipated Repayment Dates) in amounts equal to or greater than
the amounts payable on the related Mortgage Loan on each such date, and
upon satisfaction of certain other conditions. Four of the Mortgage
Loans, having aggregate principal balances as of the Cut-off Date
representing approximately 1.87% of the Initial Pool Balance, that have a
defeasance feature also provide for prepayment of the Mortgage Loan (with
an accompanying Yield Maintenance Charge), and afford the related
borrower the option either to prepay or to exercise the defeasance
feature.
(3) Represents the approximate percentage of the Initial Pool Balance that
will remain outstanding at the indicated date based upon the assumptions
described under "Description of the Certificates--Scheduled Final
Distribution Dates".
S-15
<PAGE>
PREPAYMENT LOCKOUT/PREMIUM ANALYSIS (CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL POOL BALANCE BY PREPAYMENT RESTRICTION OR DEFEASANCE FEATURE
ASSUMING 0% CPR(1)
- --------------------------------------------------------------------------------------
8/08 8/09 8/10 8/11 8/12
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Lockout/Defeasance(2) ............. 8.4% 8.6% 8.6% 8.3% 7.9%
Greater of Yield Maintenance or
Percentage Premium of:
5.00% or greater ................. 20.3 21.0 5.2 3.2 1.7
4.00% to 4.99% ................... 0.0 0.0 0.0 0.0 0.0
3.00% to 3.99% ................... 5.3 5.6 5.0 0.4 0.4
2.00% to 2.99% ................... 0.6 0.6 0.0 0.0 0.0
1.00% to 1.99% ................... 36.4 38.4 30.4 24.9 23.5
0.00% to 0.99% ................... 1.9 2.0 2.4 0.3 0.3
Total Yield Maintenance ........... 64.4 67.6 43.0 28.9 25.9
Total of Yield Maintenance and
Lockout/Defeasance: 72.9 76.2 51.6 37.3 33.8
Percentage Premium:
5.00% or greater ................. 5.8 0.2 19.6 1.7 2.9
4.00% to 4.99% ................... 0.0 2.1 0.0 20.0 0.0
3.00% to 3.99% ................... 6.1 3.3 7.7 9.4 6.1
2.00% to 2.99% ................... 2.3 0.0 0.0 1.8 0.0
1.00% to 1.99% ................... 5.2 2.2 16.7 22.0 1.4
Total Percentage Premium .......... 19.3 7.8 44.0 55.0 10.4
Open (no Call Protection) ......... 7.8 16.0 4.4 7.7 55.8
Total all Categories .............. 100.0 100.0 100.0 100.0 100.0
Current Pool Balance ($ millions) 268.0 245.6 196.0 181.7 167.4
Pool Factor(3) .................... 23.3 21.3 17.0 15.8 14.5
<CAPTION>
8/13 8/14 8/15 8/16 8/17
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Lockout/Defeasance(2) ............. 21.2% 19.9% 6.80% 5.40% 3.20%
Greater of Yield Maintenance or
Percentage Premium of:
5.00% or greater ................. 3.0 3.3 0.0 0.0 0.0
4.00% to 4.99% ................... 0.0 0.0 0.0 0.0 0.0
3.00% to 3.99% ................... 0.0 0.0 0.0 0.0 0.0
2.00% to 2.99% ................... 0.0 0.0 0.0 0.0 0.0
1.00% to 1.99% ................... 26.8 28.8 34.1 35.7 37.2
0.00% to 0.99% ................... 0.0 0.0 0.0 0.0 0.0
Total Yield Maintenance ........... 29.8 32.0 34.1 35.7 37.2
Total of Yield Maintenance and
Lockout/Defeasance: 51.0 51.9 40.9 41.1 40.3
Percentage Premium:
5.00% or greater ................. 3.0 0.0 3.9 0.0 0.0
4.00% to 4.99% ................... 10.9 1.4 0.0 4.1 0.0
3.00% to 3.99% ................... 18.9 32.4 26.8 0.0 0.0
2.00% to 2.99% ................... 5.5 0.0 10.4 1.0 0.0
1.00% to 1.99% ................... 5.8 11.4 11.5 29.3 0.0
Total Percentage Premium .......... 44.1 45.2 52.6 34.5 0.0
Open (no Call Protection) ......... 4.9 2.9 6.4 24.4 59.7
Total all Categories .............. 100.0 100.0 100.0 100.0 100.0
Current Pool Balance ($ millions) 40.3 34.3 26.0 22.4 19.0
Pool Factor(3) .................... 3.5 3.0 2.3 1.9 1.7
</TABLE>
- --------
(1) This table sets forth an analysis of the percentage of the declining
balance of the Mortgage Pool that, on the Distribution Date in August in
each of the years indicated, will be within a Lockout Period or in which
Principal Prepayments must be accompanied by the indicated Prepayment
Premium or Yield Maintenance Charge. See "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans--Prepayment
Provisions" and "--Defeasance".
(2) After the related Defeasance Lockout Period, mortgagor may obtain the
release of the lien on the related Mortgaged Property by substituting for
such Mortgaged Property, as collateral for the related promissory note,
direct, non-callable obligations of the United States of America which
provide for payments on or prior to each Due Date and on the maturity
date of the Mortgage Loan (or, in the case of the ARD Loans, through the
related Anticipated Repayment Dates) in amounts equal to or greater than
the amounts payable on the related Mortgage Loan on each such date, and
upon satisfaction of certain other conditions. Four of the Mortgage
Loans, having aggregate principal balances as of the Cut-off Date
representing approximately 1.87% of the Initial Pool Balance, that have a
defeasance feature also provide for prepayment of the Mortgage Loan (with
an accompanying Yield Maintenance Charge), and afford the related
borrower the option either to prepay or to exercise the defeasance
feature.
(3) Represents the approximate percentage of the Initial Pool Balance that
will remain outstanding at the indicated date based upon the assumptions
described under "Description of the Certificates--Scheduled Final
Distribution Dates".
S-16
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and the
Prospectus. Capitalized terms used herein and not otherwise defined herein have
the meanings assigned in the Prospectus. See "Index of Significant Definitions"
herein and in the Prospectus.
Title of Certificates... Prudential Securities Secured Financing Corporation
Commercial Mortgage Pass-Through Certificates, Series
1998-C1 (the "Certificates").
The Certificates....... $258,548,000 initial aggregate principal balance
("Certificate Balance") of Class A-1A Certificates;
$384,826,000 initial Certificate Balance of Class
A-1B Certificates;
$176,673,000 initial Certificate Balance of Class
A-2MF Certificates;
$1,150,953,000 initial Notional Balance of Class A-EC
Certificates;
$57,548,000 initial Certificate Balance of Class B
Certificates;
$63,303,000 initial Certificate Balance of Class C
Certificates;
$60,426,000 initial Certificate Balance of Class D
Certificates;
$17,265,000 initial Certificate Balance of Class E
Certificates;
$25,879,000 initial Certificate Balance of Class F
Certificates;
$28,774,000 initial Certificate Balance of Class G
Certificates;
$8,633,000 initial Certificate Balance of Class H
Certificates;
$11,510,000 initial Certificate Balance of Class J
Certificates;
$17,265,000 initial Certificate Balance of Class K
Certificates;
$14,387,000 initial Certificate Balance of Class L
Certificates;
$8,633,000 initial Certificate Balance of Class M
Certificates;
$17,265,000 initial Certificate Balance of Class N-1
Certificates;
$17,265,000 initial Notional Balance of Class N-2
Certificates;
Class R-I Certificates; and
Class R-II Certificates.
The aggregate initial Certificate Balance of all
Classes of Certificates (and of each Class) is
subject to a permitted variance of plus or minus 5%
as described herein. The Certificates will be issued
pursuant to a Pooling and Servicing Agreement to be
dated as of August 1, 1998 (the "Pooling and
Servicing Agreement") among the Depositor, the Master
Servicer, the Special Servicer and the Trustee.
ONLY THE CLASS A-1A, CLASS A-1B, CLASS A-2MF, CLASS
B, CLASS C, CLASS D AND CLASS E CERTIFICATES ARE
OFFERED HEREBY.
The Class A-EC, Class F, Class G, Class H, Class J,
Class K, Class L, Class M, Class N-1, Class N-2,
Class R-I and Class R-II Certificates (collectively,
the "Private Certificates") have not been registered
under the 1933 Act and are not offered hereby.
Accordingly, to the extent this Prospectus Supplement
contains information regarding the terms of the
Private Certificates, such information is provided
solely because of its relevance to a prospective
purchaser of an Offered Certificate.
S-17
<PAGE>
Depositor.............. Prudential Securities Secured Financing Corp.
One New York Plaza
New York, New York 10292
Master Servicer........ National Realty Funding, L.C.
911 Main Street, Suite 1400
Kansas City, Missouri 64105
Special Servicer....... National Realty Funding, L.C.
911 Main Street, Suite 1400
Kansas City, Missouri 64105
Trustee................ The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001-2697
Attn.: Structured Finance Services--CMBS
Cut-off Date........... August 1, 1998
Closing Date........... On or about August 21, 1998
Distribution Date...... The 15th day of each month, or if such 15th day is
not a Business Day, the Business Day immediately
following such day, commencing on September 17, 1998;
provided that no Distribution Date shall be fewer than
four Business Days after the related Determination
Date. As used herein, a "Business Day" is any day
other than a Saturday, Sunday or a day on which
banking institutions in the States of New York or
Missouri are authorized or obligated by law, executive
order or governmental decree to close.
Record Date............ With respect to each Distribution Date, the close of
business on the last Business Day of the month
preceding the month in which such Distribution Date
occurs.
Interest Accrual
Period................. With respect to any Distribution Date, the calendar
month preceding the month in which such Distribution
Date occurs. Interest for each Interest Accrual Period
is calculated based on a 360-day year consisting of
twelve 30-day months.
Collection Period...... With respect to each Distribution Date and any
Mortgage Loan, the period beginning on the day
following the Determination Date in the month
preceding the month in which such Distribution Date
occurs (or, in the case of the Distribution Date
occurring in September 1998, on the day after the
Cut-off Date) and ending on the Determination Date in
the month in which such Distribution Date occurs.
Determination Date..... The 11th day of any month, or if such 11th day is
not a Business Day, the Business Day immediately
following such 11th day, commencing on September 11,
1998.
Due Date............... With respect to any Collection Period and Mortgage
Loan, the date on which scheduled payments are due on
such Mortgage Loan (without regard to grace periods),
which date, for each of the Mortgage Loans, is the
first day of the month.
Denominations.......... The Class A-1A, Class A-1B, Class A-2MF, Class B,
Class C, Class D and Class E Certificates will be
issued in minimum denominations of Certificate Balance
or Notional Balance, as applicable, of $50,000 and
integral multiples of $1.00 in excess thereof and will
be registered in the name of a nominee of The
Depository Trust
S-18
<PAGE>
Company ("DTC" and, together with any successor
depository selected by the Depositor, the
"Depository") and beneficial interests therein will
be held by investors through the book-entry
facilities of the Depository. The Depositor has been
informed by DTC that its nominee will be Cede & Co.
Beneficial Owners will hold and transfer their
respective ownership interests in and to such
Book-Entry Certificates through the book-entry
facilities of DTC and will not be entitled to
definitive, fully registered Certificates except in
the limited circumstances set forth herein. See
"Description of the Certificates--Delivery, Form and
Denomination" herein.
Distributions.......... Interest. On each Distribution Date, each Class of
Certificates (other than the Class N-1 Certificates
and the Residual Certificates) generally will be
entitled to receive interest distributions in an
amount equal to the Class Interest Distribution Amount
for such Class and Distribution Date, together with
any unpaid Class Interest Shortfalls remaining from
prior Distribution Dates, in each case to the extent
of Available Funds remaining after payment to each
outstanding Class of Certificates bearing an earlier
sequential Class designation of (i) the Class Interest
Distribution Amount and any unpaid Class Interest
Shortfall for such Classes, (ii) the Pooled Principal
Distribution Amount for such Distribution Date for
such Classes and (iii) payment of the unreimbursed
amount of Realized Losses previously allocated to such
Classes. See "Description of the Certificates--
Distributions" herein.
With respect to the Senior Certificates, on each
Distribution Date prior to the date on which the
Certificate Balance of all Classes of Subordinate
Certificates are reduced to zero, concurrently, (i)
the Class A-1A and Class A-1B Certificates generally
will receive their related Class Interest
Distribution Amounts, pro rata, from the Available
Distribution Amount for Loan Group 1, (ii) the Class
A-2MF Certificates generally will receive the related
Class Interest Distribution Amount from the Available
Distribution Amount for Loan Group 2 and (iii) the
Class A-EC Certificates generally will receive the
related Class Interest Distribution Amount from the
Available Distribution Amount for both Loan Groups;
provided that if, with respect to any Distribution
Date, such Available Distribution Amounts are
insufficient to make any such distribution, the
Available Distribution Amount for both Loan Groups
will be allocated among such Classes pro rata, in
proportion to their respective Class Interest
Distribution Amounts without regard to Loan Groups.
On each Distribution Date on or after the date on
which the Certificate Balances of all Classes of
Subordinate Certificates have been reduced to zero,
distributions in respect of interest accrued will be
made to each Class of Senior Certificates pro rata.
The "Class Interest Distribution Amount" with respect
to any Distribution Date and any Class of Regular
Certificates other than the Class A-EC, Class N-1 and
Class N-2 Certificates is equal to interest accrued
during the related Interest Accrual Period at the
applicable Pass-Through Rate for such Class and such
Interest Accrual Period on the Certificate Balance of
such Class; provided that reductions of the
Certificate Balance of such Class as a result of
distributions in respect of principal or the
allocation of losses on the Distribution Date
occurring in such Interest Accrual Period will be
deemed to have been made as of the first day of such
Interest Accrual Period. With respect to any
Distribution Date and the Class A-EC and Class N-2
Certificates, the "Class Interest Distribution
Amount" will equal the product of the related
Pass-Through Rate and the related Notional
S-19
<PAGE>
Balance; provided that reductions of the Notional
Balance of such Class as a result of distributions in
respect of principal or the allocation of losses on
the Distribution Date occurring in such Interest
Accrual Period will be deemed to have been made as of
the first day of such Interest Accrual Period. For
each Class of Certificates, the Class Interest
Distribution Amount will be reduced by amounts
allocated to such Class in respect of Prepayment
Interest Shortfalls not offset by Prepayment Interest
Surplus, the Trustee Fee, the Servicing Fee for each
Mortgage Loan in the related Loan Group and, if the
Master Servicer and the Special Servicer are the same
person, the Special Servicing Fee with respect to
each such Mortgage Loan and such Distribution Date,
all as provided herein. The Class N-1 Certificates
are principal only certificates and have no Class
Interest Distribution Amount.
Principal. Generally, the Pooled Principal
Distribution Amount for each Distribution Date will
be distributed first to the Senior Certificates
(other than the Class A-EC Certificates) in the order
described below until their respective Certificate
Balances have been reduced to zero and thereafter,
sequentially to each other Class of Regular
Certificates (other than the Class N-2 Certificates),
until their respective Certificate Balances have been
reduced to zero, in each case, to the extent of
Available Funds remaining after (i) payment of the
Class Interest Distribution Amount, any unpaid Class
Interest Shortfalls remaining from prior Distribution
Dates, the Pooled Principal Distribution Amount and
the unreimbursed amount of Realized Losses, if any,
up to an amount equal to the aggregate of such
unreimbursed amount previously allocated to each
other outstanding Class of Certificates having an
earlier sequential Class designation and (ii) payment
of the Class Interest Distribution Amount and any
unpaid Class Interest Shortfalls remaining from prior
Distribution Dates to such Class (or, with respect to
the Class N-1 Certificates, to the Class N-2
Certificates) and, in the case of the Class A-1A,
Class A-1B, Class A-2MF and Class A-EC Certificates
(the "Senior Certificates"), to any other of such
Classes, because such Senior Certificates are pari
passu in respect of such interest amounts.
With respect to the Senior Certificates, on each
Distribution Date prior to the date on which the
Certificate Balance of all Classes of Subordinate
Certificates are reduced to zero, the A-2MF Principal
Distribution Amount will be distributed to the Class
A-2MF Certificates in reduction of the Class A-2MF
Certificate Balance until the Class A-2MF Cetificate
Balance has been reduced to zero. Thereafter, the
remainder of the Pooled Principal Distribution Amount
will be distributed to the Class A-1A, Class A-1B and
Class A-2MF Certificates in sequential order until
their respective Certificate Balances have been
reduced to zero.
On each Distribution Date on or after the date on
which the Certificate Balances of all Classes of
Subordinate Certificates have been reduced to zero,
distributions in reduction of the Certificate
Balances of each Class of Senior Certificates will be
made on a pro rata basis.
The "A-2MF Principal Distribution Amount" with
respect to Loan Group 2 and any Distribution Date, is
equal to the portion of the Pooled Principal
Distribution Amount for Loan Group 2 for such
Distribution Date that represents the principal
portion of any Balloon Payments and any Unscheduled
Payments of Principal collected with respect to
Mortgage Loans in Loan Group 2.
The "Pooled Principal Distribution Amount" for any
Distribution Date is equal to the sum (without
duplication), for all Mortgage Loans, of (i) the
principal component of all scheduled Monthly Payments
(other than Balloon Payments) that become due
(regardless of whether received) on the Mortgage
Loans during the
S-20
<PAGE>
related Collection Period; (ii) the principal
component of all Assumed Scheduled Payments as
applicable, deemed to become due (regardless of
whether received) during the related Collection
Period with respect to any Mortgage Loan that is
delinquent in respect of its Balloon Payment; (iii)
the Scheduled Principal Balance of each Mortgage Loan
that was repurchased from the Trust Fund in
connection with the breach of a representation or
warranty or purchased from the Trust Fund pursuant to
the Pooling and Servicing Agreement, in either case,
during the related Collection Period; (iv) the
portion of Unscheduled Payments allocable to
principal of any Mortgage Loan that was liquidated
during the related Collection Period; (v) the
principal component of all Balloon Payments received
during the related Collection Period; (vi) all other
Principal Prepayments received in the related
Collection Period; and (vii) all other full or
partial recoveries in respect of principal, including
Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds and Net REO Proceeds.
The Class N-1 Certificates will be entitled to all
distributions of Excess Interest subject to the
limitations set forth in the Pooling and Servicing
Agreement. Additionally, the holders of 100% of the
Class N-1 Certificates will have the option to
purchase at the purchase price specified herein any
ARD Loan on or after its Anticipated Repayment Date
under the circumstances described under "Description
of the Mortgage Pool--Certain Terms and Conditions of
the Mortgage Loans." Additional Master Servicer or
Special Servicer compensation, interest on Advances,
extraordinary expenses of the Trust Fund and other
similar items may create a shortfall in Available
Funds distributable on any Distribution Date.
Resulting Class Interest Shortfalls will be allocated
to the most subordinate Class then outstanding.
See "Description of the Certificates--Distributions"
herein.
Advances............... Subject to the limitations described herein with
respect to Nonrecoverable Advances, the Master
Servicer is required to make advances (each such
amount, a "P&I Advance") in respect of delinquent
Monthly Payments on the Mortgage Loans.
The amount required to be advanced in respect of
delinquent Monthly Payments on a Mortgage Loan as to
which there has been an Appraisal Reduction Event
will equal the amount required to be advanced by the
Master Servicer without giving effect to the related
Appraisal Reduction minus the related Appraisal
Reduction Amount.
The Master Servicer will not be required to advance
the full amount of any Balloon Payment not made by
the related borrower on its due date, but will
advance an amount equal to the monthly payment (or
portion thereof not received) deemed to be due on the
Mortgage Loan after such default, calculated on the
original amortization schedule of such Mortgage Loan,
with interest as described herein (the "Assumed
Scheduled Payment").
If the Master Servicer fails to make a required P&I
Advance, the Trustee, subject to the standards
applicable to the Master Servicer, will be required
to make such P&I Advance.
See "The Pooling and Servicing Agreement--Advances"
herein.
Subordination.......... As a means of providing a certain amount of
protection to the holders of the Senior Certificates
against losses associated with delinquent and
defaulted Mortgage
S-21
<PAGE>
Loans, the rights of the holders of the Subordinate
Certificates to receive distributions of interest and
principal, as applicable, will be subordinated to
such rights of the holders of the Senior
Certificates. Each Class of Subordinated Certificates
(other than the Residual Certificates) will likewise
be protected by the subordination offered by the
other Classes of Certificates that bear a later
sequential Class designation. This subordination will
be effected in two ways: (i) by the preferential
right of the holders of a Class of Certificates to
receive, on any Distribution Date, the amounts of
both interest (including shortfalls in interest on
prior Distribution Dates) and principal, as
applicable, distributable in respect of such
Certificates on such Distribution Date prior to any
distribution being made on such Distribution Date in
respect of any Classes of Certificates subordinate
thereto, and (ii) by the allocation of Realized
Losses and certain other shortfalls to the
Certificates in reverse order of their sequential
Class designations, provided that Realized Losses are
allocated pro rata among the Classes of Senior
Certificates (other than the Class A-EC Certificates,
whose Notional Balance is subject to reduction as a
function of the reduction of the Certificate Balance
of any other Class of Certificates (other than the
Class N-2 Certificates)) in accordance with their
respective Certificate Balances. See "Description of
the Certificates--Subordination" herein. No other
form of credit enhancement is provided for the
benefit of the holders of the Offered Certificates.
Early Termination...... Any holder of the Class R-I Certificates
representing more than a 50% Percentage Interest of
the Class R-I Certificates, the Master Servicer and
the Depositor, in that order, will each have the
option to purchase, at the purchase price specified
herein, all of the Mortgage Loans, and all property
acquired through exercise of remedies in respect of
any Mortgage Loans, remaining in the Trust Fund, and
thereby effect a termination of the Trust Fund and
early retirement of the then outstanding Certificates,
on any Distribution Date on which the aggregate
Scheduled Principal Balance of the Mortgage Loans
remaining in the Trust Fund is less than 1.0% of the
Initial Pool Balance. See "Description of the
Certificates--Early Termination" herein.
Certain Federal Income
Tax Consequences...... Elections will be made to treat the Trust REMICs,
and the Trust REMICs will qualify, as two separate
real estate mortgage investment conduits (each, a
"REMIC" or, alternatively, "REMIC I" or "REMIC II")
for federal income tax purposes. The Class A-1A, Class
A-1B, Class A-2MF, Class A-EC, Class B, Class C, Class
D, Class E, Class F, Class G, Class H, Class J, Class
K, Class L, Class M, Class N-1 and Class N-2
Certificates (collectively, the "Regular
Certificates") will represent "regular interests" in
REMIC II. Certain uncertificated classes of interests
will represent "regular interests" in REMIC I. The
Class R-I and Class R-II Certificates will each be
designated as the sole Class of "residual interest" in
REMIC I and REMIC II, respectively.
Because they represent regular interests, the Regular
Certificates generally will be treated as newly
originated debt instruments for federal income tax
purposes. Holders of the Regular Certificates will be
required to include in income all interest on such
Certificates in accordance with the accrual method of
accounting, regardless of a Certificateholder's usual
method of accounting. None of the Offered
Certificates is expected to be treated for federal
income tax reporting purposes as having been issued
with an original issue discount. For purposes of
determining the rate of accrual of market discount,
original issue discount and premium for federal
income tax purposes, it has been assumed that the
Mortgage Loans will prepay at
S-22
<PAGE>
the rate of 0% CPR but which each ARD Loan prepaying
in full on its Anticipated Repayment Date. No
representation is made as to whether the Mortgage
Loans will prepay at that rate or any other rate or
whether the Trust Fund will be terminated on such
date. See "Material Federal Income Tax Consequences"
herein.
Based on the expected issue prices therefor, it is
anticipated that the Class A-1A, Class A-1B, Class
A-2MF, Class B, Class C, Class D and Class E
Certificates may be treated for federal income tax
purposes as having been issued at a premium. Whether
any holder of such a Class of Certificates will be
treated as holding a Certificate with amortizable
bond premium will depend on such Certificateholder's
purchase price. Holders of such Classes of
Certificates should consult their own tax advisors
regarding the possibility of making an election to
amortize any such premium. See "Material Federal
Income Tax Consequences" in the Prospectus.
Offered Certificates held by a mutual savings bank or
domestic building and loan association will represent
interests in "qualifying real property loans" within
the meaning of Section 593(d) of the Internal Revenue
Code of 1986 (the "Code"). Offered Certificates held
by a real estate investment trust will constitute
"real estate assets" within the meaning of Section
856(c)(5)(B) of the Code, and income with respect to
Offered Certificates will be considered "interest on
obligations secured by mortgages on real property or
on interests in property" within the meaning of
Section 856(c)(3)(B) of the Code. Offered
Certificates held by a domestic building and loan
association will generally constitute a "regular or a
residual interest in a REMIC" within the meaning of
Section 7701(a)(19)(C)(xi) of the Code only in the
proportion that the Mortgage Loans are secured by
multifamily apartment buildings. See "Material
Federal Income Tax Consequences--Taxation of the
REMIC and its Holders" in the Prospectus.
For further information regarding the federal income
tax consequences of investing in the Offered
Certificates, see "Material Federal Income Tax
Consequences--Taxation of the REMIC" in the
Prospectus and "Material Federal Income Tax
Consequences" herein.
ERISA Considerations... As described under "ERISA Considerations" herein and
in the Prospectus, the Class A-1A, Class A-1B and
Class A-2MF Certificates may be purchased by employee
benefit plans that are subject to ERISA. The
Subordinate Certificates may not be purchased by
employee benefit plans that are subject to ERISA
except as provided herein.
Ratings................ It is a condition to the issuance of the Offered
Certificates that the Class A-1A, Class A-1B and Class
A-2MF Certificates each be rated "Aaa" by Moody's
Investors Service, Inc. ("Moody's") and "AAA" by
Standard & Poor's Rating Service, a division of the
McGraw-Hill Companies ("S&P") the Class B Certificates
be rated "Aa2" by Moody's and "AA" by S&P; the Class C
Certificates be rated "A2" by Moody's and "A" by S&P;
the Class D Certificates be rated "Baa2" by Moody's
and "BBB" by S&P; and the Class E Certificates be
rated "Baa3" by Moody's and "BBB-" by S&P.
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. A security rating does not
address the likelihood or frequency of prepayments
(both voluntary and involuntary) or the possibility
that Certificateholders might suffer a lower than
anticipated yield, nor does a security rating address
the likelihood of receipt of Prepayment Premiums or
the likelihood of collection by the Master Servicer
of Default Interest.
S-23
<PAGE>
Legal Investment....... The Offered Certificates will not constitute
"mortgage related securities" within the meaning of
the Secondary Mortgage Market Enhancement Act of 1984
("SMMEA"). The appropriate characterization of the
Certificates under various legal investment
restrictions, and thus the ability of investors
subject to these restrictions to purchase the
Certificates, may be subject to significant
interpretative uncertainties. Accordingly, investors
should consult their own legal advisors to determine
whether and to what extent the Certificates constitute
legal investments for them. See "Legal Investment"
herein and in the Prospectus.
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RISK FACTORS
Prospective holders of Certificates should consider, among other things,
the factors listed below and in the Prospectus under "Risk Factors" in
connection with the purchase of the Certificates.
INVESTMENT IN COMMERCIAL AND MULTIFAMILY MORTGAGE LOANS
Commercial and Multifamily Lending Generally. Commercial and multifamily
lending generally is viewed as exposing a lender to risks that are different
than many of the risks faced in connection with other types of lending, such as
consumer lending. Commercial and multifamily lending generally involves larger
loans, thereby providing lenders with less diversification of risk and the
potential for greater losses resulting from the delinquency and/or default of
individual loans. Many of the Mortgage Loans are non-recourse obligations of
the related borrowers, the repayment of which is often solely dependent upon
the successful operation of the related Mortgaged Properties. Commercial and
multifamily property values and net operating income are subject to volatility.
Many of the Mortgage Loans are also balloon loans, which may pose additional
risks associated with both the value of the related Mortgaged Property and the
borrower's ability to obtain financing as of the maturity of the related
Mortgage Loan. A borrower's ability to repay its loan may be impaired if future
operating results are not comparable to historical operating results. This may
occur for a variety of reasons, including an increase in vacancy rates, a
decline in rental rates, an increase in operating expenses and/or an increase
in necessary capital expenditures. The income from and market value of a
Mortgaged Property may also be adversely affected by such factors as changes in
the general economic climate, the existence of an oversupply of comparable
space or a reduction in demand for real estate in the area, the attractiveness
of the property to tenants and guests and perceptions regarding such property's
safety, convenience and services. Real estate values and income are also
affected by such factors as government regulations and changes in real estate,
zoning or tax laws, the willingness and ability of a property owner to provide
capable management, changes in interest rate levels, the availability of
financing and potential liability under environmental and other laws.
Aging and Deterioration of Commercial and Multifamily Properties. The age,
construction quality and design of a particular Mortgaged Property may affect
the occupancy level as well as the rents that may be charged for individual
leases or, in the case of the Nursing Home Properties, the Congregate Care
Properties and the Hospitality Properties, the amounts that occupants and
residents may be charged for the occupancy thereof. The effects of poor
construction quality are likely to require the borrower to spend increasing
amounts of money over time for maintenance and capital improvements. Even
Mortgaged Properties that were well constructed and have been well maintained
will require ongoing capital improvements in order for such Mortgaged
Properties to remain competitive in the market and retain tenants and other
occupants.
Limited Adaptability for Other Uses. Some of the Mortgaged Properties may
not readily be converted to alternative uses if such Mortgaged Properties
become unprofitable due to competition, age of the improvements, decreased
demand, zoning restrictions or other factors. The conversion of Self-Storage
Facility Properties, Congregate Care Properties, Nursing Home Properties,
Hospitality Properties (or, in the case of certain Retail Anchored or Retail
Unanchored Properties, any of the racquet clubs, movie theatres and health
clubs situated therein) to alternative uses generally would require substantial
capital expenditures. Thus, if the operation of any such Mortgaged Properties
becomes unprofitable such that the borrower becomes unable to meet its
obligations on the related Mortgage Loan, the liquidation value of any such
Mortgaged Property may be substantially less, relative to the amount owing on
the related Mortgage Loan, than would be the case if such property were readily
adaptable to other uses.
Leases. Repayment of the Mortgage Loans may be affected by the expiration
or termination of occupancy leases and the ability of the related borrowers to
renew such leases with the existing occupants or to relet the space on
economically favorable terms to new occupants, or the existence of a market
that requires a reduced rental rate, substantial tenant improvements or
expenditures or other concessions to a tenant in connection with a lease
renewal. No assurance can be given that leases that expire can be renewed, that
the space covered by leases that expire or are terminated can be leased in a
timely manner at comparable rents or on comparable terms or that the borrower
will have the cash or be able to obtain the financing to fund any required
tenant improvements. Income from and the market value of the Mortgaged
Properties would be adversely affected if vacant space in the Mortgaged
Properties could not be leased for a significant period of time, if tenants
were unable to meet their lease obligations or if, for any other reason, rental
payments could not be collected. Upon the occurrence of an event of default by
a tenant, delays and costs in enforcing the lessor's rights could occur. If a
significant portion of a Mortgaged Property is leased to a single tenant, the
consequences of the failure of the borrower to relet such portion of such
Mortgaged Property in the event that such tenant vacates the space leased to it
(either as a result of the expiration of the term of the lease or a default by
the tenant) or a failure of such tenant to perform its obligations under the
related lease, will be more pronounced than if such Mortgaged Property were
leased to a greater number of tenants. See
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"--Tenant Matters" herein. Certain tenants at the Mortgaged Properties may be
entitled to terminate their leases or reduce their rents based upon negotiated
lease provisions (e.g. if an anchor tenant ceases operations at the related
Mortgaged Property). In such cases, there can be no assurance that the
operation of such provisions will not allow such a termination or rent
reduction. A tenant's lease may also be terminated or otherwise affected if
such tenant becomes the subject of a bankruptcy proceeding.
Competition. Other multifamily and commercial properties located in the
areas of the Mortgaged Properties compete with the Mortgaged Properties of
similar types to attract customers, tenants and other occupants. Such
properties generally compete on the basis of rental rates, location, condition
and features of the property. If any oversupply of available space exists in a
particular market (either as a result of the building of new construction or a
decrease in the number of customers, tenants or other occupants due to a
decline in economic activity in the area), the rental rates for the Mortgaged
Properties may be adversely affected. Commercial or multifamily properties may
also face competition from other types of property as such properties are
converted to competitive uses in the future. Such conversions may occur based
upon future trends in the use of property by tenants and occupants, e.g., the
establishment of more home-based offices and businesses and the conversion of
warehouse space for multifamily use. Increased competition could adversely
affect income from and the market value of the Mortgaged Properties.
Quality of Management. The successful operation of the Mortgaged
Properties is also dependent on the performance of the respective property
managers of the Mortgaged Properties. Such property managers are responsible
for responding to changes in the local market, planning and implementing the
rental rate structure, including establishing levels of rent payments, and
advising the related borrower so that maintenance and capital improvements can
be carried out in a timely fashion.
Risks Associated with Hospitality Properties. Seventeen of the Mortgage
Loans, representing approximately 6.58% of the Initial Pool Balance, are
secured by Hospitality Properties. Like any income producing property, the
income generated by a Hospitality Property is subject to factors such as local,
regional and national economic conditions and competition. However, because
such income is primarily generated by room occupancy and such occupancy is
usually for short periods of time, the level of such income may respond more
quickly to conditions such as those described above. Sensitivity to competition
may require more frequent improvements and renovations than other properties.
To the extent a hotel or motel is affiliated or associated with a regional,
national or international chain, changes in the public perception of such chain
may have an impact on the income generated by the related property. If a
franchise is lost, the ability of a hotel or motel to compete successfully may
be significantly impaired. Finally, the hotel and motel industry is generally
seasonal. This seasonality is likely to result in regular fluctuations in the
income generated by Hospitality Properties.
Liquor License Considerations. The liquor licenses for some of the
Hospitality Properties that secure Mortgage Loans may be held by the property
manager rather than by the related Mortgagor. The applicable laws and
regulations relating to such licenses generally prohibit the transfer of such
licenses to any person. In the event of a foreclosure of a Hospitality Property
it is unlikely that the Master Servicer (or Special Servicer) or purchaser in
any such sale would be entitled to the rights under the liquor license for such
Hospitality Property and such party would be required to apply in its own right
for such license.
Risks Associated with Office Properties. Approximately 16.68% of the
Mortgage Loans (based on Initial Pool Balance) are secured by Office
Properties. See "Description of the Mortgage Pool." Significant factors
determining the value of office properties are the quality of the tenants in
the building, the physical attributes of the building in relation to competing
buildings and the strength and stability of the market area as a desirable
business location. Office Properties may be adversely affected by an economic
decline in the business operated by the tenants. The risk of such an adverse
effect is increased if revenue is dependent on a single tenant or if there is a
significant concentration of tenants in a particular business or industry.
Approximately 6.11% of the Mortgage Loans (based on Initial Pool Balance) are
secured by Office Properties that are single tenant properties. See
"Description of the Mortgage Pool."
Office properties also are subject to competition with other office
properties in the same market. Competition is affected by a property's age,
condition, design (for example, floor sizes and layout), access to
transportation and ability or inability to offer certain amenities to its
tenants, including sophisticated building systems (such as fiberoptic cables,
satellite communications or other base building technological features).
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<PAGE>
The success of an office property also depends on the local economy. A
company's decision to locate office headquarters in a given area, for example,
may be affected by factors such as labor cost and quality, tax environment and
quality of life issues such as proximity to schools and cultural amenities and
the quality thereof. A central business district may have an economy that is
markedly different from that of a suburb. The local economy and the financial
condition of the borrower will impact on an office property's ability to
attract stable tenants on a consistent basis. In addition, the cost of
refitting office space for a new tenant is often more costly than for other
property types.
Risks Associated with Retail Properties. Approximately 33.86% of the
Mortgage Loans (based on Initial Pool Balance) are secured by Retail Properties
(as defined herein). See "Description of the Mortgage Pool." Significant
factors determining the value of retail properties are the quality of the
tenants, as well as fundamental aspects of real estate such as location and
market demographics. The correlation between the success of tenant businesses
and property value is more direct with respect to retail properties than other
types of commercial property because a significant component of the total rent
paid by retail tenants often is tied to a percentage of gross sales. Whether a
retail property is "anchored" or "unanchored" also is an important distinction.
Retail properties that are anchored traditionally have been perceived to be
less risky. While there is no strict definition of an anchor, it generally is
understood that a retail anchor tenant is a tenant that is proportionately
large in size and is vital in attracting customers to the property. As used
herein an "anchored property" means a property in which a nationally or
regionally recognized tenant or a tenant of sufficient creditworthiness
occupies a significant portion of the Mortgaged Property, or in which any
tenant occupies more than 20,000 square feet. Approximately 17.07% of the
Mortgage Loans (based on Initial Pool Balance) are secured by multi-tenant
retail properties that are "anchored properties." Approximately 10.62% of the
Mortgage Loans (based on Initial Pool Balance) are secured by Retail Properties
that are "unanchored properties." The loss of an anchor tenant, the assignment
of an anchor tenant's interest under any lease to a less desirable tenant or a
significant decline in the level of an anchor tenant's business may have an
adverse effect on the overall operation of such properties. The correlation
between the success of tenant businesses and credit quality of the Mortgage
Loan is increased when the property is a single tenant property.
Unlike office properties or Hospitality Properties, retail properties also
face competition from sources outside a given real estate market. Catalog
retailers, home shopping networks, shopping through electronic media,
telemarketing and outlet centers all compete with more traditional retail
properties for consumer dollars. Continued growth of these alternative retail
outlets (which often are characterized by lower operating costs) could
adversely affect the rents collectible at the Retail Properties securing
Mortgage Loans in the Trust Fund.
Risks Associated with Nursing Homes and Assisted Living
Properties. Approximately 3.73% of the Mortgage Loans (based on Initial Pool
Balance) are secured by residential health care facilities. Mortgage Loans
secured by liens on residential health care facilities pose risks not
associated with loans secured by liens on other types of income-producing real
estate. Providers of long-term nursing care, assisted living and other medical
services are subject to federal and state laws that relate to the adequacy of
medical care, distribution of pharmaceuticals, rate setting, equipment,
personnel, operating policies and additions to facilities and services and to
the reimbursement policies of government programs and private insurers. The
failure of any of the borrowers to maintain or renew any required license or
regulatory approval could prevent it from continuing operations (in which case
no revenues would be received from the related Mortgaged Property or the
portion thereof requiring licensing) or, if applicable, bar it from
participating in certain reimbursement programs. Furthermore, in the event of
foreclosure, there can be no assurance that the Trustee or any other purchaser
at a foreclosure sale would be entitled to the rights under such licenses and
such party may have to apply in its own right for such a license. There can be
no assurance that a new license could be obtained. In addition, to the extent
any nursing home receives a significant portion of its revenues from government
reimbursement programs, primarily Medicaid and Medicare, such revenue may be
subject to statutory and regulatory changes, retroactive rate adjustments,
administrative rulings, policy interpretations, delays by fiscal intermediaries
and government funding restrictions. Moreover, governmental payors have
employed cost-containment measures that limit payments to health care
providers, and there are currently under consideration various proposals that
could materially change or curtail those payments. Accordingly, there can be no
assurances that payments under government programs will, in the future, be
sufficient to fully reimburse the cost of caring for program beneficiaries. If
not, net operating income of the Mortgaged Properties that receive substantial
revenues from those sources, and consequently the ability of the related
borrowers to meet their Mortgage Loan obligations, could be adversely affected.
Under applicable federal and state laws and regulations, including those that
govern Medicare and Medicaid programs, only the provider who actually furnished
the related medical goods and services may sue for or enforce its rights to
reimbursement. Accordingly, in the event of foreclosure, none of the Trustee,
the Master Servicer, the Special Servicer or a subsequent lessee or operator of
the property would generally be entitled to obtain from federal or state
governments any outstanding reimbursement payments relating to services
furnished at the respective properties prior to such foreclosure.
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<PAGE>
Attornment Considerations. Some of the tenant leases, including the anchor
tenant leases, contain provisions that require the tenant to attorn to (that
is, recognize as landlord under the lease) a successor owner of the property
following foreclosure. Some of the leases, including the anchor tenant leases,
may be either subordinate to the liens created by the Mortgage Loans or else
contain a provision that requires the tenant to subordinate the lease if the
mortgagee agrees to enter into a non-disturbance agreement. In some states, if
tenant leases are subordinate to the liens created by the Mortgage Loans and
such leases do not contain attornment provisions, such leases may terminate
upon the transfer of the property to a foreclosing lender or purchaser at
foreclosure. Accordingly, in the case of the foreclosure of a Mortgaged
Property located in such a state and leased to one or more desirable tenants
under leases that do not contain attornment provisions, such Mortgaged Property
could experience a further decline in value if such tenants' leases were
terminated (e.g., if such tenants were paying above-market rents). If a
Mortgage is subordinate to a lease, the lender will not (unless it has
otherwise agreed with the tenant) possess the right to dispossess the tenant
upon foreclosure of the property, and if the lease contains provisions
inconsistent with the Mortgage (e.g., provisions relating to application of
insurance proceeds or condemnation awards), the provisions of the lease will
take precedence over the provisions of the Mortgage.
No Guaranty. No Mortgage Loan is insured or guaranteed by the United
States of America, any governmental agency or instrumentality, any private
mortgage insurer or by the Depositor, the Transferor, the Mortgage Loan
Sellers, the Master Servicer, the Special Servicer or the Trustee or any of
their respective affiliates.
Limited Recourse. The majority of the Mortgage Loans are non-recourse
loans wherein recourse generally may be had only against the specific Mortgaged
Property securing such Mortgage Loan and such limited other assets (if any) as
may have been pledged to secure such Mortgage Loan, and not against the
borrower's other assets. Consequently, the payment of each non-recourse
Mortgage Loan is primarily dependent upon the sufficiency of the net operating
income from the related Mortgaged Property and, at maturity, upon the market
value of such Mortgaged Property. See "Description of the Mortgage
Pool--General" herein. Because the ability to collect from Mortgagors with
respect to Mortgage Loans that provide for recourse is dependent upon the
creditworthiness, solvency and other factors specific to such Mortgagors that
generally are not within the control of any of the Mortgage Loan Sellers, the
Transferor, the Depositor, the Servicer or the Trustee or any of their
affiliates, no assurance can be made as to the likelihood that significant
amounts will be realized in respect of such recourse in the event of a default
with respect to any Mortgage Loan.
Concentration of Mortgage Loans and Borrowers. In general, a mortgage pool
with a significant portion of its loans having larger average balances and a
smaller number of loans may be subject to losses that are more severe than
other pools having the same or similar aggregate principal balance and composed
of smaller average loan balances and a greater number of loans. In all cases,
each potential investor should carefully consider all aspects of any Mortgage
Loan representing a significant percentage of the Initial Pool Balance to
ensure that no such loan is subject to risks unacceptable to such potential
investor. Additionally, a mortgage pool with a high concentration of Mortgage
Loans to the same borrower or related borrowers is subject to the potential
risk that a borrower undergoing financial difficulties might divert its
resources or undertake remedial actions (such as a bankruptcy) in order to
alleviate such difficulties, to the detriment of the Mortgaged Properties. See
"Description of the Mortgage Pool--Certain Characteristics of the Mortgage
Pool--Concentration of Mortgage Loans and Borrowers" herein.
Tax Considerations Related to Foreclosure. REMIC II might become subject
to federal (and possibly state or local) tax, at the highest marginal corporate
rate (currently 35%), on certain of its net income from the operation and
management of a Mortgaged Property subsequent to the Trust Fund's acquisition
of a Mortgaged Property pursuant to a foreclosure or deed-in-lieu of
foreclosure, thereby reducing net proceeds available for distribution to
Certificateholders. Such taxable net income does not include qualifying "rents
from real property," or any rental income based on the net profits of a tenant
or sub-tenant or allocable to a service that is customary in the area and for
the type of property involved.
Future Changes in the Composition of the Mortgage Pool. As principal
payments or prepayments, if any, are made on the Mortgage Loans at different
rates based upon the varied amortization schedules and maturities of the
Mortgage Loans, the Trust Fund may be subject to more concentrated risk with
respect to the reduction in both the diversity of types of Mortgaged Properties
and the number of borrowers. Because principal on the Certificates is payable
in sequential order, and no Class receives principal until the Certificate
Balance of the preceding sequential Class or Classes has been reduced to zero,
Classes that have a later sequential designation are more likely to be exposed
to such risk of concentration than Classes with an earlier sequential priority.
Geographic Concentration. Repayments by borrowers and the market values of
the Mortgaged Properties could be affected by economic conditions generally or
in the regions where the borrowers and the Mortgaged Properties are located,
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conditions in the real estate markets where the Mortgaged Properties are
located, changes in governmental rules and fiscal policies, natural disasters
(which may result in uninsured losses) and other factors that are beyond the
control of the borrowers. The economy of any state or region in which a
Mortgaged Property is located may be adversely affected to a greater degree
than that of other areas of the country by certain developments affecting
industries concentrated in such state or region.
To the extent that general economic or other relevant conditions in states
or regions in which Mortgaged Properties securing significant portions of the
aggregate principal balance of the Mortgage Loans are located decline and
result in a decrease in commercial property, housing or consumer demand in the
region, the income from and market value of the Mortgaged Properties may be
adversely affected. See "Description of the Mortgage Pool--Certain
Characteristics of the Mortgage Pool--Geographic Concentration" herein.
Environmental Law Considerations. If an adverse environmental condition
exists with respect to a Mortgaged Property, the Trust Fund may be subject to
the following risks: (i) a diminution in the value of a Mortgaged Property or
the inability to foreclose against such Mortgaged Property; (ii) the inability
to lease such Mortgaged Property to potential tenants; (iii) the potential that
the related borrower may default on a Mortgage Loan due to such borrower's
inability to pay high investigation and/or remediation costs or difficulty in
bringing its operations into compliance with environmental laws; or (iv) in
certain circumstances as more fully described below, liability for clean-up
costs or other remedial actions, which liability could exceed the value of such
Mortgaged Property. Additionally, the environmental condition of a Mortgaged
Property may be affected by the operations of tenants and occupants thereof,
and current and future environmental laws, ordinances or regulations may impose
additional compliance obligations on business operations that can be met only
by significant capital expenditures.
Under certain federal and state laws, the reimbursement of remedial costs
incurred by state and federal regulatory agencies to correct environmental
conditions are secured by a statutory lien over the subject property, which
lien, in some instances, may be prior to the lien of an existing mortgage. Any
such lien arising with respect to a Mortgaged Property would adversely affect
the value of such Mortgaged Property and could make impracticable the
foreclosure by the Special Servicer on such Mortgaged Property in the event of
a default by the related borrower. Under various federal, state and local laws,
ordinances and regulations, a current or previous owner or operator of real
property, as well as certain other categories of parties, may be liable for the
costs of removal or remediation of hazardous or toxic substances on, under,
adjacent to or in such property. The cost of any required remediation and the
owner's liability therefor as to any property is generally not limited under
applicable federal, state or local laws, and could exceed the value of the
property and/or the aggregate assets of the owner. Under some environmental
laws, a secured lender (such as the Trust Fund) may be deemed an "owner" or
"operator" of the related Mortgaged Property if the lender is deemed to have
participated in the management of the borrower, regardless of whether the
borrower actually caused the environmental damage. In such cases, a secured
lender may be liable for the costs of any required removal or remediation of
hazardous substances. One court has held that a lender will be deemed to have
participated in the management of the borrower if the lender participated in
the financial management of the borrower to a degree indicating the capacity to
influence the borrower's treatment of hazardous waste. The Trust Fund's
potential exposure to liability for cleanup costs will increase if the Trust
Fund actually takes possession of a Mortgaged Property or control of its
day-to-day operations. See "Certain Legal Aspects of the Mortgage
Loans--Environmental Risks" in the Prospectus, and "Description of the Mortgage
Pool--Certain Characteristics of the Mortgage Pool--Environmental Risks"
herein.
In particular, under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the United States
Environmental Protection Agency ("EPA") may impose a lien on property where the
EPA has incurred costs in investigating and/or cleaning up contamination.
However, a CERCLA lien is subordinate to pre-existing, perfected security
interests. In addition, the presence of hazardous or toxic substances, or the
failure to properly remediate such property, may adversely affect the owner's
or operator's ability to refinance using such property as collateral. Persons
who arrange for the disposal or treatment of hazardous or toxic substances also
may be liable for the costs of removal or remediation of such substances at the
disposal or treatment facility. Certain laws impose liability for release of
asbestos containing materials ("ACMs") into the air or require the removal or
containment of ACMs and third parties may seek recovery from owners or
operators of real properties for personal injury associated with ACMs or other
exposure to chemicals or other hazardous substances. For all of these reasons,
the presence of, or contamination by, hazardous substances at, on, under,
adjacent to, or in a property can materially adversely affect the value of the
property.
Under the laws of some states and under CERCLA, it is conceivable that a
secured lender (such as the Trust Fund) may be held liable as an "owner" or
"operator" for the costs of addressing releases or threatened releases of
hazardous substances
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at a Mortgaged Property, even though the environmental damage or threat was
caused by a prior or current owner or operator. CERCLA imposes liability for
such costs on any and all "responsible parties", including owners and
operators. However, CERCLA excludes from the definition of "owner or operator"
a secured creditor who holds indicia of ownership primarily to protect its
security interest, but does not "participate in the management" of the
Mortgaged Property (the "secured creditor exclusion"). Thus, if a lender's
activities begin to encroach on the actual management of a contaminated
property, the lender may incur liability as an "owner or operator" under
CERCLA. Similarly, if a lender forecloses and takes title to a contaminated
property, the lender may incur CERCLA liability in various circumstances,
including, but not limited to, when it holds the property as an investment
(including leasing the property to a third party), or fails to market the
property in a timely fashion.
Recently enacted amendments to CERCLA have clarified the range of
activities in which a lender may engage without becoming subject to liability
under CERCLA. However, liability for costs associated with the investigation
and cleanup of environmental contamination also may be governed by state law,
which may not provide any specific protections to lenders. CERCLA does not
apply to petroleum products, and the secured creditor exclusion does not govern
liability for cleanup costs associated with releases of petroleum
contamination. Federal regulation of underground petroleum storage tanks (other
than heating oil tanks) is governed by Subtitle I of the federal Resource
Conservation and Recovery Act ("RCRA"). The EPA has promulgated a lender
liability rule for underground storage tanks regulated by Subtitle I of RCRA.
Under the EPA rule, a holder of a security interest in an underground storage
tank, or real property containing an underground storage tank, is not
considered an operator of the underground storage tank as long as petroleum is
not added to, stored in or dispensed from the tank. Moreover, recent amendments
to RCRA, enacted concurrently with the CERCLA amendments discussed above,
extend to the holders of security interests in petroleum underground storage
tanks the same protections accorded to secured creditors under CERCLA. It
should be noted, however, that liability for cleanup of petroleum contamination
may be governed by state law, which may not provide any specific protection for
lenders. See "Certain Legal Aspects of the Mortgage Loans--Environmental Risks"
in the Prospectus.
Each of the Mortgage Loan Sellers has represented to the Transferor that
each of the related Mortgaged Properties was subject to a Phase I ESA conducted
consistently with generally recognized industry standards, or a similar study
or an update of a previously conducted Phase I ESA or an update based upon
information contained in an established database, which assessment, study or
update was performed on behalf of the related Mortgage Loan Seller or delivered
to the related Mortgage Loan Seller in connection with its origination or
acquisition of the related Mortgage Loan. Such assessments, studies or updates
were conducted within 12 months prior to the Cut-off Date (except with respect
to one Mortgage Loan originated by NRFinance and identified in Annex A, as to
which the related ESA was obtained 13 months prior to the Cut-off Date).
Subject to the exceptions for specific Mortgaged Properties described herein
under "Description of the Mortgage Loan Pool--Certain Characteristics of the
Mortgage Pool--Environmental Risks," the Mortgage Loan Sellers have informed
the Depositor that the environmental assessments, studies or updates identified
no material adverse environmental conditions or circumstances anticipated to
require any material expenditure with respect to any Mortgaged Property, except
for: (i) those cases where such conditions or circumstances were investigated
further and based upon such additional investigation, a qualified environmental
consultant recommended no further investigations or remediation; (ii) those
cases in which an operations and maintenance plan was recommended by the
environmental consultant and such plan was obtained or an escrow reserve
established to cover the estimated costs of obtaining such plan; (iii) those
conditions in which soil or groundwater contamination was suspected or
identified and either (a) such condition or circumstance was remediated or
abated prior to the Closing Date; (b) a No Further Action letter was obtained
from the applicable regulatory authority, or (c) either an environmental
insurance policy was obtained, a letter of credit provided, an escrow reserve
account established, or an indemnity from the responsible party was obtained,
to cover the estimated costs of any required investigation, testing, monitoring
or remediation, or (iv) those cases in which a leaking underground storage tank
or groundwater contamination was identified to have originated from an offsite
property, a responsible party has been identified under applicable law, and
either such condition is not known to have affected the Mortgaged Property or
the responsible party has either received a No Further Action letter from the
applicable regulatory agency, established a remediation fund, or provided an
indemnity or guaranty to the borrower. The information contained herein is
based upon the environmental assessments, similar studies or updates and has
not been independently verified by the Mortgage Loan Sellers, the Depositor,
the Transferor, or any of their respective affiliates.
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The Pooling and Servicing Agreement requires that the Special Servicer
obtain an ESA of a Mortgaged Property prior to acquiring title thereto on
behalf of the Trust Fund or assuming its operations. Such requirement may
effectively preclude enforcement of the security for the related Mortgage Loan
until a satisfactory ESA is obtained (or until any required remedial action is
thereafter taken), but will decrease the likelihood that the Trust Fund will
become liable under any environmental law. However, there can be no assurance
that such ESA will reveal the existence of conditions or circumstances that
would result in the Trust Fund becoming liable under any environmental law, or
that the requirements of the Pooling and Servicing Agreement will effectively
insulate the Trust Fund from potential liability under environmental laws. See
"The Pooling and Servicing Agreement--Realization Upon Mortgage
Loans--Standards for Conduct Generally in Effecting Foreclosure or the Sale of
Defaulted Loans" herein and "Certain Legal Aspects of the Mortgage Loans--
Environmental Risks" in the Prospectus.
Other Financing. In general, the borrowers are prohibited from encumbering
the related Mortgaged Property with additional secured debt without the
mortgagee's approval. The Pooling and Servicing Agreement will prohibit the
Master Servicer and the Special Servicer from giving any such consent unless
such additional secured debt is expressly subordinated to the related Mortgage
Loan or certain other conditions specified herein pertain (including approval
by each Rating Agency). However, a violation of such prohibition may not become
evident until the related Mortgage Loan otherwise defaults. In cases in which
one or more subordinate liens are imposed on a Mortgaged Property or the
borrower incurs other indebtedness, the Trust Fund is subject to additional
risks, including, without limitation, the risks that the necessary maintenance
of the Mortgaged Property could be deferred to allow the borrower to pay the
required debt service on the subordinate financing and that the value of the
Mortgaged Property may decline as a result, that the borrower may have a
greater incentive to repay the subordinate or unsecured indebtedness first and
that it may be more difficult for the borrower to refinance the Mortgage Loan
or to sell the Mortgaged Property for purposes of making any Balloon Payment
upon the maturity of the Mortgage Loan or a prepayment in full on or about the
Anticipated Repayment Date in the case of any ARD Loan. See "Certain Legal
Aspects of the Mortgage Loans--Secondary Financing; Due-on-Encumbrance
Provisions" in the Prospectus, and "Description of the Mortgage Pool--Certain
Characteristics of the Mortgage Pool--Other Financing" herein.
Exercise of Remedies; Realization Upon Defaulted Mortgage Loans. The
Mortgage Loans generally contain "due-on-sale" and "due-on-encumbrance" clauses
that, in each case, permit the mortgagee to accelerate the maturity of the
Mortgage Loan if the related borrower sells or otherwise transfers or encumbers
the related Mortgaged Property or its interest in the Mortgaged Property in
violation of the mortgage. All of the Mortgage Loans also include a
debt-acceleration clause, which permits the lender to accelerate the debt upon
specified monetary or non-monetary defaults of the borrower. State courts
generally will enforce clauses providing for acceleration in the event of a
material payment default. The equity courts of any state, however, may refuse
the foreclosure or other sale of a mortgaged property or refuse to permit the
acceleration of the indebtedness as a result of a default deemed to be
immaterial or if the exercise of such remedies would be inequitable or unjust
or the circumstances would render the acceleration unconscionable.
Bankruptcy of Borrowers. The borrowers may be either individuals or legal
entities. Most of the borrowers that are legal entities are not
bankruptcy-remote entities. The borrowers that are not bankruptcy remote
entities may be more likely to become insolvent or the subject of a voluntary
or involuntary bankruptcy proceeding because such borrowers may be (a)
operating entities with businesses distinct from the operation of the property
with the associated liabilities and risks of operating an ongoing business or
(b) individuals who may have personal liabilities unrelated to the Mortgaged
Property. However, any borrower, even a bankruptcy-remote entity, as an owner
of real estate will be subject to certain potential liabilities and risks as
such an owner. No assurance can be given that a borrower will not file for
bankruptcy protection or that creditors of a borrower, or a corporate or
individual general partner or member of a borrower, will not initiate a
bankruptcy or similar proceeding against such borrower or corporate or
individual general partner or member. See "Certain Legal Aspects of the
Mortgage Loans--Foreclosure--Bankruptcy Laws" in the Prospectus.
Effect of Mortgagor Delinquencies and Defaults. The aggregate amount of
distributions on the Offered Certificates, the yield to maturity of the Offered
Certificates, the rate of principal payments on the Offered Certificates and
the weighted average lives of the Offered Certificates will be affected by the
rate and the timing of delinquencies and defaults on the Mortgage Loans. If an
investor in a Class of Offered Certificates calculates its anticipated yield
based on an assumed rate of default and amount of losses on the Mortgage Loans
that is lower than the default rate and amount of losses actually experienced
and such additional losses are allocable to such Class of Certificates or, with
respect to the Class A-EC or Class N-2 Certificates, such losses result in a
reduction of the Class A-EC Notional Balance or the Class N-2 Notional Balance,
such purchaser's actual yield to maturity will be lower than that so calculated
and could, under certain extreme scenarios, be
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negative. The timing of any loss on a liquidated Mortgage Loan will also affect
the actual yield to maturity of the Class of Offered Certificates to which a
portion of such loss is allocable, even if the rate of defaults and severity of
losses are consistent with an investor's expectations. In general, the earlier
a loss borne by an investor occurs, the greater is the effect on such
investor's yield to maturity.
Limitations of Appraisals and Engineering Reports. In general, appraisals
represent the analysis and opinion of qualified experts and are not guarantees
of present or future value. Moreover, appraisals seek to establish the amount a
willing buyer would pay a willing seller. Such amount could be significantly
higher than the amount obtained from the saleof a Mortgaged Property under a
distress or liquidation sale. Information regarding the values of the Mortgaged
Properties as of the Cut-off Date is presented under "Description of the
Mortgage Pool--Certain Characteristics of the Mortgage Pool" herein for
illustrative purposes only. The architectural and engineering reports represent
the analysis of the individual engineers or site inspectors at or before the
origination of the respective Mortgage Loans, may not have been updated since
they were originally conducted and may not have revealed all necessary or
desirable repairs, maintenance or capital improvement items.
Zoning Compliance. The Mortgaged Properties are typically subject to
applicable building and zoning ordinances and codes ("Zoning Laws") affecting
the construction and use of real property. Because the Zoning Laws applicable
to a Mortgaged Property (including, without limitation, density, use, parking
and set back requirements) are generally subject to change by the applicable
regulatory authority at any time, certain of the improvements upon the
Mortgaged Properties may not comply fully with all applicable current and
future Zoning Laws. Such changes may limit the ability of the related borrower
to rehabilitate, renovate and update the premises, and to rebuild or utilize
the premises "as is" in the event of a substantial casualty loss with respect
thereto.
Costs of Compliance with Applicable Laws and Regulations. A borrower may
be required to incur costs to comply with various existing and future federal,
state or local laws and regulations applicable to the related Mortgaged
Property, e.g., Zoning Laws and the Americans with Disabilities Act of 1990.
See "Certain Legal Aspects of the Mortgage Loans--Americans With Disabilities
Act" in the Prospectus. The expenditure of such costs, or the imposition of
injunctive relief, penalties or fines in connection with the borrower's
noncompliance could negatively impact the borrower's cash flow and,
consequently, its ability to pay its Mortgage Loan.
Limitations on Enforceability of Cross-Collateralization. Arrangements
whereby certain of the Mortgage Loans (the "Cross-Collateralized Loans") are
cross-collateralized and cross-defaulted with one or more related
Cross-Collateralized Loans could be challenged as fraudulent conveyances by
creditors of any of the related borrowers or by the representative of the
bankruptcy estate of such borrowers if one or more of such borrowers were to
become a debtor in a bankruptcy case. Generally, under federal and most state
fraudulent conveyance statutes, the incurring of an obligation or the transfer
of property (including the granting of a mortgage lien) by a person will be
subject to avoidance under certain circumstances if the person did not receive
fair consideration or reasonably equivalent value in exchange for such
obligation or transfer and (i) was insolvent or was rendered insolvent by such
obligation or transfer, (ii) was engaged in a business or a transaction, or was
about to engage in a business or a transaction, for which properties remaining
with the person constitute an unreasonably small capital or (iii) intended to
incur, or believed that it would incur, debts that would be beyond the person's
ability to pay as such debts matured. Accordingly, a lien granted by any such
borrower could be avoided if a court were to determine that (x) such borrower
was insolvent at the time of granting the lien, was rendered insolvent by the
granting of the lien, was left with inadequate capital or was not able to pay
its debts as they matured and (y) the borrower did not, when it allowed its
Mortgaged Property to be encumbered by the liens securing the indebtedness
represented by the other Cross-Collateralized Loans, receive fair consideration
or reasonably equivalent value for pledging such Mortgaged Property for the
equal benefit of the other related borrowers. No assurance can be given that a
lien granted by a borrower on a Cross-Collateralized Loan to secure the
Mortgage Loan of an affiliated borrower, or any payment thereon, would not be
avoided as a fraudulent conveyance. See "Description of the Mortgage
Pool--Certain Characteristics of the Mortgage Pool" herein for more information
regarding the Cross-Collateralized Loans.
Tenant Matters. Certain of the Mortgaged Properties are leased wholly or
in large part to a single tenant or are wholly or in large part owner-occupied
(each such tenant or owner-occupier, a "Major Tenant"). Any default by a Major
Tenant could adversely affect the related borrower's ability to make payments
on the related Mortgage Loan. There can be no assurance that any Major Tenant
will continue to perform its obligations under its lease (or, in the case of an
owner-occupied Mortgaged Property, under the related Mortgage Loan documents).
See "Description of the Mortgage Pool--Certain Characteristics of the Mortgage
Pool--Tenant Matters" and "Annex A" herein.
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Litigation. From time to time, there may be legal proceedings pending or
threatened against the borrowers and their affiliates relating to the business
of, or arising out of the ordinary course of business of, the borrowers and
their affiliates. There can be no assurance that any such litigation will not
have a material adverse effect on any borrower's ability to meet its
obligations under the related Mortgage Loan and, thus, on the distributions to
Certificateholders.
Potential Conflicts of Interests. The Master Servicer and/or Special
Servicer may own Certificates, including the Subordinate Certificates. Under
such circumstances, it is possible that the interests of the Master Servicer or
Special Servicer, in its capacity as holder of the Certificates of any Class,
may differ from those of the holders of Certificates of any other Class. The
Master Servicer and Special Servicer have advised the Depositor that they and
their respective affiliates intend to continue to service existing mortgage
loans and new mortgage loans for third parties, including portfolios of
mortgage loans similar to the Mortgage Loans, in the ordinary course of their
business. These mortgage loans and the related mortgaged properties may be in
the same markets as, or have owners, obligors and/or property managers in
common with, certain of the Mortgage Loans and the Mortgaged Properties.
Certain personnel of the Servicer and Special Servicer and their respective
affiliates may, on behalf of the Servicer or Special Servicer, as applicable,
perform services with respect to the Mortgage Loans at the same time as they
are performing services, on behalf of other persons, with respect to other
mortgage loans secured by properties in the same markets as the Mortgaged
Properties. In that event, the interests of the Servicer, the Special Servicer
and their respective affiliates and their other clients may differ from, and
compete with, the interests of the Trust Fund. Under the Pooling and Servicing
Agreement, the Servicer and the Special Servicer are required to service the
Mortgage Loans in accordance with the Servicing Standard.
PREPAYMENT AND YIELD CONSIDERATIONS
Effect of Borrower Defaults and Delinquencies. The aggregate amount of
distributions on the Regular Certificates, the yield to maturity of the Regular
Certificates, the rate of principal payments on the Regular Certificates and
the weighted average life of the Regular Certificates will be affected by the
rate and the timing of delinquencies, defaults, losses or other shortfalls
experienced on the Mortgage Loans, and by extensions of the maturity dates of
Mortgage Loans. If a purchaser of a Regular Certificate of any Class calculates
its anticipated yield based on an assumed default rate and amount of losses on
the Mortgage Loans that is lower than the default rate and amount of losses
actually experienced and such additional losses are allocable to such Class of
Certificates or, with respect to the Class A-EC or Class N-2 Certificates, such
losses result in a reduction of the Class A-EC Notional Balance or the Class
N-2 Notional Balance, respectively, such purchaser's actual yield to maturity
will be lower than the anticipated yield calculated and could, under certain
extreme scenarios, be negative. The timing of any loss on a liquidated Mortgage
Loan will also affect the actual yield to maturity of the Regular Certificates
to which a portion of such loss is allocable, even if the rate of defaults and
severity of losses are consistent with an investor's expectations. In general,
the earlier a loss borne by an investor occurs, the greater will be the effect
on such investor's yield to maturity. Realized Losses on Mortgage Loans
included in the Mortgage Pool will be allocated to the Regular Certificates
that have Certificate Balances (other than the Senior Certificates) in reverse
sequential order, until the Certificate Balances thereof are reduced to zero,
and then among the Class A-1A, Class A-1B and Class A-2MF Certificates on a pro
rata basis. Realized Losses allocated to the Class N-1 Certificates will reduce
the Class N-2 Notional Balance, and Realized Losses allocated to the Class
A-1A, Class A-1B, Class A-2MF, Class B, Class C, Class D, Class E, Class F,
Class G, Class H, Class J, Class K, Class L, Class M or Class N-1 Certificates
will reduce the Class A-EC Notional Balance. Therefore, the realization of
losses could result in significant losses, and in some cases a complete loss,
of an investor's investment in Certificates.
Most of the Mortgage Loans are Balloon Loans, which involve a greater risk
of default than self-amortizing loans because the ability of a borrower to make
a Balloon Payment typically will depend upon its ability either to refinance
the related Mortgaged Property or to sell such Mortgaged Property at a price
sufficient to permit the borrower to make the Balloon Payment. The ability of a
borrower to accomplish either of these goals will be affected by a number of
factors at the time of attempted sale or refinancing, including the level of
available mortgage rates, the fair market value of the related Mortgaged
Property, the borrower's equity in the related Mortgaged Property, the
financial condition of the borrower and the operating history of the related
Mortgaged Property, tax laws, prevailing economic conditions and the
availability of credit for multifamily or commercial properties (as the case
may be) generally. See "Yield and Maturity Considerations--Yield
Considerations--Balloon Payments" herein.
It is possible that a Mortgage Loan that is the subject of an Appraisal
Reduction will continue to generate collections at the same rate it had prior
to any Appraisal Reduction Event. Under such circumstances, the more senior
outstanding Classes of Certificates will receive collections in respect of
interest or principal at an increased rate, because the amount Available Funds
will include the principal portion of any Appraisal Reduction Amount actually
collected and the portion of
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the interest payments actually collected that is equal to interest accrued on
unreversed Appraisal Reduction Amounts allocated to an outstanding Class at the
related Pass-Through Rate (the sum of any such amounts, the "Appraisal
Reduction Excess Collections"). There can be no assurance that a Mortgage Loan
subject to an Appraisal Reduction will generate any such collection or that a
subsequent appraisal will reverse an Appraisal Reduction in whole or in part,
or that Realized Losses will be reimbursed to any Class.
Regardless of whether losses ultimately result, prior to the liquidation
of any defaulted Mortgage Loan, delinquencies on the Mortgage Loans may
significantly delay the receipt of payments by the holder of a Regular
Certificate to the extent that Advances or the subordination of another Class
of Certificates does not fully offset the effects of any delinquency or
default. The Available Funds generally consist of, as more fully described
herein, principal of and interest on the MortgageLoans actually collected or
advanced. The Master Servicer's or the Trustee's obligation, as applicable, to
make Advances is limited to the extent described under "The Pooling and
Servicing Agreement--Advances" herein. In addition, no Advances are required to
be made to the extent that, in the good faith judgment of the Master Servicer
or the Trustee, as applicable, any such Advance, if made, would be
nonrecoverable from proceeds of the Mortgage Loan to which such Advance
relates. See "The Pooling and Servicing Agreement--Advances" herein.
Effect of Prepayments and other Unscheduled Payments. The investment
performance of the Certificates may vary materially and adversely from the
investment expectations of investors due to the rate of prepayments on the
Mortgage Loans in the related Loan Group or both Loan Groups being higher or
lower than anticipated by investors. In addition, in the event of any
repurchase of a Mortgage Loan by the Transferor or the Depositor from the Trust
Fund under the circumstances described under "Description of the Mortgage
Pool--Representations and Warranties; Repurchase" herein, the repurchase price
paid will be passed through to the holders of the Certificates with the same
effect as if such Mortgage Loan had been prepaid in full (except that no
Prepayment Premium will be payable with respect to any such repurchase). The
yield to maturity of the Class A-2MF Certificates will be particularly
sensitive to the rate and timing of receipt of the A-2MF Principal Distribution
Amount, which may be comprised in substantial part of the principal component
of Balloon Payments and Unscheduled Payments paid in respect of the Mortgage
Loans in Loan Group 2. No representation is made as to the anticipated rate of
prepayments (voluntary or involuntary) on the Mortgage Loans in either Loan
Group or as to the anticipated yield to maturity of any Certificate.
Furthermore, the distribution of Liquidation Proceeds to the Class or Classes
of Certificates then entitled to distributions in respect of principal will
reduce the weighted average lives of such Classes and may reduce or increase
the weighted average life of other Classes of Certificates. See "Yield and
Maturity Considerations" herein.
In general, the yield on Certificates purchased at a premium or at a
discount and the yield on the Class A-EC and Class N-2 Certificates, which have
no Certificate Balances, will be sensitive to the amount and timing of
principal distributions thereon (or of reductions of their respective Notional
Balances). The occurrence of principal distributions with respect to Mortgage
Loans in Loan Group 1 (or, after the Certificate Balance of the Class A-2MF
Certificates is reduced to zero, in either Loan Group) at a rate faster than
that anticipated by an investor at the time of purchase will cause the actual
yield to maturity of a Certificate purchased at a premium to be lower than
anticipated. The yield to maturity of the Class A-EC and Class N-2 Certificates
will be especially sensitive to the occurrence of high rates of principal
distributions which could result in the failure of the holders of such Classes
to recover fully their initial investments. Conversely, if a Certificate is
purchased at a discount (especially the Class N-1 Certificates) and principal
distributions thereon occur at a rate slower than that assumed at the time of
purchase, the investor's actual yield to maturity will be lower than assumed at
the time of purchase.
Effect of Prepayment Premiums. The rate and timing of principal payments
made on a Mortgage Loan will be affected by restrictions on voluntary
prepayments contained in the related promissory note (e.g., lockout periods,
Yield Maintenance Charges and Prepayment Premiums). Most of the Mortgage Loans
provide that, for a specified amount of time during which a prepayment of such
Mortgage Loan is permitted, it must be accompanied by a Yield Maintenance
Charge or other Prepayment Premium. The existence of Yield Maintenance Charge
or other Prepayment Premiums generally will result in the Mortgage Loans
prepaying at a lower rate. However, the requirement that a prepayment be
accompanied by a Yield Maintenance Charge or other Prepayment Premium may not
provide a sufficient economic disincentive to a borrower seeking to refinance
at a more favorable interest rate. In addition, since holders of the Class A-EC
Certificates are anticipated to receive most, if not all, Prepayment Premiums
and Yield Maintenance Charges collected, potential purchasers therof should
especially consider that provisions requiring Prepayment Premiums and Yield
Maintenance Charges may not be enforceable in some states and under federal
bankruptcy law and may constitute interest for usury purposes. Accordingly, no
assurance can be given that the obligation to pay a Yield Maintenance Charge or
other Prepayment Premium will be
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enforceable under applicable state or federal law or, if enforceable, that the
foreclosure proceeds received with respect to a defaulted Mortgage Loan will be
sufficient to make such payment. See "Description of the Mortgage Pool--Certain
Terms and Conditions of the Mortgage Loans--Prepayment Provisions" herein.
Effect of Interest on Advances, Special Servicing Fees and other Servicing
Expenses. As and to the extent described herein, the Master Servicer or the
Trustee, as applicable, will be entitled to receive interest on unreimbursed
Advances at the Advance Rate from the date on which the related Advance is made
to the date on which such amounts are reimbursed (which in no event will be
later than the Distribution Date following the date on which funds are
available to reimburse such Advance with interest thereon at the Advance Rate).
The Master Servicer's or the Trustee's right, as applicable, to receive such
payments of interest is prior to the rights of Certificateholders to receive
distributions on the Regular Certificates and, consequently, may result in
decreased distributions to the Regular Certificates that would not otherwise
have resulted, absent the accrual of such interest. See "The Pooling and
Servicing Agreement--Advances" herein. In addition, certain circumstances,
including delinquencies in the payment of principal and interest, will result
in a Mortgage Loan being specially serviced. The Special Servicer is entitled
to additional compensation for special servicing activities, including Special
Servicing Fees, Disposition Fees and Workout Fees, which may result in
decreased distributions to the Regular Certificates that would not otherwise
have resulted absent such compensation. See "The Pooling and Servicing
Agreement--Special Servicing" herein.
LIMITED LIQUIDITY
There is currently no secondary market for the Offered Certificates. The
Underwriters have advised the Depositor that they currently intend to make a
secondary market in the Offered Certificates, but they are under no obligation
to do so. Accordingly, there can be no assurance that a secondary market for
the Offered Certificates will develop. Moreover, if a secondary market does
develop, there can be no assurance that it will provide holders of Offered
Certificates with liquidity of investment or that it will continue for the life
of the Offered Certificates. The Offered Certificates will not be listed on any
securities exchange.
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Mortgage Pool will consist of 256 multifamily and commercial "whole"
mortgage loans (the "Mortgage Loans"). The Mortgage Loans have an aggregate
Cut-off Date Principal Balance of approximately $1,150,953,450 (the "Initial
Pool Balance"), subject to a variance of plus or minus 5%. The "Cut-off Date
Principal Balance" of each Mortgage Loan is the unpaid principal balance
thereof as of the Cut-off Date, after application of all payments of principal
due on or before such date, whether or not received. Any description of the
terms and provisions of the Mortgage Loans herein is a generalized description
of the terms and provisions of the Mortgage Loans in the aggregate. Many of the
individual Mortgage Loans have special terms and provisions that deviate from
the generalized, aggregated description.
The Mortgage Pool is comprised of two separate groups of mortgage loans,
Loan Group 1 and Loan Group 2 (each, a "Loan Group"). "Loan Group 2" will
consist of 42 Mortgage Loans, representing approximately 18.03% of the Initial
Pool Balance, each of which is a Multifamily Loan (as defined herein) and as of
the Cut-Off Date has a remaining term to scheduled maturity or Anticipated
Repayment Date (as described herein) of ten years or less. "Loan Group 1" will
consist of the remaining 214 Mortgage Loans representing approximately 81.97%
of the Initial Pool Balance.
Generally, each Mortgage Loan is evidenced by a separate promissory note.
Each Mortgage Loan is secured by one or more mortgages, deeds of trust, deeds
to secure debt or other similar security instruments (each, a "Mortgage") that
creates a first lien (except in the case of one Mortgage Loan, representing
approximately 0.41% of the Initial Pool Balance, which is secured by a second
lien on property which is subject to a first lien securing another Mortgage
Loan) on one or more of a fee simple estate, an estate for years or a leasehold
estate in a real property ("Mortgaged Property") improved for multifamily or
commercial use. The Mortgaged Properties consist of properties improved by (a)
office buildings ("Office Properties," and any Mortgage Loans secured thereby,
"Office Loans"); (b) health care-related properties, including hospitals,
clinics and medical professional buildings ("Health Care-Related Properties"
and any Mortgage Loans secured thereby, "Health Care Related Loans"); (c)
assisted living facilities ("Assisted Living Properties," and any Mortgage
Loans secured thereby, "Assisted Living Loans"); (d) nursing homes ("Nursing
Home Properties," and any Mortgage Loans secured thereby, "Nursing Home
Loans"); (e) industrial properties ("Industrial Properties," and any Mortgage
Loans secured
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thereby, "Industrial Loans"); (f) office/warehouse, warehouse, mini warehouse
and self-storage facilities ("Office/Warehouse Properties," "Warehouse
Properties," "Mini Warehouse Properties," and "Self-Storage Properties", and
any Mortgage Loans secured thereby, "Office/Warehouse Loans," "Warehouse
Loans", "Mini Warehouse Loans" and "Self-Storage Loans"); (g) mobile home parks
("Mobile Home Park Properties," and any Mortgage Loans secured thereby, "Mobile
Home Park Loans"); (h) apartment buildings or complexes consisting of five or
more rental units or a complex of two or more duplex units ("Multifamily
Properties," and any Mortgage Loans secured thereby, "Multifamily Loans"); (i)
cooperative apartment buildings ("Cooperative Properties", and any Mortgage
Loans secured thereby, "Cooperative Loans"); (j) hotel and motel properties
("Hospitality Properties," and any Mortgage Loans secured thereby, "Hospitality
Loans"); (k) office/retail properties ("Office/Retail Properties," and any
Mortgage Loans secured thereby, "Office/Retail Loans"); (l) anchored retail
properties ("Retail, Anchored Properties," and any Mortgage Loans secured
thereby, "Retail, Anchored Loans"); (m) single tenant retail properties
("Retail, Single Tenant Properties," and any Mortgage Loans secured thereby,
"Retail, Single Tenant Loans"); or (n) unanchored retail properties ("Retail,
Unanchored Properties," and any Mortgage Loans secured thereby, "Retail,
Unanchored Loans"); and/or (o) other commercial real estate properties,
multifamily residential properties and/or mixed residential/commercial
properties. The percentage of the Initial Pool Balance represented by each type
of Mortgaged Property is as follows:
<TABLE>
<CAPTION>
NUMBER OF
% OF INITIAL MORTGAGED
PROPERTY TYPE POOL BALANCE PROPERTIES
- ----------------------------- -------------- -----------
<S> <C> <C>
Assisted Living 2.36% 5
Hotel 6.58% 17
Industrial 6.99% 28
Mixed Use 3.02% 10
Mobile Home Park 0.88% 4
Multifamily 24.97% 64
Nursing Home 1.37% 4
Office 16.68% 53
Office/Industrial 0.89% 3
Retail -- Anchored 17.07% 32
Retail -- Single Tenant 4.94% 20
Retail -- Unanchored 10.62% 49
Retail -- Shadow Anchored 1.23% 4
Self-Storage 0.20% 1
Warehouse 2.20% 9
------ --
Total 100.00% 303
</TABLE>
Except for one Mortgage Loan, representing 1.3% off the Initial Pool
Balance, as to which a residual value insurance policy is in place that
guarantees payment of the Balloon Payment due at maturity, none of the Mortgage
Loans is insured or guaranteed by the United States of America, any
governmental agency or instrumentality, any private mortgage insurer, the
Depositor, the Transferor, the Mortgage Loan Sellers, the Master Servicer, the
Special Servicer or the Trustee or any of their respective affiliates.
The Depositor will purchase the Mortgage Loans on or before the Closing
Date from the Transferor pursuant to a Mortgage Loan Purchase and Sale
Agreement (the "Mortgage Loan Purchase Agreement") dated as of August 1, 1998
(the "Loan Purchase Closing Date"), between the Transferor and the Depositor.
Of the Mortgage Loans sold by the Transferor pursuant to the Mortgage Loan
Purchase Agreement, the Transferor will have purchased 145, 71, 29 and 11
Mortgage Loans (representing approximately 50.08%, 32.05%, 15.76%, and 2.11% of
the Initial Pool Balance, respectively) from NRFinance, PMCF, CIBC and an
unaffiliated seller in the secondary market, respectively, on or before the
Closing Date pursuant to separate Mortgage Loan Purchase and Sale Agreements
between the Transferor and each such entity (collectively, the "Underlying
Mortgage Loan Purchase Agreements"). The Depositor will assign the Mortgage
Loans in the Mortgage Pool, and make certain representations and warranties
regarding the Mortgage Loans, to the Trustee pursuant to the Pooling and
Servicing Agreement. The Master Servicer and the Special Servicer will each
service the Mortgage Loans pursuant to the Pooling and Servicing Agreement. See
"The Pooling and Servicing Agreement--Servicing of the Mortgage Loans;
Collection of Payments."
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SECURITY FOR THE MORTGAGE LOANS
Each Mortgage Loan is secured by a Mortgage encumbering the related
borrower's interest in the related Mortgaged Property. Seven of the Mortgage
Loans, representing approximately 2.75% of the Initial Pool Balance, provide
for full or limited recourse against the related borrower, or a guarantor or
guarantors, while the remainder of the Mortgage Loans are non-recourse loans.
In the event of a borrower default under a non-recourse Mortgage Loan, recourse
generally may be had only against the specific Mortgaged Property or Mortgaged
Properties securing such Mortgage Loan and such limited other assets, if any,
as may have been pledged to secure such Mortgage Loan, and not against the
borrower's other assets. Each Mortgage Loan is also secured by an assignment of
the related borrower's interest in the leases, rents, issues and profits of the
related Mortgaged Property. In certain instances, additional collateral may
exist in the nature of letters of credit, a pledge of demand notes, the
establishment of one or more Reserve Accounts (for necessary repairs and
replacements, tenant improvements and leasing commissions, real estate taxes
and assessments, insurance premiums, deferred maintenance and/or scheduled
capital improvements or as reserves for the payment of Monthly Payments and
other payments due under the related Mortgage Loan), grants of security
interests in equipment, inventory, accounts receivable and other personal
property, assignments of licenses, trademarks and/or trade names, one or more
guarantees of all or part of the related Mortgage Loan, one or more guarantees
with respect to a tenant's performance of the terms and conditions of such
tenant's lease, the assignment of an option to obtain a ground lease with
respect to the related Mortgaged Property or the assignment of the proceeds of
purchase options. Each Mortgage Loan provides for the indemnification of the
mortgagee by the related borrower for the presence of any hazardous substances
affecting the Mortgaged Property. However, borrowers generally have limited
assets and there can be no assurance that any borrower will have sufficient
assets to support any such indemnification obligations that may arise. See
"Risk Factors--Investment in Commercial and Multifamily Mortgage
Loans--Environmental Risks" herein. Except as described above under
"--General", each Mortgage constitutes a first lien on a Mortgaged Property,
subject generally only to (a) liens for real estate and other taxes and special
assessments, (b) covenants, conditions, restrictions, rights of way, easements
and other encumbrances whether or not of public record as of the date of
recording of such Mortgage, and (c) such other exceptions and encumbrances on
the Mortgaged Property as are reflected in the related title insurance policy.
Ground Leases; Estates for Years. Ten Mortgage Loans, representing
approximately 4.36% of the Initial Pool Balance, are secured by first liens
encumbering the related borrower's leasehold interest in the related property.
Seven Mortgage Loans, representing approximately 2.58% of the Initial Pool
Balance, are secured by first liens encumbering the related borrower's
leasehold interest in the related Mortgaged Property, together with the fee
owner's interest in such real property. Three Mortgage Loans, representing
approximately 1.78% of the initial Pool Balance, are secured by first liens
encumbering the relevant borrower's (a) fee interest in a portion of the
Mortgaged Property and (b) leasehold interest in the remainder of the Mortgaged
Property. Except in the case of one Mortgage Loan, with respect to which a
portion of the Mortgaged Property which is used for parking purposes is held by
the related borrower under a ground lease which expires in 2003, the related
Mortgage Seller has represented that the related ground lease expires not less
than 10 years (including extension options) after the maturity date of the
related Mortgage Loan. See "Certain Legal Aspects of the Mortgage Loans--
Foreclosure--Leasehold Risks" in the Prospectus.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Due Dates. The Mortgage Loans provide for Monthly Payments to be due on
the first day of each month (each, a "Due Date"). Two hundred twenty-one of the
Mortgage Loans representing 99.8% of Initial Pool Balance provide for a grace
period of 10 days or less from the related Due Date before a scheduled payment
is deemed to be contractually delinquent for purposes of imposing a late
charge.
Mortgage Rates; Calculations of Interest. Each Mortgage Loan generally
accrues interest at an annualized rate (a "Mortgage Rate") that is fixed for
the entire term of such Mortgage Loan and does not permit any negative
amortization or the deferral of interest. Five of the Mortgage Loans,
representing approximately 2.55% of the Initial Pool Balance, provide for
increased Scheduled Monthly Payments, without any change in the effective
Mortgage Rate, after a specified date not less than 5 years after the date of
origination. Five Mortgage Loans, representing approximately 3.4% of the
Initial Pool Balance, provide that for a period of up to three years from
origination (or for one Mortgage Loan, to maturity), the borrower is obligated
only to pay interest accrued each month. Such Mortgage Loans are identified in
Annex A and a summary of the relevant provisions is provided therein.
Excess Interest. Forty-seven of the Mortgage Loans, representing 25.92% of
the Initial Pool Balance, bear interest at their respective Mortgage Rates
until an Anticipated Repayment Date. Commencing on the respective Anticipated
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Repayment Date, each such Mortgage Loan generally will bear interest at a fixed
rate (the "Revised Rate") per annum equal to the Mortgage Rate plus a specified
percentage (generally, no more than 5%, so long as the Mortgage Loan is
included in the Trust Fund). Until the principal balance of each such Mortgage
Loan has been reduced to zero, such Mortgage Loan will only be required to pay
interest at the Mortgage Rate, and the interest accrued at the excess of the
related Revised Rate over the related Mortgage Rate will be deferred (such
accrued and deferred interest and interest thereon, if any, is referred to
herein as "Excess Interest"). Excess Interest so accrued will not be added to
the principal balance of the related Mortgage Loan but will accrue interest at
the Revised Rate except where limited by applicable law.
Prior to the Anticipated Repayment Date, borrowers under ARD Loans
generally have entered into, or will be required to enter into, a lockbox
agreement whereby all revenue generally will be deposited directly into a
lockbox account controlled by the Master Servicer. From and after the
Anticipated Repayment Date, the related borrower generally will be required to
apply all monthly cash flow from the related Mortgaged Property to pay the
following amounts in the following order of priority: (i) required payments to
the tax and insurance escrow fund and any ground lease escrow fund, (ii)
payment of monthly debt service, (iii) payments to any other required escrow
funds, (iv) payment of operating expenses pursuant to the terms of an annual
budget approved by the Servicer, (v) payment of approved extraordinary
operating expenses or capital expenses not set forth in the approved annual
budget or allotted for in any escrow fund, (vi) principal on the Mortgage Loan
until such principal is paid in full and (vii) Excess Interest. The cash flow
from the Mortgaged Property securing an ARD Loan after payments of items (i)
through (v) above is referred to herein as "Excess Cash Flow."
As described below, each ARD Loan generally provides that the related
borrower is prohibited from prepaying the Mortgage Loan until one to six months
prior to the Anticipated Repayment Date but, upon the commencement of such
period, may prepay the loan, in whole or in part, without payment of a
Prepayment Premium or Yield Maintenance Charge. The Anticipated Repayment Date
for each ARD Loan is listed in Annex A
The Class N-1 Certificates will be entitled to all distributions of Excess
Interest subject to the limitations set forth in the Pooling and Servicing
Agreement. Additionally, the holders of 100% of the Class N-1 Certificates will
have the option to purchase any ARD Loan on or after its Anticipated Repayment
Date at a price equal to its outstanding Scheduled Principal Balance plus
accrued and unpaid interest and unreimbursed Advances made with respect thereto
(with interest thereon). As a condition to such purchase, each such holder will
be required to deliver an opinion of counsel to the effect that such purchase
(or such right to purchase) would not cause either REMIC to fail to qualify as
a REMIC under the Code at any time that any Certificate is outstanding and
either (i) an opinion of counsel to the effect that such purchase would not
result in a gain which would be subject to the tax on net income derived from
prohibited transactions imposed by Code Section 860F(a)(1) or otherwise result
in the imposition of any other tax on either REMIC under the REMIC provisions
of the Code or (ii) an accountant's certification to the effect that such
purchase would not result in the realization of any net income to either REMIC.
Amortization of Principal. One hundred ninety of the Mortgage Loans (the
"Balloon Loans"), representing approximately 69.90% of the Initial Pool
Balance, provide for monthly payments of principal based on amortization
schedules longer than their remaining terms, thereby leaving substantial
principal amounts due and payable on their respective maturity dates (each such
payment, together with interest on the related Balloon Loan for the one-month
period ending on the day preceding such Balloon Loan's maturity date, a
"Balloon Payment"). Nineteen of the Mortgage Loans, representing approximately
4.19% of the Initial Pool Balance, have remaining amortization terms that are
the same as their respective remaining terms to maturity. The weighted average
Balloon LTV applicable to the Mortgage Pool is 56.7%.
Forty-seven Mortgage Loans, representing approximately 25.92% by Initial
Pool Balance, are anticipated repayment date Mortgage Loans (the "ARD Loans")
which generally accrue interest at a higher rate following the applicable
Anticipated Repayment Date. As used herein, the terms "Mortgage Rate" and "Net
Mortgage Rate" do not include the portion of the interest rate attributable to
such rate increase. As described below, all of the Mortgage Loans that provide
for Excess Interest permit the related borrower to prepay the related Mortgage
Loan without payment of a Prepayment Premium or Yield Maintenance Charge
beginning on, or up to six months prior to, the date on which Excess Interest
begins accruing. The Anticipated Repayment Date for each ARD Loan is set forth
on Annex A.
The ARD Loans provide for substantially full amortization over their
stated terms, which extend at least 60 months beyond their related Anticipated
Repayment Dates. If the related borrower elects to prepay an ARD Loan in full
on the related Anticipated Repayment Date, a substantial amount of principal
will be due on such date. If a borrower elects not to prepay an ARD Loan on or
before its Anticipated Repayment Date, all or a substantial portion of Excess
Cash Flow collected after such date will be applied towards the prepayment of
such ARD Loan and, after the principal balance thereof
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has been reduced to zero, to the payment of accrued Excess Interest. Payment of
Excess Interest with respect to any ARD Loan will be deferred until the
principal of such ARD Loan has been paid in full. Substantially all of the ARD
Loans for which a Lockbox Account has not been established on or before the
Closing Date provide that a Lockbox Account must be established on or prior to
the applicable Anticipated Repayment Date. See "Certain Characteristics of the
Mortgage Loans--Certain Terms and Conditions of the Mortgage Loans--Excess
Interest."
Prepayment Provisions. Each Mortgage Loan restricts voluntary prepayments
in one or more of the following ways: (i) by prohibiting any prepayments for a
specified period of time after the date of origination of such Mortgage Loan (a
"Lockout Period"), (ii) by requiring that any principal prepayment made during
a specified period of time after the date of origination of such Mortgage Loan
or, in the case of a Mortgage Loan also subject to a Lockout Period, after the
date of expiration of such Lockout Period (a "Yield Maintenance Period") be
accompanied by a Yield Maintenance Charge and (iii) by imposing fees or
premiums generally equal to a fixed percentage of the then outstanding
principal balance of such Mortgage Loan ("Prepayment Premiums") in connection
with full or partial principal prepayments for a specified period of time after
the expiration of the related Yield Maintenance Period or, in the case of
Mortgage Loans not subject to a Yield Maintenance Period, the related Lockout
Period (in either case, a "Prepayment Premium Period"). Four of the Mortgage
Loans, representing 1.87% of the Initial Pool Balance, give the borrower the
option to defease the Mortgage Loan or to prepay the Mortgage Loan (with
payment of an accompanying Yield Maintenance Charge).
The Mortgage Loans generally permit prepayments to be made either (i) on a
Due Date or (ii) provided that such prepayment is accompanied by a full month's
interest, on any date. Two hundred forty-six of the Mortgage Loans,
representing approximately 96.02% of the Initial Pool Balance, provide that
during a specified period (generally two to twelve months) prior to the
maturity date or Anticipated Repayment Date, as applicable, of such Mortgage
Loans there are no restrictions on voluntary prepayments. The remaining
Mortgage Loans restrict voluntary prepayments at all times prior to the
maturity date or Anticipated Repayment Date, as applicable. For the purposes of
this Prospectus Supplement and the statistical information presented herein,
each ARD Loan is assumed to prepay on the related Anticipated Repayment Date,
notwithstanding the fact that prepayments could occur under such ARD Loans
prior to such Anticipated Repayment Date and that, in either case, such
prepayments would not be accompanied by payment of a Yield Maintenance Charge
or Prepayment Premium.
The "Yield Maintenance Charge" for any Mortgage Loan providing for such a
charge generally will be equal to the greater of (a) a specified Prepayment
Premium and (b) the present value, as of the date of such prepayment, of the
remaining scheduled payments of principal and interest on the portion of the
Mortgage Loan being prepaid (including any Balloon Payment or, with respect to
any ARD Loans, the remaining principal balance due on the related Anticipated
Repayment Date) determined by discounting such payments at the Yield Rate, less
the amount prepaid. The "Yield Rate" generally is defined as a rate equal to a
per annum rate calculated by the linear interpolation of the yields, as
reported in Federal Reserve Statistical Release H.15--Selected Interest Rates
under the heading U.S. Government Securities/Treasury constant maturities for
the week ending prior to the date of the relevant prepayment of any Mortgage
Loan, of U.S. Treasury constant maturities with maturity dates (one longer, one
shorter) most nearly approximating the maturity date (or, with respect to ARD
Loans, the Anticipated Repayment Date) of the Mortgage Loan being prepaid, or
the monthly equivalent of such rate. Generally, if Federal Reserve Statistical
Release H.15--Selected Interest Rates is no longer published, the Servicer, on
behalf of the Trustee, shall select a comparable publication to determine the
Yield Rate with respect to Mortgage Loans.
The table in "Executive Summary--Collateral Overview; Loan
Details--Prepayment Lockout/Premium Analysis" sets forth for the Distribution
Date in each indicated month the percentage of the aggregate Stated Principal
Balance of all Mortgage Loans expected to be outstanding (after giving effect
to scheduled principal payments for the Due Date relating to such Distribution
Date) with respect to which (i) a Lockout Period is in effect, (ii) a
prepayment must be accompanied by (A) a Yield Maintenance Charge, (B) a
prepayment penalty equal to the greater of a Yield Maintenance Charge or a
Prepayment Premium (the percentage used in calculating which Prepayment Premium
is also set forth in such table) or (C) a Prepayment Premium (the percentage
used in calculating which Prepayment Premium is also set forth in such table)
or (iii) no Lockout Period, Yield Maintenance Period or Prepayment Premium
Period is applicable ("Open" on such table).
Annex A attached hereto contains information regarding the Prepayment
Premiums applicable to each of the Mortgage Loans.
The Mortgage Loans generally do not require the payment of a Prepayment
Premium in connection with any involuntary prepayment resulting from a Casualty
or Condemnation, so long as no event of default then exists. The Mortgage Loans
generally also permit prepayment after an event of default (but prior to the
sale by the mortgagee thereunder of the
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Mortgaged Property through foreclosure or otherwise) provided that the related
borrower pays the applicable Prepayment Premium. Certain of the Mortgage Loans
permit the related borrower to transfer the related Mortgaged Property to a
third party without prepaying the related Mortgage Loan, provided that certain
conditions are satisfied, including, without limitation, an assumption by the
transferee of all of such borrower's obligations in respect of such Mortgage
Loan. See "-- 'Due-on-Encumbrance' and 'Due-on-Sale' Provisions" below.
Prepayment Premiums and Yield Maintenance Charges are distributable as
described herein under "Description of the Offered Certificates--Allocation of
Prepayment Premiums and Yield Maintenance Charges."
The Depositor makes no representation as to the enforceability of the
provisions of any Mortgage Loan requiring the payment of a Prepayment Premium
or as to the collectability of any Prepayment Premium. See "Risk
Factors--Prepayment and Yield Considerations--Effect of Prepayment Premiums"
herein and "Certain Legal Aspects of the Mortgage Loans--Enforceability of
Certain Provisions" in the Prospectus.
Defeasance. Thirty-nine of the Mortgage Loans, representing approximately
20.93% of the Initial Pool Balance, grant the related Borrower, subject to
certain conditions, the right, at any time following the day which is after the
related Defeasance Lockout Period, to obtain the release of the lien of the
related Mortgage on the related Mortgaged Property by substituting for such
Mortgaged Property, as collateral for the related promissory note, direct,
non-callable obligations of the United States of America which provide for
payments on or prior to each Due Date and on the maturity date of the Mortgage
Loan (or, in the case of the ARD Loans, through the related Anticipated
Repayment Dates) in amounts equal to or greater than the amounts payable under
the related promissory note on each such date. The conditions to the related
Borrower's right to a defeasance include delivery of (i) an opinion of counsel
stating that the Trust REMICs will not fail to maintain their respective
statuses as REMICs as a result of such defeasance and (ii) in some cases,
written confirmation from the Rating Agencies that the collateral substitution
will not result in a downgrading, withdrawal or qualification of the respective
ratings in effect immediately prior to such defeasance for the Certificates
then outstanding. Four of the Mortgage Loans, having aggregate principal
balances as of the Cut-off Date representing approximately 1.87% of the Initial
Pool Balance, that have a defeasance feature also provide for prepayment of the
Mortgage Loan (with an accompanying Yield Maintenance Charge), and afford the
related borrower the option either to prepay or to exercise the defeasance
feature. The remaining Mortgage Loans that have a defeasance feature do not
permit any other method of prepayment.
"Due-on-Encumbrance" and "Due-on-Sale" Provisions. The Mortgages generally
contain "due-on-encumbrance" clauses that permit the holder of the Mortgage to
accelerate the maturity of the related Mortgage Loan if the borrower encumbers
the related Mortgaged Property without the consent of the mortgagee. However,
in certain of the Mortgage Loans, the related borrower is allowed, under
certain circumstances, to encumber the related Mortgaged Property with
additional liens. See "Risk Factors--Investment in Commercial and Multi-Family
Mortgage Loans--Other Financing" herein. The Master Servicer or the Special
Servicer, as applicable, will determine, in a manner consistent with the
servicing standard described herein under "The Pooling and Servicing
Agreement--Servicing of the Mortgage Loans; Collection of Payments" whether to
exercise any right the mortgagee may have under any such clause to accelerate
payment of a Mortgage Loan upon, or to withhold its consent to, any additional
encumbrance of the related Mortgaged Property (and, in certain cases, may not
so consent or waive enforcement without Rating Agency Approval).
The Mortgages for the Mortgage Loans generally prohibit, without the
mortgagee's prior consent, the borrower from transferring the Mortgaged
Property or allowing a change in ownership, which is generally defined as,
among other things, (a) a specified percentage (generally ranging from 10% to
49%) change in the ownership of the borrower, a guarantor or, with respect to
certain of such Mortgage Loans, in the ownership of, or the transfer or pledge
of the partnership or membership interest of, the general partner or managing
member of the borrower or a guarantor, (b) the removal, resignation or change
in ownership of any general partner or managing member of a borrower, a
guarantor or, with respect to certain of such Mortgage Loans, any general
partner of a borrower or a guarantor, (c) with respect to certain of such
Mortgage Loans, the removal, resignation or change in ownership of the managing
agent of the related Mortgaged Property, or (d) the voluntary or involuntary
transfer or dilution of the controlling interest in the related borrower held
by a specified person; provided, however, that with respect to certain of such
Mortgage Loans, the borrower may be entitled to transfer the Mortgaged Property
or allow a change in ownership if certain conditions are satisfied, typically
including one or more of the following: (i) no event of default has occurred,
(ii) the proposed transferee meets the mortgagee's customary underwriting
criteria, (iii) the Mortgaged Property continues to meet the mortgagee's
customary underwriting criteria, (iv) an acceptable assumption agreement is
executed, and (v) a specified assumption fee (generally 1.0% or 0.5% of the
then outstanding principal balance of the related Mortgage Loan) has been
received by the mortgagee. Certain of the Mortgages may also allow changes in
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ownership between existing partners and members; transfers to family members
(or trusts for the benefit of family members), affiliated companies and certain
specified individuals and entities; issuance of new partnership or membership
interests; certain other changes in ownership for estate planning purposes; and
certain other transfers similar in nature to the foregoing. In the event of any
transfer or change in ownership of the Mortgaged Property in violation of the
applicable provisions of the related Mortgage Loan documents, the related
Mortgage Loan documents generally provide that the mortgagee is permitted to
accelerate the maturity of the related Mortgage Loan. See "Certain Legal
Aspects of the Mortgage Loans--Enforceability of Certain
Provisions--Due-on-Sale Provisions" in the Prospectus. The Depositor makes no
representation as to the enforceability of any due-on-sale or
due-on-encumbrance provision in any Mortgage Loan.
Default Provisions. Except as described below, the related Mortgage Loan
documents generally provide that an event of default will exist if (a) any
regular installment of principal and/or interest is not paid when specified
(generally either (i) upon the date the same is due, (ii) within a specified
period (generally five days to 10 days) after the date upon which the same was
due, or (iii) within a specified period (generally five days to 10 days)
following written notice from the mortgagee of such failure), or (b) any
violation of the conditions described in "--`Due-on-Encumbrance' and
`Due-on-Sale' Provisions" above occurs. Additionally, the related Mortgage Loan
documents may contain other specified events of default, including one or more
of the following: the borrower's failure to pay taxes or other charges when
due, to keep all required insurance policies in full force and effect, to cure
any material violations of laws or ordinances affecting the Mortgaged Property
or to operate the related Mortgaged Property according to certain criteria; the
imposition of a mechanic's, materialman's or other lien against the Mortgaged
Property; the institution of a bankruptcy, receivership or similar action
against the borrower or the Mortgaged Property; the unapproved conversion of
the related Mortgaged Property to a condominium or cooperative; defaults under
certain other agreements; defaults under or unapproved modifications to any
related franchise agreement; material changes to or defaults under any related
management agreement; or the failure to correct any deficiency that would
justify termination of a Medicare or Medicaid contract or a ban on new patients
otherwise qualifying for Medicaid or Medicare coverage or the assessment of
fines or penalties in excess of specified amounts by any state or any Medicare,
Medicaid, health, reimbursement or licensing agency.
Upon the occurrence of an event of default with respect to any Mortgage
Loan, the Master Servicer or the Special Servicer, as applicable, may take such
action as the Master Servicer or the Special Servicer deems advisable to
protect and enforce the rights of the Trustee, on behalf of the
Certificateholders, against the related borrower and in and to the related
Mortgaged Property, subject to the terms of the related Mortgage Loan,
including, without limitation, declaring the entire balance of the Mortgage
Loan to be immediately due and payable and/or instituting a proceeding,
judicial or non-judicial, for the complete or partial foreclosure of the
Mortgage Loan.
Default Interest. All of the Mortgage Loans provide for imposition of a
rate of interest higher than the stated interest rate upon the occurrence of an
event of default by the related borrower ("Default Interest"). The Default
Interest applicable to the Mortgage Loans is generally calculated as either (a)
a specified rate above the stated interest rate of such Mortgage Loan, or (b) a
rate equal to the greater of (i) a specified rate above the stated interest
rate of such Mortgage Loan, and (ii) a specified rate above a specified base
rate (typically a prime rate reported in The Wall Street Journal or published
by a major money center bank or banks). No assurance can be given as to the
enforceability of any provision of any Mortgage Loan requiring the payment of
any Default Interest or as to the collectibility of any Default Interest. See
"Certain Legal Aspects of the Mortgage Loans --Enforceability of Certain
Provisions" in the Prospectus.
Hazard, Liability and other Insurance. Generally, each Mortgage Loan
requires that the related Mortgaged Property be insured (in an amount not less
than the lesser of (a) the full replacement cost of the Mortgaged Property and
(b) the outstanding principal balance of the related Mortgage Loan, but in any
event in an amount sufficient to ensure that the insurer would not deem the
borrower a co-insurer) against loss or damage by fire or other risks and
hazards covered by a standard extended coverage insurance policy. The Mortgagor
is required to provide, and the mortgage loan originator and/or the servicer is
required to review, certificates of required insurance with respect to the
Mortgaged Property. Such insurance generally may include: (1) commercial
general liability insurance for bodily injury or death and property damage; (2)
an "All Risk of Physical Loss" policy or standard extended coverage policy; (3)
if applicable, boiler and machinery coverage; (4) if the Mortgaged Property is
located in a flood hazard area, flood insurance; and (5) such other coverage
(including in each case other than where a Major Tenant is self-insured or has
independently procured similar insurance, rental loss insurance and business
interruption insurance) as the related Mortgage Loan Seller may require based
on the specific characteristics of the Mortgaged Property. With respect to some
of the Mortgage Loans, the related borrower has satisfied the applicable
insurance requirements by obtaining blanket insurance policies, subject to the
review and approval of the same by the mortgagee, including the amount of
insurance and the number of properties covered by such policies.
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Casualty and Condemnation. The related Mortgage Loan documents typically
provide that in the event of damage to the related Mortgaged Property by reason
of fire or other casualty (a "Casualty"), all insurance proceeds in excess of a
specified amount will be paid to the mortgagee and then it is such mortgagee's
option as to whether to apply such proceeds to the outstanding indebtedness of
the related Mortgage Loan, or to allow such proceeds to be applied to the
restoration of the related Mortgaged Property; provided, however, that if
certain conditions are satisfied, the mortgagee may be required to disburse
such proceeds in connection with a restoration of the related Mortgaged
Property. These required conditions typically include one or more of the
following: (a) if the insurance proceeds payable are less than a specified
amount, (b) if less than a specified percentage of the related Mortgaged
Property is destroyed or if the value of the related Mortgaged Property
following such Casualty remains greater than either a specified amount or a
specified percentage of the value of the related Mortgaged Property immediately
preceding such Casualty, (c) if the Casualty affects less than a specified
percentage of the net rentable area of the Mortgaged Property or interrupts
less than a specified percentage of the rentals from the Mortgaged Property,
(d) if such restoration will cost less than a specified amount and if
sufficient funds are available to complete such restoration, (e) if such
restoration can be accomplished within a specified time period, (f) if the
restored Mortgaged Property will adequately secure the related Mortgage Loan,
(g) if adequate income (including rentals and insurance) will be available
during the restoration period, and (h) if no event of default then exists. In
certain of the Mortgage Loans, the lease between the related borrower and a
tenant of all or part of the related Mortgaged Property may require the
borrower or the tenant to rebuild the buildings located upon the related
Mortgaged Property in the event of a Casualty, and the related Mortgage Loan
documents may permit the application of insurance proceeds to satisfy such
requirement, regardless of the value of such Mortgaged Property following such
Casualty.
Generally, the Mortgage Loans provide that all awards payable to the
borrower in connection with any taking or exercise of the power of eminent
domain with respect to the related Mortgaged Property (a "Condemnation") will
be paid directly to the mortgagee, and then it is such mortgagee's option as to
whether to apply such proceeds to the outstanding indebtedness of the related
Mortgage Loan, or to allow such proceeds to be applied to the restoration of
the related Mortgaged Property; provided, however, that if certain conditions
are satisfied, the mortgagee may be required to disburse such awards in
connection with a restoration of the related Mortgaged Property. These required
conditions typically include one or more of the following: (a) if the award is
less than a specified amount, (b) if less than a specified percentage of the
related Mortgaged Property is taken, (c) if the Condemnation affects less than
a specified percentage of the net rentable area of the Mortgaged Property or
interrupts less than a specified percentage of the rentals from the Mortgaged
Property, (d) if such restoration will cost less than a specified amount and if
sufficient funds are available to complete such restoration, (e) if such
restoration can be accomplished within a specified time period, (f) if adequate
income (including the Condemnation award, rentals and insurance) will be
available during the restoration period, (h) if no event of default then
exists, and (i) if such restoration and repair is feasible and the related
Mortgaged Property will be commercially viable after such restoration. In
certain of the Mortgage Loans, the lease between the related borrower and a
tenant of all or part of the related Mortgaged Property may require the
borrower or the tenant to restore the related Mortgaged Property in the event
of a Condemnation and the related Mortgage Loan documents may permit the
application of Condemnation Proceeds to satisfy such requirement.
Delinquencies and Modifications. As of the Cut-off Date for each Mortgage
Loan, no Mortgage Loan was more than 30 days delinquent in respect of any
Monthly Payment, and no Mortgage Loan has been modified in any material manner
since its origination in connection with any default or threatened default on
the part of the related borrower.
CERTAIN CHARACTERISTICS OF THE MORTGAGE POOL
Concentration of Mortgage Loans and Borrowers. Several of the Mortgage
Loans have Cut-off Date Principal Balances that are substantially higher than
the average Cut-off Date Principal Balance. The largest single Mortgage Loan
has a Cut-off Date Principal Balance of $30,380,396.31, which represents
approximately 2.64% of the Initial Pool Balance. The ten largest individual
Mortgage Loans have Cut-off Date Principal Balances that represent in the
aggregate approximately 17% of the Initial Pool Balance. Moreover, four, five,
and two Mortgage Loans, collectively representing approximately 3.5%, 2.3% and
1.9% of the Initial Pool Balance, respectively, were made to two or more
affiliated entities. However, no set of Mortgage Loans made to a single
borrower or to a single group of affiliated borrowers constitutes more than
approximately 3.5% of the Initial Pool Balance. See Annex D for Affiliated
Borrower Loan Table.
AIP Portfolio. The AIP Portfolio consists of nine Mortgage Loans with an
aggregate Scheduled Principal Balance as of the Cut-off Date of $30.4 million
(2.6% of the Initial Pool Balance) and an aggregate LTV of 66.6%, and were
underwritten
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at a 1.31 weighted average DSCR. Eight of the nine related Mortgaged Properties
(office and industrial centers) are located in the Dallas/Fort Worth Metroplex
area, and the ninth is located in the Houston metropolitan area. The related
borrower is AIP-SWAG Operating Partnership, L.P., an operating partnership of
American Industrial Properties REIT. Occupancy: 81.61% as of 6/30/98. Major
Tenant: TM Century.
2355 Dulles Corner. The 2355 Dulles Corner Mortgage Loan has a Scheduled
Principal Balance as of the Cut-off Date of $24.1 million (2.1% of the Initial
Pool Balance) and an LTV of 74.84%, and was underwritten at a 1.35 DSCR. This
Mortgage Loan is secured by a seven-story 184,395 square foot office building
(178,815 square feet of net rentable space) and a 4 story parking garage with
715 parking spaces in Herndon, Virginia. The borrowers are MJV, LLC and 2355
Associates, L.P., as tenants in common, and are newly created single purpose
entities. MJV, LLC owns a 75.7% interest in the property. 2355 Associates, LP
owns a 24.3% interest in the property. The property is fully leased to five
tenants, including AT&T Corp. who occupies 94% of the building pursuant to a
lease that is co-terminus to the loan term and who owns a 99% limited
partnership interest in 2355 Associates, L.P. All rental income from the
property flows through a lock box account controlled by the lender. In addition
to the first mortgage loan, PMCC has funded a $4.31 million Mezzanine Loan
subordinate to the first lien secured by partnership and membership interests
in the Mortgage Loan borrowers. This Mezzanine loan will fully amortize in the
10 year term of the Mortgage Loan, with a residual equity kicker of $3,250,000
due at maturity. Occupancy: 99.5% as of 6/23/98.
Ivor Braka Portfolio. The Ivor Braka portfolio consists of eighteen
Mortgage Loans with an aggregate Scheduled Principal Balance as of the Cut-off
Date of $23.8 million (2.07% of the Initial Pool Balance) and an LTV of 77.5%,
and were underwritten at a 1.43 weighted average DSCR. The borrowers are five
single-purpose entities, each of which is under the control of Ivor Braka. The
Braka Loans are secured by fee mortgages encumbering eighteen properties. Six
of the related Mortgaged Properties are Office Properties; four are
Office/Industrial Properties; seven are Retail Properties and one is an
Office/Retail Property. Thirteen of the related Mortgaged Properties are
located in New Jersey; three are located in Texas; one is located in New York;
and one is located is in Wisconsin. One of the related borrowers owns ten of
these mortgaged properties; one of the related borrowers owns five of these
Mortgaged Properties; and the remaining three borrowers each owns one of these
Mortgaged Properties. All of the Braka Loans are cross-collateralized and
cross-defaulted. Occupancy: 77.1% as of 5/31/98. Major Tenant: Kohl's.
FirstPlus Financial HQ. The FirstPlus Financial HQ Mortgage Loan has a
Scheduled Principal Balance as of the Cut-off Date of $22.8 million (1.98% of
the Intial Pool Balance) and a 69% LTV, and was underwritten at a 1.60 DSCR.
The FirstPlus Financial HQ Mortgage Loan is secured by a 242,000 square foot
Class "A" office building located in Dallas, Texas. The related borrower is an
affiliate of Lexington Corporate Properties, a publicly traded real estate
investment trust. The related Mortgaged Property is subject to a 15 year net
lease between the borrower and the sole tenant, FirstPlus Financial Group.
FirstPlus Financial Group acquired the property in early 1997, and entered into
a sale leaseback transaction with the borrower later in the year at a total
price of $32.5 million. The lease is absolute net and provides for 10%
escalations in the 5th and 10th year. FirstPlus has posted a $3,223,584 Bank
One letter of credit as a security deposit for the lease, which has been
assigned as additional collateral for the loan. In the event of a tenant
breach, the letter of credit may be called by the lender and utilized for debt
service, operating expenses and retenanting costs. If there are no uncured
defaults under the lease, at the earlier of five years or at the time that
FirstPlus achieves a "BBB-" rating from S&P the letter of credit will be
released. Occupancy: 100% as of 12/24/97. Major Tenant: FirstPlus Financial
Group, Inc.
The Holiday Inn Portfolio. The Holiday Inn Portfolio consists of four
Mortgage Loans with an aggregate Scheduled Principal Balance as of the Cut-off
Date of $19.4 million (1.7% of Initial Pool Balance) and a 73.1% LTV, and were
underwritten at 1.50 weighted average DSCR. The borrowers in each case are
newly-created single purpose entities, the primary stockholders of each being
Larry Mahaney and his son, Kevin Mahaney. The Holiday Inn Portfolio is secured
by four hotel properties, one of which is located in Ellsworth, Maine, two of
which are located in Bangor, Maine, and the fourth of which is located in
Charlottesville, Virginia. The four Mortgages are cross-collateralized and
cross-defaulted.
Old Orchard Apartments. The Old Orchard Apartments Mortgage Loan has a
Scheduled Principal Balance as of the Cut-off Date of $19.5 million (1.7% of
the Initial Pool Balance) and an 80% LTV, and was underwritten at a 1.30 DSCR.
The borrower is a single-purpose, bankruptcy-remote limited partnership. The
general partner of the borrower is owned entirely by the M.H. Podell Trust
which owns interests in several properties developed through the M.H. Podell
Company. The related Mortgaged Property is a 220-unit garden style apartment
complex consisting of 19 two-story apartment buildings located in Santa Clara,
California. Occupancy: 98.6% as of 4/13/98.
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Pebblebrook Apartments. The Pebblebrook Apartments Mortgage Loan has a
Scheduled Principal Balance as of the Cut-off Date of $16.4 million (1.43 % of
the Initial Pool Balance) and a 79% LTV, and was underwritten at a 1.55 DSCR.
The Pebblebrook Apartments Mortgage Loan is secured by a 486 unit apartment
complex located in New Britain, Connecticut. Occupancy: 96.7% as of 2/25/98.
Home Depot. The Home Depot Mortgage Loan has a Scheduled Principal Balance
as of the Cut-off Date of $15.0 million (1.3% of the Initial Pool Balance) and
a 94.94% LTV, and was underwritten at a 1.03 DSCR. The borrower is HD-TB L.L.C.
(the "HD Borrower"), a newly created single purpose entity, the managing member
of which (TB-Broadview, Inc.) is also a newly created single purpose entity
with one independent director. The sponsors of the borrower are John E.
Shaffer, E. Thomas Collins, Jr. and Richard E. Hulina, each principals of
Hiffman Shaffer Associates, Inc. The Home Depot Mortgage Loan is secured by a
135,351 square foot retail, single tenant store, together with a 28,474 square
foot outdoor garden center and 665 parking spaces located in the Village of
Broadview, Cook County, Illinois. The property is fully net leased to Home
Depot U.S.A., Inc. ("HD USA"), a Delaware corporation and such lease has been
collaterally assigned to PMCC as additional collateral for this Mortgage Loan.
The obligations of the Home Depot lease are guaranteed by The Home Depot, Inc.
a Delaware corporation rated "AA-" by S&P.
The Home Depot Lease provides HD USA with termination and abatement rights
directly arising from certain casualty events or condemnations of a material
portion of the Hope Depot Premises: however, the Mortgage Loan has the benefit
of a noncancelable credit lease enhancement insurance policy issued by Chubb
Insurance (AAA rating). The Home Depot Lease provides HD USA with termination
and abatement rights arising from the HD Borrower's default relating to its
obligations under the Home Depot Lease to perform required structural
maintenance with respect to the Home Depot premises in the event of the
occurrence of certain changes of applicable law, as more fully set forth in the
Home Depot Lease; however, Home Depot, Inc. has indemnified the holder of this
Mortgage Loan from an against any such loss or liability. The loan also has as
a residual value insurance policy for $4,530,000 with RVI Services, which is
rated "A" by S&P.
Towne Mall. The Towne Mall Mortgage Loan has a Scheduled Principal Balance
as of the Cut-off Date of $14.4 million (1.2% of the Initial Pool Balance) and
a 61.7% LTV, and was underwritten at 1.81 DSCR. The related borrower, Towne
Mall, L.L.C., is a single-purpose limited liability company. The managing
member of the Towne Mall Borrower, Ivanhoe Wilmorite Towne, Inc., is also a
single-purpose corporation. The Towne Mall Mortgage Loan is secured by a fee
simple mortgage encumbering a 350,000 square foot anchored retail property
located in Elizabethtown, Kentucky. The related anchor tenants are J.C. Penney,
Sears, and Proffitt's. Occupancy: 85.6% at 11/30/97.
The Aberfeldy Portfolio. The Aberfeldy Portfolio consists of four Mortgage
Loans having an aggregate Scheduled Principal Balance as of the Cut-off Date of
$39,898,489.60 (3.47% of the Initial Pool Balance) and a 73% LTV, and was
underwritten at a 1.26 DSCR. The three related borrowers are single-purpose
entity limited partnerships, each with a separate sole general partner that is
a single-purpose entity limited liability company as to which Aberfeldy Limited
Partnership, a Texas limited partnership, is a common limited partner. One of
the Mortgage Loans in the Aberfeldy Portfolio, was made to Aberfeldy III, LP,
is secured by seven Mortgaged Properties, and, having a Scheduled Principal
Balance as of the Cut-off Date of $14.4 million (1.2% of Initial Pool Balance),
is the tenth largest loan in the Trust Fund. The related Mortgaged Properties
are primarily located in the Dallas/Ft. Worth area. The second Mortgage Loan in
the Aberfeldy Portfolio (Control #20) was made to Aberfeldy IV, LP and is
secured by four Mortgaged Properties primarily located in the Dallas/Ft. Worth
area. The third Mortgage Loan in the Aberfeldy Portfolio (Control #19) was also
made to Aberfeldy IV, LP, and is secured by a second mortgage on one of the
four Mortgage Properties described in the prior sentence which is leased to the
General Services Administration. The fourth of the Mortgage Loans in the
Aberfeldy Portfolio (Control #16) was made to Aberfeldy I, LP, and is secured
by nine Mortgaged Properties primarily located in the Dallas/Ft. Worth area.
The Mortgage Loans made to these three borrowers are not cross-collateralized
or cross-defaulted with respect to the Mortgage Loans made to either of the
other borrowers.
Each of the Aberfeldy borrowers and their general partners and their
limited partner (each an "Aberfeldy Entity") has agreed to traditional
separateness covenants in connection with their business, organizational, and
financial operating procedures. A nonconsolidation opinion was obtained from
counsel to the Aberfeldy borrowers in connection with the Aberfeldy Mortgage
Loans in the Aberfeldy Portfolio, which states that subject to various
assumptions, qualifications, and conditions set forth in the opinion, if any
Aberfeldy Entity were to become a debtor under the United States Bankruptcy
Code, a court in such a case would not order the substantive consolidation of
such debtor with any other Aberfeldy Entity and would not hold that the
property of any other Aberfeldy Entity constitutes property of the bankruptcy
estate of such debtor pursuant to Section 541 of the Bankruptcy Code on the
basis of the doctrine of piercing the corporate veil or the doctrine of
substantive consolidation.
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Nineteen Mortgage Loans, representing approximately 12.79% of the Initial
Pool Balance, are cross-collateralized and cross-defaulted with other Mortgage
Loans to the related borrower or to a related affiliated borrower. Two Mortgage
Loans, representing approximately 0.76% of the Initial Pool Balance, are
cross-defaulted with other Mortgage Loans to the related borrower or to a
related affiliated borrower, but are not cross-collateralized.
"Cross-Collateralized Loans" and "Cross-Defaulted Loans" are made to a borrower
that is affiliated with the borrower under another Mortgage Loan in order to
reduce the risk that the inability of an individual Mortgaged Property to
generate net operating income sufficient to pay debt service thereon will
result in defaults (and ultimately losses). The arrangement is based on the
belief that the risk of default is reduced by making the collateral pledged to
secure each related Cross-Collateralized Loan available to support debt service
on, and principal repayment of, the aggregate indebtedness evidenced by the
related Cross-Collateralized Loans or to improve the prospects for minimizing
losses to the lender by making it easier for a lender to foreclose on
performing collateral as well as non-performing collateral should the need
arise. Annex D contains the Affiliated Borrower Loan Table which sets forth
more detailed information regarding Mortgage Loans made to a single borrower or
to a single group of affiliated borrowers.
Geographic Concentration. The Mortgaged Properties are located in 37
states. Forty-three, 47, 27, 16 and 16 of the Mortgage Loans, representing
approximately 15.30%, 12.05%, 6.77%, 6.14% and 5.66% of the Initial Pool
Balance, respectively, are secured by liens on Mortgaged Properties located in
California, Texas, Ohio, New York and Florida. Of the remaining Mortgaged
Properties, no more than 5.0% (as a percentage of the Initial Pool Balance) are
secured by Mortgaged Properties located in any single state.
Environmental Risks. An environmental site assessment ("ESA"), a similar
study, an update of a previously conducted Phase 1 ESA, or an update based on
information contained in an established database, was obtained by the related
Mortgage Loan Seller with respect to each of the Mortgaged Properties were
obtained by the related Mortgage Loan Seller within 12 months of the respective
dates as of which the Mortgage Loans. Each Mortgaged Property has been subject
to an ESA or such a similar study or update within the 12 months preceding the
Cut-off Date (except with respect to one Mortgage Loan originated by NRFinance
representing less than % of the Initial Pool Balance as to which such report
was obtained approximately 13 months prior to the Cut-off Date).
Other than as described below, the Mortgage Loan Sellers have informed the
Depositor that the ESAs, studies or updates identified no material adverse
environmental conditions or circumstances anticipated to require any material
expenditure with respect to any Mortgaged Property, except for: (i) those cases
where such conditions or circumstances were investigated further and based upon
such additional investigation, a qualified environmental consultant recommended
no further investigation or remediation; (ii) those cases in which an
operations and maintenance plan was recommended by the environmental consultant
and such plan was obtained or an escrow reserve established to cover the
estimated costs of obtaining such plan; (iii) those conditions in which soil or
groundwater contamination was suspected or identified and either (a) such
condition or circumstance was remediated or abated prior to the Closing Date;
(b) a No Further Action letter was obtained from the applicable regulatory
authority, or (c) either an environmental insurance policy was obtained, a
letter of credit provided, an escrow reserve account established, or an
indemnity from the responsible party was obtained, to cover the estimated costs
of any required investigation, testing, monitoring or remediation, or (iv)
those cases in which a leaking underground storage tank or groundwater
contamination was identified to have originated from an offsite property, a
responsible party has been identified under applicable law, and either such
condition is not known to have affected the Mortgaged Property or the
responsible party has either received a No Further Action letter from the
applicable regulatory agency, established a remediation fund, or provided an
indemnity or guaranty to the borrower. The information contained herein is
based upon the ESAs, similar studies or updates and has not been independently
verified by the Mortgage Loan Sellers, the Depositor, the Transferor, or any of
their respective affiliates.
The ESAs, studies or updates with respect to certain of the Mortgaged
Properties identified adverse environmental conditions or circumstances which
could be material and could require material expenditure with respect to such
Mortgaged Properties. One of these Mortgage Loans (No. 1076, West Park Town
Plaza, Boise, Idaho) is secured by a Mortgaged Property to which regional
groundwater contamination originating from an offsite source has migrated. The
responsible party and owner of the offsite source property is currently
operating a groundwater remediation system partially located on the Mortgaged
Property and is otherwise responsible for all required investigation and
remediation under a Consent Order from the State of Idaho. Another of such
Mortgage Loans (No. 1224, Westwood Plaza Shopping Center, Westwood, New Jersey)
is secured by a Mortgaged Property upon which was formerly located a 1,000
gallon waste oil underground storage tank and hydraulic lifts owned and
operated by K-Mart Corporation. K-Mart Corporation is the responsible party for
any required future investigation or remediation.
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Investors should understand that the results of the ESAs do not constitute
an assurance or guaranty by the Depositor, the Mortgage Loan Sellers, the
Master Servicer, the Special Servicer, the Trustee, any affiliate of any of the
foregoing, any environmental consultants or any other person as to the absence
or extent of the existence of any environmental condition on the Mortgaged
Properties that could result in environmental liability. Given the scope of the
ESAs, an environmental condition that affects a Mortgaged Property may not be
discovered or its severity revealed during the course of the assessment.
Further, no assurance can be given that future changes in applicable
environmental laws, the development or discovery of presently unknown
environmental conditions at the Mortgaged Properties or the deterioration of
existing conditions will not require material expenses for remediation or other
material liabilities.
Other Financing. The related Mortgage Loan documents generally prohibit
subordinate financing without the mortgagee's prior consent unless certain
conditions specified below pertain. With respect to 20 of the Mortgage Loans,
representing approximately 6.87% of the Initial Pool Balance, the related
Mortgage Loan documents allow the borrower, under certain specified
circumstances, to either maintain an existing subordinate mortgage encumbering
the related Mortgaged Properties, or to grant such a subordinate mortgage in
the future. Generally, prior to any such subordinate mortgage being allowed,
certain conditions specified in the related Mortgage Loan documents must be
satisfied. Such conditions typically include one or more of the following: (a)
the purpose, amount, term and amortization period of the proposed subordinate
debt, together with the identity of the subordinate lender and the terms of the
subordinate loan documents, must be acceptable to the senior mortgagee; (b)
pursuant to either the specific terms of the subordinate mortgage or a separate
recorded agreement obtained from such subordinate lender, the subordinate
mortgage must be unconditionally subordinated to the related Mortgage Loan
documents, and the subordinate lender is also typically prohibited from
exercising any remedies against the borrower without the senior mortgagee's
consent and from receiving any payments on such subordinate debt if, for the
immediately prior 12 months, either (i) the aggregate debt service coverage
ratio for such Mortgage Loan and such subordinate debt is less than a specified
ratio (generally ranging from 1.20 to 1.30), or (ii) the aggregate loan to
value ratio for such Mortgage Loan and such subordinate debt is greater than a
specified ratio (generally ranging from 70% to 80%); (c) the subordinate debt
must be non-recourse; and (d) acceptable economic conditions regarding the
related Mortgaged Property must exist as of the effective date of such
subordinate financing, typically including (i) an aggregate debt service
coverage ratio for such Mortgage Loan and such subordinate debt equal to or
exceeding a specified ratio (generally 1.20), and/or (ii) an aggregate loan to
value ratio for such Mortgage Loan and such subordinate debt of less than a
specified ratio (generally ranging from 70% to 80%).
Zoning Compliance. The related Mortgage Loan Seller generally received
assurances (which may be limited to a representation or warranty from the
related borrower for breach of which recourse may be had to such borrower) that
all of the improvements located upon each respective Mortgaged Property
complied with all Zoning Laws in all respects material to the continued use of
the related Mortgaged Property, or that such improvements qualified as
permitted nonconforming uses.
Tenant Matters. Certain additional information regarding Major Tenants is
set forth in Annex A herein. Generally, Major Tenants do not have
investment-grade credit ratings. In connection with 53 of the Mortgage Loans,
representing approximately 17.29% of the Initial Pool Balance, a Major Tenant
occupies more than 60% of the net leasable area of the related Mortgaged
Property. Many of such Major Tenants occupy their respective leased premises
pursuant to leases that require them to pay all applicable real property taxes,
maintain insurance over the improvements thereon and maintain the physical
condition of such improvements. With respect to Mortgage Loans secured by a
retail, office or industrial property, the related Mortgage Loan Seller
generally obtained an estoppel certificate from each Major Tenant in which such
tenant indicated its intention to continue in the relevant lease and that such
tenant was not presently aware of any condition or event that would allow it to
terminate such lease prior to the end of the lease term.
Other Information. The following tables and Annex A set forth certain
information with respect to the Mortgage Loans and the Mortgaged Properties,
which was primarily derived from financial statements supplied by each borrower
for its related Mortgaged Property. The financial statements supplied by the
borrowers in most cases are unaudited and were not prepared in accordance with
generally accepted accounting principles. "Net Operating Income" and "Cash
Flow" do not represent the net operating income and cash flow reflected on the
borrowers' financial statements. The differences between "Net Operating Income"
and "Cash Flow" determined by the Mortgage Loan Sellers and net operating
income and cash flow reflected on the borrowers' financial statements represent
the adjustments made by the related Mortgage Loan Seller as described below,
which adjustments generally were intended to increase the level of consistency
between the financial statements provided by the borrowers. However, such
adjustments were subjective in nature and were not made in a uniform
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manner nor in accordance with generally accepted accounting principles.
"Underwritten NOI" and "Underwritten Cash Flow" are pro forma numbers prepared
by the related Mortgage Loan Seller to reflect their assessment of the market
based performance of the related Mortgaged Property. None of the Depositor, the
Transferor or the Underwriters has made any attempt to verify the accuracy of
the financial statements supplied by the borrowers or the accuracy or
appropriateness of the adjustments discussed below to determine "Net Operating
Income," "Cash Flow," "Underwritten NOI," and "Underwritten Cash Flow."
The numbers representing "Net Operating Income," "Cash Flow,"
"Underwritten NOI" and "Underwritten Cash Flow" are not a substitute for or an
improvement upon net income as determined in accordance with generally accepted
accounting principles as a measure of the results of a Mortgaged Property's
operations or a substitute for cash flows from operating activities determined
in accordance with generally accepted accounting principles as a measure of
liquidity. No representation is made as to the future net income or net cash
flow of the Mortgaged Properties, nor is "Net Operating Income," "Cash Flow,"
"Underwritten NOI" and "Underwritten Cash Flow" set forth herein intended to
represent such future net income or net cash flow.
For all of the Mortgaged Properties, at the request of the related
Mortgage Loan Seller, appraisals were conducted in compliance with the Code of
Professional Ethics and Standards of Professional Conduct of the Appraisal
Institute and the Uniform Standards of Professional Appraisal Practice as
adopted by the Appraisal Standards Board of the Appraisal Foundation and
accepted and incorporated into FIRREA. None of the Depositor, the Transferor,
the Master Servicer, the Special Servicer or the Trustee, any of their
affiliates or any other entity has prepared or obtained a separate independent
appraisal or reappraisal. There can be no assurance that another appraiser
would have arrived at the same opinion of value. No representation is made that
any Appraised Value would approximate either the value that would be determined
in a current appraisal of the related Mortgaged Property or the amount that
would be realized upon a sale or liquidation of the Mortgaged Property.
Accordingly, investors should not place undue reliance on the Loan-to-Value
Ratios set forth herein.
Debt service coverage ratios are used by lenders of loans secured by
income producing property to measure the ratio of (a) cash currently generated
by a property that is available for debt service (that is, cash that remains
after payment of operating expenses) to (b) required debt service payments.
However, debt service coverage ratios only measure the current, or recent,
ability of a property to service mortgage debt. If a property is not expected
to have a stable operating cash flow (for instance, if it is subject to
material leases that are scheduled to expire during the loan term and that
provide for above-market rents, may be difficult to replace, or both), a debt
service coverage ratio may not be a reliable indicator of a property's ability
to service the mortgage debt over the entire remaining loan term. In addition,
a debt service coverage ratio may not adequately reflect the significant
amounts of cash that a property owner may be required to expend to pay for
capital improvements, and for tenant improvements and leasing commissions when
expiring leases are replaced. For the reasons discussed above, the Debt Service
Coverage Ratios presented herein are limited in their usefulness in predicting
the future ability of a Mortgaged Property to generate sufficient cash flow to
repay the related Mortgage Loan. Accordingly, no assurance can be given, and no
representation is made, that the Debt Service Coverage Ratios accurately
reflect that ability.
For purposes of the tables and Annex A:
(1) "Net Operating Income" or "NOI" is revenue derived from the use and
operation of the Mortgaged Property (consisting primarily of rental income)
less operating expenses (such as utilities, general administrative expenses,
management fees, advertising, repairs and maintenance) and less fixed
expenses (such as insurance and real estate taxes). NOI generally does not
reflect capital expenditures, replacement reserves, interest expense, income
taxes and non-cash items such as depreciation or amortization. The Mortgage
Loan Sellers have informed the Depositor that they have adjusted items of
revenue and expense shown on the borrower financial statements in order to
reflect the historical operating results for a Mortgaged Property on a
normalized basis (e.g., adjusting for the payment of two years of real
estate taxes in a single year). Revenue was generally adjusted to eliminate
items not related to the operation of the Mortgaged Property, to eliminate
security deposits and to eliminate non-recurring items. Expense was
generally adjusted to eliminate distributions to owners, items of expense
not related to the operation of the Mortgaged Property, non-recurring items,
such as capital expenditures, and refunds of security deposits. The Mortgage
Loan Sellers have informed the Depositor that they have made the adjustments
based upon their review of the borrower financial statements, their
experience in originating loans and, in some cases, conversations with
borrowers. The adjustments were subjective in nature and were not uniform
for each Mortgaged Property.
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(2) "Cash Flow" means, with respect to any Mortgage Loan, the NOI for the
related Mortgaged Property decreased by tenant improvements, leasing
commissions and other non-recurring expenditures, as appropriate.
(3) "Underwritten NOI" means, with respect to any Mortgage Loan, the NOI
for the related Mortgaged Property as determined by the related Mortgage
Loan Seller as applicable, in accordance with its underwriting guidelines
for similar properties. Although there are differences in the underwriting
guidelines of the Mortgage Loan Sellers, the nature and types of adjustments
made by each of them were generally the same. Revenue generally is
calculated as follows. Rental revenue is calculated using the lower of
actual or market rental rates, with a vacancy rate equal to the higher of
the Mortgaged Property's historical rate, the market rate or an assumed
vacancy rate. Other revenues, such as parking fees, are included only if
sustainable. Certain revenues, such as application fees and lease
termination fees, are not included. Operating and fixed expenses generally
are adjusted to reflect the higher of the Mortgaged Property's average
expenses or a mid-range industry norm for expenses on similar properties in
similar locations, a market rate management fee and an annual reserve for
replacement of capital items.
(4) "Underwritten Cash Flow" means, with respect to any Mortgage Loan, the
Underwritten NOI for such Mortgage Loan decreased by an amount that the
related Mortgage Loan Seller has determined to be an appropriate allowance
for average annual tenant improvements and leasing commissions based upon
its underwriting guidelines.
(5) "Appraised Value" means, for each of the Mortgaged Properties, the
appraised value of such property as determined by an appraisal thereof made
not more than nine months prior to the origination date of the related
Mortgage Loan and reviewed by the related Mortgage Loan Seller.
(6) "Annual Debt Service" means, for any Mortgage Loan, the current annual
debt service (including interest allocable to payment of the related
Servicing Fee, Trustee Fee and principal) payable with respect to such
Mortgage Loan during the 12-month period commencing on the Cut-off Date
(assuming no principal prepayments occur).
(7) "Debt Service Coverage Ratio," "Underwritten DSCR" or "DSCR" means,
with respect to any Mortgage Loan, (a) the Underwritten Cash Flow for the
related Mortgaged Property divided by (b) the Annual Debt Service for such
Mortgage Loan.
(8) "Loan-to-Value Ratio," "Appraised LTV" or "LTV" means, with respect to
any Mortgage Loan, the principal balance of such Mortgage Loan as of the
Cut-off Date divided by the Appraised Value of the Mortgaged Property
securing such Mortgage Loan.
(9) "Balloon LTV" for any Mortgage Loan is calculated in the same manner
as LTV, except that the Balloon Amount is used instead of the Cut-off Date
principal balance.
(10) "Balloon Amount" or "Balloon Balance" for each Mortgage Loan is equal
to the principal amount, if any, due at maturity, taking into account
scheduled amortization, assuming no prepayments or defaults.
(11) "Occupancy Rate" means the percentage of gross leasable area, rooms,
units, beds, pads or sites of a Mortgaged Property that are leased or
occupied. Occupancy rates are calculated based upon the most recent rent
information received by the related Mortgage Loan Seller. The "Occupancy
Percentage" and "Occupancy Date" for each Mortgage Loan are based upon rent
information received by the related Mortgage Loan Seller from the related
borrower or mortgage loan originator (if other than the related Mortgage
Loan Seller).
(12) "Remaining Term to Maturity" generally means the number of months
remaining from the Cut-off Date until the maturity of a mortgage loan (or,
in the case of the ARD Loans, through the related Anticipated Repayment
Dates). The method for calculating the "Remaining Term to Maturity" for any
Mortgage Loan is determined by subtracting (a) the number of Due Dates from
and including the first payment date to and including the Cut-off Date from
(b) the number of Due Dates from and including the first payment date to and
including the original scheduled maturity date for such Mortgage Loan (or,
in the case of the ARD Loans, through the related Anticipated Repayment
Dates).
(13) "Remaining Amortization Term" for any Mortgage Loan is calculated as
the original amortization term of the related Mortgaged Loan (based upon
such Mortgage Loan's original balance, interest rate and monthly payment)
less the number of Due Dates from and including the first payment date to
and including the Cut-off Date.
(14) The "Year Built" is based on information contained in deed records,
appraisals, engineering surveys, architectural papers, title insurance,
and/or other insurance policies.
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(15) The "Year Renovated" is based upon information contained in the
appraisal of the related Mortgaged Property.
(16) All calculations of any applicable Lockout Period, Defeasance Lockout
Period, Yield Maintenance Period or Prepayment Premium for a Mortgage Loan
are determined based upon such Mortgage Loan's first scheduled payment date.
(17) For each Mortgage Loan secured by more than one Multifamily Property
or by more than one Congregate Care Property, the "Number of Units,"
"Units/SF," "Appraised Value," "Current Occupancy," "Underwritten NOI" and
"Underwritten Cash Flow" is the sum of the respective values for each
Mortgaged Property securing such Mortgaged Loan.
(18) "Weighted Average Maturity" means the weighted average of the
Remaining Terms to Maturity of the Mortgage Loans.
(19) Due to rounding, percentages may not add to 100% and amounts may
not add to the indicated total.
S-49
<PAGE>
RANGE OF CUT-OFF DATE PRINCIPAL BALANCES
<TABLE>
<CAPTION>
NUMBER PERCENT OF
OF INITIAL WEIGHTED AVERAGE
RANGE OF CUT-OFF DATE BALANCES LOANS POOL BALANCE INTEREST RATE
- ------------------------------------ -------- -------------- ------------------
<S> <C> <C> <C>
$ 500,000 -- $ 1,000,000 ......... 11 0.87% 7.775%
$ 1,000,001 -- $ 2,000,000 ......... 60 7.79% 7.588%
$ 2,000,001 -- $ 3,000,000 ......... 54 11.62% 7.569%
$ 3,000,001 -- $ 4,000,000 ......... 39 11.95% 7.487%
$ 4,000,001 -- $ 5,000,000 ......... 20 7.82% 7.346%
$ 5,000,001 -- $ 6,000,000 ......... 13 6.24% 7.402%
$ 6,000,001 -- $ 7,000,000 ......... 11 6.33% 7.428%
$ 7,000,001 -- $ 8,000,000 ......... 11 7.12% 7.366%
$ 8,000,001 -- $ 9,000,000 ......... 7 5.13% 7.260%
$ 9,000,001 -- $10,000,000 ......... 10 8.29% 7.214%
$10,000,001 -- $11,000,000 ......... 4 3.58% 7.240%
$11,000,001 -- $12,000,000 ......... 3 3.04% 8.012%
$12,000,001 -- $13,000,000 ......... 2 2.13% 7.578%
$13,000,001 -- $14,000,000 ......... 2 2.38% 7.263%
$14,000,001 -- $15,000,000 ......... 3 3.80% 7.217%
$16,000,001 -- $17,000,000 ......... 1 1.43% 6.950%
$19,000,001 -- $20,000,000 ......... 1 1.70% 7.240%
$22,000,001 -- $23,000,000 ......... 1 1.98% 7.490%
$23,000,001 -- $24,000,000 ......... 1 2.07% 8.155%
$24,000,001 -- $25,000,000 ......... 1 2.09% 7.040%
$30,000,001 -- $31,000,000 ......... 1 2.64% 7.250%
-- ------ -----
Total ............................ 256 100.00% 7.424%
=== ====== =====
<CAPTION>
SCHEDULED
WEIGHTED WEIGHTED PRINCIPAL
AVERAGE AVERAGE WEIGHTED BALANCE
REMAINING ORIGINAL AVERAGE AS OF THE
RANGE OF CUT-OFF DATE BALANCES TERM LTV DSCR CUT-OFF DATE
- ------------------------------------ ----------- ---------- ---------- -----------------
<S> <C> <C> <C> <C>
$ 500,000 -- $ 1,000,000 ......... 160.61 65.1 1.53 $ 9,963,642
$ 1,000,001 -- $ 2,000,000 ......... 139.19 67.4 1.42 $ 89,695,495
$ 2,000,001 -- $ 3,000,000 ......... 138.13 69.9 1.42 $ 133,788,340
$ 3,000,001 -- $ 4,000,000 ......... 135.39 70.7 1.38 $ 137,569,884
$ 4,000,001 -- $ 5,000,000 ......... 127.66 72.5 1.44 $ 90,042,489
$ 5,000,001 -- $ 6,000,000 ......... 134.59 69.9 1.44 $ 71,825,072
$ 6,000,001 -- $ 7,000,000 ......... 119.22 74.8 1.41 $ 72,865,984
$ 7,000,001 -- $ 8,000,000 ......... 156.09 71.7 1.41 $ 81,893,978
$ 8,000,001 -- $ 9,000,000 ......... 115.73 74.8 1.33 $ 59,009,195
$ 9,000,001 -- $10,000,000 ......... 118.92 76.0 1.42 $ 95,442,720
$10,000,001 -- $11,000,000 ......... 144.16 75.0 1.37 $ 41,203,397
$11,000,001 -- $12,000,000 ......... 110.41 73.0 1.32 $ 34,949,605
$12,000,001 -- $13,000,000 ......... 113.44 65.2 1.52 $ 24,554,212
$13,000,001 -- $14,000,000 ......... 145.26 76.2 1.32 $ 27,397,113
$14,000,001 -- $15,000,000 ......... 141.45 75.5 1.38 $ 43,709,426
$16,000,001 -- $17,000,000 ......... 140.00 79.3 1.55 $ 16,444,888
$19,000,001 -- $20,000,000 ......... 116.00 80.0 1.30 $ 19,538,162
$22,000,001 -- $23,000,000 ......... 173.00 69.1 1.60 $ 22,800,000
$23,000,001 -- $24,000,000 ......... 113.00 77.9 1.43 $ 23,799,051
$24,000,001 -- $25,000,000 ......... 119.00 74.8 1.35 $ 24,080,401
$30,000,001 -- $31,000,000 ......... 113.00 66.6 1.31 $ 30,380,396
------ ---- ---- --------------
Total ............................ 132.28 72.2 1.41 $1,150,953,450
====== ==== ==== ==============
</TABLE>
RANGE OF MORTGAGE RATES
<TABLE>
<CAPTION>
SCHEDULED
WEIGHTED WEIGHTED PRINCIPAL
NUMBER PERCENT OF AVERAGE AVERAGE WEIGHTED BALANCE
OF INITIAL WEIGHTED AVERAGE REMAINING ORIGINAL AVERAGE AS OF THE
RANGE OF MORTGAGE INTEREST RATES LOANS POOL BALANCE INTEREST RATE TERM LTV DSCR CUT-OFF DATE
- ---------------------------------- -------- -------------- ------------------ ----------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
6.501% -- 6.750% ................. 2 0.43% 6.720% 114.00 52.6 2.03 $ 4,974,556
6.751% -- 7.000% ................. 16 8.73% 6.916% 140.37 75.8 1.39 $ 100,479,094
7.001% -- 7.250% ................. 67 32.21% 7.133% 125.61 73.9 1.37 $ 370,735,847
7.251% -- 7.500% ................. 86 34.04% 7.394% 141.25 70.8 1.44 $ 391,757,909
7.501% -- 7.750% ................. 35 8.47% 7.607% 141.30 71.5 1.40 $ 97,468,182
7.751% -- 8.000% ................. 19 5.35% 7.878% 131.02 71.6 1.34 $ 61,533,556
8.001% -- 8.250% ................. 10 5.59% 8.118% 112.49 72.4 1.43 $ 64,381,219
8.251% -- 8.500% ................. 7 1.82% 8.419% 104.10 68.2 1.42 $ 20,902,988
8.501% -- 8.750% ................. 3 0.73% 8.682% 109.81 64.0 1.45 $ 8,373,294
8.751% -- 9.000% ................. 8 1.30% 8.944% 124.80 64.1 1.52 $ 14,954,306
9.001% -- 9.250% ................. 1 0.14% 9.100% 109.00 65.0 1.38 $ 1,597,550
9.251% -- 9.500% ................. 1 0.98% 9.270% 106.00 73.4 1.18 $ 11,232,461
9.501% -- 9.750% ................. 1 0.22% 9.720% 106.00 65.0 1.77 $ 2,562,489
-- ------ ----- ------ ---- ---- --------------
Total .......................... 256 100.00% 7.424% 132.28 72.2 1.41 $1,150,953,450
=== ====== ===== ====== ==== ==== ==============
</TABLE>
S-50
<PAGE>
RANGE OF REMAINING TERM (IN MONTHS)
<TABLE>
<CAPTION>
SCHEDULED
WEIGHTED WEIGHTED PRINCIPAL
NUMBER PERCENT OF AVERAGE AVERAGE WEIGHTED BALANCE
REMAINING TERM OF INITIAL WEIGHTED AVERAGE REMAINING ORIGINAL AVERAGE AS OF THE
TO ARD/BALLOON OR MATURITY LOANS POOL BALANCE INTEREST RATE TERM LTV DSCR CUT-OFF DATE
- ---------------------------- -------- -------------- ------------------ ----------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
48.1 -- 60.0 ............. 1 1.25% 7.390% 51.00 61.7 1.81 $ 14,371,538
72.1 -- 84.0 ............. 6 2.60% 7.597% 77.22 73.1 1.38 $ 29,907,965
96.1 -- 108.0 ............. 4 2.68% 8.606% 106.96 73.7 1.28 $ 30,898,082
108.1 -- 120.0 ............. 161 63.58% 7.387% 115.34 72.6 1.39 $ 731,804,760
120.1 -- 132.0 ............. 7 1.20% 8.456% 128.45 66.1 1.49 $ 13,779,683
132.1 -- 144.0 ............. 12 4.49% 7.134% 139.89 73.4 1.64 $ 51,718,618
144.1 -- 156.0 ............. 1 0.34% 7.240% 153.00 71.8 1.38 $ 3,950,000
156.1 -- 168.0 ............. 1 0.27% 7.510% 165.00 77.5 1.26 $ 3,084,919
168.1 -- 180.0 ............. 39 16.52% 7.390% 174.50 69.5 1.43 $ 190,156,517
180.1 -- 192.0 ............. 1 0.17% 8.280% 183.00 75.0 1.27 $ 1,938,565
192.1 -- 204.0 ............. 2 1.50% 6.811% 198.68 86.2 1.12 $ 17,321,292
204.1 -- 216.0 ............. 3 0.63% 7.597% 210.88 69.8 1.34 $ 7,216,142
228.1 -- 240.0 ............. 18 4.76% 7.440% 234.99 73.4 1.41 $ 54,805,368
--- ------ ----- ------ ---- ---- --------------
Total .................... 256 100.00% 7.424% 132.28 72.2 1.41 $1,150,953,450
=== ====== ===== ====== ==== ==== ==============
</TABLE>
RANGE OF MATURITY YEARS
<TABLE>
<CAPTION>
SCHEDULED
WEIGHTED WEIGHTED PRINCIPAL
NUMBER PERCENT OF AVERAGE AVERAGE WEIGHTED BALANCE
OF INITIAL WEIGHTED AVERAGE REMAINING ORIGINAL AVERAGE AS OF THE
YEAR LOANS POOL BALANCE INTEREST RATE TERM LTV DSCR CUT-OFF DATE
- ----------------- -------- -------------- ------------------ ----------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
2002 ............ 1 1.25% 7.390% 51.00 61.7 1.81 $ 14,371,538
2004 ............ 2 1.16% 8.203% 74.00 72.2 1.38 $ 13,345,398
2005 ............ 4 1.44% 7.109% 79.81 73.8 1.38 $ 16,562,567
2007 ............ 36 14.22% 7.986% 110.44 71.7 1.34 $ 163,612,808
2008 ............ 129 52.05% 7.286% 116.24 72.9 1.40 $ 599,090,035
2009 ............ 9 1.45% 8.362% 129.60 67.6 1.49 $ 16,720,446
2010 ............ 10 4.24% 7.087% 140.18 73.3 1.65 $ 48,777,856
2011 ............ 1 0.34% 7.240% 153.00 71.8 1.38 $ 3,950,000
2012 ............ 4 1.21% 7.713% 170.08 63.2 1.39 $ 13,898,503
2013 ............ 37 15.75% 7.377% 174.76 70.1 1.43 $ 181,281,498
2015 ............ 3 1.75% 6.903% 199.85 82.9 1.16 $ 20,162,175
2016 ............ 2 0.38% 7.686% 213.40 74.7 1.27 $ 4,375,260
2017 ............ 3 0.81% 7.750% 231.85 72.6 1.37 $ 9,335,966
2018 ............ 15 3.95% 7.376% 235.63 73.5 1.42 $ 45,469,402
--- ------ ----- ------ ---- ---- --------------
Total ......... 256 100.00% 7.424% 132.28 72.2 1.41 $1,150,953,450
=== ====== ===== ====== ==== ==== ==============
</TABLE>
S-51
<PAGE>
RANGE OF LOAN ORIGINATION YEARS
<TABLE>
<CAPTION>
SCHEDULED
WEIGHTED WEIGHTED PRINCIPAL
NUMBER PERCENT OF AVERAGE AVERAGE WEIGHTED BALANCE
OF INITIAL WEIGHTED AVERAGE REMAINING ORIGINAL AVERAGE AS OF THE
ORIGINATION YEAR LOANS POOL BALANCE INTEREST RATE TERM LTV DSCR CUT-OFF DATE
- ------------------ -------- -------------- ------------------ ----------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 ............. 89 38.54% 7.764% 125.26 70.9 1.39 $ 443,544,065
1998 ............. 167 61.46% 7.210% 136.68 73.0 1.42 $ 707,409,385
--- ------ ----- ------ ---- ---- --------------
Total .......... 256 100.00% 7.424% 132.28 72.2 1.41 $1,150,953,450
=== ====== ===== ====== ==== ==== ==============
</TABLE>
RANGE OF ORIGINAL LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
SCHEDULED
WEIGHTED WEIGHTED PRINCIPAL
NUMBER PERCENT OF AVERAGE AVERAGE WEIGHTED BALANCE
OF INITIAL WEIGHTED AVERAGE REMAINING ORIGINAL AVERAGE AS OF THE
ORIGINAL LTV LOANS POOL BALANCE INTEREST RATE TERM LTV DSCR CUT-OFF DATE
- ------------------------ -------- -------------- ------------------ ----------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
10.01 -- 15.00 ......... 1 0.10% 6.900% 112.00 11.3 1.00 $ 1,200,000
30.01 -- 35.00 ......... 1 0.20% 7.010% 203.00 30.7 1.68 $ 2,343,982
35.01 -- 40.00 ......... 1 0.12% 7.430% 174.00 38.6 1.94 $ 1,325,002
40.01 -- 45.00 ......... 2 0.30% 7.813% 172.29 43.3 1.63 $ 3,420,481
45.01 -- 50.00 ......... 3 0.46% 7.790% 136.84 49.2 1.38 $ 5,346,960
50.01 -- 55.00 ......... 10 2.47% 7.208% 137.96 52.4 1.72 $ 28,408,932
55.01 -- 60.00 ......... 3 0.52% 7.351% 144.61 58.4 1.64 $ 6,007,501
60.01 -- 65.00 ......... 31 9.62% 7.566% 121.05 62.8 1.53 $ 110,776,589
65.01 -- 70.00 ......... 46 19.97% 7.569% 134.67 68.0 1.47 $ 229,792,659
70.01 -- 75.00 ......... 100 36.35% 7.466% 134.16 73.5 1.37 $ 418,364,978
75.01 -- 80.00 ......... 53 27.06% 7.271% 127.03 78.5 1.36 $ 311,412,213
80.01 -- 85.00 ......... 3 1.12% 7.048% 138.89 81.0 1.28 $ 12,887,981
90.01 -- 95.00 ......... 2 1.71% 6.952% 176.30 94.7 1.02 $ 19,666,172
--- ------ ----- ------ ---- ---- --------------
Total ................ 256 100.00% 7.424% 132.28 72.2 1.41 $1,150,953,450
=== ====== ===== ====== ==== ==== ==============
</TABLE>
PROPERTY AGE RANGE
<TABLE>
<CAPTION>
NUMBER PERCENT OF
OF INITIAL WEIGHTED AVERAGE
YEARS RANGE PROPERTIES POOL BALANCE INTEREST RATE
- -------------------------------- ------------ -------------- ------------------
<S> <C> <C> <C>
0 -- 1 ....................... 7 3.65% 7.239%
1 -- 5 ....................... 99 34.80% 7.477%
5 -- 10 ....................... 58 21.45% 7.257%
10 -- 15 ....................... 58 16.89% 7.484%
15 -- 20 ....................... 22 7.46% 7.795%
20 -- 25 ....................... 24 9.23% 7.222%
25 -- 30 ....................... 11 2.45% 7.366%
(greater than) 30 ......... 22 4.02% 7.565%
N/A ............................ 2 .06% 8.155%
-- ------ -----
Total ........................ 303 100.00% 7.424%
=== ====== =====
<CAPTION>
SCHEDULED
WEIGHTED WEIGHTED PRINCIPAL
AVERAGE AVERAGE WEIGHTED BALANCE
REMAINING ORIGINAL AVERAGE AS OF THE
YEARS RANGE TERM LTV DSCR CUT-OFF DATE
- -------------------------------- ----------- ---------- ---------- -----------------
<S> <C> <C> <C> <C>
0 -- 1 ....................... 125.28 73.3 1.38 $ 42,019,369
1 -- 5 ....................... 140.83 72.9 1.42 $ 400,567,856
5 -- 10 ....................... 130.50 73.2 1.41 $ 246,934,301
10 -- 15 ....................... 119.58 71.1 1.39 $ 194,339,679
15 -- 20 ....................... 125.70 71.5 1.35 $ 85,817,607
20 -- 25 ....................... 130.27 70.6 1.47 $ 106,221,308
25 -- 30 ....................... 164.74 65.7 1.50 $ 28,178,773
(greater than) 30 ......... 124.79 72.9 1.32 $ 46,215,761
N/A ............................ 113.00 77.9 1.43 $ 658,796
------ ---- ---- --------------
Total ........................ 132.28 72.2 1.41 $1,150,953,450
====== ==== ==== ==============
</TABLE>
S-52
<PAGE>
RANGE OF DSCR'S
<TABLE>
<CAPTION>
SCHEDULED
WEIGHTED WEIGHTED PRINCIPAL
NUMBER PERCENT OF AVERAGE AVERAGE WEIGHTED BALANCE
OF INITIAL WEIGHTED AVERAGE REMAINING ORIGINAL AVERAGE AS OF THE
RANGE OF DSCR LOANS POOL BALANCE MORTGAGE INTEREST RATE TERM LTV DSCR CUT-OFF DATE
- --------------------------- -------- -------------- ------------------------ ----------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1.00 -- 1.05 .............. 3 1.81% 6.949% 172.61 89.9 1.02 $ 20,866,172
1.16 -- 1.20 .............. 2 1.61% 8.575% 132.32 73.2 1.18 $ 18,501,777
1.21 -- 1.25 .............. 11 3.58% 7.439% 138.55 75.8 1.24 $ 41,215,956
1.26 -- 1.30 .............. 49 19.82% 7.372% 131.48 74.7 1.28 $ 228,165,139
1.31 -- 1.35 .............. 49 22.39% 7.320% 124.46 72.2 1.33 $ 257,741,834
1.36 -- 1.40 .............. 37 11.90% 7.428% 133.22 73.9 1.38 $ 137,006,118
1.41 -- 1.45 .............. 32 11.87% 7.550% 138.41 73.9 1.43 $ 136,576,495
1.46 -- 1.50 .............. 20 6.13% 7.655% 126.01 69.4 1.48 $ 70,501,892
1.51 -- 1.55 .............. 17 6.97% 7.364% 135.98 71.7 1.53 $ 80,272,381
1.56 -- 1.60 .............. 5 3.80% 7.381% 158.63 68.7 1.60 $ 43,735,192
1.61 -- 1.65 .............. 8 2.02% 7.331% 121.83 65.2 1.62 $ 23,281,172
1.66 -- 1.70 .............. 6 2.20% 7.181% 137.04 59.6 1.67 $ 25,329,338
1.71 -- 1.75 .............. 5 1.30% 7.735% 122.89 63.6 1.73 $ 15,000,815
1.76 -- 1.80 .............. 2 0.39% 9.406% 116.32 63.4 1.77 $ 4,496,743
1.81 -- 1.85 .............. 4 2.50% 7.411% 113.51 61.5 1.82 $ 28,810,690
1.91 -- 1.95 .............. 2 0.49% 6.886% 128.03 49.3 1.95 $ 5,667,790
1.96 -- 2.00 .............. 1 0.12% 7.290% 119.00 50.9 1.96 $ 1,398,917
2.11 -- 2.15 .............. 1 0.16% 7.080% 115.00 55.4 2.13 $ 1,788,900
2.41 -- 2.45 .............. 1 0.87% 7.280% 141.00 68.5 2.42 $ 9,964,362
Greater than 2.50 ......... 1 0.05% 6.720% 114.00 52.9 2.57 $ 631,769
-- ------ ----- ------ ---- ---- --------------
Total ................... 256 100.00% 7.424% 132.28 72.2 1.41 $1,150,953,450
=== ====== ===== ====== ==== ==== ==============
</TABLE>
TYPES OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
NUMBER
OF PERCENT OF WEIGHTED AVERAGE
MORTGAGED INITIAL MORTGAGE
PROPERTY TYPE PROPERTIES POOL BALANCE INTEREST RATE
- ------------------------------------ ------------ -------------- ------------------
<S> <C> <C> <C>
Assisted Living Facilities ......... 5 2.36% 7.444%
Hotel .............................. 17 6.58% 7.717%
Industrial ......................... 28 6.99% 7.321%
Mixed Use .......................... 10 3.02% 7.814%
Mobile Home Park ................... 4 0.88% 7.033%
Multifamily ........................ 64 24.97% 7.158%
Nursing Home ....................... 4 1.37% 7.399%
Office ............................. 53 16.68% 7.514%
Office/Industrial .................. 3 0.89% 7.256%
Retail -- Anchored ................. 32 17.07% 7.505%
Retail -- Single Tenant ............ 20 4.94% 7.638%
Retail -- Unanchored ............... 49 10.62% 7.509%
Retail-Shadow Anchored ............. 4 1.23% 7.657%
Self-Storage ....................... 1 0.20% 7.570%
Warehouse .......................... 9 2.20% 7.216%
-- ------ -----
Total ............................ 303 100.00% 7.424%
=== ====== =====
<CAPTION>
SCHEDULED
WEIGHTED WEIGHTED PRINCIPAL
AVERAGE AVERAGE WEIGHTED BALANCE
REMAINING ORIGINAL AVERAGE AS OF THE
PROPERTY TYPE TERM LTV DSCR CUT-OFF DATE
- ------------------------------------ ----------- ---------- ---------- -----------------
<S> <C> <C> <C> <C>
Assisted Living Facilities ......... 151.90 74.1 1.59 $ 27,158,978
Hotel .............................. 134.79 67.9 1.56 $ 75,783,825
Industrial ......................... 127.31 67.8 1.34 $ 80,505,010
Mixed Use .......................... 141.60 67.1 1.37 $ 34,718,715
Mobile Home Park ................... 114.09 63.9 1.72 $ 10,151,136
Multifamily ........................ 130.69 74.5 1.40 $ 287,347,536
Nursing Home ....................... 139.73 68.5 2.14 $ 15,765,735
Office ............................. 134.50 73.0 1.35 $ 192,027,500
Office/Industrial .................. 115.82 69.4 1.35 $ 10,251,604
Retail -- Anchored ................. 128.78 72.6 1.40 $ 196,419,338
Retail -- Single Tenant ............ 166.12 74.4 1.31 $ 56,870,053
Retail -- Unanchored ............... 123.00 71.5 1.39 $ 122,276,346
Retail-Shadow Anchored ............. 116.65 74.1 1.33 $ 14,130,214
Self-Storage ....................... 113.00 74.2 1.43 $ 2,270,622
Warehouse .......................... 123.69 72.6 1.39 $ 25,276,838
------ ---- ---- --------------
Total ............................ 132.28 72.2 1.41 $1,150,953,450
====== ==== ==== ==============
</TABLE>
S-53
<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
SCHEDULED
NUMBER WEIGHTED WEIGHTED PRINCIPAL
OF PERCENT OF WEIGHTED AVERAGE AVERAGE AVERAGE WEIGHTED BALANCE
MORTGAGED INITIAL MORTGAGE REMAINING ORIGINAL AVERAGE AS OF THE
STATE PROPERTIES POOL BALANCE INTEREST RATE TERM LTV DSCR CUT-OFF DATE
- ----------------- ------------ -------------- ------------------ ----------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
AL .............. 2 0.86% 7.282% 117.99 78.2 1.39 $ 9,931,437
AZ .............. 6 3.24% 7.925% 111.95 74.7 1.26 $ 37,266,245
CA .............. 43 15.30% 7.246% 129.98 72.8 1.38 $ 176,102,682
CO .............. 5 1.53% 7.258% 126.17 69.2 1.38 $ 17,577,819
CT .............. 5 2.82% 7.287% 127.30 76.6 1.44 $ 32,413,508
FL .............. 16 5.66% 7.340% 116.10 75.3 1.34 $ 65,197,219
GA .............. 6 2.79% 7.548% 122.39 69.6 1.58 $ 32,125,535
ID .............. 3 1.13% 7.611% 111.85 72.2 1.30 $ 12,979,055
IL .............. 10 4.93% 7.304% 149.67 75.5 1.55 $ 56,742,069
KS .............. 4 1.49% 7.262% 123.65 68.6 1.38 $ 17,199,642
KY .............. 5 2.35% 7.553% 82.70 65.2 1.63 $ 27,028,691
LA .............. 1 0.15% 8.130% 111.00 74.6 1.42 $ 1,708,197
MA .............. 4 1.79% 7.608% 112.97 74.0 1.27 $ 20,610,873
MD .............. 6 2.53% 7.363% 125.92 68.3 1.52 $ 29,151,615
ME .............. 3 1.22% 7.310% 119.00 75.1 1.53 $ 14,032,014
MI .............. 4 1.19% 7.347% 149.98 75.4 1.42 $ 13,676,174
MN .............. 4 0.96% 7.763% 92.26 67.5 1.33 $ 11,025,769
MO .............. 10 2.52% 7.396% 138.99 73.0 1.38 $ 28,993,082
MS .............. 1 0.10% 7.080% 114.00 81.0 1.40 $ 1,141,465
NC .............. 3 1.21% 7.326% 131.01 66.6 1.43 $ 13,945,993
NE .............. 2 0.76% 7.917% 115.94 74.2 1.39 $ 8,725,620
NH .............. 1 0.48% 7.310% 176.00 51.4 1.83 $ 5,473,911
NJ .............. 18 3.86% 7.719% 127.49 73.5 1.42 $ 44,446,678
NM .............. 2 0.35% 7.574% 177.03 74.6 1.40 $ 3,991,437
NV .............. 8 2.23% 7.329% 145.67 72.9 1.48 $ 25,695,518
NY .............. 16 6.14% 7.537% 137.04 73.1 1.33 $ 70,717,153
OH .............. 27 6.77% 7.301% 133.83 70.2 1.37 $ 77,893,701
OK .............. 5 0.76% 7.582% 171.78 72.1 1.28 $ 8,803,725
OR .............. 3 0.56% 7.489% 156.46 70.1 1.33 $ 6,404,707
PA .............. 12 3.33% 7.340% 127.11 75.4 1.38 $ 38,380,408
RI .............. 2 0.54% 7.495% 234.00 72.9 1.33 $ 6,271,556
SC .............. 2 0.32% 7.665% 121.95 73.0 1.38 $ 3,683,625
TN .............. 4 1.15% 8.110% 114.33 69.0 1.46 $ 13,195,581
TX .............. 47 12.05% 7.485% 146.33 70.3 1.36 $ 138,726,765
VA .............. 6 4.24% 7.231% 143.95 71.5 1.44 $ 48,850,998
WA .............. 5 2.11% 7.460% 158.41 71.4 1.55 $ 24,322,656
WI .............. 2 0.57% 7.797% 113.40 73.1 1.56 $ 6,520,331
-- ------ ----- ------ ---- ---- --------------
Total ......... 303 100.00% 7.424% 132.28 72.2 1.41 $1,150,953,450
=== ====== ===== ====== ==== ==== ==============
</TABLE>
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the close of business on the Cut-off Date, as adjusted for
scheduled principal payments due on the Mortgage Loans on or before the Cut-off
Date. Prior to the issuance of the Certificates, one or more Mortgage Loans may
be removed from the Mortgage Pool if the Depositor deems such removal necessary
or appropriate or if it is prepaid. A limited number of other mortgage loans
may be included in the Mortgage Pool prior to the issuance of the Certificates,
unless including such mortgage loans would materially alter the characteristics
of the Mortgage Pool as described herein. Accordingly, the range of Mortgage
Rates and maturities, as well as the other characteristics of the Mortgage
Loans constituting the Mortgage Pool at the time the Certificates are issued,
may vary from those described herein.
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A Current Report on Form 8-K (the "Form 8-K") will be filed, together with
the Pooling and Servicing Agreement, with the Securities and Exchange
Commission within 15 days after the initial issuance of the Certificates. The
Form 8-K will be available to the Certificateholders promptly after its filing.
In the event that Mortgage Loans are removed from or added to the Mortgage Pool
as set forth in the preceding paragraph, such removal or addition will be noted
in the Form 8-K.
REPRESENTATIONS AND WARRANTIES; REPURCHASE
Under each Underlying Mortgage Loan Purchase Agreement, the related
Mortgage Loan Seller will make certain representations and warranties to the
Transferor, and under the Mortgage Loan Sale Agreement, the Transferor will
make certain representations and warranties to the Depositor. Pursuant to the
terms of such agreements, the related seller will be obligated to cure any
breach of its representations and warranties or to repurchase any Mortgage Loan
from the related purchaser as to which there exists a breach of any such
representation or warranty that materially and adversely affects the interests
of the Certificateholders in such Mortgage Loan. Each such agreement will
include the covenant of the related seller to repurchase any Mortgage Loan from
the related purchaser or cure any such breach within 85 days of receiving
notice thereof. Under the Pooling and Servicing Agreement, the Depositor will
assign its rights under the Mortgage Loan Sale Agreement (and therewith the
rights of the Transferor under the Underlying Mortgage Loan Purchase
Agreements) to the Trustee for the benefit of the Certificateholders. The sole
remedy available to the Trustee or the Certificateholders with respect to the
breach of any such representation or warranty that materially and adversely
affects the interest of the Certificateholders in such Mortgage Loan is the
obligation of the Depositor (and, derivatively, the Transferor) to cure or
repurchase the affected Mortgage Loan.
Such representations and warranties are made as of the date specified in
the related Underlying Mortgage Loan Purchase Agreement with respect to each
Mortgage Loan, and state the following (among other things, and subject to
certain exceptions set forth in the related agreement):
(i) Mortgage Loan Schedule. The information set forth in the mortgage loan
schedule attached thereto is true, complete and correct in all material
respects; provided, however, that with respect to the information set forth
with respect to each Mortgage Loan under the captions "Occ. %," "Occ. as
of," "96 NOI," "97 NOI," "U/W NOI," "U/W Cash Flow" and "U/W DSCR", the
related Mortgage Loan Seller represents only that such information is a
correct and accurate reproduction or derivation, as adjusted by the Seller
in accordance with its customary underwriting practices and procedures, of
the information provided to it by the related Borrower and takes no
responsibility for the accuracy or completeness of any such information
provided by the related Borrower; provided further, however, that the Seller
has no actual knowledge that such information is incorrect, inaccurate or
incomplete following the reasonable and customary due diligence performed by
the Seller in connection with its origination of the Mortgage Loans.
(ii) Mortgage Loans Documents. The related Mortgage Loan Seller has or
will cause to be delivered to the Transferor (or its designee) within the
time period prescribed by each Underlying Mortgage Loan Purchase Agreement
each of the documents comprising the Mortgage File for each Mortgage Loan.
(iii) Payment Current. All payments required to be made with respect to
such Mortgage Loan under the terms of the related promissory note or
Mortgage (inclusive of any applicable grace or cure period) up to the
closing date specified in the related Underlying Mortgage Loan Purchase
Agreement had been made. Within the twelve months preceding such closing
date, there had not been any delinquency in excess of 30 days with respect
to such Mortgage Loan.
(iv) Equity Participation or Participation Interest. Such Mortgage Loan
contains no equity participation by the related Mortgage Loan Seller and is
a whole loan and not a participation interest; neither the related
promissory note nor the related Mortgage provides for negative amortization
or any contingent or additional interest in the form of participation in the
cash flow of the related Mortgaged Property. The related Mortgage Loan
Seller has no ownership interest in such Mortgaged Property or the related
Borrower other than in such Mortgage Loan being sold and assigned.
(v) Compliance with Applicable Laws. As of the date of its origination,
such Mortgage Loan either complied with, or was exempt from, applicable
state or federal laws, regulations and other requirements pertaining to
usury. To the best of the related Mortgage Loan Seller's knowledge, as of
the date of origination of such Mortgage Loan, the related originator
complied in all material respects with the requirements of any and all other
federal, state or local laws applicable to the origination, servicing and
collection of such Mortgage Loan, including, without limitation, truth-in-
lending, real estate settlement procedures, equal credit opportunity and
disclosure laws. No governmental or regulatory approval or consent is
required for the sale of the Mortgage Loan by the related Mortgage Loan
Seller, and the related Mortgage Loan Seller has full right, power and
authority to sell such Mortgage Loan. To the extent necessary to ensure
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the enforceability of the Mortgage Loan and effective transfer, sale and
assignment thereof and of the related promissory note), the originator and
the related Mortgage Loan Seller each was qualified and appropriately
licensed to transact business in the jurisdiction in which the related
Mortgaged Property is located at the time such entity had possession of the
related promissory note.
(vi) Proceeds Fully Disbursed. The proceeds of such Mortgage Loan have
been fully disbursed (although certain reserve accounts controlled by the
related Mortgage Loan Seller may have been established as described in Annex
A), and there is no requirement for future advances thereunder. All costs,
fees and expenses incurred in connection with the origination and closing of
such Mortgage Loan, including, without limitation, recording costs and fees,
have been paid to the appropriate person or arrangements have been made for
their payment to the appropriate person on a timely basis by the related
borrower.
(vii) Documents Valid. Each of the related promissory note, the related
Mortgage and any other related mortgage loan document is the legal, valid
and binding obligation of the related borrower, the related guarantor or
other party executing such document (subject to any non-recourse or partial
recourse provisions contained therein and subject in each case to
limitations to enforceability arising under bankruptcy, insolvency,
reorganization or other similar laws effecting enforcement of creditors'
rights generally, by general principles of equity (whether considered in a
proceeding in equity or at law) or by applicable anti-deficiency law or
statute), enforceable in accordance with its terms. There is no valid
offset, defense, counterclaim or right of rescission with respect to such
promissory note, Mortgage or other document, nor will the operation of any
of the terms of such promissory note or such Mortgage, or the exercise of
any right thereunder, render either such Mortgage or such promissory note
unenforceable or subject to any valid right of rescission, offset,
counterclaim or defense, including without limitation the defense of usury,
and the related Mortgage Loan Seller has no knowledge that any such right of
rescission, offset, counterclaim or defense has been asserted or is
available with respect thereto. The Mortgage and related promissory note do
not require the related mortgagee to release any portion of the related
Mortgaged Property except upon payment in full of the loan or the excercise
of a defeasance feature.
(viii) Assignment of Mortgage: Note Endorsement. The related assignment of
mortgage (but for the insertion of the name of the assignee and any related
recording information which is not yet available to the related Mortgage
Loan Seller) is or will be in recordable form and constitutes or will
constitute the related Mortgage Loan Seller's legal, valid and binding
assignment to the Transferor of the related Mortgage and any related
assignment of leases, rents and profits or assignment of assignment of
leases, rents and profits. The related Mortgage Loan Seller's endorsement
and delivery of the related promissory note to the Transferor in accordance
with the terms of the related Underlying Mortgage Loan Purchase Agreement
constitutes or will constitute the related Mortgage Loan Seller's legal,
valid and binding assignment to the Transferor of such promissory note, and
together with the related Mortgage Loan Seller's execution and delivery of
such assignment of mortgage to the Transferor, legally and validly conveys
or will convey all right, title and interest of the related Mortgage Loan
Seller in such Mortgage Loan to the Transferor.
(ix) First Lien. Based on the related policy of title insurance, the
related Mortgage is a legal, valid and enforceable first lien on the related
Mortgaged Property (including all buildings and improvements on such
Mortgaged Property and all installations and mechanical, electrical,
plumbing, heating and air conditioning systems located in or annexed to such
buildings, and all additions, alterations and replacements made at any time
prior to the closing date of such Mortgage Loan with respect to the
foregoing, but excluding any related personal property), which Mortgaged
Property is free and clear of all encumbrances and liens having priority
over the first lien of such Mortgage, except for (1) the lien of current
real estate taxes and special assessments not yet delinquent or accruing
interest or penalties, (2) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of
recording of such Mortgage which do not materially and adversely (A) affect
the value of such Mortgaged Property as security for such Mortgage Loan, or
(B) interfere with the related Borrower's ability to make required principal
and interest payments or to make use of such Mortgaged Property for the
intended purposes therefor, (3) leases and subleases pertaining to such
Mortgaged Property which the related Mortgage Loan Seller did not require to
be subordinated to the lien of such Mortgage, and (4) other matters to which
like properties are commonly subject which do not, individually or in the
aggregate, materially and adversely (A) affect the value of such Mortgaged
Property as security for such Mortgage Loan, or (B) interfere with the
related borrower's ability to make required principal and interest payments
or to make use of such Mortgaged Property for the intended purposes
therefor.
(x) No Modification, Release or Satisfaction. Neither the related Mortgage
nor the related promissory note (including any amendments or supplements
thereto) has been impaired, waived, modified, altered, satisfied, canceled
or
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subordinated or rescinded, and the related Mortgaged Property has not been
released from the lien of such Mortgage and the related Borrower has not
been released from its obligations under such Mortgage, in whole or in any
part, in each such event in a manner which would materially interfere with
the benefits of the security intended to be provided by such Mortgage except
by a written instrument which has been delivered to the Transferor or its
designee as a part of the related mortgage file.
(xi) Defeasance. Mortgage Loans that permit defeasance provide that, after
the applicable Defeasance Lockout Period, the borrower may obtain the
release of the related Mortgaged Property from the lien of the related
Mortgage upon the pledge to the Trustee of noncallable U.S. Treasury or
other noncallable U.S. government obligations that provide payments on or
prior to all successive payment dates to maturity (or, in the case of the
ARD Loans, through the related Anticipated Repayment Dates) in the amounts
due on such dates and upon the satisfaction of certain other conditions. All
Mortgage Loans containing defeasance provisions have a Defeasance Lockout
Period of not less than two years after the Closing Date, and require that a
REMIC opinion be provided as a condition to exercise of any defeasance
option.
(xii) No Taxes or Assessments Delinquent. Based upon the applicable laws,
rules and regulations of the taxing authorities having jurisdiction over the
related Mortgaged Property (excluding any related personal property), to the
related Mortgage Loan Seller's knowledge no tax or governmental assessment,
or if payable in installments, no installment thereof, which became due and
owing prior to the Closing Date in respect of such Mortgaged Property and
which, if left unpaid, would be, or might become, a lien on such Mortgaged
Property having priority over the related Mortgage has become delinquent
such that (a) such tax, assessment or installment has commenced to accrue
interest or penalties, or (b) any such taxing authority may commence
proceedings to collect such tax, assessment or installment, as applicable.
(xiii) Escrow or Reserve Deposits. As of the date specified in the related
Underlying Mortgage Loan Purchase Agreement: (a) the related reserve
accounts, if any, contain all escrow deposits and other payments required by
the terms of the related mortgage loan documents (inclusive of any
applicable grace or cure period) to be held by the related Mortgage Loan
Seller as of the date specified in the related Underlying Mortgage Loan
Purchase Agreement; and (b) the related Mortgage Loan Seller is transferring
all amounts on deposit in the related Reserve Account(s) on the date
specified in the related Underlying Mortgage Loan Purchase Agreement to the
Transferor. To the extent not being transferred to the Transferor, all
escrow deposits and other payments required under the related promissory
note, the related Mortgage and any other related Mortgage Loan Documents
have been applied in accordance with their intended purposes by the related
mortgage loan originator, Mortgage Loan Seller or its agent.
(xiv) No Third Party Advances. The related Mortgage Loan Seller has not,
directly or indirectly, advanced funds, induced or solicited any payment
from a Person other than the related borrower, or, to the related Mortgage
Loan Seller's knowledge, received any payment other than from such borrower,
for the payment of any amount required under the related promissory note or
the related Mortgage, except for interest accruing from the date of such
promissory note or the date of disbursement of the proceeds of such Mortgage
Loan, whichever is later, to the date which precedes by 30 days the first
Due Date under such promissory note.
(xv) No Condemnation or Damages. To the best of the related Mortgage Loan
Seller's knowledge, no proceedings for the total or partial condemnation of
the related Mortgaged Property (1) have occurred since the date as of which
the appraisal of such Mortgaged Property was prepared, or (2) are pending or
threatened other than, in each such case, proceedings as to partial
condemnation which do not materially and adversely affect the value of such
Mortgaged Property as security for such Mortgage Loan and the related
Mortgaged Property is free of material damage. The related Mortgage requires
that any related condemnation award will be applied either to the
restoration of the related Mortgage Property, the payment of the outstanding
principal balance of or accrued interest on such Mortgage Loan.
(xvi) No Mechanics' Liens. To the knowledge of the related Mortgage Loan
Seller, the related Mortgaged Property (excluding any related personal
property) is free and clear of any mechanics' and materialmen's liens or
liens in the nature thereof, and no rights are outstanding that, under law,
could give rise to any such liens, any of which liens are or may be prior
to, or equal with, the lien of the related Mortgage, except those which are
insured against by the related lender's title insurance policy referred to
in (xx) below.
(xvii) Title Survey: Improvements. (1) The related Mortgage Loan Seller
has delivered an as-built survey, a survey recertification, a site plan, a
recorded plat or the like with respect to such Mortgaged Property which
satisfied, or the
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related Mortgage Loan Seller otherwise satisfied, the requirements of the
related title insurance company for deletion of the standard general
exceptions for encroachments, boundary and other survey matters and for
easements not shown by the public records from the related title insurance
policy, except that with respect to any of the Mortgaged Properties located
in jurisdictions in which the exception for easements not shown by the
public records could not be deleted, and is customarily accepted by prudent
commercial mortgage lenders in such jurisdiction. Except for encroachments
and similar matters which do not materially and adversely affect the value
of such Mortgaged Property as security for such Mortgage Loan, and based on
surveys and/or title insurance obtained at the time of origination, (i) none
of the improvements which were included for the purpose of determining the
appraised value of such Mortgaged Property in the related appraisal at the
time of the origination of such Mortgage Loan lies outside the boundaries
and building restriction lines of such Mortgaged Property, unless insured or
de minimis, and (ii) no improvements on adjoining properties materially
encroach upon such Mortgaged Property so as to materially and adversely
affect the value of such Mortgaged Property as security for such Mortgage
Loan.
(xviii) Title. The related Mortgage Loan Seller is the sole owner and
beneficial holder of such Mortgage Loan, has full right and authority to
sell and assign such Mortgage Loan hereunder, is the sole mortgagee or
beneficiary of record under the related Mortgage and is transferring such
Mortgage Loan to the Transferor free and clear of any and all liens,
encumbrances, participation interests, pledges, charges or security
interests of any nature encumbering such Mortgage Loan.
(xix) Compliance with Laws. To the best of the related Mortgage Loan
Seller's knowledge (based upon a letter or letters from governmental
authorities, a legal opinion, an endorsement or endorsements to the related
title insurance policy, a representation of the related borrower at the time
of origination of such Mortgage Loan or other information acceptable to the
related Mortgage Loan Seller at the time of such purchase), (1) no
improvements located on or forming a part of the related Mortgaged Property
are in violation of any applicable zoning and building laws or ordinances,
(2) the related Mortgaged Property complies with all other laws and
regulations pertaining to the use and occupancy thereof, excluding
Environmental Laws (as defined and addressed in (xxxi) and (xxxii) below),
and all applicable insurance requirements, (3) such Borrower has obtained
all inspections, licenses, permits, authorizations, and certificates
necessary for such compliance, including, but not limited to, certificates
of occupancy (if available), and (4) the related Mortgage Loan Seller has
not received notification from any governmental authority that such
Mortgaged Property violates or does not comply with such laws or regulations
or is being used, operated or occupied unlawfully or that such Borrower has
failed to obtain such inspections, licenses or certificates, except (in the
case of any of clauses (1), (2), (3) or (4)) for such violation or
non-compliance (A) which does not materially and adversely affect the value
of such Mortgaged Property as security for such Mortgage Loan or the use for
which such Mortgaged Property was intended at the time of origination of
such Mortgage Loan, (B) which is specifically addressed by the appraiser in
the determination of the related appraised value, or (C) for which a reserve
account held for the related Mortgage Loan Seller has been established in an
amount sufficient to pay for the estimated costs to correct such violations
or non-compliance.
(xx) Title Insurance. The lien of the related Mortgage is insured by an
ALTA lender's title insurance policy or, if an ALTA lender's title insurance
policy is unavailable, another state-approved form of lender's title
insurance policy issued in an amount not less than the stated principal
amount of such Mortgage Loan (after all advances of principal) insuring the
related Mortgage Loan Seller and its successors and assigns that the related
Mortgage is a valid first lien on the related Mortgaged Property, subject
only to exceptions described in (ix) above (or, if such a title insurance
policy has not yet been issued in respect of any Mortgage Loan, such a
policy will be issued and is currently evidenced by a pro forma or specimen
policy or by a "marked-up" commitment for title insurance which was
furnished by the related title insurance company for purposes of closing
such Mortgage Loan). Such title insurance policy is (or, when issued, will
be) in full force and effect, and upon endorsement and delivery of the
related promissory note to the Transferor and recording of the related
Assignment of Mortgage in favor of the Transferor in the applicable real
estate records, such title insurance policy will inure to the benefit of the
Transferor. Such title insurance policy (1) does not contain the standard
general exceptions for encroachments, boundary or other survey matters and
for easements not shown by the public records, other than such exceptions as
are customarily accepted by prudent commercial mortgage lenders in the
related jurisdiction, and (2) only contains such exceptions for boundary,
encroachments and survey matters as are customarily accepted by prudent
commercial mortgage lenders. The related Mortgage Loan Seller and its agents
have not taken, or omitted to take, any action that would materially impair
the coverage benefits of any such title insurance policy. The related
Mortgage Loan Seller has not made any claim under such title insurance
policy.
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(xxi) Insurance Related to Mortgaged Property. All improvements on the
related Mortgaged Property are insured by (a) a fire and extended perils
insurance policy providing coverage on a full replacement cost basis in an
amount not less than the lesser of (1) the full replacement cost of all
improvements to such Mortgaged Property, and (2) the outstanding principal
balance of such Mortgage Loan, but in any event in an amount sufficient to
avoid the operation of any co-insurance provisions contained in such
insurance policy, which policy contains a standard mortgagee clause naming
the originator or related Mortgage Loan Seller and its successors as
additional insureds; (b) an insurance policy providing business interruption
or rental continuation coverage in an amount not less than 12 months of
operations of such Mortgaged Property; (c) a comprehensive general liability
insurance policy in an amount not less than $1 million per occurrence; and
(d) if any material improvement on such Mortgaged Property is located in an
area identified by the Federal Emergency Management Agency as having special
flood hazards under the National Flood Insurance Act of 1968, as amended, a
flood insurance policy providing coverage in an amount not less than the
lesser of (A) the stated principal amount of the related promissory note,
and (B) the maximum amount of insurance available under the Flood Disaster
Protection Act of 1973, as amended. Each such insurance policy contains a
clause providing that it is not terminable and may not be reduced without 30
days prior written notice to the mortgagee (except that, in the event of
nonpayment of insurance premiums, each such policy provides for termination
upon not less than 10 days prior written notice), and no such notice has
been received by the related Mortgage Loan Seller. With respect to each such
insurance policy, the related Mortgage Loan Seller has received a
certificate of insurance or similar document dated within the last 12 months
to the effect that such policy is in full force and effect. The related
Mortgage and policy of insurance require that any related insurance
proceeds, in excess of a specified amount, will be applied either to the
repair or restoration of all or part of the related Mortgaged Property or to
the payment of the outstanding principal balance of or accrued interest on
such Mortgage Loan.
(xxii) UCC Financing Statements. One or more Uniform Commercial Code
financing statements covering all furniture, fixtures, equipment and other
personal property (1) which are collateral under the related Mortgage or
under a security or similar agreement executed and delivered in connection
with such Mortgage Loan, and (2) in which a security interest can be
perfected by the filing of Uniform Commercial Code financing statement(s)
under applicable law have been filed or recorded (or have been sent for
filing or recording) wherever necessary to perfect under applicable law a
security interest in such furniture, fixtures, equipment and other personal
property.
(xxiii) Default, Breach and Acceleration. To the related Mortgage Loan
Seller's knowledge, there is no default, breach, violation or event of
acceleration existing under the related Mortgage or the related promissory
note and no event (other than failure to make payments due but not yet
delinquent) which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration thereunder. The related Mortgage Loan
Seller has no knowledge that the related Borrower is a debtor in any state
or federal bankruptcy or insolvency proceeding.
(xxiv) Customary Provisions. The related promissory note and the related
Mortgage, together with applicable state law, contain customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the practical realization against the related
Mortgaged Property of the benefits of the security, including, but not
limited to, judicial or, if applicable, nonjudicial foreclosure, subject in
each case to limitations to enforceability arising under bankruptcy,
insolvency, reorganization or other similar laws affecting enforcement of
creditors' rights generally, by general principles of equity (whether
considered in a proceeding in equity or at law) or by applicable
anti-deficiency laws or statutes.
(xxv) Access Routes. Surveys, title insurance reports, the title insurance
policy and other relevant documents contained in the related Mortgage File
indicate that at the time of origination of such Mortgage Loan, (1) the
related borrower had sufficient rights with respect to amenities, ingress
and egress and similar matters identified in the appraisal of the related
Mortgaged Property as being critical to the appraised value thereof, and (2)
such Mortgaged Property was receiving adequate services from public or
private water, sewer and other utilities, none of which is subject to
revocation as a result of a foreclosure or change in ownership of an
adjacent property.
(xxvi) Mortgage Loans Secured by Ground Lease but Not Fee Interest. With
respect to each Mortgage Loan that is secured in whole or in part by the
interest of the related Borrower as lessee under a ground lease of all or a
portion of the related Mortgaged Property (a "Ground Lease"), but the
related fee interest in the portion of such Mortgaged Property covered by
such Ground Lease (the "Fee Interest") is not subject or subordinate to the
lien of the related Mortgage:
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(1) to the knowledge of the related Mortgage Loan Seller (A) such Ground
Lease is in full force and effect, (B) such Ground Lease or a memorandum
thereof has been recorded in the applicable real estate records, (C) such
Ground Lease (or the related estoppel letter or lender protection
agreement between the related Mortgage Loan Seller and related lessor)
does not prohibit the interest of the related lessee thereunder from being
encumbered by the related Mortgage, or a separate written agreement
permitting such encumbrance has been obtained, and (D) there have been no
material changes in the terms of such Ground Lease except as set forth in
written instruments which are part of the related Mortgage File;
(2) except as may be indicated in the related title insurance policy,
the related lessee's leasehold interest in the portion of the related
Mortgaged Property covered by such Ground Lease is not subject to any
liens or encumbrances superior to, or of equal priority with, the related
Mortgage;
(3) the related lessee's interest in such Ground Lease may be
transferred to the Transferor and its successors and assigns through
foreclosure of the related Mortgage or conveyance in lieu of foreclosure
and, thereafter, may be transferred to another Person by the mortgagee and
its successors and assigns, upon notice to, but without the consent of,
the related lessor (or, if any such consent is required, either (A) it has
been obtained prior to the date specified in the related Underlying
Mortgage Loan Purchase Agreement, or (B) it is not to be unreasonably
withheld) provided that such Ground Lease has not been terminated and all
amounts owed thereunder have been paid;
(4) the related lessor is required to give notice of any default under
such Ground Lease by the related lessee to the mortgagee either under the
terms of such Ground Lease (the related lessor having received notice of
the related Mortgage) or under the terms of a separate estoppel letter or
written agreement;
(5) the mortgagee is entitled, under the terms of such Ground Lease or
estoppel letter or a separate written agreement, to receive notice of any
default by the related lessee under such Ground Lease, and after any such
notice is entitled to the time provided to the related lessee under such
Ground Lease to cure such default;
(6) the currently effective term of such Ground Lease (excluding any
extension or renewal which is not binding on the lessor thereunder)
extends not less than 10 years beyond the Maturity Date of the related
Mortgage Loan;
(7) such Ground Lease does not impose any restrictions on subletting
which the related Mortgage Loan Seller considered to be commercially
unreasonable at the time of its origination or purchase, as applicable, of
such Mortgage Loan;
(8) the related Mortgage Loan Seller has not received any notice that
(A) the related lessor under such Ground Lease is asserting a default by
the related lessee or an event of default thereunder, or (B) any event has
occurred which, with the passage of time, the giving of notice, or both
(other than rental or other payments being due, but not yet delinquent),
would result in a default or an event of default under the terms of such
Ground Lease;
(9) the related lessor has agreed that such Ground Lease may not be
amended, modified, cancelled or terminated without the prior written
consent of the related Mortgage Loan Seller and that any such action
without such consent is not binding upon the mortgagee, and the related
lessor is required to enter into a new ground lease upon termination of
such Ground Lease for any reason (including rejection of the Ground Lease
in a bankruptcy proceeding); and
(10) under the terms of such Ground Lease and the related Mortgage,
taken together, any related insurance proceeds or condemnation award
(other than in respect of a total or substantially total loss or taking)
will be applied either to the repair or restoration of all or part of the
related Mortgaged Property covered by such Ground Lease, with the
mortgagee or a trustee appointed by it having the right to hold and
disburse such proceeds as such repair or restoration progresses, or to the
payment of the outstanding principal balance of or accrued interest on
such Mortgage Loan.
(xxvii) Deed of Trust. With respect to any related Mortgage that is a deed
of trust or trust deed, a trustee, duly qualified under applicable law to
serve as such, has either been properly designated and currently so serves
or may be substituted in accordance with applicable law. Except in
connection with a trustee's sale after default by the related Borrower or in
connection with the release of the related Mortgaged Property following the
payment of such Mortgage Loan in full, no fees or expenses are payable by
the related Mortgage Loan Seller or the Transferor to such trustee.
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(xxviii) Cross-Security. The related Mortgaged Property is not collateral
or security for the payment or performance of (1) any other obligations owed
to the related originator or Mortgage Loan Seller other than another
Mortgage Loan being sold and assigned by the related Mortgage Loan Seller
under the related Underlying Mortgage Loan Purchase Agreement, or (2) to the
related Mortgage Loan Seller's knowledge, any other obligations owed to any
Person other than the related Mortgage Loan Seller, except for security
interests in personal property and fixtures. The related promissory note is
not secured by any property other than a Mortgaged Property.
(xxix) Assignment of Leases, Rents and Profits. Unless the related
Mortgaged Property is occupied by the related borrower, the related mortgage
loan documents contain the provisions of an assignment of leases, rents and
profits or include a separate assignment of leases, rents and profits. Any
related assignment of leases, rents and profits incorporated within the
related Mortgage or set forth in a separate mortgage loan document creates
on recordation a valid first priority assignment of, or security interest
in, the right to receive all payments due under the related leases, if any.
(xxx) REMIC. (1) Such Mortgage Loan is principally secured by an interest
in real property and either (A) the fair market value of such real property
was at least equal to 80% of the adjusted issue price of such Mortgage Loan
on the date of origination or, if such Mortgage Loan has been "significantly
modified" within the meaning of Section 1001 of the Code, on the date of
such modification (unless such modification may be disregarded under Treas.
Reg. Sec. 1.860G-2(b)(3)), or (B) substantially all of the proceeds of such
Mortgage Loan were used to acquire or improve or protect an interest in real
property that, at origination, was the only security for such Mortgage Loan;
(2) such Mortgage Loan contains no equity participation by the related
Mortgage Loan Seller, and neither the related promissory note nor the
related Mortgage provides for any contingent or additional interest in the
form of participation in the cash flow or proceeds realized on disposition
of the related Mortgaged Property; and (3) such Mortgage Loan is a
"qualified mortgage" as defined in, and for purposes of, Section 860G of the
Code and provides for the payments of interest at a fixed rate or at a rate
described in Treas. Reg. Sec. 1-806G-1(a)(3).
(xxxi) Environmental Site Assessments. The ESAs, studies or updates
prepared or obtained in connection with the origination of such Mortgage
Loan identified no material adverse environmental conditions or
circumstances anticipated to require any material expenditure with respect
to any Mortgaged Property, except for: (i) those cases where such conditions
or circumstances were investigated further and based upon such additional
investigation, a qualified environmental consultant recommended no further
investigation or remediation; (ii) those cases in which an operations and
maintenance plan was recommended by the environmental consultant and such
plan was obtained or an escrow reserve established to cover the estimated
costs of obtaining such plan; (iii) those conditions in which soil or
groundwater contamination was suspected or identified and either (a) such
condition or circumstance was remediated or abated prior to the date of
closing of the related Mortgage Loan; (b) a No Further Action letter was
obtained from the applicable regulatory authority, or (c) either an
environmental insurance policy was obtained, a letter of credit provided, an
escrow reserve account established, or an indemnity from the responsible
party was obtained, to cover the estimated costs of any required
investigation, testing, monitoring or remediation; or (iv) those cases in
which a leaking underground storage tank or groundwater contamination was
identified to have originated from an offsite property, a responsible party
has been identified under applicable law, and either such condition is not
known to have affected the Mortgaged Property or the responsible party has
either received a No Further Action letter from the applicable regulatory
agency, established a remediation fund, or provided an indemnity or guaranty
to the borrower.
(xxxii) Notice of Environmental Problem. Other than with respect to any
conditions identified in the ESAs, studies or updates referred to in (xxxi)
above, the related Mortgage Loan Seller: (1) has not received actual notice
from any federal, state or other governmental authority of (A) any failure
of the related Mortgaged Property to comply with any applicable
Environmental Laws, or (B) any known or threatened release of Hazardous
Materials on or from such Mortgaged Property in violation of Environmental
Laws; or (2) has not received actual notice from the related Borrower that
(A) such borrower has received any such notice from any such governmental
authority, (B) such Mortgaged Property fails to comply with Environmental
Laws, or (C) has received actual notice that there is any known or
threatened release of Hazardous Materials on or from such Mortgaged Property
in violation of Environmental Laws; or (3) has no actual knowledge that (A)
the related Mortgaged Property fails to materially comply with any
applicable Environmental Law or (B) there has been any known or threatened
release of Hazardous Materials on or from such Mortgaged Property in
material violation of any applicable Environmental Law in contravention of
(xxxi) above.
(xxxiii) Recourse. The related Mortgage Loan Documents contain standard
provisions providing for recourse against the related Borrower for damages
sustained in connection with the Borrower's fraud, material
misrepresentation,
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or misappropriation of any tenant security deposits or rent. The related
Mortgage Loan Documents contain provisions pursuant to which the related
Borrower has agreed to indemnify the mortgagee for damages resulting from
violations of Environmental Laws.
(xxxiv) Leases. With respect to each Mortgage Loan: (1) prior to either
the origination of such Mortgage Loan, the related Mortgage Loan Seller
obtained tenant estoppel certificates from all tenants whose leases covered
more than 10% (20% in the case of any such Mortgage Loan having an original
principal balance less than or equal to $2,500,000) of the net leasable area
of the related Mortgaged Property; and based upon such tenant estoppel
certificates, no material defaults with respect to any such lease existed as
of the date of the related tenant estoppel certificate; and (2) the related
Mortgage Loan Seller has not received any notice of the existence of any
default under any such lease or of the existence of any condition which, but
for the passage of time or the giving of notice, or both, would result in
such a default.
(xxxv) Environmental Compliance. One or more of the related mortgage loan
documents contains either a representation, warranty or covenant that the
related Borrower will not use, cause or permit to exist on the related
Mortgaged Property any Hazardous Materials in violation of Environmental Law
or an indemnity with respect to any such violation in favor of the related
Mortgage Loan Seller.
(xxxvi) Inspection. The related Mortgage Loan Seller has inspected the
related Mortgaged Property or caused such Mortgaged Property to be inspected
within the 12 months preceding the date of the related Underlying Mortgage
Loan Purchase Agreement, except in the case of one Mortgage Loan sold by NR
Finance as to which such inspection occurred 13 months prior to the date of
the related Underlying Mortgage Loan Purchase Agreement.
(xxxvii) Subordinate Debt. Except as disclosed in Annex A, the related
Mortgage contains a provision for the acceleration of the payment of the
unpaid principal balance of such Mortgage Loan in the event that the related
Borrower encumbers the related Mortgaged Property without the prior written
consent of the mortgagee thereunder.
(xxxviii) Common Ownership. No two properties securing Mortgage Loans are
directly or indirectly under common ownership except to the extent that such
common ownership and the ownership structure has been specifically disclosed
in Annex A.
(xxxix) Operating or Financial Statement. The related mortgage loan
documents require the related borrower to furnish to the mortgagee at least
annually an operating statement with respect to the related Mortgaged
Property or, in the case of a borrower-occupied Mortgaged Property, a
financial statement with respect to the related Borrower.
(xl) Litigation. To the knowledge of the related Mortgage Loan Seller,
there is no pending action, suit, proceeding, arbitration or governmental
investigation with respect to the related borrower or Mortgaged Property
which if determined adversely to the related borrower would have a material
adverse effect on the .
(xli) Assisted Living Loans and Nursing Home Loans. With respect to each
Congregate Care Loan and each Nursing Home Loan, the related Mortgage Loan
Seller represents and warrants that:
(a) to the knowledge of such Mortgage Loan Seller, each facility
operator or manager and the related borrower, and the related facility
complies with all federal, state and local laws, regulations, quality and
safety standards, accreditation standards and requirements of the
applicable state department of health (including with respect to physical
plant standards, rate setting, fee splitting, distribution of
pharmaceuticals, equipment, personnel, operating policies and additions to
facilities), and such operator, manager, borrower and facility hold (in
the name of the borrower) all requisite licenses, permits, regulatory
agreements or other approvals necessary or desirable for the use and
operation thereof, and such licenses are in full force and effect, have
not been transferred to any location other than the related facility, have
not been pledged to secure any debt and are held free from conflicts and
restrictions that would materially impair the intended use or operation of
the facility;
(b) to the knowledge of such Mortgage Loan Seller, such facility is in
compliance with all requirements for participation in Medicare and
Medicaid, is in compliance with all insurance, reimbursement and cost
reporting requirements and has a current provider agreement which is in
full force and effect;
(c) to the knowledge of such Mortgage Loan Seller, there is no
threatened or pending revocation, suspension, termination, probation,
restriction, limitation or nonrenewal affecting the related operator,
borrower or Mortgage Loan Seller or any participation or provider
agreement, and there is no threatened or pending proceeding or
investigation by any governmental agency with respect to the related
operator, borrower or Mortgage Loan Seller;
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(d) to the knowledge of such Mortgage Loan Seller, no such facility has
received a "Level A" (or equivalent) violation, and no statement of
charges or deficiencies has been made or penalty imposed on, and no
enforcement action has been undertaken by any governmental agency against
such, facility, the related operator or Mortgage Loan Seller or, to the
knowledge of the related Mortgage Loan Seller, any officer, director or
stockholder of any of them, within the three years preceding the sale of
such Mortgage Loan to the Transferor;
(e) to the knowledge of the related Mortgage Loan Seller, there are no
current or pending Medicaid, Medicare or third-party payor's program
reimbursement audits or appeals pending with respect to such facility;
(f) to the knowledge of the related Mortgage Loan Seller, there are no
current or pending Medicaid, Medicare or third-party payor's program
recoupment efforts with respect to the facility;
(g) to the knowledge of the related Mortgage Loan Seller, the related
borrower has not pledged any accounts receivable relating to the
operations of the facility as security for any debt; and
(h) to the knowledge of the related Mortgage Loan Seller, any existing
management agreement with respect to the operation of the facility is in
full force and effect and neither party thereto has defaulted thereunder
or evidenced intent to terminate or fail to renew such agreement, and,
pursuant to the terms of such agreement and the relevant statutes and
regulations, taken together, in the event such agreement is terminated,
the related borrower, the Trustee or any other successor manager of the
facility need not obtain a certificate of need prior to applying for or
receiving license to operate such facility or prior to receiving payments
from Medicare or Medicaid.
(xlii) ARD Loans. If such Mortgage Loan is an ARD Loan, it commenced
amortizing on its initial scheduled Due Date and provides that: (i) its
Mortgage Rate will increase by no more than five percentage points in
connection with the passage of its Anticipated Repayment Date; (ii) its
Anticipated Repayment Date is not less than seven years following the
origination of such Mortgage Loan; (iii) no later than the related
Anticipated Repayment Date, if it has not previously done so, the related
Mortgagor is required to enter into a "lockbox agreement" whereby all
revenue from the related Mortgaged Property shall be deposited directly into
a designated account controlled by the Servicer; and (iv) any cash flow from
the related Mortgaged Property that is applied to amortize such Mortgage
Loan following its Anticipated Repayment Date shall, to the extent such net
cash flow is in excess of the Monthly Payment payable therefrom, be net of
budgeted and discretionary (servicer approved) capital expenditures.
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Prudential Securities Secured Financing Corporation, formerly known as P-B
Secured Financing Corporation (the "Depositor"), was incorporated in the State
of Delaware on August 26, 1988, as a wholly-owned, limited purpose finance
subsidiary of Prudential Securities Group Inc. (a wholly-owned indirect
subsidiary of The Prudential Insurance Company of America). The Depositor's
principal executive offices are located at One New York Plaza, 18th Floor, New
York, New York 10092. Its telephone number is (212) 214-1000, Attention: David
M. Rodgers.
The only obligations, if any, of the Depositor with respect to a
Certificate will be pursuant to certain limited representations and warranties
and limited undertakings to repurchase or substitute Mortgage Loans under
certain circumstances. The Depositor does not have, nor is it expected in the
future to have, any significant assets.
Neither the Depositor nor Prudential Securities Group Inc. nor any of its
affiliates, including The Prudential Insurance Company of America, will insure
or guarantee the Certificates of any Series.
PRUDENTIAL SECURITIES CREDIT CORP.
Prudential Securities Credit Corp., (the "Transferor"), was incorporated
in the State of Delaware on May 13, 1988, as a wholly-owned, limited purpose
finance subsidiary of Prudential Securities Group Inc. (a wholly-owned indirect
subsidiary of The Prudential Insurance Company of America). The Transferor's
principal executive offices are located at One New York Plaza, 18th Floor, New
York, New York 10092. Its telephone number is (212) 214-1000, Attention: David
M. Rodgers.
The only obligations, if any, of the Transferor with respect to a
Certificate will be pursuant to certain limited representations and warranties
and limited undertakings to repurchase or substitute Mortgage Loans under
certain circumstances.
Neither the Transferor nor Prudential Securities Group Inc. nor any of its
affiliates, including The Prudential Insurance Company of America, will insure
or guarantee the Certificates of any Series.
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MORTGAGE LOAN SELLERS
The Depositor will purchase the Mortgage Loans to be included in the
Mortgage Pool on or before the Closing Date from the Transferor pursuant to the
Mortgage Loan Purchase Agreement. The Transferor will have purchased such
Mortgage Loans from the Mortgage Loan Sellers pursuant to the Underlying
Mortgage Loan Purchase Agreements.
NRFinance is a limited liability company organized under the laws of the
State of Missouri in 1997. It is a wholly-owned, limited purpose finance
subsidiary of NRF, which also is a Missouri limited liability company organized
in 1997. NRF is a real estate financial services company which originates
commercial and multi-family real estate loans, provides loan servicing for
large pools of commercial and multi-family real estate loans, and offers asset
management for other commercial and multi-family real estate assets. NRF has
offices in Chicago, Jersey City, NJ, San Francisco and Kansas City. NRFinance
was organized for the purpose of acquiring loans originated by NRF and holding
them pending securitization or other disposition thereof. The principal offices
of both NRF and NRFinance are located at 911 Main Street, Suite 1400, Kansas
City, Missouri 64105.
Prudential Mortgage Capital Funding, LLC is a limited liability company
organized under the laws of the State of Delaware in 1997. PMCF is a wholly
owned, limited purpose, subsidiary of Prudential Mortgage Capital Company, LLC
(also a Delaware limited liability company organized in 1997). PMCC is a real
estate financial services company which originates commercial and multifamily
real estate loans throughout the United States. PMCF was organized for the
purpose of acquiring loans originated by PMCC and holding them pending
securitization or other disposition. PMCC has offices in Atlanta, Chicago, San
Francisco and Newark. The principal offices of PMCC and of PMCC are located at
4 Gateway Center, 9th Floor, 100 Mulberry Street, Newark, New Jersey 07120.
CIBC Inc. is a wholly-owned subsidiary of Canadian Imperial Holdings Inc.,
incorporated under the laws of Delaware. Canadian Imperial Holdings Inc. is a
wholly-owned subsidiary of CIBC Delaware Holdings Inc., also a Delaware
corporation, which is a subsidiary of Canadian Imperial Bank of Commerce, a
bank chartered under the Bank Act of Canada having its head office in the City
of Toronto, in the Province of Ontario, Canada, and licensed to do business in
the United States of America through its Agency located at 425 Lexington
Avenue, New York, New York 10017. CIBC Inc. is a commercial finance company
that originates commercial and multi-family real estate loans, purchases
participations in loans from third-party lenders and otherwise extends credit
to Fortune 1000 companies. CIBC Inc. has offices in Atlanta, Chicago, Houston,
Dallas, San Francisco, Los Angeles and New York. The principal office of CIBC
Inc. is located at 425 Lexington Avenue, New York, New York 10017.
CIBC Inc. is an affiliate of CIBC Oppenheimer Corp. Although CIBCOPCO is
an indirect, wholly owned subsidiary of Canadian Imperial Bank of Commerce, it
is solely responsible for its contractual obligations and commitments, and any
securities products offered or recommended or purchased or sold in any client
accounts (i) will not be insured by the Federal Deposit Insurance Corporation,
(ii)will not be deposits or other obligations of CIBC, (iii) will not be
endorsed or guaranteed by CIBC, and (iv) will be subject to investment risks,
including possible loss of principal invested.
UNDERWRITING GUIDELINES AND PROCESS
Each Mortgage Loan Seller that is an originator of Mortgage Loans has
developed a set of underwriting guidelines and procedures, and each Mortgage
Loan Seller that has purchased Mortgage Loans from another entity either
provided the originator with its own set of underwriting guidelines and
procedures, or received from, reviewed and found acceptable, a set of
underwriting guidelines and procedures prepared by such originator. Although
the underwriting guidelines and procedures developed or approved by each of the
Mortgage Loan Sellers are not identical, the following description of certain
aspects of the underwriting of the Mortgage Loans applies to each Mortgage Loan
Seller and the related originators, except where otherwise noted. In some
instances, one or more provisions of the guidelines were waived or modified
where it was determined not to adversely affect the Mortgage Loans in any
material respect.
Property Analysis. The mortgage loan originator is required to perform a
site inspection to evaluate the location and quality of each Mortgaged
Property. Such inspection includes an evaluation of functionality, design,
attractiveness, visibility, and accessibility, as well as convenience to major
thoroughfares, transportation centers, employment sources, retail areas and
educational or recreational facilities. The mortgage loan originator also is
required to assess the submarket in which the property is located to evaluate
competitive or comparable properties as well as market trends. In addition, the
mortgage loan originator is to evaluate the property's age, physical condition,
operating history, lease and tenant mix, and management.
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Cash flow Analysis. The mortgage loan originator is required to review
operating statements provided by the Mortgagor and to make adjustments in order
to determine the debt service coverage ratio ("DSCR"). See "Description of the
Mortgage Pool-Certain Characteristics of the Mortgage Loans" herein.
Appraisal and Loan-to-Value Ratio. All of the Mortgaged Properties were
appraised in connection with the origination of the related Mortgage Loans.
Each such appraisal was in compliance with the Code of Professional Ethics and
Standards of Professional Conduct of the Appraisal Institute and the Uniform
Standards of Professional Appraisal Practice as adopted by the Appraisal
Standards Board of the Appraisal Foundation and accepted and incorporated into
the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as
amended ("FIRREA"). The mortgage loan originator is required to determine the
loan-to-value ratio ("LTV") of the Mortgage Loan at the date of origination
based on the value set forth in the appraisal.
Evaluation of Borrower. The mortgage loan originator is required to
evaluate the Mortgagor and its principals with respect to credit history and
prior experience as an owner and operator of commercial real estate properties.
The evaluation generally is to include obtaining and reviewing a credit report
or other reliable indication of the Mortgagor's financial capacity; obtaining
and verifying credit references and/or business and trade references; and
obtaining and reviewing certifications provided by the Mortgagor as to prior
real estate experience and current contingent liabilities. Finally, although
the Mortgage Loans generally are non-recourse in nature, in the case of certain
Mortgage Loans, the Mortgagor and certain principals thereof may be required to
assume legal responsibility for liabilities relating to fraud,
misrepresentation, misappropriation of funds, breach of environmental or
hazardous waste requirements or unauthorized transfer of title to the property.
The mortgage loan originator is required to evaluate the financial capacity of
the borrower and such principals to meet any obligations that may arise with
respect to such liabilities.
Environmental Site Assessments. The mortgage loan originator is required
at origination to obtain or update an ESA or similar study for each Mortgaged
Property prepared by a qualified environmental firm approved by the mortgage
loan originator. The mortgage loan originator is required to review the ESA.
Based on such reviews, the Mortgage Loan Sellers have informed the Depositor
that with the exceptions described herein under "Description of the Mortgage
Loan Pool--Certain Characteristics of the Mortgage Pool--Environmental Risks,"
the ESAs, studies or updates identified no material adverse environmental
conditions or circumstances anticipated to require any material expenditure
with respect to any Mortgaged Property. Such information was based upon the
ESAs, studies or updates and has not been independently verified by the
Mortgage Loan Sellers, the Depositor, the Transferor, or any of their
respective affiliates.
Physical Assessment Report. The mortgage loan originator is required at
origination to obtain a physical assessment report ("PAR") for each Mortgaged
Property prepared by a qualified structural engineering firm approved by the
mortgage loan originator. The mortgage loan originator is required to review
the PAR to verify that the property is reported to be in satisfactory physical
condition, and to determine the anticipated costs of necessary repair,
replacement and major maintenance or capital expenditure needs over the term of
the Mortgage Loan. In cases in which the PAR identifies material repairs or
replacements needed immediately, the mortgage loan originator is generally
obligated to require the Mortgagor to carry out such repairs or replacements
prior to the origination of the Mortgage Loan, or to place sufficient funds in
escrow at the time of origination of the Mortgage Loan to complete such repairs
or replacements within not more than twelve months.
Title Insurance Policy. The Mortgagor is required to provide, and the
mortgage loan originator is required to review, a title insurance policy for
each Mortgaged Property. The title insurance policy must meet the following
requirements: (a) approval by the mortgage loan originator of the financial
condition of the title insurer or reinsurer (unless the insurer or the
reinsurer is on a list of insurers or reinsurers approved by the mortgage loan
originator); (b) the policy must be written by a title insurer licensed to do
business in the jurisdiction where the Mortgaged Property is located, (c) the
policy must be in an amount equal to the original principal balance of the
Mortgage Loan, (d) the protection and benefits must run to the mortgagee and
its successors and assigns, (e) the policy should be written on a standard
policy form of the American Land Title Association or an equivalent policy
promulgated in the jurisdiction where the Mortgaged Property is located and (f)
the legal description of the Mortgaged Property in the title policy must
conform to that shown on the survey of the Mortgaged Property, where a survey
has been required. PMCC does not require (a) above.
Property Insurance. The Mortgagor is required to provide, and the mortgage
loan originator is required to review, certificates of required insurance with
respect to the Mortgaged Property. Such insurance generally may include: (1)
commercial general liability insurance for bodily injury or death and property
damage; (2) an "All Risk of Physical Loss" policy or standard extended coverage
policy; (3) if applicable, boiler and machinery coverage; (4) if the Mortgaged
Property
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is located in a flood hazard area, flood insurance; and (5) such other coverage
(including in each case other than where a Major Tenant is self-insured or has
independently procured similar insurance, rental loss insurance and business
interruption insurance) as the Mortgage loan originator may require based on
the specific characteristics of the Mortgaged Property.
Underwriting Process. In general, the underwriting process begins with the
receipt of a loan submission from a prospective Mortgagor or independent
mortgage banker working on behalf of a prospective Mortgagor. Upon receiving a
loan submission, the mortgage loan originator typically will perform a
preliminary cash flow analysis and a general evaluation of the loan submission.
If the mortgage loan originator decides to offer the prospective Mortgagor
financing based on the preliminary analysis, the mortgage loan originator
provides the prospective Mortgagor with a loan application or a conditional
loan commitment and the prospective Mortgagor must deposit an application fee
with the Mortgage loan originator. Upon receipt of the loan application or a
conditional loan commitment, the mortgage loan originator generally performs a
more detailed cash flow analysis and obtains a property inspection report.
After the loan evaluation is completed and the prospective loan is approved,
the mortgage loan originator issues a final commitment to the prospective
Mortgagor. The mortgage loan originators' commitments are subject to certain
requirements such as insurance, appraisal values, satisfactory third-party
reports and escrow requirements for repairs identified by the related physical
site assessments. All of the mortgage loan originators require the prospective
Mortgagor to deposit a non-refundable commitment fee. At closing, the Mortgagor
must provide satisfactory title insurance, evidence of satisfaction of zoning
requirements, evidence of satisfactory property insurance and satisfactory
legal opinions of Mortgagor's counsel, and must satisfy other closing
requirements typically required by institutional lenders.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement and will consist of 19 Classes to be designated as the Class A-1A
Certificates, Class A-1B Certificates, Class A-2MF Certificates, Class A-EC
Certificates, Class B Certificates, Class C Certificates, Class D Certificates,
Class E Certificates, Class F Certificates, Class G Certificates, Class H
Certificates, Class J Certificates, Class K Certificates, Class L Certificates,
Class M Certificates, Class N-1 Certificates, Class N-2 Certificates, Class R-I
Certificates and Class R-II Certificates. Only the Class A-1A, Class A-1B,
Class A-2MF, Class B, Class C, Class D and Class E Certificates are offered
hereby. The initial Certificate Balance or Notional Balance of each Class of
Offered Certificates is expected to be the balance set forth on the cover of
this Prospectus Supplement, subject to a permitted variance of plus or minus
5%, depending on the aggregate principal balance of the Mortgage Loans actually
transferred to the Trust Fund.
The Pooling and Servicing Agreement will be included as part of the Form
8-K to be filed with the Commission within 15 days after the Closing Date. See
"The Pooling and Servicing Agreement" herein and "Description of the
Certificates" and "Servicing of the Mortgage Loans" in the Prospectus for more
important additional information regarding the terms of the Pooling and
Servicing Agreement and the Certificates.
The Certificates represent in the aggregate the entire beneficial
ownership interest in a Trust Fund consisting primarily of: (i) the Mortgage
Loans, all scheduled payments of interest and principal due after the Cut-off
Date (whether or not received) and all payments under and proceeds of the
Mortgage Loans received after the Cut-off Date (exclusive of payments of
principal and interest due on or before the Cut-off Date); (ii) any REO
Property; (iii) such funds or assets as from time to time are deposited in the
Collection Account, the Distribution Account and any account established in
connection with REO Properties (an "REO Account"); (iv) the rights of the
mortgagee under all insurance policies with respect to the Mortgage Loans; (v)
the Depositor's rights and remedies under the Mortgage Loan Purchase Agreement,
including rights with respect to enforcement of repurchase obligations of the
Mortgage Loan Sellers in connection with any breaches of representations and
warranties concerning the Mortgage Loans pursuant to the Underlying Mortgage
Loan Purchase Agreements; and (vi) all of the related mortgagee's right, title
and interest in the Reserve Accounts.
The Certificate Balance of any Class of Certificates outstanding at any
time represents the maximum amount that the holders thereof are entitled to
receive as distributions allocable to principal from the cash flow on the
Mortgage Loans and the other assets in the Trust Fund. The respective
Certificate Balance of each Class of Certificates will in each case be reduced
by amounts actually distributed on such Class that are allocable to principal
and by any Realized Losses allocated to such Class. The Class A-EC and Class
N-2 Certificates are interest only Certificates, have no Certificate Balances
and are not entitled to distributions in respect of principal. The Class N-1
Certificates are principal only certificates and are not entitled to
distributions in respect of interest.
DISTRIBUTIONS
Method, Timing and Amount. Distributions on the Regular Certificates will
be made on the 15th day of each month or, if such day is not a Business Day,
then on the next succeeding Business Day, commencing on September 17, 1998,
provided that no such day shall be fewer than four Business Days after the
related Determination Date (each, a "Distribution Date"). All distributions
(other than the final distribution on any Certificate) will be made by the
Trustee to the persons in whose names the Certificates are registered at the
close of business on the last Business Day of the month preceding the month in
which such Distribution Date occurs (the "Record Date"). Such distributions
will be made (i) by wire transfer of immediately available funds to the account
specified by the related Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder (a) is DTC or its
nominee or (b) provides the Trustee with wiring instructions no less than five
Business Days prior to the related Record Date and is the registered owner of
Certificates the aggregate Certificate Balance or Notional Balance of which is
at least $50,000, or otherwise (ii) by check mailed to such Certificateholder.
The final distribution on any Certificate will be made in like manner, but only
upon presentment or surrender of such Certificate at the location specified in
the notice to the holder thereof of such final distribution. The "Class A-EC
Notional Balance" as of any date is equal to the sum of the Certificate
Balances of the Class A-1A, Class A-1B, Class A-2MF, Class B, Class C, Class D,
Class E, Class F, Class G, Class H, Class J Certificates, Class K Certificates,
Class L Certificates, Class M Certificates and Class N-1 Certificates.
All distributions made with respect to a Class of Certificates on each
Distribution Date will be allocated pro rata among the outstanding Certificates
of such Class based on their respective Percentage Interests. The "Percentage
Interest"
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evidenced by any Regular Certificate will be equal to the initial denomination
thereof as of the Closing Date divided by the initial Certificate Balance (or,
with respect to the Class A-EC and Class N-2 Certificates, the initial Class
A-EC Notional Balance or initial Class N-2 Notional Balance) of the related
Class. The "Class A-EC Notional Balance" as of any date will be equal to the
sum of the Certificate Balances of the Class A-1A, Class A-1B, Class A-2MF,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class
K, Class L, Class M and Class N-1 Certificates. The "Class N-2 Notional
Balance" as of any date will be equal to the Certificate Balance of the Class
N-1 Certificates. The Class A-EC and Class N-2 Notional Balances are referred
to herein generally as "Notional Balances."
The aggregate distribution to be made on the Regular Certificates on any
Distribution Date will equal the Available Funds. The "Available Funds" for a
Distribution Date will be the sum of all previously undistributed Monthly
Payments or other receipts on account of principal of and interest on or in
respect of the Mortgage Loans (including Unscheduled Payments and Net REO
Proceeds, if any) received by the Master Servicer in the related Collection
Period, including all P&I Advances made by the Master Servicer or the Trustee,
as applicable, in respect of such Distribution Date, plus all other amounts
required to be placed in the Collection Account by the Master Servicer pursuant
to the Pooling and Servicing Agreement allocable to the Mortgage Loans
(including any Appraisal Reduction Excess Collections), but excluding the
following:
(a) amounts payable in respect of the Trustee Fee for the related
Collection Period (which amount will be paid to the Trustee prior to any
other allocations or distributions on each Distribution Date);
(b) amounts permitted to be used to reimburse the Master Service or the
Trustee, as applicable, for previously unreimbursed Advances and interest
thereon as described herein under "The Pooling and Servicing
AgreementAdvances;"
(c) the Servicing Fee payable with respect to each Mortgage Loan;
(d) all amounts in the nature of late fees, late charges and similar fees,
"insufficient funds" check charges, loan modification fees, extension fees,
loan service transaction fees, demand fees, beneficiary statement charges,
assumption fees and similar fees, which the Master Servicer or the Special
Servicer, as applicable, is entitled to retain as additional servicing
compensation;
(e) all amounts representing scheduled Monthly Payments due after the Due
Date in the related Collection Period (such amounts to be treated as
received on the Due Date when due);
(f) that portion of (i) amounts received in connection with the
liquidation of Specially Serviced Mortgage Loans, by foreclosure, trustee's
sale or otherwise, (ii) amounts received in connection with a sale of a
Specially Serviced Mortgage Loan or REO Property in accordance with the
terms of the Pooling and Servicing Agreement, (iii) amounts (other than
Insurance Proceeds) received in connection with the taking of a Mortgaged
Property by exercise of the power of eminent domain or condemnation
("Condemnation Proceeds"; clauses (i), (ii) and (iii) are collectively
referred to as "Liquidation Proceeds"), or (iv) proceeds of the insurance
policies (to the extent such proceeds are not to be applied to the
restoration of the Mortgaged Property or released to the borrower in
accordance with the normal servicing procedures of the Master Servicer or
the related sub-servicer, subject to the terms and conditions of the related
Mortgage and promissory note) ("Insurance Proceeds") with respect to a
Mortgage Loan that represents any unpaid servicing compensation to which the
Master Servicer or Special Servicer is entitled;
(g) all amounts representing certain expenses reimbursable to the Master
Servicer, the Special Servicer or the Trustee and other amounts permitted to
be retained by the Master Servicer or the Special Servicer or withdrawn by
the Master Servicer from the Collection Account pursuant to the terms of the
Pooling and Servicing Agreement;
(h) Prepayment Premiums, Yield Maintenance Charges and Excess Interest
received in the related Collection Period, which are distributed separately
as described herein;
(i) any interest or investment income on funds on deposit in the
Collection Account or in Permitted Investments in which such funds may be
invested; and
(j) Default Interest received in the related Collection Period with
respect to a Mortgage Loan that is in default with respect to its Balloon
Payment.
The "Monthly Payment" with respect to any Mortgage Loan for any
Distribution Date (other than any REO Mortgage Loan) is the scheduled monthly
payment of principal and interest, excluding any Balloon Payment, that is
payable by the
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related borrower on the related Due Date. The Monthly Payment with respect to
an REO Mortgage Loan for any Distribution Date is the monthly payment that
would otherwise have been payable on the related Due Date had the related
Mortgage Loan not been discharged (after giving effect to any extension or
other modification), determined as set forth in the Pooling and Servicing
Agreement.
"Unscheduled Payments" are all Liquidation Proceeds, Condemnation Proceeds
and Insurance Proceeds payable under the Mortgage Loans, the Repurchase Price
of any Mortgage Loans that are repurchased or purchased pursuant to the Pooling
and Servicing Agreement and any other payments under or with respect to the
Mortgage Loans not scheduled to be made, including Principal Prepayments, but
excluding Prepayment Premiums, Yield Maintenance Charges and Excess Interest,
which are distributed separately.
"Prepayment Premiums" are payments received on a Mortgage Loan as the
result of a Principal Prepayment thereon, not otherwise due thereon in respect
of principal or interest, which are intended to be a disincentive to
prepayment.
"Net REO Proceeds", with respect to any REO Property and any related
Mortgage Loan, are all revenues received by the Special Servicer with respect
to such REO Property or REO Mortgage Loan that do not constitute Liquidation
Proceeds, net of any insurance premiums, taxes, assessments and other costs and
expenses permitted to be paid from the related REO Account pursuant to the
Pooling and Servicing Agreement.
"Principal Prepayments" are payments of principal made by a borrower on a
Mortgage Loan that are received in advance of the scheduled Due Date for such
payments and that are not accompanied by an amount of interest representing the
full amount of scheduled interest due on any date or dates in any month or
months subsequent to the month of prepayment.
The "Collection Period", with respect to a Distribution Date, is the
period beginning on the day following the Determination Date in the month
preceding the month in which such Distribution Date occurs (or, in the case of
the Distribution Date occurring in September 1998, on the day after the Cut-off
Date) and ending on the Determination Date in the month in which such
Distribution Date occurs.
"Determination Date" means the 11th day of any month, or if such 11th day
is not a Business Day, the Business Day immediately preceding such 11th day,
commencing on September 11, 1998.
"Default Interest" with respect to any Mortgage Loan, is interest accrued
on such Mortgage Loan at the excess of the Default Rate over the Mortgage Rate.
The "Default Rate", with respect to any Mortgage Loan, is the annual rate
at which interest accrues on such Mortgage Loan following any event of default
on such Mortgage Loan, including a default in the payment of a Monthly Payment
or a Balloon Payment.
Priorities. As used below in describing the priorities of distribution of
Available Funds for each Distribution Date, the terms set forth below will have
the following meanings.
"Class Interest Distribution Amount" with respect to any Distribution Date
and any of the P&I Certificates and the Class A-EC and Class N-2 Certificates
will equal interest for the related Interest Accrual Period at the applicable
Pass-Through Rate for such Class of Certificates for such Interest Accrual
Period on the Certificate Balance or Notional Balance of such Class.
The Class N-1 Certificates are principal only Certificates and have no
Class Interest Distribution Amount.
For purposes of determining any Class Interest Distribution Amount, any
distributions in reduction of Certificate Balances (and any resulting
reductions in Notional Balances) as a result of allocations of Realized Losses
on the Distribution Date occurring in such Interest Accrual Period will be
deemed to have been made as of the first day of such Interest Accrual Period.
Notwithstanding the foregoing, the Class Interest Distribution Amount for each
Class of Certificates otherwise calculated as described above will be reduced
by such Class' pro rata share of any Prepayment Interest Shortfall not offset
by Prepayment Interest Surplus (pro rata according to each Class Interest
Distribution Amount determined without regard to this sentence).
"Prepayment Interest Shortfall" with respect to any Distribution Date and
any Mortgage Loan as to which a Principal Prepayment was made by the related
borrower during the related Collection Period is the amount by which (i) 30
full days
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of interest at the related Net Mortgage Rate on the Scheduled Principal Balance
of such Mortgage Loan in respect of which interest would have been due in the
absence of such Principal Prepayment on the Due Date next succeeding the date
of such Principal Prepayment exceeds (ii) the amount of interest received from
the related borrower in respect of such Mortgage Loan during such Collection
Period. Such shortfall may result because interest on a Principal Prepayment is
paid by the related borrower only to the date of prepayment or because no
interest is paid on a Principal Prepayment, to the extent that such Principal
Prepayment is applied to reduce the principal balance of the related Mortgage
Loan as of the Due Date preceding the date of prepayment. Prepayment Interest
Shortfalls with respect to each Distribution Date (to the extent not offset as
provided in the following two sentences) will be allocated to each Class of
Certificates pro rata based on such Class's Class Interest Distribution Amount
(without taking into account the amount of Prepayment Interest Shortfalls to
such Class on such Distribution Date) for such Distribution Date. The amount of
any Prepayment Interest Shortfall with respect to any Distribution Date will be
offset by the Master Servicer first by the amount of any Prepayment Interest
Surplus and then up to an amount equal to the aggregate Servicing Fees to which
the Master Servicer would otherwise be entitled on such Distribution Date. If
the Master Servicer and the Special Servicer are the same person, any remaining
Prepayment Interest Shortfall after the application of the prior sentence will
be offset by the aggregate Special Servicing Fees to which the Special Servicer
would otherwise be entitled on such Distribution Date.
"Prepayment Interest Surplus" with respect to any Distribution Date and
any Mortgage Loan as to which a Principal Prepayment was made by the related
borrower during the related Collection Period is the amount by which (i) the
amount of interest received from the related borrower in respect of such
Mortgage Loan during such Collection Period exceeds (ii) 30 full days of
interest at the related Net Mortgage Rate on the Scheduled Principal Balance of
such Mortgage Loan in respect of which interest would have been due in the
absence of such Principal Prepayment on the Due Date next succeeding the date
of such Principal Prepayment. The Master Servicer will be entitled to retain
any Prepayment Interest Surplus as additional servicing compensation to the
extent not required to offset Prepayment Interest Shortfalls as described in
the preceding paragraph.
The "Pass-Through Rate" for any Class of Regular Certificates is the per
annum rate at which interest accrues on the Certificates of such Class during
any Interest Accrual Period, and is set forth under "Executive Summary" herein.
The "Weighted Average Net Mortgage Rate" for any Interest Accrual Period
is a per annum rate equal to the weighted average of the Net Mortgage Rates as
of the first day of such Interest Accrual Period. The "Net Mortgage Rate" for
each Mortgage Loan is the Mortgage Rate for such Mortgage Loan in the absence
of a default and exclusive of Excess Interest, minus the related Servicing Fee
Rate and the Trustee Fee Rate.
The "Interest Accrual Period" with respect to any Distribution Date is the
calendar month preceding the month in which such Distribution Date occurs.
Interest for each Interest Accrual Period is calculated based on a 360-day year
consisting of twelve 30-day months.
"Class Interest Shortfall" means on any Distribution Date for any Class of
Certificates, the excess, if any, of the amount of interest required to be
distributed to the holders of such Class of Certificates on such Distribution
Date over the amount of interest actually distributed to such holders. No
interest will accrue on unpaid Class Interest Shortfalls.
The "Pooled Principal Distribution Amount" for any Distribution Date will
be equal to the sum (without duplication) of:
(i) the principal component of all scheduled Monthly Payments (other than
Balloon Payments) that become due (regardless of whether received) on the
Mortgage Loans during the related Collection Period;
(ii) the principal component of all Assumed Scheduled Payments, as
applicable, deemed to become due (regardless of whether received) during the
related Collection Period with respect to any Balloon Loan that is
delinquent in respect of its Balloon Payment;
(iii) the Scheduled Principal Balance of each Mortgage Loan that was,
during the related Collection Period, repurchased from the Trust Fund in
connection with the breach of a representation or warranty as described
herein under "Description of the Mortgage Pool--Representations and
Warranties; Repurchase" or purchased from the Trust Fund as described herein
under "Description of the Certificates--Early Termination";
(iv) the portion of Unscheduled Payments allocable to principal of any
Mortgage Loan that was liquidated during the related Collection Period;
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(v) the principal component of all Balloon Payments received during the
related Collection Period;
(vi) all other Principal Prepayments received in the related Collection
Period; and
(vii) all other full or partial recoveries in respect of principal,
including Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds
and Net REO Proceeds.
The "Assumed Scheduled Payment" is an amount deemed due in respect of (i)
any Mortgage Loan that is delinquent in respect of its Balloon Payment and (ii)
any REO Mortgage Loan, which will be equal to the Monthly Payment that would
have been due on the Mortgage Loan in accordance with the terms of the related
Mortgage Loan if: (a) the originally scheduled maturity date or extended
maturity date for such Mortgage Loan had not occurred, (b) the related
Mortgaged Property had not become an REO Property, such Mortgage Loan was still
outstanding and no acceleration of the Mortgage Loan had occurred, and (c) in
the case of any Mortgage Loan that provided for amortization of principal prior
to its maturity date, principal continued to amortize on the same amortization
schedule.
An "REO Mortgage Loan" is any Mortgage Loan as to which the related
Mortgaged Property has become an REO Property.
On each Distribution Date, holders of each Class of Certificates will
receive distributions, up to the amount of Available Funds, in the amounts and
in the order of priority (the "Available Funds Allocation") set forth below:
(i) concurrently, (a) from Available Funds for Loan Group 1, to the Class
A-1A Certificates and Class A-1B Certificates, pro rata in accordance with
the Class Interest Distribution Amount of each, up to an amount equal to the
Class Interest Distribution Amount of each such Class for such Distribution
Date plus, for each such Class, an amount equal to the aggregate unpaid
Class Interest Shortfalls previously allocated to such Class on any previous
Distribution Dates and not paid, (b) from Available Funds for Loan Group 2,
to the Class A-2MF Certificates, up to an amount equal to the Class Interest
Distribution Amount for such Class for such Distribution Date, plus an
amount equal to the aggregate unpaid Class Interest Shortfalls previously
allocated to such Class on any previous Distribution Dates and not paid, and
(c) from Available Funds for both Loan Groups, to the Class A-EC
Certificates, up to an amount equal to the Class Interest Distribution
Amount for such Class for such Distribution Date, plus an amount equal to
the aggregate unpaid Class Interest Shortfalls previously allocated to such
Class on any previous Distribution Dates and not paid; provided that if,
with respect to any Distribution Date, such Available Funds are insufficient
to make any such distribution, then Available Funds for both Loan Groups
will be allocated among such Classes pro rata, in proportion to their
respective Class Interest Distribution Amounts without regard to Loan
Groups;
(ii) to the Class A-2MF Certificates, in reduction of the Certificate
Balance thereof until the Certificate Balance thereof is reduced to zero, up
to an amount equal to the A-2MF Principal Distribution Amount for such
Distribution Date;
(iii) to the Class A-1A, Class A-1B and Class A-2MF Certificates, in
reduction of the Certificate Balances thereof, the remaining Pooled
Principal Distribution Amount for such Distribution Date first to the Class
A-1A Certificates until the Certificate Balance of the Class A-1A
Certificates has been reduced to zero, second to the Class A-1B Certificates
until the Certificate Balance of the Class A-1B Certificates has been
reduced to zero and, thereafter, to the Class A-2MF Certificates until the
Certificate Balance of the Class A-2MF Certificates has been reduced to
zero;
(iv) to the Class A-1A Certificates, Class A-1B Certificates and Class
A-2MF Certificates, pro rata, based upon the unreimbursed amounts of
Realized Losses, of each such Class, if any, the remaining Available Funds
up to an amount equal to the aggregate of such unreimbursed Realized Losses;
(v) to the Class B Certificates, up to an amount equal to the Class
Interest Distribution Amount of such Class for such Distribution Date;
(vi) to the Class B Certificates, up to an amount equal to the aggregate
unpaid Class Interest Shortfalls previously allocated to such Class on any
previous Distribution Dates and not paid;
(vii) after the Certificate Balances of the Class A-1A, Class A-1B and
Class A-2MF Certificates each have been reduced to zero, to the Class B
Certificates, in reduction of the Certificate Balance thereof, the Pooled
Principal Distribution Amount for such Distribution Date less the portion
thereof distributed on such Distribution Date pursuant to any preceding
clause, until the Certificate Balance thereof is reduced to zero;
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(viii) to the Class B Certificates, for the unreimbursed amounts of
Realized Losses of such Class, if any, up to an amount equal to the
aggregate of such unreimbursed Realized Losses;
(ix) to the Class C Certificates, up to an amount equal to the Class
Interest Distribution Amount of such Class for such Distribution Date;
(x) to the Class C Certificates, up to an amount equal to the aggregate
unpaid Class Interest Shortfalls previously allocated to such Class on any
previous Distribution Dates and not paid;
(xi) after the Certificate Balance of the Class B Certificates has been
reduced to zero, to the Class C Certificates, in reduction of the
Certificate Balance thereof, the Pooled Principal Distribution Amount for
such Distribution Date less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause, until the Certificate
Balance thereof is reduced to zero;
(xii) to the Class C Certificates, for the unreimbursed amounts of
Realized Losses of such Class, if any, up to an amount equal to the
aggregate of such unreimbursed Realized Losses;
(xiii) to the Class D Certificates, up to an amount equal to the Class
Interest Distribution Amount of such Class for such Distribution Date;
(xiv) to the Class D Certificates, up to an amount equal to the aggregate
unpaid Class Interest Shortfalls previously allocated to such Class on any
previous Distribution Dates and not paid;
(xv) after the Certificate Balance of the Class C Certificates has been
reduced to zero, to the Class D Certificates, in reduction of the
Certificate Balance thereof, the Pooled Principal Distribution Amount for
such Distribution Date less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause, until the Certificate
Balance thereof is reduced to zero;
(xvi) to the Class D Certificates, for the unreimbursed amounts of
Realized Losses of such Class, if any, up to an amount equal to the
aggregate of such unreimbursed Realized Losses;
(xvii) to the Class E Certificates, up to an amount equal to the Class
Interest Distribution Amount of such Class for such Distribution Date;
(xviii) to the Class E Certificates, up to an amount equal to the
aggregate unpaid Class Interest Shortfalls previously allocated to such
Class on any previous Distribution Dates and not paid;
(xix) after the Certificate Balance of the Class D Certificates has been
reduced to zero, to the Class E Certificates, in reduction of the
Certificate Balance thereof, the Pooled Principal Distribution Amount for
such Distribution Date less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause, until the Certificate
Balance thereof is reduced to zero;
(xx) to the Class E Certificates, for the unreimbursed amounts of Realized
Losses of such Class, if any, up to an amount equal to the aggregate of such
unreimbursed Realized Losses;
(xxi) to the Class F Certificates, up to an amount equal to the Class
Interest Distribution Amount of such Class for such Distribution Date;
(xxii) to the Class F Certificates, up to an amount equal to the aggregate
unpaid Class Interest Shortfalls previously allocated to such Class on any
previous Distribution Dates and not paid;
(xxiii) after the Certificate Balance of the Class E Certificates has been
reduced to zero, to the Class F Certificates, in reduction of the
Certificate Balance thereof, the Pooled Principal Distribution Amount for
such Distribution Date less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause, until the Certificate
Balance thereof is reduced to zero;
(xxiv) to the Class F Certificates, for the unreimbursed amounts of
Realized Losses of such Class, if any, up to an amount equal to the
aggregate of such unreimbursed Realized Losses;
(xxv) to the Class G Certificates, up to an amount equal to the Class
Interest Distribution Amount of such Class for such Distribution Date;
(xxvi) to the Class G Certificates, up to an amount equal to the aggregate
unpaid Class Interest Shortfalls previously allocated to such Class on any
previous Distribution Dates and not paid;
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(xxvii) after the Certificate Balance of the Class F Certificates has been
reduced to zero, to the Class G Certificates, in reduction of the
Certificate Balance thereof, the Pooled Principal Distribution Amount for
such Distribution Date less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause, until the Certificate
Balance thereof is reduced to zero;
(xxviii) to the Class G Certificates, for the unreimbursed amounts of
Realized Losses of such Class, if any, up to an amount equal to the
aggregate of such unreimbursed Realized Losses;
(xxix) to the Class H Certificates, up to an amount equal to the Class
Interest Distribution Amount of such Class for such Distribution Date;
(xxx) to the Class H Certificates, up to an amount equal to the aggregate
unpaid Class Interest Shortfalls previously allocated to such Class on any
previous Distribution Dates and not paid;
(xxxi) after the Certificate Balance of the Class G Certificates has been
reduced to zero, to the Class H Certificates, in reduction of the
Certificate Balance thereof, the Pooled Principal Distribution Amount for
such Distribution Date less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause, until the Certificate
Balance thereof is reduced to zero;
(xxxii) to the Class H Certificates, for the unreimbursed amounts of
Realized Losses of such Class, if any, up to an amount equal to the
aggregate of such unreimbursed Realized Losses;
(xxxiii) to the Class J Certificates, up to an amount equal to the Class
Interest Distribution Amount of such Class for such Distribution Date;
(xxxiv) to the Class J Certificates, up to an amount equal to the
aggregate unpaid Class Interest Shortfalls previously allocated to such
Class on any previous Distribution Dates and not paid;
(xxxv) after the Certificate Balance of the Class H Certificates has been
reduced to zero, to the Class J Certificates, in reduction of the
Certificate Balance thereof, the Pooled Principal Distribution Amount for
such Distribution Date less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause, until the Certificate
Balance thereof is reduced to zero;
(xxxvi) to the Class J Certificates, for the unreimbursed amounts of
Realized Losses of such Class, if any, up to an amount equal to the
aggregate of such unreimbursed Realized Losses;
(xxxvii) to the Class K Certificates, up to an amount equal to the Class
Interest Distribution Amount of such Class for such Distribution Date;
(xxxviii) to the Class K Certificates, up to an amount equal to the
aggregate unpaid Class Interest Shortfalls previously allocated to such
Class on any previous Distribution Dates and not paid;
(xxxix) after the Certificate Balance of the Class J Certificates has been
reduced to zero, to the Class K Certificates, in reduction of the
Certificate Balance thereof, the Pooled Principal Distribution Amount for
such Distribution Date less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause, until the Certificate
Balance thereof is reduced to zero;
(xl) to the Class K Certificates, for the unreimbursed amounts of Realized
Losses of such Class, if any, up to an amount equal to the aggregate of such
unreimbursed Realized Losses;
(xli) to the Class L Certificates, up to an amount equal to the Class
Interest Distribution Amount of such Class for such Distribution Date;
(xlii) to the Class L Certificates, up to an amount equal to the aggregate
unpaid Class Interest Shortfalls previously allocated to such Class on any
previous Distribution Dates and not paid;
(xliii) after the Certificate Balance of the Class K Certificates has been
reduced to zero, to the Class L Certificates, in reduction of the
Certificate Balance thereof, the Pooled Principal Distribution Amount for
such Distribution Date less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause, until the Certificate
Balance thereof is reduced to zero;
(xliv) to the Class L Certificates, for the unreimbursed amounts of
Realized Losses of such Class, if any, up to an amount equal to the
aggregate of such unreimbursed Realized Losses;
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(xlv) to the Class M Certificates, up to an amount equal to the Class
Interest Distribution Amount of such Class for such Distribution Date;
(xlvi) to the Class M Certificates, up to an amount equal to the aggregate
unpaid Class Interest Shortfalls previously allocated to such Class on any
previous Distribution Dates and not paid;
(xlvii) after the Certificate Balance of the Class L Certificates has been
reduced to zero, to the Class M Certificates, in reduction of the
Certificate Balance thereof, the Pooled Principal Distribution Amount for
such Distribution Date less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause, until the Certificate
Balance thereof is reduced to zero;
(xlviii) to the Class M Certificates, for the unreimbursed amounts of
Realized Losses of such Class, if any, up to an amount equal to the
aggregate of such unreimbursed Realized Losses;
(xlix) to the Class N-2 Certificates, up to an amount equal to the Class
Interest Distribution Amount of such Class for such Distribution Date;
(l) to the Class N-2 Certificates, up to an amount equal to the aggregate
unpaid Class Interest Shortfalls previously allocated to such Class on any
previous Distribution Dates and not paid;
(li) after the Certificate Balance of the Class M Certificates has been
reduced to zero, to the Class N-1 Certificates, in reduction of the
Certificate Balance thereof, the Pooled Principal Distribution Amount for
such Distribution Date less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause, until the Certificate
Balance thereof is reduced to zero;
(lii) to the Class N-1 Certificates, for the unreimbursed amounts of
Realized Losses of such Class, if any, up to an amount equal to the
aggregate of such unreimbursed Realized Losses; and
(liii) any remaining funds shall be distributed to the Residual
Certificates.
All references to pro rata in the preceding clauses shall mean pro rata
based on the amount distributable pursuant to such clause.
Additional Master Servicer or Special Servicer compensation, interest on
Advances, extraordinary expenses of the Trust Fund and other similar items will
create a shortfall in Available Funds, which generally will result in a Class
Interest Shortfall for the most subordinate Class then outstanding.
Distributions of Principal After Senior Principal Distribution Cross-Over
Date. Notwithstanding anything to the contrary herein or in the Pooling and
Servicing Agreement, on each Distribution Date on and after the Senior
Principal Distribution Cross-Over Date, and in any event on the final
Distribution Date in connection with the termination of the Trust Fund, all
distributions of principal to the Class A-1A, Class A-1B and Class A-2MF
Certificates will be paid to holders of such Classes of Certificates, pro rata
in accordance with their respective Certificate Balances outstanding
immediately prior to such Distribution Date, until the Certificate Balance of
each such Class of Certificates is reduced to zero.
The "Senior Principal Distribution Cross-Over Date" will be the first
Distribution Date as of which the aggregate Certificate Balance of the Class
A-1A, Class A-1B and Class A-2MF Certificates outstanding immediately prior
thereto exceeds the sum of (i) the aggregate Scheduled Principal Balance of the
Mortgage Loans that will be outstanding immediately following such Distribution
Date and (ii) the portion of the Available Distribution Amount for such
Distribution Date that will remain after the distribution of interest to be
made on the Senior Certificates on such Distribution Date has been made.
Prepayment Premiums. All of the Mortgage Loans, representing 100% of the
Initial Pool Balance, generally provide that a prepayment be accompanied by the
payment of either a Prepayment Premium or Yield Maintenance Charge for all or a
portion of the period during which such prepayments are permitted.
On each Distribution Date, Prepayment Premiums collected on the Mortgage
Loans in Loan Group 1 during the related Collection Period will be distributed
as follows by the Trustee to the holders of the following Classes of Regular
Certificates: to the Class A-1A, Class A-1B, Class B, Class C, Class D and
Class E Certificates, an amount equal to the product of (a) a fraction whose
numerator is the amount distributed as principal to such Class on such
Distribution Date, and whose denominator is the total amount distributed as
principal to the Class A-1A, Class A-1B, Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class J, Class K, Class L, Class M and Class N-1
Certificates on such Distribution Date, (b) 25%
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and (c) the total amount of Prepayment Premiums relating to the Mortgage Loans
in Loan Group 1 collected during such Collection Period. In the event that
Unscheduled Principal Payments from Mortgage Loans in Loan Group 1 are
distributed to holders of the Class A-2MF Certificates, the related prepayment
premium otherwise allocable to holders of the Class A-1A, Class A-1B, Class B,
Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class
L, Class M, or Class N-1 Certificates, if any, shall be allocated in proportion
to the unscheduled principal payments distributed to the holders of each class
entitled to such payments. Any Prepayment Premiums relating to the Mortgage
Loans in Loan Group 1 collected during the related Collection Period and
remaining after such distributions will be distributed to the holders of the
Class A-EC Certificates.
On each Distribution Date, Prepayment Premiums collected on the Mortgage
Loans in Loan Group 2 during the related Collection Period will be distributed
as follows by the Trustee to the holders of the Class A-2MF Certificates: An
amount equal to the product of (a) a fraction, not greater than 1, whose
numerator is the amount distributed as principal to such Class on such
Distribution Date, and whose denominator is the total amount distributed as
principal prepayments on such Distribution Date from the Mortgage Loans in Loan
Group 2, (b) 25% and (c) the total amount of Prepayment Premiums relating to
the Mortgage Loans in Loan Group 2 collected during the related Collection
Period. In the event that Unscheduled Principal Payments from Mortgage Loans in
Loan Group 2 are distributed to holders of the Certificate Classes other than
the Class A-2MF Certificates, the related prepayment premium, otherwise
allocable to the holders of the Class A-2MF Certificates, if any, shall be
allocated in proportion to the holders of each class entitled to such payment.
Any Prepayment Premiums relating to the Mortgage Loans in Loan Group 2
collected during the related Collection Period and remaining after such
distributions will be distributed to the holders of the Class A-EC
Certificates.
On each Distribution Date, Yield Maintenance Charges collected on the
Mortgage Loans in Loan Group 1 during the related Collection Period will be
distributed by the Trustee to the following Classes of Offered Certificates: to
the Class A-1A, Class A-1B, Class B, Class C, Class D and Class E Certificates,
in an amount equal to the product of (a) a fraction whose numerator is the
amount distributed as principal to such Class on such Distribution Date, and
whose denominator is the total amount distributed as principal to the Class
A-1A, Class A-1B, Class B, Class C, Class D, Class E, Class F, Class G, Class
H, Class J, Class K, Class L, Class M and Class N-1 Certificates on such
Distribution Date, (b) the Base Interest Fraction for the related principal
prepayment and such Class of Certificates, and (c) the aggregate amount of
Yield Maintenance Charges relating to the Mortgage Loans in Loan Group 1
collected on such principal prepayments during the related Collection Period.
Any Yield Maintenance Charges relating to the Mortgage Loans in Loan Group 1
collected during the related Collection Period remaining after such
distributions will be distributed to the holders of the Class A-EC
Certificates.
On each Distribution Date, Yield Maintenance Charges collected on the
Mortgage Loans in Loan Group 2 during the related Collection Period will be
distributed by the Trustee to the Class A-2MF Certificates, in an amount equal
to the product of (a) a fraction, not greater than 1, whose numerator is the
amount distributed as principal to such Class on such Distribution Date, and
whose denominator is the total amount distributed as principal prepayments on
such Distribution Date from the Mortgage Loans in Loan Group 2, (b) the Base
Interest Fraction for the related principal prepayment and such Class of
Certificates, and (c) the aggregate amount of Yield Maintenance Charges
relating to the Mortgage Loans in Loan Group 2 collected on such principal
prepayments during the related Collection Period. Any Yield Maintenance Charges
relating to the Mortgage Loans in Loan Group 2 collected during the related Due
Period remaining after such distributions will be distributed to the holders of
the Class A-EC Certificates.
The "Base Interest Fraction" with respect to any principal prepayment on
any Mortgage Loan and with respect to any Class of Offered Certificates is a
fraction (a) whose numerator is the amount, if any, by which (i) the
Pass-Through Rate on such Class of Certificates exceeds (ii) the Yield Rate
used in calculating the Yield Maintenance Charge with respect to such principal
prepayment and (b) whose denominator is the amount, if any, by which the (i)
Mortgage Rate on such Mortgage Loan exceeds (ii) Yield Rate used in calculating
the Yield Maintenance Charge with respect to such principal prepayment;
provided, however, that under no circumstances shall the Base Interest Fraction
be greater than one. If such Yield Rate is greater than or equal to the lesser
of (x) the Mortgage Rate on such Mortgage Loan and (y) the Pass-Through Rate
described in the preceding sentence, then the Base Interest Fraction shall
equal zero.
Notwithstanding the foregoing, if a penalty is imposed on the basis of a
formula that requires payment at the greater of a Yield Maintenance Charge or a
minimum amount equal to a fixed percentage of the Scheduled Principal Balance
of the Mortgage Loan, and the latter is the greater amount, then the penalty so
collected will be allocated as described above with respect to Prepayment
Premiums rather than as described above with respect to Yield Maintenance
Charges. A substantial number of those Mortgage loans which have a Yield
Maintenance Charge also feature a fixed Prepayment Penalty for a specified
period of time. For detailed information see Annex A.
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No Prepayment Premiums or Yield Maintenance Charges will be distributed to
holders of the Class F, Class G, Class H, Class J, Class K, Class L, Class M,
Class N-1, Class N-2 or Residual Certificates. Instead, after the Certificate
Balances of the Class A-1A, Class A-1B, Class A-2MF, Class B, Class C, Class D
and Class E Certificates have been reduced to zero, all Prepayment Premiums and
Yield Maintenance Charges will be distributed to holders of the Class A-EC
Certificates. For a description of Prepayment Premiums and Yield Maintenance
Charges, see "Description of the Mortgage Pool--Certain Terms and Provisions of
the Mortgage Loans--Prepayment Provisions." See also "Certain Legal Aspects of
the Mortgage Loans--Enforceability of Certain Provisions--Prepayment
Provisions" in the Prospectus.
Notwithstanding the foregoing, Prepayment Premiums will be distributed on
any Distribution Date only to the extent they are received in respect of the
Mortgage Loans in the related Collection Period.
Default Interest with Respect to Balloon Payments. Default Interest
received with respect to a Mortgage Loan that is in default with respect to its
Balloon Payment will be distributed on such Distribution Date to the holders of
the Class of Certificates that is entitled to distributions in respect of
principal on such Distribution Date; provided that if more than one Class of
Certificates is entitled to distributions in respect of principal on such
Distribution Date, the amount of such Default Interest will be allocated among
such Classes pro rata in accordance with their respective Certificate Balances
immediately prior to said Distribution Date.
Realized Losses. Realized Losses on Mortgage Loans included in the
Mortgage Pool will be allocated to the Regular Certificates that have
Certificate Balances (other than the Senior Certificates) in reverse sequential
order, until the Certificate Balances thereof are reduced to zero, and then
among the Class A-1A, Class A-1B and Class A-2MF Certificates on a pro rata
basis. Realized Losses allocated to the Class N-1 Certificates will reduce the
Class N-2 Notional Balance, and Realized Losses allocated to the Class A-1A,
Class A-1B, Class A-2MF, Class B, Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K, Class L, Class M or Class N-1 Certificates will
reduce the Class A-EC Notional Balance As referred to herein, the "Realized
Loss" with respect to any Distribution Date will mean the amount, if any, by
which (i) the aggregate Certificate Balance after giving effect to
distributions made on such Distribution Date exceeds (ii) the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the Due Date in the
month in which such Distribution Date occurs. Any amounts recovered in respect
of any amounts previously written off as Realized Losses will be distributed to
the Classes of Certificates in reverse order of allocation of Realized Losses
thereto.
Notwithstanding anything to the contrary contained herein or in the
Pooling and Servicing Agreement, the aggregate amount of Available Funds
distributable will be reduced by the aggregate amount of any indemnification
payments made from amounts comprising assets of the Trust Fund to any person
under the Pooling and Servicing Agreement. Such reduction amounts otherwise
distributable to a Class shall be allocated first in respect of interest and
second in respect of principal. For purposes of determining Class Interest
Shortfalls and Certificate Balances, the amount of any such reduction so
allocated to a Class shall be deemed to have been distributed to such Class.
See "Servicing of the Mortgage Loans--Certain Matters With Respect to the
Master Servicer, the Special Servicer, the Trustee and the Depositor" in the
Prospectus.
The "Scheduled Principal Balance" of any Mortgage Loan as of any Due Date
will be the principal balance of such Mortgage Loan as of such Due Date, after
giving effect to (i) any Principal Prepayments, prepayments that do not include
prepayment premiums or other unscheduled recoveries of principal and any
Balloon Payments received during the related Collection Period and (ii) any
payment in respect of principal, if any, due on or before such Due Date (other
than a Balloon Payment, but including the principal portion of any Assumed
Scheduled Payment, if applicable), irrespective of any delinquency in payment
by the borrower. The Scheduled Principal Balance of any REO Mortgage Loan is
equal to the principal balance thereof outstanding on the date that the related
Mortgaged Property became an REO Property minus any Net REO Proceeds allocated
to principal on such REO Mortgage Loan and reduced by the principal component
of Monthly Payments due thereon on or before such Due Date. With respect to any
Mortgage Loan, from and after the date on which the Master Servicer makes a
determination that it has recovered all amounts that it reasonably expects to
be finally recoverable (a "Final Recovery Determination"), the Scheduled
Principal Balance thereof will be zero.
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SCHEDULED FINAL DISTRIBUTION DATE
The "Scheduled Final Distribution Date" with respect to any Class of
Certificates is the Distribution Date on which the aggregate Certificate
Balance or aggregate Notional Balance, as the case may be, of such Class of
Certificates would be reduced to zero based on the assumptions set forth below.
Such Distribution Date shall in each case be as follows:
<TABLE>
<CAPTION>
CLASS SCHEDULED FINAL DISTRIBUTION DATE
- ------------------------ ----------------------------------
<S> <C>
Class A-1A ........... September 15, 2007
Class A-1B ........... July 15, 2008
Class A-2MF .......... July 15, 2008
Class A-EC ........... July 15, 2018
Class B .............. July 15, 2008
Class C .............. May 15, 2010
Class D .............. January 15, 2013
Class E .............. January 15, 2013
Class F .............. February 15, 2013
Class G .............. April 15, 2013
Class H .............. April 15, 2013
Class J .............. May 15, 2013
Class K .............. September 15, 2013
Class L .............. September 15, 2015
Class M .............. December 15, 2017
Class N-1 ............ July 15, 2018
Class N-2 ............ July 15, 2018
</TABLE>
The Scheduled Final Distribution Dates set forth above (the "Scheduled
Final Distribution Dates") were calculated without regard to any delays in the
collection of Balloon Payments and without regard to a reasonable liquidation
time with respect to any Mortgage Loans that may become delinquent.
Accordingly, in the event of defaults on the Mortgage Loans, the actual final
Distribution Date for one or more Classes of the Certificates may be later, and
could be substantially later, than the related Scheduled Final Distribution
Date(s).
In addition, the Scheduled Final Distribution Dates set forth above were
calculated assuming no prepayments (involuntary or voluntary), no exercise of
defeasance options, no Early Termination, payment in full of ARD Loans on the
related Anticipated Repayment Dates, no defaults, no condemnations, no
modifications and no extensions. Since the rate of payment (including
prepayments) of the Mortgage Loans can be expected to exceed the scheduled rate
of payments, and could exceed such scheduled rate by a substantial amount, the
actual final Distribution Date for one or more Classes of the Certificates may
be earlier, and could be substantially earlier, than the related scheduled
Final Distribution Date(s). The rate of payments (including prepayments) on the
Mortgage Loans will depend on the characteristics of the Mortgage Loans, as
well as on the prevailing level of interest rates and other factors, and no
assurance can be given as to actual payment experience.
SUBORDINATION
As a means of providing a certain amount of protection to the holders of
the Senior Certificates against losses associated with delinquent and defaulted
Mortgage Loans, the rights of the holders of the Subordinate Certificates to
receive distributions of interest and principal, as applicable, will be
subordinated to such rights of the holders of the Senior Certificates. Each
Class of Subordinate Certificates (other than the Residual Certificates) will
likewise be protected by the subordination of all Classes of Certificates
having lower Class designations. This subordination will be effected in two
ways: (i) by the preferential right of the holders of a Class of Certificates
to receive on any Distribution Date the amounts of interest (including
shortfalls in interest on prior Distribution Dates) and principal, as
applicable, distributable in respect of such Certificates on such date prior to
any distribution being made on such Distribution Date in respect of any Classes
of Certificates subordinate thereto and (ii) by the allocation of Realized
Losses, first, to the Class N-1 Certificates, second, to the Class M
Certificates, third, to the Class L Certificates, fourth, to the Class K
Certificates, fifth, to the Class J Certificates, sixth, to the Class H
Certificates, seventh, to the Class G Certificates, eighth, to the Class F
Certificates, ninth, to the Class E Certificates, tenth, to the Class D
Certificates, eleventh to the Class C Certificates, twelfth, to the Class B
Certificates and,
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finally, to the Class A-1A, Class A-1B and Class A-2MF Certificates, pro rata,
in each case in reduction of the Certificate Balance of such Class until the
Certificate Balance thereof is reduced to zero. No other form of credit
enhancement will be provided for the benefit of the holders of the Offered
Certificates.
ADDITIONAL RIGHTS OF THE RESIDUAL CERTIFICATES
The Residual Certificates will remain outstanding for as long as the Trust
Fund exists. Holders of the Residual Certificates are not entitled to regular
or scheduled distributions in respect of principal, interest or Prepayment
Premiums. Holders of the Residual Certificates are not expected to receive any
distributions until after the Certificate Balances of all other Classes of
Certificates have been reduced to zero, and then will receive distributions
only to the extent of any Available Funds remaining on any Distribution Date
and any remaining assets of the REMICs, if any, on the final Distribution Date
for the Certificates, after distributions in respect of any accrued but unpaid
interest on the Certificates and after distributions in respect of principal
have reduced the Certificate Balances of the Regular Certificates to zero.
A holder of a greater than 50% Percentage Interest of the Class R-I
Certificates may, under certain circumstances, purchase the remaining assets of
the Trust Fund, thereby effecting the termination of the Trust REMICs. See
"--Early Termination" herein.
EARLY TERMINATION
The holder of the Class R-I Certificates representing greater than a 50%
Percentage Interest of the Class R-I Certificates, and, if such holder does not
exercise this option, the Master Servicer and, if the Master Servicer does not
exercise this option, the Depositor, will have the option to purchase all of
the Mortgage Loans and all property acquired in respect of any Mortgage Loan
remaining in the Trust Fund, and thereby effect termination of the Trust Fund
and early retirement of the then outstanding Certificates, on any Distribution
Date on which the aggregate Scheduled Principal Balance of the Mortgage Loans
remaining in the Trust Fund is less than 1% of the Initial Pool Balance. The
purchase price payable upon the exercise of such option on such a Distribution
Date will be an amount equal to the greater of (i) the sum of (A) 100% of the
outstanding principal balance of each Mortgage Loan included in the Trust Fund
as of the last day of the month preceding such Distribution Date (less any
Advances previously made on account of principal); (B) the fair market value of
all other property included in the Trust Fund as of the last day of the month
preceding such Distribution Date, as determined by an independent appraiser as
of a date not more than 30 days prior to the last day of the month preceding
such Distribution Date; (C) all unpaid interest accrued on such principal
balance of each such Mortgage Loan (including any Mortgage Loan as to which
title to the related Mortgaged Property has been acquired) at the Mortgage Rate
to the last day of the month preceding such Distribution Date (less any
Advances previously made on account of interest); and (D) unreimbursed Advances
with interest thereon at the Advance Rate, unpaid servicing compensation and
unpaid Trust Fund expenses; or (ii) the aggregate fair market value of the
Mortgage Loans and all other property acquired in respect of any Mortgage Loan
in the Trust Fund, on the last day of the month preceding such Distribution
Date, as determined by an independent appraiser as of a date not more than 30
days prior to the last day of the month preceding such Distribution Date,
together with one month's interest thereon at the related Mortgage Rate, plus
disposition expenses. See "--Additional Rights of the Residual Certificates"
above.
Under the circumstances described under "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans--Excess Interest," the
holders of 100% of the Class N-1 Certificates will have the option to purchase
any ARD Loan on or after its Anticipated Repayment Date at a price equal to its
outstanding Scheduled Principal Balance plus accrued and unpaid interest and
unreimbursed Advances made with respect thereto (with interest thereon). The
exercise of this option may accelerate repayment of certain Certificates, but
is not expected to result in repayment of all Classes on the same Distribution
Date.
DELIVERY, FORM AND DENOMINATION
Book-Entry Certificates. No Person acquiring a Class A-1A, Class A-1B,
Class A-2MF, Class B, Class C, Class D or Class E Certificate (each such
Certificate, a "Book-Entry Certificate") will be entitled to receive a physical
certificate representing such Certificate, except under the limited
circumstances described below. Absent such circumstances, the Book-Entry
Certificates will be registered in the name of a nominee of DTC and beneficial
interests therein will be held by investors ("Beneficial Owners") through the
book-entry facilities of DTC, as described herein, in denominations of $50,000
initial Certificate Balance or Notional Balance and integral multiples of $1.00
in excess thereof, except one certificate of each
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such Class may be issued that represents a different initial Certificate
Balance or Notional Balance to accommodate the remainder of the initial
Certificate Balance or Notional Balance of such Class. The Depositor has been
informed by DTC that its nominee will be Cede & Co. Accordingly, Cede & Co. is
expected to be the holder of record of the Book-Entry Certificates.
No Beneficial Owner of a Book-Entry Certificate will be entitled to
receive a definitive Certificate (a "Definitive Certificate") representing such
person's interest in the Book-Entry Certificates except as set forth below.
Unless and until Definitive Certificates are issued to Beneficial Owners in
respect of the Book-Entry Certificates under the limited circumstances
described herein, all references to actions taken by Certificateholders or
holders will, in the case of the Book-Entry Certificates, refer to actions
taken by DTC upon instructions from its participants, and all references herein
to distributions, notices, reports and statements to Certificateholders or
holders will, in the case of the Book-Entry Certificates, refer to
distributions, notices, reports and statements to DTC or Cede & Co., as the
case may be, for distribution to Beneficial Owners in accordance with DTC
procedures. DTC may discontinue providing its services as securities depository
with respect to the Book-Entry Certificates at any time by giving reasonable
notice to the Trustee. Under such circumstances, in the event that a successor
securities depository is not obtained, certificates are required to be printed
and delivered. The Trustee, the Master Servicer, the Special Servicer and the
Certificate Registrar may for all purposes, including the making of payments
due on the Book-Entry Certificates, deal with DTC as the authorized
representative of the Beneficial Owners with respect to such Certificates.
The Depository Trust Company ("DTC") is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to Section
17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold
securities for its participating organizations ("Participants") and to
facilitate the clearance and settlement of securities transactions among
Participants through electronic computerized book-entry charges in
Participants' accounts, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers (including
the Underwriters), banks, trust companies and clearing corporations and certain
other organizations. The Rules applicable to DTC and its participants are on
file with the Securities and Exchange Commission. Indirect access to the DTC
system also is available to banks, brokers, dealers, trust companies and other
institutions that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc.
Purchases of Book-Entry Certificates under the DTC system must be made by
or through Direct Participants, which will receive a credit for the Book-Entry
Certificates on DTC's records. The ownership interest of each Beneficial Owner
is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchase, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the Beneficial
Owner entered into the transaction. Transfers of ownership interests in the
Book-Entry Certificates are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in the Certificates
except in the event that use of the book-entry system for the Book-Entry
Certificates is discontinued. Neither the Certificate Registrar nor the Trustee
will have any responsibility to monitor or restrict the transfer of ownership
interests in Book-Entry Certificates through the book-entry facilities of DTC.
To facilitate subsequent transfers, all Book-Entry Certificates deposited
by Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Book-Entry Certificates with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Book-Entry Certificates; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Book-Entry Certificates are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Beneficial Owners will not be recognized as Certificateholders, as such term is
used in the Pooling and Servicing Agreement, by the Trustee or any paying agent
(each, a "Paying Agent") appointed by the Trustee. Beneficial Owners will be
permitted to exercise the rights of Certificateholders only indirectly through
DTC and its Participants.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners, will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
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Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Beneficial
Owner to pledge Book-Entry Certificates to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
Book-Entry Certificates, may be limited due to lack of a definitive Certificate
for such Book-Entry Certificates. In addition, under a book-entry format,
Beneficial Owners may experience delays in their receipt of payments, since
distributions will be made by the Trustee or a Paying Agent on behalf of the
Trustee to Cede & Co., as nominee for DTC.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Book-Entry Certificates. Under its usual procedures, DTC mails an Omnibus Proxy
to the Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts the Securities are credited on that record date (identified
in a listing attached to the Omnibus Proxy). DTC may take conflicting actions
with respect to Percentage Interests or Voting Rights to the extent that
Participants whose holdings of Book-Entry Certificates evidence such Percentage
Interests or Voting Rights authorize divergent action.
Neither the Depositor, the Trustee, the Master Servicer, the Special
Servicer nor any Paying Agent 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 registered in the name of Cede & Co.,
as nominee for DTC, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests. In the event of the insolvency
of DTC, a Participant or an Indirect Participant in whose name Book-Entry
Certificates are registered, the ability of the Beneficial Owners of such
Book-Entry Certificates to obtain timely payment may be impaired. In addition,
in such event, if the limits of applicable insurance coverage by the Securities
Investor Protection Corporation are exceeded or if such coverage is otherwise
unavailable, ultimate payment of amounts distributable with respect to such
Book-Entry Certificates may be impaired.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Depositor believes to be reliable, but
the Depositor takes no responsibility for the accuracy thereof.
Physical Certificates. The Class A-EC, Class F, Class G, Class H, Class J,
Class K, Class L, Class M, Class N-1, Class N-2, Class R-I and Class R-II
Certificates will be issued in fully registered certificated form only. The
Class A-EC, Class F, Class G, Class H, Class J, Class K, Class L, Class M,
Class N-1 and Class N-2 Certificates will be issued in denominations of $50,000
initial Certificate Balance or Notional Balance, as applicable, and integral
multiples of $1.00 in excess thereof, except one Certificate of each such Class
may be issued that represents a different initial Certificate Balance or
Notional Balance to accommodate the remainder of the initial Certificate
Balance or Notional Balance. The Residual Certificates will be issued in
definitive, physical, registered form in Percentage Interests of 25% and
integral multiples of a 5% Percentage Interest in excess thereof.
Book-Entry Certificates will be converted to Definitive Certificates and
reissued to Beneficial Owners or their nominees, rather than to DTC or its
nominee, only if (i)(A) the Depositor advises the Certificate Registrar in
writing that DTC is no longer willing or able to discharge properly its
responsibilities as Depository with respect to any Class of the Book-Entry
Certificates and (B) the Depositor is unable to locate a qualified successor or
(ii) the Depositor, at its option, advises the Trustee and Certificate
Registrar that it elects to terminate the book-entry system through DTC with
respect to any Class of the Book-Entry Certificates.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Certificate Registrar will be required to notify all affected
Beneficial Owners through DTC of the availability of Definitive Certificates.
Upon surrender by DTC of the physical certificates representing the affected
Book-Entry Certificates and receipt of instructions for re-registration, the
Certificate Registrar will reissue the Book-Entry Certificates as Definitive
Certificates to the Beneficial Owners. Upon the issuance of Definitive
Certificates for purposes of representing ownership of the Class A-1A, Class
A-1B, Class A-2MF, Class B, Class C, Class D or Class E Certificates, the
registered holders of such Definitive Certificates will be recognized as
Certificateholders under the Pooling and Servicing Agreement and, accordingly,
will be entitled directly to receive payments on, and exercise Voting Rights
with respect to, and to transfer and exchange such Definitive Certificates.
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee or the Certificate Registrar in accordance with the
terms of the Pooling and Servicing Agreement.
REGISTRATION AND TRANSFER
Subject to the restrictions on transfer and exchange set forth in the
Pooling and Servicing Agreement, the holder of any Definitive Certificate may
transfer or exchange the same in whole or part (in a principal amount equal to
the minimum
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authorized denomination or any integral multiple thereof) by surrendering such
Definitive Certificate at the corporate trust office of the certificate
registrar appointed pursuant to the Pooling and Servicing Agreement (the
"Certificate Registrar") or at the office of any transfer agent, together with
an executed instrument of assignment and transfer in the case of transfer and a
written request for exchange in the case of exchange. In exchange for any
Definitive Certificate properly presented for transfer or exchange with all
necessary accompanying documentation, the Certificate Registrar will, within
five Business Days of such request if made at the corporate trust office of the
Certificate Registrar, or within ten Business Days if made at the office of a
transfer agent (other than the Certificate Registrar), execute and deliver at
such corporate trust office or the office of the transfer agent, as the case
may be, to the transferee (in the case of transfer) or holder (in the case of
exchange) or send by first class mail at the risk of the transferee (in the
case of transfer) or holder (in the case of exchange) to such address as the
transferee or holder, as applicable, may request, a Definitive Certificate or
Definitive Certificates, as the case may require, for a like aggregate
Certificate Balance or Notional Balance, as applicable, and in such authorized
denomination or denominations as may be requested. The presentation for
transfer or exchange of any Definitive Certificate will not be valid unless
made at the corporate trust office of the Certificate Registrar or at the
office of a transfer agent by the registered holder in person, or by a duly
authorized attorney-in-fact. The Certificate Registrar may decline to accept
any request for an exchange or registration of transfer of any Definitive
Certificate during the period of 15 days preceding any Distribution Date.
No fee or service charge will be imposed by the Certificate Registrar for
its services in respect of any registration of transfer or exchange referred to
herein; provided, however, that in connection with the transfer of Private
Certificates to certain institutional accredited investors, the Certificate
Registrar will be entitled to be reimbursed by the transferor for any costs
incurred in connection with such transfer. The Certificate Registrar may
require payment by each transferor of a sum sufficient to pay any tax, expense
or other governmental charge payable in connection with any such transfer.
For a discussion of certain transfer restrictions, see "ERISA
Considerations" herein.
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YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Regular Certificate will depend on (a) the price
at which such Certificate is purchased by an investor and (b) the rate, timing
and amount of distributions on such Certificate. The rate, timing and amount of
distributions on any Regular Certificate will in turn depend on, among other
things, (i) the rate and timing of principal payments (including voluntary
prepayments, involuntary prepayments resulting from defaults and liquidations
or other dispositions of the Mortgage Loans and Mortgaged Properties or the
application of insurance or condemnation proceeds and/or the purchase of the
Mortgage Loans as described under "Description of the Mortgage
Pool--Representations and Warranties; Repurchase" and "Description of the
Certificates--Early Termination") and the extent to which such amounts are to
be applied in reduction of the Certificate Balance (or Notional Balance) of the
Class of Certificates to which such Certificate belongs, (ii) the rate, timing
and severity of Realized Losses on the Mortgage Loans and the extent to which
such losses are allocable in reduction of the Certificate Balance (or Notional
Balance) of the Class of Certificates to which such Certificate belongs and
(iii) with respect to the Class A-EC, Class C, Class D, Class E, Class F, Class
G, Class H, Class J, Class K, Class L and Class M Certificates, the Weighted
Average Net Mortgage Rate as in effect from time to time. Disproportionate
principal payments (whether resulting from differences in amortization
schedules, prepayments or otherwise) on Mortgage Loans having Net Mortgage
Rates that are higher or lower than the current Weighted Average Net Mortgage
Rate will affect the yield on the Class A-EC Certificates. Such
disproportionate principal payments will also affect the Pass-Through Rates of
the Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K,
Class L and Class M Certificates and therefore the yield on each such Class.
Rate and Timing of Principal Payments. The yield to holders of the Regular
Certificates purchased at a discount or premium will be affected by the rate
and timing of principal payments made in reduction of the Certificate Balance
of such Certificates. The yield to maturity of the Class A-2MF Certificates
will be highly sensitive to the A-2MF Principal Distribution Amount, which is
comprised of Unscheduled Payments of principal of and the principal portion of
Balloon Payments due at maturity of the Mortgage Loans in Loan Group 2. As
described herein, the Pooled Principal Distribution Amount (other than the
A-2MF Principal Distribution Amount) for each Distribution Date generally will
be distributable in its entirety in respect of the Class A-1A Certificates
until the Certificate Balance thereof is reduced to zero, and will thereafter
be distributable in its entirety to each remaining Class of Regular
Certificates, sequentially in order of Class designation, in each case until
the Certificate Balance of each such Class of Certificates is, in turn, reduced
to zero. Consequently, the rate and timing of principal payments made in
reduction of the Certificate Balance of the Regular Certificates will be
directly related to the rate and timing of principal payments on or in respect
of the Mortgage Loans in either Loan Group or both Loan Groups, which will in
turn be affected by the amortization schedules thereof, the dates on which
Balloon Payments are due, or the Anticipated Repayment Date in the case of the
ARD Loans, and the rate and timing of Principal Prepayments and other
unscheduled collections thereon (including, for this purpose, collections made
in connection with liquidations of Mortgage Loans due to defaults, Casualties
or Condemnations affecting the Mortgaged Properties or purchases of Mortgage
Loans out of the Trust Fund in the manner described under "Description of the
Mortgage Pool--Representations and Warranties; Repurchase" and "Description of
the Certificates--Early Termination" or purchases of ARD Loans by Class N-1
Certificateholders described herein). Prepayments and, assuming the respective
stated maturity dates therefor have not occurred, liquidations and purchases of
the Mortgage Loans will result in distributions on the Regular Certificates
(other than the Class N-2 Certificates, and in the case of the Class A-EC
Certificates, only insofar as associated Yield Maintenance Charges and other
Prepayment Premiums are paid) of amounts that would otherwise have been
distributed over the remaining terms of the Mortgage Loans.
Defaults on the Mortgage Loans, particularly at or near their stated
maturity dates, may result in significant delays in payments of principal on
the Mortgage Loans and, accordingly, on the Regular Certificates while
work-outs are negotiated, foreclosures are completed or bankruptcy proceedings
are resolved. The yield to investors in the Subordinate Certificates will be
very sensitive to the timing and magnitude of losses on the Mortgage Loans due
to liquidations following a default, and will also be very sensitive to
delinquencies in payment. In addition, the Special Servicer has the option,
subject to certain limitations, to extend the maturity of Mortgage Loans
following a default in the payment of a Balloon Payment. See "The Pooling and
Servicing Agreement--Servicing of the Mortgage Loans; Collection of Payments"
and "--Realization Upon Mortgage Loans" herein and "Certain Legal Aspects of
the Mortgage Loans--Foreclosure" in the Prospectus.
It is possible that a Mortgage Loan that is the subject of an Appraisal
Reduction will generate collections at the same rate it had prior to any
Appraisal Reduction Event. Under such circumstances, the more senior
outstanding Classes of
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<PAGE>
Certificates will receive collections in respect of interest or principal at an
increased rate, because the amount of Available Funds will include the
principal portion of any Appraisal Reduction Amount actually collected and the
portion of the interest payments actually collected that is equal to interest
accrued on unreversed Appraisal Reduction Amounts allocated to an outstanding
Class at the related Pass-Through Rate (the sum of any such amounts, the
"Appraisal Reduction Excess Collections"). There can be no assurance that a
subsequent appraisal will reverse an Appraisal Reduction in whole or in part,
that the related borrower will thereafter make payments at any particular rate
or that Realized Losses will be reimbursed to any Class.
The rate and timing of principal payments and defaults and the severity of
losses on the Mortgage Loans may be affected by a number of factors, including,
without limitation, the terms of the Mortgage Loans (for example, the
provisions requiring the payment of Prepayment Premiums or Yield Maintenance
Charges and amortization terms that require Balloon Payments or include an
Anticipated Repayment Date), prevailing interest rates, the market value of the
Mortgaged Properties, the demographics and relative economic vitality of the
areas in which the Mortgaged Properties are located, the general supply and
demand for such facilities (and their uses) in such areas, the quality of
management of Mortgaged Properties, the servicing of the Mortgage Loans,
federal and state tax laws (which are subject to change) and other
opportunities for investment.
The rate of prepayment on the Mortgage Pool is also likely to be affected
by the amount of any required Yield Maintenance Charges and Prepayment Premiums
and the borrowers' ability to refinance their related Mortgaged Loans. If
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level have decreased enough to offset any required Yield Maintenance
Charges and Prepayment Premium, a borrower may have an increased incentive to
refinance its Mortgage Loan for purposes of either (i) converting to another
fixed rate loan with a lower interest rate and thereby "locking in" such rate
or (ii) taking advantage of an initial "teaser rate" on an adjustable rate
mortgage loan (that is, a mortgage interest rate below that which would
otherwise apply if the applicable index and gross margin were applied).
However, the ability of a borrower to refinance its Mortgage Loan will be
affected not only by prevailing market rates, but also by the current market
value of the Mortgaged Property. See "Risk Factors--Prepayment and Yield
Considerations" herein and "Certain Legal Aspects of the Mortgage
Loans--Enforceability of Certain Provisions" in the Prospectus.
In addition, some borrowers may sell Mortgaged Properties in order to
realize their equity therein, to meet cash flow needs or to make other
investments. Also, although Excess Cash Flow is applied to reduce the principal
of the ARD Loans after their respective Anticipated Repayment Dates and the
Mortgage Rates are reset at the Revised Rates, there can be no assurance that
any of such Mortgage Loans will be prepaid on that date or any date prior to
maturity. Under the circumstances described under "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans--Excess Interest," the
holders of 100% of the Class N-1 Certificates will have the option to purchase
any ARD Loan on or after its Anticipated Repayment Date at a price equal to its
outstanding Scheduled Principal Balance plus accrued and unpaid interest and
unreimbursed Advances made with respect thereto (with interest thereon). The
exercise of this option may accelerate repayment of certain Certificates, but
is not expected to result in repayment of all Classes on the same Distribution
Date.
If the markets for commercial and multifamily real estate should
experience an overall decline in property values such that the outstanding
balances of the Mortgage Loans exceed the value of the respective Mortgaged
Properties, a borrower under a non-recourse loan may have a decreased incentive
to fund operating cash flow deficits and, as a result, actual losses may be
higher than those originally anticipated by investors.
Neither the Depositor, the Transferor, the Mortgage Loan Sellers nor the
Trustee, or any affiliate of any of them, makes any representation as to the
particular factors that will affect the rate and timing of prepayments and
defaults on the Mortgage Loans, as to the relative importance of such factors,
as to the percentage of the principal balance of the Mortgage Loans that will
be prepaid or as to which a default will have occurred as of any date or as to
the overall rate of prepayment, default or principal payment on the Mortgage
Loans.
The extent to which the yield to maturity of any Class of Regular
Certificates may vary from the anticipated yield will depend upon the degree to
which they are purchased at a discount or premium and when, and to what degree,
payments of principal on the Mortgage Loans are in turn distributed in
reduction of the Certificate Balance of such Certificates. An investor should
consider, in the case of any Regular Certificate purchased at a discount,
especially the Class N-1 Certificates, the risk that a slower than anticipated
rate of principal payments on the Mortgage Loans could result in an actual
yield to such investor that is lower than the anticipated yield and, in the
case of any Regular Certificate purchased at a premium (or the Class A-EC and
Class N-2 Certificates, which have no Certificate Balances), the risk that a
faster than anticipated rate
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of principal payments could result in an actual yield to such investor that is
lower than the anticipated yield. In general, the earlier a payment of
principal on the Mortgage Loans is distributed in reduction of the Certificate
Balance of any Regular Certificate purchased at a discount or premium (or, in
the case of the Class A-EC and Class N-2 Certificates, applied in reduction of
the related Notional Balance), the greater will be the effect on an investor's
yield to maturity. As a result, the effect on an investor's yield of principal
payments on the Mortgage Loans occurring at a rate higher (or lower) than the
rate anticipated by the investor during any particular period would not be
fully offset by a subsequent like reduction (or increase) in the rate of such
principal payments. Because the rate of principal payments on the Mortgage
Loans will depend on future events and a variety of factors most of which are
not in the control of the Depositor, Transferor, related Mortgage Loan Seller,
Master Servicer, Special Servicer or Trustee (or any affiliate of any of them),
no assurance can be given as to such rate or the rate of Principal Prepayments
in particular. The Depositor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience
of a large group of commercial and/or multifamily loans comparable to the
Mortgage Loans. See "Risk Factors--Prepayment and Yield Considerations" herein.
The amounts payable with respect to the Class N-1 Certificates derive only
from principal payments on the Mortgage Loans. As a result, the yield on the
Class N-1 Certificates will be adversely affected by slower than expected
payments of principal (including prepayments, defaults and liquidations) on the
Mortgage Loans.
Balloon Payments/ARD Loan Payments. Most of the Mortgage Loans are
Balloon Loans that will have substantial payments (that is, Balloon Payments)
due at their stated maturities, unless previously prepaid, and a significant
number are ARD Loans. The ability of the borrowers to pay the Balloon Payments
at the maturity of the Balloon Loans or to prepay an ARD Loan in full on the
related Anticipated Repayment Dates may depend on their ability to sell or
refinance the Mortgaged Properties, which, in turn, will depend on a number of
factors, many of which are beyond the control of such borrowers. Such factors
include the level of interest rates and general economic conditions at the time
of sale or refinancing and changes in federal, state or local laws, including
tax laws, environmental laws and safety standards. The Certificates are subject
to the risk of default by the borrowers in making the required Balloon Payments
or prepayments of ARD Loans on their Anticipated Repayment Dates. If any
borrower is unable to make the applicable Balloon Payment when due or to prepay
an ARD Loan on the Anticipated Repayment Date, the weighted average lives of
the Certificates are likely to be longer than expected. See "Description of the
Mortgage Pool--Certain Characteristics of the Mortgage Pool--Other Information"
herein for additional information regarding maturity dates of the Mortgage
Loans.
Losses and Shortfalls. The yield to holders of the Regular Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Shortfalls in
Available Funds resulting from shortfalls in collections of amounts payable on
the Mortgage Loans (to the extent not advanced) or additional Master Servicer
or Special Servicer compensation, interest on Advances, extraordinary Trust
Fund expenses or other similar items will generally be borne: first, by the
holders of the Class N-1 Certificates, to the extent of amounts otherwise
distributable thereto; second, by the holders of the Class M Certificates, to
the extent of amounts otherwise distributable thereto; third, by the holders of
the Class L Certificates, to the extent of amounts otherwise distributable
thereto; fourth, by the holders of the Class K Certificates, to the extent of
amounts otherwise distributable thereto; fifth, by the holders of the Class J
Certificates, to the extent of amounts otherwise distributable thereto; sixth,
by the holders of the Class H Certificates, to the extent of amounts otherwise
distributable thereto; seventh, by the holders of the Class G Certificates to
the extent of amounts otherwise distributable thereto; eighth, by the holders
of the Class F Certificates, to the extent of amounts otherwise distributable
thereto; ninth, by the holders of the Class E Certificates, to the extent of
amounts otherwise distributable thereto; tenth, by the holders of the Class D
Certificates to the extent of amounts otherwise distributable thereto;
eleventh, by the holders of the Class C Certificates, to the extent of amounts
otherwise distributable thereto; twelfth, by the holders of the Class B
Certificates, to the extent of amounts otherwise distributable thereto; and,
last, by the holders of the Class A-1A, Class A-1B and Class A-2MF Certificates
on a pro-rata basis. The amount of any such shortfall generally will be
distributable to holders of such Class on subsequent Distribution Dates, to the
extent of Available Funds on such Distribution Dates. Any such shortfall will
not bear interest, however, and will therefore negatively affect the yield to
maturity of such Class of Certificates for so long as it is outstanding.
Realized Losses on the Mortgage Loans will be allocated to the Regular
Certificates that have Certificate Balances (other than the Senior
Certificates) in reverse sequential order, until the Certificate Balances
thereof are reduced to zero, and then among the Class A-1A, Class A-1B and
Class A-2MF Certificates on a pro rata basis. Realized Losses allocated to the
Class N-1 Certificates will reduce the Class N-2 Notional Balance, and Realized
Losses allocated to the Class A-1A, Class A-1B, Class A-2MF, Class B, Class C,
Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L, Class M
or Class N-1 Certificates will reduce the Class A-EC Notional Balance. As a
result, losses on the Mortgage Loans could result in a
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<PAGE>
significant loss, or in some cases a complete loss, of an investor's investment
in any Class of the Certificates. Consequently prospective investors should
perform their own analysis of the expected timing and severity of Realized
Losses prior to investing in any Subordinate Certificate. Even if losses on the
Mortgage Loans are not borne by an investor in any Class, such losses may
affect the weighted average life and yield to maturity of such investor's
Certificates.
Pass-Through Rate. The Pass-Through Rates on the Class A-EC, Class C,
Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L and
Class M Certificates are related to the Weighted Average Net Mortgage Rate.
The Weighted Average Net Mortgage Rate will fluctuate over the lives of
the Certificates as a result of scheduled amortization, voluntary prepayments,
Appraisal Reductions and liquidations of Mortgage Loans. If principal payments,
including voluntary and involuntary Principal Prepayments, are made on a
Mortgage Loan with a relatively high Net Mortgage Rate at a rate faster than
the rate of principal payments on the Mortgage Pool as a whole, the
Pass-Through Rates applicable to the Certificates (other than the Class A-1A,
Class A-1B, Class A-2MF and Class N-2 Certificates) will be adversely affected.
Accordingly, the yield on each such Class of Certificates will be sensitive to
changes in the outstanding principal balances of the Mortgage Loans as a result
of scheduled amortization, voluntary prepayments and liquidations of Mortgage
Loans.
Since the Pass-Through Rates for the Certificates (other than the Class
A-1A, Class A-1B, Class A-2MF and Class N-1 Certificates) are related to the
Weighted Average Net Mortgage Rate, a decrease in the Net Mortgage Rate for any
Mortgage Loan as a result of a modification will result in the Certificates
accruing interest at a rate higher than the Net Mortgage Rate for the Mortgage
Pool and there will not be sufficient cash flow to make all interest payments
due on each of such Classes. Any such interest shortfall would affect such
Certificates in reverse sequential order commencing with the Class N-2
Certificates. See "Description of the Certificates--Distributions" and
"Description of the Mortgage Pool--Certain Characteristics of the Mortgage
Pool" herein.
Delay in Payment of Distributions. Because monthly distributions will not
be made to Certificateholders until, at the earliest, the 15th day of the month
following the month in which interest accrued on the Certificates, the
effective yield to the holders of the Regular Certificates will be lower than
the yield that would otherwise be produced by the applicable Pass-Through Rate
and purchase prices (assuming such prices did not account for such delay).
WEIGHTED AVERAGE LIFE
Weighted average life refers to the average amount of time that will
elapse from the date such determination is made (for the purposes used herein,
the Closing Date) to the date of distribution to the investor of each dollar
distributed in reduction of principal balance or notional balance of such
security. The weighted average life of the Regular Certificates will be
influenced by, among other things, the rate at which principal of the Mortgage
Loans is paid, which may be in the form of scheduled amortization, Balloon
Payments, prepayments or liquidations.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the "Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant rate of
prepayment each month, expressed as an annual rate, relative to the then
outstanding principal balance of a pool of mortgage loans for the life of such
mortgage loans. As used in each of the following tables, the column headed "0%"
assumes that, with the exception of Loan #63 and Loan #167, which are assumed
to prepay at the expiration of their respective lockout periods, none of the
Mortgage Loans is prepaid before maturity. The columns headed "3%", "5%", "10%"
and "15%" assume that, with the exception of Loan #63 and Loan #167, which are
assumed to prepay at the expiration of their respective lockout periods, no
prepayments are made on any Mortgage Loan during such Mortgage Loan's Lock-out
Period, if any, or during such Mortgage Loan's Yield Maintenance Period, if
any, or during such Mortgage Loan's Defeasance Period, if any, and are
otherwise made on each of the Mortgage Loans at the indicated CPRs. CPR does
not purport to be either an historical description of the prepayment experience
of any pool of mortgage loans or a prediction of the anticipated rate of
prepayment of any mortgage loans, including the Mortgage Loans to be included
in the Trust Fund.
The tables set forth below have been prepared on the basis of certain
assumptions as described below regarding the characteristics of the Mortgage
Loans that are expected to be included in the Mortgage Pool as described under
"Description of the Mortgage Pool" herein and the performance thereof. The
tables assume, among other things, that: (i) as of the date of issuance of the
Regular Certificates, the Mortgage Loans (except as set forth herein) provide
for a Monthly Payment of principal and interest that would fully amortize the
remaining principal balance of such Mortgage Loan using the Monthly Payments in
the amounts set forth in Annex A hereto, commencing on the first day of the
month immediately following the month in which such issuance occurs (including,
with respect to each Balloon Loan, the final principal payment on the
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<PAGE>
maturity date set forth in Annex A); (ii) neither the Depositor, the Transferor
nor the related Mortgage Loan Seller will repurchase any Mortgage Loan and none
of the Master Servicer, the Special Servicer, the Depositor or the holders of
the Class R-I Certificates will exercise its option to purchase Mortgage Loans
and thereby cause a termination of the Trust Fund; (iii) there are no
delinquencies or Realized Losses on the Mortgage Loans; (iv) no Prepayment
Premiums are paid with respect to any Mortgage Loan; (v) there are no Appraisal
Reduction Amounts with respect to the Mortgage Loans; (vi) payments on the
Certificates will be made on the 15th day of each month, commencing on
September 15, 1998 (notwithstanding that any such day is not a Business Day or
is fewer than four Business Days after the related Determination Date); (vii)
there are no additional ongoing Trust Fund expenses payable out of the Trust
Fund other than Servicing Fees; (viii) the Regular Certificates will be
purchased on the Closing Date; (ix) no defaults occur with respect to any of
the Mortgage Loans; (x) all of the Mortgage Loans accrue interest based upon a
360 day year composed of twelve 30 day months; (xi) all Mortgage Loans have a
maturity date on the first day of a month; and (xii) each Anticipated Repayment
Loan is paid in full on its Anticipated Repayment Date.
The actual performance of the Mortgage Loans will differ from the
assumptions used in calculating the tables set forth below, which are
hypothetical in nature and are provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. Any
difference between such assumptions and the actual performance of the Mortgage
Loans, or actual prepayment or loss experience, will affect the percentages of
initial Certificate Balance outstanding over time and the weighted average
lives of the Classes of Regular Certificates.
Subject to the foregoing discussion and assumptions, the following tables
indicate the weighted average life of each Class of Regular Certificates, and
set forth the percentages of the initial Certificate Balance or Notional
Balance of each such Class of Regular Certificates that would be outstanding
after each of the Distribution Dates shown based on different prepayment speed
assumptions. Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. A common model (the "Constant Prepayment Rate" or
"CPR") represents an assumed constant rate of prepayment relative to the then
outstanding principal balance on a pool of new mortgage loans for the life of
such mortgage loans. The weighted average life of each Class is determined by
(i) multiplying the amount of each distribution in reduction of the Certificate
Balance or Notional Balance of such Class by the number of years from the date
of purchase to the related Distribution Date, (ii) adding the results and (iii)
dividing the sum by the aggregate distributions in reduction of Certificate
Balance or Notional Balance referred to in clause (i).
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<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
(OR NOTIONAL BALANCE)
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS A-1A
PREPAYMENT SPEED(1)
---------------------------------------------------------
DISTRIBUTION DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ---------------------------------- --------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .................. 100 100 100 100 100 100
August 15, 1999 .................. 94 94 94 94 94 94
August 15, 2000 .................. 88 88 88 88 88 87
August 15, 2001 .................. 81 81 81 81 80 80
August 15, 2002 .................. 73 73 73 73 72 72
August 15, 2003 .................. 57 57 56 56 56 55
August 15, 2004 .................. 48 48 47 47 46 45
August 15, 2005 .................. 32 31 31 30 29 29
August 15, 2006 .................. 22 20 19 18 17 15
August 15, 2007 .................. 2 0 0 0 0 0
August 15, 2008 .................. 0 0 0 0 0 0
August 15, 2009 .................. 0 0 0 0 0 0
August 15, 2010 .................. 0 0 0 0 0 0
August 15, 2011 .................. 0 0 0 0 0 0
August 15, 2012 .................. 0 0 0 0 0 0
August 15, 2013 .................. 0 0 0 0 0 0
August 15, 2014 .................. 0 0 0 0 0 0
August 15, 2015 .................. 0 0 0 0 0 0
August 15, 2016 .................. 0 0 0 0 0 0
August 15, 2017 .................. 0 0 0 0 0 0
August 15, 2018 .................. 0 0 0 0 0 0
August 15, 2019 .................. 0 0 0 0 0 0
August 15, 2020 .................. 0 0 0 0 0 0
August 15, 2021 .................. 0 0 0 0 0 0
August 15, 2022 .................. 0 0 0 0 0 0
August 15, 2023 .................. 0 0 0 0 0 0
August 15, 2024 .................. 0 0 0 0 0 0
August 15, 2025 .................. 0 0 0 0 0 0
August 15, 2026 .................. 0 0 0 0 0 0
August 15, 2027 .................. 0 0 0 0 0 0
August 15, 2028 .................. 0 0 0 0 0 0
August 15, 2029 .................. 0 0 0 0 0 0
Weighted Average Life(2) ......... 5.50 5.44 5.40 5.37 5.33 5.26
<CAPTION>
CLASS A-1B
PREPAYMENT SPEED(1)
----------------------------------------------------------
DISTRIBUTION DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ---------------------------------- --------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .................. 100 100 100 100 100 100
August 15, 1999 .................. 100 100 100 100 100 100
August 15, 2000 .................. 100 100 100 100 100 100
August 15, 2001 .................. 100 100 100 100 100 100
August 15, 2002 .................. 100 100 100 100 100 100
August 15, 2003 .................. 100 100 100 100 100 100
August 15, 2004 .................. 100 100 100 100 100 100
August 15, 2005 .................. 100 100 100 100 100 100
August 15, 2006 .................. 100 100 100 100 100 100
August 15, 2007 .................. 100 99 98 96 94 90
August 15, 2008 .................. 0 0 0 0 0 0
August 15, 2009 .................. 0 0 0 0 0 0
August 15, 2010 .................. 0 0 0 0 0 0
August 15, 2011 .................. 0 0 0 0 0 0
August 15, 2012 .................. 0 0 0 0 0 0
August 15, 2013 .................. 0 0 0 0 0 0
August 15, 2014 .................. 0 0 0 0 0 0
August 15, 2015 .................. 0 0 0 0 0 0
August 15, 2016 .................. 0 0 0 0 0 0
August 15, 2017 .................. 0 0 0 0 0 0
August 15, 2018 .................. 0 0 0 0 0 0
August 15, 2019 .................. 0 0 0 0 0 0
August 15, 2020 .................. 0 0 0 0 0 0
August 15, 2021 .................. 0 0 0 0 0 0
August 15, 2022 .................. 0 0 0 0 0 0
August 15, 2023 .................. 0 0 0 0 0 0
August 15, 2024 .................. 0 0 0 0 0 0
August 15, 2025 .................. 0 0 0 0 0 0
August 15, 2026 .................. 0 0 0 0 0 0
August 15, 2027 .................. 0 0 0 0 0 0
August 15, 2028 .................. 0 0 0 0 0 0
August 15, 2029 .................. 0 0 0 0 0 0
Weighted Average Life(2) ......... 9.50 9.49 9.48 9.47 9.45 9.42
</TABLE>
<PAGE>
- --------
(1) Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. A common model (the "Constant Prepayment
Rate" or "CPR") represents an assumed constant rate of prepayment
relative to the then outstanding principal balance on a pool of new
mortgage loans for the life of such mortgage loans.
(2) The weighted average life of each Class is determined by (i) multiplying
the amount of each distribution in reduction of the Certificate Balance
or Notional Balance of such Class by the number of years from the date of
purchase to the related Distribution Date, (ii) adding the results and
(iii) dividing the sum by the aggregate distributions in reduction of
Certificate Balance or Notional Balance referred to in clause (i).
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<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
(OR NOTIONAL BALANCE)
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS A-2MF
PREPAYMENT SPEED(1)
---------------------------------------------------------
DISTRIBUTION DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ---------------------------------- --------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .................. 100 100 100 100 100 100
August 15, 1999 .................. 100 100 100 100 100 100
August 15, 2000 .................. 100 100 100 100 100 100
August 15, 2001 .................. 100 100 100 100 100 100
August 15, 2002 .................. 100 100 100 100 100 100
August 15, 2003 .................. 100 100 100 100 100 100
August 15, 2004 .................. 100 100 100 100 100 100
August 15, 2005 .................. 96 96 96 96 96 96
August 15, 2006 .................. 96 96 95 95 95 94
August 15, 2007 .................. 96 95 94 93 92 90
August 15, 2008 .................. 0 0 0 0 0 0
August 15, 2009 .................. 0 0 0 0 0 0
August 15, 2010 .................. 0 0 0 0 0 0
August 15, 2011 .................. 0 0 0 0 0 0
August 15, 2012 .................. 0 0 0 0 0 0
August 15, 2013 .................. 0 0 0 0 0 0
August 15, 2014 .................. 0 0 0 0 0 0
August 15, 2015 .................. 0 0 0 0 0 0
August 15, 2016 .................. 0 0 0 0 0 0
August 15, 2017 .................. 0 0 0 0 0 0
August 15, 2018 .................. 0 0 0 0 0 0
August 15, 2019 .................. 0 0 0 0 0 0
August 15, 2020 .................. 0 0 0 0 0 0
August 15, 2021 .................. 0 0 0 0 0 0
August 15, 2022 .................. 0 0 0 0 0 0
August 15, 2023 .................. 0 0 0 0 0 0
August 15, 2024 .................. 0 0 0 0 0 0
August 15, 2025 .................. 0 0 0 0 0 0
August 15, 2026 .................. 0 0 0 0 0 0
August 15, 2027 .................. 0 0 0 0 0 0
August 15, 2028 .................. 0 0 0 0 0 0
August 15, 2029 .................. 0 0 0 0 0 0
Weighted Average Life(2) ......... 9.56 9.54 9.53 9.52 9.50 9.46
<CAPTION>
CLASS B
PREPAYMENT SPEED(1)
----------------------------------------------------------
DISTRIBUTION DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ---------------------------------- --------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .................. 100 100 100 100 100 100
August 15, 1999 .................. 100 100 100 100 100 100
August 15, 2000 .................. 100 100 100 100 100 100
August 15, 2001 .................. 100 100 100 100 100 100
August 15, 2002 .................. 100 100 100 100 100 100
August 15, 2003 .................. 100 100 100 100 100 100
August 15, 2004 .................. 100 100 100 100 100 100
August 15, 2005 .................. 100 100 100 100 100 100
August 15, 2006 .................. 100 100 100 100 100 100
August 15, 2007 .................. 100 100 100 100 100 100
August 15, 2008 .................. 0 0 0 0 0 0
August 15, 2009 .................. 0 0 0 0 0 0
August 15, 2010 .................. 0 0 0 0 0 0
August 15, 2011 .................. 0 0 0 0 0 0
August 15, 2012 .................. 0 0 0 0 0 0
August 15, 2013 .................. 0 0 0 0 0 0
August 15, 2014 .................. 0 0 0 0 0 0
August 15, 2015 .................. 0 0 0 0 0 0
August 15, 2016 .................. 0 0 0 0 0 0
August 15, 2017 .................. 0 0 0 0 0 0
August 15, 2018 .................. 0 0 0 0 0 0
August 15, 2019 .................. 0 0 0 0 0 0
August 15, 2020 .................. 0 0 0 0 0 0
August 15, 2021 .................. 0 0 0 0 0 0
August 15, 2022 .................. 0 0 0 0 0 0
August 15, 2023 .................. 0 0 0 0 0 0
August 15, 2024 .................. 0 0 0 0 0 0
August 15, 2025 .................. 0 0 0 0 0 0
August 15, 2026 .................. 0 0 0 0 0 0
August 15, 2027 .................. 0 0 0 0 0 0
August 15, 2028 .................. 0 0 0 0 0 0
August 15, 2029 .................. 0 0 0 0 0 0
Weighted Average Life(2) ......... 9.90 9.90 9.90 9.90 9.90 9.90
</TABLE>
<PAGE>
- --------
(1) Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. A common model (the "Constant Prepayment
Rate" or "CPR") represents an assumed constant rate of prepayment
relative to the then outstanding principal balance on a pool of new
mortgage loans for the life of such mortgage loans.
(2) The weighted average life of each Class is determined by (i) multiplying
the amount of each distribution in reduction of the Certificate Balance
or Notional Balance of such Class by the number of years from the date of
purchase to the related Distribution Date, (ii) adding the results and
(iii) dividing the sum by the aggregate distributions in reduction of
Certificate Balance or Notional Balance referred to in clause (i).
S-88
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
(OR NOTIONAL BALANCE)
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS C
PREPAYMENT SPEED(1)
-----------------------------------------------------------------
PAYMENT DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ---------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .................. 100 100 100 100 100 100
August 15, 1999 .................. 100 100 100 100 100 100
August 15, 2000 .................. 100 100 100 100 100 100
August 15, 2001 .................. 100 100 100 100 100 100
August 15, 2002 .................. 100 100 100 100 100 100
August 15, 2003 .................. 100 100 100 100 100 100
August 15, 2004 .................. 100 100 100 100 100 100
August 15, 2005 .................. 100 100 100 100 100 100
August 15, 2006 .................. 100 100 100 100 100 100
August 15, 2007 .................. 100 100 100 100 100 100
August 15, 2008 .................. 91 89 88 87 84 81
August 15, 2009 .................. 56 52 49 46 42 36
August 15, 2010 .................. 0 0 0 0 0 0
August 15, 2011 .................. 0 0 0 0 0 0
August 15, 2012 .................. 0 0 0 0 0 0
August 15, 2013 .................. 0 0 0 0 0 0
August 15, 2014 .................. 0 0 0 0 0 0
August 15, 2015 .................. 0 0 0 0 0 0
August 15, 2016 .................. 0 0 0 0 0 0
August 15, 2017 .................. 0 0 0 0 0 0
August 15, 2018 .................. 0 0 0 0 0 0
August 15, 2019 .................. 0 0 0 0 0 0
August 15, 2020 .................. 0 0 0 0 0 0
August 15, 2021 .................. 0 0 0 0 0 0
August 15, 2022 .................. 0 0 0 0 0 0
August 15, 2023 .................. 0 0 0 0 0 0
August 15, 2024 .................. 0 0 0 0 0 0
August 15, 2025 .................. 0 0 0 0 0 0
August 15, 2026 .................. 0 0 0 0 0 0
August 15, 2027 .................. 0 0 0 0 0 0
August 15, 2028 .................. 0 0 0 0 0 0
August 15, 2029 .................. 0 0 0 0 0 0
Weighted Average Life(2) ......... 11.07 11.00 10.95 10.91 10.84 10.74
<CAPTION>
CLASS D
PREPAYMENT SPEED(1)
-----------------------------------------------------------------
PAYMENT DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ---------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .................. 100 100 100 100 100 100
August 15, 1999 .................. 100 100 100 100 100 100
August 15, 2000 .................. 100 100 100 100 100 100
August 15, 2001 .................. 100 100 100 100 100 100
August 15, 2002 .................. 100 100 100 100 100 100
August 15, 2003 .................. 100 100 100 100 100 100
August 15, 2004 .................. 100 100 100 100 100 100
August 15, 2005 .................. 100 100 100 100 100 100
August 15, 2006 .................. 100 100 100 100 100 100
August 15, 2007 .................. 100 100 100 100 100 100
August 15, 2008 .................. 100 100 100 100 100 100
August 15, 2009 .................. 100 100 100 100 100 100
August 15, 2010 .................. 77 72 70 67 63 56
August 15, 2011 .................. 53 44 39 33 25 12
August 15, 2012 .................. 29 16 8 0 0 0
August 15, 2013 .................. 0 0 0 0 0 0
August 15, 2014 .................. 0 0 0 0 0 0
August 15, 2015 .................. 0 0 0 0 0 0
August 15, 2016 .................. 0 0 0 0 0 0
August 15, 2017 .................. 0 0 0 0 0 0
August 15, 2018 .................. 0 0 0 0 0 0
August 15, 2019 .................. 0 0 0 0 0 0
August 15, 2020 .................. 0 0 0 0 0 0
August 15, 2021 .................. 0 0 0 0 0 0
August 15, 2022 .................. 0 0 0 0 0 0
August 15, 2023 .................. 0 0 0 0 0 0
August 15, 2024 .................. 0 0 0 0 0 0
August 15, 2025 .................. 0 0 0 0 0 0
August 15, 2026 .................. 0 0 0 0 0 0
August 15, 2027 .................. 0 0 0 0 0 0
August 15, 2028 .................. 0 0 0 0 0 0
August 15, 2029 .................. 0 0 0 0 0 0
Weighted Average Life(2) ......... 13.15 12.92 12.77 12.64 12.48 12.29
</TABLE>
<PAGE>
- --------
(1) Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. A common model (the "Constant Prepayment
Rate" or "CPR") represents an assumed constant rate of prepayment
relative to the then outstanding principal balance on a pool of new
mortgage loans for the life of such mortgage loans.
(2) The weighted average life of each Class is determined by (i) multiplying
the amount of each distribution in reduction of the Certificate Balance
or Notional Balance of such Class by the number of years from the date of
purchase to the related Distribution Date, (ii) adding the results and
(iii) dividing the sum by the aggregate distributions in reduction of
Certificate Balance or Notional Balance referred to in clause (i).
S-89
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
(OR NOTIONAL BALANCE)
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS E
PREPAYMENT SPEED(1)
-----------------------------------------------------------------
PAYMENT DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ---------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .................. 100 100 100 100 100 100
August 15, 1999 .................. 100 100 100 100 100 100
August 15, 2000 .................. 100 100 100 100 100 100
August 15, 2001 .................. 100 100 100 100 100 100
August 15, 2002 .................. 100 100 100 100 100 100
August 15, 2003 .................. 100 100 100 100 100 100
August 15, 2004 .................. 100 100 100 100 100 100
August 15, 2005 .................. 100 100 100 100 100 100
August 15, 2006 .................. 100 100 100 100 100 100
August 15, 2007 .................. 100 100 100 100 100 100
August 15, 2008 .................. 100 100 100 100 100 100
August 15, 2009 .................. 100 100 100 100 100 100
August 15, 2010 .................. 100 100 100 100 100 100
August 15, 2011 .................. 100 100 100 100 100 100
August 15, 2012 .................. 100 100 100 100 59 0
August 15, 2013 .................. 0 0 0 0 0 0
August 15, 2014 .................. 0 0 0 0 0 0
August 15, 2015 .................. 0 0 0 0 0 0
August 15, 2016 .................. 0 0 0 0 0 0
August 15, 2017 .................. 0 0 0 0 0 0
August 15, 2018 .................. 0 0 0 0 0 0
August 15, 2019 .................. 0 0 0 0 0 0
August 15, 2020 .................. 0 0 0 0 0 0
August 15, 2021 .................. 0 0 0 0 0 0
August 15, 2022 .................. 0 0 0 0 0 0
August 15, 2023 .................. 0 0 0 0 0 0
August 15, 2024 .................. 0 0 0 0 0 0
August 15, 2025 .................. 0 0 0 0 0 0
August 15, 2026 .................. 0 0 0 0 0 0
August 15, 2027 .................. 0 0 0 0 0 0
August 15, 2028 .................. 0 0 0 0 0 0
August 15, 2029 .................. 0 0 0 0 0 0
Weighted Average Life(2) ......... 14.40 14.40 14.38 14.31 14.08 13.67
</TABLE>
- --------
(1) Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. A common model (the "Constant Prepayment
Rate" or "CPR") represents an assumed constant rate of prepayment
relative to the then outstanding principal balance on a pool of new
mortgage loans for the life of such mortgage loans.
(2) The weighted average life of each Class is determined by (i) multiplying
the amount of each distribution in reduction of the Certificate Balance
or Notional Balance of such Class by the number of years from the date of
purchase to the related Distribution Date, (ii) adding the results and
(iii) dividing the sum by the aggregate distributions in reduction of
Certificate Balance or Notional Balance referred to in clause (i).
S-90
<PAGE>
MASTER SERVICER AND SPECIAL SERVICER
NRF is the Master Servicer and Special Servicer. Certain information
regarding NRF is set forth herein under "Mortgage Loan Sellers."
As of June 30, 1998, NRF was responsible for the servicing of
approximately 271 commercial and multi-family loans with an aggregate principal
balance of approximately $1.054 billion, the collateral for which is located
throughout the United States.
THE POOLING AND SERVICING AGREEMENT
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement to be dated as of August 1, 1998 (the "Pooling and Servicing
Agreement"), by and among the Depositor, the Master Servicer, the Special
Servicer and the Trustee.
The Depositor will provide to a prospective or actual holder of a
Certificate without charge, upon written request, a copy (without exhibits) of
the Pooling and Servicing Agreement. Requests should be addressed to Prudential
Securities Secured Financing Corporation, One New York Plaza, 18th Floor, New
York, New York 10292, attention David M. Rodgers, at telephone number (212)
778-3225.
ASSIGNMENT OF THE MORTGAGE LOANS
On or before the Closing Date, the Depositor will assign or cause the
assignment of the Mortgage Loans, without recourse to the Trustee for the
benefit of the holders of Certificates. On or prior to the Closing Date, the
Depositor will deliver to the Trustee, with a copy to the Master Servicer, with
respect to each Mortgage Loan, the following set of documents (the "Trustee
Mortgage File"):
(i) the original of the related promissory note, endorsed by the
applicable Mortgage Loan Seller in blank in the following form: "Pay to the
order of , without recourse," which the Trustee or its designee is
authorized to complete and which promissory note and all endorsements
thereof shall show a complete chain of endorsement from the originator of
the Mortgage Loan to the applicable Mortgage Loan Seller, then to the
Transferor and then to the Depositor;
(ii) the related original recorded Mortgage or a copy thereof certified by
the related title insurance company, public recording office or closing
agent to be in the form in which executed or submitted for recording, the
related original recorded Assignment of Mortgage to the applicable Mortgage
Loan Seller or a copy thereof certified by the related title insurance
company, public recording office or closing agent to be in the form in which
executed or submitted for recording and the related original Assignment of
Mortgage executed by the applicable Mortgage Loan Seller in blank which the
Trustee or its designee is authorized to complete (and but for the insertion
of the name of the assignee and any related recording information which is
not yet available to the applicable Mortgage Loan Seller, is in suitable
form for recordation in the jurisdiction in which the related Mortgaged
Property is located);
(iii) if the related security agreement is separate from the Mortgage, the
original security agreement or a counterpart thereof, and if the security
agreement is not assigned under the Assignments of Mortgage described in
clause (ii) above, the related original assignment of such security
agreement to the applicable Mortgage Loan Seller or a counterpart thereof
and the related original assignment of such security agreement executed by
the applicable Mortgage Loan Seller in blank which the Trustee or its
designee is authorized to complete;
(iv) a copy of each Form UCC-1 financing statement, if any, filed with
respect to personal property constituting a part of the related Mortgaged
Property, together with a copy of each Form UCC-2 or UCC-3 assignment, if
any, of such financing statement to the applicable Mortgage Loan Seller and
a copy of each Form UCC-2 or UCC-3 assignment, if any, of such financing
statement executed by the applicable Mortgage Loan Seller in blank which the
Trustee or its designee is authorized to complete (and but for the insertion
of the name of the assignee and any related filing information which is not
yet available to the applicable Mortgage Loan Seller, is in suitable form
for filing in the filing office in which such financing statement was
filed);
(v) the related original of the Loan Agreement, if any, relating to such
Mortgage Loan or a counterpart thereof;
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<PAGE>
(vi) the related original lender's title insurance policy (or the original
pro forma title insurance policy), together with any endorsements thereto;
(vii) if any related Assignment of Leases, Rents and Profits is separate
from the Mortgage, the original recorded Assignment of Leases, Rents and
Profits or a copy thereof certified by the related title insurance company,
public recording office, or closing agent to be in the form in which
executed or submitted for recording, the related original recorded
reassignment of such instrument, if any, to the applicable Mortgage Loan
Seller or a copy thereof certified by the related title insurance company or
closing agent to be in the form in which executed or submitted for recording
and the related original reassignment of such instrument, if any, executed
by the applicable Mortgage Loan Seller in blank which the Trustee or its
designee is authorized to complete (and but for the insertion of the name of
the assignee and any related recording information which is not yet
available to the applicable Mortgage Loan Seller, is in suitable form for
recordation in the jurisdiction in which the related Mortgaged Property is
located) (any of which reassignments, however, may be included in a related
Assignment of Mortgage and need not be a separate instrument);
(viii) copies of the ESAs, or similar studies or reports with respect to
the Mortgaged Property made in connection with the origination of such
Mortgage Loan;
(ix) if any related assignment of contracts is separate from the Mortgage,
the original assignment of contracts or a counterpart thereof, and if the
assignment of contracts is not assigned under the Assignments of Mortgage
described in clause (ii) above, the related original reassignment of such
instrument to the applicable Mortgage Loan Seller or a counterpart thereof
and the related original reassignment of such instrument executed by the
applicable Mortgage Loan Seller in blank which the Trustee or its designee
is authorized to complete;
(x) with respect to the related Reserve Accounts, if any, a copy of the
original of any separate agreement with respect thereto between the related
borrower and the Mortgage Loan Seller;
(xi) the original of any other written agreement, instrument or document
securing such Mortgage Loan, including, without limitation, originals of any
guarantees with respect to such Mortgage Loan or the original letter of
credit, if any, with respect thereto, together with any and all amendments
thereto, including, without limitation, any amendment which entitles the
Master Servicer to draw upon such letter of credit on behalf of the Trustee
for the benefit of the Certificateholders, and the original of each
instrument or other item of personal property given as security for a
Mortgage Loan possession of which by a secured party is necessary to a
secured party's valid, perfected, first priority security interest therein,
together with all assignments or endorsements thereof necessary to entitle
the Master Servicer to enforce a valid, perfected, first priority security
interest therein on behalf of the Trustee for the benefit of the
Certificateholders;
(xii) with respect to the related Reserve Accounts, if any, a copy of the
UCC-1 financing statements, if any, submitted for filing with respect to the
applicable Mortgage Loan Seller's security interest in such Reserve Accounts
and all funds contained therein, together with a copy of each Form UCC-2 or
UCC-3 assignment, if any, of such financing statement to the applicable
Mortgage Loan Seller and a copy of each Form UCC-2 or UCC-3 assignment, if
any, of such financing statement executed by the applicable Mortgage Loan
Seller in blank which the Trustee or its designee is authorized to complete
(and but for the insertion of the name of the assignee and any related
filing information which is not yet available to the applicable Mortgage
Loan Seller, is in suitable form for filing in the filing office in which
such financing statement was filed); and
(xiii) copies of any and all amendments, modifications and supplements to,
and waivers related to, any of the foregoing.
If the Depositor cannot deliver any original or certified recorded
document described above on the Closing Date, the Depositor will use its best
efforts to deliver (or cause to be delivered) such original or certified
recorded documents within 45 days from the Closing Date (subject to delays
attributable to the failure of the appropriate recording office to return such
documents, in which case the Depositor will deliver such documents promptly
upon receipt thereof). The Trustee is obligated to review the Trustee Mortgage
File for each Mortgage Loan within 90 days after the later of delivery or the
Closing Date and report any missing documents or certain types of defects
therein to the Depositor.
The Master Servicer will hold all remaining Mortgage Loan Documents and
all other documents related to each Mortgage Loan, including copies of any
management agreements, ground leases, appraisals, surveys, environmental
reports and similar documents and any other written agreements relating to each
Mortgage Loan (collectively, the "Master Servicer
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<PAGE>
Mortgage File" and together with the Trustee Mortgage File, the "Mortgage
File") in trust for the benefit of the Trustee on behalf of Certificateholders.
The legal ownership of all records and documents with respect to each Mortgage
Loan prepared by or that come into the possession of the Master Servicer will
immediately vest in the Trustee, in trust for the benefit of
Certificateholders.
SERVICING OF THE MORTGAGE LOANS; COLLECTION OF PAYMENTS
The Pooling and Servicing Agreement requires the Master Servicer and the
Special Servicer to service and administer the Mortgage Loans (or in the case
of the Special Servicer, the Specially Serviced Mortgage Loans and REO Mortgage
Loans) on behalf of the Trust Fund solely in the best interests of and for the
benefit of all of the Certificateholders and the Trustee in accordance with the
terms of the Pooling and Servicing Agreement and the Mortgage Loans. In
furtherance of and to the extent consistent with the foregoing, except to the
extent that the Pooling and Servicing Agreement provides for a contrary
specific course of action, each of the Master Servicer and the Special Servicer
are required to service and administer the Mortgage Loans (x) in the same
manner in which, and with the same care, skill, prudence and diligence with
which it services and administers similar mortgage loans for itself and other
third-party portfolios, giving due consideration to customary and usual
standards of practice of prudent institutional commercial mortgage loan
servicers used with respect to loans comparable to the Mortgage Loans or (y) in
the same manner in which, and with the same care, skill, prudence and diligence
with which, it services and administers similar mortgage loans which it owns,
whichever standard of care is higher, and taking into account its other
obligations under the Pooling and Servicing Agreement and with the purpose of
maximizing the estimated net present value of each Mortgage Loan, but without
regard to: (i) any other relationship that the Master Servicer, the Special
Servicer, any sub-servicer, the Depositor or the Trustee, or any affiliate of
any of them may have with the borrowers or any affiliate of such borrowers;
(ii) the ownership of any Certificate by the Master Servicer, the Special
Servicer or any affiliate of either; (iii) the Master Servicer's or the
Trustee's obligations, as applicable, to make Advances or to incur servicing
expenses with respect to the Mortgage Loans; (iv) the Master Servicer's, the
Special Servicer's or any sub-servicer's right to receive compensation for its
services under the Pooling and Servicing Agreement or with respect to any
particular transaction; (v) the ownership, servicing or management for others,
by the Master Servicer, the Special Servicer or any sub-servicer of any other
mortgage loans or property; or (vi) any obligation of the Servicer to pay any
indemnity with respect to any repurchase obligation. Each of the Master
Servicer and the Special Servicer is permitted, at its own expense, to employ
sub-servicers, agents or attorneys in performing any of its obligations under
the Pooling and Servicing Agreement, but will not thereby be relieved of any
such obligation, and will be responsible for the acts and omissions of any such
sub-servicers, agents or attorneys. The Pooling and Servicing Agreement
provides, however, that neither the Master Servicer nor the Special Servicer,
nor any of their directors, officers, employees or agents, will have any
liability to the Trust Fund or the Certificateholders for taking any action or
refraining from taking an action in good faith or for errors in judgment. The
foregoing provision would not protect the Master Servicer, the Special Servicer
or such person for the breach of any of the Master Servicer's or Special
Servicer's respective representations or warranties in the Pooling and
Servicing Agreement, or against any specific liability imposed on the Master
Servicer or the Special Servicer for a breach of the servicing standards set
forth in the Pooling and Servicing Agreement, any liability by reason of
willful misfeasance, bad faith, fraud or negligence in the performance of its
duties or by reason of its reckless disregard of obligations or duties under
the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement requires the Master Servicer and the
Special Servicer to make reasonable efforts to collect all payments called for
under the terms and provisions of the Mortgage Loans, and to follow collection
procedures as are consistent with the servicing standard under the Pooling and
Servicing Agreement. Consistent with the above, the Master Servicer or the
Special Servicer, as applicable, may, in its discretion, waive any late payment
charge or penalty fee in connection with any delinquent Monthly Payment or
Balloon Payment with respect to any Mortgage Loan. With respect to the ARD
Loans, the Servicer and Special Servicer will be directed in the Pooling and
Servicing Agreement not to take any enforcement action with respect to payment
of Excess Interest or principal in excess of the principal component of the
constant Monthly Payment, other than requests for collections, prior to the
final maturity date.
ADVANCES
Subject to the limitations described below, the Master Servicer will be
obligated to advance (each such amount, a "P&I Advance"), on the Business Day
preceding each Distribution Date (the "Remittance Date"), an amount equal to
the total or any portion of the Monthly Payment on a Mortgage Loan that was
delinquent as of the close of business on the Business Day preceding such
Remittance Date or, in the event of a default in the payment of a Balloon
Payment, the Assumed
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<PAGE>
Scheduled Payment with respect to the related Balloon Loan, unless the Master
Servicer determines that any such advance would be a Nonrecoverable Advance and
delivers to the Trustee an officer's certificate and accompanying documentation
related to a determination of nonrecoverability as required by the Pooling and
Servicing Agreement.
With respect to any Distribution Date, the amount required to be advanced
in respect of a Mortgage Loan that has been subject to an Appraisal Reduction
Event will equal the amount that would be required to be advanced by the
Servicer without giving effect to the Appraisal Reduction less any Appraisal
Reduction Amount with respect to such Mortgage Loan for such Distribution Date.
In addition to P&I Advances, the Master Servicer will also be obligated
(subject to the limitations described herein) to make cash advances ("Property
Advances," and together with P&I Advances, "Advances") to pay (i) certain costs
and expenses incurred in connection with defaulted Mortgage Loans, acquiring
title to, or management of, REO Property or the sale of defaulted Mortgage
Loans or REO Properties, (ii) delinquent real estate taxes, assessments and
hazard insurance premiums and (iii) to cover other similar costs and expenses
necessary to protect and preserve the security of the related Mortgage. The
Master Servicer will not, however, be obligated to advance from its own funds
any amounts required to cure any failure of any Mortgaged Property to comply
with any applicable environmental law or to contain, clean up or remedy any
environmental condition present at any Mortgaged Property.
If the Master Servicer fails to fulfill its obligation to make any
required Advance, the Trustee, acting in accordance with the servicing
standard, will be required to make the Advance subject to its determination of
recoverability. The Trustee will be entitled to rely conclusively on any
non-recoverability determination of the Master Servicer. See "--The Trustee"
below.
The obligation of the Master Servicer or the Trustee, as applicable, to
make Advances with respect to any Mortgage Loan pursuant to the Pooling and
Servicing Agreement continues through the foreclosure of such Mortgage Loan and
until the liquidation of the Mortgage Loan or related Mortgaged Properties.
Advances are intended to provide a limited amount of liquidity, not to
guarantee or insure against losses. Neither the Master Servicer nor the Trustee
will be required to make any Advance that it determines (based on, among other
things, an updated Appraisal) in its good faith business judgment will not be
recoverable by the Master Servicer or the Trustee, as applicable, out of
related late payments, Insurance Proceeds, Liquidation Proceeds and certain
other collections with respect to the Mortgage Loan as to which such Advances
were made. To the extent that any borrower is not obligated under its Mortgage
Loan documents to pay or reimburse any portion of any Advances that are
outstanding with respect to the related Mortgage Loan as a result of a
modification of such Mortgage Loan by the Special Servicer that forgives loan
payments or other amounts that the Master Servicer or the Trustee previously
advanced, and the Master Servicer or the Trustee determines that no other
source of payment or reimbursement for such Advances is available to it, such
Advances will be deemed to be nonrecoverable; provided, however, in connection
with the foregoing, the Master Servicer or the Trustee will provide an
officer's certificate as described below. In addition, if the Master Servicer
or the Trustee, as applicable, determines that any Advance previously made will
not be recoverable from the foregoing sources, then the Master Servicer or the
Trustee, as applicable, will be entitled to reimburse itself for such Advance,
plus interest thereon, out of amounts on deposit in the Collection Account
prior to distributions on the Certificates. Any such judgment or determination
must be evidenced by an officer's certificate delivered to the Trustee (or, in
the case of the Trustee, the Depositor) setting forth such judgment or
determination of nonrecoverability and the procedure and considerations of the
Master Servicer or the Trustee, as applicable, forming the basis of such
determination, which will include a copy of the Updated Appraisal and any other
information or reports obtained by the Master Servicer or the Trustee, such as
property operating statements, rent rolls, property inspection reports,
engineering reports and other documentation which may support such
determinations.
The Master Servicer or the Trustee, as applicable, will be entitled to
reimbursement for any Advance equal to the amount of such Advance from (i) any
collections on or in respect of the particular Mortgage Loan or REO Property
with respect to which each such Advance was made or (ii) upon determining that
such Advance is not recoverable in the manner described in the preceding
paragraph, from any other amounts from time to time on deposit in the
Collection Account.
Except as set forth above with respect to Advances made during payment
grace periods, the Master Servicer or the Trustee, as applicable, will be
entitled to receive interest at a rate equal to the prime rate published in The
Wall Street Journal, or if The Wall Street Journal is no longer published, The
New York Times, from time to time (the "Advance Rate") on its outstanding
Advances and will be authorized to pay itself such interest from general
collections with respect to all of the Mortgage Loans prior to any payment to
holders of Certificates. If the interest on such Advance is not offset by
Default Interest, a shortfall will result which generally will result in a
Class Interest Shortfall for the most Subordinate Class then outstanding.
S-94
<PAGE>
APPRAISAL REDUCTIONS
After an Appraisal Reduction Event has occurred with respect to a Mortgage
Loan, an Appraisal Reduction will be calculated for such Mortgage Loan. An
"Appraisal Reduction Event" will occur on the earliest of: (i) the third
anniversary of the date on which the first extension of the maturity date of a
Mortgage Loan becomes effective as a result of a modification of such Mortgage
Loan by the Special Servicer, which extension does not decrease the aggregate
amount of Monthly Payments on the Mortgage Loan, (ii) 120 days after an uncured
delinquency occurs in respect of a Mortgage Loan, (iii) the date on which a
reduction in the amount of Monthly Payments on a Mortgage Loan, or a change in
any other material economic term of the Mortgage Loan (other than an extension
of its maturity) becomes effective as a result of a modification of such
Mortgage Loan by the Special Servicer, (iv) 60 days after a receiver has been
appointed, (v) 60 days after a borrower declares bankruptcy or is the subject
of an involuntary bankruptcy proceeding, and (vi) immediately after a Mortgage
Loan becomes an REO Loan; provided, however, that an Appraisal Reduction Event
shall not occur at any time when the aggregate Certificate Balances of all
Classes of Certificates other than the Senior Certificates have been reduced to
zero.
The "Appraisal Reduction" for any Distribution Date and for any Mortgage
Loan as to which any Appraisal Reduction Event has occurred will be an amount
equal to the excess, if any, of (a) the outstanding Scheduled Principal Balance
of such Mortgage Loan over (b) the excess of (i) 90% of the appraised value of
the related Mortgaged Property as determined (A) by one or more appraisals with
respect to any Mortgage Loan with an outstanding Scheduled Principal Balance
equal to or in excess of $2,000,000 conducted in compliance with the Code of
Professional Ethics and Standards of Professional Conduct of the Appraisal
Institute and the Uniform Standards of Professional Appraisal Practice as
adopted by the Appraisal Standards Board of the Appraisal Foundation and
accepted and incorporated into FIRREA (the costs of which shall be paid by the
Master Servicer as a Property Advance) or (B) by either an appraisal conducted
as described in the preceding clause (A) or an internal valuation performed by
the Special Servicer with respect to any Mortgage Loan with an outstanding
Scheduled Principal Balance less than $2,000,000 over (ii) the sum of (A) to
the extent not previously advanced by the Master Servicer or the Trustee, all
unpaid interest on such Mortgage Loan at a per annum rate equal to its Mortgage
Rate, (B) all unreimbursed Advances (and interest thereon) in respect of such
Mortgage Loan and (C) all currently due and unpaid real estate taxes and
assessments, insurance premiums, ground rents and all other amounts due and
unpaid with respect to such Mortgage Loan (which taxes, assessments, premiums,
ground rents and other amounts have not been subject to an Advance by the
Master Servicer or the Trustee and/or for which funds have not been escrowed).
If required to obtain an appraisal pursuant to the foregoing, the Special
Servicer must receive such appraisal within 60 days of the occurrence of such
event (and not more than 120 days thereafter, including within such 120-day
period the passage of any time period set forth in the definition of Appraisal
Reduction Event). If such appraisal is not received by such date or if, for any
Mortgage Loan with an outstanding Scheduled Principal Balance of $1,000,000 or
less, the Special Servicer elects not to obtain an appraisal, the Appraisal
Reduction for the related Mortgage Loan will be 35% of the outstanding
Scheduled Principal Balance of such Mortgage Loan as of the date of the related
Appraisal Reduction Event. On the first Determination Date occurring on or
after the delivery of such appraisal, the Special Servicer will be required to
calculate and report to the Master Servicer, and the Master Servicer will
report to the Trustee, the Appraisal Reduction to take into account such
appraisal.
As a result of calculating an Appraisal Reduction with respect to a
Mortgage Loan, the P&I Advance for such Mortgage Loan for the related
Remittance Date will be reduced, which will have the effect of reducing the
amount of interest available for distribution to the Certificateholders. The
"Appraisal Reduction Amount" for any Distribution Date and any Mortgage Loan
for which an Appraisal Reduction has been calculated will equal the product of
(i) the Reduction Rate for such Distribution Date and (ii) the Appraisal
Reduction with respect to such Mortgage Loan. The "Reduction Rate" will be a
rate per annum equal to the average of the Pass-Through Rates of each Class to
which Appraisal Reductions have been allocated pursuant to the Pooling and
Servicing Agreement, weighted on the basis of the amount of the Appraisal
Reductions allocated to each such Class. Appraisal Reductions will be allocated
to the Subordinate Certificates in reverse sequential order of the Classes for
purposes of determining Voting Rights and the identity of the Controlling
Class. See "--Realization Upon Mortgage Loans" and "--Voting Rights" herein.
With respect to each Mortgage Loan as to which an Appraisal Reduction has
occurred (unless such Mortgage Loan has become a Corrected Mortgage Loan and
has remained current for twelve consecutive Monthly Payments and no other
Appraisal Reduction Event has occurred and is continuing), the Special Servicer
is required, within 30 days before each anniversary of such Appraisal Reduction
Event, to order an appraisal (which may be an update of a prior appraisal) or,
with respect to any Mortgage Loan with an outstanding principal balance less
than $2,000,000, perform an internal valuation or obtain an appraisal (which
may be an update of a prior appraisal), the cost of which shall be paid by the
Master Servicer as a Property Advance recoverable from the Trust Fund. Based
upon such appraisal, internal valuation or, as described in the
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second preceding paragraph, percentage calculation of the Appraisal Reduction,
as the case may be, the Special Servicer shall redetermine and report to the
Trustee and the Servicer the amount of the Appraisal Reduction with respect to
such Mortgage Loan, and such redetermined Appraisal Reduction shall replace the
prior Appraisal Reduction with respect to such Mortgage Loan. Notwithstanding
the foregoing, the Special Servicer will not be required to obtain an appraisal
or perform an internal valuation, as the case may be, with respect to a
Mortgage Loan which is the subject of an Appraisal Reduction Event if the
Special Servicer has obtained an appraisal with respect to the related
Mortgaged Property within the 12-month period immediately prior to the
occurrence of such Appraisal Reduction Event. Instead, the Special Servicer may
use such prior appraisal in calculating any Appraisal Reduction with respect to
such Mortgage Loan.
ACCOUNTS
Collection Account. The Master Servicer will, pursuant to the Pooling and
Servicing Agreement, establish and maintain a segregated account or accounts
(the "Collection Account") into which it will be required to deposit, within
one Business Day of receipt the following payments and collections received or
made by it on or with respect to the Mortgage Loans: (i) all payments on
account of principal on the Mortgage Loans, including the principal component
of Unscheduled Payments on the Mortgage Loans; (ii) all payments on account of
interest and Default Interest on the Mortgage Loans and the interest portion of
all Unscheduled Payments and all Prepayment Premiums; (iii) any amounts
required to be deposited by the Master Servicer in connection with losses
realized on Permitted Investments with respect to funds held in the Collection
Account and in connection with Prepayment Interest Shortfalls; (iv) (x) all Net
REO Proceeds transferred from an REO Account, (y) all amounts transferred from
lockbox accounts in respect of ARD Loans and payable to Certificateholders and
(z) all Condemnation Proceeds, Insurance Proceeds and Net Liquidation Proceeds
not required to be applied to the restoration or repair of the related
Mortgaged Property; (v) any amounts received from borrowers that represent
recoveries of Property Advances or Appraisal Reduction Excess Collections; and
(vi) any other amounts required by the provisions of the Pooling and Servicing
Agreement to be deposited into the Collection Account by the Master Servicer or
the Special Servicer, including, without limitation, proceeds of any purchase
or repurchase of a Mortgage Loan as described under "Description of the
Mortgage Pool--Representations and Warranties; Repurchase," "The Pooling and
Servicing Agreement--Realization Upon Mortgage Loans" and "Description of the
Certificates--Early Termination" herein.
The foregoing requirements for deposits in the Collection Account will be
exclusive, and any payments in the nature of late payment charges, late fees,
"insufficient funds" check charges, assumption fees, loan modification fees,
loan service transaction fees, extension fees, demand fees, beneficiary
statement charges and similar fees need not be deposited in the Collection
Account by the Master Servicer and, to the extent permitted by applicable law,
the Master Servicer or the Special Servicer, as applicable, will be entitled to
retain any such charges and fees received with respect to the Mortgage Loans.
In the event that the Master Servicer deposits into the Collection Account any
amount not required to be deposited therein, the Master Servicer may at any
time withdraw such amount from the Collection Account.
Distribution Account. The Trustee will, pursuant to the Pooling and
Servicing Agreement, establish and maintain a segregated account or accounts
(the "Distribution Account") in the name of the Trustee for the benefit of the
holders of Certificates. With respect to each Distribution Date, the Master
Servicer will deposit in the Distribution Account, to the extent of funds on
deposit in the Collection Account, on or before the Remittance Date an
aggregate amount of immediately available funds equal to the Available Funds
plus (i) any Prepayment Premiums, Yield Maintenance Charges, Excess Interest
and Appraisal Reduction Excess Collections received by the Master Servicer
during the related Collection Period, (ii) Default Interest received with
respect to a Mortgage Loan that is in default with respect to its Balloon
Payment and (iii) Amounts payable to the Trustee as compensation, including the
Trustee fee. To the extent not included in Available Funds, the Master Servicer
will remit to the Trustee all P&I Advances for deposit into the Distribution
Account on the related Remittance Date. See "Description of the
Certificates--Distributions" herein.
The Collection Account and the Distribution Account will be held in the
name of the Trustee (or, in the case of the Collection Account, the Master
Servicer on behalf of the Trustee) on behalf of the holders of Certificates and
the Trustee (and, in the case of the Collection Account, the Master Servicer)
will be authorized to make withdrawals therefrom. Each of the Collection
Account and the Distribution Account will be either (i) a segregated account or
accounts maintained with either a federally or state-chartered depository
institution or trust company the short term unsecured debt obligations of which
are rated "A-1+" by S&P and the long term unsecured debt obligations of which
(or of such institution's parent holding company) are rated by each of the
Rating Agencies in the rating category equal to or greater than the highest
then-current rating assigned to a Class of Certificates then outstanding at the
time of any deposit therein, but in no event less than "A" or (ii) a segregated
trust account or accounts maintained with a federally or state chartered
depository institution or trust
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company acting in its fiduciary capacity, having, in either case, a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority and subject to regulations regarding
fiduciary funds on deposit substantially similar to 12 CFR 9.10(b), or as to
which the Trustee has been informed in writing by each of the Rating Agencies
that the maintenance of such account will not, in and of itself, result in a
downgrading, withdrawal or qualification of the rating then assigned by such
Rating Agency to any Class of Certificates (an "Eligible Bank"). Amounts on
deposit in the Collection Account may be invested in certain United States
government securities and other investments specified in the Pooling and
Servicing Agreement ("Permitted Investments"). See "Description of the
Certificates--Accounts" in the Prospectus for a listing of Permitted
Investments.
Additionally, for substantially all ARD Loans for which a lockbox account
has not already been established such loans require the related mortgagee to
establish a lockbox account prior to its Anticipated Repayment Date. The
lockbox accounts will not be assets of the Trust Fund.
WITHDRAWALS FROM THE COLLECTION ACCOUNT
The Master Servicer may make withdrawals from the Collection Account for
the following purposes: (i) to remit on or before each Remittance Date to the
Distribution Account an amount equal to Available Funds and any Prepayment
Premiums for such Distribution Date; (ii) to pay or reimburse the Master
Servicer or the Trustee, as applicable, for Advances made by it and interest on
Advances, the Master Servicer's right to reimburse itself for items described
in this clause (ii) being limited as described herein under "--Advances"; (iii)
to pay on or before each Remittance Date to the Master Servicer and Special
Servicer the fee portion of the servicing compensation in respect of the
related Distribution Date to be paid, in the case of the Servicing Fees, from
interest received on the related Mortgage Loan, and to pay from time to time,
to the Master Servicer, any interest or investment income earned on funds
deposited in the Collection Account, and pay the Master Servicer as additional
servicing compensation any Prepayment Interest Surplus received in the
preceding Collection Period and to pay the Master Servicer or the Special
Servicer, as applicable, any other amounts constituting additional servicing
compensation; (iv) to pay on or before each Distribution Date to the Depositor,
Transferor, related Mortgage Loan Seller or other purchaser with respect to
each Mortgage Loan or REO Property that has previously been purchased or
repurchased by it pursuant to the Pooling and Servicing Agreement, all amounts
received thereon during the related Collection Period and subsequent to the
date as of which the amount required to effect such purchase or repurchase was
determined; (v) to the extent not reimbursed or paid pursuant to any of the
above clauses, to reimburse or pay the Master Servicer, the Special Servicer,
the Trustee and/or the Depositor, as applicable, for certain other unreimbursed
expenses incurred by or on behalf of such person pursuant to and to the extent
reimbursable under the Pooling and Servicing Agreement and to satisfy any
indemnification obligations of the Trust Fund under the Pooling and Servicing
Agreement; (vi) to pay to the Trustee amounts payable to it as compensation
including, but not limited to the Trustee fee, and amounts requested by it to
pay taxes on certain net income with respect to REO Properties; (vii) to
withdraw any amount deposited into the Collection Account that was not required
to be deposited therein; and (viii) to clear and terminate the Collection
Account pursuant to a plan for termination and liquidation of the Trust Fund.
ENFORCEMENT OF "DUE-ON-SALE" AND "DUE-ON-ENCUMBRANCE" CLAUSES
The Master Servicer or the Special Servicer, as applicable, will be
obligated to enforce the Trustee's rights under the "due-on-sale" clause in the
related Mortgage Loan documents to accelerate the maturity of the related
Mortgage Loan, unless such provision is not enforceable under applicable law or
such enforcement is reasonably likely to result in meritorious legal action by
the related borrower or to the extent the Master Servicer or the Special
Servicer, as applicable, acting in accordance with the servicing standard
described herein, determines that such enforcement is not in the best interests
of the Trust Fund; provided that the Master Servicer or the Special Servicer,
as applicable, will not fail to enforce the Trustee's rights under the
"due-on-sale" clause in any Mortgage Loan or group of Mortgage Loans made to a
single borrower or related borrowers or that is secured by any group of
cross-collateralized Mortgage Properties whose Scheduled Principal Balance
equals or exceeds 5% of the Pool Balance without prior written notice to each
Rating Agency and confirmation by each Rating Agency that such failure will not
result in the reduction, modification or withdrawal of its then current rating
of any Class of Certificates.
If applicable law prohibits the enforcement of a "due-on-sale" clause or
the Master Servicer or Special Servicer is (i) otherwise prohibited from taking
such action as described in the preceding paragraph or (ii) determines that
such enforcement is not in the best interests of the Trust Fund (provided that
the Master Servicer or the Special Servicer, as applicable, will not fail to
enforce the Trustee's rights under the "due-on-sale" clause in any Mortgage
Loan or group of
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Mortgage Loans made to a single borrower or related borrowers or that is
secured by any group of cross-collateralized Mortgage Properties whose
Scheduled Principal Balance equals or exceeds 5% of the Pool Balance without
prior written notice to each Rating Agency and confirmation by each Rating
Agency that such failure will not result in the reduction, modification or
withdrawal of its then current rating of any Class of Certificates) and, as a
consequence, a Mortgage Loan is assumed, (x) the original borrower may be
released from liability for the unpaid principal balance of the related
Mortgage Loan and interest thereon at the applicable Mortgage Rate during the
remaining term of such Mortgage Loan, (y) the Master Servicer may accept
payments in respect of the Mortgage Loan from the new owner of the Mortgaged
Property and (z) the Master Servicer or the Special Servicer, as applicable,
may enter into an assumption agreement with a new purchaser whereby the new
owner of the Mortgaged Property will be substituted as the borrower and the
original borrower released, so long as (to the extent permitted by law) the new
owner satisfies the underwriting requirements customarily imposed by the Master
Servicer or the Special Servicer, as applicable, as a condition to its approval
of a borrower on a new mortgage loan substantially similar to such Mortgage
Loan. In the event a Mortgage Loan is assumed as described in the preceding
sentences, the Trustee, the Master Servicer and the Special Servicer, will not
permit any modification of such Mortgage Loan other than as described below
under "--Amendments, Modifications and Waivers." The Master Servicer or Special
Servicer, as applicable, will be entitled to retain as additional servicing
compensation any assumption fees paid by the original borrower or the new owner
in connection with such assumption. See "Certain Legal Aspects of the Mortgage
Loans--Enforceability of Certain Provisions--Due-on-Sale Provisions" in the
Prospectus. A new owner of the Mortgaged Property may be substituted or a
junior or senior lien allowed on the Mortgaged Property, without the consent of
the Master Servicer, the Special Servicer or the Trustee in a bankruptcy
proceeding involving the Mortgaged Property.
If any Mortgage Loan contains a provision in the nature of a
"due-on-encumbrance" clause, which by its terms (i) provides that such Mortgage
Loan will (or may at the related mortgagee's option) become due and payable
upon the creation of any lien or other encumbrance on such Mortgaged Property
or (ii) requires the consent of the related mortgagee to the creation of any
such lien or other encumbrance on such Mortgaged Property, then, for so long as
such Mortgage Loan is included in the Trust Fund, the Master Servicer or the
Special Servicer, as applicable, on behalf of the Trust Fund, will enforce such
provision and in connection therewith will (x) accelerate the payments due on
such Mortgage Loan or (y) withhold its consent to the creation of any such lien
or other encumbrance, as applicable, except, in each case, to the extent that
the Master Servicer or the Special Servicer, as applicable, acting in
accordance with the applicable servicing standard, determines that such
enforcement would not be in the best interests of the Trust Fund and in each
case only upon confirmation of each Rating Agency that it will not reduce,
withdraw or modify its then current rating of any Class of Certificates in
connection therewith.
A "due-on-sale" or "due-on-encumbrance" clause may, under certain
circumstances, be unenforceable against a borrower that is a debtor in a case
under the Bankruptcy Code. Notwithstanding the foregoing, the Master Servicer
or the Special Servicer, as applicable, may forbear from enforcing any
"due-on-encumbrance" provision in connection with any junior or senior lien on
the Mortgaged Property imposed in connection with any bankruptcy proceeding
involving the Mortgaged Property.
INSPECTIONS; APPRAISALS
The Master Servicer (or the Special Servicer with respect to Specially
Serviced Mortgage Loans or REO Property) is required (at its own expense) to
inspect each Mortgaged Property at such times and in such manner as are
consistent with the servicing standards described herein, but will in any event
(i) inspect each Mortgaged Property at least once every 12 months (or 24
months, in the case of Mortgage Loans having principal balances less then
$1,000,000) with the first such inspection being completed on or prior to
September 31, 1999 unless each of the Rating Agencies has confirmed in writing
that a longer period between inspections (which may not exceed 24 months) will
not result, in and of itself, in a downgrading, withdrawal or qualification of
the rating then assigned by such Rating Agency to any Class of the
Certificates, (ii) if the Master Servicer or the Special Servicer, as
applicable, retains any Financial and Lease Reporting Fees pursuant to the
related Mortgage Loan, inspect the related Mortgaged Property as soon as
practicable thereafter (except to the extent such property has been inspected
by the Master Servicer or the Special Servicer within the preceding 120 days)
and (iii) if any Monthly Payment becomes more than 60 days delinquent (without
giving effect to any grace period permitted under the related promissory note
or Mortgage) each related Mortgaged Property shall be inspected by the Special
Servicer (at its own expense) as soon as practicable thereafter.
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REALIZATION UPON MORTGAGE LOANS
Pursuant to the Pooling and Servicing Agreement, if a default on a
Mortgage Loan has occurred or, in the Special Servicer's judgment, a payment
default is imminent, the Special Servicer, on behalf of the Trust Fund, may at
any time institute foreclosure proceedings, exercise any power of sale
contained in the related Mortgage or otherwise acquire title to the related
Mortgaged Property.
Standards for Conduct Generally in Effecting Foreclosure or the Sale of
Defaulted Loans. In connection with any foreclosure or other acquisition, any
costs and expenses incurred in any such proceedings will be advanced by the
Master Servicer as a Property Advance, unless the Master Servicer determines
that such Advance would constitute a Nonrecoverable Advance.
If the Special Servicer elects to proceed with a non-judicial foreclosure
in accordance with the laws of the state in which the Mortgaged Property is
located, the Special Servicer will not be required to pursue a deficiency
judgment against the related borrower, or any other liable party if the laws of
the state do not permit such a deficiency judgment after a non-judicial
foreclosure or if the Special Servicer determines, in its best judgment, that
the likely recovery if a deficiency judgment is obtained will not be sufficient
to warrant the cost, time, expense and/or exposure of pursuing the deficiency
judgment and such determination is evidenced by an officer's certificate
delivered to the Trustee.
Notwithstanding any provision to the contrary, the Special Servicer shall
not, on behalf of the Trust Fund, obtain title to a Mortgaged Property as a
result of or in lieu of foreclosure or otherwise obtain title to any direct or
indirect partnership interest or other equity interest in any borrower pledged
pursuant to a pledge agreement and thereby be the beneficial owner of a
Mortgaged Property, and shall not otherwise acquire possession of, or take any
other action with respect to, any Mortgaged Property if, as a result of any
such action, the Trustee, for the Trust Fund or the Certificateholders, would
be considered to hold title to, to be a "mortgagee-in-possession" of, or to be
an "owner" or "operator" of such Mortgaged Property within the meaning of
CERCLA or any comparable law unless the Special Servicer has previously
determined in accordance with the Servicing Standard, based on an updated ESA
prepared within the past twelve months by an person independent of the Special
Servicer who regularly conducts environmental assessments, that: (A) such
Mortgaged Property is in compliance in all material respects with applicable
environmental laws or, if not after consultation with an environmental
consultant, that it would be in the best economic interest of the Trust Fund to
take such actions as are necessary to bring such Mortgaged Property in
compliance therewith, and (B) there are no circumstances present at such
Mortgaged Property relating to the use, management or disposal of any hazardous
materials for which investigation, testing, monitoring, containment, clean-up
or remediation could reasonably be required under any currently effective
federal, state or local law or regulation, or that, if any such hazardous
materials are present for which such action could reasonably be required, after
consultation with an environmental consultant, it would be in the best economic
interest of the Trust Fund to take such actions with respect to such Mortgaged
Property. In the event that the environmental assessment last obtained by the
Special Servicer with respect to a Mortgaged Property indicates that such
Mortgaged Property may not be in compliance in all material respects with
applicable environmental laws or that hazardous materials may be present but
does not definitively establish such fact, the Special Servicer shall cause
such further environmental tests as the Special Servicer shall deem prudent to
protect the interests of Certificateholders to be conducted by a person
independent of the Special Servicer who regularly conducts such tests. Any such
tests shall be deemed part of the ESA obtained by the Special Servicer for
these purposes.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed-in-lieu of foreclosure, the deed or certificate of sale
will be issued to the Trustee, or to its nominee (which shall not include the
Master Servicer or the Special Servicer) or a separate trustee or co-trustee on
behalf of the Trustee as the beneficial owner of the uncertificated regular
interest in the REMIC I Certificates and the holders of Certificates.
Notwithstanding any such acquisition of title and cancellation of the related
Mortgage Loan, such Mortgage Loan will be considered to be a Mortgage Loan held
in the Trust Fund until such time as the related REO Property is sold by the
Trust Fund and will be reduced by Net REO Proceeds allocated to principal.
If the Trust Fund acquires a Mortgaged Property by foreclosure or
deed-in-lieu of foreclosure upon a default of a Mortgage Loan, the Pooling and
Servicing Agreement provides that the Special Servicer must administer such
Mortgaged Property so that it qualifies at all times as "foreclosure property"
within the meaning of Code Section 860G(a)(8). The Pooling and Servicing
Agreement also requires that any such Mortgaged Property be managed and
operated by an "independent contractor," within the meaning of applicable
Treasury regulations, who furnishes or renders services to the tenants of such
Mortgaged Property, unless the Special Servicer provides the Trustee with an
opinion of counsel that the
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operation and management of the Mortgaged Property other than through an
independent contractor will not cause such Mortgaged Property to fail to
qualify as "foreclosure property" (which opinion will be an expense of the
Trust Fund). Generally, REMIC I will not be taxable on income received with
respect to the Mortgaged Property to the extent that it constitutes "rents from
real property," within the meaning of Code Section 856(c)(3)(A) and Treasury
regulations thereunder. "Rents from real property" do not include the portion
of any rental based on the net income or gain of any tenant or sub-tenant. NO
DETERMINATION HAS BEEN MADE WHETHER RENT ON ANY OF THE MORTGAGED PROPERTIES
MEETS THIS REQUIREMENT. "Rents from real property" include charges for services
customarily furnished or rendered in connection with the rental of real
property, whether or not the charges are separately stated. Services furnished
to the tenants of a particular building will be considered as customary if, in
the geographic market in which the building is located, tenants in buildings
that are of a similar class are customarily provided with the service. NO
DETERMINATION HAS BEEN MADE WHETHER THE SERVICES FURNISHED TO THE TENANTS OF
THE MORTGAGED PROPERTIES ARE "CUSTOMARY" WITHIN THE MEANING OF APPLICABLE
REGULATIONS. It is therefore possible that a portion of the rental income with
respect to a Mortgaged Property owned by the Trust Fund, presumably allocated
based on the value of any non-qualifying services, would not constitute "rents
from real property." In addition to the foregoing, any net income from a trade
or business operated or managed by an independent contractor on a Mortgaged
Property owned by REMIC-I, including but not limited to a skilled nursing care
business, will not constitute "rents from real property." Any of the foregoing
types of income may instead constitute "net income from foreclosure property,"
which would be taxable to REMIC-I at the highest marginal federal corporate
rate (currently 35%) and may also be subject to state or local taxes. Any such
taxes would be chargeable against the related income for purposes of
determining the Net REO Proceeds available for distribution to holders of
Certificates. See "Material Federal Income Tax Consequences" herein.
The Special Servicer may offer to sell to any person any Specially
Serviced Mortgage Loan or any REO Property, if and when the Special Servicer
determines, consistent with the servicing standards set forth in the Pooling
and Servicing Agreement, that no satisfactory arrangements can be made for
collection of delinquent payments thereon and such a sale would be in the best
economic interests of the Trust Fund, but will, in any event, so offer to sell
any REO Property no later than the time determined by the Special Servicer to
be sufficient to result in the sale of such REO Property within the period
specified in the Pooling and Servicing Agreement, including extensions thereof.
The Special Servicer will give the Trustee not less than 10 Business Days'
prior written notice of its intention to sell any Specially Serviced Mortgage
Loan or REO Property, in which case the Special Servicer will accept any offer
received from any person that is determined by the Special Servicer to be a
fair price for such Specially Serviced Mortgage Loan or REO Property, if the
highest offeror is not an Interested Person, or is determined to be such a
price by the Trustee (which may be based upon updated independent appraisals
received by the Trustee or the Special Servicer, as applicable), if the highest
offeror is an Interested Person; provided, however, that any offer by an
Interested Person in the amount of the Repurchase Price shall be deemed to be a
fair price. "Interested Person" means the Depositor, the Master Servicer, the
Special Servicer, the Trustee, any borrower or property manager of a Mortgaged
Property, an independent contractor engaged by the Special Servicer to manage
or operate an REO Property or any affiliate of any of the foregoing.
Notwithstanding anything to the contrary herein, neither the Trustee, in its
individual capacity, nor any of its affiliates may offer for or purchase any
Specially Serviced Mortgage Loan or any REO Property. In addition, the Special
Servicer may accept an offer that is not the highest offer if it determines, in
accordance with the servicing standard stated in the Pooling and Servicing
Agreement, that acceptance of such offer would be in the best interests of the
holders of Certificates (for example, if the prospective buyer making the lower
offer is more likely to perform its obligations, or the terms offered by the
prospective buyer making the lower offer are more favorable).
The Special Servicer will prepare a report (an "Asset Status Report") for
each Mortgage Loan which becomes a Specially Serviced Mortgage Loan not later
than 30 days after the servicing of such Mortgage Loan is transferred to the
Special Servicer. Each Asset Status Report will be delivered to the Servicer
and the Rating Agencies. The Special Servicer shall implement the courses of
action detailed therein in a commercially reasonable manner. The Special
Servicer will not be required to take or refrain from taking any action in
connection therewith that would cause it to violate applicable law, the Pooling
and Servicing Agreement, including the Servicing Standard, or the REMIC
Provisions.
Following a default in the payment of a Balloon Payment, the Special
Servicer may, acting in accordance with the Servicing Standard, grant any
number of successive extensions of up to 12 months (or the period since the
beginning of the first such extension, if shorter) with respect to the
defaulted Mortgage Loan; provided that the Special Servicer may not grant any
extension (i) that permits such borrower to make payments of interest only for
a period, in the aggregate, of greater than 12 months or (ii) extends the
maturity date of any mortgage loan beyond the Rated Final Distribution Date or
10 years prior to the expiration of any related ground lease with respect to
the Mortgaged Property securing such Mortgage Loan without the written consent
of each Rating Agency.
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AMENDMENTS, MODIFICATIONS AND WAIVERS
Neither the Master Servicer nor the Special Servicer may modify, amend,
waive or otherwise consent to the change of the stated maturity date of any
Mortgage Loan, the payment of principal of, or interest or Default Interest on,
any Mortgage Loan, or any other term of a Mortgage Loan, unless (i) such
modification, amendment, waiver or consent is not a "significant modification"
under Section 1001 of the Code, (ii) to the extent such modification,
amendment, waiver or consent would constitute a "significant modification"
under Section 1001 of the Code, such Mortgage Loan is in default or a default
with respect thereto is reasonably foreseeable or (iii) such modification,
amendment, waiver or consent is permitted under "--Realization Upon Mortgage
Loans--Appraisals for Specially Serviced Mortgage Loans" herein. Neither Master
Servicer nor the Special Servicer may agree to any retroactive modification,
amendment, waiver or consent.
THE TRUSTEE
The Chase Manhattan Bank, a New York Banking Corporation with its
principal offices in New York, New York, will act as Trustee pursuant to the
Pooling and Servicing Agreement. The Trustee's corporate trust office is
located at Structured Finance Services--CMBS 450 West 33rd Street, New York,
New York 10001.
The Trustee may resign at any time by giving written notice to the
Depositor, the Master Servicer, the Special Servicer and the Rating Agencies.
Upon such notice of the Trustee's resignation, the Master Servicer will appoint
a successor trustee. If no successor trustee is appointed within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for appointment of a successor trustee.
The Depositor or the Master Servicer may remove the Trustee if, among
other things, the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if at any time the Trustee becomes incapable
of acting, or is adjudged bankrupt or insolvent, or a receiver of the Trustee
or its property is appointed or any public officer takes charge or control of
the Trustee or of its property. The holders of Certificates representing a
majority of the aggregate Voting Rights may remove the Trustee upon written
notice to the Master Servicer, the Special Servicer, the Depositor and the
Trustee. Any resignation or removal of the Trustee and appointment of a
successor trustee will not become effective until acceptance of the appointment
by the successor trustee.
The Trust Fund will indemnify the Trustee and its directors, officers,
employees, agents and affiliates against any and all losses, liabilities,
damages, claims or expenses (including reasonable attorneys' fees) arising in
respect of the Pooling and Servicing Agreement or the Certificates (but only to
the extent that they are expressly reimbursable under the Pooling and Servicing
Agreement or are unanticipated expenses incurred by the REMIC) other than those
resulting from the negligence, fraud, bad faith or willful misconduct of the
Trustee and those for which such indemnified persons are indemnified pursuant
to the last sentence of this paragraph. The Trustee will not be required to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties under the Pooling and Servicing Agreement, or
in the exercise of any of its rights or powers, if in the Trustee's opinion the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. Each of the Master Servicer and the Special
Servicer will indemnify the Trustee and its directors, officers, employees,
agents and affiliates for similar losses incurred related to the willful
misconduct, fraud, bad faith and/or negligence in the performance of the Master
Servicer's or the Special Servicer's respective duties under the Pooling and
Servicing Agreement or by reason of reckless disregard of the Master Servicer's
or the Special Servicer's respective obligations and duties under the Pooling
and Servicing Agreement.
DUTIES OF THE TRUSTEE
The Trustee, the Special Servicer and Master Servicer will make no
representation as to the validity or sufficiency of the Pooling and Servicing
Agreement, the Certificates, this Prospectus Supplement or the validity,
enforceability or sufficiency of the Mortgage Loans or related documents. The
Trustee will not be accountable for the use or application by the Depositor of
any Certificates or of the proceeds of such Certificates, or for the use of or
application of any funds paid to the Depositor, the Master Servicer or the
Special Servicer in respect of the Mortgage Loans, or any funds deposited in or
withdrawn from the Collection Account or the Distribution Account by the
Depositor, the Master Servicer or the Special Servicer, other than with respect
to any funds held by the Trustee.
If no Event of Default has occurred of which the Trustee has actual
knowledge and after the curing of all Events of Default that may have occurred,
the Trustee is required to perform only those duties specifically required
under the Pooling and Servicing Agreement. Upon receipt of the various
certificates, reports or other instruments required to be furnished to it, the
Trustee is required to examine such documents and to determine whether they
conform on their face to the requirements of the Pooling and Servicing
Agreement.
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If the Master Servicer fails to make any required Advance, the Trustee, as
acting or successor Master Servicer, will be required to make such Advance to
the extent that such Advance is not deemed to be nonrecoverable. The Trustee
will be entitled to rely conclusively on any determination by the Master
Servicer that an Advance, if made, would be nonrecoverable (any such Advance, a
"Nonrecoverable Advance"). The Trustee will be entitled to reimbursement for
each Advance made by it in the same manner and to the same extent as the Master
Servicer. See "--Advances" herein.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Pursuant to the Pooling and Servicing Agreement, the Master Servicer will
be entitled to receive a monthly servicing fee (the "Servicing Fee") for each
Collection Period equal to a per annum rate of 0.0545% and for each Mortgage
Loan equal to a per annum rate (the related "Servicing Fee Rate") ranging from
0.1545% to 0.0545% (in the case of the Mortgage Loans sold to the Transferor by
NRFinance and PMCF) and equal to 0.1545% (in the case of the Mortgage Loans
sold to the Transferor by any other Mortgage Loan Seller or originator) on the
then outstanding principal balance of such Mortgage Loan calculated on the
basis of a 360-day year consisting of twelve 30-day months. The Servicing Fee
relating to each Mortgage Loan will be retained by the Master Servicer from
payments and collections (including Insurance Proceeds and Liquidation
Proceeds) in respect of such Mortgage Loan. The Master Servicer will also be
entitled to retain as additional servicing compensation (i) all investment
income earned on amounts on deposit in the Reserve Accounts (to the extent
consistent with applicable law and the related Mortgage Loan documents), the
Collection Account and the Distribution Account, (ii) all amounts collected
with respect to the Mortgage Loans (that are not Specially Serviced Mortgage
Loans) in the nature of late payment charges, late fees, "insufficient funds"
check charges (including with respect to Specially Serviced Mortgage Loans),
loan service transaction fees, extension fees, demand fees, modification fees,
assumption fees, beneficiary statement charges and similar fees and charges
(but not including any Prepayment Premiums or Default Interest), (iii)
Financial and Lease Reporting Fees (with respect to any Mortgage Loan that is
not a Specially Serviced Mortgage Loan and to the extent permitted under the
related Mortgage Loan) and (iv) any Prepayment Interest Surplus (to the extent
not offset against any Prepayment Interest Shortfall in accordance with the
provisions of the Pooling and Servicing Agreement). The Master Servicer will be
responsible for paying to the Trustee certain out of pocket expenses incurred
thereby in the performance of its duties in accordance with the Pooling and
Servicing Agreement.
The Master Servicer will pay all expenses incurred in connection with its
responsibilities under the Pooling and Servicing Agreement (subject to
reimbursement as described herein), including all fees of any sub-servicers
retained by it, and the various expenses of the Master Servicer specifically
described herein.
SPECIAL SERVICING
With respect to any Mortgage Loan that is designated a Specially Serviced
Mortgage Loan, the Master Servicer will transfer its servicing responsibilities
to the Special Servicer, but will continue to receive payments on such Mortgage
Loan (including amounts collected by the Special Servicer), to make certain
calculations with respect to such Mortgage Loan and to make remittances and
prepare certain reports to the Trustee with respect to such Mortgage Loan. If
the related Mortgaged Property is acquired in respect of any such Mortgage Loan
whether through foreclosure, deed-in-lieu of foreclosure or otherwise (upon
acquisition, an "REO Property"), the Special Servicer will continue to be
responsible for the operation and management thereof. The Master Servicer will
have no responsibility for the performance by the Special Servicer of its
duties under the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement will define a "Specially Serviced
Mortgage Loan" to include any Mortgage Loan with respect to which: (i) the
related borrower is 60 or more days delinquent in the payment of principal and
interest (regardless of whether in respect thereof P&I Advances have been
reimbursed); (ii) the related borrower has expressed to the Master Servicer an
inability to pay or a hardship in paying the Mortgage Loan in accordance with
its terms; (iii) the Master Servicer has received notice that the borrower has
become the subject of any bankruptcy, insolvency or similar proceeding,
admitted in writing the inability to pay its debts as they come due or made an
assignment for the benefit of creditors; (iv) the Master Servicer has received
notice of a foreclosure or threatened foreclosure of any lien on the Mortgaged
Property securing the Mortgage Loan; (v) a default of which the Master Servicer
has notice (other than a failure by the borrower to pay principal or interest)
and which materially and adversely affects the interests of the
Certificateholders has occurred and remained unremedied for the applicable
grace period specified in the Mortgage Loan (or, if no grace period is
specified, 60 days); provided, that a default requiring a Property Advance will
be deemed to materially and adversely affect the interests of
Certificateholders; (vi) the borrower has failed to make a Balloon Payment
(except in the case where the Master Servicer and the Special Servicer agree in
writing that such Mortgage Loan is likely to be paid in full within 30 days
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after such default); (vii) the Master Servicer proposes to commence foreclosure
or other workout arrangements; or (viii) the Master Servicer otherwise
determines there is a material risk of default by the related borrower,
provided, however, that a Mortgage Loan will cease to be a Specially Serviced
Mortgage Loan (a) with respect to the circumstances described in clauses (i)
and (vi) above, when the borrower thereunder has brought the Mortgage Loan
current (with respect to the circumstances described in clause (vi), pursuant
to any workout recommended by the Special Servicer) and thereafter made three
consecutive full and timely Monthly Payments, (b) with respect to the
circumstances described in clauses (ii) and (iv) above, when such circumstances
cease to exist in the good faith judgment of the Special Servicer and with
respect to the circumstances described in clauses (iii) and (vii), when such
circumstances cease to exist, (c) with respect to the circumstances described
in clause (v) above, when such default is cured; or (d) with respect to the
circumstances described in clause (viii) above, the Master Servicer determines
that there is not a material risk of default by the related borrower, provided,
in any such case, that at that time no circumstance exists (as described above)
that would cause the Mortgage Loan to continue to be characterized as a
Specially Serviced Mortgage Loan.
If any Specially Serviced Mortgage Loan, in accordance with its original
terms or as modified in accordance with the Pooling and Servicing Agreement
becomes a performing Mortgage Loan (through workout by the Special Servicer or
otherwise) for three consecutive Monthly Payments (provided no additional event
of default is foreseeable in the reasonable judgment of the Special Servicer),
the Special Servicer will return the full servicing of such Mortgage Loan (a
"Corrected Mortgage Loan") to the Master Servicer.
NRF will be the initial Special Servicer. The Special Servicer may be
removed without cause and a successor Special Servicer appointed (i) first, by
the holders of the majority of the aggregate Voting Rights of the Class M
Certificates at such time as Realized Losses allocated to the Class N-1
Certificates equal or exceed 75% of the initial Certificate Balance of such
Class, but only until such time as Realized Losses allocated to the Class M
Certificates equal or exceed 50% of the initial Certificate Balance of such
Class; (ii) second, by the holders of the majority of the aggregate Voting
Rights of the Class L Certificates, but only until such time as Realized Losses
allocated to the Class L Certificates equal or exceed 50% of the initial
Certificate Balance of such Class; and (iii) thereafter, by the holders of the
majority of the aggregate Voting Rights of the second most subordinate Class of
Certificates then outstanding, but only until such time as Realized Losses
allocated to such Class equal or exceed 50% of the initial Certificate Balance
of such Class.
Notwithstanding the foregoing, the removal of the Special Servicer and the
appointment of a successor Special Servicer shall not be effective until (i)
the successor Special Servicer has assumed in writing all of the
responsibilities, duties and liabilities of the Special Servicer hereunder
pursuant to an agreement satisfactory to the Trustee, and (ii) each of the
Rating Agencies confirms to the Trustee in writing that such appointment and
assumption shall not result, in and of itself, in a downgrading, withdrawal or
qualification of the rating then assigned by such Rating Agency to any Class of
Certificates.
Pursuant to the Pooling and Servicing Agreement, the Special Servicer will
be entitled to certain fees, including a special servicing fee (the "Special
Servicing Fee") equal to 1/12th of 0.35% of the outstanding Scheduled Principal
Balance of such Specially Serviced Mortgage Loans on a monthly basis. The
Special Servicer will also receive with respect to any Specially Serviced
Mortgage Loan or REO Property that is sold or transferred or otherwise
liquidated (except in connection with the repurchase of a Mortgage Loan as
described under "Description of the Mortgage Pool--Representations and
Warranties; Repurchase"), in addition to the Special Servicing Fee, a
disposition fee (the "Disposition Fee") equal to the product of (A) the excess,
if any, of (x) the proceeds of the sale or liquidation of any Specially
Serviced Mortgage Loan or REO Property over (y) any broker's commission and
related brokerage referral fees and (B) (x) 1.50%, if such sale or liquidation
occurs prior to 12 months following the date on which the Mortgage Loan
initially became a Specially Serviced Mortgage Loan or (y) 1.0%, if such sale
or liquidation occurs upon or after the expiration of such 12-month period.
Furthermore, the Special Servicer shall be entitled to receive, as additional
servicing compensation, a workout fee (the "Workout Fee") equal to the product
of 1.0% and the amount of Net Collections received by the Master Servicer or
the Special Servicer with respect to each Corrected Mortgage Loan. If any
Corrected Mortgage Loan again becomes a Specially Serviced Mortgage Loan, any
right to the Workout Fee with respect to such Mortgage Loan earned in
connection with the initial modification, restructuring or workout thereof
shall terminate, and the Special Servicer shall be entitled to a new Workout
Fee for such Mortgage Loan upon resolution or workout of the subsequent event
of default under such Mortgage Loan. If the Special Servicer is terminated for
any reason it will retain the right to receive any Workout Fees payable in
respect of any Mortgage Loans that become Corrected Mortgage Loans during the
period that it acted as Special Servicer (and the successor Special Servicer
will not be entitled to any portion of such Workout Fees), in each case until
the Workout Fees for any Mortgage Loan cease to be payable in accordance with
this paragraph. Each of the foregoing fees, along with certain expenses related
to special servicing of a Mortgage Loan, will be payable out of funds otherwise
available to pay principal and interest on the
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Certificates. The Special Servicer will also be entitled to retain as
additional servicing compensation (i) all investment income earned on amounts
on deposit in any REO Account and (ii) to the extent permitted under the
related Mortgage Loan, all amounts collected with respect to the Specially
Serviced Mortgage Loans in the nature of late payment charges, late fees,
assumption fees, loan modification fees, extension fees, Financial and Lease
Reporting Fees (to the extent such fees are not required to be remitted to the
related borrower pursuant to the related promissory note), loan service
transaction fees, beneficiary statement charges or similar items (but not
including any Default Interest, Yield Maintenance Charges or other Prepayment
Premiums, Excess Interest or Appraisal Reduction Excess Collections), in each
case to the extent received with respect to any Specially Serviced Mortgage
Loan and not required to be deposited or retained in the Collection Account
pursuant to the Pooling and Servicing Agreement.
"Net Collections" means, with respect to any Corrected Mortgage Loan, an
amount equal to all payments on account of interest and principal on such
Mortgage Loan and all Prepayment Premiums.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Monthly Reports. On each Distribution Date, the Trustee will forward by
mail to each Certificateholder, with copies to the Depositor, the Paying Agent,
the Underwriters, the Master Servicer and each Rating Agency, a statement as to
such distribution setting forth for each class:
(i) the Pooled Principal Distribution Amount and the amount allocable to
principal, included in Available Funds;
(ii) The Class Interest Distribution Amount distributable to such Class
and the amount of Available Funds allocable thereto, together with any Class
Interest Shortfall allocable to such Class;
(iii) The amount of any P&I Advances by the Master Servicer or the Trustee
included in the amounts distributed to the Certificateholders;
(iv) The Certificate Balance of each Class of Certificates after giving
effect to the distribution of amounts in respect of the Pooled Principal
Distribution Amount on such Distribution Date;
(v) Realized Losses and their allocation to the Certificate Balance of
any Class of Certificates;
(vi) The Scheduled Principal Balance of the Mortgage Loans as of the Due
Date preceding such Distribution Date;
(vii) The number and aggregate principal balance of Mortgage Loans (A)
delinquent one month, (B) delinquent two months, (C) delinquent three or
more months, (D) as to which foreclosure proceedings have been commenced and
(E) that otherwise constitute Specially Serviced Mortgage Loans, and, with
respect to each Specially Serviced Mortgage Loan, the amount of Property
Advances made during the related Collection Period, the amount of the P&I
Advances made on such Distribution Date, the aggregate amount of Property
Advances theretofore made that remain unreimbursed and the aggregate amount
of P&I Advances theretofore made that remain unreimbursed;
(viii) With respect to any Mortgage Loan that became an REO Mortgage Loan
during the preceding calendar month, the principal balance of such Mortgage
Loan as of the date it became an REO Mortgage Loan;
(ix) As of the Due Date preceding such Distribution Date, as to any REO
Property sold during the related Collection Period, the date on which the
Special Servicer made a Final Recovery Determination and the amount of the
proceeds of such sale deposited into the Collection Account, and the
aggregate amount of REO Proceeds and Net REO Proceeds (in each case other
than Liquidation Proceeds) and other revenues collected by the Special
Servicer with respect to each REO Property during the related Collection
Period and credited to the Collection Account, in each case identifying such
REO Property by name;
(x) The outstanding principal balance of each REO Mortgage Loan as of the
close of business on the immediately preceding Due Date and the appraised
value of the related REO Property per the most recent appraisal obtained;
(xi) The amount of the servicing compensation paid to the Master Servicer
with respect to such Distribution Date, and the amount of the additional
servicing compensation that was paid to the Master Servicer with respect to
such Distribution Date;
(xii) The amount of any Special Servicing Fee, Disposition Fee or Workout
Fee paid to the Special Servicer with respect to such Distribution Date;
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(xiii) The amount of any Appraisal Reduction Amounts allocated, and the
amount of any Appraisal Reduction Excess Collections received, during the
related Collection Period on a loan-by-loan basis and the total Appraisal
Reduction Amounts as of such Distribution Date on a loan-by-loan basis; and
(xiv) (A) The amount of Yield Maintenance Charges or Prepayment Premiums
collected and any Excess Interest received during the related Collection
Period, for each Loan Group, and (B) the amount of Default Interest received
during the related Collection Period.
In the case of information furnished pursuant to subclauses (i), (ii),
(iii) and (xiv)(A) above, the amounts will be expressed as a dollar amount in
the aggregate for all Certificates of each applicable Class and for each Class
of Certificates for a certificate having a denomination of $1,000 initial
Certificate Balance or Notional Balance.
Within a reasonable period of time after the end of each calendar year,
the Trustee will furnish to each person who at any time during the calendar
year was a holder of a Certificate (except for a Residual Certificate) a
statement containing the information set forth in subclauses (i) and (ii)
above, aggregated for such calendar year or applicable portion thereof during
which such person was a Certificateholder. Such obligation of the Trustee will
be deemed to have been satisfied to the extent that it provided substantially
comparable information pursuant to any requirements of the Code as from time to
time in force.
On each Distribution Date, the Trustee will forward to each holder of a
Residual Certificate a copy of the reports forwarded to the other
Certificateholders on such Distribution Date and a statement setting forth the
amounts, if any, actually distributed with respect to the Residual Certificates
on such Distribution Date.
Within a reasonable period of time after the end of each calendar year,
the Trustee will furnish to each person who at any time during the calendar
year was a holder of a Residual Certificate a statement setting forth the
amounts actually distributed with respect to such Certificate aggregated for
such calendar year or applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee will be deemed to have been
satisfied to the extent that it provided substantially comparable information
pursuant to any requirements of the Code as from time to time in force.
In addition, the Trustee will forward to each Certificateholder any
additional information, if any, regarding the Mortgage Loans that the Master
Servicer or the Special Servicer, in its sole discretion, delivers to the
Trustee for distribution to the Certificateholders.
Other Available Information. The Master Servicer or the Special Servicer,
if applicable, will promptly give notice to the Trustee, who will provide a
copy to each Certificateholder, each Rating Agency, the Depositor, the
Underwriters, the related Mortgage Loan Seller and the Master Servicer and
Special Servicer (if affecting a Special Serviced Mortgage Loan), of (a) any
notice from a borrower or insurance company regarding an upcoming voluntary or
involuntary prepayment (including that resulting from a Casualty or
Condemnation) of all or part of the related Mortgage Loan (provided that a
request by a borrower or other party for a quotation of the amount necessary to
satisfy all obligations with respect to a Mortgage Loan will not, in and of
itself, be deemed to be such notice); and (b) of any other occurrence known to
it with respect to a Mortgage Loan or REO Property that the Master Servicer or
the Special Servicer determines would have a material effect on such Mortgage
Loan or REO Property, which notice will include an explanation as to the reason
for such material effect (provided that any extension of the term of any
Mortgage Loan will be deemed to have a material effect).
In addition to the other reports and information made available and
distributed to the Depositor, the Underwriters, the Trustee or the
Certificateholders pursuant to other provisions of the Pooling and Servicing
Agreement, the Master Servicer and the Special Servicer will, in accordance
with such reasonable rules and procedures as they may adopt (which may include
the requirement that an agreement governing the availability, use and
disclosure of such information, and which may provide indemnification to the
Master Servicer or the Special Servicer, as applicable, for any liability or
damage that may arise therefrom, be executed to the extent the Master Servicer
or the Special Servicer, as applicable, deems such action to be necessary or
appropriate), also make available any information relating to the Mortgage
Loans, the Mortgaged Properties or the borrower for review by the Depositor,
the Underwriters, the Trustee, the Certificateholders and any other persons to
whom the Master Servicer or the Special Servicer, as the case may be, believes
such disclosure is appropriate, in each case except to the extent doing so is
prohibited by applicable law or by any documents related to a Mortgage Loan.
Upon reasonable prior written request, the Trustee will also make
available during normal business hours, for review by the Depositor, the Rating
Agencies, any Certificateholder, the Underwriters, any person identified to the
Trustee by a Certificateholder as a prospective transferee of a Certificate and
any other persons to whom the Trustee believes such disclosure is appropriate,
the following items: (i) the Pooling and Servicing Agreement, (ii) all monthly
statements to
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Certificateholders delivered since the closing date, (iii) all annual
statements as to compliance delivered to the Trustee and the Depositor and (iv)
all annual independent accountants' reports delivered to the Trustee and the
Depositor. The Master Servicer or the Special Servicer, as appropriate, will
make available at its offices during normal business hours, for review by the
Depositor, the Underwriters, the Trustee, the Rating Agencies, any
Certificateholder, any person identified to the Master Servicer or the Special
Servicer, as applicable, by a Certificateholder as a prospective transferee of
a Certificate, and any other persons to whom the Master Servicer or the Special
Servicer, as applicable, believes such disclosure is appropriate, the following
items: (i) the inspection reports prepared by or on behalf of the Master
Servicer or the Special Servicer, as applicable, in connection with the
property inspections conducted by the Master Servicer or the Special Servicer,
as applicable, (ii) any and all modifications, waivers and amendments of the
terms of a Mortgage Loan entered into by the Master Servicer or the Special
Servicer and (iii) any and all officer's certificates and other evidence
delivered to the Trustee and the Depositor to support the Master Servicer's
determination that any Advance was, or if made would be, a Nonrecoverable
Advance, in each case except to the extent doing so is prohibited by applicable
laws or by any documents related to a Mortgage Loan. The Master Servicer, the
Special Servicer and the Trustee will be permitted to require payment of a sum
sufficient to cover the reasonable costs and expenses incurred by it in
providing copies of or access to any of the above information (provided that
such costs and expenses arising from any such request by a Rating Agency will
be paid by the Master Servicer).
The Master Servicer will, on behalf of the Trust Fund, prepare, sign and
file with the Commission any and all reports, statements and information
respecting the Trust Fund that the Master Servicer or the Trustee determines
are required to be filed with the Commission pursuant to Sections 13(a) or
15(d) of the 1934 Act, each such report, statement and information to be filed
on or prior to the required filing date for such report, statement or
information. Notwithstanding the foregoing, the Depositor will file with the
Commission, within 15 days of the closing date, a Form 8-K together with the
Pooling and Servicing Agreement.
None of the Trustee, the Master Servicer and the Special Servicer will be
responsible for the accuracy or completeness of any information supplied to it
by a borrower or other third party for inclusion in any notice or in any other
report or information furnished or provided by the Master Servicer, the Special
Servicer or the Trustee hereunder, and the Master Servicer, the Special
Servicer and the Trustee will be indemnified and held harmless by the Trust
Fund against any loss, liability or expense incurred in connection with any
legal action relating to any statement or omission or alleged statement or
omission therein, including any liability related to the inclusion of such
information in any report filed with the Commission.
VOTING RIGHTS
The "Voting Rights" assigned to each Class shall be (i) 0% in the case of
the Residual Certificates, (ii) in the case of any other Class of P&I
Certificates, a percentage equal to the product of (x) 96% so long as the Class
A-EC Notional Balance is greater than zero and 97% thereafter and (y) a
fraction, the numerator of which is equal to the aggregate outstanding
Certificate Balance of such Class and the denominator of which is equal to the
aggregate outstanding Certificate Balances of all such Classes of Certificates;
(iii) in the case of the Class A-EC Certificates, 1% so long as the Class A-EC
Notional Balance is greater than zero, and 0% thereafter; (iv) 0.1% in the case
of the Class N-l Certificates; and (v) 2.9% in the case of the Class N-2
Certificates. The Voting Rights of any Class of Certificates shall be allocated
among holders of Certificates of such Class in proportion to their respective
Percentage Interests; provided, however, that any Certificate held or
beneficially owned by the Depositor, the Master Servicer, the Special Servicer,
the Trustee, a property manager or a borrower or any affiliate thereof will be
deemed not to be outstanding and the Voting Rights to which it is entitled
shall not be taken into account in determining whether the requisite percentage
of Voting Rights necessary to effect any consent, approval or waiver that
specifically relates to any such person has been obtained (unless such consent,
approval or waiver is to an action that would materially and adversely affect
the interests of the holders of any Class of Certificates while any such person
is the holder of Certificates aggregating not less than 66 2/3% of the
Percentage Interest of any such Class).
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, two separate "real estate mortgage
investment conduit" ("REMIC") elections will be made with respect to the Trust
Fund, creating two REMICs. Upon the issuance of the Offered Certificates,
O'Melveny & Myers LLP will deliver its opinion, generally to the effect that,
assuming compliance with all provisions of the Pooling and Servicing Agreement,
(i) each pool of assets with respect to which a REMIC election is made will
qualify as a REMIC under the Internal Revenue Code of 1986 (the "Code"), and
(ii) (a) the Class A-1A, Class A-1B, Class A-2MF, Class A-EC, Class B, Class C,
Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L, Class
M, Class N-1 and Class N-2 Certificates will be, or will represent ownership
of, REMIC "regular interests" and (b) each residual interest will be the sole
"residual interest" in the related REMIC. Holders of the Offered Certificates
will be required to include in income all interest on such Certificates in
accordance with the accrual method of accounting regardless of such
Certificateholders' usual methods of accounting.
Because they represent regular interests, the Regular Certificates
generally will be treated as newly originated debt instruments for federal
income tax purposes. Holders of such Classes of Certificates will be required
to include in income all interest on such Certificates in accordance with the
accrual method of accounting, regardless of a Certificateholder's usual method
of accounting. The Offered Certificates are not expected to be treated for
Federal income tax reporting purposes as having been issued with original issue
discount. For the purposes of determining the rate of accrual of market
discount, original issue discount and premium for federal income tax purposes,
it has been assumed that the Mortgage Loans will prepay at the rate of 0% CPR,
with all ARD Loans prepaying on their related Anticipated Repayment Dates. No
representation is made as to whether the Mortgage Loans will prepay at that
rate or any other.
Certain Classes of the Offered Certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
such a Class of Certificates will be treated as holding a Certificate with
amortizable bond premium will depend on such Certificateholder's purchase
price. Holders of such Classes of Certificates should consult their own tax
advisors regarding the possibility of making an election to amortize any such
premium. See "Material Federal Income Tax Consequences" in the Prospectus.
Offered Certificates held by a mutual savings bank or domestic building
and loan association will represent interests in "qualifying real property
loans" within the meaning of Section 593(d) of the Code. Offered Certificates
held by a real estate investment trust will constitute "real estate assets"
within the meaning of Section 856(c)(5)(B) of the Code, and income with respect
to Offered Certificates will be considered "interest on obligations secured by
mortgages on real property or on interests in real property" within the meaning
of Section 856(c)(3)(B) of the Code. Offered Certificates held by a domestic
building and loan association will generally constitute "a regular or a
residual interest in a REMIC" with the meaning of Section 7701(a)(19)(C)(xi) of
the Code only in the proportion that the Mortgage Loans are secured by
multifamily apartment buildings. See "Material Federal Income Tax
Consequences--Taxation of the REMIC and its Holders" in the Prospectus.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "Material Federal Income Tax
Consequences--Taxation of the REMIC" in the Prospectus.
DUE TO THE COMPLEXITY OF THESE RULES AND THE CURRENT UNCERTAINTY AS TO THE
MANNER OF THEIR APPLICATION TO THE TRUST FUND AND CERTIFICATEHOLDERS, IT IS
PARTICULARLY IMPORTANT THAT POTENTIAL INVESTORS CONSULT THEIR OWN TAX ADVISORS
REGARDING THE TAX TREATMENT OF THEIR ACQUISITION, OWNERSHIP AND DISPOSITION OF
THE CERTIFICATES.
S-107
<PAGE>
ERISA CONSIDERATIONS
SUMMARY
The Subordinate Certificates may not be purchased by or transferred to (A)
an employee benefit plan or other retirement arrangement, including an
individual retirement account or a Keogh plan, which is subject to the
fiduciary responsibility provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or Section 4975 of the Code, or a
governmental plan subject to any federal, state or local law ("Similar Law")
that is, to a material extent, similar to the foregoing provisions of ERISA or
the Code ("Plans"), (B) a collective investment fund in which such Plans are
invested, (C) other persons acting on behalf of any such Plan or using the
assets of any such Plan or any entity whose underlying assets include plan
assets by reason of a Plan's investment in the entity (within the meaning of
Department of Labor Regulations Section 2510.3-101), or (D) an insurance
company that is using assets of any insurance company separate account or
general account in which the assets of such Plans are invested (or which are
deemed pursuant to ERISA or any Similar Law to include assets of such Plans)
other than an insurance company using the assets of its general account under
circumstances whereby the assets of the Trust Fund will not be treated as "plan
assets" for purposes of applying the fiduciary responsibility and the
prohibited transactions provisions of ERISA, the Code or any Similar Law. Each
prospective transferee of a Certificate will be required to deliver to the
Depositor, the Certificate Registrar and the Trustee either: (i) a transferee
representation letter, substantially in the form of Exhibit D-2 to the Pooling
and Servicing Agreement, stating that such prospective transferee is not a
person referred to in clause (A), (B), (C) or (D) above, or (ii) an opinion of
counsel which establishes to the satisfaction of the Depositor, the Trustee and
the Certificate Registrar that the purchase and holding of such Certificate
will not result in the assets of the Trust Fund being deemed to be "plan
assets" and subject to the fiduciary responsibility or prohibited transaction
provision of ERISA, the Code or any Similar Law, and will not constitute or
result in a non-exempt prohibited transaction within the meaning of Section 406
or 407 of ERISA, Section 4975 of the Code or any Similar Law, and will not
subject the Master Servicer, the Special Servicer, the Depositor, the Trustee
or the Certificate Registrar to any obligation of liability (including
obligations or liabilities under ERISA or Section 4975 of the Code), which
opinion of counsel will not be an expense of the Trustee, the Trust Fund, the
Master Servicer, the Special Servicer, the Certificate Registrar or the
Depositor.
TO THE EXTENT ANY OFFERED CERTIFICATE IS IN BOOK-ENTRY FORM, THE HOLDER OF
BENEFICIAL INTEREST IN SUCH CERTIFICATE AND ANY TRANSFEREE THEREOF SHALL BE
DEEMED TO HAVE REPRESENTED THAT IT IS NOT A PERSON REFERRED TO IN CLAUSES (A),
(B), (C) OR (D) ABOVE.
None of the Residual Certificates may be purchased by or transferred to a
Plan. Accordingly, the following discussion does not purport to discuss the
considerations under ERISA or Code Section 4975 with respect to the purchase,
holding or disposition of the Residual Certificates.
CERTAIN REQUIREMENTS UNDER ERISA
General. ERISA and the Code impose certain duties and restrictions on
Plans and certain persons who perform services for Plans. In accordance with
ERISA's general fiduciary standards, before investing in a Certificate a Plan
fiduciary should determine whether to do so is permitted under the governing
Plan instruments and is appropriate for the Plan in view of its overall
investment policy and the composition and diversification of its portfolio. A
Plan fiduciary should especially consider the ERISA requirement of investment
prudence and the sensitivity of the return on the Certificates to the rate of
principal repayments (including voluntary prepayments by the borrowers and
involuntary liquidations) on the Mortgage Loans, as discussed in "Yield and
Maturity Considerations" herein.
Parties in Interest/Disqualified Persons. Other provisions of ERISA (and
corresponding provisions of the Code) prohibit certain transactions involving
the assets of a Plan and persons who have certain specified relationships to
the Plan (so-called "parties in interest" within the meaning of ERISA or
"disqualified persons" within the meaning of the Code). The Depositor, the
Underwriters, the Master Servicer, the Special Servicer or the Trustee or
certain affiliates thereof might be considered or might become "parties in
interest" or "disqualified persons" with respect to a Plan. If so, the
acquisition or holding of Certificates by or on behalf of such Plan could be
considered to give rise to a "prohibited transaction" within the meaning of
ERISA and the Code unless an administrative exemption described below or some
other exemption is available. Special caution should be exercised before the
assets of a Plan are used to purchase a Certificate if, with respect to such
assets, the Depositor, the Underwriters, the Master Servicer, the Special
Servicer or the Trustee or an affiliate thereof either: (i) has discretionary
authority or control with respect to the investment or management of such
assets of such Plan, or (ii) has
S-108
<PAGE>
authority or responsibility to give, or regularly gives, investment advice with
respect to such assets pursuant to an agreement or understanding that such
advice will serve as a primary basis for investment decisions with respect to
such assets and that such advice will be based on the particular needs of the
Plan.
Delegation of Fiduciary Duty. Further, if the assets included in the Trust
Fund were deemed to constitute Plan assets, it is possible that a Plan's
investment in the Certificates might be deemed to constitute a delegation under
ERISA of the duty to manage Plan assets by the fiduciary deciding to invest in
the Certificates, and certain transactions involved in the operation of the
Trust Fund might be deemed to constitute prohibited transactions under ERISA
and the Code. Neither ERISA nor the Code define the term "plan assets."
The United States Department of Labor has issued regulations (the "Plan
Asset Regulations") concerning whether a Plan's assets will be considered to
include an interest in the underlying assets of an entity (such as the Trust
Fund) for purposes of the general fiduciary responsibility provisions of ERISA,
as well as for the prohibited transaction provisions of ERISA and the Code, if
the Plan acquires an "equity interest" (such as a Certificate) in an entity.
Certain exceptions are provided in the Plan Asset Regulations whereby an
investing Plan's assets would be considered merely to include its interest in
the Certificates instead of being deemed to include an interest in the
underlying assets of a Trust Fund. However, the Depositor cannot predict in
advance, nor can there be any continuing assurance whether such exceptions may
be applicable, because of the factual nature of certain of the rules set forth
in the Plan Asset Regulations. For example, one of the exceptions in the Plan
Asset Regulations states that the underlying assets of an entity will not be
considered "plan assets" if less than 25% of the value of each class of equity
interests is held by "benefit plan investors," which are defined as Plans,
individual retirement accounts and employee benefit plans not subject to ERISA
(for example, governmental plans), but this exception is tested immediately
after each acquisition of an equity interest in the entity whether upon initial
issuance or in the secondary market.
ADMINISTRATIVE EXEMPTIONS
Individual Administrative Exemptions. The Department has granted to
Prudential Securities Incorporated an individual administrative exemption
(Prohibited Transaction Exemption 90-32, 55 Fed. Reg. 23147 (June 6, 1990, as
amended by Prohibited Transaction Exemption 97-34, 62 Fed. Reg. 39021 (July 21,
1997)) referred to herein as the "Exemption," for certain mortgage-backed and
asset-backed certificates underwritten in whole or in part by Prudential
Securities Incorporated. The Exemption may be applicable to the initial
purchase, the holding and the subsequent resale by a Plan of certain
certificates, such as the Senior Certificates, underwritten by the
Underwriters, representing interests in pass-through trusts that consist of
certain receivables, loans and other obligations, provided that the conditions
and requirements of the Exemption are satisfied. The loans described in the
Exemption include mortgage loans such as the Mortgage Loans.
Among the conditions that must be satisfied for the Exemption to apply are
the following:
(1) The acquisition of 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 interests evidenced by 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 either Moody's Investors Service, Fitch IBCA, Inc., Standard
& Poor's, or Duff & Phelps;
(4) The Trustee must not be an affiliate of any of the Depositor, the
Underwriters, the Master Servicer, the Special Servicer, any obligor with
respect to the Mortgage Loans included in the Trust Fund constituting more
than 5% of the aggregate unamortized balance of the assets in the Trust
Fund, or any affiliate of such parties (the "Restricted Group");
(5) The sum of all payments made to and retained by the Underwriters in
connection with the distribution of certificates represents not more than
reasonable compensation for underwriting the certificates; the sum of all
payments made to and retained by the Depositor pursuant to the assignment of
the mortgage loans to the Trust represents not more than the fair market
value of such mortgage loans; the sum of all payments made to and retained
by the Master Servicer and any other Servicer represents not more than
reasonable compensation for such person's services under the pooling and
servicing agreement and reimbursement of such person's reasonable expenses
in connection therewith; and
S-109
<PAGE>
(6) The Plan investing in the Certificates is an "accredited investor" as
defined in Rule 501(a)(1) of Regulation D of the Commission under the 1933
Act.
In addition, the Trust must also meet the following requirements:
(a) The corpus of the trust fund must consist solely of assets of the type
that have been included in other investment pools;
(b) Certificates in such other investment pools must have been rated in
one of the three highest rating categories of Moody's Investors Service,
Fitch IBCA, Inc., Standard & Poors, or Duff & Phelps for at least one year
prior to the Plan's acquisition of the certificates pursuant to the
Exemption; and
(c) 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 the Certificates pursuant to the
Exemption.
If the conditions of the Exemption are met, the acquisition, holding and
resale of Certificates by Plans would be exempt from the prohibited transaction
provisions of ERISA and the Code (regardless of whether a Plan's assets would
be considered to include an ownership interest in the Mortgage Loans in the
Mortgage Pool).
Moreover, the Exemption provides relief from certain
self-dealing/conflict-of-interest prohibited transactions that may occur if a
Plan fiduciary causes a Plan to acquire certificates in a trust in which the
fiduciary (or its affiliate) is an obligor on the receivables, loans or
obligations 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 50% of each class of certificates in which Plans have
invested is acquired by persons independent of the Restricted Group; and at
least 50% of the aggregate interest in the trust is acquired by persons
independent of the Restricted Group; (ii) such fiduciary (or its affiliate) is
an obligor with respect to 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 25% of all of the certificates of that class
outstanding at the time of the acquisitions; and (iv) immediately after the
acquisition no more than 25% of the assets of the 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 served by the same
entity.
The Exemption does not apply to the purchasing or holding of Certificates
by Plans sponsored by the Depositor, the Underwriters, the Trustee, the Master
Servicer, the Special Servicer, any obligor with respect to Mortgage Loans
included in the Trust Fund constituting more than 5% of the aggregate
unamortized principal balance of the assets in the Trust Fund or any affiliate
of such parties (the "Restricted Group").
THE CHARACTERISTICS OF THE SUBORDINATE CERTIFICATES AND THE RESIDUAL
CERTIFICATES DO NOT MEET THE REQUIREMENTS OF THE EXEMPTION. ACCORDINGLY, THE
SUBORDINATE CERTIFICATES MAY NOT BE PURCHASED BY OR TRANSFERRED TO A PLAN OR
PERSON ACTING ON BEHALF OF ANY PLAN OR USING THE ASSETS OF ANY SUCH PLAN, OTHER
THAN AN INSURANCE COMPANY USING ASSETS OF ITS GENERAL ACCOUNT UNDER
CIRCUMSTANCES IN WHICH SUCH PURCHASE OR TRANSFER WOULD NOT CONSTITUTE OR RESULT
IN A PROHIBITED TRANSACTION. THE RESIDUAL CERTIFICATES MAY NOT BE PURCHASED BY
OR TRANSFERRED TO A PLAN.
Before purchasing a Senior Certificate, a fiduciary of a Plan should make
its own determination as to the availability of the exemptive relief provided
by the Exemption or the availability of any other prohibited transaction
exemptions, and whether the conditions of any such exemption will be applicable
to the Senior Certificates. Any fiduciary of a Plan (including an entity that
is deemed to hold Plan assets for purposes of ERISA and the Code) considering
whether to purchase a Senior Certificate should also carefully review with its
own legal advisors the applicability of the fiduciary duty and prohibited
transaction provisions of ERISA and the Code to such investment and the
availability of the Exemption.
THE SALE OF SENIOR CERTIFICATES TO A PLAN IS IN NO RESPECT A
REPRESENTATION BY THE DEPOSITOR, THE UNDERWRITERS OR ANY OTHER MEMBER OF THE
RESTRICTED GROUP THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL REQUIREMENTS
WITH RESPECT TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR PLAN OR THAT
THIS INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN.
EXEMPT PLAN
A governmental plan as defined in Section 3(32) of ERISA is not subject to
ERISA or Code Section 4975. However, such a governmental plan may be subject to
a Similar Law. A fiduciary of a governmental plan should make its own
determination as to the need for and the availability of any exemptive relief
under any Similar Law.
S-110
<PAGE>
UNRELATED BUSINESS TAXABLE INCOME; RESIDUAL CERTIFICATES
The purchase of a Residual Certificate by any employee benefit plan
qualified under Code Section 401(a) and exempt from taxation under Code Section
501(a), including most varieties of ERISA Plans, may give rise to "unrelated
business taxable income" as described in Code Sections 511-515 and 860E.
Further, prior to the purchase of Residual Certificates, a prospective
transferee may be required to provide an affidavit to a transferor that it is
not, nor is it purchasing a Residual Certificate on behalf of, a "Disqualified
Organization," which term as defined above under the caption "Material Federal
Income Tax Consequences" in the Prospectus includes certain tax-exempt entities
not subject to Code Section 511, including certain governmental plans, as
discussed under the caption "Material Federal Income Tax Consequences" in the
Prospectus. Accordingly, Plans may not purchase Residual Certificates.
LEGAL INVESTMENT
The Offered Certificates will not be mortgage-related securities for
purposes of the Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA").
The appropriate characterization of the Certificates under various legal
investment restrictions, and thus the ability of investors subject to these
restrictions to purchase the Certificates, may be subject to significant
interpretive uncertainties.
The Depositor makes no representations as to the proper characterization
of the Certificates for legal investment purposes, financial institution
regulatory purposes or other purposes or as to the ability of particular
investors to purchase the Certificates under applicable legal investment
restrictions. These uncertainties may adversely affect the liquidity of the
Certificates. Accordingly, all institutions whose investment activities are
subject to legal investment laws and regulations, regulatory capital
requirements or review by regulatory authorities should consult with their own
legal advisors in determining whether and to what extent the Certificates
constitute a legal investment or are subject to investment, capital or other
restrictions.
S-111
<PAGE>
PLAN OF DISTRIBUTION
Prudential Securities Incorporated and CIBC Oppenheimer Corp. (the
"Underwriters") have agreed, severally and not jointly, pursuant to an
Underwriting Agreement dated August , 1998 (the "Underwriting Agreement") to
purchase from the Depositor the respective principal or notional balances of
Certificates set forth opposite their names below.
<TABLE>
<CAPTION>
PRINCIPAL OR NOTIONAL
UNDERWRITER AMOUNT
- ------------------------------------------------------- ----------------------
<S> <C>
Prudential Securities Incorporated ......... $
CIBC Oppenheimer Corp ...................... $
----------------
Total ..................................... $
</TABLE>
The Underwriters have informed the Transferor and Depositor that they
propose to offer the Offered Certificates for sale from time to time in one or
more negotiated transactions, or otherwise, at varying prices to be determined,
in each case, at the time of the related sale. The Underwriters may effect such
transactions by selling such Certificates to or through dealers, and such
dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Underwriters or purchasers of the
Certificates for whom they may act as agent. The Underwriters and any dealers
that participate with the Underwriters in the distribution of the Certificates
purchased by the Underwriters may be deemed to be underwriters, and any
discounts or commissions received by them and any profit on the resale of
Certificates by them or the Underwriters may be deemed to be underwriting
discounts or commissions under the 1933 Act.
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and the Underwriters
will be obligated to purchase all of the Certificates if any are purchased.
Each of the Underwriters is an affiliate of a Mortgage Loan Seller, and
each is therefore receiving indirect economic benefit in connection with this
offering (i.e. an interest in the profit made by such Mortgage Loan Sellers
from their sales of Mortgage Loans to the Transferor). In addition, Prudential
Securities Incorporated is an affiliate of the Transferor, and therefor will
also receive an additional indirect economic benefit from this transaction
(i.e. an interest in the profit made by the Transferor on its sale of the
Mortgage Loans to the Depositor).
The Depositor has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the 1933 Act, or contribute to
payments that the Underwriters may be required to make in respect thereof.
The Depositor also has been advised by the Underwriters that they
currently expect to make a market in the Certificates, however, they have no
obligation to do so. Any market making may be discontinued at any time, and
there can be no assurance that an active public market for the Certificates
will develop. For further information regarding any offer or sale of the
Certificates pursuant to this Prospectus Supplement and the Prospectus, see
"Plan of Distribution" in the Prospectus.
USE OF PROCEEDS
The net proceeds from the sale of Certificates will be used by the
Depositor to pay the purchase price of the Mortgage Loans, to repay
indebtedness that has been incurred to obtain funds to acquire the Mortgage
Loans and to pay costs of structuring, issuing and underwriting the
Certificates.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor and for the
Underwriters by O'Melveny & Myers LLP.
RATINGS
It is a condition to the issuance of the Offered Certificates that the
Class A-1A, Class A-1B and Class A-2MF Certificates each be rated "Aaa" by
Moody's and "AAA" by S&P; the Class B Certificates be rated "Aa2" by Moody's
and "AA" by S&P; the Class C Certificates be rated "A2" by Moody's and "A" by
S&P; the Class D Certificates be rated "Baa2" by Moody's and "BBB" by S&P; and
the Class E Certificates be rated "Baa3" by Moody's and "BBB-" by S&P.
The Rating Agencies' ratings on mortgage pass-through certificates address
the likelihood of the receipt by holders of payments of interest and principal
to which they are entitled by the Rated Final Distribution Date. The Rating
Agencies' ratings take into consideration the credit quality of the mortgage
pool, structural and legal aspects associated with the
S-112
<PAGE>
Certificates, and the extent to which the payment stream in the mortgage pool
is adequate to make payments required under the Certificates. Ratings on
mortgage pass-through certificates do not, however, represent an assessment of
the likelihood, timing or frequency of principal prepayments by borrowers or
the degree to which such prepayments (both voluntary and involuntary) might
differ from those originally anticipated. The security ratings do not address
the possibility that Certificateholders might suffer a lower than anticipated
yield. In addition, ratings on mortgage pass-through certificates do not
address the likelihood of receipt of Prepayment Premiums or the timing of the
receipt thereof or the likelihood of collection by the Master Servicer of
Default Interest. In general, the ratings thus address credit risk and not
prepayment risk.
There can be no assurance as to whether any rating agency not requested to
rate the Certificates will nonetheless issue a rating and, if so, what such
rating would be. A rating assigned to the Certificates by a rating agency that
has not been requested by the Depositor to do so may be lower than the rating
assigned by the Rating Agencies pursuant to the Depositor's request.
The rating of the Certificates should be evaluated independently from
similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating agency.
S-113
<PAGE>
INDEX OF SIGNIFICANT DEFINITIONS
DEFINITIONS PAGE
1933 Act................................................................. S-5
A-2MF Principal Distribution Amount................................ S-3, S-20
Aberfeldy Entity........................................................ S-44
ACMs.................................................................... S-29
Advance Rate............................................................ S-94
Advances................................................................ S-94
Annual Debt Service..................................................... S-48
Appraisal Reduction Excess Collections.................................. S-34
Appraised LTV........................................................... S-48
Appraised Value......................................................... S-49
ARD Loans............................................................... S-38
Asset Status Report.................................................... S-100
Assisted Living Loans................................................... S-35
Assisted Living Properties.............................................. S-35
Assumed Scheduled Payment............................................... S-21
Available Funds......................................................... S-68
Available Funds Allocation.............................................. S-71
Balloon Amount.......................................................... S-48
Balloon Balance......................................................... S-48
Balloon Loans........................................................... S-38
Balloon LTV............................................................. S-48
Balloon Payment......................................................... S-38
Base Interest Fraction.................................................. S-75
Beneficial Owners....................................................... S-78
Book-Entry Certificate.................................................. S-78
Cash Flow......................................................... S-46, S-48
Casualty................................................................ S-42
CERCLA.................................................................. S-29
Certificate Balance..................................................... S-17
Certificate Registrar................................................... S-81
Certificates....................................................... S-1, S-17
CIBC..................................................................... S-3
CIBCOPCO................................................................. S-3
Class A-EC Notional Balance............................................. S-67
Class C Strip............................................................ S-7
Class D Strip............................................................ S-7
Class E Strip............................................................ S-7
Class F Strip............................................................ S-7
Class G Strip............................................................ S-7
Class H Strip............................................................ S-7
Class Interest Distribution Amount................................ S-19, S-69
Class Interest Shortfall................................................ S-70
Class J Strip............................................................ S-7
Class K Strip............................................................ S-7
Class L Strip............................................................ S-7
Class M Strip............................................................ S-7
Closing Date............................................................ S-18
Code............................................................. S-23, S-107
Collection Account...................................................... S-96
Collection Period................................................. S-18, S-69
Commission............................................................... S-5
Condemnation............................................................ S-42
S-114
<PAGE>
Condemnation Proceeds................................................... S-68
Cooperative Loans....................................................... S-36
Cooperative Properties.................................................. S-36
Corrected Mortgage Loan................................................ S-103
Cross-Collateralized Loans.............................................. S-32
Cut-off Date............................................................ S-18
Cut-off Date Principal Balance.......................................... S-35
Debt Service Coverage Ratio............................................. S-48
Default Interest...................................................S-41, S-69
Default Rate............................................................ S-69
Defeasance Lockout Period................................................ S-4
Definitive Certificate.................................................. S-79
Delivery Date............................................................ S-1
Depositor.......................................................... S-3, S-63
Depository.............................................................. S-19
Determination Date................................................ S-18, S-69
Disposition Fee........................................................ S-103
Distribution Account.................................................... S-96
Distribution Date.................................................. S-3, S-67
DSCR........................................................ S-11, S-48, S-65
DSCRs................................................................... S-12
DTC......................................................S-1, S-9, S-19, S-79
Due Date.......................................................... S-18, S-37
Eligible Bank........................................................... S-97
EPA..................................................................... S-29
ERISA.................................................................. S-108
ESA..................................................................... S-45
Excess Cash Flow........................................................ S-38
Excess Interest......................................................... S-38
Fee Interest............................................................ S-59
Final Recovery Determination............................................ S-76
FIRREA.................................................................. S-65
Form 8-K................................................................ S-55
Ground Lease............................................................ S-59
HD Borrower............................................................. S-44
HD USA.................................................................. S-44
Health Care Related Loans............................................... S-35
Health Care-Related Properties.......................................... S-35
Hospitality Loans....................................................... S-36
Hospitality Properties.................................................. S-36
Indirect Participants................................................... S-79
Industrial Loans........................................................ S-36
Industrial Properties................................................... S-35
Initial Pool Balance.................................................... S-35
Insurance Proceeds...................................................... S-68
Interest Accrual Period........................................... S-18, S-70
KeyBank.................................................................. S-3
Liquidation Proceeds.................................................... S-68
Loan Group......................................................... S-3, S-35
Loan Purchase Closing Date.............................................. S-36
Loan-to-Value Ratio..................................................... S-48
Lockout Period.......................................................... S-39
LTV............................................................... S-48, S-65
Major Tenant............................................................ S-32
Master Servicer.......................................................... S-5
S-115
<PAGE>
Master Servicer Mortgage File........................................... S-92
Mini Warehouse Loans.................................................... S-36
Mini Warehouse Properties............................................... S-36
Mobile Home Park Loans.................................................. S-36
Mobile Home Park Properties............................................. S-36
Monthly Payment......................................................... S-68
Moody's................................................................. S-23
Mortgage................................................................ S-35
Mortgage File........................................................... S-93
Mortgage Loan Purchase Agreement........................................ S-36
Mortgage Loans..................................................... S-3, S-35
Mortgage Pool............................................................ S-3
Mortgage Rate..................................................... S-37, S-38
Mortgaged Property................................................. S-3, S-35
Multifamily Loans....................................................... S-36
Multifamily Properties.................................................. S-36
Net Mortgage Rate................................................. S-38, S-70
Net Operating Income.............................................. S-46, S-47
Net REO Proceeds........................................................ S-69
NOI..................................................................... S-47
Nonrecoverable Advance................................................. S-102
Notional Balances....................................................... S-68
NRF...................................................................... S-3
NRFinance................................................................ S-3
Nursing Home Loans...................................................... S-35
Nursing Home Properties................................................. S-35
Occupancy Rate.......................................................... S-48
Offered Certificates..................................................... S-1
Office Loans............................................................ S-35
Office Properties....................................................... S-35
Office/Retail Loans..................................................... S-36
Office/Retail Properties................................................ S-36
Office/Warehouse Loans.................................................. S-36
Office/Warehouse Properties............................................. S-36
Open.................................................................... S-39
PAR..................................................................... S-65
Participants............................................................ S-79
Pass-Through Rate....................................................... S-70
Paying Agent............................................................ S-79
Percentage Interest..................................................... S-67
Permitted Investments................................................... S-97
P&I Advance....................................................... S-21, S-93
P&I Certificates......................................................... S-3
Plan Asset Regulations................................................. S-109
Plans.................................................................. S-108
PMCC..................................................................... S-3
PMCF..................................................................... S-3
Pooled Principal Distribution Amount.............................. S-20, S-70
Pooling and Servicing Agreement.............................. S-5, S-17, S-91
Prepayment Interest Shortfall........................................... S-69
Prepayment Interest Surplus............................................. S-70
Prepayment Premium Period............................................... S-39
Prepayment Premiums............................................... S-39, S-69
Principal Prepayments................................................... S-69
Private Certificates.................................................... S-17
S-116
<PAGE>
Property Advances....................................................... S-94
PSCC..................................................................... S-3
RCRA.................................................................... S-30
Record Date........................................................S-18, S-67
Regular Certificates............................................... S-1, S-22
Remaining Amortization Term............................................. S-48
Remaining Term to Maturity.............................................. S-48
REMIC.................................................. S-5, S-8, S-22, S-107
REMIC I............................................................ S-5, S-22
REMIC II........................................................... S-5, S-22
Remittance Date......................................................... S-93
REO Account............................................................. S-67
REO Mortgage Loan....................................................... S-71
REO Property........................................................... S-102
Residual Certificates.................................................... S-1
Restricted Group................................................ S-109, S-110
Retail, Anchored Loans.................................................. S-36
Retail, Anchored Properties............................................. S-36
Retail, Single Tenant Loans............................................. S-36
Retail, Single Tenant Properties........................................ S-36
Retail, Unanchored Loans................................................ S-36
Retail, Unanchored Properties........................................... S-36
Revised Rate............................................................ S-38
Scheduled Final Distribution Date....................................... S-1
Scheduled Final Distribution Dates...................................... S-77
Scheduled Final Distribution Date....................................... S-1
Scheduled Principal Balance............................................. S-76
Self-Storage Loans...................................................... S-36
Self-Storage Properties................................................. S-36
Senior Certificates.......................................... S-3, S-10, S-20
Senior Principal Distribution Cross-Over Date........................... S-74
Servicing Fee.......................................................... S-102
Servicing Fee Rate..................................................... S-102
Similar Law............................................................ S-108
SMMEA............................................................ S-24, S-111
S&P..................................................................... S-23
Special Servicer......................................................... S-5
Special Servicing Fee.................................................. S-103
Subordinate Certificates................................................. S-3
Transferor......................................................... S-3, S-63
Trust Fund............................................................... S-3
Trust REMICs............................................................. S-5
Trustee.................................................................. S-5
Trustee Mortgage File................................................... S-91
Underlying Mortgage Loan Purchase Agreements............................ S-36
Underwriters...................................................... S-1, S-112
Underwriting Agreement................................................. S-112
Underwritten Cash Flow............................................ S-47, S-48
Underwritten DSCR....................................................... S-48
Underwritten NOI.................................................. S-47, S-48
Unscheduled Payments.................................................... S-69
Warehouse Loans......................................................... S-36
Warehouse Properties.................................................... S-36
Weighted Average Maturity............................................... S-49
Weighted Average Net Mortgage Rate...................................... S-70
S-117
<PAGE>
Workout Fee............................................................ S-103
Year Built.............................................................. S-48
Year Renovated.......................................................... S-49
Yield Maintenance Charge................................................ S-39
Yield Maintenance Period................................................ S-39
Yield Rate.............................................................. S-39
Zoning Laws............................................................. S-32
S-118
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
CONTROL LOAN LOAN
NUMBER NUMBER GROUP ORIGINATOR PROPERTY NAME
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 6102551 1 PMCC Various
6102551A PMCC Shady Trail Business Park (Walnut Oaks)
6102551B PMCC Valwood II Business Center
6102551C PMCC Valley View Commerce Park
6102551D PMCC D/FW North IV
6102551E PMCC Carpenter Center
6102551F PMCC Parkway Tech Center
6102551G PMCC Northgate III
6102551H PMCC Carrier Place
6102551I PMCC Commerce Center
2 6102992 1 PMCC 2355 Dulles Corner
3 24 1 CIBC Various
24A CIBC Northland Mall
24B CIBC 1125 Atlantic Avenue
24C CIBC Bayport One
24D CIBC Midland Plaza
24E CIBC College Park
24F CIBC 2820 South Padre Island Drive
24G CIBC 560 Broad Street
24H CIBC 1015 Springfield Ave.
24I CIBC Route 202
24J CIBC 920 18th Avenue
24K CIBC 240 Martin Luther King Ave.
24L CIBC 2020 Corlies Avenue
24M CIBC 631 Joyce Kilmer Ave.
24N CIBC 35 Branca Road
24O CIBC Bell Atlantic IV
24P CIBC Memorial Parkway
24Q CIBC 436 Central Avenue
24R CIBC 214 East Main Street
4 1548 1 NRF FirstPlus Financial Headquarters.
5 6102628 2 PMCC Old Orchard Apartments
PMCC Various
6 6102944 1 PMCC Holiday Inn - Odlin Road
7 6102945 1 PMCC Holiday Inn - Charlottesville South
8 6102946 1 PMCC Holiday Inn - Civic Center
9 6102947 1 PMCC Holiday Inn - Ellsworth
11 2555 1 NRF Pebblebrook Apartments
12 6103017 1 PMCC Home Depot
14 10 1 CIBC Towne Mall
13 1907 1 NRF Various
1907A NRF Graymark Building
1907B NRF Wells Branch Plaza
1907C NRF Walnut Creek Building
1907D NRF II American Center
1907E NRF Benchmark Office Park
1907F NRF Bedford Oaks
1907G NRF Commerce Plaza
15 2534 2 NRF Adams Station Apartments
16 1905 1 NRF Various
1905A NRF Twin Cental Building
1905B NRF Star Telegram Plaza
1905C NRF 9333 Forest Lane
1905D NRF Alpha Centre
1905E NRF Peachtree Plaza
1905F NRF Wizards Sports Cafe
1905G NRF Loy Lake Plaza
1905H NRF Colonial Office Building
1905I NRF Shoal Creek Plaza
17 2 1 CIBC Boyce Building, LLC.
18 3423 2 NRF Amberwood Apartments
19 1376 1 NRF St. Augustine II
20 1908 1 NRF Various
1908A NRF Plano/Miller Business Center
1908B NRF St. Augustine I
1908C NRF Walnut Abrams Plaza
1908D NRF The Atriums at Shiloh
21 18 1 CIBC Brookside Plaza
22 1556 1 NRF Miramar Office and Furniture Market
23 1 1 CIBC Fiesta Village Shopping Center
24 1210 1 NRF Westwood Paza
25 9 1 CIBC Frontier Village Phase II
26 2052 1 NRF Creek House Commons Apartments
27 6102530 1 PMCC Hunting Creek Plaza Shopping Center
28 6102876 2 PMCC Bucks Meadow Apartments
29 2636 1 NRF Westmont Convalescent Center
30 2394 1 NRF Hamilton Crossings
31 6102859 2 PMCC Chestnut Hills and Chestnut Towers Apartments
32 1885 1 NRF 600 Memorial Drive
33 6102580 1 PMCC Village Marketplace
34 2358 2 NRF Wildwood Acres Apartments
35 1076 1 NRF Westpark Towne Center
36 6102991 1 PMCC Mercantile Exchange Office/Warehouse
37 3641 1 KEY Circuit City Retail Center
38 6102452 2 PMCC Pacific Woods Apartments
41 3083 2 NRF The Crest Apartments
NRF Various
39 2498 1 NRF Best Western Kirkland Inn
40 2499 1 NRF Best Western at Southcenter
NRF Various
42 1224 1 NRF Crossroads Independent & Assisted Living
43 1269 1 NRF Parkside West Retirement Facility
44 6102663 2 PMCC The Preserve At Paradise Island - Phase IV
45 34 2 CIBC Clarendon Gardens
46 6102762 1 PMCC Landerbrook Place
47 16 1 CIBC 40-42 Ridgebury Road
48 6102442 1 PMCC Metcalf 103 Shopping Center
49 1776 1 NRF Willow Brook Village Shopping Center
50 6102461 1 PMCC Homestead Village Shopping Center
51 3645 1 KEY Hunters Hollow Apartments
52 1922 1 NRF Crossroads Shopping Center
53 7608323 2 PMCC Morningside Chase Apartments
55 1755 1 NRF North Creek Plaza
54 6102880 2 PMCC Campus Walk Apartment Complex
56 7 1 CIBC Philadelphia Portfolio
7A CIBC 100 - 30 Spring Garden Street
7B CIBC 1004 - 36 Spring Garden Street
7C CIBC 511 - 19 North Broad Street
7D CIBC 2901 Grant Avenue
57 6102950 1 PMCC Days Inn/Quality Inn - Charlottesville
58 2076 1 NRF Tall Oaks at Reston
59 6102533 2 PMCC Taylor's Crossing Apartments
Midland Seaman's Furniture
61 940906323 1 Midland Seaman's Furniture
62 940906324 1 Midland Seaman's Furniture
60 3 1 CIBC Crosstown Plaza Shopping Center
63 3632 1 KEY Hawthorne Court
64 1541 1 NRF Abbott Laboratories
65 1585 2 NRF Margarita Summit Apartments
66 6102764 1 PMCC Arizona Design Center
67 1782 1 NRF 6303 Dry Creek Parkway
68 1116 1 NRF Heritage Plaza Shopping Center
70 1057 1 NRF Various
1057A NRF Hennepin Business Center
1057B NRF OCC Financial Plaza
69 2635 1 NRF Grand Court-Sacramento (formerly Sterling Suites)
71 6102541 2 PMCC The Palms at Livingston Phase I Apartments
72 6102532 1 PMCC Realty One Corporate Center
73 1263 1 NRF Riverdale Plaza Shopping Center
74 13 1 CIBC Residence Inn - Chattanooga
75 12 1 CIBC Residence Inn - Macon
76 1921 1 NRF Center of New Hampshire Holiday Inn
77 1660 1 NRF Walnut Business Park
78 3218 2 NRF River Village Apartments
82 940905374 1 Midland Builder's Square Plaza
79 6102708 1 PMCC Village of Santa De La Paz Apartments
80 1859 1 NRF 4240-4292 Lincoln Blvd.
81 1523 1 NRF 30 S. La Patera Lane
83 6102902 1 PMCC Bedrosian Warehouse Distribution
84 3642 1 KEY Delco Plaza
87 6102709 1 PMCC Village of Santo Domingo Apartments
88 1152 1 NRF An Industrial Building (Endar Building)
89 6102776 1 PMCC La Paloma Plaza Shopping Center
90 15 1 CIBC The Odyssey Building
91 6102499 1 PMCC Main Street Station Shopping Center
92 2212 1 NRF Best Western Hotel - Capital Beltway
93 2910 2 NRF Riviera Village
85 23 1 CIBC Shady Oaks I
94 6102765 2 PMCC Townhomes at Regency Place
95 25 1 CIBC Brea Building D
97 11 1 CIBC Marriott Courtyard - Asheville
96 1704 1 NRF Gateway Business Park Pads
98 1013 2 NRF The College Park Apartments
99 2307 1 NRF First Virginia Warehouse
100 14 1 CIBC Holiday Inn - Warner Robins
101 6102769 2 PMCC Forest Glen Phase II Apartments
102 37 1 CIBC 45 Mayhill
103 2096 1 NRF 8 Winter Street
106 1144 1 NRF Forestream Village
104 1666 1 NRF Best Buy
105 6102707 1 PMCC 1484 First Avenue
107 6102974 2 PMCC Conestoga West Apartments
108 36 1 CIBC The Boulevard Shops
109 6 1 CIBC Tropicaire Shopping Center
110 6102542 1 PMCC San Antonio Market Place Shopping Center
111 1108 1 NRF Oakwood Village Retirement Center
112 6102875 1 PMCC Skyline Plaza Shopping Center
113 6102705 2 PMCC Golden Grove Terrace Apartments
116 1022 2 NRF Knightsbridge Apartments
114 6102969 1 PMCC Palisades Highland Plaza
115 1694 1 NRF Bank One Building
117 1534 1 NRF Old Branch Crossing
118 6102637 1 PMCC Merchant's Walk Shopping Center
119 1088 1 NRF Southern Hills Shopping Center
120 28 1 CIBC NFC Building
121 6102657 1 PMCC Mercado del Rio Shopping Center
122 2311 1 NRF Northpoint Business Park
123 1275 1 NRF Pioneer Business Center
124 1890 1 NRF University Office Park
125 20 1 CIBC County Bank Merced
126 1403 1 NRF Builder's Square
127 1538 1 NRF Phoenix North Mobile Home Park
128 2027 1 NRF Shoppes at Brantley Hall
129 1795 1 NRF Landmark Center
130 1089 1 NRF River's Edge and Cowesett Terrace
131 19 1 CIBC Thrifty Eagle Rock Center
132 1611 1 NRF Union Depot
133 6102451 1 PMCC Folsom Central Shopping Center
134 7608308 1 PMCC Lakeshore Plaza Shopping Center
135 2693 1 NRF Cameron Dewey Business Center
136 1863 1 NRF Stow Center
137 2558 1 NRF Foothills Shopping Center
138 1599 1 NRF Clarion Hotel
139 1929 1 NRF Mercury Village
142 1442 1 NRF West Valley Plaza
140 6102706 1 PMCC The Modern Publishing Distribution-Warehouse
143 1512 1 NRF Strouds
141 6102891 1 PMCC Corporate Center I and II
144 7608309 1 PMCC Kingsley Apartments
145 1535 1 NRF Carter Plaza South
146 35 2 CIBC Royal Gardens
147 1975 1 NRF The Landmark Building
148 2393 1 NRF Sam's Club
149 1407 1 NRF Palmer Gardens
150 2238 1 NRF McCormick Place
151 6102803 1 PMCC The Best Western Orlando West
152 6102972 1 PMCC Sheridan Center
153 1607 1 NRF Best Buy Store
154 5 1 CIBC Fairfield Inn
155 6102460 2 PMCC Covina Plaza Apartments
157 1781 1 NRF Various
1781A NRF Tara Apartments
1781B NRF Briarwood Apartments
156 7608315 1 PMCC Kelly Plaza Shopping Center
158 17 1 CIBC 51 Morgan Drive
159 22 1 CIBC Days Inn Savannah
160 1440 1 NRF Kingston Cove Apartments
161 6102629 1 PMCC The Village Plaza Shopping Center
162 1448 1 NRF Bally's Health & Fitness Club
163 6102834 1 PMCC The Woods Apartments
164 1321 1 NRF Design Center Portland
165 3638 1 KEY 825 East Chestnut Street
167 3633 1 KEY Oak Lane Retirement Center
166 1246 1 NRF San Joaquin Valley Professional Center
168 2917 2 NRF Villa Primera Apartments
169 6102648 2 PMCC Park Village Apartments
170 1912 1 NRF 7461 & 7481 Lake Mead Blvd.
171 1891 1 NRF Westar Nutrition Building
172 6102443 1 PMCC Key Self Storage Facility
173 940906544 1 Midland JumboSports Inc.
174 1504 1 NRF Tower Plaza Shopping Center
NRF Various
178 0998 2 NRF Fox Run Apartments
179 0999 2 NRF Riverbend Apartments
175 1810 1 NRF Gilman Nursing Center
176 6102988 1 PMCC Horoy Warehouse
177 3182 1 NRF Casa Grande Apartments
180 2463 2 NRF Preserve Apartments
181 1641 1 NRF Trademark Plaza
182 6102932 1 PMCC Tower Plaza Shopping Center
183 1555 1 NRF Bath Plaza
184 1090 1 NRF Stonebrook Plaza
185 940906539 1 Midland 13460 Admiral Park Blvd.
186 2660 1 NRF Oak Park Apartments
189 1130 1 NRF Vons Center
188 2043 1 NRF Sycamore Springs Mobile Home Park
187 2392 1 NRF Orleans Manor Apartments
190 1988 1 NRF Budnick Converting, Inc.
191 1573 1 NRF ASTA Care Center of Toluca
192 1886 1 NRF San Mateo Center
193 1075 1 NRF Gateway Shopping Center
196 940906545 1 Midland 100 Urton Lane
194 1747 1 NRF Strongsville Pointe Shopping Center
195 1041 1 NRF 12412 Victory Blvd.
197 7608318 1 PMCC Ridge and Day Plaza
198 6102904 1 PMCC River Ridge Villas
199 1239 1 NRF Riverpointe Center
200 1015 1 NRF Fox Hollow
201 1720 2 NRF Libertwo Apartments
202 1086 1 NRF Wilshire Square Business Park
203 2168 1 NRF Michaels of Oregon
205 1060 2 NRF Broussard Plaza Apartments
204 2055 2 NRF Johnson Parkway Apartments
206 6102970 1 PMCC 224 East 48th Street
207 6102901 1 PMCC Bedrosian Showroom & Warehouse Building
208 6102903 1 PMCC Rite Aid Drug/Susquehanna
209 1779 1 NRF Riggs Office Building
210 1005 1 NRF Frank's Nursery & Crafts
211 1811 1 NRF Spring Valley Nursing Home
212 6102656 2 PMCC Country Square Apartments Phase I
213 4 1 CIBC 650-670 Franklin Street
214 2060 1 NRF Medical Center Professional Plaza
215 940907039 1 Midland Oaktree Village Shopping Center
216 1852 1 NRF Carter Plaza East
217 2665 1 NRF Ambassador Warehouse (Giant Foods)
218 940906528 1 Midland JumboSports Inc.
219 1432 1 NRF Fountain Hills Office Center
221 1102 1 NRF DHL Building
220 1001 2 NRF Royal Orleans Apartments
222 2815 2 NRF Old Orchard Apartments
223 2056 1 NRF United Rotary Brush Plant
224 6102896 1 PMCC Stason Pharmaceuticals Industrial Building
225 6102900 1 PMCC 8730 Santa Monica Blvd.
226 6102943 2 PMCC Sussex Court Apartments
227 1435 1 NRF Lake Sahara Plaza Office Building
228 7608319 1 PMCC Realty One Plaza
229 7608320 1 PMCC Chagrin Plaza Shopping Center
230 2456 2 NRF Wellington Manor Apartments
231 6102840 2 PMCC Curiosity Creek Apartments
232 2133 1 NRF Pylon Plaza Office Building
233 1580 1 NRF Winston Place Office Park
234 940907278 1 Midland Savings of America Office Building
236 1320 1 NRF Kinko's Center
235 1855 1 NRF EDS Building
237 1647 1 NRF Wrench Warehouse
238 1030 2 NRF 35 W. 81st Street
239 6102770 1 PMCC Cornerstone Apartments
240 6102779 1 PMCC El Mar Plastics Building
241 1288 1 NRF Tower Market Shopping Center
242 2756 1 NRF Blockbuster Video
243 1145 1 NRF 60 Church Street
244 6102540 2 PMCC Sandcastle Apartments
245 1949 1 NRF San Marino Retail Center
246 2017 1 NRF Hollywood Video
247 1854 1 NRF Fretter Plaza
248 6102531 1 PMCC Ranchview Gardens Apartments
249 1073 1 NRF 9039 Katy Freeway Office Building
250 940906529 1 Midland 3150 Wade Hampton Boulevard
251 2200 1 NRF Palmentere Brothers Property
252 2115 1 NRF Indian Hills Apartments
253 2405 1 NRF Men's Warehouse
254 1851 1 NRF Carter Plaza North
255 1129 1 NRF Red Apple Plaza
256 1991 2 NRF Brookside Apartments
257 940906527 1 Midland 1515 South University Blvd.
86 38 1 CIBC Shady Oaks II
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CONTROL LOAN
NUMBER NUMBER PROPERTY ADDRESS PROPERTY CITY PROPERTY STATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 6102551 Various Various Various
6102551A 11048-11056 Shady Trail Dallas TX
6102551B 2210 Hutton Drive Carrollton TX
6102551C 12901 Hutton Dr.; 2000 Academy Ln.; 12900 & 12920 Senlac Dr. Farmers Branch TX
6102551D 1702 & 1712 Old Minter Chapel Road Grapevine TX
6102551E 8701 John W. Carpenter Freeway Dallas TX
6102551F 1825 E. Plano Parkway Plano TX
6102551G 10503 Forest Lane Dallas TX
6102551H 1517 W. North Carrier Parkway Grand Prairie TX
6102551I 9000 Southwest Freeway/Various St. Nos. on Commerce Park Dr. Houston TX
2 6102992 2355 Dulles Corner Blvd. Herndon VA
3 24 Various Various Various
24A 900 W. Northland Ave. Appleton WI
24B 1125 Atlantic Avenue Atlantic City NJ
24C 8025 Black Horse Pike West Atlantic City NJ
24D Loop 250 and Midkiff Road Midland TX
24E 501 Birdwell Lane Big Spring TX
24F 2820 South Padre Island Drive Corpus Christi TX
24G 560 Broad Street Newark NJ
24H 1015 Springfield Ave. Irvington NJ
24I 309,313,315, U.S. Route 202 Hunterdon County NJ
24J 92018th Avenue Newark NJ
24K 240 Martin Luther King Ave. Morris Township NJ
24L 2020 Corlies Avenue Neptune City NJ
24M 631 Joyce Kilmer Ave. New Brunswick NJ
24N 35 Branca Road East Rutherford NJ
24O 2546 Fire Road Egg Harbor NJ
24P Memorial Parkway & 291 Pickford Ave. Phillipsburg NJ
24Q 436 Central Avebue East Orange NJ
24R 214 East Main Street Patchogue NY
4 1548 1600 Viceroy Drive Dallas TX
5 6102628 2200 Monroe Street Santa Clara CA
Various Various Various
6 6102944 404 Odlin Road Bangor ME
7 6102945 1200 Fifth Street, S. W. Charlottesville VA
8 6102946 510-522 Main Street Bangor ME
9 6102947 215 High Street Ellsworth ME
11 2555 46 Brittany Farms Road New Britain CT
12 6103017 700 Broadview Village Square Broadview IL
14 10 1704 North Dixie Highway Elizabethtowne KY
13 1907 Various Various Various
1907A 16801 Addison Road Addison TX
1907B 1779 Wells Branch Parkway Austin TX
1907C 990 N. Walnut Creek Drive Mansfield TX
1907D 821 E. Southeast Loop 323 Tyler TX
1907E 2201 Brookhollow Plaza Arlington TX
1907F 2101 Bedford Road Bedford TX
1907G 5555 Rufe Snow Drive N. Richardson Hills TX
15 2534 100-700 Juniper Drive Delmar NY
16 1905 Various Various Various
1905A 1401 N. Central Expressway Richardson TX
1905B 3201 Airport Freeway Bedford TX
1905C 9333 Forest Lane Dallas TX
1905D 3200 Troup Highway Tyler TX
1905E 1425 Gross Road Mesquite TX
1905F 747 N. Central Expressway Richardson TX
1905G 2201 Loy Lake Road Sherman TX
1905H 2222 Spring Creek Parkway Plano TX
1905I 3200-3300 W. Anderson Austin TX
17 2 500-520 North Dearborn, 52-56 West Illinois, and 501-521 North Clark Chicago IL
18 3423 3253 Walters Lane Forestville MD
19 1376 4141 N. St. Augustine Road Dallas TX
20 1908 Various Various Various
1908A 10660 Plano Road/10720 Miller Road Dallas TX
1908B 4141 N. St. Augustine Road Dallas TX
1908C 1219 & 1221 Abrams Road Richardson TX
1908D 1800-1820 Shiloh Road Tyler TX
21 18 2700 Route 22 Union NJ
22 1556 8990-8996 Miramar Road San Diego CA
23 1 NWC Alma School Road and Southern Avenue Mesa AZ
24 1210 700 Broadway Westwood NJ
25 9 1841 Highway 69 Prescott AZ
26 2052 2000 White Swan Drive Greece NY
27 6102530 1820 Georgia Highway 20/138 Conyers GA
28 6102876 3131 Knights Road Bensalem PA
29 2636 6501 South Cass Avenue Westmont IL
30 2394 1750 South Erie Blvd. Hamilton OH
31 6102859 8701 Chestnut Circle Kansas City MO
32 1885 600 Memorial Drive Cambridge MA
33 6102580 1825 Tamiami Trail Port Charlotte FL
34 2358 13418 Dottie Drive Tampa FL
35 1076 267-655 N. Milwaukee Boise ID
36 6102991 23550 Commerce Park Road Beachwood OH
37 3641 5900 University Drive Huntsville AL
38 6102452 16350 Harbor Boulevard Fountain Valley CA
41 3083 3429 Canyon Crest Drive Riverside CA
Various Various WA
39 2498 12223 NE 116th Kirkland WA
40 2499 15901 West Valley Highway Tukwila WA
Various Various WA
42 1224 15750 NE 15th Bellevue WA
43 1269 2901 "I" Steet N.E. Auburn WA
44 6102663 8787 Southside Blvd. Jacksonville FL
45 34 5407-5447 Kings Highway Brooklyn NY
46 6102762 5915 Landerbrook Drive Mayfield Heights OH
47 16 40-42 Old Ridgebury Road Danbury CT
48 6102442 10303 Metcalf Avenue Overland Park KS
49 1776 US Highway 12 & Willowbrook Road Coldwater MI
50 6102461 500-530 North Sepulveda El Segundo CA
51 3645 16100 Pearl Road Strongsville OH
52 1922 8800-8820 Burnet Road & 9070 Research Blvd. Austin TX
53 7608323 1445 Monroe Drive Atlanta GA
55 1755 Del Mar Blvd. And San Dario Ave. Laredo TX
54 6102880 455 Racine Drive Wilmington NC
56 7 Philadelphia PA
7A 100 - 30 Spring Garden Street Philadelphia PA
7B 1004 - 36 Spring Garden Street Philadelphia PA
7C 511 - 19 North Broad Street Philadelphia PA
7D 2901 Grant Avenue Philadelphia PA
57 6102950 1600 Emmet Street Charlottesville VA
58 2076 12052 North Shore Drive Reston VA
59 6102533 2900 Tree Lane Jeffersontown KY
Various Various Various
61 94090632 3303 Route 35 N Eatontown NJ
62 94090632 41000-1206 Nesconset Highway Nesconset NY
60 3 Watt Street and Route 7 Schenectady NY
63 3632 524 North Ely Kennewick WA
64 1541 1150 Northpoint Blvd. Waukegan IL
65 1585 42200 Margarita Road Temecula CA
66 6102764 2708 North 68th Street Scottsdale AZ
67 1782 6303 Dry Creek Parkway Longmont CO
68 1116 7540 Dodge Street Omaha NE
70 1057 Various Various Various
1057A 950-984 & 1007-1049 10th Ave. S.E. Minneapolis MN
1057B 7221, 7261 & 7271 Ohms Lane Edina MN
69 2635 7548 Greenhaven Drive Sacramento CA
71 6102541 15420 Livingston Avenue Lutz FL
72 6102532 6000 Rockside Woods Boulevard Independence OH
73 1263 5601-5851 Riverdale Rd. Riverdale MD
74 13 215 Chestnut Street Chattanooga TN
75 12 3900 Sheraton Drive Macon GA
76 1921 700 Elm Street Manchester NH
77 1660 101 Valley Blvd. Walnut CA
78 3218 1845 North Broadway Escondido CA
82 94090537 4750 Builders Way Niagara Falls NY
79 6102708 4375 E. Sunset Road Henderson NV
80 1859 4240-4292 Lincoln Blvd. Marina Del Rey CA
81 1523 30 S. La Patera Lane Goleta CA
83 6102902 710 East Ball Road Anaheim CA
84 3642 1201 Carlisle Rd York PA
87 6102709 8530 West Sahara Avenue Las Vegas NV
88 1152 43195 Business Park Drive Temecula CA
89 6102776 6107 W. 119th Street Overland Park KS
90 15 40 Robbie Road Avon MA
91 6102499 5751 Main Street Jacksonville FL
92 2212 5910 Princess Garden Parkway Lanham MD
93 2910 1532 South Price Road Tempe AZ
85 23 5097 Shady Oak Road Minooka IL
94 6102765 3501 Woodhaven Road Philadelphia PA
95 25 130 S. State College Brea CA
97 11 244 Tunnel Road Asheville NC
96 1704 6316-56 S. Pecos Las Vegas NV
98 1013 202 College Park Dr. Weatherford TX
99 2307 140 Industrial Boulevard Toano VA
100 14 2024 Watson Boulevard Warner Robins GA
101 6102769 300 Forest Glen Boulevard Daytona Beach FL
102 37 45 Mayhill Street Saddlebrook NJ
103 2096 8 Winter Street Boston MA
106 1144 4705-4757 Transit Road Lancaster NY
104 1666 9450 Watson Road Crestwood MO
105 6102707 1484 First Avenue New York NY
107 6102974 210 Stone Mill Road Lancaster PA
108 36 463 Prospect Avenue West Hartford CT
109 6 7751 SW Bird Road Miami FL
110 6102542 1739 SW Loop 410 San Antonio TX
111 1108 801 La Prada Drive Garland TX
112 6102875 2835-2897 E. Thousand Oaks Boulevard Thousand Oaks CA
113 6102705 3407-3423 Washington Street Lemon Grove CA
116 1022 11420 Colorado Kansas City MO
114 6102969 514-549 Palisades Drive Pacific Palisades CA
115 1694 250 S. Stemmons Freeway Lewisville TX
117 1534 6315 - 6381 Old Branch Avenue Camp Springs MD
118 6102637 4900 Thoroughbred Lane Nashville/Brentwood TN
119 1088 1307 Southern Hills West Plains MO
120 28 17 Corporate Drive Halfmoon NY
121 6102657 22290 La Palma Avenue Yorba Linda CA
122 2311 1401 Corporate Center Parkway Santa Rosa CA
123 1275 1444-1466-1488 Pioneer Way El Cajon CA
124 1890 5400 South University Drive Davie FL
125 20 550 W. Main Street Merced CA
126 1403 813 E. Harmony Road Fort Collins CO
127 1538 17825 N. 7th St. Phoenix AZ
128 2027 990 N. State Rd. 434 Altamonte Springs FL
129 1795 535 Centerville Road Warwick RI
130 1089 1735 and 1700 Main Street West Warwick RI
131 19 4044 Eagle Rock Boulevard Los Angeles CA
132 1611 214 East Fourth Street St. Paul MN
133 6102451 1111-1181 Riley Street Folsom CA
134 7608308 22800 Lakeshore Blvd. Euclid OH
135 2693 4710 & 4760 W. Dewey Drive Las Vegas NV
136 1863 3732 Darrow Road Stow OH
137 2558 6105-6125 W. Tropicana Ave. Las Vegas NV
138 1599 3600 E. Cork Street Kalamazoo MI
139 1929 8008-8080 Clairemont Mesa Blvd. San Diego CA
142 1442 1310-1340 West Valley Parkway Escondido CA
140 6102706 2410 Brodhead Road Bethlehem PA
143 1512 610 State Street Santa Barbara CA
141 6102891 6275 & 6325 Corporate Drive Colorado Springs CO
144 7608309 1345 North Kingsley Drive Los Angeles CA
145 1535 24775 Lorain Road North Olmsted OH
146 35 99 Union Road Spring Valley NY
147 1975 1062 Barnes Road Wallingford CT
148 2393 7469 South Avenue Boardman OH
149 1407 104 & 106 East 29th Street Loveland CO
150 2238 23266-23300 Lorain Road North Olmsted OH
151 6102803 2014 West Colonial Drive Orlando FL
152 6102972 One Sherington Drive Bluffton SC
153 1607 4090 Commonwealth Ave. Eau Claire WI
154 5 126 Cusick Road Alcoa TN
155 6102460 1170 W. San Bernardino Road Covina CA
157 1781 Various Various Various
1781A 1715 48th St. Woodward OK
1781B 3311 22nd St. Woodward OK
156 7608315 304 South Kelly Avenue Edmond OK
158 17 51 Morgan Drive Norwood MA
159 22 4 East Gateway Boulevard Savannah GA
160 1440 519 W. 27th Street South Wichita KS
161 6102629 800 South Tallahassee Street Hazlehurst GA
162 1448 4850 Lawing Lane Orlando FL
163 6102834 1520 Woods Road Winston-Salem NC
164 1321 735 SW 20th Place Portland OR
165 3638 Reservoir & Chestnut St Lancaster PA
167 3633 727 S.W. Rogue River Ave. Grants Pass OR
166 1246 7475 , 7461 , 7433 N. First Street Fresno CA
168 2917 2005 - 2025 F Avenue National City CA
169 6102648 1115-1155 Maxwell Ave & 6910-6918 Dale St. Fullerton/Buena Park CA
170 1912 7461 & 7481 Lake Mead Blvd. Las Vegas NV
171 1891 2401 Pullman Street Santa Ana CA
172 6102443 206 Vine Street Wilder KY
173 94090654 43031 North 120th Street Omaha NE
174 1504 5338-5378 Mayfield Road Lyndhurst OH
Various Toledo OH
178 0998 2133 Stirrup Lane Toledo OH
179 0999 4601-4609 Suder Ave. Toledo OH
175 1810 U.S. Route 45 South Gilman IL
176 6102988 468 Mission Road San Marcos CA
177 3182 1751 W. University Ave San Diego CA
180 2463 1245 Roosa Avenue Durango CO
181 1641 5400-5450 West Atlantic Blvd. Margate FL
182 6102932 2520 - 2540 Iowa Street Lawrence KS
183 1555 330 West Washington Street Village of Bath NY
184 1090 1531 West 32nd St. Joplin MO
185 94090653 913460 Admiral Park Blvd. Ft. Myers FL
186 2660 2903 N. Perkins Rd. Stillwater OK
189 1130 2060-2190 White Lane Bakersfield CA
188 2043 NEC Highway MM and Miller Road House Springs MO
187 2392 900 South Boardman Ave. Gallup NM
190 1988 200 Admiral Weinel Blvd. Columbia IL
191 1573 101 East Via Ghiglieri Toluca IL
192 1886 6301-6321 San Mateo Blvd, NE Albuquerque NM
193 1075 2610-2790 S. Broadway Avenue Boise ID
196 94090654 5100 Urton Lane Louisville KY
194 1747 14379-14425 Pearl Road Strongsville OH
195 1041 12412 Victory Blvd. North Hollywood CA
197 7608318 6807-6891 Ridge Road Parma OH
198 6102904 1216 Patricia Avenue Simi Valley CA
199 1239 471 and 485 Baybrook Court Boise ID
200 1015 9450 Royal Lane Dallas TX
201 1720 1155 East Flamingo Road Las Vegas NV
202 1086 11002-11022 E. 51st St. and 5115-5123 S. 101st E. Avenue Tulsa OK
203 2168 1710 Red Soils Court Oregon City OR
205 1060 8686 Coy Drive Baton Rouge LA
204 2055 1334 & 1348 Ames Avenue St. Paul MN
206 6102970 224 East 48th Street New York NY
207 6102901 1235 S. State College Anaheim CA
208 6102903 3601 Walnut Street Harrisburg PA
209 1779 7411 Riggs Road Adelphi MD
210 1005 1081 Jericho Turnpike Huntington NY
211 1811 1300 N. Greenwood Street Spring Valley IL
212 6102656 8301 Country Square Tampa FL
213 4 650 and 670 Franklin Street Schenectady NY
214 2060 4920 NE Stallings Drive Nacogdoches TX
215 94090703 93701 19th St. and 3702 20th St. Lubbock TX
216 1852 7777 Mentor Ave Mentor OH
217 2665 7110 Ambassador Rd. Baltimore MD
218 94090652 83650 Boston Road Lexington KY
219 1432 17100 East Shea Blvd Fountain Hills AZ
221 1102 6930 Portwest Drive Houston TX
220 1001 3902 College View Drive Joplin MO
222 2815 4330 Keller Road Holt MI
223 2056 20078 State Route 4 Marysville OH
224 6102896 11 Morgan Street Irvine CA
225 6102900 8730 Santa Monica Blvd. West Hollywood CA
226 6102943 4215-4245 Sussex Drive Lower Paxton Township PA
227 1435 8687 West Sahara Drive Las Vegas NV
228 7608319 8376-8396 Mentor Avenue Mentor OH
229 7608320 28700 Chagrin Boulevard Woodmere OH
230 2456 18650-678 Van Horn Road Woodhaven MI
231 6102840 102 Curiosity Creek Lane Tampa FL
232 2133 5455 Noth Federal Highway Boca Raton FL
233 1580 104 East Park Drive Brentwood TN
234 94090727 83003 South Loop West Houston TX
236 1320 9648 Kenwood Road Blue Ash OH
235 1855 28605 Ranney Parkway Westlake OH
237 1647 15001 Farm Creek Drive Woodbridge VA
238 1030 35 West 81st Street New York NY
239 6102770 4040 Denton Highway Haltom City TX
240 6102779 840-860 East Walnut Street Carson CA
241 1288 37 Hwy. 35 Eatontown NJ
242 2756 12144 Lebanon Road Sharonville OH
243 1145 62 and 64 Church Street Yalesville CT
244 6102540 404 West Beach Boulevard Long Beach MS
245 1949 2265-2285 Huntington Drive San Marino CA
246 2017 11517 Clifton Blvd. Cleveland OH
247 1854 2270 Romig Road Akron OH
248 6102531 1219 East Perkins Avenue Sandusky OH
249 1073 9039 Katy Freeway Hedwig Village TX
250 94090652 93150 Wade Hampton Boulevard Greenville County SC
251 2200 919 E. 14th Avenue North Kansas City MO
252 2115 4220 Lasata Drive St. Louis MO
253 2405 6330 Mayfield Road Mayfield Heights OH
254 1851 24910 Lorain Road North Olmsted OH
255 1129 785 Tucker Road, Units A-K Tehachapi CA
256 1991 1101-1111 Brookside Avenue Independence MO
257 94090652 71515 South University Blvd. Mobile AL
86 38 5097 Shady Oak Road Minooka IL
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
CONTROL LOAN
NUMBER NUMBER PROPERTY ZIP CODE PROPERTY TYPE
- ---------------------------------------------------------------------------
<S> <C> <C>
1 6102551 Various Industrial
6102551A 75229 Industrial
6102551B 75006 Industrial
6102551C 75234 Industrial
6102551D 76051 Industrial
6102551E 75247 Industrial
6102551F 75074 Industrial
6102551G 75243 Industrial
6102551H 75050 Industrial
6102551I 77074 Industrial
2 6102992 22071 Office
3 24 Various Various
24A 54911 Retail - Anchored
24B 08401 Office
24C 08401 Office
24D 79701 Retail - Unanchored
24E 79720 Retail - Unanchored
24F 78469 Office
24G 07102 Office
24H 07111 Retail - Unanchored
24I 08822 Retail - Unanchored
24J 07102 Retail - Unanchored
24K 07950 Industrial
24L 10105 Office
24M 08901 Industrial
24N 07073 Industrial
24O 08213 Industrial
24P 08865 Office
24Q 07018 Retail - Unanchored
24R 11772 Retail - Unanchored
4 1548 75235 Office
5 6102628 95050 Multifamily
Various Hotel
6 6102944 04401 Hotel
7 6102945 22901 Hotel
8 6102946 04401 Hotel
9 6102947 04605 Hotel
11 2555 06053 Multifamily
12 6103017 60153 Retail - Single Tenant
14 10 42701 Retail - Anchored
13 1907 Various Various
1907A 75001 Office
1907B 78728 Retail - Unanchored
1907C 76063 Office
1907D 75701 Office
1907E 76010 Mixed Use
1907F 76021 Retail - Unanchored
1907G 76180 Retail - Unanchored
15 2534 12054 Multifamily
16 1905 Various Various
1905A 75080 Office
1905B 76021 Mixed Use
1905C 75243 Mixed Use
1905D 75701 Office
1905E 75149 Retail - Unanchored
1905F 75080 Retail - Unanchored
1905G 75090 Retail - Unanchored
1905H 75023 Office
1905I 78731 Retail - Unanchored
17 2 60610 Mixed Use
18 3423 20747 Multifamily
19 1376 75228 Office
20 1908 Various Office
1908A 75238 Office
1908B 75228 Office
1908C 75243 Office
1908D 75701 Office
21 18 07083 Retail - Anchored
22 1556 92126 Retail - Unanchored
23 1 85202 Retail - Anchored
24 1210 07675 Retail - Anchored
25 9 86301 Retail - Anchored
26 2052 14626 Multifamily
27 6102530 30013 Retail - Anchored
28 6102876 19020 Multifamily
29 2636 60559 Nursing Home
30 2394 45011 Retail - Anchored
31 6102859 64131 Multifamily
32 1885 02139 Office
33 6102580 33948 Retail - Anchored
34 2358 33617 Multifamily
35 1076 83704 Retail-Shadow Anchored
36 6102991 44122 Industrial
37 3641 35816 Retail - Anchored
38 6102452 92704 Multifamily
41 3083 92507 Multifamily
Various Hotel
39 2498 98034 Hotel
40 2499 98188 Hotel
Various Various
42 1224 98008 Assisted Living
43 1269 98002 Multifamily
44 6102663 32256 Multifamily
45 34 11203 Multifamily
46 6102762 44124 Office
47 16 06810 Office
48 6102442 66212 Retail - Anchored
49 1776 49036 Retail - Anchored
50 6102461 90245 Retail - Anchored
51 3645 44136 Multifamily
52 1922 78757 Retail - Unanchored
53 7608323 30324 Multifamily
55 1755 78045 Retail - Anchored
54 6102880 28403 Multifamily
56 7 19123 Various
7A 19123 Retail - Unanchored
7B 19123 Retail - Unanchored
7C 19123 Office
7D 19123 Industrial
57 6102950 22901 Hotel
58 2076 20190 Assisted Living
59 6102533 40299 Multifamily
Various Retail - Unanchored
61 940906323 07799 Retail - Unanchored
62 940906324 11787 Retail - Unanchored
60 3 12304 Retail - Anchored
63 3632 99336 Assisted Living
64 1541 60085 Office
65 1585 92592 Multifamily
66 6102764 85257 Retail - Unanchored
67 1782 80503 Warehouse
68 1116 68114 Retail - Anchored
70 1057 Various Office
1057A 55414 Office
1057B 55439 Office
69 2635 95831 Assisted Living
71 6102541 33549 Multifamily
72 6102532 44131 Office
73 1263 20737 Retail - Anchored
74 13 37402 Hotel
75 12 31210 Hotel
76 1921 03101 Hotel
77 1660 91789 Office/Industrial
78 3218 92026 Multifamily
82 940905374 14304 Retail - Single Tenant
79 6102708 89014 Multifamily
80 1859 90292 Retail - Unanchored
81 1523 93117 Industrial
83 6102902 92805 Industrial
84 3642 17404 Retail - Anchored
87 6102709 89117 Multifamily
88 1152 92590 Warehouse
89 6102776 66209 Retail - Unanchored
90 15 02322 Industrial
91 6102499 32208 Retail - Anchored
92 2212 20706 Hotel
93 2910 85281 Multifamily
85 23 60447 Mobile Home Park
94 6102765 19154 Multifamily
95 25 92821 Office
97 11 28805 Hotel
96 1704 89120 Retail - Unanchored
98 1013 76086 Multifamily
99 2307 23168 Warehouse
100 14 31093 Hotel
101 6102769 32114 Multifamily
102 37 07663 Industrial
103 2096 02108 Office
106 1144 14043-5004 Mixed Use
104 1666 63126 Retail - Single Tenant
105 6102707 10021 Office
107 6102974 17603 Multifamily
108 36 06105 Retail - Anchored
109 6 33155 Retail - Anchored
110 6102542 78227 Retail - Anchored
111 1108 75043 Multifamily
112 6102875 91362 Retail - Unanchored
113 6102705 91945 Multifamily
116 1022 64137 Multifamily
114 6102969 90272 Retail - Unanchored
115 1694 75057 Office
117 1534 20748 Mixed Use
118 6102637 32027 Retail - Unanchored
119 1088 65775 Retail - Anchored
120 28 12065 Office
121 6102657 92687 Retail - Unanchored
122 2311 95407 Office
123 1275 92020 Office
124 1890 33328 Office
125 20 95340 Office
126 1403 80525 Retail - Single Tenant
127 1538 85022 Mobile Home Park
128 2027 32701 Retail - Unanchored
129 1795 02886 Office
130 1089 02893 Multifamily
131 19 90065 Retail - Single Tenant
132 1611 55101 Mixed Use
133 6102451 95630 Retail - Anchored
134 7608308 44123 Retail - Anchored
135 2693 89118 Office/Industrial
136 1863 44224 Retail - Anchored
137 2558 89103 Retail - Unanchored
138 1599 49001 Hotel
139 1929 92121 Retail - Unanchored
142 1442 92029 Mixed Use
140 6102706 18020 Industrial
143 1512 93101 Retail - Single Tenant
141 6102891 80919 Industrial
144 7608309 90027 Multifamily
145 1535 44070 Retail - Unanchored
146 35 10977 Multifamily
147 1975 06492 Office
148 2393 44512 Retail - Single Tenant
149 1407 80538 Mixed Use
150 2238 44070 Retail - Unanchored
151 6102803 32804 Hotel
152 6102972 29910 Retail - Unanchored
153 1607 54701 Retail - Single Tenant
154 5 37701 Hotel
155 6102460 91722 Multifamily
157 1781 Various Multifamily
1781A 73801 Multifamily
1781B 73801 Multifamily
156 7608315 73003 Retail - Anchored
158 17 02062 Industrial
159 22 31419 Hotel
160 1440 67217 Multifamily
161 6102629 31539 Retail - Anchored
162 1448 32819 Retail - Single Tenant
163 6102834 27106 Multifamily
164 1321 97205 Office
165 3638 17602 Retail - Anchored
167 3633 97526-2799 Assisted Living
166 1246 93720 Office
168 2917 91950 Multifamily
169 6102648 92833/90621 Multifamily
170 1912 89128 Retail - Unanchored
171 1891 92705 Warehouse
172 6102443 41076 Self-Storage
173 940906544 68144 Retail - Single Tenant
174 1504 44124 Retail - Unanchored
Various Multifamily
178 0998 41612 Multifamily
179 0999 43611 Multifamily
175 1810 60938 Nursing Home
176 6102988 92069 Industrial
177 3182 92103 Multifamily
180 2463 81301 Multifamily
181 1641 33063 Retail - Unanchored
182 6102932 66046 Retail - Unanchored
183 1555 14810 Retail - Unanchored
184 1090 64804 Office
185 940906539 33912 Retail - Single Tenant
186 2660 74075 Multifamily
189 1130 93304 Retail-Shadow Anchored
188 2043 63051 Mobile Home Park
187 2392 87301 Multifamily
190 1988 62236 Warehouse
191 1573 61369 Nursing Home
192 1886 87110 Retail - Unanchored
193 1075 83706 Retail-Shadow Anchored
196 940906545 40243 Retail - Single Tenant
194 1747 44136 Retail - Unanchored
195 1041 91606 Office
197 7608318 44129 Retail - Anchored
198 6102904 93065 Multifamily
199 1239 83712 Office
200 1015 75243 Multifamily
201 1720 89119 Multifamily
202 1086 74146 Office/Industrial
203 2168 97045 Warehouse
205 1060 70810 Multifamily
204 2055 55106 Multifamily
206 6102970 10016 Multifamily
207 6102901 92805 Industrial
208 6102903 17104 Retail - Single Tenant
209 1779 20783 Office
210 1005 11743 Retail - Single Tenant
211 1811 61362 Nursing Home
212 6102656 33615 Multifamily
213 4 12305 Office
214 2060 75961 Office
215 940907039 79499 Retail - Unanchored
216 1852 44060 Retail - Unanchored
217 2665 21244 Warehouse
218 940906528 40503 Retail - Single Tenant
219 1432 85262 Office
221 1102 77024 Industrial
220 1001 64801 Multifamily
222 2815 48842 Multifamily
223 2056 43040 Industrial
224 6102896 92718 Industrial
225 6102900 90069 Retail - Unanchored
226 6102943 17109 Multifamily
227 1435 89117 Office
228 7608319 44060 Retail - Unanchored
229 7608320 44122 Retail - Anchored
230 2456 48183 Multifamily
231 6102840 33612 Multifamily
232 2133 33431 Office
233 1580 37027 Office
234 940907278 77454 Office
236 1320 45242 Retail - Anchored
235 1855 44145 Office
237 1647 22192 Warehouse
238 1030 10024 Multifamily
239 6102770 76117 Multifamily
240 6102779 90746 Industrial
241 1288 07781 Retail - Unanchored
242 2756 45241 Retail - Single Tenant
243 1145 06492 Mixed Use
244 6102540 39560 Multifamily
245 1949 91108 Retail - Unanchored
246 2017 44102 Retail - Single Tenant
247 1854 44320 Retail - Unanchored
248 6102531 44870 Multifamily
249 1073 77055 Office
250 940906529 29687 Retail - Single Tenant
251 2200 64116 Warehouse
252 2115 63123 Multifamily
253 2405 44124 Retail - Single Tenant
254 1851 44070 Retail - Unanchored
255 1129 93561 Retail-Shadow Anchored
256 1991 64053 Multifamily
257 940906527 36606 Retail - Single Tenant
86 38 60447 Mobile Home Park
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
CONTROL LOAN ORIGINAL PRINCIPAL
NUMBER NUMBER BORROWER NAME BALANCE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 6102551 AIP-SWAG Operating Partnership, LP $30,550,000.00
6102551A AIP-SWAG Operating Partnership, LP 1,225,463.27
6102551B AIP-SWAG Operating Partnership, LP 1,352,005.67
6102551C AIP-SWAG Operating Partnership, LP 4,995,094.83
6102551D AIP-SWAG Operating Partnership, LP 2,464,246.78
6102551E AIP-SWAG Operating Partnership, LP 1,265,424.02
6102551F AIP-SWAG Operating Partnership, LP 2,197,841.73
6102551G AIP-SWAG Operating Partnership, LP 7,392,740.35
6102551H AIP-SWAG Operating Partnership, LP 2,197,841.73
6102551I AIP-SWAG Operating Partnership, LP 7,459,341.62
2 6102992 Mayfair Joint Venture, L.L.C. and 2355 Associates L.P. 24,100,000.00
3 24 Various 23,933,899.00
24A Northland Mall LLC, c/o DID Acquisition Company, Inc. 3,961,440.00
24B 1125 Atlantic Avenue LLC, c/o DID Acquisition Company, Inc. 4,519,500.00
24C Bayport One, LLC c/o DID Acquisition Company, Inc. 2,247,960.00
24D U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc. 2,160,763.00
24E U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc. 1,649,863.00
24F U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc. 1,964,263.00
24G U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc. 863,863.00
24H U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc. 1,178,263.00
24I Aetna Realty Financial Note Corp., c/o DID Acquisition Company, Inc. 785,263.00
24J Aetna Realty Financial Note Corp., c/o DID Acquisition Company, Inc. 309,733.00
24K U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc. 1,099,663.00
24L U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc. 785,263.00
24M U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc. 580,903.00
24N Aetna Realty Financial Note Corp., c/o DID Acquisition Company, Inc. 474,793.00
24O U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc. 494,443.00
24P U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc. 426,858.00
24Q Aetna Realty Financial Note Corp., c/o DID Acquisition Company, Inc. 235,671.00
24R Aetna Realty Financial Note Corp., c/o DID Acquisition Company, Inc. 195,394.00
4 1548 Lepercq Corporate Income Fund L.P. 22,800,000.00
5 6102628 Old Orchard 19,600,000.00
Various 19,455,000.00
6 6102944 Penobscot Yacht Club 7,163,000.00
7 6102945 Morris Creek Yacht Club 5,397,000.00
8 6102946 Kenduskeag Yacht Club 3,584,000.00
9 6102947 Union River Yacht Club 3,311,000.00
11 2555 Brittany Farms Associates, LP 16,500,000.00
12 6103017 HD - TB, LLC 15,000,000.00
14 10 Towne Mall LLC 14,500,000.00
13 1907 Aberfeldy III, LP 14,437,000.00
1907A Aberfeldy III, LP 3,254,383.69
1907B Aberfeldy III, LP 1,627,191.85
1907C Aberfeldy III, LP 1,038,633.09
1907D Aberfeldy III, LP 3,808,321.34
1907E Aberfeldy III, LP 2,008,023.98
1907F Aberfeldy III, LP 969,390.89
1907G Aberfeldy III, LP 1,731,055.16
15 2534 Adams Station, LLC 13,840,000.00
16 1905 Aberfeldy I, LP 13,652,000.00
1905A Aberfeldy I, LP 2,390,005.31
1905B Aberfeldy I, LP 1,955,458.89
1905C Aberfeldy I, LP 1,086,366.05
1905D Aberfeldy I, LP 1,050,153.85
1905E Aberfeldy I, LP 1,303,639.26
1905F Aberfeldy I, LP 832,880.64
1905G Aberfeldy I, LP 1,050,153.85
1905H Aberfeldy I, LP 1,339,851.46
1905I Aberfeldy I, LP 2,643,490.69
17 2 The Boyce Building Group, LLC 12,500,000.00
18 3423 Amerwood Apartments, LLC 12,150,000.00
19 1376 Aberfeldy IV, LP 4,900,000.00
20 1908 Aberfeldy IV, LP 7,308,000.00
1908A Aberfeldy IV, LP 1,421,000.00
1908B Aberfeldy IV, LP 1,827,000.00
1908C Aberfeldy IV, LP 3,383,333.33
1908D Aberfeldy IV, LP 676,666.67
21 18 2700 Route 22, LLC 12,000,000.00
22 1556 Miramar Commercial Center, Ltd. 11,850,000.00
23 1 Fiesta Village Shopping Centers, INC., 11,300,000.00
24 1210 First Real Estate Investment Trust of New Jersey 10,600,000.00
25 9 Grace Investment Co. 10,500,000.00
26 2052 Creek House Housing Partners, LP 10,200,000.00
27 6102530 F.S. Associates, LP 10,100,000.00
28 6102876 B-S Partners, LP 10,000,000.00
29 2636 Westmont Convalescent Center, LP. Amer. Nat. Bank & Trust of Chicago, as trustee 10,000,000.00
30 2394 Hamilton Crossings, LP 9,850,000.00
31 6102859 Chestnut Hill, LLC 9,750,000.00
32 1885 MCE-MCC Joint Venture, LLC 9,750,000.00
33 6102580 CMC/Village Marketplace LP and McKinley RetailSouth LP 9,450,000.00
34 2358 Wildwood Acres Dev., Inc. and Wildwood Acres Dev., Inc. 9,300,000.00
35 1076 Walla Walla Shopping Center Associates and Paul Revere 9,300,000.00
36 6102991 Mercantile Exchange, LP 9,200,000.00
37 3641 NP Huntsville, LLC 9,190,000.00
38 6102452 Pacific Woods, LLC 9,000,000.00
41 3083 Crest 220, LP 8,800,000.00
Shuh-Wen Liu and Kin-Luan Liu 8,875,000.00
39 2498 Shuh-Wen Liu and Kin-Luan Liu 4,885,000.00
40 2499 Shuh-Wen Liu and Kin-Luan Liu 3,990,000.00
Various 8,825,000.00
42 1224 John W. Underwood, Mary Ann Underwood, H. C. Chavers, Ruth B. Chavers,
Mark A. Chavers, Kathy Chavers, and Crossroads Retirement Center, Inc. 4,925,000.00
43 1269 John W. Underwood, Mary Ann Underwood, Hosea C. Chavers, Ruth B. Chavers,
Mark A. Chavers, and Parkside West, Inc. 3,900,000.00
44 6102663 DonCo of Florida, Inc. 8,400,000.00
45 34 King Clarendon Associates, LP 8,300,000.00
46 6102762 Landerbrook Place, LP 8,273,000.00
47 16 United Value Realty Investments, LLC 8,250,000.00
48 6102442 103 Investors, LP 8,200,000.00
49 1776 Willowbrook Village, LP 8,050,000.00
50 6102461 New Group-El Segundo, LLC 7,800,000.00
51 3645 Hunters Hollow Apartments LLC 7,700,000.00
52 1922 Sage-Interwest Associates, Ltd. 7,700,000.00
53 7608323 Capstone Morningside Chase, LP 7,520,000.00
55 1755 North Creek Group, Ltd. 7,450,000.00
54 6102880 Campus Walk Associates, GP 7,400,000.00
56 7 7,180,000.00
7A Front and Spring Garden Street Associates 2,060,000.00
7B Spring-Ten Associates 790,000.00
7C 511 Associates 2,180,000.00
7D Grant Plaza Associates 2,150,000.00
57 6102950 Lake Monticello Yacht Club 7,045,000.00
58 2076 Tall Oaks at Reston, LC 7,000,000.00
59 6102533 Hunters Ridge Apartments, L.P 7,000,000.00
Various 6,900,000.00
61 940906323 D.J. Associates, GP 2,900,000.00
62 940906324 J.J.J.D. Associates, GP 4,000,000.00
60 3 Crosstown Plaza, LLC 6,880,000.00
63 3632 HCRC, LLC 6,750,000.00
64 1541 Northpoint Business Center, LP and Amer. Nat. Bank & Trust Co.
of Chicago, as Trustee 6,625,000.00
65 1585 Ventana Properties, LLC 6,625,000.00
66 6102764 68th & Thomas, Inc. 6,600,000.00
67 1782 North Star, Inc. 6,600,000.00
68 1116 Heritage Plaza, LLC 6,500,000.00
70 1057 1021 Hennepin Associates 6,300,000.00
1057A 1021 Hennepin Associates 4,814,150.94
1057B 1021 Hennepin Associates 1,485,849.06
69 2635 Grand Court - Sacramento Associates 6,280,000.00
71 6102541 Palms I Partner, Ltd. 6,000,000.00
72 6102532 C Center, Ltd 6,000,000.00
73 1263 Riverdale Plaza Shopping Center, LP 6,000,000.00
74 13 McKibbon Hotel Group of Chattenooga, TN, LP 5,907,000.00
75 12 McKibbon Hotel Group of Macon, GA, LLC 5,760,000.00
76 1921 JPA III Development Company 5,500,000.00
77 1660 Vogel Properties, Inc. 5,500,000.00
78 3218 River Village Apartments, Ltd. 5,300,000.00
82 940905374 Benderson-Niagara Associates, Inc. 5,300,000.00
79 6102708 The Chiou Partnership, GP 5,250,000.00
80 1859 Marina Associates 5,200,000.00
81 1523 La Patera, LLC 5,200,000.00
83 6102902 East Ball Road Property 5,000,000.00
84 3642 Delco Mall Corp. 5,000,000.00
87 6102709 Santal Corporation 4,800,000.00
88 1152 RSR Agri-Corp., Inc. 4,800,000.00
89 6102776 La Paloma Plaza, LLC 4,550,000.00
90 15 New Avon, LP 4,500,000.00
91 6102499 The Development Group, Inc. 4,500,000.00
92 2212 Capital Beltway, LP 4,480,000.00
93 2910 Tempe Riviera Investors, LP II 4,400,000.00
85 23 Manufactured Housing Communites, LP 4,365,000.00
94 6102765 Townhomes of Liberty Bell Associates 4,300,000.00
95 25 Brea D Investors 4,300,000.00
97 11 McKibbon Hotel Group of Ashville, NC, LLP 4,240,000.00
96 1704 American Pacific Capital Sahara Royale Co., LLC 4,218,750.00
98 1013 College Park Development Associates, LP 4,200,000.00
99 2307 First Virginia Warehouse, LP 4,200,000.00
100 14 McKibbon Hotel Group of Warner Robins, GA, LP 4,060,000.00
101 6102769 Baron Capital of Daytona, Inc. 4,000,000.00
102 37 Jos. L. Muscarelle, Inc 4,000,000.00
103 2096 Winter 8 Associates, LLC 4,000,000.00
106 1144 Forestream Village Inc. 4,000,000.00
104 1666 Neal A. Morse, Joseph Bouquet, Palisades Investors Inc. and Elaine Hoffman 3,975,000.00
105 6102707 Prize Network Group, LLC 3,950,000.00
107 6102974 Conestoga West Realty Associates, LP 3,800,000.00
108 36 HPE Boulevard, LLC 3,800,000.00
109 6 Tropicaire Development Inc. 3,800,000.00
110 6102542 Windward Partners II, LTD 3,775,000.00
111 1108 Grand Court - Garland Associates 3,721,875.00
112 6102875 San Marcos View Estates, LP 3,600,000.00
113 6102705 Golden Grove Terrace Apartment, LP 3,600,000.00
116 1022 Knightsbridge Associates, LP 3,550,000.00
114 6102969 Highland Partners, LLC 3,500,000.00
115 1694 Hamilton Trust 3,500,000.00
117 1534 Old Branch Crossing, LLLP 3,500,000.00
118 6102637 Merchant's Walk, LP 3,500,000.00
119 1088 Southern Hills Center, Ltd. 3,500,000.00
120 28 Sitterly Associates II 3,500,000.00
121 6102657 Mercado Del Rio Investors, LLC 3,450,000.00
122 2311 John K. Bugay and Reta G. Bugay 3,400,000.00
123 1275 Argus Associates, LP, and MacHutchin Investments, LP 3,335,000.00
124 1890 University Park Properties, LP 3,300,000.00
125 20 Captial Corp of the West 3,300,000.00
126 1403 Smitmart, LLC, Seazona Propeties, Ltd., and Ruffin Tech Center, Ltd. 3,258,000.00
127 1538 CIC Arizona, LLC 3,175,000.00
128 2027 REC I/Brantley Hall, LP 3,150,000.00
129 1795 Mutual Property Associates, LLP 3,150,000.00
130 1089 Mutual Apartment Properties, LP 3,150,000.00
131 19 Papock Tuttle LP 3,100,000.00
132 1611 La Tete Maison, Ltd. 3,100,000.00
133 6102451 Folsom Central, LLC 3,050,000.00
134 7608308 Lakeshore Plaza, LLC 3,050,000.00
135 2693 Cameron Dewey, LP 3,000,000.00
136 1863 Coral Stow, LP 3,000,000.00
137 2558 New Foothills, Inc. 3,000,000.00
138 1599 Kal Motel Real Estate, LLC and Kal Motel, Inc. 3,000,000.00
139 1929 Mercury Plaza LLC 2,900,000.00
142 1442 Valley Parkway-Vineyard Partnership 2,900,000.00
140 6102706 Unireal Corp. 2,880,000.00
143 1512 PDJ Partnership 2,860,000.00
141 6102891 Elite Properties of America, Inc. 2,850,000.00
144 7608309 North Kingsley, LP #151 2,850,000.00
145 1535 Miles G. Carter 2,850,000.00
146 35 Empire of Spring Valley LLC 2,800,000.00
147 1975 Landmark of Wallingford, Inc. 2,800,000.00
148 2393 WHC II Properties LP 2,800,000.00
149 1407 USF/Palmer LP 2,780,000.00
150 2238 23300 Lorain Road Company, LLC 2,760,000.00
151 6102803 Finnane Investments, Inc. 2,750,000.00
152 6102972 Carolina Partners, LLC 2,700,000.00
153 1607 Eau Claire Equity Fund LP 2,600,000.00
154 5 Alten, LP 2,600,000.00
155 6102460 Rose Street Investors, LLC 2,572,000.00
157 1781 Tommy W. Weder and Micah K. Weder 2,513,000.00
1781A Tommy W. Weder and Micah K. Weder 1,114,817.51
1781B Tommy W. Weder and Micah K. Weder 1,398,182.49
156 7608315 Kelly Plaza Associates, LLC 2,500,000.00
158 17 Morgan Drive Associates LP 2,500,000.00
159 22 Zeus Properties LLC 2,475,000.00
160 1440 Kingston Cove 2,450,000.00
161 6102629 COAB, LLC 2,400,000.00
162 1448 MDR Health Club LP 2,400,000.00
163 6102834 Gelwin Woods LLC 2,350,000.00
164 1321 PBH, Inc., and Peter B. Hoffman 2,350,000.00
165 3638 825 East Chestnut Co. LLC 2,330,000.00
167 3633 OLRC, LLC 2,325,000.00
166 1246 B.C.C.D. Partnership 2,320,000.00
168 2917 Primavera Investments, LLC 2,300,000.00
169 6102648 Maxwell Investors, LLC 2,300,000.00
170 1912 American Pacific Capital Summerhill Pads Company, LLC 2,300,000.00
171 1891 Hamilton Airway I, LLC 2,300,000.00
172 6102443 GFC, Investments, LLC 2,300,000.00
173 940906544 Wilmington Trust Company, as Trustee for JSI 28 Delaware Business Trust 2,300,000.00
174 1504 Tower Plaza LLC 2,250,000.00
Harris Management Services, Inc. 2,245,000.00
178 0998 Harris Management Services, Inc. 1,126,000.00
179 0999 Harris Management Services, Inc. 1,119,000.00
175 1810 Gilman Associates and LaSalle National Bank 2,223,000.00
176 6102988 Homan, LLC 2,210,000.00
177 3182 B. H. Group, Inc. 2,200,000.00
180 2463 TAMU Joint Venture 2,150,000.00
181 1641 Trademark Developers, Ltd. 2,135,000.00
182 6102932 Tower Plaza Center 2,100,000.00
183 1555 Cavalier Development Ltd. 2,100,000.00
184 1090 Hillside Medical Plaza Associates, LP 2,100,000.00
185 940906539 Wilmington Trust Company, as Trustee of JSI 71 Delaware Business Trust 2,100,000.00
186 2660 David M. Henneberry and Shida R. Henneberry 2,050,000.00
189 1130 White & Hughes Associates, LP 2,032,500.00
188 2043 Sycamore Springs, LLC 2,025,000.00
187 2392 Orleans Manor 2,024,000.00
190 1988 Budnick Converting, Inc. 2,000,000.00
191 1573 Monte Cassino Healthcare Center, L.P.and LaSalle National Trust, N.A. 2,000,000.00
192 1886 Platinum Properties, LLC 2,000,000.00
193 1075 Gateway Shopping Center LP 1,965,000.00
196 940906545 Wilmington Trust Company, as Trustee for JSI 63 Delaware Business Trust 1,960,000.00
194 1747 Coral Strongsville LP 1,950,000.00
195 1041 Kenyon North Hollywood, LLC 1,950,000.00
197 7608318 Ridge and Day Plaza, Ltd. 1,950,000.00
198 6102904 River Ridge Villas, LLC 1,825,000.00
199 1239 Ivan Strand 1,800,000.00
200 1015 Dallas Fox Hollow LP 1,800,000.00
201 1720 YONY Properties, Inc. 1,800,000.00
202 1086 Wilshire Square, LLC, 38th Street Investment Corp., and R.H.M., LLC 1,800,000.00
203 2168 RS #7 LLC 1,800,000.00
205 1060 Baton Associates 1,735,000.00
204 2055 1334 Ames Avenue LLP 1,725,000.00
206 6102970 224 East 48th Street LLC 1,700,000.00
207 6102901 State College Property, GP 1,700,000.00
208 6102903 The Porsch Company, LLC 1,625,000.00
209 1779 Llarby Company LC 1,625,000.00
210 1005 Frank's Nursery & Crafts, Inc. 1,625,000.00
211 1811 Spring Valley Nursing Center-LP and Amer. Nat. Bank & Trust Co. of Chicago 1,600,000.00
212 6102656 Country Square Apartments, Ltd 1,600,000.00
213 4 Shamlo Realty Co., Inc. 1,600,000.00
214 2060 NMC Investors, Ltd. 1,560,000.00
215 940907039 American Realty Trust, Inc. 1,540,000.00
216 1852 Miles G. Carter 1,506,000.00
217 2665 Ambassador Operating Associates, LP 1,500,000.00
218 940906528 Wilmington Trust Company, as Trustee of JSI 19 Delaware Business Trust 1,500,000.00
219 1432 FHOC, LLC 1,470,000.00
221 1102 Mary May Moore, as Trustee under the Mary May Moore Revocable Living Trust 1,465,000.00
220 1001 Royal Orleans Associates, L.P. 1,450,000.00
222 2815 Keller-Orchard, LLC 1,425,000.00
223 2056 United Rotary Brush Corporation 1,425,000.00
224 6102896 Stason Industrial Corporation 1,400,000.00
225 6102900 8730 Santa Monica Blvd. Investors, LLC 1,400,000.00
226 6102943 Chester Cassell 1,400,000.00
227 1435 Marion J. Dudek 1,400,000.00
228 7608319 Realty One Plaza, Ltd. 1,400,000.00
229 7608320 Chagrin Plaza Co., LP 1,350,000.00
230 2456 Wellington Investments, LLC 1,300,000.00
231 6102840 Curiosity Creek Apartments, Ltd. 1,300,000.00
232 2133 Frank L. Rubin 1,300,000.00
233 1580 Winston Place, LLC 1,300,000.00
234 940907278 Transcontinental Realty Investors, Inc. 1,289,000.00
236 1320 TransBlueAsh, LLC 1,275,000.00
235 1855 Miles G. Carter 1,270,000.00
237 1647 Farm Creek LP 1,225,000.00
238 1030 81st Dwellers Inc. 1,200,000.00
239 6102770 HC Cornerstone Partners, LP 1,200,000.00
240 6102779 Allen Schor, as Trustee of The Walnut Warehouse Trust 1,200,000.00
241 1288 Tower Market Incorporated 1,200,000.00
242 2756 O'Connor / MCI Associates #1, LLC 1,190,000.00
243 1145 Sixty Church Street, LLC 1,190,000.00
244 6102540 Adjor Associates, LP 1,150,000.00
245 1949 Pence Family Partners, Ltd. 1,100,000.00
246 2017 LDC Clifton Limited 1,050,000.00
247 1854 Miles G. Carter 1,040,000.00
248 6102531 Ranchview Gardens, Ltd. 1,000,000.00
249 1073 9039 Katy Freeway I, Ltd. 1,000,000.00
250 940906529 Wilmington Trust Company, as Trustee for JSI 12 Delaware Business Trust 1,000,000.00
251 2200 P.R. Investments, LLC 975,000.00
252 2115 Breihan Family LP 950,000.00
253 2405 May-Gold Properties, Ltd. 945,000.00
254 1851 Miles G. Carter 940,000.00
255 1129 Red Apple Plaza Associates, LP 937,500.00
256 1991 C.W.T. Shelter / Management, Inc. 890,000.00
257 940906527 William J. Wade, as Trustee of JSI 13 Delaware Business Trust 770,000.00
86 38 Shady Oaks II, LP 635,000.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
GROSS NET 1ST INTEREST
CONTROL LOAN CUT-OFF DATE MORTGAGE MORTGAGE PAYMENT
NUMBER NUMBER BALANCE LOAN TYPE RATE RATE NOTE DATE DATE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6102551 $30,380,396.31 Fixed 7.250% 7.196% 12/30/97 02/01/98
6102551A 1,218,659.89 Fixed 7.250% 7.196% 12/30/97 02/01/98
6102551B 1,344,499.77 Fixed 7.250% 7.196% 12/30/97 02/01/98
6102551C 4,967,363.69 Fixed 7.250% 7.196% 12/30/97 02/01/98
6102551D 2,450,566.09 Fixed 7.250% 7.196% 12/30/97 02/01/98
6102551E 1,258,398.80 Fixed 7.250% 7.196% 12/30/97 02/01/98
6102551F 2,185,640.02 Fixed 7.250% 7.196% 12/30/97 02/01/98
6102551G 7,351,698.26 Fixed 7.250% 7.196% 12/30/97 02/01/98
6102551H 2,185,640.02 Fixed 7.250% 7.196% 12/30/97 02/01/98
6102551I 7,417,929.77 Fixed 7.250% 7.196% 12/30/97 02/01/98
2 6102992 24,080,400.83 Fixed 7.040% 6.986% 07/01/98 08/01/98
3 24 23,799,050.85 Fixed 8.155% 8.101% 12/31/97 02/01/98
24A 3,939,120.50 Fixed 8.155% 8.101% 12/31/97 02/01/98
24B 4,494,036.30 Fixed 8.155% 8.101% 12/31/97 02/01/98
24C 2,235,294.59 Fixed 8.155% 8.101% 12/31/97 02/01/98
24D 2,148,588.80 Fixed 8.155% 8.101% 12/31/97 02/01/98
24E 1,640,567.33 Fixed 8.155% 8.101% 12/31/97 02/01/98
24F 1,953,195.98 Fixed 8.155% 8.101% 12/31/97 02/01/98
24G 858,995.81 Fixed 8.155% 8.101% 12/31/97 02/01/98
24H 1,171,624.46 Fixed 8.155% 8.101% 12/31/97 02/01/98
24I 780,838.70 Fixed 8.155% 8.101% 12/31/97 02/01/98
24J 307,987.92 Fixed 8.155% 8.101% 12/31/97 02/01/98
24K 1,093,467.28 Fixed 8.155% 8.101% 12/31/97 02/01/98
24L 780,838.70 Fixed 8.155% 8.101% 12/31/97 02/01/98
24M 577,630.11 Fixed 8.155% 8.101% 12/31/97 02/01/98
24N 472,117.95 Fixed 8.155% 8.101% 12/31/97 02/01/98
24O 491,657.19 Fixed 8.155% 8.101% 12/31/97 02/01/98
24P 424,452.97 Fixed 8.155% 8.101% 12/31/97 02/01/98
24Q 234,343.17 Fixed 8.155% 8.101% 12/31/97 02/01/98
24R 194,293.09 Fixed 8.155% 8.101% 12/31/97 02/01/98
4 1548 22,800,000.00 Fixed 7.490% 7.436% 12/30/97 02/01/98
5 6102628 19,538,161.94 Fixed 7.240% 7.186% 03/17/98 05/01/98
19,419,037.69 Fixed 7.310% 7.256% 06/04/98 08/01/98
6 6102944 7,149,759.29 Fixed 7.310% 7.256% 06/04/98 08/01/98
7 6102945 5,387,023.72 Fixed 7.310% 7.256% 06/04/98 08/01/98
8 6102946 3,577,375.02 Fixed 7.310% 7.256% 06/04/98 08/01/98
9 6102947 3,304,879.66 Fixed 7.310% 7.256% 06/04/98 08/01/98
11 2555 16,444,887.90 Fixed 6.950% 6.896% 03/30/98 05/01/98
12 6103017 14,977,310.09 Fixed 6.780% 6.726% 06/29/98 08/01/98
14 10 14,371,537.62 Fixed 7.390% 7.336% 11/05/97 01/01/98
13 1907 14,360,578.55 Fixed 7.500% 7.446% 12/15/97 02/01/98
1907A 3,237,156.80 Fixed 7.500% 7.446% 12/15/97 02/01/98
1907B 1,618,578.40 Fixed 7.500% 7.446% 12/15/97 02/01/98
1907C 1,033,135.15 Fixed 7.500% 7.446% 12/15/97 02/01/98
1907D 3,788,162.20 Fixed 7.500% 7.446% 12/15/97 02/01/98
1907E 1,997,394.62 Fixed 7.500% 7.446% 12/15/97 02/01/98
1907F 964,259.47 Fixed 7.500% 7.446% 12/15/97 02/01/98
1907G 1,721,891.91 Fixed 7.500% 7.446% 12/15/97 02/01/98
15 2534 13,817,378.84 Fixed 7.030% 6.976% 05/28/98 07/01/98
16 1905 13,579,733.95 Fixed 7.500% 7.446% 12/15/97 02/01/98
1905A 2,377,353.95 Fixed 7.500% 7.446% 12/15/97 02/01/98
1905B 1,945,107.78 Fixed 7.500% 7.446% 12/15/97 02/01/98
1905C 1,080,615.43 Fixed 7.500% 7.446% 12/15/97 02/01/98
1905D 1,044,594.92 Fixed 7.500% 7.446% 12/15/97 02/01/98
1905E 1,296,738.52 Fixed 7.500% 7.446% 12/15/97 02/01/98
1905F 828,471.83 Fixed 7.500% 7.446% 12/15/97 02/01/98
1905G 1,044,594.92 Fixed 7.500% 7.446% 12/15/97 02/01/98
1905H 1,332,759.03 Fixed 7.500% 7.446% 12/15/97 02/01/98
1905I 2,629,497.57 Fixed 7.500% 7.446% 12/15/97 02/01/98
17 2 12,414,270.00 Fixed 8.193% 8.139% 07/31/97 09/01/97
18 3423 12,139,942.08 Fixed 6.950% 6.896% 06/26/98 08/01/98
19 1376 4,688,861.61 Fixed 7.500% 7.446% 12/15/97 02/01/98
20 1908 7,269,315.49 Fixed 7.500% 7.446% 12/15/97 02/01/98
1908A 1,413,478.01 Fixed 7.500% 7.446% 12/15/97 02/01/98
1908B 1,817,328.87 Fixed 7.500% 7.446% 12/15/97 02/01/98
1908C 3,365,423.84 Fixed 7.500% 7.446% 12/15/97 02/01/98
1908D 673,084.77 Fixed 7.500% 7.446% 12/15/97 02/01/98
21 18 11,941,357.72 Fixed 7.490% 7.436% 12/08/97 02/01/98
22 1556 11,775,785.52 Fixed 7.340% 7.286% 11/21/97 01/01/98
23 1 11,232,461.35 Fixed 9.270% 9.216% 05/30/97 07/01/97
24 1210 10,550,904.41 Fixed 7.380% 7.326% 01/08/98 03/01/98
25 9 10,435,138.96 Fixed 7.410% 7.356% 10/24/97 01/01/98
26 2052 10,166,394.89 Fixed 7.020% 6.966% 03/24/98 05/01/98
27 6102530 10,050,958.39 Fixed 7.140% 7.046% 01/16/98 03/01/98
28 6102876 9,991,899.64 Fixed 7.060% 6.966% 06/11/98 08/01/98
29 2636 9,964,362.44 Fixed 7.280% 7.226% 04/22/98 06/01/98
30 2394 9,814,729.59 Fixed 7.250% 7.196% 04/02/98 06/01/98
31 6102859 9,726,770.04 Fixed 7.190% 7.095% 04/21/98 06/01/98
32 1885 9,658,948.78 Fixed 7.440% 7.386% 11/13/97 01/01/98
33 6102580 9,426,395.33 Fixed 6.950% 6.853% 04/21/98 06/01/98
34 2358 9,255,675.11 Fixed 7.280% 7.126% 03/27/98 05/01/98
35 1076 9,243,672.60 Fixed 7.510% 7.456% 11/24/97 01/01/98
36 6102991 9,188,714.70 Fixed 7.040% 6.986% 07/01/98 08/01/98
37 3641 9,171,551.61 Fixed 7.140% 7.086% 04/10/98 06/01/98
38 6102452 8,955,522.70 Fixed 7.050% 6.951% 01/28/98 03/01/98
41 3083 8,792,843.45 Fixed 7.040% 6.936% 06/17/98 08/01/98
8,842,805.14 Fixed 7.490% 7.436% 05/28/98 07/01/98
39 2498 4,867,279.23 Fixed 7.490% 7.436% 05/28/98 07/01/98
40 2499 3,975,574.84 Fixed 7.490% 7.436% 05/28/98 07/01/98
8,762,713.48 Fixed 7.400% 7.346% 01/30/98 03/01/98
42 1224 4,890,239.54 Fixed 7.400% 7.346% 01/30/98 03/01/98
43 1269 3,872,473.95 Fixed 7.400% 7.346% 01/30/98 03/01/98
44 6102663 8,372,756.68 Fixed 7.100% 6.998% 03/31/98 05/01/98
45 34 8,288,540.62 Fixed 7.200% 7.146% 05/21/98 07/01/98
46 6102762 8,260,458.89 Fixed 7.410% 7.307% 05/05/98 07/01/98
47 16 8,207,768.97 Fixed 7.750% 7.696% 11/21/97 01/01/98
48 6102442 8,131,303.84 Fixed 7.310% 7.207% 12/11/97 02/01/98
49 1776 7,974,435.12 Fixed 7.280% 7.226% 01/23/98 03/01/98
50 6102461 7,762,935.61 Fixed 7.250% 7.144% 01/09/98 03/01/98
51 3645 7,688,808.86 Fixed 6.990% 6.936% 05/08/98 07/01/98
52 1922 7,670,715.34 Fixed 7.350% 7.296% 03/31/98 05/01/98
53 7608323 7,483,557.38 Fixed 7.150% 7.042% 01/13/98 03/01/98
55 1755 7,352,642.31 Fixed 7.380% 7.326% 12/30/97 02/01/98
54 6102880 7,395,401.18 Fixed 7.020% 6.911% 06/05/98 08/01/98
56 7 7,114,208.93 Fixed 8.425% 8.371% 09/17/97 11/01/97
7A 2,041,124.01 Fixed 8.425% 8.371% 09/17/97 11/01/97
7B 782,761.15 Fixed 8.425% 8.371% 09/17/97 11/01/97
7C 2,160,024.44 Fixed 8.425% 8.371% 09/17/97 11/01/97
7D 2,130,299.33 Fixed 8.425% 8.371% 09/17/97 11/01/97
57 6102950 7,032,198.86 Fixed 7.450% 7.396% 06/04/98 08/01/98
58 2076 6,978,982.54 Fixed 7.490% 7.436% 03/20/98 05/01/98
59 6102533 6,971,981.17 Fixed 7.180% 7.068% 02/09/98 04/01/98
6,788,711.69 Fixed 8.670% 8.616% 09/12/97 11/01/97
61 940906323 2,853,226.65 Fixed 8.670% 8.616% 09/12/97 11/01/97
62 940906324 3,935,485.04 Fixed 8.670% 8.616% 09/12/97 11/01/97
60 3 6,838,503.74 Fixed 8.435% 8.381% 08/26/97 10/01/97
63 3632 6,717,088.22 Fixed 7.500% 7.446% 12/30/97 02/01/98
64 1541 6,619,580.25 Fixed 7.010% 6.956% 06/15/98 08/01/98
65 1585 6,603,087.37 Fixed 7.000% 6.946% 03/02/98 05/01/98
66 6102764 6,584,292.19 Fixed 7.250% 7.135% 06/01/98 07/01/98
67 1782 6,600,000.00 Fixed 7.020% 6.966% 01/30/98 04/01/98
68 1116 6,455,832.51 Fixed 7.540% 7.486% 10/08/97 12/01/97
70 1057 6,231,189.11 Fixed 7.950% 7.896% 09/24/97 11/01/97
1057A 4,761,569.04 Fixed 7.950% 7.896% 09/24/97 11/01/97
1057B 1,469,620.07 Fixed 7.950% 7.896% 09/24/97 11/01/97
69 2635 6,265,446.58 Fixed 7.330% 7.276% 04/28/98 06/01/98
71 6102541 5,965,909.13 Fixed 7.140% 7.019% 12/31/97 02/01/98
72 6102532 5,957,316.75 Fixed 7.350% 7.229% 01/30/98 03/01/98
73 1263 5,953,925.22 Fixed 7.860% 7.806% 12/16/97 01/01/98
74 13 5,860,481.05 Fixed 8.040% 7.986% 11/04/97 01/01/98
75 12 5,714,638.71 Fixed 8.040% 7.986% 11/04/97 01/01/98
76 1921 5,473,910.55 Fixed 7.310% 7.256% 03/24/98 05/01/98
77 1660 5,477,985.22 Fixed 7.180% 7.126% 02/13/98 04/01/98
78 3218 5,295,542.98 Fixed 6.870% 6.816% 06/16/98 08/01/98
82 940905374 5,158,057.88 Fixed 7.970% 7.916% 10/09/97 12/01/97
79 6102708 5,237,039.89 Fixed 7.010% 6.879% 05/01/98 06/01/98
80 1859 5,183,496.56 Fixed 7.210% 7.156% 03/16/98 05/01/98
81 1523 5,159,744.69 Fixed 6.810% 6.756% 01/14/98 03/01/98
83 6102902 4,991,497.34 Fixed 7.095% 6.961% 06/05/98 08/01/98
84 3642 4,990,095.04 Fixed 7.190% 7.136% 04/20/98 06/01/98
87 6102709 4,787,986.80 Fixed 6.940% 6.802% 05/01/98 06/01/98
88 1152 4,800,000.00 Fixed 7.120% 7.066% 12/23/97 02/01/98
89 6102776 4,544,436.35 Fixed 7.060% 6.918% 07/01/98 08/01/98
90 15 4,478,592.21 Fixed 8.050% 7.996% 11/22/97 01/01/98
91 6102499 4,478,447.89 Fixed 7.210% 7.067% 01/08/98 03/01/98
92 2212 4,459,511.42 Fixed 7.540% 7.486% 03/19/98 05/01/98
93 2910 4,389,578.72 Fixed 7.220% 7.166% 04/30/98 06/01/98
85 23 4,342,787.45 Fixed 6.720% 6.666% 01/09/98 03/01/98
94 6102765 4,283,982.40 Fixed 7.000% 6.853% 04/23/98 06/01/98
95 25 4,276,182.90 Fixed 7.270% 7.216% 12/23/97 02/01/98
97 11 4,206,609.04 Fixed 8.040% 7.986% 11/04/97 01/01/98
96 1704 4,208,698.57 Fixed 7.190% 7.136% 03/31/98 06/01/98
98 1013 4,168,686.68 Fixed 7.620% 7.566% 09/25/97 11/01/97
99 2307 4,160,989.55 Fixed 7.370% 7.316% 02/25/98 04/01/98
100 14 4,028,026.59 Fixed 8.040% 7.986% 11/04/97 01/01/98
101 6102769 3,986,795.65 Fixed 7.010% 6.856% 03/25/98 05/01/98
102 37 3,986,685.69 Fixed 7.260% 7.206% 02/02/98 04/01/98
103 2096 3,986,036.49 Fixed 7.410% 7.356% 04/03/98 06/01/98
106 1144 3,942,124.60 Fixed 7.670% 7.616% 11/24/97 01/01/98
104 1666 3,952,223.81 Fixed 7.790% 7.736% 11/17/97 01/01/98
105 6102707 3,950,000.00 Fixed 7.240% 7.086% 05/01/98 06/01/98
107 6102974 3,795,979.79 Fixed 6.920% 6.766% 06/26/98 08/01/98
108 36 3,791,843.32 Fixed 7.330% 7.276% 05/12/98 07/01/98
109 6 3,777,195.55 Fixed 8.000% 7.946% 09/19/97 11/01/97
110 6102542 3,760,359.07 Fixed 7.340% 7.286% 02/11/98 04/01/98
111 1108 3,698,090.20 Fixed 7.850% 7.796% 10/14/97 12/01/97
112 6102875 3,591,714.14 Fixed 7.460% 7.306% 05/28/98 07/01/98
113 6102705 3,591,473.48 Fixed 7.220% 7.066% 04/23/98 06/01/98
116 1022 3,486,530.84 Fixed 7.820% 7.766% 09/29/97 11/01/97
114 6102969 3,497,136.73 Fixed 7.010% 6.856% 07/01/98 08/01/98
115 1694 3,491,788.56 Fixed 7.340% 7.286% 05/21/98 07/01/98
117 1534 3,484,171.01 Fixed 7.610% 7.556% 03/26/98 05/01/98
118 6102637 3,483,450.16 Fixed 7.330% 7.176% 03/24/98 05/01/98
119 1088 3,482,345.60 Fixed 6.920% 6.866% 03/10/98 05/01/98
120 28 3,458,955.27 Fixed 7.970% 7.916% 02/01/98 02/01/98
121 6102657 3,436,808.71 Fixed 7.320% 7.166% 03/11/98 05/01/98
122 2311 3,389,503.85 Fixed 7.350% 7.296% 03/12/98 05/01/98
123 1275 3,301,697.43 Fixed 7.830% 7.776% 10/17/97 12/01/97
124 1890 3,292,276.32 Fixed 7.280% 7.226% 04/16/98 06/01/98
125 20 3,275,872.16 Fixed 7.806% 7.752% 12/22/97 02/01/98
126 1403 3,227,583.37 Fixed 7.490% 7.436% 11/24/97 01/01/98
127 1538 3,158,160.02 Fixed 7.490% 7.436% 12/16/97 02/01/98
128 2027 3,147,740.65 Fixed 7.670% 7.616% 06/26/98 08/01/98
129 1795 3,137,903.28 Fixed 7.390% 7.336% 01/29/98 04/01/98
130 1089 3,133,652.53 Fixed 7.600% 7.546% 12/04/97 02/01/98
131 19 3,084,919.13 Fixed 7.510% 7.456% 12/30/97 02/01/98
132 1611 3,077,723.55 Fixed 7.620% 7.566% 03/19/98 05/01/98
133 6102451 3,025,280.03 Fixed 7.520% 7.366% 12/11/97 02/01/98
134 7608308 3,020,074.43 Fixed 7.440% 7.386% 12/31/97 02/01/98
135 2693 2,996,389.44 Fixed 7.160% 7.106% 06/15/98 08/01/98
136 1863 2,993,130.07 Fixed 7.390% 7.336% 04/27/98 06/01/98
137 2558 2,990,867.98 Fixed 8.900% 8.846% 05/13/98 07/01/98
138 1599 2,980,065.44 Fixed 7.780% 7.726% 01/28/98 03/01/98
139 1929 2,882,887.92 Fixed 7.360% 7.306% 01/30/98 04/01/98
142 1442 2,840,882.47 Fixed 7.460% 7.406% 10/31/97 12/01/97
140 6102706 2,863,557.23 Fixed 7.120% 6.966% 04/06/98 06/01/98
143 1512 2,836,077.69 Fixed 7.320% 7.266% 12/20/97 02/01/98
141 6102891 2,847,807.48 Fixed 7.320% 7.166% 06/08/98 08/01/98
144 7608309 2,835,997.95 Fixed 7.080% 6.926% 01/07/98 03/01/98
145 1535 2,832,534.46 Fixed 7.120% 7.066% 02/18/98 04/01/98
146 35 2,794,512.07 Fixed 7.230% 7.176% 04/20/98 06/01/98
147 1975 2,790,193.27 Fixed 7.460% 7.406% 04/22/98 06/01/98
148 2393 2,789,591.60 Fixed 7.290% 7.236% 05/07/98 07/01/98
149 1407 2,757,610.36 Fixed 7.560% 7.506% 12/18/97 02/01/98
150 2238 2,756,803.03 Fixed 7.400% 7.246% 06/05/98 08/01/98
151 6102803 2,744,064.54 Fixed 7.860% 7.706% 05/12/98 07/01/98
152 6102972 2,696,760.81 Fixed 7.180% 7.026% 06/24/98 08/01/98
153 1607 2,581,210.32 Fixed 7.250% 7.196% 01/15/98 03/01/98
154 5 2,562,489.39 Fixed 9.720% 9.666% 05/21/97 07/01/97
155 6102460 2,557,414.97 Fixed 7.150% 6.996% 12/12/97 02/01/98
157 1781 2,490,410.20 Fixed 7.640% 7.586% 02/06/98 04/01/98
1781A 1,104,796.22 Fixed 7.640% 7.586% 02/06/98 04/01/98
1781B 1,385,613.98 Fixed 7.640% 7.586% 02/06/98 04/01/98
156 7608315 2,490,550.38 Fixed 7.470% 7.416% 02/04/98 04/01/98
158 17 2,487,295.07 Fixed 7.780% 7.726% 11/22/97 01/01/98
159 22 2,459,937.80 Fixed 8.820% 8.766% 12/30/97 02/01/98
160 1440 2,427,942.84 Fixed 7.720% 7.666% 11/03/97 01/01/98
161 6102629 2,388,415.74 Fixed 7.200% 7.046% 03/30/98 05/01/98
162 1448 2,370,509.38 Fixed 7.890% 7.836% 12/04/97 02/01/98
163 6102834 2,343,982.36 Fixed 7.010% 6.856% 06/19/98 08/01/98
164 1321 2,329,725.37 Fixed 7.770% 7.716% 03/05/98 05/01/98
165 3638 2,320,121.55 Fixed 7.430% 7.376% 03/23/98 05/01/98
167 3633 2,307,220.77 Fixed 7.550% 7.496% 12/30/97 02/01/98
166 1246 2,308,126.07 Fixed 7.670% 7.616% 12/15/97 02/01/98
168 2917 2,297,187.61 Fixed 7.060% 7.006% 06/29/98 08/01/98
169 6102648 2,293,339.38 Fixed 7.030% 6.876% 03/26/98 05/01/98
170 1912 2,292,829.04 Fixed 7.300% 7.246% 03/03/98 05/01/98
171 1891 2,283,326.01 Fixed 7.230% 7.176% 01/05/98 03/01/98
172 6102443 2,270,622.39 Fixed 7.570% 7.416% 12/30/97 02/01/98
173 940906544 2,269,787.09 Fixed 8.990% 8.936% 05/08/97 07/01/97
174 1504 2,237,513.00 Fixed 7.260% 7.206% 12/24/97 02/01/98
2,219,765.77 Fixed 8.390% 8.336% 08/27/97 10/01/97
178 0998 1,113,343.55 Fixed 8.390% 8.336% 08/27/97 10/01/97
179 0999 1,106,422.23 Fixed 8.390% 8.336% 08/27/97 10/01/97
175 1810 2,219,049.12 Fixed 7.630% 7.576% 06/15/98 08/01/98
176 6102988 2,207,340.22 Fixed 7.160% 7.006% 06/23/98 08/01/98
177 3182 2,200,000.00 Fixed 7.050% 6.996% 07/01/98 09/01/98
180 2463 2,144,817.65 Fixed 7.170% 7.116% 05/29/98 07/01/98
181 1641 2,119,522.19 Fixed 7.230% 7.176% 01/12/98 03/01/98
182 6102932 2,095,958.92 Fixed 6.980% 6.926% 07/01/98 08/01/98
183 1555 2,091,887.52 Fixed 7.360% 7.306% 02/27/98 04/01/98
184 1090 2,086,283.58 Fixed 7.740% 7.686% 10/20/97 12/01/97
185 940906539 2,072,414.40 Fixed 8.990% 8.936% 05/08/97 07/01/97
186 2660 2,045,534.41 Fixed 7.590% 7.536% 06/23/98 08/01/98
189 1130 2,012,491.64 Fixed 7.920% 7.866% 10/22/97 12/01/97
188 2043 2,018,419.48 Fixed 7.090% 7.036% 03/20/98 05/01/98
187 2392 2,021,703.90 Fixed 7.530% 7.476% 06/09/98 08/01/98
190 1988 1,990,617.62 Fixed 7.380% 7.326% 03/25/98 05/01/98
191 1573 1,986,258.83 Fixed 7.570% 7.516% 01/16/98 03/01/98
192 1886 1,969,733.59 Fixed 7.620% 7.566% 01/26/98 04/01/98
193 1075 1,945,778.70 Fixed 7.960% 7.906% 10/30/97 12/01/97
196 940906545 1,934,253.35 Fixed 8.990% 8.936% 05/08/97 07/01/97
194 1747 1,943,300.45 Fixed 7.510% 7.456% 04/30/98 06/01/98
195 1041 1,938,565.42 Fixed 8.280% 8.226% 10/01/97 12/01/97
197 7608318 1,913,892.04 Fixed 7.430% 7.376% 01/30/98 03/01/98
198 6102904 1,823,901.78 Fixed 7.125% 6.971% 06/24/98 08/01/98
199 1239 1,789,603.91 Fixed 7.750% 7.696% 11/19/97 01/01/98
200 1015 1,789,495.77 Fixed 7.430% 7.376% 02/27/98 04/01/98
201 1720 1,788,899.61 Fixed 7.080% 7.026% 01/30/98 04/01/98
202 1086 1,777,229.67 Fixed 7.650% 7.596% 12/01/97 02/01/98
203 2168 1,767,760.63 Fixed 7.040% 6.986% 03/09/98 05/01/98
205 1060 1,708,197.15 Fixed 8.130% 8.076% 10/13/97 12/01/97
204 2055 1,716,856.20 Fixed 7.340% 7.286% 03/30/98 05/01/98
206 6102970 1,698,888.23 Fixed 6.850% 6.696% 06/25/98 08/01/98
207 6102901 1,697,131.04 Fixed 7.145% 6.991% 06/05/98 08/01/98
208 6102903 1,622,330.30 Fixed 7.320% 7.166% 06/16/98 08/01/98
209 1779 1,617,485.03 Fixed 7.470% 7.416% 03/03/98 05/01/98
210 1005 1,597,549.57 Fixed 9.100% 9.046% 08/19/97 10/01/97
211 1811 1,596,064.44 Fixed 7.610% 7.556% 06/01/98 07/01/98
212 6102656 1,595,119.06 Fixed 7.410% 7.256% 03/03/98 05/01/98
213 4 1,584,582.08 Fixed 8.735% 8.681% 08/26/97 10/01/97
214 2060 1,548,583.34 Fixed 7.470% 7.416% 03/27/98 05/01/98
215 940907039 1,517,202.24 Fixed 8.480% 8.426% 10/06/97 12/01/97
216 1852 1,499,900.45 Fixed 7.120% 7.066% 02/18/98 04/01/98
217 2665 1,496,580.54 Fixed 7.520% 7.466% 05/07/98 07/01/98
218 940906528 1,480,296.02 Fixed 8.990% 8.936% 05/08/97 07/01/97
219 1432 1,466,613.61 Fixed 7.360% 7.306% 04/27/98 06/01/98
221 1102 1,441,617.19 Fixed 7.860% 7.806% 10/21/97 12/01/97
220 1001 1,444,629.61 Fixed 7.320% 7.266% 05/14/98 07/01/98
222 2815 1,423,260.30 Fixed 7.070% 7.016% 06/30/98 08/01/98
223 2056 1,417,221.80 Fixed 7.490% 7.436% 04/02/98 06/01/98
224 6102896 1,398,916.52 Fixed 7.290% 7.136% 06/24/98 08/01/98
225 6102900 1,398,578.13 Fixed 7.110% 6.956% 06/09/98 08/01/98
226 6102943 1,398,233.10 Fixed 6.860% 6.706% 06/30/98 08/01/98
227 1435 1,392,806.18 Fixed 7.650% 7.596% 12/10/97 02/01/98
228 7608319 1,374,076.31 Fixed 7.430% 7.376% 01/30/98 03/01/98
229 7608320 1,325,002.16 Fixed 7.430% 7.376% 01/30/98 03/01/98
230 2456 1,298,412.90 Fixed 7.070% 7.016% 06/30/98 08/01/98
231 6102840 1,296,957.34 Fixed 7.280% 7.126% 04/20/98 06/01/98
232 2133 1,295,440.14 Fixed 7.380% 7.326% 04/17/98 06/01/98
233 1580 1,289,160.38 Fixed 7.340% 7.286% 12/16/97 02/01/98
234 940907278 1,274,741.55 Fixed 8.490% 8.436% 08/20/97 10/01/97
236 1320 1,258,851.53 Fixed 7.640% 7.586% 12/17/97 02/01/98
235 1855 1,268,993.42 Fixed 7.170% 7.116% 06/11/98 08/01/98
237 1647 1,211,402.89 Fixed 7.430% 7.376% 01/07/98 03/01/98
238 1030 1,200,000.00 Fixed 6.900% 6.846% 11/04/97 12/01/97
239 6102770 1,199,065.74 Fixed 7.260% 7.106% 06/04/98 08/01/98
240 6102779 1,193,321.09 Fixed 7.330% 7.176% 04/27/98 06/01/98
241 1288 1,191,218.15 Fixed 7.170% 7.116% 01/13/98 03/01/98
242 2756 1,187,172.33 Fixed 7.260% 7.206% 05/15/98 07/01/98
243 1145 1,178,814.69 Fixed 8.210% 8.156% 10/20/97 12/01/97
244 6102540 1,141,464.53 Fixed 7.080% 6.926% 01/08/98 03/01/98
245 1949 1,096,286.65 Fixed 7.620% 7.566% 04/23/98 06/01/98
246 2017 1,042,315.71 Fixed 7.470% 7.416% 03/25/98 05/01/98
247 1854 1,035,097.89 Fixed 7.350% 7.296% 03/06/98 05/01/98
248 6102531 994,494.83 Fixed 7.420% 7.366% 04/15/98 06/01/98
249 1073 992,538.53 Fixed 8.040% 7.986% 12/22/97 02/01/98
250 940906529 986,863.91 Fixed 8.990% 8.936% 05/08/97 07/01/97
251 2200 966,160.71 Fixed 7.570% 7.516% 02/24/98 04/01/98
252 2115 945,717.26 Fixed 7.630% 7.576% 03/31/98 05/01/98
253 2405 939,701.88 Fixed 7.270% 7.216% 04/08/98 06/01/98
254 1851 934,239.43 Fixed 7.120% 7.066% 02/18/98 04/01/98
255 1129 928,271.05 Fixed 7.920% 7.866% 10/22/97 12/01/97
256 1991 884,000.67 Fixed 7.690% 7.636% 01/29/98 03/01/98
257 940906527 759,885.25 Fixed 8.990% 8.936% 05/08/97 07/01/97
86 38 631,768.64 Fixed 6.720% 6.666% 01/09/98 03/01/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1ST INT. &
PRIN. INTEREST
CONTROL LOAN PAYMENT ACCRUAL GRACE PAYMENT
NUMBER NUMBER DATE METHOD DUE DATE PERIOD FREQUENCY MONTHLY PAYMENT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6102551 02/01/98 30/360 1st of the month 10 Monthly $208,475.41
6102551A 02/01/98 30/360 1st of the month 10 Monthly 8,362.65
6102551B 02/01/98 30/360 1st of the month 10 Monthly 9,226.18
6102551C 02/01/98 30/360 1st of the month 10 Monthly 34,086.89
6102551D 02/01/98 30/360 1st of the month 10 Monthly 16,816.20
6102551E 02/01/98 30/360 1st of the month 10 Monthly 8,635.35
6102551F 02/01/98 30/360 1st of the month 10 Monthly 14,998.23
6102551G 02/01/98 30/360 1st of the month 10 Monthly 50,448.59
6102551H 02/01/98 30/360 1st of the month 10 Monthly 14,998.23
6102551I 02/01/98 30/360 1st of the month 10 Monthly 50,903.09
2 6102992 08/01/98 30/360 1st of the month 10 Monthly 160,985.84
3 24 02/01/98 Actual/360 1st of the month 7 Monthly 183,046.81
24A 02/01/98 Actual/360 1st of the month 7 Monthly 30,297.15
24B 02/01/98 Actual/360 1st of the month 7 Monthly 34,565.20
24C 02/01/98 Actual/360 1st of the month 7 Monthly 17,192.43
24D 02/01/98 Actual/360 1st of the month 7 Monthly 16,525.55
24E 02/01/98 Actual/360 1st of the month 7 Monthly 12,618.18
24F 02/01/98 Actual/360 1st of the month 7 Monthly 15,022.71
24G 02/01/98 Actual/360 1st of the month 7 Monthly 6,606.84
24H 02/01/98 Actual/360 1st of the month 7 Monthly 9,011.37
24I 02/01/98 Actual/360 1st of the month 7 Monthly 6,005.70
24J 02/01/98 Actual/360 1st of the month 7 Monthly 2,368.84
24K 02/01/98 Actual/360 1st of the month 7 Monthly 8,410.24
24L 02/01/98 Actual/360 1st of the month 7 Monthly 6,005.70
24M 02/01/98 Actual/360 1st of the month 7 Monthly 4,442.75
24N 02/01/98 Actual/360 1st of the month 7 Monthly 3,631.22
24O 02/01/98 Actual/360 1st of the month 7 Monthly 3,781.51
24P 02/01/98 Actual/360 1st of the month 7 Monthly 3,264.62
24Q 02/01/98 Actual/360 1st of the month 7 Monthly 1,802.42
24R 02/01/98 Actual/360 1st of the month 7 Monthly 1,494.38
4 1548 02/01/00 30/360 1st of the month 10 Monthly 168,341.71
5 6102628 05/01/98 30/360 1st of the month 5 Monthly 133,573.64
08/01/98 30/360 1st of the month 10 Monthly 154,475.69
6 6102944 08/01/98 30/360 1st of the month 10 Monthly 56,875.32
7 6102945 08/01/98 30/360 1st of the month 10 Monthly 42,853.01
8 6102946 08/01/98 30/360 1st of the month 10 Monthly 28,457.51
9 6102947 08/01/98 30/360 1st of the month 10 Monthly 26,289.85
11 2555 05/01/98 30/360 1st of the month 10 Monthly 109,221.40
12 6103017 08/01/98 30/360 1st of the month 10 Monthly 107,439.91
14 10 01/01/98 Actual/360 1st of the month 7 Monthly 106,118.39
13 1907 02/01/98 30/360 1st of the month 10 Monthly 100,945.60
1907A 02/01/98 30/360 1st of the month 10 Monthly 22,755.12
1907B 02/01/98 30/360 1st of the month 10 Monthly 11,377.56
1907C 02/01/98 30/360 1st of the month 10 Monthly 7,262.27
1907D 02/01/98 30/360 1st of the month 10 Monthly 26,628.34
1907E 02/01/98 30/360 1st of the month 10 Monthly 14,040.40
1907F 02/01/98 30/360 1st of the month 10 Monthly 6,778.12
1907G 02/01/98 30/360 1st of the month 10 Monthly 12,103.79
15 2534 07/01/98 30/360 1st of the month 10 Monthly 92,356.88
16 1905 02/01/98 30/360 1st of the month 10 Monthly 95,456.76
1905A 02/01/98 30/360 1st of the month 10 Monthly 16,711.26
1905B 02/01/98 30/360 1st of the month 10 Monthly 13,672.85
1905C 02/01/98 30/360 1st of the month 10 Monthly 7,596.03
1905D 02/01/98 30/360 1st of the month 10 Monthly 7,342.83
1905E 02/01/98 30/360 1st of the month 10 Monthly 9,115.23
1905F 02/01/98 30/360 1st of the month 10 Monthly 5,823.62
1905G 02/01/98 30/360 1st of the month 10 Monthly 7,342.83
1905H 02/01/98 30/360 1st of the month 10 Monthly 9,368.44
1905I 02/01/98 30/360 1st of the month 10 Monthly 18,483.67
17 2 09/01/97 Actual/360 1st of the month 10 Monthly 93,407.90
18 3423 08/01/98 30/360 1st of the month 10 Monthly 80,426.67
19 1376 02/01/98 30/360 1st of the month 10 Monthly 60,226.78
20 1908 02/01/98 30/360 1st of the month 10 Monthly 51,098.60
1908A 02/01/98 30/360 1st of the month 10 Monthly 9,935.84
1908B 02/01/98 30/360 1st of the month 10 Monthly 12,774.65
1908C 02/01/98 30/360 1st of the month 10 Monthly 23,656.76
1908D 02/01/98 30/360 1st of the month 10 Monthly 4,731.35
21 18 02/01/98 Actual/360 1st of the month 7 Monthly 83,823.59
22 1556 01/01/98 30/360 1st of the month 10 Monthly 81,562.53
23 1 07/01/97 Actual/360 1st of the month 7 Monthly 93,126.14
24 1210 03/01/98 30/360 1st of the month 10 Monthly 73,247.69
25 9 01/01/98 30/360 1st of the month 7 Monthly 72,771.52
26 2052 05/01/98 30/360 1st of the month 10 Monthly 67,997.92
27 6102530 03/01/98 30/360 1st of the month 10 Monthly 68,147.86
28 6102876 08/01/98 30/360 1st of the month 10 Monthly 66,933.69
29 2636 06/01/98 30/360 1st of the month 10 Monthly 72,474.08
30 2394 06/01/98 30/360 1st of the month 10 Monthly 71,196.48
31 6102859 06/01/98 30/360 1st of the month 10 Monthly 66,115.86
32 1885 01/01/98 30/360 1st of the month 10 Monthly 71,671.55
33 6102580 06/01/98 30/360 1st of the month 10 Monthly 62,554.08
34 2358 05/01/98 30/360 1st of the month 10 Monthly 67,400.89
35 1076 01/01/98 30/360 1st of the month 10 Monthly 65,090.64
36 6102991 08/01/98 30/360 1st of the month 10 Monthly 65,258.63
37 3641 06/01/98 Actual/360 1st of the month 5 Monthly 62,007.80
38 6102452 03/01/98 30/360 1st of the month 10 Monthly 60,179.75
41 3083 08/01/98 30/360 1st of the month 10 Monthly 58,783.21
07/01/98 30/360 1st of the month 10 Monthly 71,442.14
39 2498 07/01/98 30/360 1st of the month 10 Monthly 39,323.36
40 2499 07/01/98 30/360 1st of the month 10 Monthly 32,118.78
03/01/98 30/360 1st of the month 10 Monthly 64,643.03
42 1224 03/01/98 30/360 1st of the month 10 Monthly 36,075.57
43 1269 03/01/98 30/360 1st of the month 10 Monthly 28,567.46
44 6102663 05/01/98 30/360 1st of the month 10 Monthly 56,450.68
45 34 07/01/98 Actual/360 1st of the month 7 Monthly 56,339.42
46 6102762 07/01/98 30/360 1st of the month 10 Monthly 57,337.03
47 16 01/01/98 Actual/360 1st of the month 7 Monthly 59,104.01
48 6102442 02/01/98 30/360 1st of the month 10 Monthly 59,587.51
49 1776 03/01/98 30/360 1st of the month 10 Monthly 61,241.15
50 6102461 03/01/98 30/360 1st of the month 10 Monthly 53,209.75
51 3645 07/01/98 Actual/360 1st of the month 10 Monthly 51,176.58
52 1922 05/01/98 30/360 1st of the month 10 Monthly 54,416.75
53 7608323 03/01/98 30/360 1st of the month 10 Monthly 50,790.59
55 1755 02/01/98 30/360 1st of the month 10 Monthly 59,471.23
54 6102880 08/01/98 Actual/360 1st of the month 10 Monthly 49,331.82
56 7 11/01/97 Actual/360 1st of the month 7 Monthly 57,452.87
7A 11/01/97 Actual/360 1st of the month 7 Monthly 16,483.69
7B 11/01/97 Actual/360 1st of the month 7 Monthly 6,321.42
7C 11/01/97 Actual/360 1st of the month 7 Monthly 17,443.91
7D 11/01/97 Actual/360 1st of the month 7 Monthly 17,203.85
57 6102950 08/01/98 30/360 1st of the month 10 Monthly 56,538.85
58 2076 05/01/98 30/360 1st of the month 10 Monthly 48,897.09
59 6102533 04/01/98 30/360 1st of the month 10 Monthly 47,420.44
11/01/97 30/360 1st of the month 10 Monthly 60,624.28
61 940906323 11/01/97 30/360 1st of the month 10 Monthly 25,479.77
62 940906324 11/01/97 30/360 1st of the month 10 Monthly 35,144.51
60 3 10/01/97 Actual/360 1st of the month 7 Monthly 52,584.64
63 3632 02/01/98 Actual/360 1st of the month 5 Monthly 47,196.98
64 1541 08/01/98 30/360 1st of the month 10 Monthly 44,120.79
65 1585 05/01/98 30/360 1st of the month 10 Monthly 44,076.29
66 6102764 07/01/98 30/360 1st of the month 10 Monthly 47,705.25
67 1782 04/01/00 30/360 1st of the month 10 Monthly 43,998.65
68 1116 12/01/97 30/360 1st of the month 10 Monthly 45,627.11
70 1057 11/01/97 30/360 1st of the month 10 Monthly 48,415.93
1057A 11/01/97 30/360 1st of the month 10 Monthly 36,997.08
1057B 11/01/97 30/360 1st of the month 10 Monthly 11,418.85
69 2635 06/01/98 30/360 1st of the month 10 Monthly 43,181.96
71 6102541 02/01/98 30/360 1st of the month 10 Monthly 40,483.88
72 6102532 03/01/98 30/360 1st of the month 10 Monthly 43,755.72
73 1263 01/01/98 30/360 1st of the month 10 Monthly 45,753.90
74 13 01/01/98 Actual/360 1st of the month 7 Monthly 45,747.82
75 12 01/01/98 Actual/360 1st of the month 7 Monthly 44,609.35
76 1921 05/01/98 30/360 1st of the month 10 Monthly 39,967.23
77 1660 04/01/98 30/360 1st of the month 10 Monthly 37,258.92
78 3218 08/01/98 30/360 1st of the month 10 Monthly 34,799.52
82 940905374 12/01/97 30/360 1st of the month 10 Monthly 50,557.81
79 6102708 06/01/98 30/360 1st of the month 10 Monthly 34,963.65
80 1859 05/01/98 30/360 1st of the month 10 Monthly 35,332.20
81 1523 03/01/98 30/360 1st of the month 10 Monthly 36,124.66
83 6102902 08/01/98 Actual/360 1st of the month 10 Monthly 39,050.58
84 3642 06/01/98 Actual/360 1st of the month 5 Monthly 33,905.57
87 6102709 06/01/98 30/360 1st of the month 10 Monthly 31,741.33
88 1152 02/01/99 30/360 1st of the month 10 Monthly 32,322.29
89 6102776 08/01/98 30/360 1st of the month 10 Monthly 32,332.82
90 15 01/01/98 Actual/360 1st of the month 7 Monthly 33,176.39
91 6102499 03/01/98 30/360 1st of the month 10 Monthly 30,575.94
92 2212 05/01/98 30/360 1st of the month 10 Monthly 33,223.46
93 2910 06/01/98 30/360 1st of the month 10 Monthly 29,926.28
85 23 03/01/98 Actual/360 1st of the month 10 Monthly 28,224.32
94 6102765 06/01/98 30/360 1st of the month 10 Monthly 30,391.51
95 25 02/01/98 30/360 1st of the month 7 Monthly 29,391.93
97 11 01/01/98 Actual/360 1st of the month 7 Monthly 32,837.44
96 1704 06/01/98 30/360 1st of the month 10 Monthly 28,607.82
98 1013 11/01/97 30/360 1st of the month 10 Monthly 29,712.89
99 2307 04/01/98 30/360 1st of the month 10 Monthly 33,501.84
100 14 01/01/98 Actual/360 1st of the month 7 Monthly 31,443.40
101 6102769 05/01/98 30/360 1st of the month 10 Monthly 26,638.97
102 37 04/01/98 Actual/360 1st of the month 7 Monthly 27,314.19
103 2096 06/01/98 30/360 1st of the month 10 Monthly 29,325.88
106 1144 01/01/98 30/360 1st of the month 10 Monthly 32,640.80
104 1666 01/01/98 30/360 1st of the month 10 Monthly 28,587.34
105 6102707 06/01/01 30/360 1st of the month 10 Monthly 23,831.67
107 6102974 08/01/98 Actual/360 1st of the month 10 Monthly 26,663.99
108 36 07/01/98 Actual/360 1st of the month 7 Monthly 27,662.82
109 6 11/01/97 Actual/360 1st of the month 7 Monthly 27,883.05
110 6102542 04/01/98 30/360 1st of the month 10 Monthly 25,983.00
111 1108 12/01/97 30/360 1st of the month 10 Monthly 26,921.62
112 6102875 07/01/98 30/360 1st of the month 10 Monthly 26,510.09
113 6102705 06/01/98 30/360 1st of the month 10 Monthly 24,485.14
116 1022 11/01/97 30/360 1st of the month 10 Monthly 29,297.18
114 6102969 08/01/98 30/360 1st of the month 10 Monthly 23,309.10
115 1694 07/01/98 30/360 1st of the month 10 Monthly 25,501.54
117 1534 05/01/98 30/360 1st of the month 10 Monthly 26,115.64
118 6102637 05/01/98 30/360 1st of the month 10 Monthly 25,478.91
119 1088 05/01/98 30/360 1st of the month 10 Monthly 24,558.94
120 28 02/01/98 Actual/360 1st of the month 7 Monthly 29,210.10
121 6102657 05/01/98 30/360 1st of the month 10 Monthly 24,312.80
122 2311 05/01/98 30/360 1st of the month 10 Monthly 23,425.05
123 1275 12/01/97 30/360 1st of the month 10 Monthly 25,365.63
124 1890 06/01/98 30/360 1st of the month 10 Monthly 22,579.01
125 20 02/01/98 Actual/360 1st of the month 7 Monthly 25,047.30
126 1403 01/01/98 30/360 1st of the month 10 Monthly 24,055.14
127 1538 02/01/98 30/360 1st of the month 10 Monthly 22,178.33
128 2027 08/01/98 30/360 1st of the month 10 Monthly 22,393.10
129 1795 04/01/98 30/360 1st of the month 10 Monthly 21,788.48
130 1089 02/01/98 30/360 1st of the month 10 Monthly 22,241.35
131 19 02/01/98 Actual/360 1st of the month 7 Monthly 21,696.88
132 1611 05/01/98 30/360 1st of the month 10 Monthly 25,201.35
133 6102451 02/01/98 30/360 1st of the month 10 Monthly 22,578.92
134 7608308 02/01/98 30/360 1st of the month 10 Monthly 23,106.22
135 2693 08/01/98 30/360 1st of the month 10 Monthly 21,510.56
136 1863 06/01/98 30/360 1st of the month 10 Monthly 20,750.93
137 2558 07/01/98 30/360 1st of the month 10 Monthly 26,799.14
138 1599 03/01/98 30/360 1st of the month 10 Monthly 22,718.98
139 1929 04/01/98 30/360 1st of the month 10 Monthly 21,167.36
142 1442 12/01/97 30/360 1st of the month 10 Monthly 24,435.30
140 6102706 06/01/98 30/360 1st of the month 10 Monthly 22,536.53
143 1512 02/01/98 30/360 1st of the month 10 Monthly 20,801.44
141 6102891 08/01/98 30/360 1st of the month 10 Monthly 19,577.52
144 7608309 03/01/98 30/360 1st of the month 10 Monthly 19,114.49
145 1535 04/01/98 30/360 1st of the month 10 Monthly 20,361.90
146 35 06/01/98 Actual/360 1st of the month 7 Monthly 19,062.97
147 1975 06/01/98 30/360 1st of the month 10 Monthly 20,618.96
148 2393 07/01/98 30/360 1st of the month 10 Monthly 22,198.44
149 1407 02/01/98 30/360 1st of the month 10 Monthly 20,652.57
150 2238 08/01/98 30/360 1st of the month 10 Monthly 20,216.97
151 6102803 07/01/98 30/360 1st of the month 10 Monthly 20,970.54
152 6102972 08/01/98 30/360 1st of the month 10 Monthly 19,394.19
153 1607 03/01/98 30/360 1st of the month 10 Monthly 18,792.98
154 5 07/01/97 Actual/360 1st of the month 5 Monthly 23,900.93
155 6102460 02/01/98 30/360 1st of the month 10 Monthly 17,371.46
157 1781 04/01/98 30/360 1st of the month 10 Monthly 20,460.23
1781A 04/01/98 30/360 1st of the month 10 Monthly 9,076.57
1781B 04/01/98 30/360 1st of the month 10 Monthly 11,383.66
156 7608315 04/01/98 30/360 1st of the month 10 Monthly 17,429.04
158 17 01/01/98 Actual/360 1st of the month 7 Monthly 17,962.16
159 22 02/01/98 Actual/360 1st of the month 7 Monthly 20,465.89
160 1440 01/01/98 30/360 1st of the month 10 Monthly 18,457.33
161 6102629 05/01/98 30/360 1st of the month 10 Monthly 17,270.13
162 1448 02/01/98 30/360 1st of the month 10 Monthly 19,910.57
163 6102834 08/01/98 30/360 1st of the month 15 Monthly 19,745.56
164 1321 05/01/98 30/360 1st of the month 10 Monthly 20,235.94
165 3638 05/01/98 Actual/360 1st of the month 5 Monthly 17,112.55
167 3633 02/01/98 Actual/360 1st of the month 5 Monthly 17,257.23
166 1246 02/01/98 30/360 1st of the month 10 Monthly 16,492.69
168 2917 08/01/98 30/360 1st of the month 5 Monthly 16,344.06
169 6102648 05/01/98 Actual/360 1st of the month 7 Monthly 15,348.33
170 1912 05/01/98 30/360 1st of the month 10 Monthly 15,768.13
171 1891 03/01/98 30/360 1st of the month 10 Monthly 16,594.93
172 6102443 02/01/98 30/360 1st of the month 10 Monthly 18,627.21
173 940906544 07/01/97 30/360 1st of the month 10 Monthly 19,285.77
174 1504 02/01/98 30/360 1st of the month 10 Monthly 15,364.24
10/01/97 30/360 1st of the month 10 Monthly 17,911.23
178 0998 10/01/97 30/360 1st of the month 10 Monthly 8,983.54
179 0999 10/01/97 30/360 1st of the month 10 Monthly 8,927.69
175 1810 08/01/98 30/360 1st of the month 10 Monthly 18,085.46
176 6102988 08/01/98 30/360 1st of the month 10 Monthly 15,846.11
177 3182 09/01/98 30/360 1st of the month 10 Monthly 14,710.60
180 2463 07/01/98 30/360 1st of the month 10 Monthly 15,429.71
181 1641 03/01/98 30/360 1st of the month 10 Monthly 15,404.43
182 6102932 08/01/98 30/360 1st of the month 10 Monthly 16,256.08
183 1555 04/01/98 30/360 1st of the month 10 Monthly 14,482.72
184 1090 12/01/97 30/360 1st of the month 10 Monthly 15,030.15
185 940906539 07/01/97 30/360 1st of the month 10 Monthly 17,608.74
186 2660 08/01/98 30/360 1st of the month 10 Monthly 17,431.84
189 1130 12/01/97 30/360 1st of the month 10 Monthly 15,579.60
188 2043 05/01/98 30/360 1st of the month 10 Monthly 13,595.00
187 2392 08/01/98 30/360 1st of the month 10 Monthly 14,996.70
190 1988 05/01/98 30/360 1st of the month 10 Monthly 14,624.07
191 1573 03/01/98 30/360 1st of the month 10 Monthly 14,871.01
192 1886 04/01/98 30/360 1st of the month 10 Monthly 18,676.89
193 1075 12/01/97 30/360 1st of the month 10 Monthly 15,114.16
196 940906545 07/01/97 30/360 1st of the month 10 Monthly 16,434.83
194 1747 06/01/98 30/360 1st of the month 10 Monthly 14,423.01
195 1041 12/01/97 30/360 1st of the month 10 Monthly 14,690.85
197 7608318 03/01/98 30/360 1st of the month 10 Monthly 17,999.26
198 6102904 08/01/98 Actual/360 1st of the month 10 Monthly 12,295.36
199 1239 01/01/98 30/360 1st of the month 10 Monthly 12,895.42
200 1015 04/01/98 30/360 1st of the month 10 Monthly 13,219.99
201 1720 04/01/98 30/360 1st of the month 10 Monthly 12,814.03
202 1086 02/01/98 30/360 1st of the month 10 Monthly 14,666.22
203 2168 05/01/98 30/360 1st of the month 10 Monthly 18,549.26
205 1060 12/01/97 30/360 1st of the month 10 Monthly 14,652.92
204 2055 05/01/98 30/360 1st of the month 10 Monthly 12,568.61
206 6102970 08/01/98 Actual/360 1st of the month 10 Monthly 11,139.41
207 6102901 08/01/98 Actual/360 1st of the month 10 Monthly 13,328.45
208 6102903 08/01/98 Actual/360 1st of the month 10 Monthly 12,912.62
209 1779 05/01/98 30/360 1st of the month 10 Monthly 11,976.91
210 1005 10/01/97 30/360 1st of the month 10 Monthly 14,725.22
211 1811 07/01/98 30/360 1st of the month 10 Monthly 11,938.58
212 6102656 05/01/98 30/360 1st of the month 10 Monthly 11,088.99
213 4 10/01/97 Actual/360 1st of the month 7 Monthly 13,138.00
214 2060 05/01/98 30/360 1st of the month 10 Monthly 12,538.65
215 940907039 12/01/97 30/360 1st of the month 10 Monthly 13,344.99
216 1852 04/01/98 30/360 1st of the month 10 Monthly 10,141.12
217 2665 07/01/98 30/360 1st of the month 10 Monthly 11,104.39
218 940906528 07/01/97 30/360 1st of the month 10 Monthly 12,577.67
219 1432 06/01/98 30/360 1st of the month 10 Monthly 10,137.90
221 1102 12/01/97 30/360 1st of the month 10 Monthly 12,126.51
220 1001 07/01/98 30/360 1st of the month 10 Monthly 11,522.03
222 2815 08/01/98 30/360 1st of the month 10 Monthly 10,135.33
223 2056 06/01/98 30/360 1st of the month 10 Monthly 11,470.99
224 6102896 08/01/98 30/360 1st of the month 10 Monthly 9,588.48
225 6102900 08/01/98 Actual/360 1st of the month 10 Monthly 9,993.37
226 6102943 08/01/98 30/360 1st of the month 10 Monthly 9,770.23
227 1435 02/01/98 30/360 1st of the month 10 Monthly 9,933.20
228 7608319 03/01/98 30/360 1st of the month 10 Monthly 12,922.55
229 7608320 03/01/98 30/360 1st of the month 10 Monthly 12,461.03
230 2456 08/01/98 30/360 1st of the month 10 Monthly 9,246.26
231 6102840 06/01/98 30/360 1st of the month 10 Monthly 8,894.76
232 2133 06/01/98 30/360 1st of the month 10 Monthly 9,505.64
233 1580 02/01/98 30/360 1st of the month 10 Monthly 9,472.00
234 940907278 10/01/97 30/360 1st of the month 10 Monthly 10,370.69
236 1320 02/01/98 30/360 1st of the month 10 Monthly 10,380.74
235 1855 08/01/98 30/360 1st of the month 10 Monthly 8,594.83
237 1647 03/01/98 30/360 1st of the month 10 Monthly 9,816.15
238 1030 30/360 1st of the month 10 Monthly 6,900.00
239 6102770 08/01/98 30/360 1st of the month 10 Monthly 8,194.26
240 6102779 06/01/98 30/360 1st of the month 10 Monthly 9,542.76
241 1288 03/01/98 30/360 1st of the month 10 Monthly 8,611.93
242 2756 07/01/98 30/360 1st of the month 10 Monthly 8,609.07
243 1145 12/01/97 30/360 1st of the month 10 Monthly 9,350.77
244 6102540 03/01/98 30/360 1st of the month 10 Monthly 8,186.74
245 1949 06/01/98 30/360 1st of the month 10 Monthly 8,214.96
246 2017 05/01/98 30/360 1st of the month 10 Monthly 8,439.48
247 1854 05/01/98 30/360 1st of the month 10 Monthly 7,584.32
248 6102531 06/01/98 30/360 1st of the month 10 Monthly 8,007.09
249 1073 02/01/98 30/360 1st of the month 10 Monthly 7,744.69
250 940906529 07/01/97 30/360 1st of the month 10 Monthly 8,385.12
251 2200 04/01/98 30/360 1st of the month 10 Monthly 7,896.32
252 2115 05/01/98 30/360 1st of the month 10 Monthly 7,100.94
253 2405 06/01/98 30/360 1st of the month 10 Monthly 7,480.51
254 1851 04/01/98 30/360 1st of the month 10 Monthly 6,715.86
255 1129 12/01/97 30/360 1st of the month 10 Monthly 7,186.16
256 1991 03/01/98 30/360 1st of the month 10 Monthly 6,687.41
257 940906527 07/01/97 30/360 1st of the month 10 Monthly 6,456.54
86 38 03/01/98 Actual/360 1st of the month 10 Monthly 4,105.94
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CONTROL LOAN YIELD MAINTENANCE
NUMBER NUMBER CROSS COLLATERALIZED / CROSS DEFAULTED PREPAYMENT DESCRIPTION DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 6102551 LO(25),YM1(89),O(6) Treasury Flat
6102551A 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
6102551B 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
6102551C 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
6102551D 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
6102551E 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
6102551F 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
6102551G 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
6102551H 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
6102551I 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
2 6102992 LO(49),YM1(65),O(6) Treasury Flat
3 24 LO(24),DEF(90),O(6) NAP
24A 24 A-R LO(24),DEF(90),O(6) NAP
24B 24 A-R LO(24),DEF(90),O(6) NAP
24C 24 A-R LO(24),DEF(90),O(6) NAP
24D 24 A-R LO(24),DEF(90),O(6) NAP
24E 24 A-R LO(24),DEF(90),O(6) NAP
24F 24 A-R LO(24),DEF(90),O(6) NAP
24G 24 A-R LO(24),DEF(90),O(6) NAP
24H 24 A-R LO(24),DEF(90),O(6) NAP
24I 24 A-R LO(24),DEF(90),O(6) NAP
24J 24 A-R LO(24),DEF(90),O(6) NAP
24K 24 A-R LO(24),DEF(90),O(6) NAP
24L 24 A-R LO(24),DEF(90),O(6) NAP
24M 24 A-R LO(24),DEF(90),O(6) NAP
24N 24 A-R LO(24),DEF(90),O(6) NAP
24O 24 A-R LO(24),DEF(90),O(6) NAP
24P 24 A-R LO(24),DEF(90),O(6) NAP
24Q 24 A-R LO(24),DEF(90),O(6) NAP
24R 24 A-R LO(24),DEF(90),O(6) NAP
4 1548 YM5(144),5%(12),4%(12),O(12) Treasury Flat
5 6102628 LO(25),YM1(89),O(6) Treasury Flat
LO(37),DEF(83) NAP
6 6102944 6102945, 6102946, 6102947 LO(37),DEF(83) NAP
7 6102945 6102944, 6102946, 6102947 LO(37),DEF(83) NAP
8 6102946 6102944, 6102945, 6102947 LO(37),DEF(83) NAP
9 6102947 6102944, 6102945, 6102946 LO(37),DEF(83) NAP
11 2555 YM1(120),1%(12),O(12) Treasury Flat
12 6103017 LO(25),DEF(171),O(3) NAP
14 10 LO(24),DEF(29),O(6) NAP
13 1907 YM1(144),1%(24),O(12) Treasury Flat
1907A 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
1907B 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
1907C 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
1907D 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
1907E 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
1907F 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
1907G 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
15 2534 YM5(96),5%(12),O(12) Treasury Flat
16 1905 YM1(144),1%(24),O(12) Treasury Flat
1905A 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
1905B 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
1905C 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
1905D 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
1905E 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
1905F 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
1905G 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
1905H 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
1905I 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
17 2 LO(60),YM1(54),O(6) Treasury Flat
18 3423 YM5(96),5%(12),O(12) Treasury Flat
19 1376 1908 YM5(96),5%(12),O(6) Treasury Flat
20 1908 1376 YM1(144),1%(24),O(12) Treasury Flat
1908A 1376 YM1(144),1%(24),O(12) Treasury Flat
1908B 1376 YM1(144),1%(24),O(12) Treasury Flat
1908C 1376 YM1(144),1%(24),O(12) Treasury Flat
1908D 1376 YM1(144),1%(24),O(12) Treasury Flat
21 18 LO(24),DEF(90),O(6) NAP
22 1556 YM5(114),O(6) Treasury Flat
23 1 LO(48),DEF(66),O(6) NAP
24 1210 YM1(156),1%(12),O(12) Treasury Flat
25 9 LO(24),3%(12),2%(12),1%(66),O(6) Treasury Flat
26 2052 YM5(144),5%(12),4%(12),O(12) Treasury Flat
27 6102530 LO(30),DEF(84),O(6) NAP
28 6102876 LO(49),YM1(65),O(6) Treasury Flat
29 2636 YM5(120),3%(12),O(12) Treasury Flat
30 2394 YM5(96),1%(12),O(12) Treasury Flat
31 6102859 LO(49),YM1(65),O(6) Treasury Flat
32 1885 YM3(96),O(24) Treasury Flat
33 6102580 LO(25),YM1(90),O(6) Treasury Flat
34 2358 YM2(60),YM1(36),1%(12),O(12) Treasury Flat
35 1076 YM1(114),O(6) Treasury Flat
36 6102991 LO(49),DEF(71) NAP
37 3641 LO(48),YM1(69),O(3) Treasury Flat
38 6102452 LO(25), YM1(89),O(6) Treasury Flat
41 3083 LO(36),DEF(78),O(6) NAP
YM5(96),5%(12),O(12) Treasury Flat
39 2498 2499 YM5(96),5%(12),O(12) Treasury Flat
40 2499 2498 YM5(96),5%(12),O(12) Treasury Flat
YM3(120),3%(96),1%(12),O(12) Treasury Flat
42 1224 1269 (Cross-defaulted only) YM3(120),3%(96),1%(12),O(12) Treasury Flat
43 1269 1224 (Cross-defaulted only) YM3(120),3%(96),1%(12),O(12) Treasury Flat
44 6102663 LO(25),YM1(89),O(6) Treasury Flat
45 34 LO(24),DEF(90),O(6) NAP
46 6102762 LO(26),DEF(88),O(6) NAP
47 16 LO(24),DEF(90),O(6) NAP
48 6102442 LO(25),YM1(89),O(6) Treasury Flat
49 1776 YM3(120),2%(12),1%(12),O(36) Treasury Flat
50 6102461 LO(25), YM1(209),O(6) Treasury Flat
51 3645 LO(60), YM1(114),O(6) Treasury Flat
52 1922 LO(24),YM1(84),O(12) Treasury Flat
53 7608323 LO(25),YM1(89),O(6) Treasury Flat
55 1755 YM5(120),5%(12),4%(12),O(36) Treasury Flat
54 6102880 LO(49),YM1(65),O(6) Treasury Flat
56 7 LO(24),DEF(54),O(6) NAP
7A 7A - D LO(24),DEF(54),O(6) NAP
7B 7A - D LO(24),DEF(54),O(6) NAP
7C 7A - D LO(24),DEF(54),O(6) NAP
7D 7A - D LO(24),DEF(54),O(6) NAP
57 6102950 LO(37),DEF(203) NAP
58 2076 YM3(156),3%(12),O(12) Treasury Flat
59 6102533 LO(25),YM1(89),O(6) Treasury Flat
YM5(96),5%(12),O(12) Treasury Flat
61 940906323 940906324 YM5(96),5%(12),O(12) Treasury Flat
62 940906324 940906323 YM5(96),5%(12),O(12) Treasury Flat
60 3 LO(24),DEF(90),O(6) NAP
63 3632 LO(60),YM1(54),O(6) Treasury plus 140 bp
64 1541 YM3(108),3%(12),O(24) Treasury Flat
65 1585 YM5(114),O(6) Treasury Flat
66 6102764 LO(25),YM1(88),O(6) Treasury Flat
67 1782 YM5(96),O(24) Treasury Flat
68 1116 YM5(96),5%(12),O(12) Treasury Flat
70 1057 YM3(60),3%(6),2%(6),O(12) Treasury Flat
1057A 1057 A-B YM3(60),3%(6),2%(6),O(12) Treasury Flat
1057B 1057 A-B YM3(60),3%(6),2%(6),O(12) Treasury Flat
69 2635 LO(28),DEF(86),O(6) Treasury Flat
71 6102541 LO(25),YM1(89),O(6) Treasury Flat
72 6102532 LO(25),YM1(149),O(6) Treasury Flat
73 1263 YM2(96),1%(6),O(19) Treasury Flat
74 13 LO(24),DEF(90),O(6) NAP
75 12 LO(24),DEF(90),O(6) NAP
76 1921 YM5(60),YM3(60),YM(36),O(24) Treasury Flat
77 1660 YM3(60),1%(48),O(12) Treasury Flat
78 3218 YM3(96),3%(12),O(12) Treasury Flat
82 940905374 LO(48),YM5%(120),O(12) Treasury Flat
79 6102708 LO(61),YM1(113),O(6) Treasury Flat
80 1859 YM5(60),YM3(36),3%(12),O(12) Treasury Flat
81 1523 YM5(120),5%(12),O(12) Treasury Flat
83 6102902 LO(60),DEF(120) NAP
84 3642 LO(60),YM1(57),O(3) Treasury Flat
87 6102709 LO(61), YM1(113),O(6) Treasury Flat
88 1152 YM3(78),O(6) Treasury Flat
89 6102776 LO(25),YM1(89),O(6) Treasury Flat
90 15 LO(24),DEF(90),O(6) NAP
91 6102499 LO(24),YM1(90),O(6) Treasury Flat
92 2212 YM3(156),3%(12),O(12) Treasury Flat
93 2910 YM5(96),5%(12),O(12) Treasury Flat
85 23 LO(24),DEF(90),O(6) NAP
94 6102765 LO(25),YM1(56),O(3) Treasury Flat
95 25 LO(24),DEF(102),O(6) NAP
97 11 LO(24),DEF(90),O(6) NAP
96 1704 LO(60),YM1(48),O(12) Treasury Flat
98 1013 YM5(96),5%(12),O(12) Treasury Flat
99 2307 YM5(96),5%(12),O(12) Treasury Flat
100 14 LO(24),DEF(90),O(6) NAP
101 6102769 LO(25),YM1(53),O(6) Treasury Flat
102 37 LO(24),DEF(90),O(6) NAP
103 2096 YM4(60),YM3(24),YM1(24),O(12) Treasury Flat
106 1144 YM5(168),5%(12),4%(12),3%(12),1%(12),O(24) Treasury Flat
104 1666 YM5(156),5%(24),4%(12),3%(12),2%(12),1%(12),O(12) Treasury Flat
105 6102707 LO(25),YM1(125),O(6) Treasury Flat
107 6102974 LO(49),YM1(65),O(6) Treasury Flat
108 36 LO(60),5%(12),4%(12),3%(12),2%(12),1%(6),O(6) Treasury Flat
109 6 LO(24),DEF(90),O(6) NAP
110 6102542 LO(60),YM1(114),O(6) Treasury Flat
111 1108 YM5(96),5%(12),O(12) Treasury Flat
112 6102875 LO(25),YM1(89),O(6) Treasury Flat
113 6102705 LO(25),YM1(90),O(6) Treasury Flat
116 1022 YM1(96),1%(12),O(12) Treasury Flat
114 6102969 LO(25),DEF(89),O(6) NAP
115 1694 YM3(48),YM2(24),O(12) Treasury Flat
117 1534 YM5(96),5%(12),O(12) Treasury Flat
118 6102637 LO(25),YM1(91),O(4) Treasury Flat
119 1088 YM5(96),5%(12),O(12) Treasury Flat
120 28 LO(24),DEF(90),O(6) NAP
121 6102657 LO(25),YM1(89),O(6) Treasury Flat
122 2311 YM5(96),5%(12),O(12) Treasury Flat
123 1275 YM1(96),1%(12),O(12) Treasury Flat
124 1890 YM5(96),5%(12),O(12) Treasury Flat
125 20 LO(24),DEF(90),O(6) NAP
126 1403 YM5(144),5%(12),4%(12),O(12) Treasury Flat
127 1538 YM3(96),3%(12),O(12) Treasury Flat
128 2027 YM2(96),1%(12),O(12) Treasury Flat
129 1795 YM3(144),3%(72),O(24) Treasury Flat
130 1089 YM1(144),1%(72),O(24) Treasury Flat
131 19 LO(24),DEF(120),3%(12),2%(10),O(6) Treasury Flat
132 1611 YM5(96),5%(12),O(12) Treasury Flat
133 6102451 LO(61), YM1(113),O(6) Treasury Flat
134 7608308 LO(25),YM1(89),O(6) Treasury Flat
135 2693 YM5(96),5%(12),O(12) Treasury Flat
136 1863 YM3(96),3%(12),O(12) Treasury Flat
137 2558 YM5(96),5%(12),O(12) Treasury Flat
138 1599 YM5(96),5%(12),O(12) Treasury Flat
139 1929 YM5(96),5%(12),O(12) Treasury Flat
142 1442 YM5(180),5%(12),1%(12),O(12) Treasury Flat
140 6102706 LO(85),YM1(149),O(6) Treasury Flat
143 1512 YM3(108),O(36) Treasury Flat
141 6102891 LO(25),YM1(89),O(6) Treasury Flat
144 7608309 LO(25),YM1(149),O(6) Treasury Flat
145 1535 YM3(96),3%(12),O(12) Treasury Flat
146 35 LO(24),DEF(90),O(6) NAP
147 1975 YM5(96),3%(12),O(12) Treasury Flat
148 2393 YM5(96),5%(12),O(12) Treasury Flat
149 1407 YM2(96),1%(12),O(12) Treasury Flat
150 2238 YM3(96),3%(12),O(12) Treasury Flat
151 6102803 LO(25),YM1(89),O(6) Treasury Flat
152 6102972 LO(49),YM1(65),O(6) Treasury Flat
153 1607 YM5(96),5%(12),O(12) Treasury Flat
154 5 LO(36),DEF(81),O(3) NAP
155 6102460 LO(25), YM1(89),O(6) Treasury Flat
157 1781 YM5(144),5%(12),4%(12),O(12) Treasury Flat
1781A 1781B YM5(144),5%(12),4%(12),O(12) Treasury Flat
1781B 1781A YM5(144),5%(12),4%(12),O(12) Treasury Flat
156 7608315 LO(25),YM1(149),O(6) Treasury Flat
158 17 LO(24),DEF(90),O(6) NAP
159 22 LO(60),YM1(54),O(6) Treasury Flat
160 1440 YM5(144),5%(12),4%(12),O(12) Treasury Flat
161 6102629 LO(25), YM1(209),O(6) Treasury Flat
162 1448 YM2(144),1.5%(12),1%(12),O(12) Treasury Flat
163 6102834 LO(49),YM1(149),O(6) Treasury Flat
164 1321 YM5(144),5%(12),4%(12),3%(12),2%(12),1%(6),O(18) Treasury Flat
165 3638 LO(120),YM1(117),O(3) Treasury Flat
167 3633 LO(60),YM1(54),O(6) Treasury plus 145 bp
166 1246 YM3(96),3%(12),O(12) Treasury Flat
168 2917 YM5(96),5%(12),O(12) Treasury Flat
169 6102648 LO(25),YM1(89),O(6) Treasury Flat
170 1912 LO(60),YM2(48),YM1(60),O(12) Treasury Flat
171 1891 YM3(108),O(12) Treasury Flat
172 6102443 LO(25), YM1(89),O(6) Treasury Flat
173 940906544 YM5(120),5%(12),O(12) Treasury Flat
174 1504 YM5(96),5%(12),O(12) Treasury Flat
LO(60),YM5(54),O(6) Treasury Flat
178 0998 0999 LO(60),YM5(54),O(6) Treasury Flat
179 0999 0998 LO(60),YM5(54),O(6) Treasury Flat
175 1810 YM5(96),5%(12),O(12) Treasury Flat
176 6102988 LO(49),DEF(71) NAP
177 3182 YM5(96),5%(12),O(12) Treasury Flat
180 2463 YM3(96),2%(12),O(12) Treasury Flat
181 1641 YM5(96),5%(12),O(12) Treasury Flat
182 6102932 LO(49),YM1(65),O(6) Treasury Flat
183 1555 YM5(120),5%(12),O(12) Treasury Flat
184 1090 YM5(108),O(12) Treasury Flat
185 940906539 YM5(120),5%(12),O(12) Treasury Flat
186 2660 YM5(144),5%(12),4%(12),3%(12),2%(12),O(24) Treasury Flat
189 1130 YM5(120),5%(12),O(12) Treasury Flat
188 2043 YM2(60),YM1(36),1%(12),O(12) Treasury Flat
187 2392 YM5(144),5%(12),4%(12),O(12) Treasury Flat
190 1988 YM5(204),5%(12),4%(12),O(12) Treasury Flat
191 1573 YM5(120),3%(30),O(30) Treasury Flat
192 1886 YM5(144),5%(12),4%(12),O(12) Treasury Flat
193 1075 YM1(96),1%(12),O(12) Treasury Flat
196 940906545 YM5(120),5%(12),O(12) Treasury Flat
194 1747 YM3(96),3%(12),O(12) Treasury Flat
195 1041 YM5(120),5%(12),4%(12),3%(12),O(36) Treasury Flat
197 7608318 LO(25),YM1(149),O(6) Treasury Flat
198 6102904 LO(49),YM1(125),O(6) Treasury Flat
199 1239 YM5(96),5%(12),O(12) Treasury Flat
200 1015 YM5(144),5%(12),4%(12),O(12) Treasury Flat
201 1720 YM5(96),5%(12),O(12) Treasury Flat
202 1086 YM2(96),2%(12),O(12) Treasury Flat
203 2168 YM3(60),YM1(24),5%(12),4%(12),3%(12),2%(12),O(12) Treasury Flat
205 1060 YM5(96),5%(12),O(12) Treasury Flat
204 2055 YM5(96),5%(12),O(12) Treasury Flat
206 6102970 LO(25),YM1(89),O(6) Treasury Flat
207 6102901 LO(61),DEF(119) NAP
208 6102903 LO(61), YM1(173),O(6) Treasury Flat
209 1779 YM2(96),1%(12),O(12) Treasury Flat
210 1005 YM3(96),2%(6),1%(6),O(12) Treasury Flat
211 1811 YM5(96),5%(12),O(12) Treasury Flat
212 6102656 LO(49),YM1(65),O(6) Treasury Flat
213 4 LO(24),DEF(90),O(6) NAP
214 2060 YM5(180),5%(12),4%(12),3%(12),2%(12),O(12) Treasury Flat
215 940907039 YM3(36),YM2(12),YM1(60),O(12) Treasury Flat
216 1852 YM3(96),3%(12),O(12) Treasury Flat
217 2665 LO(27),DEF(87),O(6) NAP
218 940906528 YM5(120),5%(12),O(12) Treasury Flat
219 1432 YM5(96),5%(12),O(12) Treasury Flat
221 1102 YM3(180),2%(12),1%(12),O(36) Treasury Flat
220 1001 YM1(96),1%(12),O(12) Treasury Flat
222 2815 YM5(96),5%(12),O(12) Treasury Flat
223 2056 YM3(60),YM2(36),1%(12),O(36) Treasury Flat
224 6102896 LO(25),YM1(89),O(6) Treasury Flat
225 6102900 LO(49),YM1(65),O(6) Treasury Flat
226 6102943 LO(49),YM1(65),O(6) Treasury Flat
227 1435 YM5(96),5%(12),O(12) Treasury Flat
228 7608319 LO(25),YM1(149),O(6) Treasury Flat
229 7608320 LO(25),YM1(149),O(6) Treasury Flat
230 2456 YM5(96),5%(12),O(12) Treasury Flat
231 6102840 LO(25),YM1(89),O(6) Treasury Flat
232 2133 YM5(96),5%(12),O(12) Treasury Flat
233 1580 YM5(120),5%(12),O(12) Treasury Flat
234 940907278 LO(36),YM1(72),O(12) Treasury Flat
236 1320 YM(180) Treasury Flat
235 1855 YM3(96),3%(12),O(12) Treasury Flat
237 1647 YM5(96),5%(12),O(12) Treasury Flat
238 1030 YM1(115),O(6) Treasury Flat
239 6102770 LO(61),YM1(113),O(6) Treasury Flat
240 6102779 LO(25),YM1(89),O(6) Treasury Flat
241 1288 YM3(84),3%(12),2%(12),O(12) Treasury Flat
242 2756 YM3(60),YM2(60),O(24) Treasury Flat
243 1145 YM5(96),5%(12),O(12) Treasury Flat
244 6102540 LO(25),YM1(89),O(6) Treasury Flat
245 1949 YM3(144),3%(12),2%(12),O(12) Treasury Flat
246 2017 YM5(96),YM4(12),O(12) Treasury Flat
247 1854 YM3(96),3%(12),O(12) Treasury Flat
248 6102531 LO(61), YM1(113),O(6) Treasury Flat
249 1073 YM5(144),5%(12),4%(12),O(12) Treasury Flat
250 940906529 YM5(120),5%(12),O(12) Treasury Flat
251 2200 YM5(120),5%(24),O(96) Treasury Flat
252 2115 YM5(144),5%(12),4%(12),3%(12),2%(12),1%(12),O(36) Treasury Flat
253 2405 YM5(96),5%(12),O(12) Treasury Flat
254 1851 YM3(96),3%(12),O(12) Treasury Flat
255 1129 YM5(120),5%(12),O(12) Treasury Flat
256 1991 YM5(96),5%(12),O(12) Treasury Flat
257 940906527 YM5(120),5%(12),O(12) Treasury Flat
86 38 LO(24),DEF(90),O(6) NAP
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ORIGINAL ARD/ REMAINING REMAINING BALLOON, FULLY
CONTROL LOAN AMORTIZATION ORIGINAL TERM MATURITY AMORTIZATION TERM TO AMORTIZING OR
NUMBER NUMBER TERM TO MATURITY DATE PERIOD MATURITY SEASONING ARD
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 6102551 360 120 01/01/08 353 113 7 Balloon
6102551A 360 120 01/01/08 353 113 7 Balloon
6102551B 360 120 01/01/08 353 113 7 Balloon
6102551C 360 120 01/01/08 353 113 7 Balloon
6102551D 360 120 01/01/08 353 113 7 Balloon
6102551E 360 120 01/01/08 353 113 7 Balloon
6102551F 360 120 01/01/08 353 113 7 Balloon
6102551G 360 120 01/01/08 353 113 7 Balloon
6102551H 360 120 01/01/08 353 113 7 Balloon
6102551I 360 120 01/01/08 353 113 7 Balloon
2 6102992 360 120 07/01/08 359 119 1 ARD
3 24 324 120 01/01/08 317 113 7 ARD
24A 324 120 01/01/08 317 113 7 ARD
24B 324 120 01/01/08 317 113 7 ARD
24C 324 120 01/01/08 317 113 7 ARD
24D 324 120 01/01/08 317 113 7 ARD
24E 324 120 01/01/08 317 113 7 ARD
24F 324 120 01/01/08 317 113 7 ARD
24G 324 120 01/01/08 317 113 7 ARD
24H 324 120 01/01/08 317 113 7 ARD
24I 324 120 01/01/08 317 113 7 ARD
24J 324 120 01/01/08 317 113 7 ARD
24K 324 120 01/01/08 317 113 7 ARD
24L 324 120 01/01/08 317 113 7 ARD
24M 324 120 01/01/08 317 113 7 ARD
24N 324 120 01/01/08 317 113 7 ARD
24O 324 120 01/01/08 317 113 7 ARD
24P 324 120 01/01/08 317 113 7 ARD
24Q 324 120 01/01/08 317 113 7 ARD
24R 324 120 01/01/08 317 113 7 ARD
4 1548 300 180 01/01/13 293 173 7 Balloon
5 6102628 360 120 04/01/08 356 116 4 ARD
240 120 07/01/08 239 119 1 Balloon
6 6102944 240 120 07/01/08 239 119 1 Balloon
7 6102945 240 120 07/01/08 239 119 1 Balloon
8 6102946 240 120 07/01/08 239 119 1 Balloon
9 6102947 240 120 07/01/08 239 119 1 Balloon
11 2555 360 144 04/01/10 356 140 4 Balloon
12 6103017 276 199 01/31/15 275 198 1 Balloon
14 10 300 59 11/01/02 292 51 8 ARD
13 1907 360 180 01/01/13 353 173 7 Balloon
1907A 360 180 01/01/13 353 173 7 Balloon
1907B 360 180 01/01/13 353 173 7 Balloon
1907C 360 180 01/01/13 353 173 7 Balloon
1907D 360 180 01/01/13 353 173 7 Balloon
1907E 360 180 01/01/13 353 173 7 Balloon
1907F 360 180 01/01/13 353 173 7 Balloon
1907G 360 180 01/01/13 353 173 7 Balloon
15 2534 360 120 06/01/08 358 118 2 Balloon
16 1905 360 180 01/01/13 353 173 7 Balloon
1905A 360 180 01/01/13 353 173 7 Balloon
1905B 360 180 01/01/13 353 173 7 Balloon
1905C 360 180 01/01/13 353 173 7 Balloon
1905D 360 180 01/01/13 353 173 7 Balloon
1905E 360 180 01/01/13 353 173 7 Balloon
1905F 360 180 01/01/13 353 173 7 Balloon
1905G 360 180 01/01/13 353 173 7 Balloon
1905H 360 180 01/01/13 353 173 7 Balloon
1905I 360 180 01/01/13 353 173 7 Balloon
17 2 360 120 08/01/07 348 108 12 ARD
18 3423 360 120 07/01/08 359 119 1 Balloon
19 1376 114 114 07/01/07 107 107 7 Fully Amortizing
20 1908 360 180 01/01/13 353 173 7 Balloon
1908A 360 180 01/01/13 353 173 7 Balloon
1908B 360 180 01/01/13 353 173 7 Balloon
1908C 360 180 01/01/13 353 173 7 Balloon
1908D 360 180 01/01/13 353 173 7 Balloon
21 18 360 120 01/01/08 353 113 7 ARD
22 1556 360 120 12/01/07 352 112 8 Balloon
23 1 360 120 06/01/07 346 106 14 ARD
24 1210 360 180 02/01/13 354 174 6 Balloon
25 9 360 120 12/01/07 352 112 8 ARD
26 2052 360 180 04/01/13 356 176 4 Balloon
27 6102530 360 120 02/01/08 354 114 6 Balloon
28 6102876 360 120 07/01/08 359 119 1 ARD
29 2636 300 144 05/01/10 297 141 3 Balloon
30 2394 300 120 05/01/08 297 117 3 Balloon
31 6102859 360 120 05/01/08 357 117 3 ARD
32 1885 300 120 12/01/07 292 112 8 Balloon
33 6102580 360 121 06/01/08 357 118 3 Balloon
34 2358 300 120 04/01/08 296 116 4 Balloon
35 1076 360 120 12/01/07 352 112 8 Balloon
36 6102991 300 120 07/01/08 299 119 1 Balloon
37 3641 360 120 05/01/08 357 117 3 Balloon
38 6102452 360 120 02/01/08 354 114 6 Balloon
41 3083 360 120 07/01/08 359 119 1 Balloon
240 120 06/01/08 238 118 2 Balloon
39 2498 240 120 06/01/08 238 118 2 Balloon
40 2499 240 120 06/01/08 238 118 2 Balloon
300 240 02/01/18 294 234 6 Balloon
42 1224 300 240 02/01/18 294 234 6 Balloon
43 1269 300 240 02/01/18 294 234 6 Balloon
44 6102663 360 120 04/01/08 356 116 4 ARD
45 34 360 120 06/01/08 358 118 2 ARD
46 6102762 360 120 06/01/08 358 118 2 ARD
47 16 360 120 12/01/07 352 112 8 ARD
48 6102442 300 120 01/01/08 293 113 7 Balloon
49 1776 264 180 02/01/13 258 174 6 Balloon
50 6102461 360 240 02/01/18 354 234 6 Balloon
51 3645 360 180 06/01/13 358 178 2 Balloon
52 1922 330 120 04/01/08 326 116 4 Balloon
53 7608323 360 120 02/01/08 354 114 6 Balloon
55 1755 240 180 01/01/13 233 173 7 Balloon
54 6102880 360 120 07/01/08 359 119 1 ARD
56 7 300 84 10/01/04 290 74 10 ARD
7A 300 84 10/01/04 290 74 10 ARD
7B 300 84 10/01/04 290 74 10 ARD
7C 300 84 10/01/04 290 74 10 ARD
7D 300 84 10/01/04 290 74 10 ARD
57 6102950 240 240 07/01/18 239 239 1 Fully Amortizing
58 2076 360 180 04/01/13 356 176 4 Balloon
59 6102533 360 120 03/01/08 355 115 5 Balloon
240 120 10/01/07 230 110 10 Balloon
61 940906323 240 120 10/01/07 230 110 10 Balloon
62 940906324 240 120 10/01/07 230 110 10 Balloon
60 3 360 120 09/01/07 349 109 11 ARD
63 3632 360 120 01/01/08 353 113 7 Balloon
64 1541 360 144 07/01/10 359 143 1 Balloon
65 1585 360 120 04/01/08 356 116 4 Balloon
66 6102764 300 119 05/01/08 298 117 2 Balloon
67 1782 360 120 03/01/08 355 115 5 Balloon
68 1116 360 120 11/01/07 351 111 9 Balloon
70 1057 300 84 10/01/04 290 74 10 Balloon
1057A 300 84 10/01/04 290 74 10 Balloon
1057B 300 84 10/01/04 290 74 10 Balloon
69 2635 360 120 05/01/08 357 117 3 Balloon
71 6102541 360 120 01/01/08 353 113 7 Balloon
72 6102532 300 180 02/01/13 294 174 6 Balloon
73 1263 300 121 01/01/08 292 113 8 Balloon
74 13 300 120 12/01/07 292 112 8 ARD
75 12 300 120 12/01/07 292 112 8 ARD
76 1921 300 180 04/01/13 296 176 4 Balloon
77 1660 360 120 03/01/08 355 115 5 Balloon
78 3218 360 120 07/01/08 359 119 1 Balloon
82 940905374 180 180 11/01/12 171 171 9 Fully Amortizing
79 6102708 360 180 05/01/13 357 177 3 Balloon
80 1859 360 120 04/01/08 356 116 4 Balloon
81 1523 300 144 02/01/10 294 138 6 Balloon
83 6102902 240 180 07/01/13 239 179 1 Balloon
84 3642 360 120 05/01/08 357 117 3 Balloon
87 6102709 360 180 05/01/13 357 177 3 Balloon
88 1152 360 84 01/01/05 353 77 7 Balloon
89 6102776 300 120 07/01/08 299 119 1 Balloon
90 15 360 120 12/01/07 352 112 8 ARD
91 6102499 360 120 02/01/08 354 114 6 ARD
92 2212 300 180 04/01/13 296 176 4 Balloon
93 2910 360 120 05/01/08 357 117 3 Balloon
85 23 360 120 02/01/08 354 114 6 ARD
94 6102765 300 84 05/01/05 297 81 3 Balloon
95 25 360 132 01/01/09 353 125 7 ARD
97 11 300 120 12/01/07 292 112 8 ARD
96 1704 360 120 05/01/08 357 117 3 Balloon
98 1013 360 120 10/01/07 350 110 10 Balloon
99 2307 240 120 03/01/08 235 115 5 Balloon
100 14 300 120 12/01/07 292 112 8 ARD
101 6102769 360 84 04/01/05 356 80 4 ARD
102 37 360 120 03/01/08 355 115 5 ARD
103 2096 300 120 05/01/08 297 117 3 Balloon
106 1144 240 240 12/01/17 232 232 8 Fully Amortizing
104 1666 360 240 12/01/17 352 232 8 Balloon
105 6102707 300 156 05/01/11 297 153 3 Balloon
107 6102974 300 120 07/01/08 299 119 1 Balloon
108 36 300 120 06/01/08 298 118 2 ARD
109 6 360 120 10/01/07 350 110 10 ARD
110 6102542 360 180 03/01/13 355 175 5 Balloon
111 1108 360 120 11/01/07 351 111 9 Balloon
112 6102875 300 120 06/01/08 298 118 2 Balloon
113 6102705 360 121 05/31/08 357 118 3 ARD
116 1022 240 120 10/01/07 230 110 10 Balloon
114 6102969 360 120 07/01/08 359 119 1 ARD
115 1694 300 84 06/01/05 298 82 2 Balloon
117 1534 300 120 04/01/08 296 116 4 Balloon
118 6102637 300 120 04/01/08 296 116 4 Balloon
119 1088 300 120 04/01/08 296 116 4 Balloon
120 28 240 120 01/01/08 233 113 7 ARD
121 6102657 330 120 04/01/08 326 116 4 Balloon
122 2311 360 120 04/01/08 356 116 4 Balloon
123 1275 300 120 11/01/07 291 111 9 Balloon
124 1890 360 120 05/01/08 357 117 3 Balloon
125 20 300 120 01/01/08 293 113 7 ARD
126 1403 300 180 12/01/12 292 172 8 Balloon
127 1538 360 120 01/01/08 353 113 7 Balloon
128 2027 360 120 07/01/08 359 119 1 Balloon
129 1795 360 240 03/01/18 355 235 5 Balloon
130 1089 360 240 01/01/18 353 233 7 Balloon
131 19 360 172 05/01/12 353 165 7 ARD
132 1611 240 120 04/01/08 236 116 4 Balloon
133 6102451 300 180 01/01/13 293 173 7 Balloon
134 7608308 276 120 01/01/08 269 113 7 Balloon
135 2693 300 120 07/01/08 299 119 1 Balloon
136 1863 360 120 05/01/08 357 117 3 Balloon
137 2558 240 120 06/01/08 238 118 2 Balloon
138 1599 300 120 02/01/08 294 114 6 Balloon
139 1929 300 120 03/01/08 295 115 5 Balloon
142 1442 216 216 11/01/15 207 207 9 Fully Amortizing
140 6102706 240 240 05/01/18 237 237 3 Fully Amortizing
143 1512 300 144 01/01/10 293 137 7 Balloon
141 6102891 360 120 07/01/08 359 119 1 ARD
144 7608309 360 180 02/01/13 354 174 6 Balloon
145 1535 300 120 03/01/08 295 115 5 Balloon
146 35 360 120 05/01/08 357 117 3 ARD
147 1975 300 120 05/01/08 297 117 3 Balloon
148 2393 240 120 06/01/08 238 118 2 Balloon
149 1407 300 120 01/01/08 293 113 7 Balloon
150 2238 300 120 07/01/08 299 119 1 Balloon
151 6102803 300 120 06/01/08 298 118 2 Balloon
152 6102972 300 120 07/01/08 299 119 1 Balloon
153 1607 300 120 02/01/08 294 114 6 Balloon
154 5 264 120 06/01/07 250 106 14 ARD
155 6102460 360 120 01/01/08 353 113 7 Balloon
157 1781 240 180 03/01/13 235 175 5 Balloon
1781A 240 180 03/01/13 235 175 5 Balloon
1781B 240 180 03/01/13 235 175 5 Balloon
156 7608315 360 180 03/01/13 355 175 5 Balloon
158 17 360 120 12/01/07 352 112 8 ARD
159 22 300 120 01/01/08 293 113 7 ARD
160 1440 300 180 12/01/12 292 172 8 Balloon
161 6102629 300 240 04/01/18 296 236 4 ARD
162 1448 240 180 01/01/13 233 173 7 Balloon
163 6102834 204 204 07/01/15 203 203 1 Fully Amortizing
164 1321 216 216 04/01/16 212 212 4 Fully Amortizing
165 3638 300 240 04/01/18 296 236 4 Balloon
167 3633 300 120 01/01/08 293 113 7 Balloon
166 1246 360 120 01/01/08 353 113 7 Balloon
168 2917 300 120 07/01/08 299 119 1 Balloon
169 6102648 360 120 04/01/08 356 116 4 ARD
170 1912 360 180 04/01/13 356 176 4 Balloon
171 1891 300 120 02/01/08 294 114 6 Balloon
172 6102443 240 120 01/01/08 233 113 7 Balloon
173 940906544 300 144 06/01/09 286 130 14 Balloon
174 1504 360 120 01/01/08 353 113 7 Balloon
300 120 09/01/07 289 109 11 Balloon
178 0998 300 120 09/01/07 289 109 11 Balloon
179 0999 300 120 09/01/07 289 109 11 Balloon
175 1810 240 120 07/01/08 239 119 1 Balloon
176 6102988 300 120 07/01/08 299 119 1 Balloon
177 3182 360 120 08/01/08 360 120 0 Balloon
180 2463 300 120 06/01/08 298 118 2 Balloon
181 1641 300 120 02/01/08 294 114 6 Balloon
182 6102932 240 120 07/01/08 239 119 1 Balloon
183 1555 360 144 03/01/10 355 139 5 Balloon
184 1090 360 120 11/01/07 351 111 9 Balloon
185 940906539 300 144 06/01/09 286 130 14 Balloon
186 2660 216 216 07/01/16 215 215 1 Fully Amortizing
189 1130 300 144 11/01/09 291 135 9 Balloon
188 2043 360 120 04/01/08 356 116 4 Balloon
187 2392 300 180 07/01/13 299 179 1 Balloon
190 1988 300 240 04/01/18 296 236 4 Balloon
191 1573 300 180 02/01/13 294 174 6 Balloon
192 1886 180 180 03/01/13 175 175 5 Fully Amortizing
193 1075 300 120 11/01/07 291 111 9 Balloon
196 940906545 300 144 06/01/09 286 130 14 Balloon
194 1747 300 120 05/01/08 297 117 3 Balloon
195 1041 360 192 11/01/13 351 183 9 Balloon
197 7608318 180 180 02/01/13 174 174 6 Fully Amortizing
198 6102904 360 180 07/01/13 359 179 1 ARD
199 1239 360 120 12/01/07 352 112 8 Balloon
200 1015 300 180 03/01/13 295 175 5 Balloon
201 1720 300 120 03/01/08 295 115 5 Balloon
202 1086 240 120 01/01/08 233 113 7 Balloon
203 2168 144 144 04/01/10 140 140 4 Fully Amortizing
205 1060 240 120 11/01/07 231 111 9 Balloon
204 2055 300 120 04/01/08 296 116 4 Balloon
206 6102970 360 120 07/01/08 359 119 1 ARD
207 6102901 240 180 07/01/13 239 179 1 Balloon
208 6102903 240 240 07/01/18 239 239 1 Fully Amortizing
209 1779 300 120 04/01/08 296 116 4 Balloon
210 1005 240 120 09/01/07 229 109 11 Balloon
211 1811 300 120 06/01/08 298 118 2 Balloon
212 6102656 360 120 04/01/08 356 116 4 ARD
213 4 300 120 09/01/07 289 109 11 ARD
214 2060 240 240 04/01/18 236 236 4 Fully Amortizing
215 940907039 240 120 11/01/07 231 111 9 Balloon
216 1852 360 120 03/01/08 355 115 5 Balloon
217 2665 300 120 06/01/08 298 118 2 Balloon
218 940906528 300 144 06/01/09 286 130 14 Balloon
219 1432 360 120 05/01/08 357 117 3 Balloon
221 1102 240 240 11/01/17 231 231 9 Fully Amortizing
220 1001 240 120 06/01/08 238 118 2 Balloon
222 2815 300 120 07/01/08 299 119 1 Balloon
223 2056 240 144 05/01/10 237 141 3 Balloon
224 6102896 360 120 07/01/08 359 119 1 Balloon
225 6102900 300 120 07/01/08 299 119 1 Balloon
226 6102943 300 120 07/01/08 299 119 1 Balloon
227 1435 360 120 01/01/08 353 113 7 Balloon
228 7608319 180 180 02/01/13 174 174 6 Fully Amortizing
229 7608320 180 180 02/01/13 174 174 6 Fully Amortizing
230 2456 300 120 07/01/08 299 119 1 Balloon
231 6102840 360 120 05/01/08 357 117 3 ARD
232 2133 300 120 05/01/08 297 117 3 Balloon
233 1580 300 144 01/01/10 293 137 7 Balloon
234 940907278 300 120 09/01/07 289 109 11 Balloon
236 1320 240 180 01/01/13 233 173 7 Balloon
235 1855 360 120 07/01/08 359 119 1 Balloon
237 1647 240 120 02/01/08 234 114 6 Balloon
238 1030 IO 121 12/01/07 IO 112 9 Balloon
239 6102770 360 180 07/01/13 359 179 1 Balloon
240 6102779 240 120 05/01/08 237 117 3 Balloon
241 1288 300 120 02/01/08 294 114 6 Balloon
242 2756 300 144 06/01/10 298 142 2 Balloon
243 1145 300 120 11/01/07 291 111 9 Balloon
244 6102540 300 120 02/01/08 294 114 6 Balloon
245 1949 300 180 05/01/13 297 177 3 Balloon
246 2017 240 120 04/01/08 236 116 4 Balloon
247 1854 300 120 04/01/08 296 116 4 Balloon
248 6102531 240 240 05/01/18 237 237 3 Fully Amortizing
249 1073 300 180 01/01/13 293 173 7 Balloon
250 940906529 300 144 06/01/09 286 130 14 Balloon
251 2200 240 240 03/01/18 235 235 5 Fully Amortizing
252 2115 300 240 04/01/18 296 236 4 Balloon
253 2405 240 120 05/01/08 237 117 3 Balloon
254 1851 300 120 03/01/08 295 115 5 Balloon
255 1129 300 144 11/01/09 291 135 9 Balloon
256 1991 300 120 02/01/08 294 114 6 Balloon
257 940906527 300 144 06/01/09 286 130 14 Balloon
86 38 360 120 02/01/08 354 114 6 ARD
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FUTURE APPRAISAL
CONTROL LOAN BALLOON/ARD BALLOON/ARD DUE ON SUBORDINATE APPRAISAL VALUE "AS OF"
NUMBER NUMBER BALANCE LTV RATIO DUE ON SALE ENCUMBRANCE FINANCING VALUE VALUE DATE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 6102551 $26,405,903.36 57.6% Yes Yes No $45,870,000 Various
6102551A 1,059,229.61 57.6% Yes Yes No 1,840,000 01/23/98
6102551B 1,168,606.58 57.6% Yes Yes No 2,030,000 01/23/98
6102551C 4,317,511.99 57.6% Yes Yes No 7,500,000 01/23/98
6102551D 2,129,972.58 57.6% Yes Yes No 3,700,000 01/29/98
6102551E 1,093,769.71 57.6% Yes Yes No 1,900,000 01/22/98
6102551F 1,899,705.28 57.6% Yes Yes No 3,300,000 01/23/98
6102551G 6,389,917.75 57.6% Yes Yes No 11,100,000 01/23/98
6102551H 1,899,705.28 57.6% Yes Yes No 3,300,000 01/22/98
6102551I 6,447,484.58 57.6% Yes Yes No 11,200,000 01/23/98
2 6102992 20,700,203.18 64.3% Yes Yes No 32,200,000 05/13/98
3 24 20,576,548.80 67.0% Yes Yes No 30,720,000 Various
24A 3,405,745.38 67.6% Yes Yes No 5,040,000 07/01/97
24B 3,885,523.17 67.6% Yes Yes No 5,750,000 07/01/97
24C 1,932,626.04 67.6% Yes Yes No 2,860,000 07/01/97
24D 1,857,658.72 67.6% Yes Yes No 2,750,000 07/01/97
24E 1,418,426.20 67.5% Yes Yes No 2,100,000 07/01/97
24F 1,688,724.51 67.5% Yes Yes No 2,500,000 07/01/97
24G 742,683.20 67.5% Yes Yes No 1,100,000 07/01/97
24H 1,012,981.52 67.5% Yes Yes No 1,500,000 07/01/97
24I 675,110.02 67.5% Yes Yes No 1,000,000 07/01/97
24J 266,285.37 67.4% Yes Yes No 395,000 07/01/97
24K 945,406.47 67.5% Yes Yes No 1,400,000 07/01/97
24L 675,110.02 67.5% Yes Yes No 1,000,000 07/01/97
24M 499,417.13 67.5% Yes Yes No 740,000 07/01/97
24N 408,191.66 67.5% Yes Yes No 605,000 07/01/97
24O 425,084.03 67.5% Yes Yes No 630,000 07/01/97
24P 366,979.38 72.0% Yes Yes No 510,000 03/01/98
24Q 202,611.76 58.7% Yes Yes No 345,000 03/01/98
24R 167,984.21 33.9% Yes Yes No 495,000 03/01/98
4 1548 16,029,606.36 48.6% Yes Yes No 33,000,000 12/10/97
5 6102628 16,912,974.00 69.0% Yes Yes No 24,500,000 01/08/98
13,123,138.94 49.3% Yes Yes No 26,625,000 Various
6 6102944 4,831,716.64 50.6% Yes Yes No 9,540,000 06/30/98
7 6102945 3,640,482.09 46.1% Yes Yes No 7,900,000 04/21/98
8 6102946 2,417,544.73 50.6% Yes Yes No 4,775,000 04/23/99
9 6102947 2,233,395.48 50.6% Yes Yes No 4,410,000 06/30/98
11 2555 13,441,244.39 64.6% Yes Yes No 20,800,000 03/19/98
12 6103017 4,114,681.11 26.0% Yes Yes No 15,800,000 04/07/98
14 10 13,396,892.86 57.0% Yes Yes No 23,500,000 08/31/97
13 1907 10,889,347.18 52.2% Yes Yes No 20,850,000 Various
1907A 2,454,672.99 52.2% Yes Yes No 4,700,000 09/17/97
1907B 1,227,336.49 52.2% Yes Yes No 2,350,000 09/04/97
1907C 783,406.27 52.2% Yes Yes No 1,500,000 09/17/97
1907D 2,872,489.66 52.2% Yes Yes No 5,500,000 09/02/97
1907E 1,514,585.46 52.2% Yes Yes No 2,900,000 09/15/97
1907F 731,179.19 52.2% Yes Yes No 1,400,000 10/01/97
1907G 1,305,677.12 52.2% Yes Yes No 2,500,000 10/01/97
15 2534 11,884,801.93 68.7% Yes Yes No 17,300,000 04/20/98
16 1905 10,297,249.88 54.6% Yes Yes No 18,850,000 Various
1905A 1,802,701.57 54.6% Yes Yes No 3,300,000 09/10/97
1905B 1,474,937.65 54.6% Yes Yes No 2,700,000 12/01/97
1905C 819,409.81 54.6% Yes Yes No 1,500,000 09/15/97
1905D 792,096.14 54.6% Yes Yes No 1,450,000 09/02/97
1905E 983,291.77 54.6% Yes Yes No 1,800,000 09/05/97
1905F 628,214.18 54.6% Yes Yes No 1,150,000 08/29/97
1905G 792,096.14 54.6% Yes Yes No 1,450,000 09/08/97
1905H 1,010,605.43 54.6% Yes Yes No 1,850,000 09/17/97
1905I 1,993,897.10 54.6% Yes Yes No 3,650,000 09/16/97
17 2 11,228,988.76 61.1% Yes Yes No 18,390,000 04/10/97
18 3423 10,413,908.67 53.4% Yes Yes Yes 19,500,000 04/20/98
19 1376 0.00 0.0% Yes Yes No 5,200,000 11/01/97
20 1908 5,512,179.46 51.0% Yes Yes No 10,800,000 Various
1908A 1,071,812.67 51.0% Yes Yes No 2,100,000 09/15/97
1908B 1,378,044.86 51.0% Yes Yes No 2,700,000 11/01/97
1908C 2,551,934.93 51.0% Yes Yes No 5,000,000 09/16/97
1908D 510,386.99 51.0% Yes Yes No 1,000,000 09/02/97
21 18 10,595,060.89 66.2% Yes Yes No 16,000,000 10/01/97
22 1556 10,248,632.47 61.0% Yes Yes No 16,800,000 11/01/97
23 1 10,396,043.38 67.6% Yes Yes No 15,390,000 03/03/97
24 1210 7,959,920.26 56.1% Yes Yes No 14,200,000 12/05/97
25 9 9,095,314.95 64.6% Yes Yes No 14,070,000 09/26/97
26 2052 7,555,770.64 58.6% Yes Yes No 12,900,000 01/27/98
27 6102530 8,695,381.73 61.7% Yes Yes No 14,100,000 11/26/97
28 6102876 8,593,312.34 68.7% Yes Yes No 12,500,000 03/25/98
29 2636 7,296,222.55 50.0% Yes Yes No 14,600,000 03/23/98
30 2394 7,799,251.96 61.9% Yes Yes No 12,600,000 03/10/98
31 6102859 8,403,725.66 68.9% Yes Yes No 12,200,000 03/21/98
32 1885 7,759,969.82 59.7% Yes Yes No 13,000,000 09/15/97
33 6102580 8,084,062.97 68.5% Yes Yes No 11,800,000 01/29/98
34 2358 7,369,803.79 59.0% Yes Yes No 12,500,000 03/13/98
35 1076 8,073,711.00 64.6% Yes Yes No 12,500,000 10/01/97
36 6102991 7,242,380.92 55.7% Yes Yes No 13,000,000 04/27/98
37 3641 8,047,147.69 69.1% Yes Yes No 11,650,000 03/12/98
38 6102452 7,732,173.82 54.8% Yes Yes No 14,100,000 10/03/97
41 3083 7,558,580.27 65.7% Yes Yes No 11,500,000 01/28/98
6,021,271.72 41.4% Yes Yes Various 14,550,000 04/21/98
39 2498 3,314,243.65 49.8% Yes Yes No 6,650,000 04/21/98
40 2499 2,707,028.07 34.3% Yes Yes Yes 7,900,000 04/21/98
3,233,693.06 27.2% Yes Yes Various 11,900,000 Various
42 1224 1,804,638.90 26.9% Yes Yes No 6,700,000 12/10/97
43 1269 1,429,054.17 27.5% Yes Yes Yes 5,200,000 12/15/97
44 6102663 7,225,107.56 68.8% Yes Yes No 10,500,000 01/28/98
45 34 7,278,122.99 69.3% Yes Yes No 10,500,000 02/10/98
46 6102762 7,166,241.72 64.0% Yes Yes No 11,200,000 01/26/98
47 16 7,332,426.19 67.9% Yes Yes No 10,800,000 09/15/97
48 6102442 6,503,423.43 59.1% Yes Yes No 11,000,000 10/02/97
49 1776 4,021,106.61 39.4% Yes Yes No 10,200,000 12/15/97
50 6102461 4,532,306.39 43.6% Yes Yes No 10,400,000 10/12/97
51 3645 5,889,770.60 52.6% Yes Yes No 11,200,000 04/01/98
52 1922 6,419,922.38 55.8% Yes Yes No 11,500,000 03/12/98
53 7608323 6,475,679.84 55.3% Yes Yes No 11,700,000 10/10/97
55 1755 1,430,509.96 13.0% Yes Yes No 11,000,000 12/11/97
54 6102880 6,459,096.63 68.0% Yes Yes No 9,500,000 04/06/98
56 7 6,458,134.64 63.3% Yes Yes No 10,200,000 Various
7A 1,852,891.00 63.3% Yes Yes No 2,800,000 05/14/97
7B 710,574.70 63.3% Yes Yes No 1,200,000 05/14/97
7C 1,960,826.40 63.3% Yes Yes No 2,300,000 06/27/97
7D 1,933,842.55 63.3% Yes Yes No 3,900,000 05/14/97
57 6102950 0.00 0.0% Yes Yes No 10,000,000 04/21/98
58 2076 5,277,931.74 49.8% Yes Yes No 10,600,000 02/05/98
59 6102533 6,032,058.39 60.9% Yes Yes No 9,900,000 12/05/97
4,853,951.29 45.4% Yes Yes No 10,700,000 04/29/97
61 940906323 2,040,066.46 43.4% Yes Yes No 4,700,000 04/29/97
62 940906324 2,813,884.83 46.9% Yes Yes No 6,000,000 05/01/97
60 3 6,213,710.55 61.5% Yes Yes No 10,100,000 05/12/97
63 3632 5,961,216.28 69.3% Yes Yes No 8,600,000 11/25/97
64 1541 5,406,387.18 65.1% Yes Yes No 8,300,000 04/14/98
65 1585 5,685,070.40 68.2% Yes Yes No 8,330,000 12/12/97
66 6102764 5,241,930.50 59.6% Yes Yes No 8,800,000 12/04/97
67 1782 5,917,964.91 66.8% Yes Yes No 8,860,000 10/17/97
68 1116 5,646,634.46 67.6% Yes Yes No 8,350,000 09/23/97
70 1057 5,552,664.02 65.5% Yes Yes Yes 8,480,000 Various
1057A 4,243,073.45 65.5% Yes Yes Yes 6,480,000 07/20/97
1057B 1,309,590.57 65.5% Yes Yes Yes 2,000,000 07/14/97
69 2635 5,430,120.04 68.6% Yes Yes No 7,910,000 04/01/98
71 6102541 5,165,572.82 68.9% Yes Yes No 7,500,000 11/25/97
72 6102532 3,710,615.92 39.1% Yes Yes Yes 9,500,000 10/23/97
73 1263 4,814,334.23 59.4% Yes Yes No 8,100,000 10/12/97
74 13 4,873,498.09 57.3% Yes Yes No 8,500,000 10/07/97
75 12 4,752,217.54 59.4% Yes Yes No 8,000,000 10/01/97
76 1921 3,395,326.84 31.7% Yes Yes Yes 10,700,000 01/30/98
77 1660 4,739,474.69 61.5% Yes Yes No 7,710,000 01/07/98
78 3218 4,534,051.57 68.2% Yes Yes No 6,650,000 05/28/98
82 940905374 0.00 0.0% Yes Yes No 7,600,000 06/20/97
79 6102708 3,887,494.61 58.5% Yes Yes No 6,650,000 01/23/98
80 1859 4,484,041.83 59.8% Yes Yes No 7,500,000 11/19/97
81 1523 3,732,621.33 43.8% Yes Yes No 8,525,000 12/08/97
83 6102902 2,081,282.55 26.5% Yes Yes Yes 7,850,000 04/13/98
84 3642 4,383,931.70 55.5% Yes Yes No 7,900,000 09/12/97
87 6102709 3,544,629.52 59.1% Yes Yes No 6,000,000 12/04/97
88 1152 4,461,968.05 66.9% Yes Yes No 6,670,000 12/02/97
89 6102776 3,583,829.89 57.3% Yes Yes No 6,250,000 01/22/98
90 15 4,028,484.12 66.0% Yes Yes No 6,100,000 07/29/97
91 6102499 3,880,420.52 68.7% Yes Yes No 5,650,000 10/30/97
92 2212 2,793,985.02 41.3% Yes Yes Yes 6,760,000 02/25/98
93 2910 3,795,057.20 66.6% Yes Yes No 5,700,000 04/03/98
85 23 3,776,627.34 45.5% Yes Yes No 8,300,000 11/20/97
94 6102765 3,726,722.33 69.0% Yes Yes No 5,400,000 02/05/98
95 25 3,627,453.27 59.5% Yes Yes No 6,100,000 11/18/97
97 11 3,498,159.94 55.1% Yes Yes No 6,350,000 09/17/97
96 1704 3,636,227.42 64.6% Yes Yes No 5,625,000 03/23/98
98 1013 3,654,962.16 67.9% Yes Yes No 5,385,000 08/14/97
99 2307 2,838,552.73 45.8% Yes Yes No 6,200,000 02/10/98
100 14 3,349,653.34 57.8% Yes Yes No 5,800,000 10/01/97
101 6102769 3,646,463.06 63.1% Yes Yes No 5,775,000 03/03/98
102 37 3,513,632.39 54.9% Yes Yes No 6,400,000 11/10/97
103 2096 3,181,007.57 59.5% Yes Yes No 5,350,000 02/01/98
106 1144 0.00 0.0% Yes Yes Yes 5,500,000 10/08/97
104 1666 2,377,902.93 44.9% Yes Yes No 5,300,000 08/28/97
105 6102707 3,126,761.77 56.9% Yes Yes No 5,500,000 01/20/98
107 6102974 3,033,131.71 61.6% Yes Yes No 4,920,000 05/06/98
108 36 3,071,420.49 55.8% Yes Yes No 5,500,000 01/07/98
109 6 3,397,949.76 61.8% Yes Yes No 5,500,000 06/17/97
110 6102542 2,830,565.77 57.3% Yes Yes No 4,940,000 10/21/97
111 1108 3,254,827.54 65.1% Yes Yes No 5,000,000 08/09/97
112 6102875 2,866,758.19 59.7% Yes Yes No 4,800,000 01/11/98
113 6102705 3,099,242.85 68.9% Yes Yes No 4,500,000 02/20/98
116 1022 2,433,753.51 51.8% Yes Yes No 4,700,000 07/25/97
114 6102969 3,004,139.22 62.6% Yes Yes No 4,800,000 05/11/98
115 1694 3,052,301.24 64.9% Yes Yes No 4,700,000 04/09/98
117 1534 2,798,280.96 59.5% Yes Yes No 4,700,000 03/10/98
118 6102637 2,777,362.48 55.5% Yes Yes No 5,000,000 01/09/98
119 1088 2,745,974.22 41.5% Yes Yes No 6,610,000 02/10/98
120 28 2,464,605.24 44.8% Yes Yes No 5,500,000 12/15/97
121 6102657 2,874,322.52 61.5% Yes Yes No 4,670,000 01/28/98
122 2311 2,941,197.17 63.6% Yes Yes No 4,625,000 02/03/98
123 1275 2,681,741.93 58.9% Yes Yes No 4,550,000 09/05/97
124 1890 2,850,183.88 64.8% Yes Yes No 4,400,000 02/24/98
125 20 2,703,688.55 60.8% Yes Yes No 4,450,000 10/31/97
126 1403 2,027,410.81 33.8% Yes Yes No 6,000,000 11/07/97
127 1538 2,755,132.34 65.6% Yes Yes No 4,200,000 11/07/97
128 2027 2,744,184.84 66.9% Yes Yes No 4,100,000 03/09/98
129 1795 1,844,473.51 43.9% Yes Yes No 4,200,000 01/13/98
130 1089 1,865,504.53 41.9% Yes Yes No 4,450,000 10/28/97
131 19 2,473,456.02 61.8% Yes Yes No 4,000,000 08/12/97
132 1611 2,111,921.18 33.8% Yes Yes Yes 6,250,000 02/20/98
133 6102451 1,900,485.29 37.1% Yes Yes No 5,125,000 10/13/97
134 7608308 2,305,842.26 56.2% Yes Yes No 4,100,000 10/31/97
135 2693 2,369,533.85 52.1% Yes Yes No 4,550,000 05/20/98
136 1863 2,597,501.47 60.4% Yes Yes No 4,300,000 03/01/98
137 2558 2,124,635.91 44.7% Yes Yes No 4,750,000 01/15/98
138 1599 2,409,236.86 53.5% Yes Yes No 4,500,000 12/31/97
139 1929 2,303,116.42 56.2% Yes Yes No 4,100,000 12/12/97
142 1442 0.00 0.0% Yes Yes No 4,650,000 09/29/97
140 6102706 0.00 0.0% Yes Yes No 3,900,000 01/15/98
143 1512 1,841,576.86 42.3% Yes Yes No 4,350,000 12/03/97
141 6102891 2,463,751.03 64.8% Yes Yes No 3,800,000 03/10/98
144 7608309 2,116,058.04 55.7% Yes Yes No 3,800,000 10/21/97
145 1535 2,248,566.22 59.2% Yes Yes No 3,800,000 12/12/97
146 35 2,457,556.54 70.2% Yes Yes No 3,500,000 02/10/98
147 1975 2,229,701.25 59.5% Yes Yes No 3,750,000 01/20/98
148 2393 1,887,484.12 35.6% Yes Yes No 5,300,000 03/02/98
149 1407 2,219,691.99 49.3% Yes Yes No 4,500,000 10/23/97
150 2238 2,194,303.32 59.3% Yes Yes No 3,700,000 03/18/98
151 6102803 2,213,044.40 54.0% Yes Yes No 4,100,000 02/13/98
152 6102972 2,133,757.20 60.1% Yes Yes No 3,550,000 04/29/98
153 1607 2,058,685.79 52.1% Yes Yes No 3,950,000 12/12/97
154 5 2,084,891.22 52.1% Yes Yes No 4,000,000 03/01/97
155 6102460 2,214,820.71 67.1% Yes Yes No 3,300,000 10/07/97
157 1781 1,017,690.16 30.2% Yes Yes No 3,370,000 Various
1781A 451,467.89 30.2% Yes Yes No 1,495,000 12/30/97
1781B 566,222.27 30.2% Yes Yes No 1,875,000 12/30/97
156 7608315 1,883,590.39 49.1% Yes Yes No 3,835,000 11/04/97
158 17 2,223,575.05 61.8% Yes Yes No 3,600,000 09/05/97
159 22 2,086,188.13 54.9% Yes Yes No 3,800,000 08/13/97
160 1440 1,539,995.25 27.0% Yes Yes No 5,707,000 10/06/97
161 6102629 868,032.70 27.3% Yes Yes No 3,175,000 01/20/98
162 1448 984,512.35 29.0% Yes Yes No 3,400,000 08/05/97
163 6102834 0.00 0.0% Yes Yes No 7,650,000 03/13/98
164 1321 0.00 0.0% Yes Yes No 3,350,000 01/06/98
165 3638 953,626.48 34.7% Yes Yes No 2,750,000 12/04/97
167 3633 1,890,559.75 59.1% Yes Yes No 3,200,000 12/01/97
166 1246 2,021,113.93 63.2% Yes Yes No 3,200,000 10/08/97
168 2917 1,811,606.55 60.4% Yes Yes No 3,000,000 06/02/98
169 6102648 2,007,915.55 68.8% Yes Yes No 2,920,000 01/23/98
170 1912 1,465,544.17 47.7% Yes Yes No 3,075,000 01/28/98
171 1891 1,820,147.02 59.1% Yes Yes No 3,080,000 12/09/97
172 6102443 1,564,426.25 50.5% Yes Yes No 3,100,000 09/20/97
173 940906544 1,770,787.57 49.2% Yes Yes No 3,600,000 02/17/97
174 1504 1,942,423.11 62.7% Yes Yes No 3,100,000 12/01/97
1,830,848.64 54.7% Yes Yes No 3,350,000 07/21/97
178 0998 918,278.66 54.7% Yes Yes No 1,680,000 07/21/97
179 0999 912,569.99 54.6% Yes Yes No 1,670,000 07/21/97
175 1810 1,514,931.43 47.7% Yes Yes No 3,175,000 12/31/97
176 6102988 1,745,557.11 59.2% Yes Yes No 2,950,000 05/15/98
177 3182 1,890,087.05 60.0% Yes Yes No 3,150,000 06/02/98
180 2463 1,698,634.89 60.7% Yes Yes No 2,800,000 02/19/98
181 1641 1,689,571.25 62.8% Yes Yes No 2,690,000 11/20/97
182 6102932 1,401,319.75 44.5% Yes Yes No 3,150,000 04/29/98
183 1555 1,730,997.79 59.9% Yes Yes No 2,890,000 12/31/97
184 1090 1,832,203.67 65.2% Yes Yes No 2,810,000 08/18/97
185 940906539 1,616,807.73 49.7% Yes Yes No 3,250,000 02/26/97
186 2660 0.00 0.0% Yes Yes No 2,565,000 04/28/98
189 1130 1,514,620.70 55.9% Yes Yes No 2,710,000 09/19/97
188 2043 1,741,362.16 63.3% Yes Yes No 2,750,000 02/18/98
187 2392 1,261,728.18 49.9% Yes Yes No 2,530,000 04/02/98
190 1988 731,899.64 27.4% Yes Yes No 2,675,000 02/11/98
191 1573 1,248,956.79 44.8% Yes Yes No 2,790,000 12/11/97
192 1886 0.00 0.0% Yes Yes No 2,900,000 01/10/98
193 1075 1,585,382.81 57.7% Yes Yes No 2,750,000 10/01/97
196 940906545 1,509,019.00 47.2% Yes Yes No 3,200,000 03/04/97
194 1747 1,554,906.67 59.8% Yes Yes No 2,600,000 03/01/98
195 1041 1,209,745.38 46.5% Yes Yes No 2,600,000 08/06/97
197 7608318 0.00 0.0% Yes Yes Yes 3,000,000 11/19/97
198 6102904 1,404,882.43 57.9% Yes Yes No 2,425,000 03/31/98
199 1239 1,570,795.19 53.6% Yes Yes No 2,930,000 10/10/97
200 1015 1,117,150.20 33.9% Yes Yes No 3,300,000 02/03/98
201 1720 1,418,569.47 43.6% Yes Yes No 3,250,000 12/11/97
202 1086 1,227,441.34 47.2% Yes Yes No 2,600,000 08/21/97
203 2168 0.00 0.0% Yes Yes No 2,700,000 02/02/98
205 1060 1,200,905.49 51.7% Yes Yes No 2,325,000 08/28/97
204 2055 1,369,214.41 59.5% Yes Yes No 2,300,000 03/02/98
206 6102970 1,477,111.61 61.5% Yes Yes No 2,400,000 04/07/98
207 6102901 709,915.73 26.3% Yes Yes Yes 2,700,000 04/13/98
208 6102903 59,074.90 2.9% Yes Yes No 2,065,000 04/17/98
209 1779 1,294,370.05 58.8% Yes Yes No 2,200,000 12/11/97
210 1005 1,157,482.86 46.3% Yes Yes No 2,500,000 06/10/97
211 1811 1,279,214.15 49.9% Yes Yes No 2,565,000 12/31/97
212 6102656 1,385,953.43 63.4% Yes Yes No 2,185,000 01/22/98
213 4 1,345,724.15 51.8% Yes Yes No 2,600,000 05/13/97
214 2060 0.00 0.0% Yes Yes No 2,200,000 02/21/98
215 940907039 1,077,262.36 47.6% Yes Yes No 2,265,000 05/20/97
216 1852 1,295,959.34 64.2% Yes Yes No 2,020,000 12/10/97
217 2665 1,196,401.21 63.0% Yes Yes No 1,900,000 03/25/98
218 940906528 1,154,863.03 49.1% Yes Yes No 2,350,000 02/19/97
219 1432 1,271,920.83 63.6% Yes Yes No 2,000,000 03/07/98
221 1102 0.00 0.0% Yes Yes No 2,220,000 09/24/97
220 1001 978,396.51 42.5% Yes Yes No 2,300,000 04/16/98
222 2815 1,122,721.39 59.1% Yes Yes No 1,900,000 05/28/98
223 2056 826,509.28 43.5% Yes Yes Yes 1,900,000 02/13/98
224 6102896 1,209,443.11 44.0% Yes Yes No 2,750,000 02/27/98
225 6102900 1,124,116.08 48.5% Yes Yes No 2,320,000 04/02/98
226 6102943 1,096,521.91 60.9% Yes Yes No 1,800,000 04/21/98
227 1435 1,219,111.80 64.8% Yes Yes No 1,880,000 10/22/97
228 7608319 0.00 0.0% Yes Yes Yes 2,300,000 10/30/97
229 7608320 0.00 0.0% Yes Yes Yes 3,500,000 10/28/97
230 2456 1,024,237.06 58.5% Yes Yes No 1,750,000 05/21/98
231 6102840 1,122,799.65 46.3% Yes Yes No 2,425,000 03/18/98
232 2133 1,032,990.48 57.4% Yes Yes No 1,800,000 03/03/98
233 1580 950,439.95 52.8% Yes Yes No 1,800,000 11/12/97
234 940907278 1,053,768.15 39.0% Yes Yes No 2,700,000 07/18/97
236 1320 516,337.79 30.4% Yes Yes No 1,700,000 11/18/97
235 1855 1,094,136.18 56.7% Yes Yes No 1,930,000 04/23/98
237 1647 829,509.89 48.8% Yes Yes No 1,700,000 12/12/97
238 1030 1,200,000.00 11.3% Yes Yes No 10,600,000 10/21/97
239 6102770 897,088.44 52.8% Yes Yes No 1,700,000 12/17/97
240 6102779 809,969.88 40.5% Yes Yes No 2,000,000 02/15/98
241 1288 948,075.28 49.9% Yes Yes No 1,900,000 10/15/97
242 2756 867,659.90 54.6% Yes Yes No 1,590,000 04/09/98
243 1145 966,173.55 56.8% Yes Yes No 1,700,000 09/29/97
244 6102540 906,309.01 63.8% Yes Yes No 1,420,000 12/01/97
245 1949 688,429.18 45.3% Yes Yes Yes 1,520,000 03/11/98
246 2017 711,920.37 48.8% Yes Yes No 1,460,000 03/04/98
247 1854 825,721.37 58.8% Yes Yes No 1,405,000 01/23/98
248 6102531 0.00 0.0% Yes Yes No 2,000,000 10/31/97
249 1073 637,213.45 28.3% Yes Yes No 2,250,000 11/05/97
250 940906529 769,906.97 49.7% Yes Yes No 1,550,000 02/28/97
251 2200 0.00 0.0% Yes Yes No 1,300,000 01/30/98
252 2115 353,284.63 23.6% Yes Yes No 1,500,000 03/02/98
253 2405 636,613.04 47.2% Yes Yes No 1,350,000 02/24/98
254 1851 741,632.37 58.6% Yes Yes No 1,265,000 12/12/97
255 1129 698,625.78 55.9% Yes Yes No 1,250,000 09/22/97
256 1991 713,063.04 61.5% Yes Yes No 1,160,000 12/17/97
257 940906527 592,828.98 53.9% Yes Yes No 1,100,000 03/06/97
86 38 549,406.86 45.8% Yes Yes No 1,200,000 11/20/97
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
CONTROL LOAN CURRENT
NUMBER NUMBER LTV RATIO YEAR BUILT YEAR RENOVATED OWNERSHIP INTEREST NET RENTABLE SF / UNITS
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 6102551 66.2% Various Fee 1,070,795
6102551A 66.2% 1984 Fee 67,945
6102551B 66.2% 1984 Fee 52,607
6102551C 66.2% 1986 Fee 137,581
6102551D 66.2% 1985 Fee 73,644
6102551E 66.2% 1983 Fee 44,114
6102551F 66.2% 1984 Fee 69,011
6102551G 66.2% 1979-1986 Fee 257,505
6102551H 66.2% 1984 Fee 82,146
6102551I 66.2% 1971, 1974 Fee 286,242
2 6102992 74.8% 1988 Fee 178,815
3 24 77.5% Various Various Fee 824,619
24A 78.2% 1970 1984 Fee 185,046
24B 78.2% 1900 Fee 86,680
24C 78.2% 1987 Fee 73,416
24D 78.1% 1986 Fee 68,671
24E 78.1% 1962 1972 Fee 171,471
24F 78.1% 1984 Fee 64,038
24G 78.1% 1920 Fee 32,800
24H 78.1% 1931 Fee 26,069
24I 78.1% 1983 1993 Fee 7,425
24J 78.0% 1947 1989 Fee 9,600
24K 78.1% 1960 Fee 17,600
24L 78.1% 1963 Fee 13,886
24M 78.1% 1949 Fee 23,860
24N 78.0% 1965 Fee 3,465
24O 78.0% 1940 Fee 21,840
24P 83.2% N/A Fee 6,572
24Q 67.9% N/A Fee 2,400
24R 39.3% 1945 Fee 9,780
4 1548 69.1% 1986 1996 Fee 242,032
5 6102628 79.7% 1976 1997 Fee 220
72.9% Various Various Fee 561
6 6102944 74.9% 1969, 1971 1987, 1998 Fee 207
7 6102945 68.2% 1973 1982 Fee 130
8 6102946 74.9% 1960, 1966 1984-1987, 1992-1994 Fee 121
9 6102947 74.9% 1972-1973 1977 Fee 103
11 2555 79.1% 1974 Fee 486
12 6103017 94.8% 1994 Fee 135,351
14 10 61.2% 1985 Fee 354,167
13 1907 68.9% Various Fee 371,516
1907A 68.9% 1982 Fee 69,566
1907B 68.9% 1987 Fee 28,374
1907C 68.9% 1987 Fee 36,277
1907D 68.9% 1985 Fee 94,007
1907E 68.9% 1984 Fee 73,915
1907F 68.9% 1983 Fee 21,282
1907G 68.9% 1983 Fee 48,095
15 2534 79.9% 1987 Fee & Leasehold 282
16 1905 72.0% Various Fee 322,877
1905A 72.0% 1982 Fee 51,527
1905B 72.0% 1986 Fee 37,796
1905C 72.0% 1970 Fee 49,860
1905D 72.0% 1984 Fee 45,632
1905E 72.0% 1986 Fee 23,855
1905F 72.0% 1958 1994 Fee 12,300
1905G 72.0% 1984 Fee 35,661
1905H 72.0% 1985 Fee 27,281
1905I 72.0% 1977 Fee 38,965
17 2 67.5% 1914 1997 Fee 172,359
18 3423 62.3% 1975 Fee 599
19 1376 90.2% 1979 1997 Fee 121,924
20 1908 71.7% Various Various Fee 353,522
1908A 71.7% 1982 Fee 74,688
1908B 71.7% 1979 1997 Fee 121,924
1908C 71.7% 1985 Fee 117,832
1908D 71.7% 1983 Fee 39,078
21 18 74.6% 1968 1997 Fee 111,133
22 1556 70.1% 1986 Fee 163,182
23 1 73.0% 1980 Fee 150,612
24 1210 74.3% 1981 Fee 173,854
25 9 74.2% 1994 Leasehold 210,108
26 2052 78.8% 1997 Fee 240
27 6102530 71.3% 1988-1990 Fee 136,626
28 6102876 79.9% 1965 1995-1998 Fee 344
29 2636 68.2% 1976 1993 Fee 215
30 2394 77.9% 1989 Fee 208,277
31 6102859 79.7% 1970, 1975 Fee 389
32 1885 74.3% 1925 1996 Fee 75,282
33 6102580 79.9% 1984, 1985 1996 Fee 178,247
34 2358 74.0% 1967 1998 Fee 337
35 1076 73.9% 1990 Fee 104,046
36 6102991 70.7% 1970-1974 Fee 297,103
37 3641 78.7% 1997 Fee 82,392
38 6102452 63.5% 1976 Fee 232
41 3083 76.5% 1984 Fee 220
60.8% Various Fee 256
39 2498 73.2% 1985 Fee 110
40 2499 50.3% 1986 Fee 146
73.6% Various Fee 192
42 1224 73.0% 1974 Fee 105
43 1269 74.5% 1993 Fee 87
44 6102663 79.7% 1996-1997 Fee 132
45 34 78.9% 1952 Fee 224
46 6102762 73.8% 1989 Fee 77,664
47 16 76.0% 1981 Fee 118,849
48 6102442 73.9% 1974, 1987 Fee 190,957
49 1776 78.2% 1992 Fee 179,741
50 6102461 74.6% 1997 Fee 45,668
51 3645 68.7% 1989 Fee 208
52 1922 66.7% 1982 Fee 99,141
53 7608323 64.0% 1975 1990's Fee 201
55 1755 66.8% 1993 Fee 104,403
54 6102880 77.8% 1990 Fee 288
56 7 69.7% Various Various Fee 207,864
7A 69.7% 1948 1986 Fee 27,850
7B 69.7% 1948 1986 Fee 22,156
7C 69.7% 1911 1993 Fee 63,046
7D 69.7% 1960 1994 Fee 94,812
57 6102950 70.3% 1960, 1963, 1972 Fee 198
58 2076 65.8% 1989 Fee 120
59 6102533 70.4% 1969 1993-1998 Fee 384
63.4% Various Fee 72,235
61 940906323 60.7% 1986 Fee 31,951
62 940906324 65.6% 1985 Fee 40,284
60 3 67.7% 1972 1995 Fee 211,139
63 3632 78.1% 1967 1995 Fee 136
64 1541 79.8% 1992 Fee 103,720
65 1585 79.3% 1990 Fee 143
66 6102764 74.8% 1976 1995, 1997 Fee 101,953
67 1782 74.5% 1991 Fee 158,127
68 1116 77.3% 1982 Fee 103,514
70 1057 73.5% Various Fee 165,469
1057A 73.5% 1985 Fee 139,252
1057B 73.5% 1982 Fee 26,217
69 2635 79.2% 1989 Fee 149
71 6102541 79.5% 1986 Fee 236
72 6102532 62.7% 1980 1995 Fee 89,966
73 1263 73.5% 1966 Fee 131,113
74 13 68.9% 1996 Leasehold 76
75 12 71.4% 1996 Fee 78
76 1921 51.2% 1984 1997 Fee 250
77 1660 71.1% 1981 Fee 113,751
78 3218 79.6% 1988 Fee 123
82 940905374 67.9% 1994 Fee 110,668
79 6102708 78.8% 1989 Fee 120
80 1859 69.1% 1987 Fee 26,120
81 1523 60.5% 1951 1989 Fee & Leasehold 175,214
83 6102902 63.6% 1973 1994 Fee 133,000
84 3642 63.2% 1972 Fee 367,485
87 6102709 79.8% 1989 Fee 120
88 1152 72.0% 1991 Fee 160,561
89 6102776 72.7% 1989, 1990 Fee 47,064
90 15 73.4% 1972 1985 Fee 152,875
91 6102499 79.3% 1989 Fee 73,000
92 2212 66.0% 1971 1993 Fee 169
93 2910 77.0% 1980 Fee 165
85 23 52.3% 1965 1994 Fee 318
94 6102765 79.3% 1972 1995-1997 Fee 159
95 25 70.1% 1983 1996, 1997 Fee 43,449
97 11 66.2% 1996 Leasehold 78
96 1704 74.8% 1997 Fee 35,091
98 1013 77.4% 1985 Fee 168
99 2307 67.1% 1991 Fee 211,649
100 14 69.4% 1972 1997 Fee 152
101 6102769 69.0% 1985 1994 Fee 116
102 37 62.3% 1964 Fee 205,086
103 2096 74.5% 1917 1990 Fee 39,508
106 1144 71.7% 1989 Fee 65,928
104 1666 74.6% 1994 Fee 44,864
105 6102707 71.8% 1921 1998 Fee 14,000
107 6102974 77.2% 1967 1988 Fee 121
108 36 68.9% 1961 1988 Fee 24,551
109 6 68.7% 1994 Leasehold 296,437
110 6102542 76.1% 1985 1995 Fee 91,420
111 1108 74.0% 1983 Fee 114
112 6102875 74.8% 1978 Fee 36,772
113 6102705 79.8% 1987, 1993 Fee 103
116 1022 74.2% 1974 Fee 207
114 6102969 72.9% 1987 Fee 25,080
115 1694 74.3% 1970 1993 Fee 40,374
117 1534 74.1% 1989 Fee 99,086
118 6102637 69.7% 1987 Fee 47,932
119 1088 52.7% 1975 Fee 168,342
120 28 62.9% 1997 Fee 51,420
121 6102657 73.6% 1990 Fee 38,461
122 2311 73.3% 1989 Fee 52,320
123 1275 72.6% 1974 Fee 101,645
124 1890 74.8% 1990 Fee 53,040
125 20 73.6% 1997 Fee 28,860
126 1403 53.8% 1991 Fee 106,080
127 1538 75.2% 1976 Fee 137
128 2027 76.8% 1989 Fee 33,580
129 1795 74.7% 1986 1997 Fee 36,830
130 1089 70.4% 1988 Fee 84
131 19 77.1% 1962 1987 Fee 32,209
132 1611 49.2% 1920 1998 Fee 69,554
133 6102451 59.0% 1996, 1997 Fee 32,231
134 7608308 73.7% 1951 1986 Fee 79,651
135 2693 65.9% 1997 Fee 66,800
136 1863 69.6% 1993 Fee 51,620
137 2558 63.0% 1979 Fee 66,953
138 1599 66.2% 1978 1995 Fee 156
139 1929 70.3% 1980 1989 Fee 28,516
142 1442 61.1% 1985 Fee 35,141
140 6102706 73.4% 1997 Fee 100,080
143 1512 65.2% 1997 Fee 23,500
141 6102891 74.9% 1995, 1996 Fee 50,665
144 7608309 74.6% 1987 Fee 65
145 1535 74.5% 1968 Fee 43,110
146 35 79.8% 1964 Fee 86
147 1975 74.4% 1988 Fee 38,573
148 2393 52.6% 1989 Fee 106,118
149 1407 61.3% 1985 Fee 56,915
150 2238 74.5% 1996 Fee 46,000
151 6102803 66.9% 1967 1997 Fee 111
152 6102972 76.0% 1995 Fee 33,450
153 1607 65.3% 1990 Fee 45,515
154 5 64.1% 1995 Fee 91
155 6102460 77.5% 1971 Fee 82
157 1781 73.9% Various Various Fee 329
1781A 73.9% 1976 1981 Fee 111
1781B 73.9% 1970 1983 Fee 218
156 7608315 64.9% 1984 Fee 86,439
158 17 69.1% 1980 Fee 62,998
159 22 64.7% 1972 1995 Fee 82
160 1440 42.5% 1968 Fee 251
161 6102629 75.2% 1976 1997 Fee 73,120
162 1448 69.7% 1988 Fee 26,000
163 6102834 30.6% 1972 Fee 209
164 1321 69.5% 1946 1997 Fee 31,743
165 3638 84.4% 1997 Fee 21,180
167 3633 72.1% 1960 1977 Fee 86
166 1246 72.1% 1995 Fee 22,100
168 2917 76.6% 1965 Fee 97
169 6102648 78.5% 1963 Fee 58
170 1912 74.6% 1997 Fee 10,500
171 1891 74.1% 1969 1997 Fee 45,411
172 6102443 73.2% 1986, 1989 Fee 722
173 940906544 63.0% 1993 Fee 52,207
174 1504 72.2% 1989 Fee 29,025
66.3% Various Various Fee 122
178 0998 66.3% 1973 1994 Fee 62
179 0999 66.3% 1979 Fee 60
175 1810 69.9% 1973 1993 Fee 99
176 6102988 74.8% 1989 Fee 62,884
177 3182 69.8% 1935 Fee 58
180 2463 76.6% 1996 Fee 40
181 1641 78.8% 1988 Fee 26,176
182 6102932 66.5% 1993 Fee 33,525
183 1555 72.4% 1963 1995 Fee 100,670
184 1090 74.2% 1990 Fee 29,795
185 940906539 63.8% 1995 Fee 43,839
186 2660 79.7% 1965 Fee 120
189 1130 74.3% 1997 Fee 25,400
188 2043 73.4% 1990 Fee 176
187 2392 79.9% 1975 Fee 100
190 1988 74.4% 1997 Fee 48,825
191 1573 71.2% 1976 Fee 104
192 1886 67.9% 1986 Leasehold 48,200
193 1075 70.8% 1989 Fee 22,587
196 940906545 60.4% 1995 Fee 52,373
194 1747 74.7% 1989 Leasehold 41,116
195 1041 74.6% 1961 1997 Fee 35,155
197 7608318 63.8% 1976 Fee 39,170
198 6102904 75.2% 1989 Fee 30
199 1239 61.1% 1988 Fee 28,476
200 1015 54.2% 1979 1997 Fee 132
201 1720 55.0% 1977 Fee 102
202 1086 68.4% 1984 Fee 69,178
203 2168 65.5% 1997 Fee 39,000
205 1060 73.5% 1974 Fee 127
204 2055 74.6% 1970 1993 Fee 84
206 6102970 70.8% 1928 Various Fee 24
207 6102901 62.9% 1969 1996 Fee 34,680
208 6102903 78.6% 1998 Fee 10,106
209 1779 73.5% 1964 1994 Fee 55,164
210 1005 63.9% 1969 1983 Fee 19,779
211 1811 62.2% 1973 Fee 98
212 6102656 73.0% 1981 1997 Fee 73
213 4 60.9% 1965 Fee 67,271
214 2060 70.4% 1997 Fee/Leasehold 14,448
215 940907039 67.0% 1979 Leasehold 45,623
216 1852 74.3% 1988 Fee 15,070
217 2665 78.8% 1967 Fee 42,842
218 940906528 63.0% 1990 Fee 35,264
219 1432 73.3% 1997 Fee 16,098
221 1102 64.9% 1997 Fee 26,720
220 1001 62.8% 1973 Fee 113
222 2815 74.9% 1970 Fee 96
223 2056 74.6% 1965 1997 Fee 71,825
224 6102896 50.9% 1982 Fee 37,149
225 6102900 60.3% 1952 1987, 1997 Fee 10,058
226 6102943 77.7% 1986 Fee 56
227 1435 74.1% 1997 Fee 11,447
228 7608319 59.7% 1988 Fee 22,590
229 7608320 37.9% 1981 1996 Fee 22,500
230 2456 74.2% 1966 1996 Fee 64
231 6102840 53.5% 1982 Fee 81
232 2133 72.0% 1988 Fee 24,882
233 1580 71.6% 1985 Fee 20,889
234 940907278 47.2% 1979 Fee 68,713
236 1320 74.1% 1996 Fee 9,956
235 1855 65.8% 1988 1993 Fee 28,800
237 1647 71.3% 1987 Fee 37,000
238 1030 11.3% 1908 1940 Fee 73
239 6102770 70.5% 1964 1995-1997 Fee 74
240 6102779 59.7% 1974 Fee 49,837
241 1288 62.7% 1989 Fee 23,000
242 2756 74.7% 1997 Fee 6,500
243 1145 69.3% 1980 Fee 30,930
244 6102540 80.4% 1977 Fee 72
245 1949 72.1% 1991 Fee 5,028
246 2017 71.4% 1997 Fee 7,488
247 1854 73.7% 1986 Fee 27,900
248 6102531 49.7% 1967 Fee 90
249 1073 44.1% 1974 Fee 57,794
250 940906529 63.7% 1989 Fee 35,040
251 2200 74.3% 1910 1971 Fee 167,000
252 2115 63.0% 1963 Fee 46
253 2405 69.6% 1995 Fee 5,429
254 1851 73.9% 1990 Fee 12,000
255 1129 74.3% 1995 Fee 12,300
256 1991 76.2% 1968 Fee 54
257 940906527 69.1% 1990 Fee 35,040
86 38 52.6% 1965 1994 Fee 46
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LARGEST TENANT
CONTROL LOAN LARGEST TENANT SF AS A % OF PHYSICAL
NUMBER NUMBER LARGEST TENANT NAME SF TOTAL OCCUPANCY %
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 6102551 Various Various Various Various
6102551A Pooled Source, Inc. 8,120 12.0% 79.4%
6102551B Moore Business Forms, Inc. 41,541 79.0% 79.0%
6102551C TM Century, Inc. 46,645 33.9% 93.4%
6102551D ABB Service. Inc. 11,756 16.0% 45.8%
6102551E Sabredata, Inc. 11,772 26.7% 81.3%
6102551F Control Manufacturing, Inc. 20,610 29.9% 82.9%
6102551G PlasmaQuest, Inc. 29,131 11.3% 85.9%
6102551H Cam-Tech Manufacturing, Inc. 10,089 12.3% 100.0%
6102551I Federal Express Corporation 39,990 14.0% 76.8%
2 6102992 AT&T 168,612 94.3% 99.5%
3 24 Various Various Various Various
24A Kohl's 81,525 44.1% 94.1%
24B Cooper, Perskie, April, Nied 31,118 35.9% 99.0%
24C Kallister, Westmoreland 11,421 15.6% 73.3%
24D Creative Schoolhouse, Inc. 10,123 14.7% 82.0%
24E State of Texas 26,584 15.5% 35.0%
24F Shiner, Moseley, & Assoc. 8,567 13.4% 93.7%
24G Concentra Health Services 16,400 50.0% 50.0%
24H Rite Aid 0f NJ 13,230 50.7% 51.0%
24I Pizza Hut 3,100 41.8% 100.0%
24J Franca Corporation 9,600 100.0% 100.0%
24K New Jersey Bell Telephone Co. 17,600 100.0% 100.0%
24L Meridian Health Realty Corp. 13,886 100.0% 100.0%
24M New Jersey Bell Telephone Co. 23,860 100.0% 100.0%
24N New Jersey Bell Telephone Co. 3,465 100.0% 100.0%
24O Bell Atlantic 21,840 100.0% 100.0%
24P Vista Bancorp 6,572 100.0% 100.0%
24Q Kentucky Fried Chicken 2,400 100.0% 100.0%
24R Anarik Enterprises, Inc. 9,780 100.0% 100.0%
4 1548 FirstPlus Financial Group, Inc. 242,032 100.0% 100.0%
5 6102628 98.6%
Various
6 6102944 71.4%
7 6102945 65.1%
8 6102946 55.2%
9 6102947 54.1%
11 2555 96.7%
12 6103017 Home Depot 135,351 100.0% 100.0%
14 10 Sears 69,400 19.6% 85.6%
13 1907 Various Various Various Various
1907A Entex Information Services 10,304 14.8% 97.3%
1907B Players Billards 6,170 21.7% 100.0%
1907C Bank One 10,838 29.9% 96.3%
1907D Health Care Partners 37,313 39.7% 94.8%
1907E Bizmart/Office Max 15,930 21.6% 100.0%
1907F Floors and Windows 4,041 19.0% 88.2%
1907G Con-Way Transportation 28,385 59.0% 100.0%
15 2534 95.4%
16 1905 Various Various Various Various
1905A Professional Court Reporting School 25,079 48.7% 89.2%
1905B Fort Worth Star-Telegram 17,800 47.1% 94.9%
1905C Vingcard 49,860 100.0% 100.0%
1905D Blue Cross & Blue Shield 6,479 14.2% 85.6%
1905E TownBank 5,603 23.5% 100.0%
1905F Wizards 12,300 100.0% 100.0%
1905G Texas Dept. of Human Services 12,215 34.3% 80.6%
1905H Centex Title Company 5,806 21.3% 94.0%
1905I High Fidelity, Inc. 7,820 20.1% 100.0%
17 2 Health Systems Consultants 43,593 25.3% 98.0%
18 3423 90.7%
19 1376 General Services Adminstration/INS 121,924 100.0% 100.0%
20 1908 Various Various Various Various
1908A Computer Resources 6,020 8.1% 86.6%
1908B General Services Adminstration/INS 121,924 100.0% 100.0%
1908C Richland College 18,192 15.4% 84.6%
1908D Medical Team Care 5,129 13.1% 96.6%
21 18 Circuit City 43,163 38.8% 94.0%
22 1556 Plummers 19,540 12.0% 94.5%
23 1 Office Max 41,562 27.6% 96.0%
24 1210 K-Mart 84,254 48.5% 95.7%
25 9 Target 90,000 42.8% 98.5%
26 2052 92.5%
27 6102530 A&P 52,816 38.7% 97.1%
28 6102876 94.0%
29 2636 94.9%
30 2394 K-Mart 91,723 44.0% 98.3%
31 6102859 93.8%
32 1885 Modern Continental Enterprises 35,280 46.9% 96.0%
33 6102580 Winn Dixie 42,400 23.8% 96.0%
34 2358 93.5%
35 1076 Ross Stores 28,875 27.8% 96.2%
36 6102991 Office Max, Inc. 96,097 32.3% 91.1%
37 3641 Circuit City (National Props., Inc.) 37,591 45.6% 100.0%
38 6102452 98.7%
41 3083 92.7%
Various
39 2498 74.5%
40 2499 84.9%
Various
42 1224 88.6%
43 1269 64.4%
44 6102663 90.2%
45 34 99.6%
46 6102762 Victoria Financial Corporation 24,762 31.9% 95.0%
47 16 PHH (HFS Mobility) 30,000 25.2% 92.0%
48 6102442 Payless 42,714 22.4% 89.0%
49 1776 Wal-Mart 90,576 50.4% 100.0%
50 6102461 Ralph's Supermarket 43,086 94.3% 98.9%
51 3645 98.1%
52 1922 Trudy's North Star 8,700 8.8% 95.8%
53 7608323 93.5%
55 1755 Marshalls 40,000 38.3% 87.0%
54 6102880 90.6%
56 7 Various Various Various Various
7A Delilah's Den of Philadelphia 11,000 39.5% 100.0%
7B The Spaghetti Warehouse 16,156 72.9% 100.0%
7C Assessment & Treatment Alternative 9,225 14.6% 100.0%
7D Busy Body 20,300 21.4% 100.0%
57 6102950 70.5%
58 2076 93.3%
59 6102533 84.6%
Seaman's Furniture Various Various Various
61 940906323 Seaman's Furniture 23,956 75.0% 75.0%
62 940906324 Seaman's Furniture 23,000 57.1% 100.0%
60 3 Caldor 88,680 42.0% 96.0%
63 3632 90.4%
64 1541 Abbott Labs 103,720 100.0% 100.0%
65 1585 100.0%
66 6102764 Dean Warren 24,759 24.3% 89.6%
67 1782 Case Logic, Inc. 158,127 1 100.0%
68 1116 Toys R Us 35,534 34.3% 98.0%
70 1057 Various Various Various Various
1057A Norwest Bank 45,063 32.4% 100.0%
1057B Northwestern Travel Services (7271) 26,217 100.0% 100.0%
69 2635 91.3%
71 6102541 92.0%
72 6102532 Realty One, Inc. 44,596 49.6% 92.4%
73 1263 Giant Food 22,344 17.0% 92.8%
74 13 83.6%
75 12 81.0%
76 1921 68.4%
77 1660 Utility Trailer 11,600 10.2% 98.1%
78 3218 95.1%
82 940905374 Builders Square 110,668 100.0% 100.0%
79 6102708 99.2%
80 1859 Pain Net, Inc. 7,863 30.1% 96.3%
81 1523 Powell Manufacturing 68,819 39.3% 100.0%
83 6102902 Paragon Industries, Inc. 133,000 100.0% 100.0%
84 3642 K-Mart 89,491 24.4% 93.1%
87 6102709 96.0%
88 1152 Endar Corp. 160,561 100.0% 100.0%
89 6102776 Contemporary Concepts 11,645 24.7% 100.0%
90 15 Haemonetics 48,000 31.4% 100.0%
91 6102499 Food Lion 29,000 39.7% 99.2%
92 2212 60.4%
93 2910 94.5%
85 23 98.9%
94 6102765 96.0%
95 25 Capital Group 43,449 100.0% 100.0%
97 11 76.2%
96 1704 Bedtime Mattress 6,272 17.9% 97.9%
98 1013 98.8%
99 2307 Owens Brockway 211,649 100.0% 100.0%
100 14 73.8%
101 6102769 98.3%
102 37 Pam International 132,086 64.4% 100.0%
103 2096 Consumer Credit Counseling 13,960 35.3% 100.0%
106 1144 Record Theatre 10,000 15.2% 95.8%
104 1666 Best Buy 44,864 100.0% 100.0%
105 6102707 New York Presbyterian Hospital 14,000 100.0% 100.0%
107 6102974 95.0%
108 36 CVS 9,180 37.4% 93.5%
109 6 Target 139,549 47.1% 100.0%
110 6102542 Hobby Lobby Store 40,040 43.8% 90.2%
111 1108 84.2%
112 6102875 Lassens Health Foods 5,528 15.0% 92.0%
113 6102705 97.0%
116 1022 89.9%
114 6102969 Collar & Leash 3,200 12.8% 90.5%
115 1694 BankOne 10,358 25.7% 94.7%
117 1534 Lite House 41,400 41.8% 86.5%
118 6102637 Pargo's (Shoney's Ground Lse) 6,097 12.7% 100.0%
119 1088 Big Lots 26,000 15.4% 99.4%
120 28 NFC 51,420 100.0% 100.0%
121 6102657 Fanatics Athletic Club 8,903 23.1% 98.7%
122 2311 Discovery Office Systems 30,868 59.0% 100.0%
123 1275 Ababa Bolts 16,512 16.2% 98.7%
124 1890 UPS 17,680 33.3% 98.5%
125 20 County Bank 28,860 100.0% 100.0%
126 1403 Builder's Square 106,080 100.0% 100.0%
127 1538 97.8%
128 2027 Outback Steakhouse 6,200 18.5% 96.4%
129 1795 Daly & Wolcott 16,753 45.5% 96.1%
130 1089 90.5%
131 19 Thrifty Drug 32,209 100.0% 100.0%
132 1611 Continental Cable 19,081 27.4% 96.0%
133 6102451 Kinko's Copies 8,500 26.4% 87.8%
134 7608308 Marc Glassman, Inc. 30,861 38.7% 93.7%
135 2693 Jack of Diamonds Auto Body 16,000 24.0% 100.0%
136 1863 Marc's 30,600 59.3% 94.2%
137 2558 Sampler Shoppe 40,533 60.5% 98.1%
138 1599 73.7%
139 1929 PC Club 8,171 28.7% 93.6%
142 1442 San Diego Blood Bank 3,999 11.4% 92.2%
140 6102706 Modern Publishing 100,080 100.0% 100.0%
143 1512 Stroud's 23,500 100.0% 100.0%
141 6102891 Arlun Floors 23,312 46.0% 100.0%
144 7608309 95.4%
145 1535 E & B Discount Marine 13,800 32.0% 95.1%
146 35 93.0%
147 1975 Sentry Insurance 8,419 21.8% 100.0%
148 2393 Sam's Club 106,118 100.0% 100.0%
149 1407 Northern Auto 5,400 9.5% 98.4%
150 2238 Levin Furniture Gallery 40,000 87.0% 100.0%
151 6102803 73.0%
152 6102972 Discount Flooring 13,555 40.5% 100.0%
153 1607 Best Buy 45,515 100.0% 100.0%
154 5 74.6%
155 6102460 98.8%
157 1781 Various
1781A 96.4%
1781B 86.2%
156 7608315 Big Lots Consolidated Stores 30,844 35.7% 95.2%
158 17 94.0%
159 22 76.5%
160 1440 96.8%
161 6102629 Food Lion 29,000 39.7% 98.6%
162 1448 Bally's Health & Fitness Club 26,000 100.0% 100.0%
163 6102834 87.6%
164 1321 Summit Mtg. 5,590 17.6% 95.5%
165 3638 RiteAid of PA, Inc. 11,180 52.8% 100.0%
167 3633 86.0%
166 1246 Paychex 7,800 35.3% 100.0%
168 2917 93.8%
169 6102648 96.6%
170 1912 Las Vegas Discount Golf & Tennis 6,000 57.1% 100.0%
171 1891 Westar Nutrition 45,411 100.0% 100.0%
172 6102443 99.5%
173 940906544 JumboSports, Inc. 52,207 100.0% 100.0%
174 1504 The Ohio Motorists (AAA) 8,270 28.5% 100.0%
Various
178 0998 98.4%
179 0999 95.0%
175 1810 86.9%
176 6102988 Across Town Movers 62,884 100.0% 100.0%
177 3182 100.0%
180 2463 100.0%
181 1641 Gotrocks Raw Bar & Grill 3,140 12.0% 94.9%
182 6102932 Colorport Paint 7,000 20.9% 100.0%
183 1555 Corning Building Corp. 30,000 29.8% 87.1%
184 1090 Regional Eye Center 5,561 18.7% 96.0%
185 940906539 JumboSports, Inc. 43,839 100.0% 100.0%
186 2660 97.5%
189 1130 Peter Piper Pizza 8,400 33.1% 80.3%
188 2043 97.7%
187 2392 97.0%
190 1988 Budnick Converting, Inc. 48,825 100.0% 100.0%
191 1573 79.8%
192 1886 General Cinema of New Mexico 32,200 66.8% 100.0%
193 1075 New Images Academy of Beauty 4,515 20.0% 100.0%
196 940906545 JumboSports, Inc. 52,373 100.0% 100.0%
194 1747 Tuesday Morning 4,800 11.7% 97.1%
195 1041 College of Dental and Medical Assistants 35,155 100.0% 100.0%
197 7608318 Revco Drug/CVS Pharmacy 10,500 26.8% 88.9%
198 6102904 100.0%
199 1239 EDS 13,570 47.7% 100.0%
200 1015 93.2%
201 1720 92.2%
202 1086 J.C. Penney 17,914 25.9% 88.3%
203 2168 Michaels of Oregon 39,000 100.0% 100.0%
205 1060 100.0%
204 2055 97.6%
206 6102970 100.0%
207 6102901 Bedrosians 34,680 100.0% 100.0%
208 6102903 Rite Aid of Pennsylvania, Inc. 10,106 100.0% 100.0%
209 1779 Capital Primary Care 4,000 7.3% 91.1%
210 1005 Frank's Nursery & Crafts 19,779 100.0% 100.0%
211 1811 82.7%
212 6102656 98.6%
213 4 Davis Vision 21,611 32.1% 92.0%
214 2060 Tenet Healthcare, Ltd 14,448 100.0% 100.0%
215 940907039 Rodolfo Martinez 4,437 9.7% 92.1%
216 1852 Pier 1 Imports 9,970 66.2% 100.0%
217 2665 Giant of Maryland, Inc. 42,842 100.0% 100.0%
218 940906528 JumboSports Inc. 35,264 100.0% 100.0%
219 1432 FHOC Suites 3,298 20.5% 100.0%
221 1102 DHL 26,720 100.0% 100.0%
220 1001 92.0%
222 2815 92.7%
223 2056 United Rotary Brush Plant 71,825 100.0% 100.0%
224 6102896 Stason Pharmaceutical, Inc. 37,149 100.0% 100.0%
225 6102900 Paschal Photography 1,630 16.2% 100.0%
226 6102943 100.0%
227 1435 Great American Capital 3,478 30.4% 100.0%
228 7608319 Realty One 10,250 45.4% 100.0%
229 7608320 Realty One 7,200 32.0% 100.0%
230 2456 93.8%
231 6102840 97.6%
232 2133 Internetwork Publishing 4,404 17.7% 94.5%
233 1580 Professional Center 7,000 33.5% 100.0%
234 940907278 Savings of America 24,694 35.9% 90.8%
236 1320 Kinko's 6,688 67.2% 100.0%
235 1855 Electronic Data Systems 28,800 100.0% 100.0%
237 1647 Featherstone Gymnastics 8,500 23.0% 100.0%
238 1030 98.6%
239 6102770 93.0%
240 6102779 El Mar Plastics 26,000 52.2% 100.0%
241 1288 West Coast Video 3,250 14.1% 85.9%
242 2756 Blockbuster Videos, Inc. 6,500 100.0% 100.0%
243 1145 National Golf 7,000 22.6% 96.1%
244 6102540 97.2%
245 1949 Fashion Dry Cleaners #7 1,750 34.8% 100.0%
246 2017 Hollywood Entertainment 7,488 100.0% 100.0%
247 1854 Diversified Inventory 11,500 41.2% 95.7%
248 6102531 100.0%
249 1073 Saltgrass, Inc. 6,457 11.2% 85.7%
250 940906529 JumboSports, Inc. 35,040 100.0% 100.0%
251 2200 P. R. & G. 35,600 21.3% 51.3%
252 2115 89.1%
253 2405 Men's Warehouse 5,429 100.0% 100.0%
254 1851 Lampshader 5,000 41.7% 100.0%
255 1129 Propath, Inc. 2,400 19.5% 90.2%
256 1991 96.3%
257 940906527 JumboSports, Inc. 35,040 100.0% 100.0%
86 38 100.0%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL
UNDERWRITTEN
CONTROL LOAN OCCUPANCY AS ORIGINAL LTV UNDERWRITTEN UNDERWRITTEN REPLACEMENT
NUMBER NUMBER OF DATE RATIO 1996 NOI 1997 NOI NOI NET CASH FLOW RESERVES
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 6102551 Various 66.6% 3,044,616 3,906,929 4,085,568 3,267,164 439,026
6102551A 06/30/98 66.6% 196,453 198,415 239,478 187,676 27,857
6102551B 06/30/98 66.6% 173,461 203,625 284,953 244,940 21,569
6102551C 06/30/98 66.6% 526,927 631,630 641,801 528,327 56,408
6102551D 06/30/98 66.6% 272,069 319,036 104,850 59,686 30,194
6102551E 06/30/98 66.6% 174,216 153,996 163,782 129,770 18,087
6102551F 06/30/98 66.6% 284,243 343,378 307,015 253,329 28,295
6102551G 06/30/98 66.6% 880,697 888,874 1,106,276 908,964 105,577
6102551H 06/30/98 66.6% 213,727 260,682 361,677 293,707 33,680
6102551I 06/30/98 66.6% 322,823 907,293 875,736 660,765 117,359
2 6102992 06/23/98 74.8% 3,671,176 2,869,920 2,604,307 17,882
3 24 Various 77.9% 2,877,998 3,683,522 3,773,967 3,131,136 153,309
24A 06/08/98 78.6% 449,185 555,739 665,813 521,361 37,009
24B 06/04/98 78.6% 232,835 500,743 615,711 513,034 17,336
24C 05/31/98 78.6% 336,363 578,280 407,306 337,260 11,012
24D 06/08/98 78.6% 353,874 364,772 410,183 360,738 10,522
24E 05/29/98 78.6% 329,650 329,728 309,721 235,511 36,200
24F 05/01/98 78.6% 275,105 290,334 342,460 258,418 9,603
24G 06/08/98 78.5% 131,916 125,865 186,819 160,497 4,920
24H 05/31/98 78.6% 51,926 214,379 151,197 136,495 3,910
24I 05/29/98 78.5% 133,496 115,939 102,544 100,937 244
24J 05/31/98 78.4% 38,190 47,773 46,451 41,075 1,920
24K 05/29/98 78.5% 106,893 120,721 111,175 97,922 3,520
24L 05/31/98 78.5% 98,135 95,926 111,921 101,190 2,756
24M 05/29/98 78.5% 84,014 94,174 79,143 62,705 4,772
24N 05/29/98 78.5% 64,340 65,544 62,687 59,602 864
24O 05/29/98 78.5% 67,683 66,056 64,835 48,976 5,460
24P 05/29/98 83.7% 56,893 63,301 60,113 54,911 1,314
24Q 05/31/98 68.3% 42,779 35,625 26,249 23,919 480
24R 05/29/98 39.5% 24,721 18,623 19,641 16,585 1,467
4 1548 12/24/97 69.1% 3,223,866 3,223,866 0
5 6102628 04/13/98 80.0% 1,758,152 1,990,915 2,123,966 2,076,886 47,080
12/31/97 73.1% 2,561,422 3,201,442 3,118,483 2,779,721 112,921
6 6102944 12/31/97 75.1% 936,042 1,160,799 1,156,753 1,041,038 38,572
7 6102945 12/31/97 68.3% 728,018 807,980 810,759 735,348 25,137
8 6102946 12/31/97 75.1% 419,928 584,980 610,194 524,874 28,440
9 6102947 12/31/97 75.1% 477,434 647,683 540,777 478,461 20,772
11 2555 02/25/98 79.3% 1,795,256 2,154,345 2,034,668 2,034,668 109,350
12 6103017 04/07/98 94.9% 1,326,094 1,326,094 0
14 10 11/30/97 61.7% 2,440,666 2,732,952 2,556,759 2,308,546 70,833
13 1907 Various 69.2% 1,408,394 1,847,532 1,968,496 1,603,391 91,106
1907A 04/27/98 69.2% 255,242 367,664 423,003 333,166 17,417
1907B 12/31/97 69.2% 137,373 219,804 229,119 206,035 6,733
1907C 12/23/97 69.2% 114,151 173,982 146,622 115,342 9,069
1907D 01/01/98 69.2% 309,414 454,390 489,942 385,459 23,479
1907E 12/23/97 69.2% 355,074 323,856 307,481 253,470 16,733
1907F 12/31/97 69.2% 149,628 104,624 141,497 123,104 4,173
1907G 12/31/97 69.2% 87,512 203,212 230,832 186,815 13,502
15 2534 03/04/98 80.0% 1,337,351 1,473,828 1,456,121 1,456,121 51,550
16 1905 Various 72.4% 1,521,280 1,770,473 1,791,958 1,529,168 71,276
1905A 03/25/98 72.4% 93,898 186,737 212,339 148,155 7,729
1905B 03/31/98 72.4% 298,047 284,092 316,371 282,973 13,505
1905C 03/31/98 72.4% 129,561 189,187 136,850 121,125 7,479
1905D 03/31/98 72.4% 113,337 164,701 156,731 103,687 11,408
1905E 03/31/98 72.4% 132,369 192,884 173,099 157,560 6,013
1905F 03/31/98 72.4% 110,250 119,033 123,151 116,008 1,845
1905G 03/31/98 72.4% 133,746 132,425 155,484 136,354 6,933
1905H 03/25/98 72.4% 141,814 154,336 164,661 135,311 7,158
1905I 03/31/98 72.4% 368,258 347,078 353,272 327,995 9,206
17 2 01/01/98 68.0% 427,104 1,711,782 1,732,420 1,544,882 25,457
18 3423 05/31/98 62.3% 1,395,449 1,597,734 1,615,858 1,615,858 149,750
19 1376 12/31/97 94.2% 725,553 725,553 0
20 1908 Various 72.8% 855,115 1,202,126 998,268 795,351 70,471
1908A 12/23/97 72.8% 166,182 206,692 189,799 137,838 13,633
1908B 12/31/97 72.8% 169,821 358,312 310,034 310,034 12,277
1908C 12/23/97 72.8% 443,565 530,302 393,668 281,638 29,458
1908D 12/31/97 72.8% 75,547 106,820 104,767 65,841 15,103
21 18 07/01/97 75.0% 1,487,952 1,531,143 1,476,854 16,669
22 1556 03/17/98 70.5% 1,417,254 1,420,515 1,427,643 1,283,737 46,264
23 1 03/01/98 73.4% 1,392,938 1,434,459 1,390,656 1,317,675 22,592
24 1210 02/23/98 74.6% 1,380,322 1,286,951 1,243,157 1,204,407 35,807
25 9 03/01/98 74.6% 879,012 1,276,660 1,178,980 1,096,549 31,516
26 2052 03/06/98 79.1% 318,848 1,035,317 1,035,317 60,000
27 6102530 05/01/98 71.6% 1,431,966 1,401,865 1,422,253 1,310,932 46,453
28 6102876 04/20/98 80.0% 862,514 875,502 1,130,737 1,044,737 86,000
29 2636 03/31/98 68.5% 1,576,844 1,748,375 2,103,387 2,103,387 53,750
30 2394 03/12/98 78.2% 1,306,148 1,253,305 1,208,672 1,148,245 31,242
31 6102859 04/06/98 79.9% 1,123,211 1,124,390 1,111,131 1,013,881 97,250
32 1885 03/01/98 75.0% 1,278,838 1,218,667 1,100,935 18,821
33 6102580 03/31/98 80.1% 534,595 476,408 1,029,045 940,754 35,649
34 2358 03/05/98 74.4% 894,381 1,151,628 1,116,509 1,116,509 84,250
35 1076 03/25/98 74.4% 1,004,127 1,224,358 1,073,724 1,015,558 15,606
36 6102991 05/19/98 70.8% 1,104,564 1,165,265 1,266,717 993,287 103,986
37 3641 03/26/98 78.9% 1,038,725 1,017,115 6,720
38 6102452 04/24/98 63.8% 971,331 1,315,339 1,177,081 1,110,497 66,584
41 3083 05/29/98 76.5% 917,337 963,898 934,986 934,986 46,640
Various 61.0% 2,020,878 2,155,485 1,371,224 1,371,224 255,109
39 2498 01/28/98 73.5% 938,884 1,078,773 758,510 758,510 114,103
40 2499 12/31/97 50.5% 1,081,994 1,076,712 612,714 612,714 141,006
Various 74.2% 1,293,096 1,347,213 1,219,447 1,219,447 48,000
42 1224 01/06/98 73.5% 683,691 751,938 693,753 693,753 26,250
43 1269 05/27/98 75.0% 609,405 595,275 525,694 525,694 21,750
44 6102663 05/25/98 80.0% 391,807 872,912 849,812 23,100
45 34 02/28/98 79.0% 769,694 953,898 908,714 852,714 56,000
46 6102762 04/01/98 73.9% 1,035,846 876,381 1,038,458 907,670 13,988
47 16 08/01/97 76.4% 1,027,112 1,070,394 920,125 23,769
48 6102442 05/01/98 74.5% 1,173,154 1,076,272 1,092,171 914,924 55,055
49 1776 04/30/98 78.9% 1,015,884 1,001,974 952,110 925,619 26,961
50 6102461 04/20/98 75.0% 954,268 921,081 6,849
51 3645 03/19/98 68.8% 956,174 757,737 939,871 939,871 52,000
52 1922 01/31/98 67.0% 1,077,505 1,068,481 1,008,664 940,777 14,871
53 7608323 03/31/98 64.3% 742,751 726,032 1,041,351 981,051 60,300
55 1755 11/01/97 67.7% 784,476 1,071,793 937,587 901,244 15,654
54 6102880 05/23/98 77.9% 947,689 957,303 906,355 848,754 57,601
56 7 Various 70.4% 617,160 996,580 1,167,189 1,002,111 44,487
7A 06/04/98 70.4% 254,552 345,717 285,515 253,279 6,140
7B 06/04/98 70.4% 90,329 108,515 105,949 88,202 4,437
7C 06/04/98 70.4% 267,348 380,878 330,583 13,110
7D 06/04/98 70.4% 272,279 275,000 394,847 330,047 20,800
57 6102950 12/31/97 70.5% 1,275,987 1,306,548 1,038,865 958,649 26,739
58 2076 03/02/98 66.0% 1,031,904 1,043,276 1,072,211 1,072,211 30,000
59 6102533 05/25/98 70.7% 721,833 809,757 828,698 723,098 105,600
Various 64.5% 1,445,759 1,146,586 1,091,512 10,634
61 940906323 11/01/96 61.7% 671,140 473,775 450,524 4,793
62 940906324 11/01/96 66.7% 774,619 672,811 640,988 5,841
60 3 04/01/98 68.1% 872,547 932,424 994,377 919,686 31,698
63 3632 10/31/97 78.5% 899,652 559,349 823,437 823,437 27,200
64 1541 06/01/98 79.8% 713,837 733,246 691,591 691,591 34,228
65 1585 01/25/98 79.5% 509,319 714,714 705,080 705,080 25,740
66 6102764 05/06/98 75.0% 529,104 581,927 787,863 731,908 15,293
67 1782 04/16/98 74.5% 715,524 750,860 714,606 15,813
68 1116 03/31/98 77.8% 889,935 705,990 776,012 745,133 15,522
70 1057 Various 74.3% 756,367 756,575 923,120 760,771 27,442
1057A 10/01/97 74.3% 756,367 666,009 704,503 570,163 20,888
1057B 10/01/97 74.3% 90,566 218,617 190,608 6,554
69 2635 02/10/98 79.4% 1,040,789 927,528 783,893 783,893 36,750
71 6102541 03/31/98 80.0% 576,641 755,329 732,656 679,556 53,100
72 6102532 04/23/98 63.2% 851,043 826,024 798,081 669,221 11,777
73 1263 12/16/97 74.1% 603,895 609,221 730,236 689,212 19,667
74 13 04/30/98 69.5% 842,486 884,040 801,080 82,960
75 12 04/30/98 72.0% 1,016,179 995,860 913,500 82,360
76 1921 02/28/98 51.4% 1,382,139 726,301 876,409 876,409 298,048
77 1660 04/02/98 71.3% 749,728 771,874 679,444 615,006 30,711
78 3218 06/04/98 79.7% 543,806 561,285 565,577 565,577 25,055
82 940905374 10/09/97 69.7% 842,900 789,726 749,227 16,600
79 6102708 04/30/98 78.9% 668,896 704,512 652,008 606,408 45,600
80 1859 02/28/98 69.3% 567,566 677,144 643,282 613,823 6,530
81 1523 01/01/98 61.0% 646,991 707,470 648,720 35,933
83 6102902 05/27/98 63.7% 733,200 733,200 667,560 647,610 19,950
84 3642 06/30/98 63.3% 775,937 918,404 892,144 653,277 55,125
87 6102709 04/30/98 80.0% 552,886 610,043 581,946 554,946 27,000
88 1152 03/18/98 72.0% 607,457 570,837 16,056
89 6102776 01/22/98 72.8% 551,317 563,612 580,551 539,478 14,119
90 15 03/01/98 73.8% 520,522 595,633 545,311 485,710 30,575
91 6102499 04/01/98 79.6% 551,506 596,258 527,962 461,237 21,170
92 2212 01/01/98 66.3% 703,549 943,933 665,148 665,148 120,030
93 2910 04/02/98 77.2% 477,875 431,959 495,189 495,189 41,250
85 23 10/31/97 52.6% 585,058 677,589 680,881 661,801 19,080
94 6102765 04/30/98 79.6% 277,041 58,808 553,053 496,290 56,763
95 25 10/01/97 70.5% 482,924 388,063 503,258 461,981 8,690
97 11 12/31/97 66.8% 518,374 603,759 510,309 93,450
96 1704 03/10/98 75.0% 549,136 511,250 3,514
98 1013 09/24/97 78.0% 546,619 541,803 516,520 516,520 33,600
99 2307 02/25/98 67.7% 645,249 678,189 607,872 581,159 21,165
100 14 04/30/98 70.0% 669,466 555,042 659,654 573,246 86,408
101 6102769 05/12/98 69.3% 493,625 474,779 452,903 422,395 30,508
102 37 03/31/98 62.5% 247,852 433,326 522,492 431,229 30,763
103 2096 02/25/98 74.8% 458,566 629,417 520,576 450,219 9,790
106 1144 03/19/98 72.7% 683,484 702,453 631,832 565,466 17,470
104 1666 10/20/97 75.0% 456,864 456,864 7,690
105 6102707 05/01/98 71.8% 395,747 393,647 2,100
107 6102974 05/14/98 77.2% 380,638 438,519 441,555 416,992 24,563
108 36 12/24/97 69.1% 512,135 549,456 492,577 470,955 13,513
109 6 10/19/97 69.1% 460,367 435,956 434,465 428,536 5,929
110 6102542 05/06/98 76.4% 229,698 514,401 490,123 411,313 31,997
111 1108 09/05/97 74.4% 505,605 448,318 448,318 24,416
112 6102875 05/14/98 75.0% 429,864 500,609 481,909 440,758 5,516
113 6102705 02/27/98 80.0% 377,749 443,143 425,571 398,689 26,882
116 1022 05/11/98 75.5% 471,277 480,452 470,739 470,739 53,033
114 6102969 04/02/98 72.9% 400,647 396,200 403,753 376,339 6,018
115 1694 05/01/98 74.5% 441,351 496,467 455,738 407,930 10,093
117 1534 11/14/97 74.5% 574,873 602,759 481,094 432,355 14,863
118 6102637 06/01/98 70.0% 496,936 523,401 461,074 392,694 12,942
119 1088 04/23/98 53.0% 369,061 367,905 591,095 489,668 24,882
120 28 08/01/97 63.6% 221,699 522,049 465,536 7,713
121 6102657 05/29/98 73.9% 104,238 258,597 435,457 404,186 7,771
122 2311 02/25/98 73.5% 299,438 420,644 369,775 11,510
123 1275 01/01/98 73.3% 316,947 337,953 420,479 387,377 17,302
124 1890 03/01/98 75.0% 417,440 430,547 366,436 13,260
125 20 10/01/97 74.2% 479,075 460,610 425,978 5,772
126 1403 01/23/98 54.3% 429,723 429,723 13,790
127 1538 02/27/98 75.6% 305,969 320,035 357,896 357,896 6,850
128 2027 03/12/98 76.8% 483,335 410,042 393,909 376,606 3,358
129 1795 04/27/98 75.0% 369,973 100,443 378,124 341,150 9,208
130 1089 05/01/98 70.8% 373,518 368,355 362,724 362,724 21,453
131 19 10/16/97 77.5% 349,809 327,978 4,831
132 1611 06/01/98 49.6% 240,919 248,558 446,046 399,396 13,911
133 6102451 05/01/98 59.5% 312,006 439,279 410,223 3,223
134 7608308 05/22/98 74.4% 507,629 541,175 404,574 340,490 19,913
135 2693 06/05/98 65.9% 34,760 407,178 348,421 10,020
136 1863 03/04/98 69.8% 454,404 454,876 409,103 377,806 7,743
137 2558 06/09/98 63.2% 366,781 428,458 442,011 422,936 10,043
138 1599 10/31/97 66.7% 380,619 540,699 467,233 467,233 75,660
139 1929 07/15/98 70.7% 364,831 390,528 366,522 342,100 5,988
142 1442 12/31/97 62.4% 408,869 485,556 456,547 422,336 6,255
140 6102706 05/22/98 73.8% 395,553 380,403 15,150
143 1512 03/19/98 65.7% 343,585 328,389 3,525
141 6102891 06/01/98 75.0% 394,590 342,996 310,811 5,067
144 7608309 03/31/98 75.0% 332,820 299,081 349,855 336,855 13,000
145 1535 04/28/98 75.0% 410,220 418,931 342,140 317,962 17,490
146 35 01/30/98 80.0% 162,510 363,428 314,546 293,046 21,500
147 1975 04/02/98 74.7% 364,697 395,470 377,198 327,964 9,643
148 2393 03/01/98 52.8% 480,306 479,987 439,885 404,565 15,918
149 1407 03/31/98 61.8% 365,962 370,320 370,769 330,456 14,228
150 2238 05/14/98 74.6% 340,843 359,831 338,304 4,600
151 6102803 12/31/97 67.1% 276,148 416,435 430,542 378,110 26,216
152 6102972 06/01/98 76.1% 305,947 336,812 335,684 312,735 3,346
153 1607 01/15/98 65.8% 393,613 393,613 6,857
154 5 12/31/97 65.0% 472,247 542,593 560,417 506,434 53,983
155 6102460 05/01/98 77.9% 317,052 309,976 310,426 288,368 22,058
157 1781 Various 74.6% 343,123 567,168 298,623 298,623 82,250
1781A 05/31/98 74.6% 182,797 277,554 130,529 130,529 28,000
1781B 05/31/98 74.6% 160,326 289,614 168,094 168,094 54,250
156 7608315 05/01/98 65.2% 323,331 334,700 348,125 287,554 12,844
158 17 03/01/98 69.4% 360,414 332,943 317,827 285,411 12,600
159 22 12/30/97 65.1% 469,893 479,043 423,910 379,299 44,611
160 1440 12/31/97 42.9% 373,654 452,933 387,037 387,037 75,300
161 6102629 03/03/98 75.6% 80,173 299,471 266,989 15,182
162 1448 09/01/97 70.6% 355,515 322,320 307,291 5,200
163 6102834 06/11/98 30.7% 477,609 475,120 471,731 397,745 73,986
164 1321 02/19/98 70.1% 221,045 344,366 316,617 7,970
165 3638 03/03/98 84.7% 288,512 280,941 3,177
167 3633 10/31/97 72.7% 380,851 211,386 294,370 294,370 17,200
166 1246 03/19/98 72.5% 82,038 185,248 288,957 266,167 5,525
168 2917 05/26/98 76.7% 208,365 278,444 276,026 276,026 19,200
169 6102648 05/29/98 78.8% 246,463 268,621 252,924 236,046 16,878
170 1912 03/02/98 74.8% 282,504 270,236 2,189
171 1891 11/05/97 74.7% 280,531 267,640 4,541
172 6102443 04/30/98 74.2% 371,256 354,659 328,946 320,282 8,664
173 940906544 04/01/97 63.9% 356,364 342,633 6,787
174 1504 03/31/98 72.6% 315,432 323,614 288,316 267,989 4,359
02/11/98 67.0% 316,451 350,440 281,197 281,197 30,500
178 0998 02/11/98 67.0% 155,533 189,493 142,109 142,109 15,500
179 0999 02/11/98 67.0% 160,918 160,947 139,088 139,088 15,000
175 1810 05/01/98 70.0% 308,075 254,427 326,159 326,159 24,750
176 6102988 06/23/98 74.9% 377,304 275,536 262,042 13,494
177 3182 05/27/98 69.8% 223,769 255,519 221,717 221,717 14,250
180 2463 05/20/98 76.8% 119,913 295,612 260,248 260,248 8,000
181 1641 03/25/98 79.4% 293,625 270,901 283,643 265,228 7,853
182 6102932 04/08/98 66.7% 337,523 337,759 285,142 257,657 3,353
183 1555 01/15/98 72.7% 128,735 248,423 298,453 259,924 13,751
184 1090 03/25/98 74.7% 285,874 307,878 279,048 249,586 7,449
185 940906539 02/01/97 64.6% 318,902 308,876 3,946
186 2660 05/18/98 79.9% 282,723 258,343 258,343 30,000
189 1130 03/02/98 75.0% 94,299 288,185 269,308 2,552
188 2043 02/25/98 73.6% 292,362 335,443 256,528 256,527 8,800
187 2392 03/31/98 80.0% 262,817 277,598 253,069 253,069 28,000
190 1988 03/01/98 74.8% 256,292 244,139 7,324
191 1573 01/06/98 71.7% 349,691 437,006 329,405 329,405 31,200
192 1886 12/31/97 69.0% 383,266 371,572 342,115 312,191 29,160
193 1075 12/31/97 71.5% 266,214 232,765 248,012 234,641 3,388
196 940906545 02/01/97 61.3% 385,224 347,231 5,237
194 1747 03/04/98 75.0% 295,114 268,197 246,722 223,006 14,870
195 1041 03/01/98 75.0% 233,913 223,469 7,031
197 7608318 05/04/98 65.0% 397,877 355,722 322,757 277,992 12,611
198 6102904 05/01/98 75.3% 211,076 216,144 194,186 184,586 9,600
199 1239 09/01/97 61.4% 236,624 255,295 242,533 199,038 7,119
200 1015 06/02/98 54.5% 143,919 235,132 236,740 236,740 33,000
201 1720 11/10/97 55.4% 348,498 323,690 328,077 328,077 24,350
202 1086 12/31/97 69.2% 297,234 315,881 258,949 220,887 12,709
203 2168 02/25/98 66.7% 290,525 283,801 7,020
205 1060 04/01/98 74.6% 243,048 266,869 249,077 249,077 31,750
204 2055 03/30/98 75.0% 187,172 224,952 209,735 209,735 21,000
206 6102970 06/19/98 70.8% 80,178 174,523 193,881 187,905 5,976
207 6102901 06/01/98 63.0% 249,696 249,696 227,357 222,005 5,352
208 6102903 06/11/98 78.7% 188,059 187,048 1,011
209 1779 12/03/97 73.9% 244,160 277,238 276,447 212,796 13,801
210 1005 06/10/97 65.0% 254,414 243,140 4,648
211 1811 05/01/98 62.4% 127,961 273,895 234,718 234,718 24,500
212 6102656 04/30/98 73.2% 191,723 183,212 185,501 169,076 16,425
213 4 04/01/98 61.5% 270,549 256,019 243,370 197,355 13,123
214 2060 04/21/98 70.9% 206,374 192,183 3,612
215 940907039 06/15/97 68.0% 312,783 273,956 245,478 6,843
216 1852 04/28/98 74.6% 216,601 230,555 190,755 176,208 2,349
217 2665 04/01/98 78.9% 179,017 193,318 185,435 173,903 4,284
218 940906528 02/01/97 63.8% 260,918 251,031 3,879
219 1432 03/17/98 73.5% 181,548 163,704 4,040
221 1102 09/01/97 66.0% 195,448 184,219 2,672
220 1001 04/14/98 63.0% 203,470 170,346 182,218 182,218 28,331
222 2815 06/03/98 75.0% 195,642 202,131 202,131 24,000
223 2056 02/28/97 75.0% 190,300 179,667 7,183
224 6102896 02/27/98 50.9% 213,890 271,714 231,094 225,522 5,572
225 6102900 06/09/98 60.3% 205,778 266,772 214,759 196,528 1,710
226 6102943 04/21/98 77.8% 198,078 188,691 176,115 153,715 22,400
227 1435 04/30/98 74.5% 189,665 169,042 2,862
228 7608319 05/04/98 60.9% 254,968 259,896 234,912 215,214 4,518
229 7608320 04/23/98 38.6% 352,500 364,185 319,111 289,482 12,150
230 2456 06/03/98 74.3% 177,961 177,089 167,141 167,141 19,111
231 6102840 06/01/98 53.6% 204,563 222,661 213,240 184,890 28,350
232 2133 03/31/98 72.2% 118,024 159,254 186,905 163,496 6,221
233 1580 12/04/97 72.2% 173,540 182,738 177,925 155,878 6,058
234 940907278 07/29/97 47.7% 245,262 234,143 165,047 13,597
236 1320 03/01/98 75.0% 142,969 173,128 168,880 996
235 1855 06/01/98 65.8% 176,392 171,537 182,812 150,458 7,200
237 1647 05/12/98 72.1% 183,645 188,107 168,014 150,924 8,806
238 1030 09/01/97 11.3% 130,454 116,989 828,270 828,270 21,600
239 6102770 04/01/98 70.6% -1,644 124,782 142,998 125,460 17,538
240 6102779 05/27/98 60.0% 155,438 165,875 158,257 143,446 7,476
241 1288 04/01/98 63.2% 209,256 237,937 186,084 168,042 3,450
242 2756 06/01/98 74.8% 145,905 140,250 708
243 1145 12/31/97 70.0% 173,339 214,724 168,917 142,594 10,516
244 6102540 04/01/98 81.0% 168,378 161,539 152,521 137,905 14,616
245 1949 10/06/97 72.4% 141,761 157,633 138,611 132,642 955
246 2017 05/17/98 71.9% 136,398 136,398 1,193
247 1854 04/28/98 74.0% 161,040 158,569 132,225 114,477 14,982
248 6102531 04/23/98 50.0% 142,634 137,002 184,626 157,356 27,270
249 1073 03/31/98 44.4% 172,675 202,155 189,996 125,044 13,464
250 940906529 02/01/97 64.5% 159,679 150,614 4,906
251 2200 02/01/98 75.0% 82,578 156,528 145,455 16,700
252 2115 02/25/98 63.3% 132,772 131,621 116,680 116,680 11,500
253 2405 03/12/98 70.0% 122,929 116,840 543
254 1851 04/28/98 74.3% 129,856 101,995 122,313 113,382 1,800
255 1129 03/02/98 75.0% 112,704 144,478 136,521 129,206 1,230
256 1991 05/01/98 76.7% 118,590 120,562 111,254 111,254 13,500
257 940906527 04/01/97 70.0% 135,584 124,456 5,957
86 38 10/31/97 52.9% 126,757 128,026 129,238 126,478 2,760
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ANNUAL
UNDERWRITTEN REPAIR &
REPLACEMENT UNDERWRITTEN CUT-OFF DATE REMEDIATION
CONTROL LOAN RESERVES PER UNDERWRITTEN NET CASH FLOW ORIGINAL LOAN LOAN PER PAID TO RESERVE
NUMBER NUMBER UNIT/SF NOI DSCR DSCR PER UNIT/SF UNIT/SF DATE HOLDBACK
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 6102551 0.41 1.63 1.31 $28.53 $28.37 08/01/98 216,563.00
6102551A 0.41 1.63 1.31 28.53 28.37 08/01/98
6102551B 0.41 1.63 1.31 28.53 28.37 08/01/98
6102551C 0.41 1.63 1.31 28.53 28.37 08/01/98
6102551D 0.41 1.63 1.31 28.53 28.37 08/01/98
6102551E 0.41 1.63 1.31 28.53 28.37 08/01/98
6102551F 0.41 1.63 1.31 28.53 28.37 08/01/98
6102551G 0.41 1.63 1.31 28.53 28.37 08/01/98
6102551H 0.41 1.63 1.31 28.53 28.37 08/01/98
6102551I 0.41 1.63 1.31 28.53 28.37 08/01/98
2 6102992 0.10 1.49 1.35 134.78 134.67 08/01/98 8,750.00
3 24 0.19 1.72 1.43 29.02 28.86 08/01/98
24A 0.20 1.83 1.43 21.41 21.29 08/01/98
24B 0.20 1.48 1.24 52.14 51.85 08/01/98
24C 0.15 1.97 1.63 30.62 30.45 08/01/98
24D 0.15 2.07 1.82 31.47 31.29 08/01/98
24E 0.21 2.05 1.56 9.62 9.57 08/01/98
24F 0.15 1.90 1.43 30.67 30.50 08/01/98
24G 0.15 2.36 2.02 26.34 26.19 08/01/98
24H 0.15 1.40 1.26 45.20 44.94 08/01/98
24I 0.03 1.42 1.40 105.76 105.16 08/01/98
24J 0.20 1.63 1.44 32.26 32.08 08/01/98
24K 0.20 1.10 0.97 62.48 62.13 08/01/98
24L 0.20 1.55 1.40 56.55 56.23 08/01/98
24M 0.20 1.48 1.18 24.35 24.21 08/01/98
24N 0.25 1.44 1.37 137.03 136.25 08/01/98
24O 0.25 1.43 1.08 22.64 22.51 08/01/98
24P 0.20 1.53 1.40 64.95 64.59 08/01/98
24Q 0.20 1.21 1.11 98.20 97.64 08/01/98
24R 0.15 1.10 0.92 19.98 19.87 08/01/98
4 1548 - 1.60 1.60 94.20 94.20 08/01/98
5 6102628 214.00 1.33 1.30 89,090.91 88,809.83 08/01/98
201.29 1.42 1.50 34,679.14 34,615.04 08/01/98
6 6102944 186.34 1.69 1.53 34,603.86 34,539.90 08/01/98
7 6102945 193.36 1.58 1.43 41,515.38 41,438.64 08/01/98
8 6102946 235.04 1.79 1.54 29,619.83 29,565.08 08/01/98
9 6102947 201.67 1.71 1.52 32,145.63 32,086.21 08/01/98
11 2555 225.00 1.55 1.55 33,950.62 33,837.22 08/01/98 310,000.00
12 6103017 - 1.03 1.03 110.82 110.66 08/01/98
14 10 0.20 2.01 1.81 40.94 40.58 08/01/98
13 1907 0.25 1.63 1.32 38.86 38.65 08/01/98 11,731.66
1907A 0.25 1.63 1.32 38.86 38.65 08/01/98
1907B 0.24 1.63 1.32 38.86 38.65 08/01/98
1907C 0.25 1.63 1.32 38.86 38.65 08/01/98
1907D 0.25 1.63 1.32 38.86 38.65 08/01/98
1907E 0.23 1.63 1.32 38.86 38.65 08/01/98
1907F 0.20 1.63 1.32 38.86 38.65 08/01/98
1907G 0.28 1.63 1.32 38.86 38.65 08/01/98
15 2534 182.80 1.31 1.31 49,078.01 48,997.80 08/01/98
16 1905 0.22 1.56 1.33 42.28 42.06 08/01/98 28,633.54
1905A 0.15 1.56 1.33 42.28 42.06 08/01/98
1905B 0.36 1.56 1.33 42.28 42.06 08/01/98
1905C 0.15 1.56 1.33 42.28 42.06 08/01/98
1905D 0.25 1.56 1.33 42.28 42.06 08/01/98
1905E 0.25 1.56 1.33 42.28 42.06 08/01/98
1905F 0.15 1.56 1.33 42.28 42.06 08/01/98
1905G 0.19 1.56 1.33 42.28 42.06 08/01/98
1905H 0.26 1.56 1.33 42.28 42.06 08/01/98
1905I 0.24 1.56 1.33 42.28 42.06 08/01/98
17 2 0.15 1.55 1.38 72.52 72.03 08/01/98
18 3423 250.00 1.67 1.67 20,283.81 20,267.02 08/01/98 12,480.00
19 1376 - 1.00 1.00 40.19 38.46 08/01/98
20 1908 0.20 1.40 1.19 23.54 23.19 08/01/98
1908A 0.18 1.40 1.19 23.54 23.19 08/01/98
1908B 0.10 1.40 1.19 23.54 23.19 08/01/98
1908C 0.25 1.40 1.19 23.54 23.19 08/01/98
1908D 0.39 1.40 1.19 23.54 23.19 08/01/98
21 18 0.15 1.52 1.47 107.98 107.45 08/01/98
22 1556 0.28 1.46 1.31 72.62 72.16 08/01/98
23 1 0.15 1.24 1.18 75.03 74.58 08/01/98
24 1210 0.21 1.41 1.37 60.97 60.69 08/01/98 15,156.00
25 9 0.15 1.35 1.26 49.97 49.67 08/01/98
26 2052 250.00 1.27 1.27 42,500.00 42,359.98 08/01/98
27 6102530 0.34 1.74 1.60 73.92 73.57 08/01/98 48,375.00
28 6102876 250.00 1.41 1.30 29,069.77 29,046.22 08/01/98 165,312.00
29 2636 250.00 2.42 2.42 46,511.63 46,345.87 08/01/98
30 2394 0.15 1.41 1.34 47.29 47.12 08/01/98 36,750.00
31 6102859 250.00 1.40 1.28 25,064.27 25,004.55 08/01/98
32 1885 0.25 1.42 1.28 129.51 128.30 08/01/98
33 6102580 0.20 1.37 1.25 53.02 52.88 08/01/98 312.50
34 2358 250.00 1.38 1.38 27,596.44 27,464.91 08/01/98
35 1076 0.15 1.37 1.30 89.38 88.84 08/01/98
36 6102991 0.35 1.62 1.27 30.97 30.93 08/01/98
37 3641 0.08 1.40 1.37 111.54 111.32 08/01/98 448.20
38 6102452 287.00 1.63 1.54 38,793.10 38,601.39 08/01/98
41 3083 212.00 1.33 1.33 40,000.00 39,967.47 08/01/98
996.52 1.60 1.60 34,667.97 34,542.40 08/01/98
39 2498 1,037.30 1.61 1.61 44,409.09 44,247.99 08/01/98 9,030.00
40 2499 965.79 1.59 1.59 27,328.77 27,229.96 08/01/98 11,750.00
250.00 1.57 1.57 45,963.54 45,639.13 08/01/98
42 1224 250.00 1.60 1.60 46,904.76 46,573.71 08/01/98
43 1269 250.00 1.53 1.53 44,827.59 44,511.19 08/01/98
44 6102663 175.00 1.29 1.25 63,636.36 63,429.97 08/01/98
45 34 250.00 1.34 1.26 37,053.57 37,002.41 08/01/98
46 6102762 0.18 1.51 1.32 106.52 106.36 08/01/98
47 16 0.20 1.51 1.30 69.42 69.06 08/01/98
48 6102442 0.29 1.53 1.28 42.94 42.58 08/01/98
49 1776 0.15 1.30 1.26 44.79 44.37 08/01/98
50 6102461 0.15 1.49 1.44 170.80 169.99 08/01/98
51 3645 250.00 1.53 1.53 37,019.23 36,965.43 08/01/98 10,058.00
52 1922 0.15 1.54 1.44 77.67 77.37 08/01/98
53 7608323 300.00 1.71 1.61 37,412.94 37,231.63 08/01/98 56,200.00
55 1755 0.15 1.31 1.26 71.36 70.43 08/01/98
54 6102880 200.00 1.53 1.43 25,694.44 25,678.48 08/01/98
56 7 0.21 1.69 1.45 34.54 34.23 08/01/98
7A 0.22 1.69 1.45 34.54 34.23 08/01/98
7B 0.20 1.69 1.45 34.54 34.23 08/01/98
7C 0.21 1.69 1.45 34.54 34.23 08/01/98
7D 0.22 1.69 1.45 34.54 34.23 08/01/98
57 6102950 135.05 1.53 1.41 35,580.81 35,516.16 08/01/98
58 2076 250.00 1.83 1.83 58,333.33 58,158.19 08/01/98
59 6102533 275.00 1.46 1.27 18,229.17 18,156.20 08/01/98
0.15 1.58 1.50 95.52 93.98 08/01/98
61 940906323 0.15 1.55 1.47 90.76 89.30 08/01/98
62 940906324 0.14 1.60 1.52 99.30 97.69 08/01/98
60 3 0.15 1.58 1.46 32.59 32.39 08/01/98
63 3632 200.00 1.45 1.45 49,632.35 49,390.35 08/01/98 45,144.21
64 1541 0.33 1.31 1.31 63.87 63.82 08/01/98
65 1585 180.00 1.33 1.33 46,328.67 46,175.44 08/01/98
66 6102764 0.15 1.38 1.28 64.74 64.58 08/01/98 4,950.00
67 1782 0.10 1.42 1.35 41.74 41.74 08/01/98
68 1116 0.15 1.42 1.36 62.79 62.37 08/01/98
70 1057 0.17 1.59 1.31 38.07 37.66 08/01/98
1057A 0.15 1.59 1.31 38.07 37.66 08/01/98
1057B 0.25 1.59 1.31 38.07 37.66 08/01/98
69 2635 246.64 1.51 1.51 42,147.65 42,049.98 08/01/98
71 6102541 225.00 1.51 1.40 25,423.73 25,279.28 08/01/98 346,000.00
72 6102532 0.13 1.52 1.27 66.69 66.22 08/01/98
73 1263 0.15 1.33 1.26 45.76 45.41 08/01/98
74 13 1,091.58 1.61 1.46 77,723.68 77,111.59 08/01/98
75 12 1,055.90 1.86 1.71 73,846.15 73,264.60 08/01/98
76 1921 1,192.19 1.83 1.83 22,000.00 21,895.64 08/01/98 87,750.00
77 1660 0.27 1.52 1.38 48.35 48.16 08/01/98
78 3218 203.70 1.35 1.35 43,089.43 43,053.19 08/01/98
82 940905374 0.15 1.30 1.23 47.89 46.61 08/01/98
79 6102708 380.00 1.55 1.45 43,750.00 43,642.00 08/01/98 13,563.00
80 1859 0.25 1.52 1.45 199.08 198.45 08/01/98
81 1523 0.21 1.63 1.50 29.68 29.45 08/01/98
83 6102902 0.15 1.42 1.38 37.59 37.53 08/01/98
84 3642 0.15 2.19 1.61 13.61 13.58 08/01/98 469,721.20
87 6102709 225.00 1.53 1.46 40,000.00 39,899.89 08/01/98
88 1152 0.10 1.57 1.47 29.90 29.90 08/01/98
89 6102776 0.30 1.50 1.39 96.68 96.56 08/01/98 6,000.00
90 15 0.20 1.37 1.22 29.44 29.30 08/01/98
91 6102499 0.29 1.44 1.26 61.64 61.35 08/01/98 2,063.00
92 2212 710.24 1.67 1.67 26,508.88 26,387.64 08/01/98 103,325.00
93 2910 250.00 1.38 1.38 26,666.67 26,603.51 08/01/98 55,376.00
85 23 60.00 2.01 1.95 13,726.42 13,656.56 08/01/98
94 6102765 357.00 1.52 1.36 27,044.03 26,943.29 08/01/98 9,750.00
95 25 0.20 1.43 1.31 98.97 98.42 08/01/98
97 11 1,198.08 1.53 1.30 54,358.97 53,930.89 08/01/98
96 1704 0.10 1.60 1.49 120.22 119.94 08/01/98
98 1013 200.00 1.45 1.45 25,000.00 24,813.61 08/01/98 34,702.03
99 2307 0.10 1.51 1.45 19.84 19.66 08/01/98
100 14 568.47 1.75 1.52 26,710.53 26,500.17 08/01/98
101 6102769 263.00 1.42 1.32 34,482.76 34,368.93 08/01/98
102 37 0.15 1.59 1.32 19.50 19.44 08/01/98
103 2096 0.25 1.48 1.28 101.25 100.89 08/01/98
106 1144 0.26 1.61 1.44 60.67 59.79 08/01/98
104 1666 0.17 1.33 1.33 88.60 88.09 08/01/98
105 6102707 0.15 1.38 1.38 282.14 282.14 08/01/98
107 6102974 203.00 1.38 1.30 31,404.96 31,371.73 08/01/98
108 36 0.55 1.48 1.42 154.78 154.45 08/01/98
109 6 0.02 1.30 1.28 12.82 12.74 08/01/98
110 6102542 0.35 1.57 1.32 41.29 41.13 08/01/98
111 1108 214.18 1.39 1.39 32,648.03 32,439.39 08/01/98
112 6102875 0.15 1.51 1.39 97.90 97.68 08/01/98 48,000.00
113 6102705 260.99 1.45 1.36 34,951.46 34,868.67 08/01/98
116 1022 256.20 1.34 1.34 17,149.76 16,843.14 08/01/98
114 6102969 0.24 1.44 1.35 139.55 139.44 08/01/98
115 1694 0.25 1.49 1.33 86.69 86.49 08/01/98
117 1534 0.15 1.54 1.38 35.32 35.16 08/01/98
118 6102637 0.27 1.51 1.28 73.02 72.67 08/01/98 113,125.00
119 1088 0.15 2.01 1.66 20.79 20.69 08/01/98
120 28 0.15 1.49 1.33 68.07 67.27 08/01/98
121 6102657 0.20 1.49 1.39 89.70 89.36 08/01/98 11,676.00
122 2311 0.22 1.50 1.32 64.98 64.78 08/01/98
123 1275 0.17 1.38 1.27 32.81 32.48 08/01/98
124 1890 0.25 1.59 1.35 62.22 62.07 08/01/98
125 20 0.20 1.53 1.42 114.35 113.51 08/01/98
126 1403 0.13 1.49 1.49 30.71 30.43 08/01/98
127 1538 50.00 1.34 1.34 23,175.18 23,052.26 08/01/98
128 2027 0.10 1.47 1.40 93.81 93.74 08/01/98
129 1795 0.25 1.45 1.30 85.53 85.20 08/01/98
130 1089 255.39 1.36 1.36 37,500.00 37,305.39 08/01/98
131 19 0.15 1.34 1.26 96.25 95.78 08/01/98
132 1611 0.20 1.47 1.32 44.57 44.25 08/01/98
133 6102451 0.10 1.62 1.51 94.63 93.86 08/01/98
134 7608308 0.25 1.46 1.23 38.29 37.92 08/01/98
135 2693 0.15 1.58 1.35 44.91 44.86 08/01/98
136 1863 0.15 1.64 1.52 58.12 57.98 08/01/98
137 2558 0.15 1.37 1.32 44.81 44.67 08/01/98 41,250.00
138 1599 485.00 1.71 1.71 19,230.77 19,102.98 08/01/98 5,456.72
139 1929 0.21 1.44 1.35 101.70 101.10 08/01/98
142 1442 0.18 1.56 1.44 82.52 80.84 08/01/98
140 6102706 0.15 1.46 1.41 28.78 28.61 08/01/98
143 1512 0.15 1.38 1.32 121.70 120.68 08/01/98
141 6102891 0.10 1.46 1.32 56.25 56.21 08/01/98
144 7608309 200.00 1.53 1.47 43,846.15 43,630.74 08/01/98
145 1535 0.41 1.40 1.30 66.11 65.70 08/01/98
146 35 250.00 1.38 1.28 32,558.14 32,494.33 08/01/98
147 1975 0.25 1.52 1.33 72.59 72.34 08/01/98
148 2393 0.15 1.65 1.52 26.39 26.29 08/01/98
149 1407 0.25 1.50 1.33 48.84 48.45 08/01/98
150 2238 0.10 1.48 1.39 60.00 59.93 08/01/98
151 6102803 236.18 1.71 1.50 24,774.77 24,721.30 08/01/98 35,700.00
152 6102972 0.10 1.44 1.34 80.72 80.62 08/01/98 8,375.00
153 1607 0.15 1.75 1.75 57.12 56.71 08/01/98
154 5 593.22 1.95 1.77 28,571.43 28,159.22 08/01/98
155 6102460 269.00 1.49 1.38 31,365.85 31,187.99 08/01/98
157 1781 250.00 1.22 1.22 7,638.30 7,569.64 08/01/98
1781A 252.25 1.22 1.22 7,638.30 7,569.64 08/01/98
1781B 248.85 1.22 1.22 7,638.30 7,569.64 08/01/98
156 7608315 0.15 1.66 1.37 28.92 28.81 08/01/98 4,375.00
158 17 0.20 1.47 1.32 39.68 39.48 08/01/98
159 22 544.04 1.73 1.54 30,182.93 29,999.24 08/01/98
160 1440 300.00 1.75 1.75 9,760.96 9,673.08 08/01/98 54,383.41
161 6102629 0.21 1.45 1.29 32.82 32.66 08/01/98
162 1448 0.20 1.35 1.29 92.31 91.17 08/01/98
163 6102834 354.00 1.99 1.68 11,244.02 11,215.23 08/01/98
164 1321 0.25 1.42 1.30 74.03 73.39 08/01/98
165 3638 0.15 1.40 1.37 110.01 109.54 08/01/98 1,382.10
167 3633 200.00 1.42 1.42 27,034.88 26,828.15 08/01/98 7,595.67
166 1246 0.25 1.46 1.34 104.98 104.44 08/01/98
168 2917 197.94 1.41 1.41 23,711.34 23,682.35 08/01/98 70,500.00
169 6102648 291.00 1.37 1.28 39,655.17 39,540.33 08/01/98 11,280.00
170 1912 0.21 1.49 1.43 219.05 218.36 08/01/98
171 1891 0.10 1.41 1.34 50.65 50.28 08/01/98
172 6102443 12.00 1.47 1.43 3,185.60 3,144.91 08/01/98 29,475.00
173 940906544 0.13 1.54 1.48 44.06 43.48 08/01/98
174 1504 0.15 1.56 1.45 77.52 77.09 08/01/98 23,125.00
250.00 1.31 1.31 18,401.64 18,194.80 08/01/98
178 0998 250.00 1.32 1.32 18,161.29 17,957.15 08/01/98
179 0999 250.00 1.30 1.30 18,650.00 18,440.37 08/01/98
175 1810 250.00 1.50 1.50 22,454.55 22,414.64 08/01/98
176 6102988 0.21 1.45 1.38 35.14 35.10 08/01/98 9,450.00
177 3182 245.69 1.26 1.26 37,931.03 37,931.03 08/01/98
180 2463 200.00 1.41 1.41 53,750.00 53,620.44 08/01/98
181 1641 0.30 1.53 1.43 81.56 80.97 08/01/98
182 6102932 0.10 1.46 1.32 62.64 62.52 08/01/98
183 1555 0.14 1.72 1.50 20.86 20.78 08/01/98 20,625.00
184 1090 0.25 1.55 1.38 70.48 70.02 08/01/98
185 940906539 0.09 1.51 1.46 47.90 47.27 08/01/98
186 2660 250.00 1.24 1.24 17,083.33 17,046.12 08/01/98
189 1130 0.10 1.54 1.44 80.02 79.23 08/01/98
188 2043 50.00 1.57 1.57 11,505.68 11,468.29 08/01/98
187 2392 280.00 1.41 1.41 20,240.00 20,217.04 08/01/98
190 1988 0.15 1.46 1.39 40.96 40.77 08/01/98
191 1573 300.00 1.85 1.85 19,230.77 19,098.64 08/01/98
192 1886 0.60 1.53 1.39 41.49 40.87 08/01/98
193 1075 0.15 1.37 1.29 87.00 86.15 08/01/98
196 940906545 0.10 1.95 1.76 37.42 36.93 08/01/98
194 1747 0.36 1.43 1.29 47.43 47.26 08/01/98
195 1041 0.20 1.33 1.27 55.47 55.14 08/01/98
197 7608318 0.32 1.49 1.29 49.78 48.86 08/01/98 2,125.00
198 6102904 320.00 1.32 1.25 60,833.33 60,796.73 08/01/98
199 1239 0.25 1.57 1.29 63.21 62.85 08/01/98
200 1015 250.00 1.49 1.49 13,636.36 13,556.79 08/01/98 76,000.00
201 1720 238.73 2.13 2.13 17,647.06 17,538.23 08/01/98
202 1086 0.18 1.47 1.26 26.02 25.69 08/01/98
203 2168 0.18 1.31 1.27 46.15 45.33 08/01/98
205 1060 250.00 1.42 1.42 13,661.42 13,450.37 08/01/98
204 2055 250.00 1.39 1.39 20,535.71 20,438.76 08/01/98
206 6102970 249.00 1.45 1.41 70,833.33 70,787.01 08/01/98 750.00
207 6102901 0.15 1.42 1.39 49.02 48.94 08/01/98
208 6102903 0.10 1.21 1.21 160.80 160.53 08/01/98
209 1779 0.25 1.92 1.48 29.46 29.32 08/01/98
210 1005 0.23 1.44 1.38 82.16 80.77 08/01/98 50,000.00
211 1811 250.00 1.64 1.64 16,326.53 16,286.37 08/01/98
212 6102656 225.00 1.39 1.27 21,917.81 21,850.95 08/01/98 8,125.00
213 4 0.20 1.54 1.25 23.78 23.56 08/01/98
214 2060 0.25 1.37 1.28 107.97 107.18 08/01/98 24,000.00
215 940907039 0.15 1.71 1.53 33.75 33.26 08/01/98
216 1852 0.16 1.57 1.45 99.93 99.53 08/01/98
217 2665 0.10 1.39 1.31 35.01 34.93 08/01/98
218 940906528 0.11 1.73 1.66 42.54 41.98 08/01/98
219 1432 0.25 1.49 1.35 91.32 91.11 08/01/98
221 1102 0.10 1.34 1.27 54.83 53.95 08/01/98
220 1001 250.72 1.32 1.32 12,831.86 12,784.33 08/01/98 31,000.00
222 2815 250.00 1.66 1.66 14,843.75 14,825.63 08/01/98
223 2056 0.10 1.38 1.31 19.84 19.73 08/01/98
224 6102896 0.15 2.01 1.96 37.69 37.66 08/01/98
225 6102900 0.17 1.79 1.64 139.19 139.05 08/01/98 3,577.50
226 6102943 400.00 1.50 1.31 25,000.00 24,968.45 08/01/98
227 1435 0.25 1.59 1.42 122.30 121.67 08/01/98
228 7608319 0.20 1.51 1.39 61.97 60.83 08/01/98 8,563.00
229 7608320 0.54 2.13 1.94 60.00 58.89 08/01/98 5,625.00
230 2456 298.61 1.51 1.51 20,312.50 20,287.70 08/01/98
231 6102840 350.00 2.00 1.73 16,049.38 16,011.82 08/01/98
232 2133 0.25 1.64 1.43 52.25 52.06 08/01/98
233 1580 0.29 1.57 1.37 62.23 61.71 08/01/98
234 940907278 0.20 1.88 1.33 18.76 18.55 08/01/98
236 1320 0.10 1.39 1.36 128.06 126.44 08/01/98
235 1855 0.25 1.77 1.46 44.10 44.06 08/01/98
237 1647 0.24 1.43 1.28 33.11 32.74 08/01/98 12,750.00
238 1030 295.89 1.00 1.00 16,438.36 16,438.36 08/01/98
239 6102770 237.00 1.45 1.28 16,216.22 16,203.59 08/01/98 19,125.00
240 6102779 0.15 1.38 1.25 24.08 23.94 08/01/98 43,402.00
241 1288 0.15 1.80 1.63 52.17 51.79 08/01/98
242 2756 0.11 1.41 1.36 183.08 182.64 08/01/98
243 1145 0.34 1.51 1.27 38.47 38.11 08/01/98 9,150.00
244 6102540 203.00 1.55 1.40 15,972.22 15,853.67 08/01/98 8,156.00
245 1949 0.19 1.41 1.35 218.77 218.04 08/01/98
246 2017 0.16 1.35 1.35 140.22 139.20 08/01/98
247 1854 0.54 1.45 1.26 37.28 37.10 08/01/98 28,769.00
248 6102531 303.00 1.92 1.64 11,111.11 11,049.94 08/01/98 1,938.00
249 1073 0.23 2.04 1.35 17.30 17.17 08/01/98
250 940906529 0.14 1.59 1.50 28.54 28.16 08/01/98
251 2200 0.10 1.65 1.54 5.84 5.79 08/01/98
252 2115 250.00 1.37 1.37 20,652.17 20,559.07 08/01/98
253 2405 0.10 1.37 1.30 174.07 173.09 08/01/98
254 1851 0.15 1.52 1.41 78.33 77.85 08/01/98
255 1129 0.10 1.58 1.50 76.22 75.47 08/01/98
256 1991 250.00 1.39 1.39 16,481.48 16,370.38 08/01/98
257 940906527 0.17 1.75 1.61 21.97 21.69 08/01/98
86 38 60.00 2.62 2.57 13,804.35 13,734.10 08/01/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TI / LC P & I ENVIRONMENTAL ECONOMIC MONTHLY
CONTROL LOAN RESERVE RESERVE RESERVE RESERVE TOTAL RESERVE REPLACEMENT MONTHLY
NUMBER NUMBER HOLDBACK HOLDBACK HOLDBACK HOLDBACK HOLDBACK RESERVES TAX ESCROW
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 6102551 258,364.73 14,637.00 489,564.73 65,634.47
6102551A
6102551B
6102551C
6102551D
6102551E
6102551F
6102551G
6102551H
6102551I
2 6102992 212,042.00 220,792.00 1,483.00 26,521.73
3 24
24A 10,342.25
24B 6,875.92
24C 5,568.25
24D 2,374.00
24E 1,461.33
24F 5,368.25
24G 2,252.75
24H 3,473.83
24I 3,827.58
24J 1,126.42
24K 1,458.83
24L 2,279.83
24M 2,034.92
24N 854.17
24O 1,488.08
24P 1,163.08
24Q 3,670.92
24R 1,631.33
4 1548 3,223,584.00 3,223,584.00
5 6102628 144,163.65 144,163.65 3,923.33 4,519.59
6 6102944 78,820.52 750.00 79,570.52 10,396.86 10,673.67
7 6102945 54,616.31 750.00 55,366.31 7,832.94 2,601.12
8 6102946 28,457.51 750.00 29,207.51 5,201.26 7,824.78
9 6102947 26,289.85 750.00 27,039.85 4,805.94 5,106.01
11 2555 310,000.00 20,082.19
12 6103017
14 10 17,574.39 17,574.39 6,788.00 17,582.25
13 1907 11,731.66 26,097.60
1907A
1907B
1907C
1907D
1907E
1907F
1907G
15 2534 27,601.88
16 1905 28,633.54 23,520.72
1905A
1905B
1905C
1905D
1905E
1905F
1905G
1905H
1905I
17 2 2,122.00 32,763.35
18 3423 1,125.00 13,605.00 17,294.74
19 1376
20 1908 12,505.76
1908A
1908B
1908C
1908D
21 18 79,064.99 79,064.99 1,674.35 6,552.80
22 1556 12,374.21
23 1 73,145.45 73,145.45 1,618.83 17,629.54
24 1210 15,156.00 57,774.80
25 9
26 2052 17,195.26
27 6102530 96,068.03 144,443.03 2,277.08 9,971.67
28 6102876 84,329.77 249,641.77 7,167.00 10,229.08
29 2636 5,855.66
30 2394 36,750.00 4,569.01
31 6102859 66,115.86 618.75 66,734.61 8,104.00 8,387.84
32 1885 29,052.06
33 6102580 81,305.84 81,618.34 3,286.00 11,735.18
34 2358 750.00 750.00 9,143.75
35 1076 13,647.84
36 6102991 8,720.00 13,215.01
37 3641 448.20 224.00 1,480.66
38 6102452 70,651.56 70,651.56 5,822.55
41 3083 8,930.72
39 2498 9,030.00 9,030.00 5,869.61
40 2499 11,750.00 11,750.00 8,813.43
42 1224 1,125.00 1,125.00 5,885.73
43 1269 4,862.15
44 6102663 72,257.24 72,257.24 2,762.00 11,990.00
45 34 138,187.50 138,187.50 4,666.67 18,833.33
46 6102762 25,000.00 80,035.64 105,035.64 1,166.00 12,315.27
47 16 32,337.68 32,337.68 2,404.98 14,737.91
48 6102442 220,000.00 55,588.00 275,588.00 4,588.00 22,890.20
49 1776 8,938.69
50 6102461 58,147.58 58,147.58 570.00 3,813.25
51 3645 10,058.00 5,029.00 16,018.50
52 1922 15,044.00
53 7608323 65,870.20 500.00 122,570.20 3,977.00 10,082.19
55 1755 54,000.00 54,000.00 16,828.66
54 6102880 64,015.03 64,015.03 4,800.00 6,026.79
56 7 80,847.00 80,847.00 3,312.00 12,296.88
7A
7B
7C
7D
57 6102950 68,863.35 750.00 69,613.35 6,683.00 4,753.58
58 2076 5,851.92
59 6102533 64,233.24 64,233.24 8,800.00 4,753.10
61 940906323 8,154.23
62 940906324 9,517.72
60 3 35,702.53 35,702.53 849.93 17,183.31
63 3632 45,144.21 215.50 5,795.75
64 1541
65 1585 8,406.86
66 6102764 4,950.00 680.00 6,926.36
67 1782 124,000.00 124,000.00 13,359.94
68 1116 6,690.63
70 1057 200,000.00 3,332.30 203,332.30 27,734.61
1057A
1057B
69 2635 3,940.75
71 6102541 59,946.67 405,946.67 4,425.00 10,778.12
72 6102532 66,958.06 66,958.06 1,309.00 8,849.44
73 1263 76,125.00 76,125.00 10,843.66
74 13 35.64 35.64 6,610.75 7,208.33
75 12 34.70 34.70 6,098.17 5,291.67
76 1921 87,750.00 19,895.40
77 1660 5,409.23
78 3218 4,058.15
82 940905374
79 6102708 43,611.03 57,174.03 3,020.00 4,783.88
80 1859 6,353.46
81 1523 4,558.43
83 6102902 43,868.64 43,868.64 1,662.50 2,873.97
84 3642 469,721.20 10,139.58 11,047.49
87 6102709 2,250.00 4,368.73
88 1152 80,000.00 80,000.00 4,972.19
89 6102776 45,737.35 51,737.35 854.00 11,045.37
90 15 5,867.42 5,867.42 2,547.92 6,369.83
91 6102499 41,653.16 43,716.16 2,130.00 6,370.56
92 2212 3,475.00 106,800.00 10,003.00 2,764.13
93 2910 1,125.00 56,501.00 3,438.00 3,510.24
85 23 1,590.00 3,474.63
94 6102765 42,727.66 52,477.66 3,498.00 6,457.82
95 25 516.67 3,360.03
97 11 25.54 25.54 5,523.42 4,208.33
96 1704 892.35
98 1013 34,702.03 5,478.79
99 2307 300,000.00 300,000.00
100 14 24.46 24.46 8,150.92 4,195.83
101 6102769 38,069.29 38,069.29 2,900.00 7,338.16
102 37 5,000.00 5,000.00 2,904.17 16,783.33
103 2096 17,856.00 4,300.00 22,156.00 22,857.00
106 1144 10,632.65
104 1666
105 6102707 29,256.73 29,256.73 4,913.15
107 6102974 36,254.00 36,254.00 2,581.00 5,017.10
108 36 5,000.00 5,000.00 204.60 4,166.67
109 6 27,883.05 27,883.05
110 6102542 45,750.00 33,614.98 79,364.98 2,134.00 4,726.56
111 1108 8,095.45
112 6102875 27,483.00 29,084.64 69,645.00 174,212.64 2,238.41
113 6102705 32,579.27 32,579.27 2,635.00 4,748.38
116 1022 4,251.53
114 6102969 175,102.00 28,074.00 203,176.00 501.00 3,823.74
115 1694 1,472.90 1,472.90 2,729.05
117 1534 4,938.35
118 6102637 45,000.00 34,088.87 192,213.87 1,268.00 6,731.21
119 1088 3,125.89
120 28 11,777.40 11,777.40 642.85 398.24
121 6102657 10,160.00 28,699.46 50,535.46 787.00 3,086.91
122 2311 4,000.00
123 1275 2,619.84
124 1890 7,201.24
125 20 691.67
126 1403
127 1538 575.00 575.00 2,372.58
128 2027 25,000.00 25,000.00 4,876.54
129 1795 2,380.87
130 1089 8,776.43
131 19
132 1611 200,000.00 200,000.00 5,789.72
133 6102451 27,767.70 27,767.70 4,667.20
134 7608308 30,922.41 30,922.41 1,551.00 3,853.83
135 2693 314.17
136 1863 42,000.00 42,000.00 4,529.72
137 2558 255,000.00 1,125.00 297,375.00 2,926.68
138 1599 5,456.72 6,250.00 9,196.03
139 1929 1,125.00 1,125.00 2,976.25
142 1442 3,028.06
140 6102706 30,970.20 30,970.20 1,263.00 5,775.25
143 1512
141 6102891 25,155.85 25,155.85 422.25 4,777.66
144 7608309 24,380.09 24,380.09 1,083.00 3,258.10
145 1535 4,832.30
146 35 1,791.67 12,666.67
147 1975 92,000.00 92,000.00 4,685.75
148 2393 3,000.00 3,000.00
149 1407 6,066.59
150 2238 5,238.22
151 6102803 29,230.24 675.00 65,605.24 4,366.00 2,207.70
152 6102972 21,124.47 29,499.47 278.75 868.28
153 1607
154 5 4,044.00 3,554.82
155 6102460 1,825.00 2,045.44
157 1781 2,457.08
1781A
1781B
156 7608315 22,237.27 26,612.27 1,071.00 2,109.81
158 17 5,867.42 5,867.42 1,000.00 4,583.33
159 22 4,741.00 3,956.49
160 1440 1,125.00 55,508.41 3,702.22
161 6102629 20,535.50 20,535.50 2,026.00 672.04
162 1448 5,000.00 5,000.00 4,714.98
163 6102834 26,704.44 1,500.00 28,204.44 5,166.80
164 1321 5,834.00 5,834.00 1,376.34
165 3638 1,382.10 344.89 1,470.94
167 3633 7,595.67 144.72 6,384.49
166 1246 1,810.00
168 2917 1,125.00 71,625.00 1,518.33
169 6102648 11,280.00 1,409.00 2,706.36
170 1912 1,627.56
171 1891
172 6102443 5,667.03 20,612.82 55,754.85 330.00 1,095.94
173 940906544
174 1504 23,125.00 4,698.88
178 0998 2,205.83
179 0999 2,508.50
175 1810 3,526.60
176 6102988 18,905.00 28,355.00 1,124.47 1,537.56
177 3182 15,200.00 15,200.00 2,227.24
180 2463 870.86
181 1641 2,568.25
182 6102932 130,000.00 23,856.79 153,856.79 143.85 7,040.35
183 1555 340,000.00 360,625.00 4,697.40
184 1090 2,023.33
185 940906539
186 2660 1,185.31
189 1130 132,500.00 132,500.00 255.64
188 2043 2,068.34
187 2392 1,125.00 1,125.00 2,023.71
190 1988
191 1573 2,250.00 2,250.00 938.85
192 1886 4,296.41
193 1075 3,618.77
196 940906545
194 1747 4,569.22
195 1041 1,416.02
197 7608318 60,000.00 22,623.50 84,748.50 985.25 3,175.41
198 6102904 16,195.92 16,195.92 800.00 1,816.80
199 1239 49,600.00 49,600.00 3,531.23
200 1015 76,000.00 4,934.03
201 1720 1,824.70
202 1086 1,819.50
203 2168
205 1060 1,250.00
204 2055 1,125.00 1,125.00 4,554.80
206 6102970 17,283.63 10,875.00 28,908.63 436.00 5,550.62
207 6102901 15,146.08 15,146.08 446.00 1,273.21
208 6102903 12,969.00 12,969.00 56.15
209 1779 2,625.00 2,625.00 2,019.44
210 1005 50,000.00 2,879.86
211 1811 1,125.00 1,125.00 3,335.95
212 6102656 450.00 8,575.00 1,368.75 1,920.81
213 4 9,084.39 9,084.39 2,641.49 6,851.41
214 2060 24,000.00 1,588.92
215 940907039 4,350.03
216 1852 18,332.00 18,332.00 1,509.63
217 2665 1,212.63 1,212.63 1,798.23
218 940906528
219 1432 2,496.16
221 1102 4,977.97
220 1001 1,125.00 32,125.00 973.35
222 2815 3,154.67
223 2056 1,824.43
224 6102896 13,140.00 13,140.00 464.36 2,587.61
225 6102900 469.00 12,634.23 16,680.73 143.00 1,002.93
226 6102943 14,363.65 300.00 14,663.65 1,867.00 1,826.59
227 1435 1,778.85
228 7608319 15,745.01 24,308.01 373.00 2,038.79
229 7608320 15,883.63 2,880.00 24,388.63 3,361.35
230 2456 3,204.60
231 6102840 13,346.22 742.00 14,088.22 1,687.50 1,905.86
232 2133 2,346.58
233 1580 1,436.33
234 940907278 3,587.38
236 1320 890.07
235 1855 2,455.93
237 1647 12,750.00 1,529.28
238 1030 2,250.00 2,250.00 8,907.06
239 6102770 12,726.11 675.00 32,526.11 1,462.00 1,787.02
240 6102779 24,314.00 13,371.82 81,087.82 605.00 1,772.48
241 1288 3,613.27
242 2756 500.00 500.00
243 1145 6,920.00 16,070.00 2,517.20
244 6102540 13,326.32 21,482.32 1,417.00 1,890.24
245 1949 854.65
246 2017 463.90
247 1854 28,769.00 2,595.82
248 6102531 13,599.32 15,537.32 1,875.00 2,977.23
249 1073 2,414.69
250 940906529
251 2200 1,005.47
252 2115 675.00 24,400.00 25,075.00
253 2405
254 1851 4,448.00 4,448.00 1,529.05
255 1129 907.05
256 1991 985.00
257 940906527
86 38 230.00 55.69
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
MONTHLY MONTHLY
CONTROL LOAN INSURANCE TI/LC
NUMBER NUMBER ESCROW ESCROW
- ---------------------------------------------------------
<S> <C> <C> <C>
1 6102551 6,666.68
6102551A
6102551B
6102551C
6102551D
6102551E
6102551F
6102551G
6102551H
6102551I
2 6102992 2,407.58 20,644.00
3 24
24A 2,250.00
24B 1,808.33
24C 1,366.67
24D 841.67
24E 1,725.00
24F 691.67
24G 733.33
24H 800.00
24I 16.67
24J 266.67
24K 700.00
24L 66.67
24M 600.00
24N 133.33
24O 333.33
24P 225.00
24Q 33.33
24R 525.00
4 1548
5 6102628 2,147.09
6 6102944 874.67
7 6102945 1,176.33
8 6102946 1,402.58
9 6102947 1,452.25
11 2555 5,666.67
12 6103017
14 10 2,166.67 2,500.00
13 1907
1907A
1907B
1907C
1907D
1907E
1907F
1907G
15 2534 2,430.22
16 1905
1905A
1905B
1905C
1905D
1905E
1905F
1905G
1905H
1905I
17 2 2,265.75
18 3423 5,993.42
19 1376
20 1908
1908A
1908B
1908C
1908D
21 18 650.00 8,333.33
22 1556 1,057.71
23 1
24 1210 210.92
25 9
26 2052 1,925.85
27 6102530 1,837.75 4,166.67
28 6102876
29 2636 3,750.00
30 2394 2,703.17
31 6102859 3,419.08
32 1885
33 6102580 3,730.58
34 2358 5,271.00
35 1076 635.75
36 6102991 1,368.42
37 3641 955.25
38 6102452 4,649.26
41 3083 1,259.83
39 2498 2,154.63
40 2499 2,154.63
42 1224 542.33
43 1269 367.67
44 6102663 1,054.56
45 34 2,240.67
46 6102762 822.34 8,333.00
47 16 1,666.67 4,583.33
48 6102442 1,132.50
49 1776 1,079.83
50 6102461 554.58
51 3645 2,111.50
52 1922 1,794.75
53 7608323 1,020.42
55 1755 5,427.83 9,000.00
54 6102880 3,856.42
56 7 2,741.25 8,983.00
7A
7B
7C
7D
57 6102950 887.92
58 2076 638.83
59 6102533 3,259.70
61 940906323
62 940906324 583.33
60 3 1,120.85 1,667.67
63 3632 2,066.50
64 1541
65 1585 1,075.00
66 6102764 146.67
67 1782 6,000.00
68 1116 787.42
70 1057 1,297.42 256.33
1057A
1057B
69 2635 2,094.80
71 6102541 4,259.67
72 6102532 1,689.08
73 1263 1,305.83
74 13 1,448.43
75 12 1,170.06
76 1921 23,950.00
77 1660 409.83
78 3218 1,035.75
82 940905374
79 6102708 843.50
80 1859 3,768.58
81 1523 3,213.00
83 6102902 281.59
84 3642 4,400.83
87 6102709 1,055.04
88 1152 1,341.67
89 6102776 834.25 700.00
90 15 833.33
91 6102499 1,326.66 1,250.00
92 2212 1,345.67
93 2910 1,018.42
85 23 652.50
94 6102765 2,380.33
95 25
97 11 1,144.32
96 1704 762.00
98 1013 1,195.20
99 2307
100 14 1,480.50
101 6102769 1,192.16
102 37 1,518.07 1,250.00
103 2096 473.42 5,952.00
106 1144 1,829.42
104 1666
105 6102707 511.91
107 6102974 1,991.50
108 36 833.33
109 6
110 6102542 771.42
111 1108 1,970.25
112 6102875 336.14
113 6102705 710.75
116 1022 1,609.25
114 6102969 463.41
115 1694 523.66 347.90
117 1534 690.53
118 6102637 610.75
119 1088 1,418.67
120 28 401.17 1,667.00
121 6102657 512.75
122 2311 258.71
123 1275 1,250.75
124 1890 1,640.25
125 20
126 1403
127 1538 390.92
128 2027 611.25
129 1795 341.67
130 1089 727.92
131 19
132 1611 1,150.06
133 6102451 521.58
134 7608308 1,097.25 2,000.00
135 2693 640.50
136 1863 1,000.00
137 2558 799.58 5,000.00
138 1599 2,543.83
139 1929 623.17
142 1442 512.49
140 6102706 1,395.42
143 1512
141 6102891 378.17
144 7608309 924.50
145 1535
146 35 710.75
147 1975 252.50
148 2393 3,000.00
149 1407 443.00
150 2238
151 6102803 1,686.00
152 6102972 583.25
153 1607
154 5 2,123.67
155 6102460 723.92
157 1781 7,308.92
1781A
1781B
156 7608315 794.09 833.33
158 17 833.33
159 22 1,205.42
160 1440 2,476.83
161 6102629 567.33
162 1448
163 6102834 1,132.50
164 1321 355.92 2,917.00
165 3638 752.00
167 3633 1,062.67
166 1246 390.00
168 2917 345.50
169 6102648 644.25
170 1912 458.33
171 1891
172 6102443 559.67
173 940906544
174 1504
178 0998 654.25
179 0999 300.58
175 1810 1,409.83
176 6102988 396.84
177 3182 1,464.83
180 2463 253.17
181 1641 1,355.93
182 6102932 416.59
183 1555 1,484.97
184 1090 416.58
185 940906539
186 2660 1,100.25
189 1130 119.17
188 2043 292.50
187 2392 1,298.50
190 1988
191 1573 1,186.83
192 1886 465.50
193 1075 464.42
196 940906545
194 1747
195 1041
197 7608318 463.58
198 6102904 1,283.76
199 1239 562.92 2,800.00
200 1015 1,327.11
201 1720 444.08
202 1086 481.00
203 2168
205 1060 1,942.33
204 2055 787.71
206 6102970 157.60
207 6102901 98.42
208 6102903
209 1779 509.17
210 1005
211 1811 1,342.42
212 6102656 763.12
213 4 747.24 833.33
214 2060 448.83
215 940907039 221.08
216 1852 4,583.00
217 2665 129.50 87.63
218 940906528
219 1432 764.50
221 1102 247.50
220 1001 1,260.67
222 2815 385.08
223 2056
224 6102896 500.00
225 6102900 1,025.93 469.00
226 6102943 274.83
227 1435 681.67
228 7608319 410.67
229 7608320 61.25
230 2456 359.83
231 6102840 858.10
232 2133 863.03
233 1580 264.92
234 940907278 640.58 4,350.00
236 1320
235 1855
237 1647 650.58
238 1030 452.00
239 6102770 1,282.83
240 6102779 1,451.58
241 1288 407.92
242 2756 98.08 500.00
243 1145 446.75 865.00
244 6102540 1,832.34
245 1949 801.83
246 2017 143.42
247 1854
248 6102531 740.00
249 1073 610.58
250 940906529
251 2200 107.83
252 2115
253 2405
254 1851 1,112.00
255 1129 132.75
256 1991 471.42
257 940906527
86 38 97.50
</TABLE>
<PAGE>
ANNEX B
ADDITIONAL MULTIFAMILY LOAN CHARACTERISTICS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CONTROL LOAN CUTOFF DATE PROPERTY
# NUMBER ORIGINATOR BALANCE PROPERTY NAME PROPERTY COUNTY ZIP
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
45 34 CIBC $ 8,288,540.62 Clarendon Gardens Kings County 11203
146 35 CIBC $ 2,794,512.07 Royal Gardens Rockland County 10977
51 3645 KEY $ 7,688,808.84 Hunters Hollow Apartments Cuyahoga 44136
178 0998 NRF $ 1,113,343.55 Fox Run Apartments Lucas 41612
179 0999 NRF $ 1,106,422.23 Riverbend Apartments Lucas 63611
220 1001 NRF $ 1,444,629.61 Royal Orleans Apartments Jasper 64801
98 1013 NRF $ 4,168,686.68 The College Park Apartments Parker 76086
200 1015 NRF $ 1,789,495.77 Fox Hollow Dallas 75243
116 1022 NRF $ 3,486,530.84 Knightsbridge Apartments Jackson 64137
238 1030 NRF $ 1,200,000.00 35 W. 81st Street New York 10024
205 1060 NRF $ 1,708,197.15 Broussard Plaza Apartments East Baton Rouge Parish 70810
130 1089 NRF $ 3,133,652.53 River's Edge and Cowesett Terrace Kent 02893
111 1108 NRF $ 3,698,090.20 Oakwood Village Retirement Center Dallas 75043
43 1269 NRF $ 3,872,473.95 Parkside West Retirement Facility King 98002
160 1440 NRF $ 2,427,942.84 Kingston Cove Apartments Sedgwick 67217
65 1585 NRF $ 6,603,087.37 Margarita Summit Apartments Riverside 92592
201 1720 NRF $ 1,788,899.61 Libertwo Apartments Clark 89119
157 1781-A NRF $ 2,490,410.22 Tara Apartments Woodward 73801
157 1781-B NRF Briarwood
256 1991 NRF $ 884,000.67 Brookside Apartments Jackson 64053
26 2052 NRF $10,166,394.89 Creek House Commons Apartments Monroe 14626
204 2055 NRF $ 1,716,856.20 Johnson Parkway Apartments Ramsey 55106
252 2115 NRF $ 945,717.26 Indian Hills Apartments South St. Louis 63123
34 2358 NRF $ 9,255,675.11 Wildwood Acres Apartments Hillsborough 33617
187 2392 NRF $ 2,021,703.90 Orleans Manor Apartments McKinnley 87301
230 2456 NRF $ 1,298,412.90 Wellington Manor Apartments Wayne 48183
180 2463 NRF $ 2,144,817.65 Preserve Apartments La Plata 81301
15 2534 NRF $13,817,378.84 Adams Station Apartments Albany 12054
11 2555 NRF $16,444,887.90 Pebblebrook Apartments Hartford 06053
186 2660 NRF $ 2,045,534.41 Oak Park Apartments Payne 74075
222 2815 NRF $ 1,423,260.30 Old Orchard Apartments Ingham 48842
93 2910 NRF $ 4,389,578.72 Riviera Village Maricopa 85281
168 2917 NRF $ 2,297,187.61 Villa Primera Apartments San Diego 91950
041 3083 NRF $ 8,792,843.45 The Crest Apartments Riverside 92507
177 3182 NRF $ 2,200,000.00 Casa Grande Apartments San Diego 92103
78 3218 NRF $ 5,295,542.98 River Village Apartments San Diego 92026
18 3423 NRF $12,139,942.08 Amberwood Apartments Prince George's 20747
038 6102452 PMCC $ 8,955,522.70 Pacific Woods Apartments Orange 92704
155 6102460 PMCC $ 2,557,414.97 Covina Plaza Apartments Los Angeles 91722
248 6102531 PMCC $ 994,494.83 Ranchview Gardens Apartments Erie 44870
59 6102533 PMCC $ 6,971,981.17 Taylor's Crossing Apartments Jefferson 40299
244 6102540 PMCC $ 1,141,464.53 Sandcastle Apartments Harrison 39560
71 6102541 PMCC $ 5,965,909.13 The Palms at Livingston Phase I Apartments Hillsborough 33549
5 6102628 PMCC $19,538,161.94 Old Orchard Apartments Santa Clara 95050
169 6102648 PMCC $ 2,293,339.38 Park Village Apartments Orange County 90621
212 6102656 PMCC $ 1,595,119.06 Country Square Apartments Phase I Hillsborough 33615
44 6102663 PMCC $ 8,372,756.68 The Preserve At Paradise Island - Phase IV Duval 32256
113 6102705 PMCC $ 3,591,473.48 Golden Grove Terrace Apartments San Diego 91945
79 6102708 PMCC $ 5,237,039.89 Village of Santa De La Paz Apartments Clark 89014
87 6102709 PMCC $ 4,787,986.80 Village of Santo Domingo Apartments Clark 89117
94 6102765 PMCC $ 4,283,982.40 Townhomes at Regency Place Philadelphia 19154
101 6102769 PMCC $ 3,986,795.65 Forest Glen Phase II Apartments Volusia 32114
239 6102770 PMCC $ 1,199,065.74 Cornerstone Apartments Tarrant 76117
163 6102834 PMCC $ 2,343,982.36 The Woods Apartments Forsyth 27106
231 6102840 PMCC $ 1,296,957.34 Curiosity Creek Apartments Hillsborough 33612
31 6102859 PMCC $ 9,726,770.04 Chestnut Hills and Chestnut Towers Apartments Jackson 64131
28 6102876 PMCC $ 9,991,899.64 Bucks Meadow Apartments Bucks 19020
54 6102880 PMCC $ 7,395,401.18 Campus Walk Apartment Complex New Hanover 28403
198 6102904 PMCC $ 1,823,901.78 River Ridge Villas Ventura 93065
226 6102943 PMCC $ 1,398,230.34 Sussex Court Apartments Dauphin 17109
206 6102970 PMCC $ 1,698,888.23 224 East 48th Street New York 10016
107 6102974 PMCC $ 3,795,979.79 Conestoga West Apartments Lancaster County 17603
144 7608309 PMCC $ 2,835,997.95 Kingsley Apartments Los Angeles 90027
53 7608323 PMCC $ 7,483,557.38 Morningside Chase Apartments Fulton 30324
</TABLE>
<PAGE>
[TABLE RESTUBBED FROM ABOVE]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CONTROL LOAN ARE THERE LANDLORD PAYS NUMBER OF AVERAGE RENT NUMBER OF ONE AVERAGE RENT ONE NUMBER OF TWO AVERAGE RENT TWO
# NUMBER ELEVATORS? ALL UTILITIES? STUDIO UNITS STUDIO UNITS BEDROOM UNITS BEDROOM UNITS BEDROOM UNITS BEDROOM UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 34 No No 0 160 $ 615 64 $ 708
146 35 No No 3 $598 65 $ 638 16 $ 709
51 3645 No No 0 40 $ 695 168 $ 843
178 0998 No No 0 37 $ 337 25 $ 420
179 0999 No No 0 24 $ 322 36 $ 382
220 1001 No No 0 72 $ 337 41 $ 407
98 1013 No No 32 $379 56 $ 410 80 $ 476
200 1015 No No 0 100 $ 378 32 $ 545
116 1022 No No 5 $353 60 $ 385 94 $ 463
238 1030 Yes No 24 $387 24 $ 724 24 $1,174
205 1060 No No 0 24 $ 310 79 $ 344
130 1089 No No 0 6 $ 579 78 $ 680
111 1108 Yes Yes 3 $768 85 $1,105 24 $1,408
43 1269 Yes Yes 0 81 $1,234 6 $1,505
160 1440 No No 5 $329 140 $ 372 105 $ 430
65 1585 No No 0 0 140 $ 702
201 1720 No No 88 $431 14 $ 495 0
157 1781-A No No 0 4 $ 270 104 $ 309
157 1781-B No 0 88 $ 258 118 $ 312
256 1991 No No 0 38 $ 300 16 $ 394
26 2052 Yes No 0 0 152 $ 574
204 2055 No No 12 $361 38 $ 427 34 $ 528
252 2115 No No 0 16 $ 339 28 $ 474
34 2358 No No 0 1 $ 750 332 $ 551
187 2392 No Yes 0 12 $ 475 80 $ 510
230 2456 No No 4 $410 32 $ 442 24 $ 497
180 2463 No No 0 20 $ 638 20 $ 820
15 2534 No No 0 94 $ 635 188 $ 737
11 2555 Yes No 0 171 $ 645 315 $ 724
186 2660 No No 0 40 $ 336 80 $ 397
222 2815 No No 0 64 $ 392 32 $ 452
93 2910 No No 0 80 $ 489 85 $ 552
168 2917 No No 0 96 $ 418 0
041 3083 No No 18 $523 72 $ 562 130 $ 716
177 3182 Yes No 17 $451 36 $ 567 4 $ 768
78 3218 No No 0 59 $ 576 64 $ 674
18 3423 No Yes 0 97 $ 569 427 $ 645
038 6102452 No No 0 148 $ 723 84 $ 884
155 6102460 No No 0 61 $ 580 21 $ 738
248 6102531 No No 0 24 $ 360 64 $ 420
59 6102533 No Yes 0 72 $ 430 252 $ 469
244 6102540 No No 0 0 72 $ 397
71 6102541 No No 0 176 $ 460 60 $ 612
5 6102628 No No 0 98 $1,053 122 $1,184
169 6102648 No No 0 16 $ 558 40 $ 673
212 6102656 No No 14 $329 51 $ 409 8 $ 529
44 6102663 No No 0 36 $ 725 96 $ 896
113 6102705 No No 0 36 $ 505 67 $ 610
79 6102708 No No 0 48 $ 612 72 $ 675
87 6102709 No No 0 40 $ 621 80 $ 725
94 6102765 No No 0 0 141 $ 650
101 6102769 No No 0 0 76 $ 612
239 6102770 No No 0 24 $ 349 44 $ 434
163 6102834 Yes Yes 0 82 $ 480 103 $ 587
231 6102840 No No 16 $345 59 $ 404 6 $ 497
31 6102859 Yes No 0 145 $ 450 244 $ 528
28 6102876 No No 0 170 $ 536 130 $ 637
54 6102880 No No 0 288 $ 425 0
198 6102904 No No 0 12 $ 748 18 $ 841
226 6102943 No No 0 56 $ 566 0
206 6102970 Yes No 0 24 $1,144 0
107 6102974 No No 0 55 $ 535 66 $ 600
144 7608309 Yes No 2 $438 2 $ 650 60 $ 763
53 7608323 No No 0 72 $ 725 113 $ 895
</TABLE>
<PAGE>
[TABLE RESTUBBED FROM ABOVE]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CONTROL LOAN NUMBER OF THREE AVERAGE RENT THREE TOTAL
# NUMBER BEDROOM UNITS BEDROOM UNITS APTS COMMENTS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
45 34 0 224
146 35 2 $ 933 86
51 3645 0 208
178 0998 0 62
179 0999 0 60
220 1001 0 113
98 1013 0 168
200 1015 0 132
116 1022 48 $ 582 207
238 1030 72
205 1060 24 $ 383 127
130 1089 0 84
111 1108 0 114 includes 2 employee units
43 1269 0 87
160 1440 1 $ 555 251
65 1585 3 $ 885 143
201 1720 0 102
157 1781-A 3 $ 428 111
157 1781-B 11 $ 382 218 includes 1 employee unit
256 1991 0 54
26 2052 88 $ 671 240
204 2055 0 84
252 2115 2 $ 550 46
34 2358 4 $ 778 337
187 2392 8 $ 585 100
230 2456 4 $ 600 64
180 2463 0 40
15 2534 0 282
11 2555 0 486
186 2660 0 120
222 2815 0 96
93 2910 0 165
168 2917 0 96
041 3083 0 220
177 3182 0 57
78 3218 0 123
18 3423 75 $ 822 599
038 6102452 0 232
155 6102460 0 82
248 6102531 2 $ 470 90
59 6102533 60 $ 550 384
244 6102540 0 72
71 6102541 0 236
5 6102628 0 220
169 6102648 2 $ 850 58
212 6102656 0 73
44 6102663 0 132
113 6102705 0 103
79 6102708 0 120
87 6102709 0 120
94 6102765 18 $ 725 159
101 6102769 40 $ 688 116
239 6102770 6 $ 593 74
163 6102834 24 $ 695 209
231 6102840 0 81
31 6102859 0 389
28 6102876 44 $ 773 344
54 6102880 0 288
198 6102904 0 30
226 6102943 0 56
206 6102970 0 24
107 6102974 0 121
144 7608309 1 $1,150 65
53 7608323 16 $1,295 201
</TABLE>
<PAGE>
ANNEX C
- -------------------------------------------------------------------------------
STRUCTURAL AND COLLATERAL TERM SHEET
PRUDENTIAL SECURITIES SECURED FINANCING CORP. (DEPOSITOR)
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-C1
$1,018,589,000 (APPROXIMATE)
- -------------------------------------------------------------------------------
APPROX. SECURITIES STRUCTURE
- ----------------------------
Approx. Expected
Face/Notional Credit Weighted Principal
Expected Rating Amount Support Average Payment
Class (Moody's/S&P) ($000's) (% of UPB) Life(a) Window(a)
- -------------------------------------------------------------------------------
Publicly Offered Classes
A-1A Aaa/AAA 258,548 28.75 5.500 9/98-9/07
A-1B Aaa/AAA 384,826 28.75 9.503 9/07-7/08
A-2MF Aaa/AAA 176,673 28.75 9.565 4/05-7/08
B Aa2/AA 57,548 23.75 9.900 7/08-7/08
C A2/A 63,303 18.25 11.067 7/08-5/10
D Baa2/BBB 60,426 13.00 13.155 5/10-1/13
E Baa3/BBB- 17,265 11.50 14.400 1/13-1/13
Privately Placed Classes
A-EC Privately 1,150,953 28.75
Offered
F Privately 25,897 9.25 14.414 1/13-2/13
Offered
G Privately 28,774 6.75 14.538 2/13-4/13
Offered
H Privately 8,633 6.00 14.650 4/13-4/13
Offered
J Privately 11,510 5.00 14.685 4/13-5/13
Offered
K Privately 17,265 3.50 14.836 5/13-9/13
Offered
L Privately 14,387 2.25 16.070 9/13-9/15
Offered
M Privately 8,633 1.50 18.266 9/15-12/17
Offered
N-1 Privately 17,265 0.00 19.501 12/17-7/18
Offered
N-2 Privately 17,265 0.00 19.501 12/17-7/18
Offered
Total Securities: 1,150,953
- -------------------------------------------------------------------------------
(a) Calculated at 0% CPR and no balloon extension
COLLATERAL FACTS:
- -----------------
Cut-Off Date Balance: $1,150,953,450
Number of Mortgage Loans: 256
Average Cut-Off Date Balance: $4,495,912
Weighted Average Mortgage Interest Rate: 7.42%
Weighted Average Original Amortization Term: 322.6 mos.
Weighted Average DSCR: 1.41x
Weighted Average LTV Ratio: 72.18%
Weighted Average Balloon/ARD LTV Ratio: 56.69%
Weighted Average Remaining Term to Maturity: 132 mos.
NUMBER OF
PROPERTY CUT-OFF MORTGAGE PERCENT BY WTD. AVG.
TYPE BALANCE PROPERTIES BALANCE DSCR
- -------------------------------------------------------------------------------
Multifamily 287,347,536 64 24.97 1.40
Retail - Anchored 196,419,338 32 17.07 1.40
Office 192,027,500 53 16.68 1.35
Retail - Unanchored 122,276,346 49 10.62 1.39
Industrial 80,505,010 28 6.99 1.34
Hotel 75,783,825 17 6.58 1.56
Retail - Single Tenant 56,870,053 20 4.94 1.31
Mixed Use 34,718,715 10 3.02 1.37
Assisted Living 27,158,978 5 2.36 1.59
Warehouse 25,276,838 9 2.20 1.39
Other 52,569,311 16 4.57 1.66
- -------------------------------------------------------------------------------
Total $1,150,953,450 303 100.00 1.41
NUMBER OF
COLLATERAL CUT-OFF MORTGAGE % OF WTD. AVG. WTD. AVG.
CONTRIBUTORS BALANCE LOANS POOL DSCR COUPON
- -------------------------------------------------------------------------------
NRF $576,441,697 50.08 1.43 7.38
145
PMCC 368,823,327 71 32.05 1.36 7.17
CIBC 181,446,213 29 15.76 1.43 7.92
Other 24,242,213 11 2.11 1.46 8.63
- -------------------------------------------------------------------------------
Total $1,150,953,450 256 100.00 1.41 7.42
KEY FEATURES:
- -------------
Lead Manager & Prudential Securities Incorporated ("PSI")
Placement Agent:
Co-Lead Manager & CIBC Oppenheimer Corp. ("CIBCOPCO.")
Placement Agent:
Mortgage Loan National Realty Finance L.C. ("NRFinance")
Sellers: Prudential Mortgage Capital Funding, LLC ("PMCC")
CIBC Inc. ("CIBC")
Transferor: Prudential Securities Credit Corp. ("PSCC")
Master Servicer: National Realty Funding, L.C., a Missouri limited
liability company.
Special Servicer: National Realty Funding, L.C., a Missouri limited
liability company.
Trustee: The Chase Manhattan Bank, a nationally chartered bank
with its principal offices in New York, New York. The
Trustee will be obligated to make any principal and
interest advances required to be made in the event that
the Master Servicer or Special Servicer defaults in its
performance of its obligation to make such advances.
Pricing Date: To be announced
Settlement: On or about August 21, 1998
Cut-Off Date: August 1, 1998
Determination Date: The 11th of each month, or if the 11th is not a
Business Day, the Business Day immediately following
the 11th day.
Distribution Date: The 15th of each month, or if the 15th day is not a
Business Day, the Business Day immediately following
the 15th day. But in no event shall it be earlier than
four Business Days after the Determination Date.
First Pay Date: September 15, 1998
ERISA Eligible: A-1A, A-1B, A-2MF, & A-EC
Structure: See "Structural Overview" herein
Interest Accrual Calendar month preceding distribution
Period:
Day Count: 30/360
Tax Treatment: REMIC
Rated Final
Distribution Date: July 15, 2028
Clean-up Call: 1%
Minimum The Offered Certificates will be issued in
Denominations: minimum denominations of $50,000.00 and multiples of
$1.00 in excess thereof.
Pricing Assumption: With the exception of two loans totaling $9.024
million, which are assumed to prepay immediately after
their respective lockout periods, each loan will be
assumed to pay as scheduled to its respective maturity
or anticipated repayment date.
SIGNIFICANT STATE CONCENTRATIONS
GEOGRAPHIC CUT-OFF # OF % BY WTD. AVG.
DISTRIBUTION BALANCE PROPERTIES BALANCE DSCR
- -------------------------------------------------------------------------------
California $176,102,682 43 13.30 1.38
Texas 138,726,765 47 12.05 1.36
Ohio 77,893,701 27 6.77 1.37
New York 70,717,153 16 6.14 1.33
Florida 65,197,219 16 5.66 1.34
Illinois 56,742,069 10 4.93 1.55
Virginia 48,850,998 6 4.24 1.44
New Jersey 44,446,678 18 3.86 1.42
Pennsylvania 38,380,408 12 3.33 1.38
Arizona 37,266,245 6 3.24 1.26
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES INCORPORATED 1 CIBC OPPENHEIMER CORP.
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
TRANSACTION HIGHLIGHTS
- -------------------------------------------------------------------------------
o Diversification
o 256 loans secured by 303 properties
o Top 5 loans only 10% of pool; Top 10 only 17%
o California 15%, Texas 12%, no other state > 7%; 37 states in
total
o Balloon/ARD distribution features only 53% in 2008, and no
other year more than 16%
o Underwriting: 1.41x DSCR, 72% LTV, 57% Balloon/ARD LTV (27 year
Weighted Average Original Amortization Term)
o National Realty Finance L.C., the largest collateral contributor, will
be purchasing the non-rated and "B3" rated securities
- -------------------------------------------------------------------------------
GENERAL POOL CHARACTERISTICS
- -------------------------------------------------------------------------------
Number of Loans: 256
Number of Properties: 303
Aggregate Unpaid Principal Balance: $1,150,953,450
Aggregate Original Principal Balance: $1,156,821,524
Weighted Average Gross Coupon: 7.42%
Gross Coupon Range: 6.72% - 9.72%
Weighted Average Net Coupon: 7.35%
Net Coupon Range: 6.67% - 9.67%
Average Unpaid Principal Balance: $4,495,912
Average Original Principal Balance: $4,518,834
Maximum Unpaid Principal Balance: $30,380,396
Minimum Unpaid Principal Balance: $631,769
Maximum Original Principal Balance: $30,550,000
Minimum Original Principal Balance: $635,000
Weighted Avg. Stated Rem. Term to Balloon/Maturity: 132.28
Stated Rem Term Range: 51.000 - 239.000
Weighted Avg. Rem. Amortization Term: 317.52
Rem Amortization Term Range: 107.000 - 360.000
Weighted Average Age (First Pay thru Last Pay): 5.14
Age Range: 0.000 - 14.000
Weighted Average Original Term to Balloon/Maturity: 137.42
Original Term Range: 59.000 - 240.000
Weighted Average Original Amortization Term: 322.66
Original Amortization Term Range: 114.000 - 360.000
Weighted Average Original LTV: 72.2
Original LTV Range: 11.300% - 94.900%
Weighted Average Balloon/ARD LTV: 56.7
Balloon/ARD LTV Range: 11.300% - 70.200%
Weighted Average Debt Service Coverage Ratio: 1.41
Debt Service Coverage Ratio Range: 1.000 - 2.570
<PAGE>
- -------------------------------------------------------------------------------
STRUCTURAL OVERVIEW
- -------------------------------------------------------------------------------
o The Mortgage Pool will be comprised of two Loan Groups: Group 1
(Cut-off principal balance of $943,452,384) and Group 2 (Cut-off
principal balance of $207, 501,066)
o Group 2 will be comprised of the multifamily loans, all of
whose balloon dates or anticipated repayment dates are less
than or equal to 10 years.
o Group 1 will be comprised of the remainder of the loans in
the trust.
o The Class A-2MF will be entitled to receive all unscheduled
principal payments and balloon payments from the Group 2
loans; regularly scheduled monthly principal payments from
the Group 2 loans will be paid on a straight sequential
basis (i.e., A-1A, A-1B, A-2MF, etc.).
o All principal prepayments from the Group 1 loans will be
distributed on a straight sequential basis
o If all classes other than classes A-1A, A-1B, A-2MF have
been reduced to zero, principal will be allocated to Class
A-1A, A-1B, A-2MF on a pro-rata basis.
o Each of the Classes will be subordinate to earlier alphabetically
lettered classes. Realized Losses and Appraisal Reductions will be
allocated in reverse alphabetical order to Classes with certificate
balances and pro-rata to Classes A-1A, A-1B, A-2MF.
o All Classes will pay interest on a 30/360 basis.
o Shortfalls resulting from servicer modifications or special servicer
compensation will be allocated in reverse alphabetical order to
Classes with certificate balances.
o The initial Special Servicer will be National Realty Funding, L.C. The
Special Servicer will be responsible for servicing loans that, in
general, are in default or are in imminent default, and for
administering REO properties. The Special Servicer may modify such
loans, if among other things, such modifications, in the sole good
faith of the Special Servicer, increases the recovery to
Certificateholders on an estimated net present value basis. The
Special Servicer, as agent for the trust and all certificate holders
is responsible for all collections, modifications and extensions for
defaulted loans or REO properties.
PRUDENTIAL SECURITIES INCORPORATED 2 CIBC OPPENHEIMER CORP.
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
CALL PROTECTION TABLE
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
AUG-98 AUG-99 AUG-00 AUG-01 AUG-02 AUG-03 AUG-04 AUG-05 AUG-06 AUG-07
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Locked Out/Defeasance 54.10% 54.20% 36.50% 35.50% 32.10% 21.70% 20.90% 21.20% 21.20% 11.70%
Greater of Yield Maintenance
or Percentage Premium of:
5.00% and greater 25.7 25.7 25.6 25.5 25.8 25.5 25.4 25.9 12.4 10.0
4.00% to 4.99% 0.3 0.3 0.3 0.3 0.3 0.0 0.0 0.0 0.1 0.0
3.00% to 3.99% 9.7 9.7 9.7 9.6 9.3 9.4 8.9 8.7 4.6 3.6
2.00% to 2.99% 2.5 2.5 2.5 2.6 2.8 2.3 2.0 2.0 0.5 0.3
1.00% to 1.99% 7.5 7.5 24.3 25.4 27.4 38.7 39.1 40.0 38.3 30.5
0.00% to 0.99% 0.1 0.1 0.1 1.0 0.1 0.1 0.1 0.1 0.1 0.1
Total Yield Maintenance 45.9 45.8 62.6 63.6 65.7 76.0 75.4 76.7 56.0 44.4
Total of Yield Maintenance
and LockOut/Defeasance 100.0 100.0 99.1 99.1 97.8 97.7 96.3 98.0 77.3 56.1
Precentage Premium:
5.00% and greater 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.1 11.5 1.1
4.00% to 4.99% 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.1 0.0
3.00% to 3.99% 0.0 0.0 0.9 0.0 0.0 0.0 0.0 0.5 3.2 0.7
2.00% to 2.99% 0.0 0.0 0.0 0.9 0.0 0.5 0.0 0.0 0.8 0.0
1.00% to 1.99% 0.0 0.0 0.0 0.0 0.9 1.4 1.5 1.5 5.2 0.4
Total Percentage Premium 0.0 0.0 0.9 0.9 0.9 2.3 1.8 2.0 20.7 2.2
Open (no Call Protection) 0.0 0.0 0.0 0.0 1.2 0.0 1.9 0.0 2.0 41.7
Total All Categories 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Current Pool Balance (000's) 1151.0 1135.6 1119.6 1101.7 1082.4 1039.8 1017.7 967.3 942.1 891.4
Pool Factor 100.0 98.7 97.3 95.7 94.0 90.3 88.4 84.0 81.9 77.4
<CAPTION>
AUG-08 AUG-09 AUG-10 AUG-11 AUG-12 AUG-13 AUG-14 AUG-15 AUG-16 AUG-17
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Locked Out/Defeasance 8.40% 8.60% 8.60% 8.30% 7.90% 21.20% 19.90% 6.80% 5.40% 3.20%
Greater of Yield Maintenance
or Percentage Premium of:
5.00% and greater 20.3 21.0 5.2 3.2 1.7 3.0 3.3 0.0 0.0 0.0
4.00% to 4.99% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
3.00% to 3.99% 5.3 5.6 5.0 0.4 0.4 0.0 0.0 0.0 0.0 0.0
2.00% to 2.99% 0.6 0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
1.00% to 1.99% 36.4 38.4 30.4 24.9 23.5 26.8 28.8 34.1 35.7 37.0
0.00% to 0.99% 1.9 2.0 2.4 0.3 0.3 0.0 0.0 0.0 0.0 0.0
Total Yield Maintenance 64.4 67.6 43.0 28.9 25.9 29.8 32.0 34.1 35.7 37.0
Total of Yield Maintenance
and LockOut/Defeasance 72.9 76.2 51.6 37.3 33.8 51.0 51.9 40.9 41.1 40.0
Precentage Premium:
5.00% and greater 5.8 0.2 19.6 1.7 2.9 3.0 0.0 3.9 0.0 0.0
4.00% to 4.99% 0.0 2.1 0.0 20.0 0.0 10.9 1.4 0.0 4.1 0.0
3.00% to 3.99% 6.1 3.3 7.0 9.4 6.1 18.9 32.4 26.8 0.0 0.0
2.00% to 2.99% 2.3 0.0 0.0 1.8 0.0 5.5 0.0 10.4 1.0 0.0
1.00% to 1.99% 5.2 2.2 16.7 22.0 1.4 5.8 11.4 11.5 29.3 0.0
Total Percentage Premium 19.3 7.8 44.0 55.0 10.4 44.1 45.2 52.6 34.5 0.0
Open (no Call Protection) 7.8 16.0 4.4 7.7 55.8 4.9 2.9 6.4 24.4 59.0
Total All Categories 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Current Pool Balance (000's) 268.0 245.6 196.0 181.7 167.4 40.3 34.3 26.0 22.4 19.0
Pool Factor 23.3 21.3 17.0 15.8 14.5 3.5 3.0 2.3 1.9 1.7
PRUDENTIAL SECURITIES INCORPORATED 3 CIBC OPPENHEIMER CORP.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
ALLOCATION OF PREPAYMENT PENALTIES
- -------------------------------------------------------------------------------
ALLOCATION OF PREPAYMENT PREMIUMS
Prepayment premiums will be allocated between the Offered Certificates and the
Class A-EC certificates as follows:
Yield Maintenance Charges:
o Generally, a percentage of all Yield Maintenance Charges will be
allocated to the Offered Certificates in proportion to the product of
(a) the percentage of the total principal distribution that each such
Class receives, and (b) a percentage which is based on the
relationship between the Pass-Through Rate currently receiving
principal, the mortgage rate of the loan that has prepaid, and the
discount rate used in calculating the borrower's yield maintenance
penalty. If the Mortgage Loan imposes a floor or minimum Yield
Maintenance Charge, then such amounts will be located based on the
formulation described below for Fixed Percentage Prepayment Premiums.
------------------------------------------------------------------
| (Pass-Through Rate - Discount Rate |
| Yield Maintenance - Yield Maintenance Spread*) |
| Charge Allocation = -------------------------------------- |
| Percentage (Mortgage Rate - Discount Rate - |
| Yield Maintenance Spread*) |
------------------------------------------------------------------
* With the exception of two loans in the Trust, all yield maintenance
calculations are based upon Treasuries flat. The two loans that calculate
yield maintenance as Treasury plus a spread (aggregate principal cut-off
balance totaling $9,024,309) are assumed to pay off immediately after their
lock-out period for pricing purposes.
o The remaining percentage of the Yield Maintenance Charges will be
allocated to the Class A-EC Certificates.
o In general, this formula provides for an increase in the allocation of
yield maintenance charges to the Offered Certificates then entitled to
principal distribution relative to the Class A-EC certificates as
interest rates decrease and a decrease in the allocation to such
Classes as interest rates rise.
Fixed Percentage Prepayment Premiums:
o 25% of all Fixed Percentage Prepayment Premiums will be allocated to
the Offered Certificates in proportion to the percentage of the total
principal distribution that each such Class receives. The remaining
percentage of the Fixed Percentage Prepayment Premiums for each Loan
Group will be allocated to the Class A-EC Certificates.
- -------------------------------------------------------------------------------
PROPERTY TYPE DISTRIBUTION BY CUT-OFF DATE PRINCIPAL BALANCE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF WTD. AVG.
PROPERTY CUT-OFF MORTGAGE PERCENT BY WTD. AVG. REM WTD. AVG. ORIGINAL
TYPE BALANCE PROPERTIES BALANCE COUPON TERM DSCR LTV
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Multifamily $287,347,536 64 24.97 7.158 130.69 1.40 74.5
Retail - Anchored 196,419,338 32 17.07 7.505 128.78 1.40 72.6
Office 192,027,500 53 16.68 7.514 134.50 1.35 73.0
Retail - Unanchored 122,276,346 49 10.62 7.509 123.00 1.39 71.5
Industrial 80,505,010 28 6.99 7.321 127.31 1.34 67.8
Hotel 75,783,825 17 6.58 7.717 134.79 1.56 67.9
Retail - Single Tenant 56,870,053 20 4.94 7.638 166.12 1.31 74.4
Mixed Use 34,718,715 10 3.02 7.814 141.60 1.37 67.1
Assisted Living 27,158,978 5 2.36 7.444 151.90 1.59 74.1
Warehouse 25,276,838 9 2.20 7.216 123.69 1.39 72.6
Nursing Home 15,765,735 4 1.37 7.399 139.73 2.14 68.5
Retail-Shadow Anchored 14,130,214 4 1.23 7.657 116.65 1.33 74.1
Office/Industrial 10,251,604 3 0.89 7.256 115.82 1.35 69.4
Mobile Home Park 10,151,136 4 0.88 7.033 114.09 1.72 63.9
Self-Storage 2,270,622 1 0.20 7.570 113.00 1.43 74.2
- ---------------------------------------------------------------------------------------------------------------
Total $1,150,953,450 303 100.00 7.424 132.28 1.41 72.2
</TABLE>
PRUDENTIAL SECURITIES INCORPORATED 4 CIBC OPPENHEIMER CORP.
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
GEOGRAPHIC DISTRIBUTION BY CUT-OFF DATE PRINCIPAL BALANCE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF WTD. AVG.
GEOGRAPHIC CUT-OFF MORTGAGE % BY WTD. AVG. WTD. AVG. REMAINING ORIGINAL
DISTRIBUTION BALANCE PROPERTIES BALANCE DSCR COUPON TERM LTV
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California $176,102,682 43 15.30 1.38 7.246 129.98 72.8
Texas 138,726,765 47 12.05 1.36 7.485 146.33 70.3
Ohio 77,893,701 27 6.77 1.37 7.301 133.83 70.2
New York 70,717,153 16 6.14 1.33 7.537 137.04 73.1
Florida 65,197,219 16 5.66 1.34 7.340 116.10 75.3
Illinois 56,742,069 10 4.93 1.55 7.304 149.67 75.5
Virginia 48,850,998 6 4.24 1.44 7.231 143.95 71.5
New Jersey 44,446,678 18 3.86 1.42 7.719 127.49 73.5
Pennsylvania 38,380,408 12 3.33 1.38 7.340 127.11 75.4
Arizona 37,266,245 6 3.24 1.26 7.925 111.95 74.7
Connecticut 32,413,508 5 2.82 1.44 7.287 127.30 76.6
Georgia 32,125,535 6 2.79 1.58 7.548 122.39 69.6
Maryland 29,151,615 6 2.53 1.52 7.363 125.92 68.3
Missouri 28,993,082 10 2.52 1.38 7.396 138.99 73.0
Kentucky 27,028,691 5 2.35 1.63 7.553 82.70 65.2
Nevada 25,695,518 8 2.23 1.48 7.329 145.67 72.9
Washington 24,322,656 5 2.11 1.55 7.460 158.41 71.4
Massachusetts 20,610,873 4 1.79 1.27 7.608 112.97 74.0
Colorado 17,577,819 5 1.53 1.38 7.258 126.17 69.2
Kansas 17,199,642 4 1.49 1.38 7.262 123.65 68.6
Maine 14,032,014 3 1.22 1.53 7.310 119.00 75.1
North Carolina 13,945,993 3 1.21 1.43 7.326 131.01 66.6
Michigan 13,676,174 4 1.19 1.42 7.347 149.98 75.4
Tennessee 13,195,581 4 1.15 1.46 8.110 114.33 69.0
Idaho 12,979,055 3 1.13 1.30 7.611 111.85 72.2
Minnesota 11,025,769 4 0.96 1.33 7.763 92.26 67.5
Alabama 9,931,437 2 0.86 1.39 7.282 117.99 78.2
Oklahoma 8,803,725 5 0.76 1.28 7.582 171.78 72.1
Nebraska 8,725,620 2 0.76 1.39 7.917 115.94 74.2
Wisconsin 6,520,331 2 0.57 1.56 7.797 113.40 73.1
Oregon 6,404,707 3 0.56 1.33 7.489 156.46 70.1
Rhode Island 6,271,556 2 0.54 1.33 7.495 234.00 72.9
New Hampshire 5,473,911 1 0.48 1.83 7.310 176.00 51.4
New Mexico 3,991,437 2 0.35 1.40 7.574 177.03 74.6
South Carolina 3,683,625 2 0.32 1.38 7.665 121.95 73.0
Louisiana 1,708,197 1 0.15 1.42 8.130 111.00 74.6
Mississippi 1,141,465 1 0.10 1.40 7.080 114.00 81.0
- ----------------------------------------------------------------------------------------------------------
Total $1,150,953,450 303 100.00 1.41 7.424 132.28 72.2
</TABLE>
- -------------------------------------------------------------------------------
PAYMENT TYPES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF WTD. AVG. WTD. AVG.
CUT-OFF DATE MORTGAGE % OF WTD. AVG. WTD. AVG. REMAINING ORIGINAL
PAYMENT TYPES PRINCIPAL BALANCE LOANS POOL DSCR COUPON TERM LTV
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fully Amortizing $48,168,576 19 4.19 1.35 7.510 199.28 69.3
Balloon 804,474,529 190 69.90 1.42 7.348 135.84 71.9
ARD 298,310,345 47 25.92 1.39 7.615 111.87 73.4
- -----------------------------------------------------------------------------------------------------------
Total/Weighted Avg. $1,150,953,450 256 100 1.41 7.42 132.28 72.2
</TABLE>
PRUDENTIAL SECURITIES INCORPORATED 5 CIBC OPPENHEIMER CORP.
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
BALLOON / ARD LTV RANGE (BALLOON / ARD LOANS ONLY)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WTD. AVG.
BALLOON LTV CUT-OFF NUMBER OF % OF WTD. AVG. REM ORIGINAL WTD. AVG.
RANGE BALANCE LOANS POOL COUPON (%) TERM LTV (%) DSCR
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10.01 - 15.00 $8,552,642 2 0.78 7.313 164.44 59.8 1.22
20.01 - 25.00 945,717 1 0.09 7.630 236.00 63.3 1.37
25.01 - 30.00 40,598,676 10 3.68 7.174 203.11 77.4 1.30
30.01 - 35.00 23,613,671 8 2.14 7.479 163.42 58.6 1.52
35.01 - 40.00 21,021,365 5 1.91 7.409 162.48 66.3 1.34
40.01 - 45.00 54,552,651 18 4.95 7.499 165.44 66.4 1.48
45.01 - 50.00 100,197,108 31 9.09 7.642 142.61 67.3 1.65
50.01 - 55.00 115,831,344 27 10.50 7.482 138.31 68.9 1.45
55.01 - 60.00 256,205,240 55 23.23 7.361 121.76 71.5 1.40
60.01 - 65.00 214,884,143 43 19.49 7.379 114.98 73.6 1.38
65.01 - 70.00 263,587,805 36 23.90 7.421 113.56 78.0 1.34
70.01 - 75.00 2,794,512 1 0.25 7.230 117.00 80.0 1.28
- -----------------------------------------------------------------------------------------------------
Total $1,102,784,874 237 100.00 7.420 129.35 72.3 1.41
</TABLE>
- -------------------------------------------------------------------------------
DEBT SERVICE COVERAGE RATIO
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET CASH FLOW WTD. AVG.
DSCR CUT-OFF NUMBER OF % OF WTD. AVG. REM ORIGINAL WTD. AVG.
RANGE BALANCE LOANS POOL COUPON (%) TERM LTV (%) DSCR
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1.00 - 1.05 $20,866,172 3 1.81 6.949 172.61 89.9 1.02
1.16 - 1.20 18,501,777 2 1.61 8.575 132.32 73.2 1.18
1.21 - 1.25 41,215,956 11 3.58 7.439 138.55 75.8 1.24
1.26 - 1.30 228,165,139 49 19.82 7.372 131.48 74.7 1.28
1.31 - 1.35 257,741,834 49 22.39 7.320 124.46 72.2 1.33
1.36 - 1.40 137,006,118 37 11.90 7.428 133.22 73.9 1.38
1.41 - 1.45 136,576,495 32 11.87 7.550 138.41 73.9 1.43
1.46 - 1.50 70,501,892 20 6.13 7.655 126.01 69.4 1.48
1.51 - 1.55 80,272,381 17 6.97 7.364 135.98 71.7 1.53
1.56 - 1.60 43,735,192 5 3.80 7.381 158.63 68.7 1.60
1.61 - 1.65 23,281,172 8 2.02 7.331 121.83 65.2 1.62
1.66 - 1.70 25,329,338 6 2.20 7.181 137.04 59.6 1.67
1.71 - 1.75 15,000,815 5 1.30 7.735 122.89 63.6 1.73
1.76 - 1.80 4,496,743 2 0.39 9.406 116.32 63.4 1.77
1.81 - 1.85 28,810,690 4 2.50 7.411 113.51 61.5 1.82
1.91 - 1.95 5,667,790 2 0.49 6.886 128.03 49.3 1.95
1.96 - 2.00 1,398,917 1 0.12 7.290 119.00 50.9 1.96
2.11 - 2.15 1,788,900 1 0.16 7.080 115.00 55.4 2.13
2.41 - 2.45 9,964,362 1 0.87 7.280 141.00 68.5 2.42
Greater than 2.50 631,769 1 0.05 6.720 114.00 52.9 2.57
- -----------------------------------------------------------------------------------------------------------
Total $1,150,953,450 256 100.00 7.424 132.28 72.2 1.41
</TABLE>
PRUDENTIAL SECURITIES INCORPORATED 6 CIBC OPPENHEIMER CORP.
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
MORTGAGE INTEREST RATES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF WTD. AVG.
COUPON CUT-OFF MORTGAGE % BY WTD. AVG. WTD. AVG REMAINING ORIGINAL
RANGE BALANCE PROPERTIES BALANCE DSCR COUPON TERM LTV
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
6.501 - 6.750 $4,974,556 2 0.43 2.03 6.720 114.00 52.6
6.751 - 7.000 100,479,094 16 8.73 1.39 6.916 140.37 75.8
7.001 - 7.250 370,735,847 67 32.21 1.37 7.133 125.61 73.9
7.251 - 7.500 391,757,909 86 34.04 1.44 7.394 141.25 70.8
7.501 - 7.750 97,468,182 35 8.47 1.40 7.607 141.30 71.5
7.751 - 8.000 61,533,556 19 5.35 1.34 7.878 131.02 71.6
8.001 - 8.250 64,381,219 10 5.59 1.43 8.118 112.49 72.4
8.251 - 8.500 20,902,988 7 1.82 1.42 8.419 104.10 68.2
8.501 - 8.750 8,373,294 3 0.73 1.45 8.682 109.81 64.0
8.751 - 9.000 14,954,306 8 1.30 1.52 8.944 124.80 64.1
9.001 - 9.250 1,597,550 1 0.14 1.38 9.100 109.00 65.0
9.251 - 9.500 11,232,461 1 0.98 1.18 9.270 106.00 73.4
9.501 - 9.750 2,562,489 1 0.22 1.77 9.720 106.00 65.0
- ----------------------------------------------------------------------------------------------------------
$1,150,953,450 256 100.00 1.41 7.424 132.28 72.2
</TABLE>
- -------------------------------------------------------------------------------
MORTGAGE POOL HIGHLIGHTS
- -------------------------------------------------------------------------------
AIP PORTFOLIO. The AIP Portfolio consists of nine Mortgage Loans with
an aggregate Scheduled Principal Balance as of the Cut-off Date of $30.4
million (2.6% of the Initial Pool Balance) and an aggregate LTV of 66.6%, which
were underwritten at a 1.31:1 weighted average DSCR. Eight of the nine related
Mortgaged Properties (office and industrial centers) are located in the
Dallas/Fort Worth Metroplex area, and the ninth is located in the Houston
metropolitan area. The related borrower is AIP-SWAG Operating Partnership,
L.P., an operating partnership of American Industrial Properties REIT.
Occupancy: 81.61% as of 6/30/98. Major Tenant: TM Century.
2355 DULLES CORNER. The 2355 Dulles Corner Mortgage Loan has a
Scheduled Principal Balance as of the Cut-off Date of $24.1 million loan (2.1%
of the Initial Pool Balance), and an LTV of 74.84%, and was underwritten at a
1.35:1 DSCR. This Mortgage Loan is secured by a seven-story 184,395 square foot
office building (178,815 square feet of net rentable space) and a 4 story
parking garage with 715 parking spaces in Herndon, Virginia. The borrowers are
MJV, LLC and 2355 Associates, L.P., as tenants in common, and are newly created
single purpose entities. MJV, LLC owns a 75.7% interest in the property. 2355
Associates, LP owns a 24.3% interest in the property. The property is fully
leased to five tenants, including AT&T Corp. who occupies 94% of the building
pursuant to a lease that is co-terminus to the loan term and who owns a 99%
limited partnership interest in 2355 Associates, L.P. All rental income from
the property flow through a lock box account controlled by the lender. In
addition to the first mortgage loan, PMCC will fund a $4.31 million Mezzanine
Loan subordinate to the first lien secured by partnership and membership
interests in the Mortgage Loan borrowers. This Mezzanine loan will fully
amortize in the 10 year term of the Mortgage Loan, with a residual equity
kicker of $3,250,000 due at maturity. Occupancy: 99.5% as of 6/23/98.
IVOR BRAKA PORTFOLIO. The Ivor Braka portfolio consists of eighteen
Mortgage Loans with an aggregate Scheduled Principal Balance as of the Cut-off
Date of $23.8 million (2.07% of the Initial Pool Balance) and an LTV of 77.5%,
and were underwritten at a 1.43:1 weighted average DSCR. The borrowers are five
single-purpose entities, each of which is under the control of Ivor Braka. The
Braka Loans are secured by fee mortgages encumbering eighteen properties. Six
of the related Mortgaged Properties are Office Properties; four are
Office/Industrial Properties; seven are Retail Properties and one is an
Office/Retail Property. Thirteen of the related Mortgaged Properties are
located in New Jersey; three are located in Texas; one is located in New York;
and one is located is in Wisconsin. One of the related Borrowers owns ten of
these Mortgaged Properties; one of the related borrowers owns five of these
Mortgaged Properties; and the remaining three borrowers each owns one of these
Mortgaged Properties. All of the Braka Loans are cross-collateralized and
cross-defaulted. Occupancy: 77.1% as of 5/31/98. Major Tenants: Kohl's.
FIRSTPLUS FINANCIAL HQ. The FirstPlus Financial HQ Mortgage Loan has a
Scheduled Principal Balance as of the Cut-off Date of $22.8 million (1.98% of
the Intial Pool Balance) and a 69% LTV, and was underwritten at 1.60:1 DSCR.
The FirstPlus Financial HQ Mortgage Loan is secured by a 242,000 square foot
Class "A" office building located in Dallas, Texas. The related borrower is an
affiliate of Lexington Corporate Properties, a publicly traded real estate
investment trust. The related Mortgaged Property is subject to a 15 year net
lease between the borrower and the sole tenant, FirstPlus Financial Group.
FirstPlus Financial Group acquired the property in early 1996, and entered into
a sale leaseback transaction with the borrower later in the year at a total
price of $32.5 million. The lease is absolute net and provides for 10%
escalations in the 5th and 10th year. FirstPlus has posted a $3,223,584 Bank
One letter of credit as a security deposit for the lease, which has been
assigned as additional collateral for the loan. In the event of a tenant
breach, the letter of credit maybe called by the lender and utilized for debt
service, operating expenses and retenanting costs. Provided that there are no
uncured defaults under the lease, at the earlier of five years or at the time
that FirstPlus achieves a "BBB-" rating from S&P the letter of credit will be
released. Occupancy: 100% as of 12/24/97. Major Tenant: FirstPlus Financial
Group, Inc.
THE HOLIDAY INN PORTFOLIO. The Holiday Inn Portfolio consists of four
Mortgage Loans with an aggregate Scheduled Principal Balance as of the Cut-off
Date of $19.4 million loan portfolio (1.7% of Initial Pool Balance) and a 73.1%
LTV, and was underwritten at 1.50:1 weighted average DSCR. The borrowers in
each case are newly-created single purpose entities, the primary stockholders
of each being Larry Mahaney and his son, Kevin Mahaney. The Holiday Inn
Portfolio is secured by four hotel properties, one of which is located in
Ellsworth,
PRUDENTIAL SECURITIES INCORPORATED 7 CIBC OPPENHEIMER CORP.
- -------------------------------------------------------------------------------
<PAGE>
Maine, two of which are located in Bangor, Maine, and the fourth of which is
located in Charlottesville, Virginia. The four Mortgages are
cross-collateralized and cross-defaulted.
OLD ORCHARD APARTMENTS. The Old Orchard Apartments Mortgage Loan has a
Scheduled Principal Balance as of the Cut-off Date of $19.5 million (1.7% of
the Initial Pool Balance) and an 80% LTV, and was underwritten at 1.30:1 DSCR.
The borrower is a single-purpose, bankruptcy-remote limited partnership. The
general partner of the borrower is owned entirely by the M.H. Podell Trust
which owns interests in several properties developed through the M.H. Podell
Company. The related Mortgaged Property is a 220-unit garden style apartment
complex consisting of 19 two-story apartment buildings located in Santa Clara,
California. Occupancy: 98.6% as of 4/13/98.
PEBBLEBROOK APARTMENTS. The Pebblebrook Apartments Mortgage Loan has a
Scheduled Principal Balance as of the Cut-off Date of $16.4 million loan (1.43
% of Initial Pool Balance) and a 79% LTV, and was underwritten at a 1.55:1
DSCR. The Pebblebrook Apartments Mortgage Loan is secured by a 486 unit
apartment complex located in New Britain, Connecticut. Occupancy: 96.7% as of
2/25/98.
HOME DEPOT. The Home Depot Mortgage Loan has a Scheduled Principal
Balance as of the Cut-off Date of $15.0 million (1.3% of Initial Pool Balance)
and a 94.94% LTV, and was underwritten at a 1.03:1 DSCR. The borrower is HD-TB
L.L.C. (the "HD Borrower"), a newly created single purpose entity, the managing
member of which (TB-Broadview, Inc.) is also a newly created single purpose
entity with one independent director. The sponsors of the borrower are John E.
Shaffer, E. Thomas Collins, Jr. and Richard E. Hulina, each principals of
Hiffman Shaffer Associates, Inc. The Home Depot Mortgage Loan is secured by a
135,351 square foot retail, single tenant store, together with a 28,474 square
foot outdoor garden center and 665 parking spaces located in the Village of
Broadview, Cook County, Illinois. The property is fully net leased to Home
Depot U.S.A., Inc. ("HD USA"), a Delaware corporation and such lease has been
collaterally assigned to PMCC as additional collateral for this Mortgage Loan.
The obligations of the Home Depot lease are guaranteed by The Home Depot, Inc.
a Delaware corporation rated "AA-" by S&P.
The HD Lease provides HD USA with termination and abatement rights directly
arising from certain condemnations of a material portion of the Home Depot
Premises: however, the Mortgage Loan has the benefit of a noncancelable credit
lease enhancement insurance policy issued by Chubb Insurance (AAA rating). The
Home Depot Lease ("HD Lease) provides HD USA with termination and abatement
rights arising from the HD Borrower's default relating to its obligations under
the HD Lease to perform required structural maintenance with respect to the
Home Depot premises in the event of the occurrence of certain changes of
applicable law, as more fully set forth in the HD Lease; however, the HD
Guarantors have indemnified the holder of this Mortgage Loan from an against
any such loss or liability. The loan also has as a residual value insurance
policy for $4,530,000 with RVI services, which is rated "A" by S&P.
TOWNE MALL. The Towne Mall Mortgage Loan has a Scheduled Principal
Balance as of the Cut-off Date of $14.4 million (1.2% of the Initial Pool
Balance) and a 61.7% LTV, and was underwritten at 1.81:1 DSCR. The related
borrower, Towne Mall, L.L.C., is a single-purpose limited liability company.
The managing member of the Towne Mall Borrower, Ivanhoe Wilmorite Towne, Inc.,
is also a single-purpose corporation. The Towne Mall Mortgage Loan is secured
by a fee simple mortgage encumbering a 350,000 square foot anchored retail
property located in Elizabethtown, Kentucky. The related anchor tenants are
J.C. Penney, Sears, and Proffitt's. Occupancy: 85.6% at 11/30/97.
THE ABERFELDY PORTFOLIO. The Aberfeldy Portfolio consists of four
Mortgage Loans having an aggregate Scheduled Principal Balance as of the
Cut-off Date of $39,898,489.60 (3.47% of the Initial Pool Balance) and a 73%
LTV, and was underwritten at 1.26:1 DSCR. The three related borrowers are
single-purpose entity limited partnerships, each with a separate sole general
partner that is a single-purpose entity limited liability company as to which
Aberfeldy Limited Partnership, a Texas limited partnership, is a common limited
parnter. One of the Mortgage Loans in the Aberfeldy Portfolio (Control #13),
was made to Aberfeldy III, LP, is secured by seven Mortgaged Properties, and,
having a Scheduled Principal Balance as of the Cut-off Date of of $14.4 million
(1.2% of Initial Pool Balance) is the tenth largest loan in the Trust Fund. The
related Mortgaged Properties are primarily located in the Dallas/Ft. Worth
area. The second Mortgage Loan in the Aberfeldy Portfolio (Control #20) was
made to Aberfeldy IV, LP and is secured by four Mortgaged Properties primarily
located in the Dallas/Ft. Worth area. The third Mortgage Loan in the Aberfeldy
Portfolio (Control #19) was also made to Aberfeldy IV, LP, and is secured by a
second mortgage on one of the four Mortgage Properties described in the prior
sentence which is leased to the General Services Administration. The fourth of
the Mortgage Loans in the Aberfeldy Portfolio (Control #16) was made to
Aberfeldy I, LP, and is secured by nine properties primarily located in the
Dallas/Ft. Worth area. The Mortgage Loans made to these three borrowers are not
cross-collateralized or cross-defaulted with respect to the Mortgage Loans made
to either of the other borrowers.
Each of the Aberfeldy borrowers is a single-purpose entity limited partnership
whose sole general partners are single-purpose entity limited liability
companies. The Aberfeldy borrowers have a common limited partner, Aberfeldy
Limited Partnership, a Texas limited partnership. Each of the Aberfeldy
borrowers and their general partners and their limited partner (each an
"Aberfeldy Entity") agreed to traditional separateness covenants in connection
with their business, organizational, and financial operating procedures. A
nonconsolidation opinion was obtained from counsel to the Aberfeldy borrowers
in connection with the Aberfeldy Mortgage Loans in the Aberfeldy Portfolio,
which states that subject to various assumptions, qualifications, and
conditions set forth in the opinion, if any Aberfeldy Entity were to become a
debtor under the United States Bankruptcy Code, a court in such a case would
not order the substantive consolidation of such debtor with any other Aberfeldy
Entity and would not hold that the property of any other Aberfeldy Entity,
constitutes property of the bankruptcy estate of such debtor pursuant to
Section 541 of the Bankruptcy Code on the basis of the doctrine of piercing the
corporate veil or the doctrine of substantive consolidation.
PRUDENTIAL SECURITIES INCORPORATED 8 CIBC OPPENHEIMER CORP.
- -------------------------------------------------------------------------------
<PAGE>
ANNEX D
AFFILIATED BORROWERS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
% CUT-OFF RELATIONSHIP OF CROSS COLLATERALIZED AND
LOAN NUMBERS BALANCE BORROWER CROSS DEFAULTED
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1376 & 1908 are cross-collateralized
1376, 1905, 1907, 1908 3.47% Affiliated Entities and cross-defaulted
- -------------------------------------------------------------------------------------------------------------------------
6102944, 6102945, 6102946, 6102947, cross-collateralized and cross-defaulted
- -------------------------------------------------------------------------------------------------------------------------
6102950 2.30% Affiliated Entities (Not including loan 6102950)
- -------------------------------------------------------------------------------------------------------------------------
1, 9 1.88% Same Borrower No
- -------------------------------------------------------------------------------------------------------------------------
11,12,13, 14 1.72% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
34, 35, 38 1.29% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
6102541, 6102656, 6102769, 6102840 1.12% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
6102531, 6102532, 7608318, 7608319,
- -------------------------------------------------------------------------------------------------------------------------
7608320 1.00% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1075, 1076 0.97% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1108, 2635 0.87% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1407, 1448, 1779, 2027 0.86% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1504, 1535, 1851, 1852, 1854, 1855 0.85% Same Borrower No
- -------------------------------------------------------------------------------------------------------------------------
940906527, 940906528, 940906529,
940906539, 940906544, 940906545 0.83% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
3632, 3633 0.78% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
2498, 2499 0.77% Affiliated Entities cross-collateralized and cross-defaulted
- -------------------------------------------------------------------------------------------------------------------------
1224, 1269 0.76% Affiliated Entities cross-defaulted only
- -------------------------------------------------------------------------------------------------------------------------
6102540, 7608323 0.75% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
3, 4 0.73% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
6102460, 6102648, 6120657 0.72% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1704, 1720, 1912 0.72% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1057, 2665 0.67% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
15, 17 0.61% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
940906323, 940906324 0.59% Affiliated Entities cross-collateralized and cross-defaulted
- -------------------------------------------------------------------------------------------------------------------------
6102901, 6102902 0.58% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
6102542, 7608315 0.54% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1089, 1795 0.54% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1013, 1015 0.52% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1747, 1863 0.43% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1001, 1022 0.43% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1145, 1975 0.34% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1810, 1811 0.33% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
2393, 2405 0.32% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
1129, 1130 0.26% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
2456, 2815 0.24% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
940907039, 940907278 0.24% Affiliated Entities No
- -------------------------------------------------------------------------------------------------------------------------
0998, 0999 0.19% Affiliated Entities cross-collateralized and cross-defaulted
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE #1
RECORD DATE:
<TABLE>
<CAPTION>
ANNEX E
- ------------------------------------------------------------------------------------------------------------------------------------
Original Beginning Prepayment Collateral Support Ending
Certificate Certificate Principal Interest Penalities Deficit Total Certificate
Class Cusip# Balance Balance Distribution Distribution (PP/YMC) Allocation/(Reimb) Distribution Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Original Beginning Prepayment Ending
Notional Notional Interest Penalities Total Notional
Class Cusip# Amount Amount Distribution (PP/YMC) Distribution Balance
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Factor Information Per $1,000
- -------------------------------------------------------------------------------
Principal Interest End Prin Pass Through
Class Cusip# Distribution Distribution Balance Rate
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Factor Information Per $1,000 Pass Through Rates
- -------------------------------------------------------------------------------
Interest Ending Notional Current Pass Next Pass
Class Cusip Distribution Balance Through Rate Through Rate
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
If there are any questions or comments, please contact the Administrator listed
below
Nina Velastegui
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
(212) 946-7600
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE # 2
RECORD DATE:
Sec III.2 (a) (iii) P & I Advances
Sec III.2 (a) (v) Realized Losses
- -------------------------------------------------------------------------------
Class Loss Amount
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Sec III.2 (a) (vi) Aggregate Stated Principal Balance
Sec III.2 (a) (vii) Loans Delinquent
- -------------------------------------------------------------------------------
Period Number Aggregated Principal Balance
- -------------------------------------------------------------------------------
1 Month
2 Months
3 Months or more
In Foreclosure
- -------------------------------------------------------------------------------
Sec III.2(a) (viii) Principal Balance of REO Loan and REO Date
Sec III.2(a) (ix) REO Proceeds from Final Recovery Determination And Date
Sec III.2(a) (x) Outstanding Principal Balance of REO Loan and Appraisal
Value
Sec III.2(a) (xi) Servicing Compensation
Sec III.2(a) (xii) Special Servicing Fee
Sec III.2(a) (xiii) Prepayment Premiums
Sec III.2(b) (xiii) Default Interest
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE # 3
RECORD DATE:
DISTRIBUTION OF MORTGAGE LOAN CHARACTERISTICS
STRATIFICATION BY CURRENT LOAN BALANCE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of % of Agg -------------------------------------
Current Scheduled Principal Balance Loans Principal Balance Prin Balance WAM Note rate DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS
- -----------------------------------------------------------------------------------------------------------------------------------
Average Principal Balance:
</TABLE>
STRATIFICATION BY REMAINING STATED TERM (BALLOON LOANS ONLY)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of % of Agg -------------------------------------
Remaining Stated Term Loans Principal Balance Prin Balance WAM Note rate DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
STRATIFICATION BY MORTGAGE LOAN CURRENT NOTE RATE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of % of Agg -------------------------------------
Current Note Rate Loans Principal Balance Prin Balance WAM Note rate DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
STRATIFICATION BY REMAINING STATED TERM (FULLY AMORTIZING LOANS ONLY)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of % of Agg -------------------------------------
Remaining Stated Term Loans Principal Balance Prin Balance WAM Note rate DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE # 4
RECORD DATE:
DISTRIBUTION OF MORTGAGE LOAN CHARACTERISTICS
STRATIFICATION BY DEBT SERVICE COVERAGE RATIO (DSCR)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of % of Agg -------------------------------------
Debt Service Coverage Ratio Loans Principal Balance Prin Balance WAM Note rate DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
STRATIFICATION BY STATE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of % of Agg -------------------------------------
State Loans Principal Balance Prin Balance WAM Note rate DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
STRATIFICATION BY SEASONING
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of % of Agg -------------------------------------
Seasoning Loans Principal Balance Prin Balance WAM Note rate DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
STRATIFICATION BY PROPERTY TYPE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Average
# of % of Agg -------------------------------------
Property Type Loans Principal Balance Prin Balance WAM Note rate DSCR
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Debt Coverage Service Ratios are calculated as described in the prospectus,
values are updated periodically as new NOI figures become available from
borrowers on an asset level. The Paying Agent makes no representation as to the
accuracy of the data provided by the borrower for this calculation.
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE # 5
RECORD DATE:
MONTHLY LOAN STATUS DETAIL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Offering Metropolitan Neg. Beginning Ending
Memorandum Property Statistical Monthly Gross Maturity Amort Scheduled Scheduled
Loan ID Cross-Reference Type (I) Area State P&I Coupon Date (Y/N) Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(RESTUBBED FROM ABOVE)
- --------------------------------------------------------------------------------
Paid Appraisal Appraisal Has Loan Ever Loan
Thru Reduction Reduction Been Specially Status
Date Date Amount Serviced?(Y/N Code (II)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(I) PROPERTY TYPE CODE
1. Single Family
2. Multi-Family
3. Condominium or Co-Operative
4. Mobile Home
5. Plan Unit Development
6. Commercial (Non-Exempt)
7. Commercial (Church)
8. Commercial (School, HCF, WF)
9. Commercial (Retail)
10. Commercial (Office)
11. Commercial (Retail/Office)
12. Commercial (Hotel)
13. Commercial (Industrial)
14. Commercial (Industrial/Flex)
15. Commercial (Multiple Properties)
16. Commercial (ministorage)
(II) LOAN STATUS CODE
1. Specially Serviced
2. Foreclosure
3. Bankruptcy
4. REO
5. Prepayment in Full
6. Discounted Payoff
7. Foreclosure Sale
8. Bankruptcy Sale
9. REO Disposal
10. Modification/Workout
11. Rehabilitated/Corrected
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE # 6
RECORD DATE:
PRINCIPAL PREPAYMENT DETAIL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Offering Memorandum Curtailment Net Liquidation Net Insurance Mortgage Repurchase
Loan Number Cross-Reference Amount Payoff Amount Proceeds Proceeds Price
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE # 7
RECORD DATE:
HISTORICAL INFORMATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Delinquencies
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Month 2 Months 3+ Months Foreclosure REO Modifications
Distrib. ----------------------------------------------------------------------------------------
Date # Balance # Balance # Balance # Balance # Balance # Balance
- ----------------------------------------------------------------------------------------------------
</TABLE>
(RESTUBBED FROM ABOVE)
Prepayments Rates & Maturities
Curtailment Payoff Next Weighted Avg.
- -------------------------------------------------------------
# Amount # Amount Coupon Remit WAM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE # 8
RECORD DATE:
ADVANCE SUMMARY
Master Servicer P&I Advances Made
Master Servicer Unreimbursed P&I Advances Outstanding
Interest Accrued & Payable to Master Service in Respect of Advances Made
SERVICING FEE BREAKDOWN
Current Period Accrued Servicing Fees
Less Delinquent Servicing Fees
Plus Additional Servicing Fees
Less Reductions to Servicing Fees
Plus Servicing Fees for Delinquent Payments Received
Plus Adjustments for Prior Servicing Calculation
Total Servicing Fees Collected
ALLOCATION OF INTEREST SHORTFALLS, LOSSES & EXPENSES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Accrued Prepayment Beginning Total Certificate Ending
Certificate Interest Unpaid Interest Interest Interest Unpaid
Class Interest Shortfall Interest Loss Expenses Payable Distributable Interest
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE # 9
RECORD DATE:
DELINQUENCY LOAN DETAIL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Offering Special
Memorandum # of Paid
Cross- Months Thru Current P&I Outstanding P&I Advance Loan Transfer
Loan Number Reference Delinq. Date Advances Advances** Description(I) Status(II) Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(RESTUBBED FROM ABOVE)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Current Outstanding
Property Property Outstanding
Foreclosure Protection Protection Property REO
Date Advances Advances Bankruptcy Date Date
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
</TABLE>
(I) ADVANCE DESCRIPTION
A. P&I Advance - Loan in Grace Period
B. P&I Advance - Late Payment but less than one Month Delinquent
1. P&I Advance - Loan Delinquent 1 month
2. P&I Advance - Loan Delinquent 2 months
3. P&I Advance - Loan Delinquent 3 month or more
** Outstanding P & I Advances include the current period advance
(II) LOAN STATUS
1. Specially Serviced
2. Foreclosure
3. Bankruptcy
4. REO
5. Prepaid in Full
6. Discount Pay Off
7. Foreclosure Sale
8. Bankruptcy Sale
9. REO Dispositions
10. Modification/Workout
11. Rehabilitated/Corrected
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE # 10
RECORD DATE:
SPECIALLY SERVICED LOAN DETAIL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Offering Date of Specially Current Balance
Distrib Memorandum Transfer to Serviced Scheduled Transfer Property Interest
Date Loan Number Cross-Reference Spec. Serv. Code (I) Balance Date Type (II) State Rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(RESUTBBED FROM ABOVE)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Net Remaining
Operating NOI Note Maturity Amort
Income Date DSCR Date Date Terms
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------
</TABLE>
(I) Specially Serviced Code
(1) Request for waiver of Prepayment Penalty
(2) Payment default
(3) Request for Loan Modification or Workout
(4) Loan with Borrower Bankruptcy
(5) Loan in Process of Foreclosure
(6) Loan now REO Property
(7) Loan Paid Off
(8) Loan Returned to Master Servicer
(II) Property Type Code
1. Single Family
2. Multi-Family
3. Condominium or Co-Operative
4. Mobile Home
5. Plan Unit Development
6. Commercial (Non-Exempt)
7. Commercial (Church)
8. Commercial (School, HCF, WF)
9. Commercial (Retail)
10. Commercial (Office)
11. Commercial (Retail/Office)
12. Commercial (Hotel)
13. Commercial (Industrial)
14. Commercial (Industrial/Flex)
15. Commercial (Multiple Properties)
16. Commercial (Ministorage)
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE # 11
RECORD DATE:
SPECIALLY SERVICED LOAN DETAIL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Specially Site
Distribution Offering Memo Serviced Inspection Phase 1 Appraisal Appraisal
Date Loan Number Cross-Reference Code (I) Date Date Date Value Comment
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(I) Specially Serviced Code
(1) Request for waiver of Prepayment Penalty
(2) Payment default
(3) Request for Loan Modification or Workout
(4) Loan with Borrower Bankruptcy
(5) Loan in Process of Foreclosure
(6) Loan now REO Property
(7) Loan Paid Off
(8) Loan Returned to Master Servicer
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE # 12
RECORD DATE:
MODIFIED LOAN DETAIL
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Offering Memorandum Modification
Loan Number Cross-Reference Date Modification Description
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-C1
STATEMENT TO CERTIFICATEHOLDERS
- -------------------------------------------------------------------------------
DIST DATE: PAGE # 13
RECORD DATE:
REALIZED LOSS DETAIL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Offering Beginning Gross Proceeds Aggregate
Memorandum Appraisal Appraisal Scheduled Gross as a % of Liquidaton
Loan Number Cross-Reference Date Value Balance Proceeds Sched Principal Expenses*
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Current Total
- -----------------------------------------------------------------------------------------------------------------------------
Cumulative
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(RESTUBBED FROM ABOVE)
Net Net Proceeds
Liquidation as a % of Realized
Proceeds Sched Balance Loss
- ------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
* Aggregate liquidation expenses also include outstanding P & I advances and
unpaid servicing fees, unpaid trustee fees, etc.
[CHASE LOGO]
NATIONAL REALTY FUNDING, L.C.
SERVICER
(C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- -------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
Prudential Securities Secured Financing Corporation
Depositor
Commercial/Multifamily Mortgage Pass-Through Certificates
(Issuable in Series)
--------------
Prudential Securities Secured Financing Corporation (the "Depositor") from
time to time will offer Commercial/ Multifamily Mortgage Pass-Through
Certificates (the "Offered Certificates") in "Series" by means of this
Prospectus and a separate Prospectus Supplement for each Series. The Offered
Certificates, together with any other Commercial/Multifamily Mortgage
Pass-Through Certificates of such Series, are collectively referred to herein
as the "Certificates."
The Certificates of each Series will evidence beneficial ownership
interests in a trust fund (the "Trust Fund") to be established by the
Depositor. The Certificates of a Series may be divided into two or more
"Classes," which may have different interest rates and which may receive
principal payments in differing proportions and at different times. In
addition, rights of the holders of certain Classes to receive principal and
interest may be subordinated to those of other Classes.
Each Trust Fund will consist of a pool (the "Mortgage Pool") of one or
more mortgage loans secured by first or junior liens on fee simple or leasehold
interests in commercial real estate properties, multifamily residential
properties and/or mixed residential/commercial properties and related property
and interests, conveyed to such Trust Fund by the Depositor, and other assets,
including any Credit Enhancement described in the related Prospectus
Supplement. If so specified in the related Prospectus Supplement, the Mortgage
Pool may also include participation interests in such types of mortgage loans,
installment contracts for the sale of such types of properties and/or mortgage
pass-through certificates (including private mortgage-pass-through
certificates, Certificates issued or guaranteed by FHLMC, Fannie Mae or GNMA or
mortgage pass-through certificates previously created by the Depositor). Such
mortgage loans, participation interests, installment contracts and mortgage
pass-through certificates are hereinafter referred to as the "Mortgage Loans."
The Mortgage Loans will have fixed or adjustable interest rates. Some
Mortgage Loans will fully amortize over their remaining terms to maturity and
others will provide for balloon payments at maturity. The Mortgage Loans will
provide for recourse against only the Mortgaged Properties, or provide for
recourse against the other assets of the obligors thereunder. The Mortgage
Loans will be newly originated or seasoned, and will be acquired by the
Depositor either directly or through one or more affiliates. Information
regarding each Series of Certificates, including interest and principal payment
provisions for each Class, as well as information regarding the size,
composition and other characteristics of the Mortgage Pool relating to such
Series, will be furnished in the related Prospectus Supplement. The Mortgage
Loans will be serviced by a Master Servicer identified in the related
Prospectus Supplement.
The Certificates do not represent an obligation of or an interest in the
Depositor or any affiliate thereof. Unless so specified in the related
Prospectus Supplement, neither the Certificates nor the Mortgage Loans are
insured or guaranteed by any governmental agency or instrumentality or by any
other person or entity.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS DISCUSSED HEREIN UNDER
"RISK FACTORS" AT PAGE 12 AND SUCH INFORMATION AS MAY BE SET FORTH UNDER THE
CAPITON "RISK FACTORS" IN THE RELATED PROSPECTUS SUPPLEMENT BEFORE PURCHASING
ANY OF THE OFFERED CERTICITATES.
The Depositor, as specified in the related Prospectus Supplement, may
elect to treat all of a specified portion of the collateral securing any Series
of Certificates or the arrangement by which a Series of Certificates is issued
as a "real estate mortgage investment conduit" (a "REMIC"). If such election is
made, each Class of Certificates of a Series will be either Regular
Certificates or Residual Certificates, as specified in the related Prospectus
Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Offers of the Certificates may be made through one or more different
methods, including offerings through underwriters, as more fully described
under "PLAN OF DISTRIBUTION" herein and in the related Prospectus Supplement.
Certain offerings of the Certificates, as specified in the related Prospectus
Supplement, may be made in one or more transactions exempt from the
registration requirements of the Securities Act of 1933, as amended. Such
offerings are not being made pursuant to the Registration Statement of which
this Prospectus forms a part.
With respect to each Series, all of the Offered Certificates will be rated
in one of the four highest ratings categories by one or more nationally
recognized statistical rating organizations. There will have been no public
market for the Certificates of any Series prior to the offering thereof. No
assurance can be given that such a secondary market will develop as a result of
such offering or, if it does develop, that it will provide the holders of
Certificates with liquidity of investment or that it will continue.
RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE. THIS PROSPECTUS MAY NOT BE
USED TO CONSUMMATE SALES OF THE CERTIFICATES OFFERED HEREBY UNLESS ACCOMPANIED
BY A PROSPECTUS SUPPLEMENT.
The date of this Prospectus is July 31, 1998.
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to each Series of Certificates will,
among other things, set forth with respect to such Series of Certificates: (i)
the identity of each Class within such Series; (ii) the initial aggregate
principal amount, the interest rate (the "Pass-Through Rate") (or the method
for determining it) and the authorized denominations of each Class of
Certificates of such Series; (iii) certain information concerning the Mortgage
Loans relating to such Series, including the principal amount, type and
characteristics of such Mortgage Loans on the date of issue of such Series of
Certificates; (iv) the circumstances, if any, under which the Certificates of
such Series are subject to redemption prior to maturity; (v) the final
scheduled distribution date of each Class of Certificates of such Series; (vi)
the method used to calculate the aggregate amount of principal available and
required to be applied to the Certificates of such Series on each Distribution
Date; (vii) the order of the application of principal and interest payments to
each Class of Certificates of such Series and the allocation of principal to be
so applied; (viii) the extent of subordination of any Subordinate Certificates;
(ix) the principal amount of each Class of Certificates of such Series that
would be outstanding on specified Distribution Dates, if the Mortgage Loans
relating to such Series were prepaid at various assumed rates; (x) the
Distribution Dates for each Class of Certificates of such Series; (xi) relevant
financial information with respect to the Mortgagor(s) and the Mortgaged
Properties underlying the Mortgage Loans relating to such Series, if
applicable; (xii) information with respect to the terms of the Subordinate
Certificates or Residual Certificates, if any, of such Series; (xiii)
additional information with respect to the Credit Enhancement, if any, relating
to such Series; (xiv) additional information with respect to the plan of
distribution of such Series; and (xv) whether the Certificates of such Series
will be registered in the name of the nominee of The Depository Trust Company
or another depository.
ADDITIONAL INFORMATION
This Prospectus contains, and the Prospectus Supplement for each Series of
Certificates will contain, a summary of the material terms of the documents
referred to herein and therein, but neither contains nor will contain all of
the information set forth in the Registration Statement (the "Registration
Statement") of which this Prospectus and the related Prospectus Supplement is a
part. For further information, reference is made to such Registration Statement
and the exhibits thereto which the Depositor has filed with the Securities and
Exchange Commission (the "Commission"), under the Securities Act of 1933, as
amended (the "1933 Act"). Statements contained in this Prospectus and any
Prospectus Supplement as to the contents of any contract or other document
referred to are summaries and in each instance reference is made to the copy of
the contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. Copies of the Registration Statement may be obtained from the
Commission, upon payment of the prescribed charges, or may be examined free of
charge at the Commission's offices. Reports and other information filed with
the Commission can be inspected and copied at prescribed rates at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Regional Offices of the Commission at Seven
World Trade Center, 13th Floor, New York, New York 10048; and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of the Agreement pursuant to which a Series of Certificates is issued
will be provided to each person to whom a Prospectus and the related Prospectus
Supplement are delivered, upon written or oral request directed to: Prudential
Securities Secured Financing Corporation, One New York Plaza, New York, New
York 10292 attention, David Rodgers, (212) 214-1000.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
With respect to the Trust Fund for each Series, there are incorporated
herein by reference all documents and reports filed or caused to be filed by
the Depositor with respect to such Trust Fund pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, after the date of this
Prospectus and prior to the termination of the offering of the Offered
Certificates evidencing an interest in such Trust Fund. The Depositor will
provide or cause to be provided without charge to each person to whom this
Prospectus is delivered in connection with the offering of one or more Classes
of Certificates,
2
<PAGE>
upon request, a copy of any or all such documents or reports incorporated
herein by reference, in each case to the extent such documents or reports
relate to one or more of such Classes of such Certificates, other than the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). The Depositor has determined that its
financial statements are not material to the offering of any of the Offered
Certificates. See "FINANCIAL INFORMATION." Requests to the Depositor should be
directed to: Prudential Securities Secured Financing Corporation, One New York
Plaza, New York, New York 10292, attention, David Rodgers, (212) 214-1000.
REPORTS
In connection with each distribution and annually, Certificateholders will
be furnished with statements containing information with respect to principal
and interest payments and the related Trust Fund, as described herein and in
the applicable Prospectus Supplement for such Series. Any financial information
contained in such reports most likely will not have been examined or reported
upon by an independent public accountant. See "DESCRIPTION OF THE
CERTIFICATES-Reports to Certificateholders." The Master Servicer for each
Series will furnish periodic statements setting forth certain specified
information relating to the Mortgage Loans to the related Trustee, and, in
addition, annually will furnish such Trustee with a statement from a firm of
independent public accountants with respect to the examination of certain
documents and records relating to the servicing of the Mortgage Loans in the
related Trust Fund. See "SERVICING OF THE MORTGAGE LOANS-Evidence of
Compliance." Copies of the monthly and annual statements provided by the Master
Servicer to the Trustee will be furnished to Certificateholders of each Series
upon request addressed to the Depositor's principal executive offices are
located at Prudential Securities Secured Financing Corporation, One New York
Plaza, New York, New York 10292, attention David Rodgers, (212) 214-1000.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT ..................................................... 2
ADDITIONAL INFORMATION .................................................... 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE ......................... 2
REPORTS ................................................................... 3
SUMMARY OF PROSPECTUS ..................................................... 7
RISK FACTORS .............................................................. 12
Limited Liquidity ........................................................ 12
Limited Assets ........................................................... 12
Average Life of Certificates; Prepayments; Yields ........................ 12
Limited Nature of Ratings ................................................ 13
Risks Associated with Lending on Income Producing Properties ............. 13
Material Federal Tax Considerations Regarding Residual Certificates ...... 14
Material Federal Tax Considerations Regarding Original Issue
Discount ............................................................... 14
Certain Tax Considerations of Variable Rate Certificates ................. 15
Nonrecourse Mortgage Loans ............................................... 15
Delinquent and Non-Performing Mortgage Loans ............................. 15
Junior Mortgage Loans .................................................... 15
Balloon Payments ......................................................... 15
Extensions and Modifications of Defaulted Mortgage Loans; Additional
Servicing Fees ......................................................... 15
Risks Related to the Mortgagor's Form of Entity and Sophistication ....... 16
Credit Enhancement Limitations ........................................... 16
Risks to Subordinated Certificateholders ................................. 17
Taxable Income in Excess of Distributions Received ....................... 17
Due-on-Sale Clauses and Assignments of Leases and Rents .................. 17
Environmental Risks ...................................................... 18
ERISA Considerations ..................................................... 18
Control .................................................................. 18
Book-Entry Registration .................................................. 18
THE DEPOSITOR ............................................................. 19
USE OF PROCEEDS ........................................................... 19
DESCRIPTION OF THE CERTIFICATES ........................................... 19
General .................................................................. 19
Distributions on Certificates ............................................ 20
Accounts ................................................................. 21
Amendment ................................................................ 23
Termination .............................................................. 24
Reports to Certificateholders ............................................ 24
</TABLE>
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<TABLE>
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The Trustee .............................................................. 24
THE MORTGAGE POOLS ........................................................ 25
General .................................................................. 25
Assignment of Mortgage Loans ............................................. 26
Representations and Warranties ........................................... 27
SERVICING OF THE MORTGAGE LOANS ........................................... 28
General .................................................................. 28
Collections and Other Servicing Procedures ............................... 28
Insurance ................................................................ 29
Fidelity Bonds and Errors and Omissions .................................. 30
Servicing Compensation and Payment of Expenses ........................... 31
Advances ................................................................. 31
Modifications, Waivers and Amendments .................................... 31
Evidence of Compliance ................................................... 31
Certain Matters With Respect to the Master Servicer,
the Special Servicer, the Trustee and the Depositor .................... 32
Events of Default ........................................................ 33
Rights Upon Event of Default ............................................. 34
CREDIT ENHANCEMENT ........................................................ 35
General .................................................................. 35
Enhancement Limitations .................................................. 35
Subordinate Certificates ................................................. 35
Reserve Funds ............................................................ 36
Cross-Support Features ................................................... 36
Certificate Guarantee Insurance .......................................... 37
Limited Guarantee ........................................................ 37
Letter of Credit ......................................................... 37
Pool Insurance Policies; Special Hazard Insurance Policies ............... 37
Surety Bonds ............................................................. 37
Fraud Coverage ........................................................... 37
Mortgagor Bankruptcy Bond ................................................ 38
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS ............................... 38
General .................................................................. 38
Types of Mortgage Instruments ............................................ 38
Personality .............................................................. 39
Installment Contracts .................................................... 39
Junior Mortgages; Rights of Senior Mortgagees or Beneficiaries ........... 39
Foreclosure .............................................................. 41
Environmental Risks ...................................................... 46
Enforceability of Certain Provisions ..................................... 49
Soldiers' and Sailors' Relief Act ........................................ 50
Applicability of Usury Laws .............................................. 51
</TABLE>
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<TABLE>
<CAPTION>
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Alternative Mortgage Instruments ......................................... 51
Leases and Rents ......................................................... 52
Secondary Financing; Due-on-Encumbrance Provisions ....................... 52
Certain Laws and Regulations ............................................. 52
Type of Mortgaged Property ............................................... 53
Criminal Forfeitures ..................................................... 53
Americans With Disabilities Act .......................................... 53
MATERIAL FEDERAL INCOME TAX CONSEQUENCES .................................. 54
Federal Income Tax Consequences for REMIC Certificates ................... 54
Taxation of Regular Certificates ......................................... 57
Taxation of Residual Certificates ........................................ 63
Taxes that may be Imposed on the REMIC Pool .............................. 70
Liquidation of the REMIC Pool ............................................ 70
Administrative Matters ................................................... 71
Limitations on Deduction of Certain Expenses ............................. 71
Taxation of Certain Foreign Investors .................................... 71
Backup Withholding ....................................................... 72
Reporting Requirements ................................................... 72
Standard Certificates .................................................... 73
Stripped Certificates .................................................... 76
Federal Income Tax Consequences for FASIT Certificates ................... 79
Reporting Requirements and Backup Withholding ............................ 79
Taxation of Certain Foreign Investors .................................... 79
STATE AND OTHER TAX CONSIDERATIONS ........................................ 80
ERISA CONSIDERATIONS ...................................................... 80
Prohibited Transactions .................................................. 80
Unrelated Business Taxable Income-Residual Interests ..................... 81
LEGAL INVESTMENT .......................................................... 82
PLAN OF DISTRIBUTION ...................................................... 84
LEGAL MATTERS ............................................................. 84
FINANCIAL INFORMATION ..................................................... 85
RATING .................................................................... 85
</TABLE>
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SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each Series
of Certificates contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of such Series. An Index of
Significant Definitions is included at the end of this Prospectus.
Title of Certificates....... Commercial/Multifamily Mortgage Pass-Through
Certificates, issuable in Series (the
"Certificates").
Depositor................... Prudential Securities Secured Financing
Corporation, One New York Plaza, New York, New
York 10292. Its telephone number is (212)
214-1000.
Master Servicer............. The Master Servicer for each Series of
Certificates will be named in the related
Prospectus Supplement. See "SERVICING OF THE
MORTGAGE LOANS--General."
Special Servicer............ The special servicer (the "Special Servicer"),
if any, for each Series of Certificates, will be
named, or the circumstances in accordance with
which a Special Servicer will be appointed, will
be described in the related Prospectus
Supplement. See "SERVICING OF THE MORTGAGE
LOANS--General."
Trustee..................... The trustee (the "Trustee") for each Series of
Certificates will be named in the related
Prospectus Supplement. See "DESCRIPTION OF THE
CERTIFICATES--The Trustee."
The Trust Fund.............. Each Series of Certificates will represent in
the aggregate the entire beneficial ownership
interest in a Trust Fund consisting primarily of
the following:
A. Mortgage Pool........... The primary assets of each Trust Fund will
consist of a pool of mortgage loans (the
"Mortgage Pool") secured by first or junior
mortgages, deeds of trust or similar security
instruments (each, a "Mortgage") on, or
installment contracts ("Installment Contracts')
for the sale of, fee simple or leasehold
interests in property improved by office
buildings, health-care related properties,
congregate care facilities, hotels and motels,
industrial properties, warehouse, mini-warehouse,
and self-storage facilities, mobile home parks,
multifamily properties, cooperative apartment
buildings, nursing homes, office/retail
properties, anchored retail properties,
single-tenant retail properties, unanchored
retail properties and other commercial real
estate properties, multifamily residential
properties and/or mixed residential commercial
properties (each, a "Mortgaged Property"). A
Mortgage Pool may also include any or all of the
participation interests in such types of mortgage
loans, private-label mortgage pass-through or
collateralized mortgaged obligations
certificates, certificates issued or guaranteed
by FHLMC, Fannie Mae or GNMA. Each such mortgage
loan, Installment Con-
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<PAGE>
tract, participation interest or certificate or
collateralized mortgage obligation is herein
referred to as a "Mortgage Loan." The Mortgage
Loans will not be guaranteed or insured by the
Depositor or any of its affiliates. The
Prospectus Supplement will indicate whether the
Mortgage Loans will be guaranteed or insured by
any governmental agency or instrumentality or
other person. The Mortgage Loans will have the
additional characteristics described under "THE
MORTGAGE POOLS" herein and "DESCRIPTION MORTGAGE
POOL" in the related Prospectus Supplement. All
Mortgage Loans will have been purchased, either
directly or indirectly, by the Depositor on or
before the date of initial issuance of the
related Series of Certificates.
All Mortgage Loans will be of one or more of the
following types: Mortgage Loans with fixed
interest rates; Mortgage Loans with adjustable
interest rates; Mortgage Loans whose principal
balances fully amortize over their remaining
terms to maturity. Mortgage Loans whose
principal balances do not fully amortize, but
instead provide for a substantial principal
payment at the stated maturity of the loan;
Mortgage Loans that provide for recourse against
only the Mortgaged Properties; Mortgage Loans
that provide for recourse against the other
assets of the related mortgagors; and any other
types of Mortgages described in the related
Prospectus Supplement. Certain Mortgage Loans
may provide that scheduled interest and
principal payments thereon are applied first to
interest accrued from the last date to which
interest has been paid to the date such payment
is received and the balance thereof is applied
to principal. and other Mortgage Loans may
provide for payment of interest in advance
rather than in arrears. Each Mortgage Loan may
contain prohibitions on prepayment or require
payment of a premium or a yield maintenance
penalty in connection with a prepayment, in each
case as described in the related Prospectus
Supplement. The Mortgage Loans may provide for
payments of principal, interest or both, on due
dates that occur monthly, quarterly,
semi-annually or at such other interval as is
specified in the related Prospectus Supplement.
B. Accounts................ A Collection Account and a Distribution
Account. The Master Servicer generally will be
required to establish and maintain an account
(the "Collection Account") in the name of the
Trustee on behalf of the Certificateholders into
which the Master Servicer will, to the extent
described herein and in the related Prospectus
Supplement, deposit all payments and collections
received or advanced with respect to the Mortgage
Loans. The Trustee generally will be required to
establish an account (the "Distribution Account")
into which the Master Servicer will deposit
amounts held in the Collection Account from which
distributions of principal and interest will be
made. Such distributions will be made to the
Certificateholders in the
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manner described in the related Prospectus
Supplement. Funds held in the Collection Account
and Distribution Account may be invested in
certain short-term, investment grade
obligations.
C. Credit Enhancement...... If so provided in the related Prospectus
Supplement, credit enhancement with respect to
one or more Classes of Certificates of a Series
or the related Mortgage Loans ("Credit
Enhancement"). Credit Enhancement may be in the
form of a letter of credit, the subordination of
one or more Classes of the Certificates of such
Series, the establishment of one or more reserve
funds, surety bonds, certificate guarantee
insurance, limited guarantees, or another type of
credit support, or a combination thereof. It is
unlikely that Credit Enhancement will protect
against all risks of loss or guarantee repayment
of the entire principal balance of the
Certificates and interest thereon. The amount and
types of coverage, the identification of the
entity providing the coverage (if applicable) and
related information with respect to each type of
Credit Enhancement, if any, will be described in
the applicable Prospectus Supplement for a Series
of Certificates. See "RISK FACTORS--Credit
Enhancement Limitations" and "CREDIT
ENHANCEMENT--General."
Description of
Certificates................ The Certificates of each Series will be issued
pursuant to a Pooling and Servicing Agreement
(the "Agreement"). If so specified in the
applicable Prospectus Supplement, Certificates of
a given Series may be issued in several Classes,
which may pay interest at different rates, may
represent different allocations of the right to
receive principal and interest payments, and
certain of which may be subordinated to other
Classes in the event of shortfalls in available
cash flow from the underlying mortgage loans.
Alternatively, or in addition, Classes may be
structured to receive principal payments in
sequence. Each Class in a group of sequential pay
Classes would be entitled to be paid in full
before the next Class in the group is entitled to
receive any principal payments. A Class of
Certificates may also provide for payments of
principal only or interest only or for
disproportionate payments of principal and
interest. Each Series of Certificates (including
any Class or Classes of Certificates of such
Series not offered hereby) will represent in the
aggregate the entire beneficial ownership
interest in the Trust Fund. See "PROSPECTUS
SUPPLEMENT" for a listing of additional
characteristics of the Certificates that will be
included in the Prospectus Supplement for each
The Certificates will not be guaranteed or
insured by the Depositor or any of its
affiliates. Unless so specified in the related
Prospectus Supplement, neither the Certificates
nor the Mortgage Loans are insured or guaranteed
by any governmental agency Or instrumentality or
by any other person or entity. See "RISK
FACTORS--Limited Assets" and "DESCRIPTION OF THE
CERTIFICATES."
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<PAGE>
Distributions on
Certificates................ Distributions of principal and interest on the
Certificates of each Series will be made to the
registered holders thereof on the day (the
"Distribution Date") specified in the related
Prospectus Supplement, beginning in the period
specified in the related Prospectus Supplement
following the establishment related Trust Fund.
With respect to each Series of Certificates on
each Distribution Date, the Trustee (or such
other paying agent as may be identified in the
applicable Prospectus Supplement) will
distribute to the Certificateholders the amounts
described in the related Prospectus Supplement
that are due to be paid on such Distribution
Date. In general, such amounts will include
previously undistributed payments of principal
(including principal prepayments, if any) and
interest on the Mortgage Loans received by the
Master Servicer or the Special Servicer, if any,
after a date specified in the related Prospectus
Supplement (the "Cut-off Date") and prior to the
day preceding each Distribution Date specified
in the related Prospectus Supplement.
Advances.................... The related Prospectus Supplement will set
forth the obligations, if any, of the Master
Servicer and the Special Servicer, if any, as
part of their servicing responsibilities, to make
certain advances with respect to delinquent
payments on the Mortgage Loans, payments of
taxes, assessments, insurance premiums and other
required payments. See "DESCRIPTION OF THE
CERTIFICATES--Advances."
Termination................. The obligations of the parties to the Agreement
for each Series will terminate upon: (i) the
purchase of all of the assets of the related
Trust Fund, as described in the related
Prospectus Supplement; (ii) the later of (a) the
distribution to Certificateholders of that Series
of final payment with respect to the last
outstanding Mortgage Loan or (b) the disposition
of all property acquired upon foreclosure or
deed-in-lieu of foreclosure with respect to the
last outstanding Mortgage Loan and the remittance
to the Certificateholders of all funds due under
the Agreement; (iii) the sale of the assets of
the related Trust Fund after the principal
amounts of all Certificates have been reduced to
zero under circumstances set forth in the
Agreement; or (iv) mutual consent of the parties
and all Certificateholders. With respect to each
Series, the Trustee will give or cause to be
given written notice of termination of the
Agreement to each Certificateholder and, unless
otherwise specified in the applicable Prospectus
Supplement, the final distribution under the
Agreement will be made only upon surrender and
cancellation of the related Certificates at an
office or agency specified in the notice of
termination. See "DESCRIPTION OF THE CERTIFICATES
termination."
Tax Status of
the Certificates............ The Certificates of each Series will constitute
either (i) "Regular Interests" ("Regular
Certificates") and "Residual Interests"
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("Residual Certificates") in a Trust Fund
treated as a REMIC under Sections 860A through
860G of the Internal Revenue Code of 1986 (the
"Code"), or (ii) interests in a Trust Fund
treated as a grantor trust under applicable
provisions of the Code. For the treatment of
Regular Certificates, Residual Certificates or
grantor trust certificates under the Code, see
"MATERIAL FEDERAL INCOME TAX CONSEQUENCES"
herein and in the related Prospectus Supplement.
ERISA Considerations........ Fiduciaries of employee benefit plans or of
certain other retirement plans and arrangements
that are subject to the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code should
carefully review with their legal advisors
whether the purchase or holding of Certificates
may give rise to a transaction that is prohibited
or is not otherwise permissible either under
ERISA or Section 4975 of the Code. See "ERISA
CONSIDERATIONS" herein and in the related
Prospectus Supplement.
Legal Investment............ The related Prospectus Supplement will indicate
whether the Offered Certificates will constitute
"mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of
1984. Accordingly, investors whose investment
authority is subject to legal restrictions should
consult their own legal advisors to determine
whether and to what extent the Certificates
constitute legal investments for them. See "LEGAL
INVESTMENT" herein and in the related Prospectus
Supplement.
Rating...................... At the date of issuance, as to each Series,
each Class of Offered Certificates will be rated
not lower than investment grade by one or more
nationally recognized statistical rating agencies
(each a "Rating Agency"). See "RATING" herein and
"RATINGS" in the related Prospectus Supplement.
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RISK FACTORS
Investors should consider, in connection with the purchase of Offered
Certificates, among other things, the following factors and certain other
factors as may, be set forth in "RISK FACTORS" in the related Prospectus
Supplement.
LIMITED LIQUIDITY
There can be no assurance that a secondary market for the Certificates of
any Series will develop or, if it does develop, that it will provide holders
with liquidity of investment or will continue while Certificates of such Series
remain outstanding. The market value of Certificates will fluctuate with
changes in prevailing rates of interest. Consequently, any sale of Certificates
by a holder in any secondary market that may develop may be at a discount from
100% of their original principal balance or from their purchase price.
Furthermore, secondary market purchasers may look only hereto, to the related
Prospectus Supplement and to the reports to Certificateholders delivered
pursuant to the Agreement as described herein under the heading "DESCRIPTION OF
THE CERTIFICATES--Reports to Certificateholders" and "SERVICING OF THE MORTGAGE
LOANS--Evidence of Compliance" for information concerning the Certificates.
Certificateholders will have only those redemption rights and the Certificates
will be subject to early retirement only under the circumstances described
herein or in the related Prospectus Supplement. See "DESCRIPTION OF THE
CERTIFICATES--Termination."
LIMITED ASSETS
A Series of Certificates will have a claim against or security interest in
the Trust Funds for another Series only if so specified in the related
Prospectus Supplement. If the related Prospectus Supplement does not specify
that a Series of Certificates will have a claim against or security interest in
the Trust Funds for another Series and the related Trust Fund is insufficient
to make payments on such Certificates, no other assets will be available for
payment of the deficiency. Additionally, certain amounts remaining in certain
funds or accounts, including the Distribution Account, the Collection Account
and any accounts maintained as Credit Enhancement, may be withdrawn under
certain conditions, as described in the related Prospectus Supplement. In the
event of such withdrawal, such amounts will not be available for future payment
of principal of or interest on the Certificates. If so provided in the
Prospectus Supplement for a Series of Certificates consisting of one or more
Classes of Subordinate Certificates, on any Distribution Date in respect of
which losses or shortfalls in collections on the Mortgaged Properties have been
realized, the amount of such losses or shortfalls will be borne first by one or
more Classes of the Subordinate Certificates, and, thereafter, by the remaining
Classes of Certificates in the priority and manner and subject to the
limitations specified in such Prospectus Supplement.
AVERAGE LIFE OF CERTIFICATES; PREPAYMENTS; YIELDS
Prepayments on the Mortgage Loans in any Trust Fund generally will result
in a faster rate of principal payments on one or more Classes of the related
Certificates than if payments on such Mortgage Loans were made as scheduled.
Thus, the prepayment experience on the Mortgage Loans may affect the average
life of each Class of related Certificates. The rate of principal payments on
pools of mortgage loans varies between pools and from time to time is
influenced by a variety of economic, demographic, geographic, social, tax,
legal and other factors. There can be no assurance as to the rate of prepayment
on the Mortgage Loans in any Trust Fund or that the rate of payments will
conform to any model described in any Prospectus Supplement. If prevailing
interest rates fall significantly below the applicable rates borne by the
Mortgage Loans included in a Trust Fund, principal prepayments are likely to be
higher than if prevailing rates remain at or above the rates home by those
Mortgage Loans. As a result, the actual maturity of any Class of Certificates
could occur significantly earlier than expected. Alternatively, the actual
maturity of any Class of Certificates could occur significantly later than
expected as a result of prepayment premiums or the existence of defaults on the
Mortgage Loans, particularly at or near their maturity dates. In addition, the
Master Servicer or the Special Servicer, if any, may have the option under the
Agreement for such Series to extend the maturity of the Mortgage Loans
following a default in the payment of a balloon payment, which would also have
the effect of extending the average life of each
12
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Class of related Certificates. A Series of Certificates may include one or more
Classes of Certificates with priorities of payment and, as a result, yields on
other Classes of Certificates, including Classes of Offered Certificates, of
such Series may be more sensitive to prepayments on Mortgage Loans. A Series of
Certificates may include one or more Classes offered at a significant premium
or discount. Yields on such Classes of Certificates will be sensitive, and in
some cases extremely sensitive, to prepayments on Mortgage Loans. With respect
to interest only or disproportionately interest weighted Classes purchased at a
premium, such Classes may not return their purchase Prices under rapid
repayment scenarios. See "YIELD AND MATURITY CONSIDERATIONS" in the related
Prospectus Supplement.
LIMITED NATURE OF RATINGS
Any rating assigned by a Rating Agency to a Class of Certificates will
reflect such Rating Agency's assessment solely of the likelihood that holders
of Certificates of such Class will receive payments to which such
Certificateholders are entitled under the related Agreement. Such rating will
not constitute an assessment of the likelihood that principal prepayments on
the related Mortgage Loans will be made, the degree to which the rate of such
prepayments might differ from that originally anticipated or the likelihood of
early optional termination of the Series Of Certificates. Such rating will not
address the possibility that prepayment at higher or lower rates than
anticipated by an investor may cause such investor to experience a lower than
anticipated yield or that an investor purchasing a Certificate at a significant
premium, or a Certificate that is entitled to disproportionately low, nominal
or no principal distributions, might fail to recoup its initial investment
under certain prepayment scenarios. Each Prospectus Supplement will identify
any payment to which holders of Offered Certificates of the related Series are
entitled that is not covered by the applicable rating. See "Credit Enhancement
Limitations."
RISKS ASSOCIATED WITH LENDING ON INCOME PRODUCING PROPERTIES
Mortgage loans made with respect to multifamily or commercial property may
entail risks of delinquency and foreclosure, and risks of loss in the event
thereof, that are greater than similar risks associated with single-family
property. For example, the ability of a mortgagor to repay a loan secured by an
income-producing property typically is dependent primarily upon the successful
operation of such property rather than any independent income or assets of the
mortgagor; thus, the value of an income-producing property is directly related
to the net operating income, as defined in the prospectus supplement, derived
from such property. In contrast, the ability of a mortgagor to repay a
single-family loan typically is dependent primarily upon the mortgagor's
household income, rather than the capacity of the property to produce income;
thus, other than in geographical areas where employment is dependent upon a
particular employer or an industry, the mortgagor's income tends not to reflect
directly the value of such property. A decline in the net operating income of
an income-producing property will likely affect both the performance of the
related loan as well as the liquidation value of such property, whereas a
decline in the income of a mortgagor on a single-family property will likely
affect the performance of the related loan but may not affect the liquidation
value of such property.
Further, the concentration of default foreclosure and loss risks for
Mortgage Loans in a particular Trust Fund or the related Mortgaged Properties
will generally be greater than for pools of single-family loans both because
the Mortgage Loans in a Trust Fund will generally consist of a smaller number
of loans than would a single-family pool of comparable aggregate unpaid
principal balance and because of the higher principal balance of individual
Mortgage Loans.
The performance of a mortgage loan secured by an income-producing property
leased by the mortgagor to tenants as well as the liquidation value of such
property may be dependent upon the business operated by such tenants in
connection with such property, the creditworthiness of such tenants or both;
the risks associated with such loans may be offset by the number of tenants or,
if applicable, a diversity of types of business operated by such tenants. A
number of the Mortgage Loans may be secured by liens on owner-occupied
Mortgaged Properties or on Mortgaged Properties leased to a single tenant.
Accordingly, a decline in the financial condition of the borrower or single
tenant, as applicable, may have a disproportionately greater effect on the net
operating income from such Mortgaged Properties than would be the case with
respect to Mortgaged Properties with multiple tenants. Furthermore, the value
of
13
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any mortgaged property may be adversely affected by risks generally incident to
interests in real property, including changes in general or local economic
conditions and/or specific industry segments, declines in real estate values;
declines in rental or occupancy rates; increases in interest rates, real estate
tax rates and other operating expenses; changes in governmental rules,
regulations and fiscal policies, including environmental legislation; natural
disasters; and other factors beyond the control of the Master Servicer or the
Special Servicer, if any. Additional risk may be presented by the type and use
of a particular mortgaged property. For instance, mortgaged properties that
operate as hospitals. nursing homes or convalescent homes may present special
risks to mortgagees due to the significant governmental regulation of the
ownership, operation, maintenance, control and financing of health care
institutions. Mortgages encumbering mortgaged properties that are owned by the
mortgagor under a condominium form of ownership are subject to the declaration,
by-laws and other rules and regulations of the condominium association. Hotel
and motel properties are often operated pursuant to franchise, management or
operating agreements that may be terminable by the franchiser or operator.
Moreover, the transferability of a hotel's operating, liquor and other licenses
upon a transfer of the hotel, whether through purchase or foreclosure, is
subject to local law requirements. In addition, mortgaged properties that are
multifamily residential properties or cooperatively owned multifamily
properties may be subject to rent control laws, which could impact the future
cash flows of such properties. Any such risks will be more fully described in
the related Prospectus Supplement under the captions "RISK FACTORS" and
"DESCRIPTION OF THE MORTGAGE POOL."
If applicable, certain legal aspects of the Mortgage Loans for a Series of
Certificates may be described in the related Prospectus Supplement. See also
"CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS."
MATERIAL FEDERAL TAX CONSIDERATIONS REGARDING RESIDUAL CERTIFICATES
Holders of Residual Certificates will be required to report on their
federal income tax returns as ordinary income their pro rata share of the
taxable income of the REMIC, regardless of the amount or timing of their
receipt of cash payments, as described in "Material Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates".
Accordingly, under certain circumstances, holders of Offered Certificates that
constitute Residual Certificates may have taxable income and tax liabilities
arising from such investment during a taxable year in excess of the cash
received during such period. The requirement that holders of Residual
Certificates report their pro rata share of the taxable income and net loss of
the REMIC will continue until the Certificate Balances of all classes of
Certificates of the related series have been reduced to zero, even though
holders of Residual Certificates have received full payment of their stated
interest and principal. A portion (or, in certain circumstances, all) of such
Certificateholder's share of the REMIC taxable income may be treated as "excess
inclusion" income to such holder which (i) generally, will not be subject to
offset by losses from other activities, (ii) for a tax-exempt holder, will be
treated as unrelated business taxable income and (iii) for a foreign holder,
will not qualify for exemption from withholding tax. Individual holders of
Residual Certificates may be limited in their ability to deduct servicing fees
and other expenses of the REMIC. In addition, Residual Certificates are subject
to certain restrictions on transfer. Because of the special tax treatment of
Residual Certificates, the taxable income arising in a given year on a Residual
Certificate will not be equal to the taxable income associated with investment
in a corporate bond or stripped instrument having similar cash flow
characteristics and pre-tax yield. Therefore, the after-tax yield on the
Residual
Certificate may be significantly less than that of a corporate bond or
stripped instrument having similar cash flow characteristics.
MATERIAL FEDERAL TAX CONSIDERATIONS REGARDING ORIGINAL ISSUE DISCOUNT
Accrual Certificates will be, and certain of the other Classes of
Certificates of a series may be, issued with "original issue discount" for
federal income tax purposes, which generally will result in recognition of some
taxable income in advance of the receipt of cash attributable to such income.
See "Material Federal Income Tax Consequences--Federal Income Tax Consequences
for REMIC Certificates--Taxation of Regular Certificates."
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CERTAIN TAX CONSIDERATIONS OF VARIABLE RATE CERTIFICATES
There are certain tax matters as to which counsel to the Depositor is
unable to opine at the time of the issuance of the Prospectus due to
uncertainty in the law. Specifically, the treatment of Interest Weighted
Certificates and Variable Rate Regular Interests are subject to unsettled law
which creates uncertainty as to the exact method of income accrual which should
control. The REMIC will accrue income using a method which is consistent with
certain regulations; however, there can be no assurance that such method will
be controlling.
NONRECOURSE MORTGAGE LOANS
It is anticipated that a substantial portion of the Mortgage Loans
included in any Trust Fund will be nonrecourse loans or loans for which
recourse may be restricted or unenforceable. As to such Mortgage Loans, in the
event of mortgagor default, recourse may he had only against the specific
multifamily or commercial property and such other assets, if any, as have been
pledged to secure the Mortgage Loan. With respect. to those Mortgage Loans that
provide for recourse against the mortgagor and its assets generally, there can
be no assurance that such recourse will ensure a recovery in respect of a
defaulted Mortgage Loan greater than the liquidation value of the related
Mortgaged Property.
DELINQUENT AND NON-PERFORMING MORTGAGE LOANS
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular Series of Certificates may include Mortgage Loans that are past due
or are non-performing. If so specified in the related Prospectus Supplement,
the servicing of such Mortgage Loans will be performed by a Special Servicer.
Credit Enhancement, if provided with respect to a particular Series of
Certificates, may not cover all losses related to such delinquent or
non-performing Mortgage Loans, and investors should consider the risk that the
inclusion of such Mortgage Loans in the Trust Fund may adversely affect the
rate of defaults and prepayments on Mortgaged Properties and the yield on the
Certificates of such Series.
JUNIOR MORTGAGE LOANS
Certain of the Mortgage Loans may be junior mortgage loans. The primary
risk to holders of mortgage loans secured by junior liens is the possibility
that a foreclosure of a related senior lien would extinguish the junior lien
and that adequate funds will not be received in connection with such
foreclosure to pay the debt held by the holder of such junior mortgage loan
after satisfaction of all related senior liens.
See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS--Junior Mortgages; Rights
of Senior Mortgagees or Beneficiaries" and "--Foreclosure" for a discussion of
additional risks to holders of mortgage loans secured by junior liens.
BALLOON PAYMENTS
Certain of the Mortgage Loans as of the Cut-off Date may not be fully
amortizing over their terms to maturity and, thus, will require substantial
principal payments (i.e., balloon payments) at their stated maturity. Mortgage
loans with balloon payments involve a greater degree of risk because the
ability of a mortgagor to make a balloon payment typically will depend upon its
ability either to refinance the loan or to sell the related mortgaged property
in a timely manner. The ability of a mortgagor to accomplish either of these
goals will be affected by a number of factors, including the level of available
mortgage rates at the time of sale or refinancing, the mortgagor's equity in
the related mortgaged property, the financial condition and operating history
of the mortgagor and the related mortgaged property, tax laws, rent control
laws (with respect to certain multifamily properties and mobile home parks),
reimbursement rates (with respect to certain hospitals, nursing homes and
congregate care facilities), renewability of operating licenses, prevailing
general economic conditions and the availability of credit for commercial or
multifamily, as the case may be, real properties generally.
EXTENSIONS AND MODIFICATIONS OF DEFAULTED MORTGAGE LOANS; ADDITIONAL SERVICING
FEES
In order to maximize recoveries on defaulted Mortgage Loans, a Master
Servicer or Special Servicer, if any, will be permitted (within the parameters
specified in the related Prospectus Supplement) to extend
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and modify Mortgage Loans that are in default or as to which a payment default
is reasonably foreseeable, including in particular with respect to balloon
payments. In addition, a Master Servicer or a Special Servicer, if any, may
receive workout fees, management fees, liquidation fees or other similar fees
based on receipts from or proceeds of such Mortgage Loans. Although a Master
Servicer or Special Servicer, if any, generally will be required to determine
that any such extension or modification is reasonably likely to produce a
greater recovery amount than liquidation, there can be no assurance that such
flexibility with respect to extensions or modifications or payment of a workout
fee will increase the amount of receipts from or proceeds of Mortgage Loans
that are in default or as to which a payment default is reasonably foreseeable.
RISKS RELATED TO THE MORTGAGOR'S FORM OF ENTITY AND SOPHISTICATION
Mortgage loans made to partnerships, corporations or other entities may
entail risks of loss from delinquency and foreclosure that are greater than
those of mortgage loans made to individuals. For example, an entity, as opposed
to an individual, may be more inclined to seek legal protection from its
creditors, such as a mortgagee, under the bankruptcy laws. Unlike individuals
involved in bankruptcies, various types of entities generally do not have
personal assets and creditworthiness at stake. The bankruptcy of a mortgagor
may impair the ability of the mortgagee to enforce its rights and remedies
under the related mortgage. See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS--
Foreclosure--Bankruptcy Law." The mortgagor's sophistication may increase the
likelihood of protracted litigation or bankruptcy in default situations. The
more sophisticated a mortgagor is, the more likely it will be aware of its
rights, remedies and defenses against its mortgagee and the more likely it will
have the resources to make effective use of all of its rights, remedies and
defenses.
CREDIT ENHANCEMENT LIMITATIONS
The Prospectus Supplement for a Series of Certificates will describe any
Credit Enhancement in the related Trust Fund, which may include letters of
credit, insurance policies, surety bonds, limited guarantees, reserve funds or
other types of credit support, or combinations thereof. Use of Credit
Enhancement will be subject to the conditions and limitations described herein
and in the related Prospectus Supplement and is not expected to cover all
potential losses or risks or guarantee repayment of the entire principal
balance of the Certificates and interest thereon.
A Series of Certificates may include one or more Classes of Subordinate
Certificates (which may include Offered Certificates), if so provided in the
related Prospectus Supplement. Although subordination is intended to reduce the
risk to holders of Senior Certificates of delinquent distributions or ultimate
losses, the amount of subordination will be limited and may decline or be
reduced to zero under certain circumstances. In addition, if principal payments
on one or more Classes of Certificates of a Series are made in a specified
order of priority, any limits with respect to the aggregate amount of claims
under any related Credit Enhancement may be exhausted before the principal of
the lower priority Classes of Certificates of such Series has been repaid. As a
result, the impact of significant losses and shortfalls on the Mortgaged
Properties may fall primarily upon those Classes of Certificates having a lower
priority of payment. Moreover, if a form of Credit Enhancement covers more than
one Series of Certificates, holders of Certificates of one Series will be
subject to the risk that such Credit Enhancement will be exhausted by the
claims of the holders of Certificates of one or more other Series.
The amount, type and nature of Credit Enhancement, if any, established
with respect to a Series of Certificates will be determined on the basis of
criteria established by each Rating Agency rating Classes of the Certificates
of such Series. Such criteria are sometimes based upon an actuarial analysis of
the behavior of mortgage loans in a larger group. Such analysis is often the
basis upon which each Rating Agency determines the amount of Credit Enhancement
required with respect to each such Class. There can be no assurance that the
historical data supporting any such actuarial analysis will accurately reflect
future experience nor any assurance that the data derived from a large pool of
mortgage loans accurately predicts the delinquency, foreclosure or loss
experience of any particular pool of Mortgage Loans. No assurance can be given
with respect to any Mortgage Loan that the appraised value of the related
Mortgaged Property has remained or will remain at its level as of the
origination date of such Mortgage
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Loan. Moreover, there is no assurance that appreciation of real estate values
generally will limit loss experiences on commercial or multifamily properties.
If the commercial or multifamily residential real estate markets should
experience an overall decline in property values such that the outstanding
principal balances of the Mortgage Loans in a particular Trust Fund and any
secondary financing on the related Mortgaged Properties become equal to or
greater than the value of the Mortgaged Properties, the rates of delinquencies,
foreclosures and losses could be higher than those now generally experienced by
institutional lenders for similar mortgage loans. In addition, adverse economic
conditions (which may or may not affect real property values) may affect the
timely payment by mortgagors of scheduled payments of principal and interest on
the Mortgage Loans and, accordingly, the rates of delinquencies, foreclosures
and losses with respect to any Trust Fund. To the extent that such losses are
not covered by Credit Enhancement, such losses will be borne, at least in part,
by the holders of one or more Classes of the Certificates of the related
Series. See "Limited Nature of Ratings," "DESCRIPTION OF THE CERTIFICATES" and
"CREDIT ENHANCEMENT."
RISKS TO SUBORDINATED CERTIFICATEHOLDERS
If so provided in the related Prospectus Supplement, a Series of
Certificates may include one or more Classes of Subordinate Certificates (which
may include Offered Certificates). If losses or shortfalls in collections on
Mortgaged Properties are realized, the amount of such losses or shortfalls will
be borne first by one or more Classes of the Subordinate Certificates. The
remaining amount of such losses or shortfalls, if any, will be borne by the
remaining Classes of Certificates in the priority and subject to the
limitations specified in such Prospectus Supplement. In addition to the
foregoing, any Credit Enhancement, if applicable, may be used by the
Certificates of a higher priority of payment before the principal of the lower
priority Classes of Certificates of such Series has been repaid. Therefore, the
impact of significant losses and shortfalls on the mortgaged properties may
fall primarily upon those Classes of Certificates with a lower payment
priority.
TAXABLE INCOME IN EXCESS OF DISTRIBUTIONS RECEIVED
A holder of a certificate in a Class of Subordinate Certificates could be
allocated taxable income attributable to accruals of interest and original
issue discount in excess of cash distributed to such holder if mortgage loans
were in default giving rise to delays in distributions. See "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES--Taxation of Regular Interests--Treatment of
Subordinate Certificates" herein.
DUE-ON-SALE CLAUSES AND ASSIGNMENTS OF LEASES AND RENTS
Mortgages may contain a due-on-sale clause, which permits the mortgagee to
accelerate the maturity of the mortgage loan if the mortgagor sells, transfers
or conveys the related mortgaged property or its interest in the mortgaged
property. Mortgages may also include a debt-acceleration clause, which permits
the mortgagee to accelerate the debt upon a monetary or non-monetary default of
the mortgagor. Such clauses are generally enforceable subject to certain
exceptions. The courts of all states will enforce clauses providing for
acceleration in the event of a material payment default. The equity courts of
any state, however, may refuse the foreclosure of a mortgage or deed of trust
when an acceleration of the indebtedness would be inequitable or unjust or the
circumstances would render the acceleration unconscionable.
The related Prospectus Supplement will describe whether and to what extent
the Mortgage Loans will be secured by an assignment of leases and rents
pursuant to which the mortgagor typically assigns its right, title and interest
as landlord under the leases on the related Mortgaged Property and the income
derived therefrom to the mortgagee as further security for the related Mortgage
Loan, while retaining a license to collect rents for so long as there is no
default. In the event the mortgagor defaults, the license terminates and the
mortgagee is entitled to collect rents. Such assignments are typically not
perfected as security interests prior to the mortgagee's taking possession of
the related mortgaged property and/or appointment of a receiver. Some state
laws may require that the mortgagee take possession of the mortgaged property
and obtain a judicial appointment of a receiver before becoming entitled to
collect
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the rents. In addition, if bankruptcy or similar proceedings are commenced by
or in respect of the mortgagor, the mortgagee's ability to collect the Tents
may be adversely affected. See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE
LOANS--Leases and Rents."
ENVIRONMENTAL RISKS
Real property pledged as security for a mortgage loan may be subject to
certain environmental risks. Under the laws of certain states, contamination of
a property may give rise to a lien on the property to assure the costs of
cleanup. In several states. such a lien has priority over the lien of an
existing mortgage against such property. In addition, under the laws of some
states and under the federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA"), a mortgagee may be liable as an "owner"
or "operator" for costs of addressing releases or threatened releases of
hazardous substances that require remedy at a property. if agents or employees
of the mortgagee have become sufficiently involved in the operations of the
mortgagor, regardless of whether the environmental damage or threat was caused
by a prior owner. A mortgagee also risks such liability on foreclosure of the
mortgage. Each Agreement will generally provide that the Master Servicer or the
Special Servicer, if any, acting on behalf of the Trust Fund, may not acquire
title to a Mortgaged Property securing a Mortgage Loan or take over its
operation unless the Master Servicer or Special Servicer, as applicable, has
previously determined, based upon a report prepared by a person who regularly
conducts environmental audits, that: (i) the Mortgaged Property is in
compliance with applicable environmental laws, and there are no circumstances
present at the Mortgaged Property relating to the use, management or disposal
of any hazardous substances, hazardous materials, wastes or petroleum based
materials for which investigation, testing, monitoring, containment, clean-up
or remediation could be required under any federal, state or local law or
regulation; or (ii) if the Mortgaged Property is not so in compliance or such
circumstances are so present, then it would be in the best economic interest of
the Trust Fund to acquire title to the Mortgaged Property and further to take
such actions as would be necessary and appropriate to effect such compliance
and/or respond to such circumstances, which may include obtaining an
environmental insurance policy. The related Prospectus Supplement may impose
additional restrictions on the ability of the Master Servicer or the Special
Servicer, if any, to take any of the foregoing actions. See "CERTAIN LEGAL
ASPECTS OF THE MORTGAGE LOANS--Environmental Risks."
ERISA CONSIDERATIONS
Generally, title I of ERISA and certain sections of the Code apply to
investments made by employee benefit plans and transactions involving the
assets of such plans. Due to the complexity of regulations that govern such
plans, prospective benefit plan investors that are subject to ERISA or the Code
are urged to consult their own counsel regarding consequences under ERISA of
acquisition, ownership and disposition of the Offered Certificates of any
Series. See "ERISA CONSIDERATIONS."
CONTROL
Under certain circumstances, the consent or approval of the holders of a
specified percentage of the aggregate Certificate Balance of all outstanding
Certificates of a Series or a similar means of allocating decision-making under
the related Agreement, which will be specified in the related Prospectus
Supplement ("Voting Rights"), will be required to direct, and will be
sufficient to bind all Certificateholders of such Series to, certain actions,
including amending the related Agreement in certain circumstances. See
"SERVICING OF THE MORTGAGE LOANS--Events of Default," "--Rights Upon Event of
Default" and "DESCRIPTION OF THE CERTIFICATES--Amendment."
BOOK-ENTRY REGISTRATION
The related Prospectus Supplement may provide that one or more Classes of
the Certificates initially will be represented by one or more certificates
registered in the name of the nominee for The Depository Trust Company, and
will not be registered in the names of the Certificateholders or their
nominees. Because of this, unless and until definitive certificates, as defined
in the Prospectus Supplement, are issued, beneficial owners of the Certificates
of such Class or Classes will not be recognized by the Trustee
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as "Certificateholders" (as that term is to be used in the related Agreement).
Hence, until such time as definitive certificates are issued, the beneficial
owners will be able to exercise the rights of Certificateholders only
indirectly through The Depository Trust Company and its participating
organizations. See "DESCRIPTION OF THE CERTIFICATES--General."
THE DEPOSITOR
Prudential Securities Financing Corp. was incorporated in the State of
Delaware on August 26, 1988 as a wholly owned, limited purpose finance
subsidiary of Prudential Securities Group. The principal executive offices of
the Depositor are located at One New York Plaza, New York, New York 10292,
attention David Rodgers, (212) 214-1000.
The Depositor will have no servicing obligations or responsibilities with
respect to any Series of Certificates, Mortgage Pool or Trust Fund. The
Depositor does not have, nor is it expected in the future to have, any
significant assets.
The Depositor was organized, among other things, for the purposes of
establishing trusts, selling beneficial interests therein and acquiring and
selling mortgage assets to such trusts. Neither the Depositor, its parent nor
any of the Depositor's affiliates will insure or guarantee distributions on the
Certificates of any Series.
Unless otherwise specified in the applicable Prospectus Supplement, the
assets of the Trust Funds will be acquired by the Depositor directly or through
one or more affiliates.
USE OF PROCEEDS
The Depositor will apply all or substantially all of the net proceeds from
the sale of each Series of Offered Certificates to purchase the Mortgage Loans
relating to such Series, to repay indebtedness that has been incurred to obtain
funds to acquire Mortgage Loans, to obtain Credit Enhancement, if any, for the
Series and to pay costs of structuring, issuing and underwriting the
Certificates. If so specified in the related Prospectus Supplement,
Certificates may be exchanged by the Depositor for Mortgage Loans.
DESCRIPTION OF THE CERTIFICATES
The Certificates of each Series will he issued pursuant to a separate
Pooling and Servicing Agreement (the "Agreement") to be entered into among the
Depositor, the Master Servicer, the Special Servicer, if any, and the Trustee
for that Series and any other parties described in the applicable Prospectus
Supplement, substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus is a part or in such other form as may be
described in the applicable Prospectus Supplement. The following summaries
describe certain provisions expected to be common to each Series and the
Agreement with respect to the underlying Trust Fund. However, the Prospectus
Supplement for each Series will describe more fully the Certificates and the
provisions of the related Agreement, which may be different from the summaries
set forth below.
At the time of issuance, the Offered Certificates of each Series will be
rated "investment grade," typically one of the four highest generic rating
categories, by at least one nationally recognized statistical rating
organization. Each of such rating organizations specified in the applicable
Prospectus Supplement as rating the Offered Certificates of the related Series
is hereinafter referred to as a "Rating Agency." A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning Rating Agency.
GENERAL
The Certificates of each Series will be issued in registered or book-entry
form and will represent beneficial ownership interests in the trust fund (the
"Trust Fund") created pursuant to the Agreement for such Series. The Trust Fund
for each Series will primarily comprise, to the extent provided in the
Agreement: (i) the Mortgage Loans conveyed to the Trustee pursuant to the
Agreement; (ii) all payments on or collections in respect of the Mortgage Loans
due after the Cut-off Date; (iii) any REO property, as
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defined in the Prospectus Supplement; (iv) all revenue received in respect of
REO Property; (v) insurance policies with respect to such Mortgage Loans; (vi)
any assignments of leases, rents and profits and security agreements; (vii) any
indemnities or guaranties given as additional security for such Mortgage Loans;
(viii) the Trustee's right, title and interest in and to any reserve or escrow
accounts established pursuant to any of the Mortgage Loan documents (each, a
"Reserve Account"); (ix) the Collection Account; (x) the Distribution Account
and the REO Account; (xi) any environmental indemnity agreements relating to
such Mortgaged Properties; (xii) the rights and remedies under the Mortgage
Loan Purchase and Sale Agreement; (xiii) the proceeds of any of the foregoing
(excluding interest earned on deposits in any Reserve Account, to the extent
such interest belongs to the related mortgagor); and (xiv) such other assets or
rights as are described in the related Prospectus Supplement. In addition, the
Trust Fund for a Series may include private mortgage pass-through certificates,
certificates issued or guaranteed by the Federal Home Loan Mortgage Corporation
("FHLMC"), the Federal National Mortgage Association ("Fannie Mae") or the
Governmental National Mortgage Association ("GNMA") or mortgage pass-through
certificates previously created by the Depositor, as well as various forms of
Credit Enhancement. See "CREDIT ENHANCEMENT." Such other assets will be
described more fully in the related Prospectus Supplement.
If so specified in the applicable Prospectus Supplement, Certificates of a
given Series may be issued in several Classes, which may pay interest at
different rates, may represent different allocations of the right to receive
principal and interest payments, and certain of which may be subordinated to
other Classes in the event of shortfalls in available cash flow from the
underlying Mortgage Loans. Alternatively, or in addition, Classes may be
structured to receive principal payments in sequence. Each Class in a group of
sequential pay Classes would be entitled to be paid in full before the next
Class in the group is entitled to receive any principal payments. A Class of
Certificates may also provide for payments of principal only or interest only
or for disproportionate payments of principal and interest. Subordinate
Certificates of a given Series of Certificates may he offered in the same
Prospectus Supplement as the Senior Certificates of such Series or may be
offered in a separate offering document. Each Class of Certificates of a Series
will be issued in the minimum denominations specified in the related Prospectus
Supplement.
The Prospectus Supplement for any Series including Classes similar to any
of those described above will contain a complete description of their
characteristics and risk factors, including, as applicable, (i) mortgage
principal prepayment effects on the weighted average lives of Classes; (ii) the
risk that interest only, or disproportionately interest weighted, Classes
purchased at a premium may not return their purchase prices under rapid
prepayment scenarios; and (iii) the degree to which an investor's yield is
sensitive to principal prepayments.
The Offered Certificates of each Series will be freely transferable and
exchangeable at the office specified in the related Agreement and Prospectus
Supplement, provided, however, that certain Classes of Certificates may be
subject to transfer restrictions described in the related Prospectus
Supplement. If specified in the related Prospectus Supplement, the Certificates
may be transferable only on the books of The Depository Trust Company or
another deposition, identified in such Prospectus Supplement.
DISTRIBUTIONS ON CERTIFICATES
Distributions of principal and interest on the Certificates of each Series
will be made to the registered holders thereof ("Certificateholders") by the
Trustee (or such other paying agent as may be identified in the related
Prospectus Supplement) on the day (the "Distribution Date") specified in the
related Prospectus Supplement, beginning in the period specified in the related
Prospectus Supplement following the establishment of the related Trust Fund.
Distributions for each Series will be made by check mailed to the address of
the person entitled thereto as it appears on the certificate register for such
Series maintained by the Trustee or by wire transfer if so specified in the
related Prospectus Supplement. The final distribution in retirement of the
Certificates of each Series will be made only upon presentation and surrender
of the Certificates at the office or agency specified in the notice to the
Certificateholders of such final distribution. In addition, the Prospectus
Supplement relating to each Series will set forth the applicable due period,
prepayment period, record date, Cut-off Date and determination date in respect
of each Series of Certificates.
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With respect to each Series of Certificates on each Distribution Date, the
Trustee (or such other paying agent as may be identified in the applicable
Prospectus Supplement) will distribute to the Certificateholders the amounts
described in the related Prospectus Supplement that are due to be paid on such
Distribution Date. In general, such amounts will include previously
undistributed payments of principal (including principal prepayments, if any)
and interest on the Mortgage Loans received by the Master Servicer or the
Special Servicer, if any, after a date specified in the related Prospectus
Supplement (the "Cut-off Date") and prior to the day preceding each
Distribution Date specified in the related Prospectus Supplement.
ACCOUNTS
It is expected that the Agreement for each Series of Certificates will
provide that the Trustee establish an account (the "Distribution Account") into
which the Master Servicer will deposit amounts held in the Collection Account
from which Certificateholder distributions will be made with respect to a given
Distribution Date. On each Distribution Date, the Trustee will apply amounts on
deposit in the Distribution Account generally to make distributions of interest
and principal to the Certificateholders in the manner described in the related
Prospectus Supplement.
It is also expected that the Agreement for each Series of Certificates
will provide that the Master Servicer establish and maintain an account (the
"Collection Account") in the name of the Trustee for the benefit of
Certificateholders. The Master Servicer will generally be required to deposit
into the Collection Account all amounts received on or in respect of the
Mortgage Loans. The Master Servicer will be entitled to make certain
withdrawals from the Collection Account to, among other things: (i) remit
certain amounts for the related Distribution Date into the Distribution
Account; (ii) pay Property Protection Expenses, taxes, assessments and
insurance premiums and certain third-party expenses in accordance with the
Agreement; (iii) pay accrued and unpaid servicing fees and other servicing
compensation to the Master Servicer and the Special Servicer, if any, and (iv)
reimburse the Master Servicer, the Special Servicer, if any, the Trustee and
the Depositor for certain expenses and provide indemnification to the
Depositor. the Master Servicer and the Special Servicer, if any, as described
in the Agreement. "Property Protection Expenses" comprise certain costs and
expenses incurred in connection with defaulted Mortgage Loans, acquiring title
to, or management of, REO Property or the sale of defaulted Mortgage Loans or
REO Properties, as more fully described in the related Agreement. The
applicable Prospectus Supplement may provide for additional circumstances in
which the Master Servicer will be entitled to make withdrawals from the
Collection Account.
The amount at any time credited to the Collection Account or the
Distribution Account may be invested in Permitted Investments that are payable
on demand or in general mature or are subject to withdrawal or redemption on or
before the business day preceding the next succeeding Master Servicer
Remittance Date, in the case of the Collection Account, or the business day
preceding the next succeeding Distribution Date, in the case of the
Distribution Account. The Master Servicer will be required to remit amounts on
deposit in the Collection Account that are required for distribution to
Certificateholders to the Distribution Account on or before the business day
preceding the related Distribution Date (the "Master Servicer Remittance
Date"). The income from the investment of funds in the Collection Account and
the Distribution Account in Permitted Investments will constitute additional
servicing compensation for the Master Servicer, and the risk of loss of funds
in the Collection Account and the Distribution Account resulting from such
investments will be home by the Master Servicer. The amount of each such loss
will be required to be deposited by the Master Servicer in the Collection
Account or the Distribution Account, as the case may be, promptly as realized.
It is expected that the Agreement for each Series of Certificates will
provide that an account (the "REO Account") will be established and maintained
in order to be used in connection with REO Properties and, if specified in the
related Prospectus Supplement, certain other Mortgaged Properties. To the
extent set forth in the Agreement, certain withdrawals from the REO Account
will be made to, among other things, (i) make remittances to the Collection
Account as required by the Agreement; (ii) pay taxes, assessments, insurance
premiums, other amounts necessary for the proper operation, management and
maintenance of the REO Properties and such Mortgaged Properties and certain
third-party expenses in
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accordance with the Agreement; and (iii) provide for the reimbursement of
certain expenses in respect of the REO Properties and such Mortgaged
Properties.
The amount at any time credited to the REO Account may be invested in
Permitted Investments that are payable on demand or mature, or are subject to
withdrawal or redemption, on or before the business day preceding the day on
which such amounts are required to be remitted to the Master Servicer for
deposit in the Collection Account. The income from the investment of funds in
the REO Account in Permitted Investments will be for the benefit of the Master
Servicer, or the Special Servicer, if applicable, and the risk of loss of funds
in the REO Account resulting from such investments will be borne by the Master
Servicer, or the Special Servicer, if applicable. "Permitted Investments" will
generally consist of one or more of the following, unless the Rating Agencies
rating Certificates of a Series require other or additional investments:
(i) direct obligations of, or guarantees as to timely payment of
principal and interest by, the United States or any agency or
instrumentality thereof, provided that such obligations are backed by the
full faith and credit of the United States of America;
(ii) direct obligations of the FHLMC (debt obligations only), Fannie Mae
(debt obligations only), the Federal Farm Credit System (consolidated
system-wide bonds and notes only), the Federal Home Loan Banks
(consolidated debt obligations only), the Student Loan Marketing
Association (debt obligations only), the Financing Corp. (consolidated debt
obligations only) and the Resolution Funding Corp. (debt obligations only);
(iii) federal funds time deposits in, or certificates of deposit of, or
bankers' acceptances, or repurchase obligations, all having maturities of
not more than 365 days, issued by any bank or trust company, savings and
loan association or savings bank, depositing institution or trust company
having the highest short-term debt obligation from Standard & Poor's Rating
Services, a division of the McGraw-Hill Companies, Inc. ("S&P") or A+1, at
least one of the Rating Agencies rating such Certificates, or such lower
rating as will not result in the downgrade or withdrawal of the rating or
ratings then assigned to the Certificates by any Rating Agency rating such
Certificates;
(iv) commercial paper having a maturity of 365 days or less (including
both non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than one year
after the date of issuance thereof and demand notes that constitute
vehicles for investment in commercial paper) that is rated by each Rating
Agency rating such Certificates in its highest short-term unsecured rating
category;
(v) units of taxable money market funds or mutual funds, which funds seek
to maintain a constant asset value and have been rated by each Rating
Agency rating such Certificates as Permitted Investments with respect to
this definition;
(vi) if previously confirmed in writing to the Trustee, any other demand,
money market or time deposit, or any other obligation, security or
investment. as may be acceptable to each Rating Agency rating such
Certificates as a permitted investment of funds backing securities having
ratings equivalent to each Rating Agency's highest initial rating of the
Certificates; and
(vii) such other obligations as are acceptable as Permitted Investments
to each Rating Agency rating such Certificates;
provided, however, that (a) if S&P is rating such Certificates, none of such
obligations or securites listed above may have an "r" highlighter affixed to
its rating if rated by S&P; (b) except with respect to units of money market
funds pursuant to clause (v) above, each such obligation or security will have
a fixed dollar amount of principal due at maturity which cannot vary or change;
(c) except with respect to units of money market funds pursuant to clause (v)
above, if any such obligation or security provides for a variable rate of
interest, interest will be tied to a single interest rate index plus a single
fixed spread (if any) and move proportionately with that index; and (d) if any
of the obligations or securities listed in paragraphs (iii) - (vi) above are
not rated by each Rating Agency rating such Certificates, such investment will
nonetheless qualify as a Permitted Investment if it is rated by one of the
Rating Agencies rating such
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Certificates and one other nationally recognized statistical rating
organization; and provided, further, that such instrument continues to qualify
as a "cash flow investment" pursuant to Code Section 860G(a)(6) earning a
passive return in the nature of interest and that no instrument or security
will be a Permitted Investment if (i) such instrument or security evidences a
right to receive only interest payments or (ii) the right to receive principal
and interest payments derived from the underlying investment provides a yield
to maturity in excess of 120% of the yield to maturity at par of such
underlying investment as of the date of its acquisition.
AMENDMENT
Generally, the Agreement for each Series will provide that it may be
amended from time to time by the parties thereto, without the consent of any of
the Certificateholders, (i) to cure any ambiguity, (ii) to correct or
supplement any provisions therein that may be inconsistent with any other
provisions therein, (iii) to amend any provision thereof to the extent
necessary or desirable to maintain the rating or ratings assigned to each of
the Classes of Certificates by each Rating Agency or (iv) to make any other
provisions with respect to matters or questions arising under the Agreement
that will not (a) be inconsistent with the provisions of the Agreement, (b)
result in the downgrading, withdrawal or qualification of the rating or ratings
then assigned to any outstanding Class of Certificates and (c) adversely affect
in any material respect the interests of any Certificateholder, as evidenced by
an opinion of counsel.
Each Agreement will also provide that it may be amended from time to time
by the parties thereto with the consent of the holders of each of the Classes
of Regular Certificates representing not less than a percentage specified in
the related Agreement of each Class of Certificates affected by the amendment
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Agreement or of modifying in any
manner the rights of the Certificateholders; provided, however, that no such
amendment shall: (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans that are required to be distributed on
any Certificate without the consent of each affected Certificateholder; (ii)
change the percentage of Certificates the holders of which are required to
consent to any action or inaction under the Agreement, without the consent of
the holders of all Certificates then outstanding; or (iii) alter the
obligations of the Master Servicer or the Trustee to make an advance without
the consent of the holders of all Certificates representing all of the Voting
Rights of the Class or Classes affected thereby.
Further, the Agreement for each Series may provide that the parties
thereto, at any time and from time to time, without the consent of the
Certificateholders, may amend the Agreement to modify, eliminate or add to any
of its provisions to such extent as shall be necessary to maintain the
qualification of any REMIC related to such Series or to prevent the imposition
of any additional material state or local taxes, at all times that any of the
Certificates are outstanding, provided, however, that such action, as evidenced
by an opinion of counsel, is necessary or helpful to maintain such
qualification or to prevent the imposition of any such taxes, and would not
adversely affect in any material respect the interest of any Certificateholder.
The related Prospectus Supplement will specify. the method for allocating
Voting Rights among holders of Certificates of a Class. Any Certificate
beneficially owned by the Depositor, the Master Servicer, the Special Servicer
(if any), any mortgagor, the Trustee, a manager or any of their respective
affiliates will be deemed not to be outstanding; provided, however, that,
Certificates beneficially owned by the Master Servicer, the Special Servicer
(if any), or any affiliate thereof will be deemed to be outstanding in
connection with any required consent to an amendment of the Agreement that
relates to an action that would materially adversely affect in any material
respect the interests of the Certificateholders of any Class while the Master
Servicer, the Special Servicer (if any), or any such affiliate owns not less
than a percentage specified in the related Agreement of such Class.
The Agreement relating to each Series may provide that no amendment to
such Agreement will be made unless there has been delivered in accordance with
such Agreement an opinion of counsel to the effect that such amendment will not
cause such Series to fail to qualify as a REMIC at any time that any of the
Certificates are outstanding.
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The Prospectus Supplement for a Series may describe other or different
provisions concerning the amendment of the related Agreement required by the
Rating Agencies rating Certificates of such Series.
TERMINATION
The obligations of the parties to the Agreement for each Series will
terminate upon: (i) the purchase of all of the assets of the related Trust
Fund, as described in the related Prospectus Supplement; (ii) the later of (a)
the distribution to Certificateholders of that Series of final payment with
respect to the last outstanding Mortgage Loan or (b) the disposition of all
property acquired upon foreclosure or deed-in-lieu of foreclosure with respect
to the last outstanding Mortgage Loan and the remittance to the
Certificateholders of all funds due under the Agreement; (iii) the sale of the
assets of the related Trust Fund after the principal amounts of all
Certificates have been reduced to zero under circumstances set forth in the
Agreement; or (iv) mutual consent of the parties and all Certificateholders.
With respect to each Series, the Trustee will give or cause to be given written
notice of termination of the Agreement to each Certificateholder and the final
distribution under the Agreement will be made only upon surrender and
cancellation of the related Certificates at an office or agency specified in
the notice of termination.
REPORTS TO CERTIFICATEHOLDERS
Concurrently with each distribution for each Series, the Trustee (or such
other paying agent as may be identified in the applicable Prospectus
Supplement) will forward to each Certificateholder a statement setting forth
such information relating to such distribution as is specified in the Agreement
and described in the applicable Prospectus Supplement.
THE TRUSTEE
The Depositor will select a bank or trust company to act as trustee (the
"Trustee") under the Agreement for each Series and the Trustee will be
identified, and its obligations under that Agreement will be described, in the
applicable Prospectus Supplement. The Rating Agencies rating Certificates of a
Series may require the appointment of a Fiscal Agent to guarantee certain
obligations of the Trustee. Such Fiscal Agent will be a party to the Agreement.
In such event, the Fiscal Agent will be identified, and its obligations under
the Agreement will be described, in the applicable Prospectus Supplement. See
"SERVICING OF THE MORTGAGE LOAN--Certain Matters with Respect to the Master
Servicer, the Special Servicer, the Trustee and the Depositor."
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THE MORTGAGE POOLS
GENERAL
Each Mortgage Pool will consist of mortgage loans secured by first or
junior mortgages, deeds of trust or similar security instruments (each, a
"Mortgage") on, or installment contracts ("Installment Contracts") for the sale
of, fee simple or leasehold interests in properties improved by office
buildings, health-care related properties, congregate care facilities, hotels
and motels, industrial properties, warehouse, mini-warehouse, and self-storage
facilities, mobile home parks, multifamily properties, cooperative apartment
buildings, nursing homes, office/retail properties, anchored retail properties,
single-tenant retail properties, unanchored retail properties and other
commercial real estate properties, multifamily residential properties and/or
mixed residential commercial properties (each, a "Mortgaged Property"). A
Mortgage Pool may also include participation interests in such types of
mortgage loans, private-label mortgage pass-through certificates, certificates
issued or guaranteed by FHLMC, Fannie Mae or GNMA, mortgage pass-through
certificates, or collateralized mortgage obligations. Each such mortgage loan,
Installment Contract, participation interest, certificate, or collateralized
mortgage obligation is herein referred to as a "Mortgage Loan."
All Mortgage Loans will be of one or more of the following types:
1. Mortgage Loans with fixed interest rates;
2. Mortgage Loans with adjustable interest rates;
3. Mortgage Loans whose principal balances fully amortize over their
remaining terms to maturity;
4. Mortgage Loans whose principal balances do not fully amortize, but
instead provide for a substantial principal payment at the stated
maturity of the loan;
5. Mortgage Loans that provide for recourse against only the Mortgaged
Properties;
6. Mortgage Loans that provide for recourse against the other assets of
the related mortgagors; and
7. any other types of Mortgage Loans described in the applicable
Prospectus Supplement.
Mortgage Loans may also be secured by one or more assignments of leases
and rents, management agreements or operating agreements relating to the
Mortgaged Property and in some cases by certain letters of credit, personal
guarantees or both. Pursuant to an assignment of leases and rents, the obligor
on the related promissory note, bond, mortgage consolidation agreement,
installment contract or other similar instrument (each, a "Note") assigns its
right, title and interest as landlord under each lease and the income derived
therefrom to the related mortgagee, while retaining a license to collect the
rents for so long as there is no default. If the obligor defaults, the license
terminates and the related mortgagee is entitled to collect the rents from
tenants to he applied to the monetary obligations of the obligor. State law may
limit or restrict the enforcement of the assignment of leases and rents by a
mortgagee until the mortgagee takes possession of the related mortgaged
property and/or a receiver is appointed. See "CERTAIN LEGAL ASPECTS OF THE
MORTGAGE LOANS--Leases and Rents."
If so specified in the related Prospectus Supplement, a Trust Fund may
include a number of Mortgage Loans with a single obligor or related obligors
thereunder; provided, however, that the principal balance of the mortgage loans
to a single obligor or group of related obligors will not exceed 45% of the
initial principal amount of the Certificates for a Series. In addition, in the
event that the Mortgage Pool securing Certificates for any Series includes a
Mortgage Loan or mortgage-backed security or a group of Mortgage Loans or
mortgage-backed securities of a single obligor or group of affiliated obligors
representing 10% or more, but less than 45%, of the principal amount of such
Certificates, the Prospectus Supplement will contain information, including
financial information, regarding the credit quality of the obligors. The
Mortgage Loans will be newly originated or seasoned, and will be acquired by
the Depositor either directly or through one or more affiliates.
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Unless otherwise specified in the Prospectus Supplement for a Series, the
Mortgage Loans will not be insured or guaranteed by the United States, any
governmental agency, any private mortgage insurer or any other person or
entity.
The Prospectus Supplement relating to each Series will specify the
Mortgage Loan Seller or Mortgage Loan Sellers relating to the Mortgage Loans,
which may include, among others, Real Estate Investment Trusts ("REITs"),
commercial banks, savings and loan associations, other financial institutions,
mortgage banks, credit companies, insurance companies, real estate developers
or other HUD approved lenders, and the underwriting criteria to the extent
available in connection with originating the Mortgage Loans. The criteria
applied by the Depositor in selecting the Mortgage Loans to be included in a
Mortgage Pool will vary from Series to Series. The Prospectus Supplement
relating to each Series also will provide specific information regarding the
characteristics of the Mortgage Loans, as of the Cut-off Date, including, among
other things: (i) the aggregate principal balance of the Mortgage Loans; (ii)
the types of properties securing the Mortgage Loans and the aggregate principal
balance of the Mortgage Loans secured by each type of property; (iii) the
interest rate or range of interest rates of the Mortgage Loans; (iv) the
origination dates and the original and, with respect to seasoned Mortgage
Loans, remaining terms to stated maturity of the Mortgage Loans; (v) the
loan-to-value ratios at origination and, with respect to seasoned Mortgage
Loans, current loan balance-to-original value ratios of the Mortgage Loans;
(vi) the geographic distribution of the Mortgaged Properties underlying the
Mortgage Loans; (vii) the minimum interest rates, margins, adjustment caps,
adjustment frequencies, indices and other similar information applicable to
adjustable rate Mortgage Loans; (viii) the debt service coverage ratios
relating to the Mortgage Loans; and (ix) payment delinquencies, if any,
relating to the Mortgage Loans. The applicable Prospectus Supplement will also
specify any materially inadequate, incomplete or obsolete documentation
relating to the Mortgage Loans and other characteristics of the Mortgage Loans
relating to each Series. If specified in the applicable Prospectus Supplement,
the Depositor may segregate the Mortgage Loans in a Mortgage Pool into separate
"Mortgage Loan Groups" (as described in the related Prospectus Supplement) as
part of the structure of the payments of principal and interest on the
Certificates of a Series. In such case, the Depositor will disclose the
above-specified information by Mortgage Loan Group.
The Depositor will file a current report on Form 8-K (the "Form 8-K") with
the Commission within 15 days after the initial issuance of each Series of
Certificates (each, a "Closing Date"), as specified in the related Prospectus
Supplement, which will set forth information with respect to the Mortgage Loans
included in the Trust Fund for a Series as of the related Closing Date. The
Form 8-K will be available to the Certificateholders of the related Series
promptly after its filing.
ASSIGNMENT OF MORTGAGE LOANS
At the time of issuance of the Certificates of each Series, the Depositor
will cause the Mortgage Loans to be assigned to the Trustee, together with all
scheduled payments of interest and principal due after the Cut-off Date
(whether received) and all payments of interest and principal received by the
Depositor or the Master Servicer on or with respect to the Mortgage Loans after
the Cut-off Date. The Trustee, concurrently with such assignment, will execute
and deliver Certificates evidencing the beneficial ownership interests in the
related Trust Fund to the Depositor in exchange for the Mortgage Loans. Each
Mortgage Loan will be identified in a schedule appearing as an exhibit to the
Agreement for the related Series (the "Mortgage Loan Schedule"). The Mortgage
Loan Schedule will include, among other things, as to each Mortgage Loan,
information as to its outstanding principal balance as of the close of business
on the Cut-off Date, as well as information respecting the interest rate, the
scheduled monthly (or other periodic) payment of principal and interest as of
the Cut-off Date, the maturity date of each Note and the address of the
property securing the Note.
In addition, the Depositor will, as to each Mortgage Loan, deliver to the
Trustee: (i) the Note, endorsed to the order of the Trustee without recourse;
(ii) the Mortgage and an executed assignment thereof in favor of the Trustee or
otherwise as required by the Agreement; (iii) any assumption, modification or
substitution agreements relating to the Mortgage Loan; (iv) a mortgagee's title
insurance policy (or owner's policy in the case of an Installment Contract),
together with its endorsements, or an
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attorney's opinion of title issued as of the date of origination of the
Mortgage Loan; (v) if the security losses are not covered by the methods of
Credit Enhancement or the insurance policies described herein and/or in the
related Prospectus Supplement, the ability of the Trust Fund to pay principal
of and interest on the Certificates may be adversely affected. Even if credit
support covers all losses resulting from defaults and foreclosure, the effect
of defaults and foreclosures may be to increase prepayment experience on the
Mortgage Loans, thus shortening weighted average life and affecting yield to
maturity.
REPRESENTATIONS AND WARRANTIES
The seller of a Mortgage Loan to the Depositor (the "Mortgage Loan
Seller"), which may be an affiliate of the Depositor, will have made
representations and warranties in respect of the Mortgage Loans sold by such
Mortgage Loan Seller to the Depositor. Such representations and warranties will
generally include, among other things: (i) with respect to each Mortgaged
Property, that title insurance (or in the case of Mortgaged Properties located
in areas where such policies are generally not available, an attorney's opinion
of title) and any required hazard insurance was effective at the origination of
each Mortgage Loan, and that each policy (or opinion of title) remained in
effect on the date of purchase of the Mortgage Loan from the Mortgage Loan
Seller, (ii) that the Mortgage Loan Seller had good and marketable (or
indefeasible, in the case of real property located in Texas) title to each such
Mortgage Loan, (iii) with respect to each Mortgaged Property, that each
mortgage constituted a valid first lien on the Mortgaged Property (subject only
to permissible title insurance exceptions); (iv) that there were no delinquent
tax or assessment liens against the Mortgaged Property; and (v) that each
Mortgage Loan was current as to all required payments. The Prospectus
Supplement for a Series will specify the representations and warranties being
made by the Mortgage Loan Seller.
All of the representations and warranties of a Mortgage Loan Seller in
respect of a Mortgage Loan generally will have been made as of the date on
which such Mortgage Loan Seller sold the Mortgage Loan to the Depositor. The
related Prospectus Supplement will indicate if a different date is applicable.
A substantial period of time may have elapsed between such date and the date of
the initial issuance of the Series of Certificates evidencing an interest in
such Mortgage Loan. Since the representations and warranties of the Mortgage
Loan Seller do not address events that may occur following the sale of a
Mortgage Loan by the Mortgage Loan Seller, the repurchase obligation of the
Mortgage Loan Seller described below will not arise if, on or after the date of
the sale of a Mortgage Loan by the Mortgage Loan Seller to the Depositor, the
relevant event occurs that would have given rise to such an obligation.
However, the Depositor will not include any Mortgage Loan in the Trust Fund for
any Series of Certificates if anything has come to the Depositor's attention
that would cause it to believe that the representations and warranties of the
Mortgage Loan Seller will not be accurate and complete in all material respects
in respect of such Mortgage Loan as of the related Cut-off Date. If so
specified in the related Prospectus Supplement, the Depositor will make certain
representations and warranties for the benefit of Certificateholder of a Series
in respect of a Mortgage Loan that relate to the period commencing on the date
of sale of such Mortgage Loan to the Depositor.
Upon the discovery of the breach of any representation or warranty made by
the Mortgage Loan Seller in respect of a Mortgage Loan that materially and
adversely affects the interests of the Certificateholders of the related
Series. Such Mortgage Loan Seller generally will be obligated to repurchase
such Mortgage Loan at a purchase price equal to 100% of the unpaid principal
balance thereof at the date of repurchase or, in the case of a Series of
Certificates as to which the Depositor has elected to treat the related Trust
Fund as a REMIC, as defined in the Code, at such other price as may be
necessary to avoid a tax on a prohibited transaction, as described in Section
860F(a) of the Code, in each case together with accrued interest at the
interest rate for such Mortgage Loan, to the first day of the month following
such repurchase and the amount of any unreimbursed advances made by the Master
Servicer in respect of such Mortgage Loan, together with interest thereon at
the reimbursement rate. The Master Servicer will be required to enforce such
obligation of the Mortgage Loan Seller for the benefit of the Trustee and the
Certificateholders, following the practices it would employ in its good faith
business judgment were it the owner of such Mortgage Loan. This repurchase
obligation will generally constitute the sole remedy available to the
Certificateholders of such Series for a breach of a representation or warranty
by a Mortgage Loan Seller and the Depositor and the Master Servicer will have
no liability to
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the Trust Fund for any such breach. The applicable Prospectus Supplement will
indicate whether any additional remedies will be available to the
Certificateholders. No assurance can be given that a Mortgage Loan Seller will
carry out its repurchase obligation with respect to the Mortgage Loans.
If specified in the related Prospectus Supplement, the Mortgage Loan
Seller may deliver to the Trustee within a specified number of days following
the issuance of a Series of Certificates Mortgage Loans in substitution for any
one or more of the Mortgage Loans initially included in the Trust Fund but
which do not conform in one or more respects to the description thereof
contained in the related Prospectus Supplement, as to which a breach of a
representation or warranty is discovered, which breach materially and adversely
affects the interests of the Certificateholders, or as to which a document in
the related Mortgage Loan File is defective in any material respect. The
related Prospectus Supplement will describe any required characteristics of any
such substituted Mortgage Loans.
SERVICING OF THE MORTGAGE LOANS
GENERAL
The servicer of the Mortgage Loans (the "Master Servicer") will be
specified in the applicable Prospectus Supplement and may be an affiliate of
the Depositor. The Prospectus Supplement for the related Series will set forth
certain information concerning the Master Servicer. The Master Servicer will be
responsible for servicing the Mortgage Loans pursuant to the Agreement for the
related Series. To the extent so specified in the related Prospectus
Supplement, one or more Special Servicers may be a party to the related
Agreement or may be appointed by holders of certain Classes of Regular
Certificates representing a certain percentage specified in the related
Agreement of such Class or Classes of Certificates or by another specified
party. Certain information with respect to the Special Servicer will be set
forth in such Prospectus Supplement. A Special Servicer for any Series of
Certificates may be an affiliate of the Depositor or the Master Servicer and
may hold, or be affiliated with the holder of, Subordinate Certificates of such
Series. A Special Servicer may be entitled to any of the rights, and subject to
any of the obligations, described herein in respect of a Master Servicer. In
general, a Special Servicer's duties will relate to defaulted Mortgage Loans or
those Mortgage Loans that otherwise require special servicing ("Specially
Serviced Mortgage Loans"), including instituting foreclosures and negotiating
work-outs and will also include asset management activities with respect to any
REO Property. The related Prospectus Supplement will describe the rights,
obligations and compensation of any Special Servicer for a particular Series of
Certificates. The Master Servicer or Special Servicer generally may subcontract
the servicing of all or a portion of the Mortgage Loans to one or more
sub-servicers provided certain conditions are met. Such sub-servicer may be an
affiliate of the Depositor and may have other business relationships with
Depositor and its affiliates.
COLLECTIONS AND OTHER SERVICING PROCEDURES
The Master Servicer and the Special Servicer, if any, will make reasonable
efforts to collect all pavements called for under the Mortgage Loans and will,
consistent with the related Agreement, follow such collection procedures as it
deems necessary or desirable. Consistent with the above and unless otherwise
specified in the related Prospectus Supplement. The Master Servicer or the
Special Servicer, if applicable, may, in its discretion, waive any late payment
charge or penalty fees in connection with a late payment of a Mortgage Loan
and, if so specified in the related Prospectus Supplement, may extend the due
dates for payments due on a Note.
It is expected that the Agreement for each Series will provide that the
Master Servicer establish and maintain an escrow account (the "Escrow Account")
in which the Master Servicer will be required to deposit amounts received from
each mortgagor, if required by the terms of the related Mortgage Loan
documents, for the payment of taxes, assessments, certain mortgage and hazard
insurance premiums and other comparable items ("Escrow Payments"). The Special
Servicer, if any, will be required to remit amounts received for such purposes
on Mortgage Loans serviced by it to the Master Servicer for deposit into the
Escrow Account, and will be entitled to direct the Master Servicer to make
withdrawals from the Escrow Account as may be required for servicing of such
Mortgage Loans. Withdrawals from the Escrow
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Account generally may be made to (i) effect timely payment of taxes,
assessments, mortgage and hazard insurance premiums and other comparable items,
(ii) to transfer funds to the Collection Account to reimburse the Master
Servicer or the Trustee, as applicable, for any advance with interest thereon
relating to Escrow Payments, (iii) to restore or repair the Mortgaged
Properties, (iv) to clear and terminate such account, (v) to pay interest to
mortgagors on balances in the Escrow Account, if required by the terms of the
related Mortgage Loan documents or by applicable law, (vi) to remit to the
related borrower the Financial Lease and Reporting Fee as and when required by
the related Mortgage, and (vii) to remove amounts not required to be deposited
therein. The related Prospectus Supplement may provide for other permitted
withdrawals from the Escrow Account. The Master Servicer will be entitled to
all income on the funds in the Escrow Account invested in Permitted Investments
not required to be paid to mortgagors by the terms of the related Mortgage Loan
documents or by applicable law. The Master Servicer will be responsible for the
administration of the Escrow Account.
INSURANCE
The Agreement for each Series will require that the Master Servicer use
its reasonable efforts to or require each mortgagor to maintain insurance in
accordance with the related Mortgage Loan documents, which generally will
include a standard fire and hazard insurance policy with extended coverage. To
the extent required by the related Mortgage Loan, the coverage of each such
standard hazard insurance policy will be in an amount that is at least equal to
the lesser of (i) the full replacement cost of the improvements and equipment
securing such Mortgage Loan or (ii) the outstanding principal balance owing on
such Mortgage Loan or such amount as is necessary to prevent any reduction in
such policy by reason of the application of co-insurance and to prevent the
Trustee thereunder from being deemed to be a co-insurer, in each case with a
replacement cost rider. The Master Servicer will also use its reasonable
efforts to require each mortgagor to maintain (i) insurance providing coverage
against 12 months of rent interruptions and (ii) such other insurance as
provided in the related Mortgage Loan. Subject to the requirements for
modification, waiver or amendment of a Mortgage Loan (See "Modifications,
Waivers and Amendments"), the Master Servicer may in its reasonable discretion
consistent with the servicing standard set forth in the related Agreement waive
the requirement of a Mortgage Loan that the related mortgagor maintain
earthquake insurance on the related Mortgaged Property.
If a Mortgaged Property is located at the time of origination of the
related Mortgage Loan in a federally designated special flood hazard area, the
Master Servicer will also use its reasonable efforts to require the related
mortgagor to maintain flood insurance in an amount equal to the lesser of the
unpaid principal balance of the related Mortgage Loan and the maximum amount
obtainable with respect to the Mortgage Loan. The related Agreement will
provide that the Master Servicer will be required to maintain the foregoing
insurance if the related mortgagor fails to maintain such insurance to the
extent such insurance is available at commercially reasonable rates and to the
extent the Trustee, as mortgagee, has an insurable interest. The cost of any
such insurance maintained by the Master Servicer will be advanced by the Master
Servicer. The Master Servicer or the Special Servicer, if any, will cause to be
maintained fire and hazard insurance with extended coverage on each REO
Property in an amount that is at least equal to the full replacement cost of
the improvements and equipment. The cost of any such insurance with respect to
an REO Property will be payable out of amounts on deposit in the related REO
Account or will be advanced by the Master Servicer. The Master Servicer or the
Special Servicer, if any, will maintain flood insurance providing substantially
the same coverage as described above on any REO Property that was located in a
federally designated special flood hazard area at the time the related mortgage
loan was originated. The Master Servicer or the Special Servicer, if any, will
maintain with respect to each REO Property (i) public liability insurance, (ii)
loss of rent endorsements and (iii) such other insurance as provided in the
related Mortgage Loan. Any such insurance that is required to be maintained
with respect to any REO Property will only be so required to the extent such
insurance is available at commercially reasonable rates. The related Agreement
will provide that the Master Servicer or Special Servicer, if any, may satisfy
its obligation to cause hazard insurance policies to be maintained by
maintaining a master force placed insurance policy insuring against losses on
the Mortgage Loans or REO Properties, as the case may be. The incremental cost
of such insurance allocable to any particular Mortgage Loan or REO Property, if
not home by the related mortgagor, will be an expense of the Trust Fund.
Alternatively, the
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Master Servicer or Special Servicer, if any, may satisfy its obligation by
maintaining, at its expense, a blanket policy (i.e., not a master force placed
policy) insuring against losses on the Mortgage Loans or REO Properties, as the
case may be. If such a blanket or master force placed policy contains a
deductible clause, the Master Servicer or the Special Servicer, if any, will be
obligated to deposit in the Collection Account all sums that would have been
deposited therein but for such clause to the extent any such deductible exceeds
the deductible limitation that pertained to the related Mortgage Loan, or in
the absence of any such deductible limitation, the deductible limitation that
is consistent with the servicing standard under the related Agreement.
In general, the standard form of fire and hazard extended coverage
insurance policy will cover physical damage to, or destruction of, the
improvements on the Mortgaged Property caused by fire, lightning, explosion,
smoke, windstorm, hail, riot, strike and civil commotion, subject to the
conditions and exclusions particularized in each policy. Since the standard
hazard insurance policies relating to the Mortgage Loans will be underwritten
by different insurers and win cover Mortgaged Properties located in various
states, such policies will not contain identical terms and conditions. The most
significant terms thereof, however, generally will be determined by state law
and conditions. Most such policies typically will not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), nuclear reaction, wet or dry rot, vermin, rodents, insects or
domestic animals, theft and, in certain cases, vandalism. The foregoing list is
merely indicative of certain kinds of uninsured risks and is not intended to be
all-inclusive. Any losses incurred with respect to Mortgage Loans due to
uninsured risks (including earthquakes, mudflows and floods) or insufficient
hazard insurance proceeds could affect distributions to the Certificateholders.
The standard hazard insurance policies covering Mortgaged Properties
securing Mortgage Loans typically will contain a "coinsurance" clause which, in
effect, will require the insured at all times to carry insurance of a specified
percentage (generally 80% to 90%) of the full replacement value of the
dwellings, structures and other improvements on the Mortgaged Property in order
to recover the full amount of any partial loss. If the insured's coverage falls
below this specified percentage, such clause will provide that the insurer's
liability in the event of partial loss will not exceed the greater of (i) the
actual cash value (the replacement cost less physical depreciation) of the
structures and other improvements damaged or destroyed and (ii) such proportion
of the loss, without deduction for depreciation, as the amount of insurance
carried bears to the specified percentage of the full replacement cost of such
dwellings, structures and other improvements.
The Prospectus Supplement may describe other provisions concerning the
insurance policies required to be maintained under the related Agreement.
Unless otherwise specified in the applicable Prospectus Supplement, no
pool insurance policy, special hazard insurance policy, bankruptcy bond,
repurchase bond or guarantee insurance will be maintained with respect to the
Mortgage Loans nor will any Mortgage Loan be subject to FHA insurance.
The FHA is responsible for administering various federal programs,
including mortgage insurance, authorized under the National Housing Act of
1934, as amended, and the United States Housing Act of 1937, as amended. To the
extent specified in the related Prospectus Supplement, all or a portion of the
Mortgage Loans may be insured by the FHA. The Master Servicer will be required
to take such steps as are reasonably necessary to keep such insurance in full
force and effect.
FIDELITY BONDS AND ERRORS AND OMISSIONS
The Agreement for each Series will generally require that the Master
Servicer and the Special Servicer, if applicable, obtain and maintain in effect
a fidelity bond or similar form of insurance coverage (which may provide
blanket coverage) or any combination thereof insuring against loss occasioned
by fraud, theft or other intentional misconduct of the officers and employees
of the Master Servicer and the Special Servicer, if applicable. The related
Agreement will allow the Master Servicer and the Special Servicer, if
applicable, to self-insure against loss occasioned by the errors and omissions
of the officers and employees of the Master Servicer and the Special Servicer,
if applicable, so long as certain criteria set forth in the Agreement are met.
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SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Master Servicer's principal compensation for its activities under the
Agreement for each Series will come from the payment to it or retention by it,
with respect to each Mortgage Loan, of a "Servicing Fee" (as defined in the
related Prospectus Supplement). The exact amount and calculation of such
Servicing Fee will be established in the Prospectus Supplement and Agreement
for the related Series. Since the aggregate unpaid principal balance of the
Mortgage Loans will generally decline over time, the Master Servicer's
servicing compensation will ordinarily decrease as the Mortgage Loans amortize.
In addition, the Agreement for a Series may provide that the Master
Servicer be entitled to receive, as additional compensation, (i) Prepayment
Premiums, late fees and certain other fees collected from mortgagors and (ii)
any interest or other income earned on funds deposited in the Collection
Account and Distribution Account (as described under "DESCRIPTION OF THE
CERTIFICATES--Accounts") and, except to the extent such income is required to
be paid to the related mortgagors, the Escrow Account.
The Master Servicer will generally pay the fees and expenses of the
Trustee.
The amount and calculation of the fee for the servicing of Specially
Serviced Mortgage Loans (the "Special Servicing Fee") will be described in the
Prospectus Supplement and Agreement for the related Services.
In addition to the compensation described above, the Master Servicer and
the Special Servicer, if applicable, (or any other party specified in the
applicable Prospectus Supplement) may retain, or be entitled to the
reimbursement of, such other amounts and expenses as are described in the
applicable Prospectus Supplement.
ADVANCES
The applicable Prospectus Supplement will set forth the obligations, if
any, of the Master Servicer and the Special Servicer, if applicable, to make
any advances with respect to delinquent payments on Mortgage Loans, payments of
taxes, assessments, insurance premiums and Property Protection Expenses or
otherwise. Any such advances will be made in the form and manner described in
the Prospectus Supplement and Agreement for the related Series.
MODIFICATIONS, WAIVERS AND AMENDMENTS
The Agreement for each Series will provide the Master Servicer or the
Special Servicer, if any, with the discretion to modify, waive or amend certain
of the terms of any Mortgage Loan without the consent of the Trustee or any
Certificateholder subject to certain conditions set forth therein, including
the condition that such modification, waiver or amendment will not result in
such Mortgage Loan ceasing to be a "qualified mortgage" under the REMIC
Regulations.
EVIDENCE OF COMPLIANCE
The Agreement for each Series will generally provide that on or before a
specified date in each year, beginning the first such date that is at least a
specified number of months after the Cut-off Date, there will be furnished to
the related Trustee a report of a firm of independent certified public
accountants stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Master Servicer or Special
Servicer, if any, which includes an assertion that the Master Servicer or
Special Servicer, if any, has complied with certain minimum mortgage loan
servicing standards (to the extent applicable to commercial and multifamily
mortgage loans), identified in the Uniform Single Attestation Program for
Mortgage Bankers established by the Mortgage Bankers Association of America,
with respect to the Master Servicer's or, if applicable, the Special Servicer's
servicing of commercial and multifamily mortgage loans during the most recently
completed calendar year and (ii) on the basis of an examination conducted by
such firm in accordance with standards established by the American Institute of
Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that, in
the opinion of such firm, such standards require it to report.
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In rendering its report such firm may rely, as to the matters relating to
the direct servicing of commercial and multifamily mortgage loans by
sub-services, upon comparable reports of firms of independent public
accountants rendered on the basis of examination conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those sub-servicers. The Prospectus Supplement may provide that additional
reports of independent certified public accountants relating to the servicing
of mortgage loans may be required to be delivered to the Trustee.
In addition, the Agreement for each Series will generally provide that the
Master Servicer and the Special Servicer, if any, will each deliver to the
Trustee, the Depositor and each Rating Agency, annually on or before a date
specified in the Agreement, a statement signed by an officer of the Master
Servicer or the Special Servicer, as applicable, to the effect that, based on a
review of its activities during the preceding calendar year, to the best of
such officer's knowledge, the Master Servicer or the Special Servicer, as
applicable, has fulfilled in all material respects its obligations under the
Agreement throughout such year or, if there has been a default in the
fulfillment of any such obligation, specifying each default known to such
officer.
CERTAIN MATTERS WITH RESPECT TO THE MASTER SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE AND THE DEPOSITOR
The Agreement for each Series will also provide that none of the
Depositor, the Master Servicer, the Special Servicer, if any, or any partner,
director, officer, employee or agent of the Depositor, the Master Servicer or
the Special Servicer, if any (or any general partner thereof), will be under
any liability to the Trust Fund or the Certificateholders for any action taken,
or for refraining from the taking of any action, in good faith pursuant to the
Agreement, or for errors in judgment; provided, however, that neither the
Depositor, the Master Servicer, the Special Servicer, if any, nor any such
person will be protected against any liability for a breach of any
representations or warranties under the Agreement or that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence (or, in the
case of the Master Servicer or Special Servicer, if any, a breach of the
servicing standards set forth in the Agreement) in the performance of its
duties or by reason of negligent disregard of its obligations and duties
thereunder. The Agreement will further provide that the Depositor, the Master
Servicer, the Special Servicer, if any, and any director, officer, employee or
agent of the Depositor, the Master Servicer, the Special Servicer, if any (and
any general partner thereof), will be entitled to indemnification by the Trust
Fund for any loss, liability or expense incurred in connection with any legal
action relating to the Agreement or the Certificates, other than any loss,
liability or expense incurred by reason of its respective willful misfeasance,
bad faith, fraud or negligence (or, in the case of the Master Servicer or the
Special Servicer, if any, a breach of the servicing standard set forth in the
Agreement) in the performance of duties thereunder or by reason of negligent
disregard of its respective obligations and duties thereunder. Any loss
resulting from such indemnification will reduce amounts distributable to
Certificateholders. The Prospectus Supplement will specify any variations to
the foregoing required by the Rating Agencies rating Certificates of a Series.
In addition, the Agreement will generally provide that none of the
Depositor, the Special Servicer or the Master Servicer, if any, will be under
any obligation to appear in, prosecute or defend any legal action unless such
action is related to its duties under the Agreement and which in its opinion
does not involve it in any expense or liability. The Master Servicer or the
Special Servicer, if any, may, however, in its discretion undertake any such
action that is related to its respective obligations under the related
Agreement and that it may deem necessary or desirable with respect to the
Agreement and the rights and duties of the parties thereto and the interests of
the holders of Certificates thereunder. In such event, the legal expenses and
costs of such action and any liability resulting therefrom (except any
liability related to the Master Servicer's or the Special Servicer's, if any
obligations to service the Mortgage Loans in accordance with the servicing
standard under the Agreement) will be expenses, costs and liabilities of the
Trust Fund, and the Master Servicer or Special Servicer, if applicable, will be
entitled to be reimbursed therefor and to charge the Collection Account.
Any person into which the Master Servicer or the Special Servicer, if any,
may be merged or consolidated, or any person resulting from any merger or
consolidation to which the Master Servicer or the Special Servicer, if any, is
a party, or any person succeeding to the business of the Master Servicer or
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the Special Servicer, if any, will be the successor of the Master Servicer or
the Special Servicer, as applicable, under the Agreement, and will be deemed to
have assumed all of the liabilities and obligations of the Master Servicer or
the Special Servicer, as applicable, under the Agreement, if each of the Rating
Agencies has confirmed in writing that such merger or consolidation and
succession will not result in a downgrading, withdrawal or qualification of the
rating then assigned by such Rating Agency to any Class of the Certificates.
The related Prospectus Supplement will describe any additional restrictions on
such a merger or consolidation.
Generally, the Master Servicer or the Special Servicer, if any, may assign
its rights and delegate its duties and obligations under the Agreement in
connection with the sale or transfer of a substantial portion of its mortgage
servicing or asset management portfolio; provided that certain conditions are
met, including the written consent of the Trustee and written confirmation by
each of the Rating Agencies that such assignment and delegation by the Master
Servicer or the Special Servicer, as applicable, will not, in and of itself,
result in a downgrading, withdrawal or qualification of the rating then
assigned by such Rating Agency to any Class of Certificates. The related
Prospectus will describe any additional restrictions on such assignment.
The Agreement will also provide that the Master Servicer or the Special
Servicer, if any, may not otherwise resign from its obligations and duties as
Master Servicer or Special Servicer thereunder, except upon the determination
that performance of its duties is no longer permissible under applicable law
and provided that such determination is evidenced by an opinion of counsel
delivered to the Trustee. No such resignation or removal may become effective
until the Trustee or a successor Master Servicer or Special Servicer, as the
case may be, has assumed the obligations of the Master Servicer or the Special
Servicer, as applicable, under the Agreement.
The Trustee under each Agreement will be named in the applicable
Prospectus Supplement. The commercial bank or trust company serving as Trustee
may have normal banking relationships with the Depositor, the Master Servicer,
the Special Servicer, if any, and/or any of their respective affiliates.
The Trustee may resign from its obligations under the Agreement at any
time, in which event a successor Trustee will be appointed. In addition, the
Depositor may remove the Trustee if the Trustee ceases to be eligible to act as
Trustee under the Agreement or if the Trustee becomes insolvent, at which time
the Depositor will become obligated to appoint a successor Trustee. The Trustee
may also be removed at any time by the holders of Certificates evidencing the
percentage of Voting Rights specified in the applicable Prospectus Supplement.
Any resignation and removal of the Trustee, and the appointment of a successor
Trustee, will not become effective until acceptance of such appointment by the
successor Trustee.
The Depositor is not obligated to monitor or supervise the performance of
the Master Servicer, Special Servicer, if any, or the Trustee under the
Agreement.
EVENTS OF DEFAULT
Events of default with respect to the Master Servicer or the Special
Servicer, if any, as applicable (each, an "Event of Default") under the
Agreement for each Series will consist of, in summary form, (i) any failure by
the Master Servicer or the Special Servicer, if any, to remit to the Collection
Account or any failure by the Master Servicer to remit to the Trustee for
deposit into the Distribution Account any amount required to be so remitted
pursuant to the Agreement; (ii) any failure by the Master Servicer or Special
Servicer, as applicable, duly to observe or perform in any material respect any
of its other covenants or agreements or the breach of its representations or
warranties (which breach materially and adversely affects the interests of the
Certificateholders, the Trustee, the Master Servicer or the Special Servicer,
if any, with respect to any Mortgage Loan) under the Agreement, which in each
case continues unremedied for 30 days after the giving of written notice of
such failure to the Master Servicer or the Special Servicer, as applicable, by
the Depositor or the Trustee, or to the Master Servicer or Special Servicer, if
any, the Depositor and the Trustee by the holders of Certificates evidencing
Voting Rights of at least 25% of any affected Class; (iii) confirmation in
writing by any of the Rating Agencies that the then current rating assigned to
any Class of Certificates would be withdrawn, downgraded or qualified unless
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the Master Servicer or Special Servicer, as applicable, is removed; (iv)
certain events of insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings and certain actions by, on behalf of or
against the Master Servicer or Special Servicer, as applicable, indicating its
insolvency or inability to pay its obligations; or (v) any failure by the
Master Servicer to make a required advance. The related Prospectus Supplement
may provide for other Events of Default to the extent required by the Rating
Agencies rating Certificates of a Series.
RIGHTS UPON EVENT OF DEFAULT
As long as an Event of Default remains unremedied, the Trustee may, and at
the written direction of the holders of Certificates entitled to 25% of the
aggregate Voting Rights of all Certificates will, terminate all of the rights
and obligations of the Master Servicer or Special Servicer, as the case may be.
Notwithstanding the foregoing, upon any termination of the Master Servicer or
the Special Servicer, as applicable, under the Agreement the Master Servicer or
the Special Servicer, as applicable, will continue to be entitled to receive
all accrued and unpaid servicing compensation through the date of termination
plus, in the case of the Master Servicer, all advances and interest thereon as
provided in the Agreement.
The holders of Certificates evidencing not less than 66 2/3% of the
aggregate Voting Rights of the Certificates may, on behalf of all holders of
Certificates, waive any default by the Master Servicer or Special Servicer, if
any, in the performance of its obligations under the Agreement and its
consequences, except a default in making any required deposits to (including
advances) or payments from the Collection Account or the Distribution Account
or in remitting payments as received, in each case in accordance with the
Agreement. Upon any such waiver of a past default, such default will cease to
exist, and any Event of Default arising therefrom will be deemed to have been
remedied for every purpose of the Agreement. No such waiver will extend to any
subsequent or other default or impair any right consequent thereon.
On and after the date of termination, the Trustee will succeed to all
authority and power of the Master Servicer or the Special Servicer, as
applicable. under the Agreement and will be entitled to similar compensation
arrangements to which the Master Servicer or the Special Servicer, as
applicable, would have been entitled. If the Trustee is unwilling or unable so
to act, or if the holders of Certificates evidencing a majority of the
aggregate Voting Rights so request or if the Trustee is not rated in one of its
two highest long-term debt rating categories by each of the Rating Agencies or
if the Trustee is not approved as a servicer by the Rating Agencies, the
Trustee must appoint, or petition a court of competent jurisdiction for the
appointment of, an established mortgage loan servicing institution with a net
worth of at least $10,000,000 and which is either Fannie Mae or FHLMC approved,
the appointment of which will not result in the downgrading, withdrawal or
qualification of the rating or ratings then assigned to any Class of
Certificates as evidenced in writing by each Rating Agency, to act as successor
to the Master Servicer or the Special Servicer, as applicable, under the
Agreement. Pending such appointment, the Trustee will be obligated to act in
such capacity. The Trustee and any such successor may agree upon the servicing
compensation to be paid, which in no event may be greater than the compensation
payable to the Master Servicer or the Special Servicer, as the case may be,
under the Agreement.
No Certificateholder will have any right under the Agreement to institute
any proceeding with respect to the Agreement or the Mortgage Loans, unless,
with respect to the Agreement, such holder previously shall have given to the
Trustee a written notice of a default under the Agreement and of the
continuance thereof, and unless also the holders of Certificates representing a
majority of the aggregate Voting Rights allocated to each affected Class have
made written request of the Trustee to institute such proceeding in its own
name as Trustee under the Agreement and have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 30 days
after its receipt of such notice, request and offer of indemnity, has neglected
or refused to institute such proceeding.
The Trustee will have no obligation to institute, conduct or defend any
litigation under the Agreement or in relation thereto at the request, order or
direction of any of the holders of Certificates, unless such holders of
Certificates have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
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CREDIT ENHANCEMENT
GENERAL
If specified in the related Prospectus Supplement for any Series, credit
enhancement may be provided with respect to one or more Classes thereof or the
related Mortgage Loans ("Credit Enhancement"). Credit Enhancement may be in the
form of a letter of credit, the subordination of one or more Classes of the
Certificates of such Series, the establishment of one or more reserve funds,
surety bonds, certificate guarantee insurance, the use of cross-support
features, limited guarantees or another method of Credit Enhancement described
in the related Prospectus Supplement, or any combination of the foregoing.
It is unlikely that Credit Enhancement will provide protection against all
risks of loss or guarantee repayment of the entire principal balance of the
Certificates and interest thereon. If losses occur that exceed the amount
covered by Credit Enhancement or that are not covered by Credit Enhancement,
Certificateholders will bear their allocable share of deficiencies. See "RISK
FACTORS--Credit Enhancement Limitations"
ENHANCEMENT LIMITATIONS
If Credit Enhancement is provided with respect to a Series, or the related
Mortgage Loans, the applicable Prospectus Supplement will include a description
of (a) the amount payable under such Credit Enhancement, (b) any conditions to
payment thereunder not otherwise described herein, (c) the conditions (if any)
under which the amount payable under such Credit Enhancement may be reduced and
under which such Credit Enhancement may be terminated or replaced and (d) the
material provisions of any agreement relating to such Credit Enhancement.
Additionally, the applicable Prospectus Supplement will set forth certain
information with respect to the issuer of any third-party Credit Enhancement,
including (i) a brief description of its principal business activities, (ii)
its principal place of business, the jurisdiction of organization and the
jurisdictions under which it is chartered or licensed to do business, (iii) if
applicable, the identity of regulatory agencies that exercise primary
jurisdiction over the conduct of its business and (iv) its total assets and its
stockholders' or policyholders' surplus, if applicable, as of the date
specified in such Prospectus Supplement. If the holders of any Certificates of
any Series will be materially dependent upon the issuer of any third party
Credit Enhancement for timely payment of interest and/or principal on their
Certificates, the Depositor will file a current report on Form 8-K within 15
days after the initial issuance of such Certificates, which will include any
material information regarding such issuer, including audited financial
statements to the extent required.
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more Classes
of a Series may be Subordinate Certificates. If so specified in the related
Prospectus Supplement, the rights of the holders of subordinate Certificates
(the "Subordinate Certificates") to receive distributions of principal and
interest from the Distribution Account on any Distribution Date will be
subordinated to such rights of the holders of senior Certificates (the "Senior
Certificates") to the extent specified in the related Prospectus Supplement. In
addition, subordination may be effected by the allocation of losses first to
Subordinate Certificates in reduction of the principal balance of such
Certificates until the principal balance thereof is reduced to zero before any
losses are allocated to Senior Certificates. The Agreement may require a
trustee that is not the Trustee to be appointed to act on behalf of holders of
Subordinate Certificates.
A Series may include one or more Classes of Subordinate Certificates
entitled to receive cash flows remaining after distributions are made to all
other Classes designated as being senior thereto. Such right to receive
payments will effectively be subordinate to the rights of holders of such
senior designated Classes of Certificates. A Series may also include one or
more Classes of Subordinate Certificates that will be allocated losses prior to
any losses being allocated to Classes of Subordinate Certificates designated as
being senior thereto. If so specified in the related Prospectus Supplement, the
subordination of a Class may apply only in the event of (or may be limited to)
certain types of losses not covered by insurance policies or other Credit
Enhancement, such as losses arising from damage to property securing a Mortgage
Loan not covered by standard hazard insurance policies.
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The related Prospectus Supplement will describe any such subordination in
greater detail and set forth information concerning, among other things. to the
extent applicable, (i) the amount of subordination of a Class or Classes of
Subordinate Certificates in a Series, (ii) the circumstances in which such
subordination will be applicable, (iii) the manner, if any, in which the amount
of subordination will decrease over time, (iv) the manner of funding any
related reserve fund, (v) the conditions under which amounts in any applicable
reserve fund will be used to make distributions to holders of Senior
Certificates and/or to holders of Subordinate Certificates or be released from
the applicable Trust Fund and (vi) if one or more Classes of Subordinate
Certificates of a Series are offered Certificates, the sensitivity of
distributions on such Certificates based on certain default assumptions. See
"RISK FACTORS--Risks to Subordinated Certificateholders" herein.
RESERVE FUNDS
If specified in the related Prospectus Supplement, one or more reserve
funds (each, a "Reserve Fund") may be established with respect to one or more
Classes of the Certificates of a Series, in which cash, a letter of credit,
Permitted Investments or a combination thereof, in the amounts, if any, so
specified in the related Prospectus Supplement will be deposited. Such Reserve
Funds may also be funded over time by depositing therein a specified amount of
the distributions received on the applicable Mortgage Loans if specified in the
related Prospectus Supplement. The Depositor may pledge the Reserve Funds to a
separate collateral agent specified in the related Prospectus Supplement.
Amounts on deposit in any Reserve Fund for one or more Classes of
Certificates of a Series will be applied by the Trustee for the purposes, in
the manner, and to the extent specified in the related Prospectus Supplement. A
Reserve Fund may be provided to increase the likelihood of timely payments of
principal of and interest on the Certificates, if required as a condition to
the rating of such Series by any Rating Agency. If so specified in the related
Prospectus Supplement, Reserve Funds may be established to provide limited
protection, in an amount satisfactory to a Rating Agency, against certain types
of losses not covered by insurance policies or other Credit Enhancement.
Reserve Funds may also be established for other purposes and in such amounts as
will be specified in the related Prospectus Supplement. Following each
Distribution Date amounts in any Reserve Fund in excess of any amount required
to be maintained therein may be released from the Reserve Fund under the
conditions and to the extent specified in the related Prospectus Supplement and
will not be available for further application by the Trustee.
Moneys deposited in any Reserve Fund generally will be permitted to be
invested in Permitted Investments. Generally, any reinvestment income or other
gain from such investments will be credited to the related Reserve Fund for
such Series, and any loss resulting from such investments will be charged to
such Reserve Fund. If specified in the related Prospectus Supplement, such
income or other gain may be payable to the Servicer as additional servicing
compensation, and any loss resulting from such investment will be borne by the
Servicer. The Reserve Fund. if any for a Series will be a part of the Trust
Fund only if the related Prospectus Supplement so specifies. If the Reserve
Fund is not a part of the Trust Fund, the right of the Trustee to make draws on
the Reserve Fund will be an asset of the Trust Fund.
Additional information concerning any Reserve Fund will be set forth in
the related Prospectus Supplement, including the initial balance of such
Reserve Fund, the balance required to be maintained in the Reserve Fund, the
manner in which such required balance will decrease over time, the manner of
funding such Reserve Fund, the purpose for which funds in the Reserve Fund may
be applied to make distributions to Certificateholders and use of investment
earnings, if any, from the Reserve Fund.
CROSS-SUPPORT FEATURES
If the Mortgage Pool for a Series is divided into separate Mortgage Loan
Groups, each securing a separate Class or Classes of a Series, Credit
Enhancement may be provided by a cross-support feature that requires that
distributions be made on Senior Certificates secured by one Mortgage Loan Group
prior to distributions on Subordinate Certificates secured by another Mortgage
Loan Group within the Trust Fund. The related Prospectus Supplement for a
Series that includes a cross-support feature will describe the manner and
conditions for applying such cross-support feature.
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CERTIFICATE GUARANTEE INSURANCE
If so specified in the related Prospectus Supplement, certificate
guarantee insurance, if any, with respect to a Series of Certificates will be
provided by one or more insurance companies. Such certificate guarantee
insurance will guarantee, with respect to one or more Classes of Certificates
of the applicable Series, timely distributions of interest and full
distributions of principal on the basis of a schedule of principal
distributions set forth in or determined in the manner specified in the related
Prospectus Supplement. If so specified in the related Prospectus Supplement,
the certificate guarantee insurance will also guarantee against any payment
made to a Certificateholder that is subsequently recovered as a "voidable
preference" payment under the Bankruptcy Code. A copy of the certificate
guarantee insurance for a Series, if any, will be filed with the Commission as
an exhibit to the Form 8-K to be filed with the Commission within 15 days of
issuance of the Certificates of the applicable Series.
LIMITED GUARANTEE
If so specified in the Prospectus Supplement with respect to a Series of
Certificates, Credit Enhancement may be provided in the form of a limited
guarantee issued by a guarantor named therein.
LETTER OF CREDIT
Alternative Credit Enhancement with respect to one or more Classes of
Certificates of a Series of Certificates may be provided by the issuance of a
letter of credit by the bank or financial institution specified in the
applicable Prospectus Supplement. The coverage, amount and frequency of any
reduction in coverage provided by a letter of credit issued with respect to one
or more Classes of Certificates of a Series will be set forth in the Prospectus
Supplement relating to such Series.
POOL INSURANCE POLICIES; SPECIAL HAZARD INSURANCE POLICIES
If so specified in the Prospectus Supplement relating to a Series of
Certificates, the Depositor will obtain a pool insurance policy for the
Mortgage Loans in the related Trust Fund. The pool insurance policy will cover
any loss (subject to the limitations described in a related Prospectus
Supplement) by reason of default to the extent a related Mortgage Loan is not
covered by any primary mortgage insurance policy. The amount and terms of any
such coverage will be set forth in the Prospectus Supplement.
If so specified in the applicable Prospectus Supplement, for each Series
of Certificates as to which a pool insurance policy is provided, the Depositor
will also obtain a special hazard insurance policy for the related Trust Fund
in the amount set forth in such Prospectus Supplement. The special hazard
insurance policy will, subject to the limitations described in the applicable
Prospectus Supplement, protect against loss by reason of damage to Mortgaged
Properties caused by certain hazards not insured against under the standard
form of hazard insurance policy for the respective states in which the
Mortgaged Properties are located. The amount and terms of any such coverage
will be set forth in the Prospectus Supplement.
SURETY BONDS
If so specified in the Prospectus Supplement relating to a Series of
Certificates, Credit Enhancement with respect to one or more Classes of
Certificates of a Series may be provided by the issuance of a surety bond
issued by a financial guarantee insurance company specified in the applicable
Prospectus Supplement. The coverage, amount and frequency or any reduction in
coverage provided by a surety bond will be set forth in the Prospectus
Supplement relating to such Series.
FRAUD COVERAGE
If so specified in the applicable Prospectus Supplement, losses resulting
from fraud, dishonesty or misrepresentation in connection with the origination
or sale of the Mortgage Loans may be covered to a limited extent by (i)
representations and warranties to the effect that no such fraud, dishonesty or
misrepresentation had occurred, (ii) a Reserve Fund, (iii) a letter of credit
or (iv) some other method. The amount and terms of any such coverage will be
set forth in the Prospectus Supplement.
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MORTGAGOR BANKRUPTCY BOND
If so specified in the applicable Prospectus Supplement, losses resulting
from a bankruptcy proceeding relating to a mortgagor or obligor affecting the
Mortgage Loans in a Trust Fund with respect to a Series of Certificates will be
covered under a mortgagor bankruptcy bond (or any other instrument that will
not result in a withdrawal, downgrading or qualification of the rating of the
Certificates of a Series by any of the Rating Agencies that rated any
Certificates of such Series). Any mortgagor bankruptcy bond or such other
instrument will provide for coverage in an amount and with such terms meeting
the criteria of the Rating Agencies rating any Certificates of the related
Series, which amount and terms will be set forth in the related Prospectus
Supplement.
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS
The following discussion contains summaries of certain legal aspects of
mortgage loans that are general in nature. Because many of the legal aspects of
mortgage loans are governed by applicable state laws (which may vary
substantially), the following summaries do not purport to be complete, to
reflect the laws of any particular state, to reflect all the laws applicable to
any particular Mortgage Loan or to encompass the laws of all states in which
the properties securing the Mortgage Loans are situated. The summaries are
qualified in their entirety by reference to the applicable federal and state
laws governing the Mortgage Loans.
GENERAL
All of the Mortgage Loans are loans evidenced by (or, in the case of
mortgage pass-through certificates, supported by) a note or bond that is
secured by a lien and security interest in property created under related
security instruments, which may be mortgages, deeds of trust or deeds to secure
debt, depending upon the prevailing practice and law in the state in which the
Mortgaged Property is located. As used herein, unless the context otherwise
requires, the term "Mortgage" includes mortgages, deeds of trust and deeds to
secure debt. Any of the foregoing mortgages will create a lien upon, or grant a
title interest in, the mortgaged property, the priority of which will depend on
the terms of the mortgage, the existence of any separate contractual
arrangements with others holding interests in the mortgaged property, the order
of recordation of the mortgage in the appropriate public recording office and
the actual or constructive knowledge of the mortgagee as to any unrecorded
liens, leases or other interests affecting the mortgaged property, Mortgages
typically do not possess priority over governmental claims for real estate
taxes, assessments and, in some states, for reimbursement of remediation costs
of certain environmental conditions. See "Environmental Risks." In addition,
the Code provides priority to certain tax liens over the lien of the mortgage.
The mortgagor is generally responsible for maintaining the property in good
condition and for paying real estate taxes, assessments and hazard insurance
premiums associated with the property.
TYPES OF MORTGAGE INSTRUMENTS
A mortgage either creates a lien against or constitutes a conveyance of an
interest in real property between two parties--a mortgagor (the borrower and
usually the owner of the subject property) and a mortgagee (the lender). A deed
of trust is a three-party instrument, wherein a trustor (the equivalent of a
mortgagor), grants the property to a trustee, in trust with a power of sale,
for the benefit of a beneficiary (the lender) as security for the payment of
the secured indebtedness. A deed to secure debt is a two party instrument
wherein the grantor (the equivalent of a mortgagor) conveys title to, as
opposed to merely creating a lien upon, the subject property to the grantee
(the lender) until such time as the underlying debt is repaid, generally with a
power of sale as security for the indebtedness evidenced by the related note.
As used herein, unless the context otherwise requires. the term "mortgagor"
includes a mortgagor under a mortgage, a trustor under a deed of trust and a
grantor under a deed to secure debt, and the term, "mortgagee" includes a
mortgagee under a mortgage, a beneficiary under a deed of trust and a grantee
under a deed to secure debt. The mortgagee's authority under a mortgage, the
trustee's authority under a deed of trust and the grantee's authority under a
deed to secure debt are governed by the express
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provisions of the mortgage, the law of the state in which the real property is
located, certain federal laws and, in some cases, in deed of trust
transactions, the directions of the beneficiary. The Mortgage Loans (other than
Installment Contracts) will consist of (or, in the case of mortgage
pass-through certificates, be supported by) loans secured by mortgages.
The real property covered by a mortgage is most often the fee estate in
land and improvements. However, a mortgage may encumber other interests in real
property such as a tenant's interest in a lease of land, leasehold improvements
or both, and the leasehold estate created by such lease. A mortgage covering an
interest in real property other than the fee estate requires special provisions
in the instrument creating such interest, in the mortgage or in a separate
agreement with the landlord or other party to such instrument, to protect the
mortgagee against termination of such interest before the mortgage is paid.
PERSONALITY
Certain types of mortgaged properties, such as nursing homes, hotels,
motels and industrial plants, are likely to derive a significant part of their
value from personal property that does not constitute "fixtures" under
applicable state real property law, and hence, would not be subject to the lien
of a mortgage. Such property is generally pledged or assigned as security to
the mortgagee under the Uniform Commercial Code ("UCC"). In order to perfect
its security interest therein, the mortgagee generally must file UCC financing
statements and, to maintain perfection of such security interest, file
continuation statements generally every five years.
INSTALLMENT CONTRACTS
The Mortgage Loans may also consist of Installment Contracts (also
sometimes called contracts for deed). Under an Installment Contract, the seller
(referred to in this Section as the "mortgagee") retains legal title to the
property and enters into an agreement with the purchaser (referred to in this
Section as the "mortgagor") for the payment of the purchase price plus
interest, over the term of such Installment Contract. Only after full
performance by the mortgagor of the Installment Contract is the mortgagee
obligated to convey title to the property to the mortgagor. As with mortgage or
deed of trust financing, during the effective period of the Installment
Contract, the mortgagor is generally responsible for maintaining the property
in good condition and for paying real estate taxes, assessments and hazard
insurance premiums associated with the property.
The method of enforcing the rights of the mortgagee under an Installment
Contract varies on a state-by-state basis depending upon the extent to which
state courts are willing or able to enforce the Installment Contract strictly
according to its terms. The terms of Installment Contracts generally provide
that upon a default by the mortgagor, the mortgagor loses his or her right to
occupy the property, the entire indebtedness is accelerated and the mortgagor's
equitable interest in the property is forfeited. The mortgagee in such a
situation does not have to foreclose in order to obtain title to the property,
although in some cases both a quiet title action to clear title to the property
(if the mortgagor has recorded notice of the Installment Contract) and an
ejectment action to recover possession may be necessary. In a few states,
particularly in cases of a default during the early years of an Installment
Contract, ejectment of the mortgagor and a forfeiture of his or her interest in
the properly will be permitted. However, in most states, laws (analogous to
mortgage laws) have been enacted to protect mortgagors under Installment
Contracts from the harsh consequences of forfeiture. These laws may require the
mortgagee to pursue a judicial or nonjudicial foreclosure with respect to the
property, give the mortgagor a notice of default and some grace period during
which the Installment Contract may be reinstated upon full payment of the
default amount. Additionally, the mortgagor may have a post-foreclosure
statutory redemption right, and, in some states, a mortgagor with a significant
equity investment in the property may be permitted to share in the proceeds of
any sale of the property after the indebtedness is repaid or may otherwise be
entitled to a prohibition of the enforcement of the forfeiture clause.
JUNIOR MORTGAGES; RIGHTS OF SENIOR MORTGAGEES OR BENEFICIARIES
Some of the Mortgage Loans may be secured by junior mortgages that are
subordinate to senior mortgages held by other lenders or institutional
investors. In such cases, the rights of the Trust Fund (and
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therefore the Certificateholders), as mortgagee under a junior mortgage, will
be subordinate to those of the mortgagee under the senior mortgage, including
the Prior rights of the senior mortgagee to: (i) receive rents, hazard
insurance proceeds and condemnation proceeds; and (ii) cause the property
securing the Mortgage Loan to be sold upon the occurrence of a default under
the senior mortgage, thereby extinguishing the lien of the junior mortgage,
unless the Master Servicer or Special Servicer, if applicable, either asserts
such subordinate interest in the related property in the foreclosure of the
senior mortgage or satisfies the defaulted senior loan. As discussed more fully
below, in many states a junior mortgagee may satisfy a defaulted senior loan in
full. or may cure such default and bring the senior loan current, in either
event adding the amounts expended to the balance due on the junior loan. Absent
a provision in the senior mortgage or the existence of a recorded request for
notice in compliance with applicable state law (if any), no notice of default
is typically required to be given to the junior mortgagee.
The form of the mortgage used by many institutional lenders confers on the
mortgagee the right both to receive all proceeds collected under any hazard
insurance Policy and all awards made in connection with any condemnation
proceedings, and to apply such proceeds and awards to any indebtedness secured
by such mortgage in such order as the mortgagee may determine. Thus, in the
event improvements on the property are damaged or destroyed by fire or other
casualty, or in the event the property (or any part thereof) is taken by
condemnation, the mortgagee under the senior mortgage will have the prior right
to collect any applicable insurance proceeds and condemnation awards and to
apply the same to the indebtedness secured by the senior mortgage. However, the
laws of certain states may provide that, unless the security of the mortgagee
has been impaired, the mortgagor must be allowed to use any applicable
insurance proceeds or partial condemnation awards to restore the property.
The form of mortgage used by many institutional lenders also typically
contains a "future advance" clause that provides that additional amounts
advanced to or on behalf of the mortgagor by the mortgagee are to be secured by
the mortgage. Such a clause is valid under the laws of most states. In some
states, however, the priority of any advance made under the clause depends upon
whether the advance was an 'obligatory" or "optional" advance. If the mortgagee
is obligated to advance the additional amounts, the advance may be entitled to
receive the same priority as amounts initially made under the mortgage,
notwithstanding that other junior mortgages or other liens may have encumbered
the property between the date of recording of the senior mortgage and the date
of the future advance, and that the mortgagee had actual knowledge of such
intervening junior mortgages or other liens at the time of the advance. If the
mortgagee is not obligated to advance the additional amounts and has actual
knowledge of any such intervening junior mortgages or other liens. the advance
may be subordinate to such intervening junior mortgages or other liens. In many
other states, all advances under a "future advance" clause are given the same
priority as amounts initially made under the mortgage so long as such advances
do not exceed a specified "credit limit" amount stated in the recorded
mortgage.
Another provision typically found in the form of the mortgage used by many
institutional lenders obligates the mortgagor: (i) to pay all taxes and
assessments affecting the property prior to delinquency; (ii) to pay, when due,
all other encumbrances. charges and liens affecting the property that may be
prior to the lien of the mortgage; (iii) to provide and maintain hazard
insurance on the property; (iv) to maintain and repair the property and not to
commit or permit any waste thereof; and (v) to appear in and defend any action
or proceeding purporting to affect the property or the rights of the mortgagee
under the mortgage. Upon a failure of the mortgagor to perform any of these
obligations, the mortgage typically provides the mortgagee the option to
perform the obligation itself, with the mortgagor agreeing to reimburse the
mortgagee for any sums expended by. the mortgagee in connection therewith. All
sums so expended by the mortgagee also typically become part of the
indebtedness secured by the mortgage. The form of mortgage used by many
institutional lenders also typically requires the mortgagor to obtain the
consent of the mortgagee as to all actions affecting the mortgaged property,
including, without limitation, all leasing activities (including new leases and
termination or modification of existing leases), any alterations, modifications
or improvements to the buildings and other improvements forming a part of the
mortgaged property and all property management activities affecting the
mortgaged property (including new management or leasing agreements or any
termination or modification of existing management or leasing agreements).
Tenants will often refuse to execute a lease unless the mortgagee executes a
written
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agreement with the tenant not to disturb the tenant's possession of its
premises in the event Of a foreclosure. A senior mortgagee may refuse to
consent to matters approved by a junior mortgagee with the result that the
value of the security for the junior mortgage is diminished. For example, a
senior mortgagee may decide not to approve a lease or refuse to grant to a
tenant such a non-disturbance agreement. If, as a result, the lease is not
executed. the value of the mortgaged property may be diminished.
FORECLOSURE
Foreclosure is a legal procedure that allows the mortgagee to recover its
mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the mortgagor defaults in payment or performance of its
obligations under the note or mortgage and, by reason thereof, the indebtedness
has been accelerated, the mortgagee has the right to institute foreclosure
proceedings to sell the mortgaged property at public auction to satisfy the
indebtedness. Foreclosure procedures with respect to the enforcement of a
mortgage vary from state to state. Although there are other foreclosure
procedures available in some states that are either infrequently used or
available only in certain limited circumstances, the two primary methods of
foreclosing a mortgage are judicial foreclosure and non-judicial foreclosure
pursuant to a power of sale granted in the mortgage. In either case, the actual
foreclosure of the mortgage will be accomplished pursuant to a public sale of
the mortgaged property by a designated official or by the trustee under a deed
of trust. The purchaser at any such sale acquires only the estate or interest
in the mortgaged property encumbered by the mortgage. For example, if the
mortgage only encumbered a tenant's leasehold interest in the property, such
purchaser will only acquire such leasehold interest, subject to the tenant's
obligations under the lease to pay rent and perform other covenants contained
therein.
Judicial Foreclosure. A judicial foreclosure of a mortgage is a judicial
action initiated by the service of legal pleadings upon all necessary parties
having an interest in the real property.
Delays in completion of foreclosure may occasionally result from
difficulties in locating the necessary parties to the action. As a judicial
foreclosure is a lawsuit, it is subject to all of procedures, delays and
expenses attendant to litigation, sometimes requiring up to several years to
complete if contested. At the completion of a judicial foreclosure, if the
mortgagee prevails, the court ordinarily issues a judgment of foreclosure and
appoints a referee or other designated official to conduct a public sale of the
property. Such sales are made in accordance with procedures that vary from
state to state.
Non-Judicial Foreclosure. In the majority of cases, foreclosure of a deed
of trust (and in some instances, other types of mortgage instruments) is
accomplished by a non-judicial trustee's sale pursuant to a provision in the
deed of trust that authorizes the trustee, generally following a request from
the beneficiary, to sell the mortgaged property at public sale upon any default
by the mortgagor under the terms of the note or deed of trust. In addition to
the specific contractual requirements set forth in the deed of trust, a
non-judicial trustee's sale is also typically subject to any applicable
judicial or statutory requirements imposed in the state where the mortgaged
property is located. The specific requirements that must be satisfied by a
trustee prior to the trustee's sale vary from state to state. Examples of the
varied requirements imposed by certain states are: (i) that notices of both the
mortgagor's default and the mortgagee's acceleration of the debt be provided to
the mortgagor; (ii) that the trustee record a notice of default and send a copy
of such notice to the mortgagor, any other person having an interest in the
real property, including any junior lienholders. any person who has recorded a
request for a copy of a notice of default and notice of sale, any successor in
interest to the mortgagor and to certain other persons; (iii) that the
mortgagor, or any other person having a junior encumbrance on the real estate,
may, during a reinstatement period, cure the default by paying the entire
amount in arrears, plus, in certain states, certain allowed costs and expenses
incurred by the mortgagee in connection with the default; and (iv) the method
(publication, posting, recording, etc.), timing. content, location and other
particulars as to any required public notices of the trustee's sale.
Foreclosure of a deed to secure debt is also generally accomplished by a
non-judicial sale similar to that required by a deed of trust, except that the
mortgagee or its agent, rather than a trustee, is typically empowered to
perform the sale in accordance with the terms of the deed to secure debt and
applicable law.
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Limitations on Mortgagee's Rights. Because of the difficulty a potential
buyer at any foreclosure sale might have in determining the exact status of
title to the mortgaged property, the potential existence of redemption rights
(see "Rights of Redemption" below) and because the physical condition and
financial performance of the mortgaged property may have deteriorated during
the foreclosure proceedings and/or for a variety of other reasons, a third
party may be unwilling to purchase the property at the foreclosure sale. Some
states require that the mortgagee disclose all known facts materially affecting
the value of the mortgaged property to potential bidders at a trustee's sale.
Such disclosure may have an adverse affect on the trustee's ability to sell the
mortgaged property or the sale price thereof. Potential buyers may be reluctant
to purchase property at a foreclosure sale as a result of the 1980 decision of
the United States Court of Appeals for the Fifth Circuit in Durrett v.
Washington National Insurance Company and other decisions that have followed
its reasoning. The court in Durrett held that even a non-collusive, regularly
conducted foreclosure sale was a fraudulent transfer under the federal
Bankruptcy Code, as amended from time to time (11 U.S.C.) (the "Bankruptcy
Code"), and, therefore, could be rescinded in favor of the bankrupt's estate,
if, (i) the foreclosure sale was held while the debtor was insolvent and not
more than one year prior to the filing of the bankruptcy petition; and (ii) the
price paid for the foreclosed property did not represent "fair consideration"
("reasonably equivalent value" under the Bankruptcy Code). Although the
reasoning and result of Durrett in respect of the Bankruptcy Code was rejected
by the United States Supreme Court in May 1994, the case could nonetheless be
persuasive to a court applying a state fraudulent conveyance law that has
provisions similar to those construed in Durrett. Furthermore, a bankruptcy
trustee or debtor in possession could possibly avoid a foreclosure sale by
electing to proceed under state fraudulent conveyance law, and the period of
time for which a foreclosure sale could be subject to avoidance under such law
is often greater than one year. For these reasons, it is common for the
mortgagee to purchase the property from the trustee, referee or other
designated official for an amount equal to the outstanding principal amount of
the secured indebtedness, together with accrued and unpaid interest and the
expenses of foreclosure, in which event, if the amount bid by the mortgagee
equals the full amount of such debt, interest and expenses, the secured debt
would be extinguished. Thereafter, the mortgagee assumes the burdens of
ownership and management of the property (frequently, through the employment of
a third party management company), including third party liability, paying
operating expenses and real estate taxes and making repairs, until a sale of
the property to a third party can be arranged. The costs of operating and
maintaining commercial property may be significant and may be greater than the
income derived from that property. The costs of management and operation of
those mortgaged properties that are hotels, motels or nursing or convalescent
homes or hospitals may be particularly significant, because of the expertise,
knowledge and, with respect to nursing or convalescent homes or hospitals,
regulatory compliance required to run such operations and the effect that
foreclosure and a change in ownership may have on the public's and the
industry's (including franchisers') perception of the quality of such
operations. The mortgagee will commonly obtain the services of a real estate
broker and pay the broker's commission in connection with the sale of the
property. Depending upon market conditions, the ultimate proceeds of the sale
of the property may not equal the mortgagee's investment in the property.
Moreover, a mortgagee commonly incurs substantial legal fees and court costs in
acquiring a mortgaged property through contested foreclosure and/or bankruptcy
proceedings. In addition, a mortgagee may be responsible under federal or state
law for the cost of cleaning up a mortgaged property that is environmentally
contaminated. See "--Environmental Risks" below. As a result, a mortgagee could
realize an overall loss on a mortgage loan even if the related mortgaged
property is sold at foreclosure or resold after it is acquired through
foreclosure for an amount equal to the full outstanding principal amount of the
mortgage loan, plus accrued interest.
Courts may also apply general equitable principles in connection with
foreclosure proceedings to limit a mortgagee's remedies. These equitable
principles are generally designed to relieve the mortgagor from the legal
effect of his defaults under the loan documents to the extent such effect is
determined to be harsh or unfair. Examples of judicial remedies that have been
fashioned include requiring mortgagees to undertake affirmative and expensive
actions to determine the causes of the mortgagor's default and the likelihood
that the mortgagor will be able to reinstate the loan, requiring the mortgagees
to reinstate loans or recast payment schedules in order to accommodate
mortgagors who are suffering from temporary financial disability, and limiting
the rights of mortgagees to foreclose if the default under the mortgage
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instrument is not monetary, such as the mortgagor's failing to maintain the
property adequately or executing a second mortgage affecting the property.
Finally, some courts have been faced with the issue of whether federal or state
constitutional provisions reflecting due process concerns for adequate notice
require that mortgagors under deeds of trust or mortgages receive notices in
addition to the statutorily prescribed minimum. For the most part, these cases
have upheld the notice provisions as being reasonable or have found that the
sale by a trustee under a deed of trust, or under a mortgage having a power of
sale, does not involve sufficient state action to afford constitutional
protections to the mortgagor.
Under the REMIC Regulations and the related Agreement, the Master Servicer
or Special Servicer, if any, may be permitted (and in some cases may be
required) to hire an independent contractor to operate any REO Property. The
costs of such operation may be significantly greater than the costs of direct
operation by the Master Servicer or Special Servicer, if any. See "SERVICING OF
THE MORTGAGE LOANS--Collections and Other Servicing Procedures."
Rights of Redemption. The purposes of a foreclosure are to enable the
mortgagee to realize upon its security and to bar the mortgagor, and all
persons who have an interest in the property that is subordinate to the
mortgage being foreclosed, from any exercise of their "equity of redemption."
The doctrine of equity of redemption provides that, until the property covered
by a mortgage has been sold in accordance with a properly conducted foreclosure
sale, those having an interest that is subordinate to that of the foreclosing
mortgagee have an equity of redemption and may redeem the property by paying
the entire debt with interest. In addition, in some states, when a foreclosure
action has been commenced, the redeeming party must pay certain costs of such
action. Those having an equity of redemption must generally be made parties and
joined in the foreclosure proceeding in order for their equity of redemption to
be cut off and terminated. Equity of redemption is generally a common-law
(non-statutory) right that only exists prior to completion of the foreclosure
sale is not waivable by the mortgagor and must be exercised prior to
foreclosure sale.
In contrast to the doctrine of equity of redemption, in some states, the
mortgagor and foreclosed junior lienors are given a statutory period after the
completion of a foreclosure in which to redeem the property from the
foreclosure sale by payment of a redemption price. The required redemption
price varies from state to state. Some states require the payment of the entire
principal balance of the loan, accrued interest and expenses of foreclosure,
others require the payment of the foreclosure sale price, while other states
require the payment of only a portion of the sums due. The effect of a
statutory right of redemption is to diminish the ability of the mortgagee to
sell the foreclosed property. The exercise of a statutory right of redemption
may defeat the title of any purchaser at a foreclosure sale or any purchaser
from the mortgagee subsequent to a foreclosure sale.
Consequently, the practical effect of the redemption right is often to
force the mortgagee to retain the property and pay the expenses of ownership
until the redemption period has run. Certain states permit a mortgagee to
invalidate an attempted exercise of a statutory redemption right by waiving its
right to any deficiency judgment. In some states, there is no right to redeem
property after a trustee's sale under a deed of trust.
Under the REMIC Regulations currently in effect, property acquired by
foreclosure generally must not be held for more than two years. With respect to
a Series of Certificates for which an election is made to qualify the Trust
Fund or a part thereof as a REMIC. The Agreement will permit foreclosed
property to be held for more than two years if the Trustee receives (i) an
extension from the IRS or (ii) an opinion of counsel to the effect that holding
such property for such period is permissible under the REMIC Regulations.
Mortgagors under Installment Contracts generally do not have the benefits
of redemption periods such as those that exist in the same jurisdiction for
mortgage loans. If redemption statutes do exist under state laws for
Installment Contracts, the redemption period may be shorter than for mortgages.
Anti-Deficiency Legislation. Some of the Mortgage Loans will be
nonrecourse loans as to which, in the event of default by a mortgagor, recourse
may be had only against the specific property pledged to secure the related
Mortgage Loan and not against the mortgagor's other assets. Even if a mortgage
by its
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terms provides for recourse against the mortgagor, certain states have imposed
prohibitions against or limitations upon such recourse. For example, some state
statutes limit the right of the mortgagee to obtain a deficiency judgment
against the mortgagor following foreclosure or sale under a deed of trust. A
deficiency judgment is a personal judgment against the former mortgagor equal
in most cases to the difference between the net amount realized upon the public
sale of the real property and the amount due to the mortgagee. Other statutes
require the mortgagee to exhaust the security afforded under a mortgage by
foreclosure in an attempt to satisfy the full debt before bringing a personal
action against the mortgagor. In certain states, the mortgagee has the option
of bringing a personal action against the mortgagor on the debt without first
exhausting its security, however, in some of these states, a mortgagee choosing
to pursue such an action may be deemed to have elected its remedy and may be
precluded from exercising any remedies with respect to the security.
Consequently, the practical effect of the election requirement, when
applicable, is that mortgagees will usually proceed first against the security
rather than bringing personal action against the mortgagor. Other statutory
provisions limit any deficiency judgment against the former mortgagor following
a judicial sale to the excess of the outstanding debt over the fair market
value of the property at the time of the public sale. The purpose of these
statutes is generally to prevent a mortgagee from obtaining a large deficiency
judgment against the former mortgagor as a result of low bids, or the absence
of bids, at the judicial sale.
Leasehold Risks. Certain of the Mortgage Loans may be secured by a
mortgage encumbering the mortgagor's leasehold interest under a ground lease.
Leasehold mortgages are subject to certain risks not associated with mortgages
encumbering a fee ownership interest in the mortgaged property. The most
significant of these risks is that the ground lease creating the leasehold
estate could terminate, thereby depriving the leasehold mortgagee of its
security. The ground lease may terminate if, among other reasons, the ground
lessee breaches or defaults in its obligations under the ground lease or there
is a bankruptcy of the ground lessee or the ground lessor. Examples of
protective provisions that may be included in the related ground lease, or a
separate agreement between the ground lessee, the ground lessor and the
mortgagee, in order to minimize such risk are the right of the mortgagee to
receive notices from the ground lessor of any defaults by the mortgagor. the
right to cure such defaults, with adequate cure periods; if a default is not
susceptible of cure by the mortgagee, the right to acquire the leasehold estate
through foreclosure or otherwise prior to any termination of the ground lease;
the ability of the ground lease to be assigned to and by the mortgagee or a
purchaser at a foreclosure sale and for a release of the assigning ground
lessee's liabilities thereunder, the right of the mortgagee to enter into a
ground lease with the ground lessor on the same terms and conditions as the old
ground lease in the event of a termination thereof; and provisions for
disposition of any insurance proceeds or condemnation awards payable upon a
casualty to, or condemnation of, the mortgaged property. In addition to the
foregoing protections, the leasehold mortgage may prohibit the ground lessee
from treating the ground lease as terminated in the event of the ground
lessor's bankruptcy and rejection of the ground lease by the trustee for the
debtor-ground lessor, and may assign to the mortgagee the debtor-ground
lessee's right to reject a lease pursuant to Section 365 of the Bankruptcy
Code, although the enforceability of such assignment has not been established.
An additional manner in which to obtain protection against the termination of
the ground lease is to have the ground lessor enter into a mortgage encumbering
the fee estate in addition to the mortgage encumbering the leasehold interest
under the ground lease. Additional protection is afforded to the mortgagee,
because if the ground lease is terminated, the mortgagee may nonetheless
possess rights contained in the fee mortgage. Without the protections described
in this paragraph, a leasehold mortgagee may be more likely to lose the
collateral securing its leasehold mortgage. No assurance can be given that any
or all of the above described provisions will be obtained in connection with
any particular Mortgage Loan.
Bankruptcy Laws. Mortgagors often file bankruptcy to delay or prevent
exercise of remedies under loan documents. Numerous statutory and common law
provisions, including the Bankruptcy Code and state laws affording relief to
debtors, may interfere with and delay the ability of a mortgagee to obtain
payment of the loan, to realize upon collateral and/or to enforce a deficiency
judgment. For example, under the Bankruptcy Code virtually all actions
(including foreclosure actions and deficiency judgment proceedings) are
automatically stayed upon the filing of the bankruptcy petition and often no
interest or principal payments are made during the course of the bankruptcy
proceeding (although "adequate
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protection" payments for anticipated diminution, if any, in the value of the
mortgaged property may be made). The delay and consequences thereof caused by
such automatic stay can be significant. A particular mortgagor may become
subject to the Bankruptcy Code either by a voluntary or involuntary petition
with respect to such mortgagor or, by virtue of the doctrine of "substantive
consolidation" by an affiliate of such mortgagor becoming a debtor under the
Bankruptcy Code. Additionally, the filing of a petition in bankruptcy by or on
behalf of a junior lienor or junior mortgagee may stay the senior mortgagee
from taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards for the mortgagee are met, the amount and terms of a mortgage or
deed of trust secured by property of the debtor may be modified under certain
circumstances. The outstanding amount of the loan secured by the real property
may be reduced to the then current value of the property (with a corresponding
partial reduction of the amount of the mortgagee's security interest), thus
leaving the mortgagee a general unsecured creditor for the difference between
such value and the outstanding balance of the loan. Other modifications may
include the reduction in the amount of each monthly payment, which reduction
may result from a reduction in the rate of interest and/or the alteration of
the repayment schedule (with or without affecting the unpaid principal balance
of the loan) and/or an extension (or acceleration) of the final maturity date.
Some bankruptcy courts have approved plans, based on the particular facts of
the reorganization case before them, that affected the curing of a mortgage
loan default by paying arrearages over a number of years. A bankruptcy court
may also permit a debtor to de-accelerate a secured loan and to reinstate the
loan even though the mortgagee had accelerated such loan and final judgment of
foreclosure had been entered in state court (provided no sale of the property
had yet occurred) prior to the filing of the debtor's petition, even if the
full amount due under the original loan is never repaid. Other types of
significant modifications to the terms of the mortgage may be acceptable to the
bankruptcy court, often depending on the particular facts and circumstances of
the specific case.
Federal bankruptcy law may also interfere with or affect the ability of a
mortgagee to enforce an assignment of rents and leases or a security interest
in hotel revenues related to the mortgaged property. In connection with a
bankruptcy proceeding involving a mortgagor, Section 362 of the Bankruptcy Code
automatically stays any attempts by the mortgagee to enforce any such
assignment or security interest. The legal proceedings necessary to resolve
such a situation can be time-consuming and may result in significant delays in
the receipt of the rents or hotel revenues. Rents or hotel revenues may also be
lost (i) if the assignment or security interest is not fully documented or
perfected under state law prior to commencement of the bankruptcy proceeding,
(ii) to the extent such rents or hotel revenues are used by the mortgagor to
maintain the mortgaged property or for other court authorized expenses; (iii)
to the extent other collateral may be substituted therefor; and (iv) if the
bankruptcy court determines that it is necessary or appropriate "based on the
equities of the case."
To the extent a mortgagor's ability to make payment on a mortgage loan is
dependent on payments under a lease of the related property, such ability may
he impaired by the commencement of a bankruptcy proceeding relating to the
lessee under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in an automatic stay barring the
commencement or continuation of any state court proceeding for past due rent,
for accelerated rent, for damages or for a summary eviction order with respect
to a default under the lease that occurred prior to the filing of the lessee's
petition.
In addition, the Bankruptcy Code generally provides that a bankruptcy
trustee or debtor in possession may, subject to approval of the bankruptcy
court, either (i) assume the lease and retain it or assign it to a third party
or (ii) reject the lease. If the lease is assumed, the bankruptcy trustee or
debtor in possession (or assignee, if applicable) must cure any defaults under
the lease, compensate the lessor for its losses and provide the lessor with
"adequate assurance" of future performance. Such remedies may be insufficient,
however, as the lessor may be forced to continue under the lease with a lessee
that is a poor credit risk or an unfamiliar tenant if the lease was assigned,
and any assurances provided to the lessor may, in fact, be inadequate.
Furthermore, there may be a significant period of time between the date that a
lessee files a bankruptcy petition and the date that the lease is assumed or
rejected. Although the lessee is obligated to make all lease payments currently
with respect to the post-petition period, there is a risk
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that such payments will not be made due to the lessees poor financial
condition. If the lease is rejected, the lessor will be treated as an unsecured
creditor with respect to its claim for damages for termination of the lease,
and the lessor must relet the mortgaged property before the flow of lease
payments will recommence. In addition, pursuant to Section 502(b)(6) of the
Bankruptcy Code, a lessor's damages for lease rejection are limited.
In a bankruptcy or similar proceeding, action may be taken seeking the
recovery, as a preferential transfer, of certain payments made by the mortgagor
under the related Mortgage Loan to the Trust Fund. Payments on long-term debt
may be protected from recovery as preferences if they are payments in the
ordinary course of business made on debts incurred in the ordinary course of
business. Whether any particular payment would be protected depends upon the
facts specific to a particular transaction. If a Mortgage Loan includes any
guaranty, and the guaranty waives any rights of subrogation or contribution,
then certain payments by the mortgagor to the Trust Fund also may be avoided
and recovered as fraudulent conveyances.
A trustee in bankruptcy or a debtor in possession or various creditors who
extend credit after a case is filed, in some cases, may be entitled to collect
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the mortgagee. In certain circumstances, a trustee in bankruptcy or
debtor in possession may have the power to grant liens senior to or pari passu
with the lien of a mortgage, and analogous state statutes and general
principles of equity may also provide a mortgagor with means to halt a
foreclosure proceeding or sale and enforce a restructuring of a mortgage loan
on terms a mortgagee would not otherwise accept.
A trustee in bankruptcy or a debtor in possession, in some cases, also may
be entitled to subordinate the lien created by the mortgage loan to other liens
or the claims of general unsecured creditors. Generally, this requires proof of
"unequitable conduct" by the mortgagee. However, various courts have expanded
the grounds for equitable subordination to apply to various non-pecuniary
claims for such items as penalties and fines. A court may find that any
prepayment charge, various late payment charges and other claims by mortgagees
may be subject to equitable subordination on these grounds.
A trustee in bankruptcy or a debtor in possession, in some cases, also may
be entitled to avoid all or part of any claim or lien by the mortgagee if and
to the extent a judgment creditor, or a bona fide purchaser of real estate,
could have done so outside of bankruptcy.
Generally, this involves some defect in the language, execution or
recording of the mortgage loan documents.
ENVIRONMENTAL RISKS
Real property pledged as security to a mortgagee may be subject to
environmental risks arising from the presence of hazardous or toxic substances
on, under, adjacent to, or in such property. The environmental condition of
mortgaged properties may be affected by the actions and operations of tenants
and occupants of such properties. Of particular concern may be those mortgaged
properties that are, or have been, the site of manufacturing, industrial or
disposal activity or have been built with or contain asbestos-containing
material or other indoor pollutants. In addition, current and future
environmental laws, ordinances or regulations, including new requirements
developed by federal agencies pursuant to the mandates of the Clean Air Act
Amendments of 1990, may impose additional compliance obligations on business
operations that can he met only by significant capital expenditures.
A mortgagee may be exposed to risks related to environmental conditions
such as the following: (i) a diminution in the value of a mortgaged property;
(ii) the potential that the mortgagor may default on a mortgage loan due to the
mortgagor's inability to pay high remediation costs or difficulty in bringing
its operations into compliance with environmental laws; (iii) in certain
circumstances as more fully described below, liability for clean-up costs or
other remedial actions, which liability could exceed the value of such
mortgaged property or the unpaid balance of the related mortgage loan; or (iv)
the inability to sell the related Mortgage Loan in the secondary market. In
certain circumstances, a mortgagee may choose not to foreclose on contaminated
property rather than risk incurring liability for remedial actions.
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In addition, a mortgagee may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers
(including prospective buyers at a foreclosure sale or following foreclosure).
Such disclosure may decrease the amount that prospective buyers are willing to
pay for the affected property, sometimes substantially, and thereby decrease
the ability of the mortgagee to recoup its investment in a loan upon
foreclosure.
In certain states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. In these cases, a mortgagee
that becomes the owner of a property through foreclosure, deed in lieu of
foreclosure or otherwise, may be required to clean up the contamination before
selling or otherwise transferring the property.
Under federal and certain states' laws, the owner's failure to perform
remedial actions required under environmental laws may in certain circumstances
give rise to a lien on the mortgaged property to ensure the reimbursement of
remedial costs incurred by federal and state regulatory agencies. In several
states such lien has priority over the lien of an existing mortgage against
such property. Since the costs of remedial action could be substantial, the
value of a mortgaged property as collateral for a mortgage loan could be
adversely affected by the existence of an environmental condition giving rise
to a lien.
Under certain circumstances, it is possible that environmental cleanup
costs, or the obligation to take remedial actions, can be imposed on a
mortgagee such as the Trust Fund with respect to each Series. Under the laws of
some states and under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), strict liability
may be imposed on present and past "owners" and "operators" of contaminated
real property for the costs of clean-up. Excluded from CERCLA's definition of
"owner" or "operator", however, is a person "who without participating in the
management of the facility, holds indicia of ownership primarily to protect his
security interest". This is known as the "secured creditor exemption." Judicial
decisions interpreting the secured creditor exemption had varied widely, and
one decision, United States v. Fleet Factors Corp., 901 F.2d 1550 (11th Cir.
1990), cert. denied, 498 U.S. 1046 (1991), had indicated that a lender's mere
power to affect and influence a borrower's operations might be sufficient to
lead to liability on the part of the lender. However, on September 30, 1996,
the Asset Conservation, Lender Liability, and Deposit Insurance Protection Act
of 1996 (the "Lender Liability Act") became law. The Lender Liability Act
clarifies the secured creditor exemption to impose liability only on a secured
lender who exercises control over operational aspects of the facility and thus
is "participating in management". A number of environmentally related
activities before the loan is made and during its pendency as well as "workout"
steps to protect a security interest, are identified as permissible to protect
a security interest without triggering liability. The Lender Liability Act also
identifies the circumstances in which foreclosure and post-closure activities
will not trigger CERCLA liability. The Lender Liability Act also amends the
Solid Waste Disposal Act to limit the liability of lenders holding a security
interest for costs of cleaning up contamination from underground storage tanks.
However, the Lender Liability Act has no effect on state environmental laws
similar to CERCLA that may impose liability on mortgagees and other persons,
and not all of those laws provide for a secured creditor exemption. Liability
under many of these federal and state laws may exist even if the mortgagee did
not cause or contribute to the contamination and regardless of whether the
mortgagee has actually taken possession of a mortgaged property through
foreclosure, deed in lieu of foreclosure or otherwise. Moreover, such liability
is not limited to the original or unamortized principal balance of a loan or to
the value of the property securing a loan.
CERCLA's "innocent landowner" defense to strict liability may be available
to a mortgagee that has taken title to a mortgaged property and has performed
an appropriate environmental site assessment that does not disclose existing
contamination and that meets other requirements of the defense. However, it is
unclear whether the environmental site assessment must be conducted upon loan
origination, prior to foreclosure or both, and uncertainty exists as to what
kind of environmental site assessment must be performed in order to qualify for
the defense.
Beyond statute-based environmental liability, there exist common law
causes of action that can be asserted to redress hazardous environmental
conditions on a property (e.g., actions based on nuisance for so called toxic
torts resulting in death, personal injury or damage to property). Although it
may be more
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difficult to hold a mortgagee liable in such cases, unanticipated or uninsured
liabilities of the mortgagor may jeopardize the mortgagor ability to meet its
loan obligations. At the time the Mortgage Loans were originated, it is
possible that no environmental assessment or a very limited environmental
assessment of the Mortgaged Properties was conducted.
The related Agreement will provide that the Master Servicer or the Special
Servicer, if any, acting on behalf of the Trust Fund, may not acquire title to
any Mortgaged Property or take over its operation unless the Master Servicer or
the Special Servicer, if any, has previously determined, based upon a phase I
or other specified environmental assessment prepared by a person who regularly
conducts such environmental assessments, that (a) the Mortgaged Property is in
compliance with applicable environmental laws or that it would be in the best
economic interest of the Trust Fund to take the actions necessary to comply
with such laws and (b) there are no circumstances or conditions present at the
Mortgaged Property relating to hazardous substances for which some
investigation, remediation or clean-up action could be required or that it
would be in the best economic interest of the Trust Fund to take such actions
with respect to such Mortgaged Property. This requirement effectively precludes
enforcement of the security for the related Note until a satisfactory
environmental assessment is obtained and/or any required remedial action is
taken. This requirement will reduce the likelihood that a given Trust Fund will
become liable for any environmental conditions affecting a Mortgaged Property,
but will make it more difficult to realize on the security for the Mortgage
Loan. There can be no assurance that any environmental assessment obtained by
the Master Servicer or the Special Servicer, if any, will detect all possible
environmental conditions or that the other requirements of the Agreement, even
if fully observed by the Master Servicer or the Special Servicer, if any, will
in fact insulate a given Trust Fund from liability for environmental
conditions.
"Hazardous Materials" are generally defined as any dangerous, toxic or
hazardous pollutants, chemicals, wastes or substances, including, without
limitation, those so identified pursuant to CERCLA or any other environmental
laws now existing. and specifically including, without limitation, asbestos and
asbestos-containing materials, polychlorinated biphenyls, radon gas, petroleum
and petroleum products, urea formaldehyde and any substances classified as
being "in inventory," "usable work in process" or similar classification that
would, if classified as unusable, be included in the foregoing definition.
If a mortgagee is or becomes liable for clean-up costs, it may bring an
action for contribution against the current owners or operators, the owners or
operators at the time of on-site disposal activity or any other party who
contributed to the environmental hazard, but such persons or entities may be
without substantial assets, bankrupt or otherwise judgment proof. Furthermore,
such action against the mortgagor may be adversely affected by the limitations
on recourse in the loan documents. Similarly, in some states anti-deficiency
legislation and other statutes requiring the mortgagee to exhaust its security
before bringing a personal action against the mortgagor (see "--Anti-Deficiency
Legislation" above) may curtail the mortgagee's ability to recover from its
mortgagor the environmental clean-up and other related costs and liabilities
incurred by the mortgagee. Accordingly, it is possible that such costs could
become a liability of the Trust Fund and occasion a loss to the
Certificateholders. Shortfalls occurring as the result of imposition of any
clean-up costs will be addressed in the Prospectus Supplement and Agreement for
the related Series.
Other environmental laws that may affect the value of a mortgaged
property, or impose cleanup costs or liabilities, including those related to
asbestos, radon. lead paint and underground storage tanks.
Certain federal, state and local laws, regulations and ordinances govern
the removal, encapsulation or disturbance of asbestos-containing materials
("ACMs") in the event of the remodeling, renovation or demolition of a
building. Such laws, as well as common law standards, may impose liability for
releases of ACMs and may allow third parties to seek recovery from owners or
operators of real properties for personal injuries associated with such
releases. In addition, federal law requires that building owners inspect their
facilities for ACMs and presumed ACMs (consisting of thermal system insulation,
surfacing materials and asphalt and vinyl flooring in buildings constructed
prior to 1981) and transfer all information regarding ACMs and presumed ACMs in
their facilities to successive owners.
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The United States Environmental Protection Agency (the "EPA') has
concluded that radon gas, a naturally occurring substance, is linked to
increased risks of lung cancer. Although there are no current federal or state
requirements mandating radon gas testing, the EPA and the United States Surgeon
General recommend testing residences for the presence of radon and that
abatement measures be undertaken if radon concentrations in indoor air meet or
exceed four picocuries per liter.
The Residential Lead-Based Paint Hazard Reduction Act of 1992 (the "Lead
Paint Act") requires federal agencies to promulgate regulations that will
require owners of residential housing constructed prior to 1978 to disclose to
potential residents or purchasers any known lead-paint hazards. The Lead Paint
Act creates a private right of action with treble damages available for any
failure to so notify. Federal agencies have issued regulations delineating the
scope of this disclosure obligation which became effective in September of 1996
for owners of more than four residential dwellings and [are to take effect in
December of 1996 for owners of one to four residential dwellings.] In addition,
the ingestion of lead-based paint chips or dust particles by children can
result in lead poisoning, and the owner of a property where such circumstances
exist may be held liable for such injuries. Finally, federal law mandates that
detailed worker safety standards must be complied with where construction,
alteration, repair or renovation of structures that contain lead, or materials
that contain lead, is contemplated.
Underground storage tanks ("USTs") are, and in the past have been,
frequently located at properties used for industrial, retail and other business
purposes. Federal law, as well as the laws of most states, currently require
USTs used for the storage of fuel or hazardous substances and waste to meet
certain standards designed to prevent releases from the USTs into the
environment. USTs installed prior to the implementation of these standards, or
that otherwise do not meet these standards, are potential sources of
contamination to the soil and groundwater. Land owners may be liable for the
costs of investigating and remediating soil and groundwater contamination that
may emanate from leaking USTs.
ENFORCEABILITY OF CERTAIN PROVISIONS
Default Interest; Late Charges; and Prepayment Fees. Some of the Mortgage
Loans may contain provisions requiring the mortgagor to pay late charges or
additional interest if required payments are not timely made. In certain states
there may be limitations upon the enforceability of such provisions, and no
assurance can be given that any of such provisions related to any Mortgage Loan
will be enforceable. Some of the Mortgage Loans may also contain provisions
prohibiting any prepayment of the loan prior to maturity or requiring the
payment of a prepayment fee in connection with any such prepayment. Even if
enforceable, a requirement for such prepayment fees may not deter mortgagors
from prepaying their mortgage loans. Although certain states will allow the
enforcement of such provisions upon a voluntary prepayment of a mortgage loan,
in other states such provisions may be unenforceable after a mortgage loan has
been outstanding for a certain number of years or if enforcement would be
unconscionable, or the allowed amount of any prepayment fee may be limited
(i.e., to a specified percentage of the original principal amount of the
mortgage loan, to a specified percentage of the outstanding principal balance
of a mortgage loan or to a fixed number of months' interest on the prepaid
amount). In certain states there may be limitations upon the enforceability of
prepayment fee provisions applicable in connection with a default by the
mortgagor or an involuntary acceleration of the secured indebtedness, and no
assurance can be given that any of such provisions related to a mortgage loan
will be enforceable under such circumstances. The applicable laws of certain
states may also treat certain prepayment fees as usurious if in excess of
statutory limits. See "--Applicability of Usury Laws."
Due-on-Sale Provisions. The enforceability of due-on-sale provisions has
been the subject of legislation or litigation in many states, and in some
cases, typically involving single family residential mortgage transactions,
their enforceability has been limited or denied. In any event, the Garn-St
Germain Depository Institutions Act of 1982 (the "Garn-St Germain Act")
preempts state constitutional, statutory and case law that prohibits the
enforcement of due-on-sale clauses and permits mortgagees to enforce these
clauses in accordance with their terms, subject to certain exceptions. As a
result, due-on-sale clauses have become generally enforceable except in those
states whose legislatures exercised their authority to regulate the
enforceability of such clauses with respect to mortgage loans that were: (i)
originated or assumed during the "window period" under the Garn-St Germain Act,
which ended in all cases not later
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than October 15,1982; and (ii) originated by lenders other than national banks,
federal savings institutions or federal credit unions. The Federal Home Loan
Mortgage Corporation has taken the position in its published mortgage servicing
standards that, out of a total of eleven "window period states," five states
(Arizona, Michigan, Minnesota, New Mexico and Utah) have enacted statutes
extending, on various terms and for varying periods, the prohibition on
enforcement of due-on-sale clauses with respect to certain categories of loans
that were originated or assumed during the "window period" applicable to such
state. Also, the Gam-St Germain Act does "encourage" lenders to permit
assumption of loans at the original rate of interest or at some other rate less
than the average of the original rate and the market rates.
The Agreement for each Series generally will provide that if any Mortgage
Loan contains a provision in the nature of a "Due-on-Sale" clause, which by its
terms provides that: (i) such Mortgage Loan shall (or may at the mortgagee's
option) become due and payable upon the sale or other transfer of an interest
in the related Mortgaged Property or (ii) such Mortgage Loan may not be assumed
without the consent of the related mortgagee in connection with any such sale
or other transfer, then, for so long as such Mortgage Loan is included in the
Trust Fund, the Master Servicer or the Special Servicer, if any, on behalf of
the Trustee, shall take such actions as it deems to be in the best interest of
the Trust Fund in accordance with the servicing standard set forth in the
Agreement, and may waive or enforce any due-on-sale clause contained in the
related Note or Mortgage.
In addition, under the federal Bankruptcy Code, due-on-sale clauses may
not be enforceable in bankruptcy proceedings and may, under certain
circumstances, be eliminated in any modified mortgage resulting from such
bankruptcy proceeding.
Acceleration on Default. It is expected that the Mortgage Loans will
include a "Debt-Acceleration" clause, which permits the mortgagee to accelerate
the full debt upon a monetary or nonmonetary default of the mortgagor. The
courts of all states will enforce such acceleration clauses in the event of a
material payment default if appropriate notices of default have been
effectively given. However, the equity courts of any state may refuse to
foreclose a mortgage when an acceleration of the indebtedness would be
inequitable or unjust or the circumstances would render the acceleration
unconscionable. Furthermore, in some states, the mortgagor may avoid
foreclosure and reinstate an accelerated loan by paying only the defaulted
amounts and, in certain states, the costs and attorneys' fees incurred by the
mortgagee in collecting such defaulted payments.
State courts also are known to apply various legal and equitable
principles to avoid enforcement of the forfeiture provisions of Installment
Contracts. For example, a mortgagee's practice of accepting late payments from
the mortgagor may be deemed a waiver of the forfeiture clause. State courts
also may impose equitable grace periods for payment of arrearages or otherwise
permit reinstatement of the Installment Contract following a default. Not
infrequently, if a mortgagor under an Installment Contract has significant
equity in the property, equitable principles will be applied to reform or
reinstate the Installment Contract or to permit the mortgagor to share the
proceeds upon a foreclosure sale of the property if the sale price exceeds the
debt.
SOLDIERS' AND SAILORS' RELIEF ACT
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a mortgagor who enters military service (including
the Army, Navy, Air Force, Marines, Coast Guard, members of the National Guard
or any Reserves who are called to active duty status after the origination of
their mortgage loan and officers of the U.S. Public Health Service assigned to
duty with the military) after the origination of such mortgagor's mortgage loan
may not be charged interest (including fees and charges) above an annual rate
of 6% during the period of such mortgagor's active duty status, unless a court
orders otherwise upon application of the mortgagee. Any shortfall in interest
collections resulting from the application of the Relief Act. to the extent not
covered by any applicable Credit Enhancement, could result in losses to the
holders of the Certificates. In addition, the Relief Act imposes limitations
that would impair the ability of the Master Servicer or the Special Servicer,
if any, to foreclose on an affected Mortgage Loan during the mortgagor's period
of active duty status and, under certain circumstances, during an additional
three months thereafter. Thus, in the event that such a Mortgage Loan goes into
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default, there may be delays and losses occasioned by the inability to realize
upon the Mortgaged Property in a timely fashion. Because the Relief Act applies
to mortgagors who enter military service (including reservists who are later
called to active duty) after origination of their mortgage loan, no information
can be provided as to the number of Mortgage Loans that may be affected by the
Relief Act. The Relief Act may also be applicable if the mortgagor is an entity
owned or controlled by a person in a military service.
APPLICABILITY OF USURY LAWS
State and federal usury laws limit the interest that mortgagees are
entitled to receive on a mortgage loan. In determining whether a given
transaction is usurious, courts may include charges in the form of "points" and
"fees" in the determination of the "interest" charged in connection with a
loan. If, however, the amount charged for the use of the money loaned is found
to exceed a statutorily established maximum rate, the form employed and the
degree of overcharge are both immaterial. Statutes differ in their provision as
to the consequences of a usurious loan. One type of statute requires the
mortgagee to forfeit the interest above the applicable limit or imposes a
specified penalty. Under this statutory scheme, the mortgagor may have the
recorded mortgage or deed of trust canceled upon paying its debt with lawful
interest, or the mortgagee may foreclose, but only for the debt plus lawful
interest, in either case, subject to any applicable credit for excessive
interest collected from the mortgagor and any penalty owed by the mortgagee. A
second type of statute is more severe. A violation of this type of usury law
results in the invalidation of the transaction, thereby permitting the
mortgagor to have the recorded mortgage or deed of trust canceled without any
payment and prohibiting the mortgagee from foreclosing.
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, as amended ("Title V"), provides that state usury limitations do
not apply to certain types of residential (including multifamily, but not other
commercial) first mortgage loans originated by certain lenders after March 31,
1980. A similar federal statute was in effect with respect to mortgage loans
made during the first three months of 1980. The statute authorized any state to
reimpose interest rate limits by adopting, before April 1, 1983, a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not so rejected, any state is authorized by
law to adopt a provision limiting discount points or other charges on mortgage
loans covered by Title V. Certain states have taken action to reimpose interest
rate limits and/or to limit discount points or other charges.
ALTERNATIVE MORTGAGE INSTRUMENTS
Alternative mortgage instruments, including adjustable rate mortgage
loans, originated by nonfederally chartered lenders have historically been
subjected to a variety of restrictions. Such restrictions differed from state
to state, resulting in difficulties in determining whether a particular
alternative mortgage instrument originated by a state-chartered lender was in
compliance with applicable law. These difficulties were alleviated
substantially with respect to residential (including multifamily, but not other
commercial) mortgage loans as a result of the enactment of Title VIII of the
Garn-St Germain Act ("Title VIII"). Title VIII provides that, notwithstanding
any state law to the contrary: (i) state-chartered banks may originate
alternative mortgage instruments in accordance with regulations promulgated by
the Comptroller of the Currency with respect to origination of alternative
mortgage instruments by national banks; (ii) state-chartered credit unions may
originate alternative mortgage instruments in accordance with regulations
promulgated by the National Credit Union Administration (the "NCUN') with
respect to origination of alternative mortgage instruments by federal credit
unions; and (iii) all other nonfederally chartered housing creditors, including
state-chartered savings and loan associations, state chartered savings banks
and mortgage banking companies may originate alternative mortgage instruments
in accordance with the regulations promulgated by the Federal Home Loan Bank
Board (now the Office, of Thrift Supervision) with respect to origination of
alternative mortgage instruments by federal savings and loan associations.
Title VIII authorized any state to reject applicability of the provisions of
Title VIII by adopting, prior to October 15, 1985, a law or constitutional
provision expressly rejecting the applicability of such provisions. Certain
states have taken such action. A mortgagee's failure to comply with the
applicable federal regulations in connection with the origination of an
alternative mortgage instrument could subject such mortgage loan to state
restrictions that would not otherwise be applicable.
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LEASES AND RENTS
Some of the Mortgage Loans may be secured by an assignment of leases and
rents, either through assignment provisions incorporated in the mortgage,
through a separate assignment document or both. Under an assignment of leases
and rents, the mortgagor typically assigns to the mortgagee the mortgagor's
right, title and interest as landlord under each lease and the income derived
therefrom, while retaining a revocable license to collect the rents for so long
as there is no default under the mortgage loan documentation. In the event of
such a default, the license terminates and the mortgagee may be entitled to
collect rents. A mortgagee's failure to perfect properly its interest in rents
may result in the loss of a substantial pool of funds that could otherwise
serve as a source of repayment for the loan. Some state laws may require that
in addition to recording properly the assignment of leases and rents, the
mortgagee must also take possession of the property and/or obtain judicial
appointment of a receiver before such mortgagee is entitled to collect rents.
Although mortgagees actually taking possession of the property may become
entitled to collect the rents therefrom, such mortgagees may also incur
potentially substantial risks attendant to such possession, including liability
for environmental clean-up costs and other risks inherent to property ownership
and operation. In addition, if a bankruptcy or similar proceeding is commenced
by or in respect of the mortgagor, the mortgagee's ability to collect the rents
may also be adversely affected.
SECONDARY FINANCING; DUE-ON-ENCUMBRANCE PROVISIONS
Some of the Mortgage Loans may not restrict secondary financing, thereby
permitting the mortgagor to use the Mortgaged Property as security for one or
more additional loans. Some of the Mortgage Loans may preclude secondary
financing (often by permitting the senior mortgagee to accelerate the maturity
of its loan if the mortgagor further encumbers the Mortgaged Property) or may
require the consent of the senior mortgagee, however, such provisions may be
unenforceable in certain jurisdictions under certain circumstances. The
Agreement for each Series will generally provide that if any Mortgage Loan
contains a provision in the nature of a "Due-on-Encumbrance" clause, which by
its terms: (i) provides that such Mortgage Loan will (or may at the mortgagee's
option) become due and payable upon the creation of any lien or other
encumbrance on the related Mortgaged Property, or (ii) requires the consent of
the related mortgagee to the creation of any such lien or other encumbrance on
the related Mortgaged Property; then for so long as such Mortgage Loan is
included in a given Trust Fund, the Master Servicer or, if such Mortgage Loan
is a Specially Serviced Mortgage Loan, the Special Servicer, if any, on behalf
of such Trust Fund, will exercise (or decline to exercise) any right it may
have as the mortgagee of record with respect to such Mortgage Loan to (x)
accelerate the payments thereon or (y) withhold its consent to the creation of
any such lien or other encumbrance, in a manner consistent with the servicing
standard set forth in the Agreement.
If a mortgagor encumbers a mortgaged property with one or more junior
liens, the senior mortgagee is subjected to additional risk, such as the
following. First, the mortgagor may have difficulty servicing and repaying
multiple loans. In addition, if the junior loan permits recourse to the
mortgagor and the senior loan does not, a mortgagor may be more likely to repay
sums due on the junior loan than those due on the senior loan. Second, acts of
the senior mortgagee that prejudice the junior mortgagee or impair the junior
mortgagee's security may create a superior equity in favor of the junior
mortgagee. For example, if the mortgagor and the senior mortgagee agree to an
increase in the principal amount of, or the interest rate payable on, the
senior loan, the senior mortgagee may lose its priority to the extent an
existing junior mortgagee is prejudiced or the mortgagor is additionally
burdened. Third, if the mortgagor defaults on the senior loan and/or any junior
loan or loans, the existence of junior loans and actions taken by junior
mortgagees can impair the security available to the senior mortgagee and can
interfere with, delay and in certain circumstances even prevent the taking of
action by the senior mortgagee. Fourth, the bankruptcy of a junior mortgagee
may operate to stay foreclosure or similar proceedings by the senior mortgagee.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in
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material diminution in the value of a Mortgaged Property, which could, together
with the possibility of limited alternative uses for a particular Mortgaged
Property (e.g., a nursing or convalescent home or hospital), result in a
failure to realize the full principal amount of and interest on the related
Mortgage Loan.
TYPE OF MORTGAGED PROPERTY
A mortgagee may be subject to additional risk depending upon the type and
use of the mortgaged property in question. For instance, mortgaged properties
that are hospitals, nursing homes or convalescent homes may present special
risks to mortgagees in large part due to significant governmental regulation of
the ownership, operation, maintenance, control and financing of health care
institutions. Mortgages encumbering mortgaged properties that are owned by the
mortgagor under a condominium form of ownership are subject to the declaration,
by-laws and other rules and regulations of the condominium association.
Mortgaged properties that are hotels or motels may present additional risk to
the mortgagee in that: (i) hotels and motels are typically operated pursuant to
franchise, management and operating agreements that may be terminable by the
operator; and (ii) the transferability of the hotel's operating, liquor and
other licenses to the entity acquiring the hotel either through purchase or
foreclosure is subject to the vagaries of local law requirements. In addition,
mortgaged properties that are multifamily residential properties or
cooperatively owned multifamily properties may be subject to rent control laws,
which could impact the future cash flows of such properties. See "RISK
FACTORS--Risks Associated with Lending on Income Producing Properties."
CRIMINAL FORFEITURES
Various federal and state laws (collectively, the "Forfeiture Laws")
provide for the civil or criminal forfeiture of certain property (including
real estate) used or intended to be used to commit or facilitate the commission
of a violation of certain laws (typically criminal laws), or purchased with the
proceeds of such violations, Even though the Forfeiture Laws were originally
intended as tools to fight organized crime and drug related crimes, the current
climate appears to be to expand the scope of such laws. Certain of the
Forfeiture Laws (i.e., the Racketeer Influenced and Corrupt Organizations law
and the Comprehensive Crime Control Act of 1984) provide for notice,
opportunity to be heard and for certain defenses for "innocent lienholders."
However, given the uncertain scope of the Forfeiture Laws and their
relationship to existing constitutional protections afforded property owners,
no assurance can be made that enforcement of a Forfeiture Law with respect to
any Mortgaged Property would not deprive the Trust Fund of its security for the
related Mortgage Loan.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove structural, architectural and communication
barriers from existing places of public accommodation to the extent "readily
achievable." In addition, under the ADA, alterations to a place of public
accommodation or a commercial facility are to be made so that, to the maximum
extent feasible, such altered portions are readily accessible to and usable by
disabled individuals. The "readily achievable" standard takes into account,
among other factors. the financial resources of the affected site, owner,
landlord or other applicable person. In addition to imposing a possible
financial burden on the mortgagor in its capacity as owner or landlord, the ADA
may also impose such requirements on a foreclosing mortgagee who succeeds to
the interest of the mortgagor as owner or landlord. Furthermore, since the
"readily achievable" standard may vary depending on the financial condition of
the owner or landlord, a foreclosing mortgagee who is financially more capable
than the mortgagor of complying with the requirements of the ADA may be subject
to more stringent requirements than those to which the mortgagor is subject.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of
Certificates. The discussion below does not purport to address all federal
income tax consequences that may be applicable to particular categories of
investors, some of which may be subject to special rules. The authorities on
which this discussion is based are subject to change or differing
interpretations, and any such change or interpretation could apply
retroactively. This discussion reflects the applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), as well as regulations
(the "REMIC Regulations") promulgated by the U.S. Department of Treasury (the
"Treasury"). Investors should consult their own tax advisors in determining the
federal, state, local and other tax consequences to them of the purchase,
ownership and disposition of Certificates.
FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES
General. With respect to a particular Series of Certificates, an election
may be made to treat the Trust Fund or one or more segregated pools of assets
therein as one or more REMICs within the meaning of Code Section 860D. A Trust
Fund or a portion thereof as to which a REMIC election will be made will be
referred to as a "REMIC Pool". For purposes of this discussion, Certificates of
a series as to which one or more REMIC elections are made are referred to as
"REMIC Certificates" and will consist of one or more Classes of "Regular
Certificates" and one Class of "Residual Certificates" in the case of each
REMIC Pool. Qualification as a REMIC requires ongoing compliance with certain
conditions. With respect to each series of REMIC Certificates, O'Melveny &
Myers LLP, counsel to the Depositor, has advised the Depositor that in the
firm's opinion, assuming (i) the making of such an election, (ii) compliance
with the Pooling Agreement and (iii) compliance with any changes in the law,
including any amendments to the Code or applicable Treasury regulations
thereunder, each REMIC Pool will qualify as a REMIC. In such case, the Regular
Certificates will be considered to be "regular interests" in the REMIC Pool and
generally will be treated for federal income tax purposes as if they were newly
originated debt instruments, and the Residual Certificates will be considered
to be "residual interests" in the REMIC Pool. The Prospectus Supplement for
each series of Certificates will indicate whether one or more REMIC elections
will be made with respect to the related Trust Fund, in which event references
to "REMIC" or "REMIC Pool" herein shall be deemed to refer to each such REMIC
Pool. If so specified in the applicable Prospectus Supplement, the portion of a
Trust Fund as to which a REMIC election is not made may be treated as either a
financial asset securitization investment trust (a "FASIT") or as a grantor
trust for federal income tax purposes. See "--Federal Income Tax Consequences
for FASIT Certificates and "--Federal Income Tax Consequences for Certificates
as to Which No REMIC Election Is Made".
Status of REMIC Certificates. REMIC Certificates held by a domestic
building and loan association will constitute "a regular or residual interest
in a REMIC" within the meaning of Code Section 7701(a)(19)(C)(xi), but only in
the same proportion that the assets of the REMIC Pool would be treated as
"loans . . . secured by an interest in real property which is . . . residential
real property" (such as single family or multifamily properties, but not
commercial properties) within the meaning of Code Section 7701(a)(19)(C)(v) or
as other assets described in Code Section 7701(a)(19)(C), and otherwise will
not qualify for such treatment. REMIC Certificates held by a real estate
investment trust will constitute "real estate assets" within the meaning of
Code Section 856(c)(4)(A), and interest on the Regular Certificates and income
with respect to Residual Certificates will be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Code Section 856(c)(3)(B) in the same
proportion that, for both purposes, the assets of the REMIC Pool would be so
treated. If at all times 95% or more of the assets of the REMIC Pool qualify
for each of the foregoing respective treatments, the REMIC Certificates will
qualify for the corresponding status in their entirety. For purposes of Code
Section 856(c)(4)(A), payments of principal and interest on the Mortgage Loans
that are reinvested pending distribution to holders of REMIC Certificates
qualify for such treatment. Where two REMIC Pools are a part of a tiered
structure they will be treated as one REMIC for purposes of the tests described
above respecting asset ownership of more or less than 95%. REMIC Certificates
held by a regulated investment company will not constitute "Government
Securities" within the meaning of Code Section 851(b)(3)(A)(i). REMIC
Certificates held certain financial institutions will constitute an "evidence
of indebtedness" within the meaning of Code Section 582(c)(1). The Small
Business Job
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Protection Act of 1996 (the "SBJPA of 1996") repealed the reserve method for
bad debts of domestic building and loan associations and mutual savings banks,
and thus has eliminated the asset category of "qualifying real property loans"
in former Code Section 593(d) for taxable years beginning after December 31,
1995. The requirement in the SBJPA of 1996 that such institutions must
"recapture" a portion of their existing bad debt reserves is suspended if a
certain portion of their assets are maintained in "residential loans" under
Code Section 7701(a)(19)(C)(v), but only if such loans were made to acquire,
construct or improve the related real property and not for the purpose of
refinancing. However, no effort will be made to identify the portion of the
Mortgage Loans of any Series meeting this requirement, and no representation is
made in this regard.
Qualification as a REMIC. In order for the REMIC Pool to qualify as a
REMIC, there must be ongoing compliance on the part of the REMIC Pool with the
requirements set forth in the Code. The REMIC Pool must fulfill an asset test,
which requires that no more than a de minimis portion of the assets of the
REMIC Pool, as of the close of the third calendar month beginning after the
"Startup Day" (which for purposes of this discussion is the date of issuance of
the REMIC Certificates) and at all times thereafter, may consist of assets
other than "qualified mortgages" and "permitted investments". The REMIC
Regulations provide a safe harbor pursuant to which the de minimis requirement
is met if at all times the aggregate adjusted basis of the nonqualified assets
is less than 1% of the aggregate adjusted basis of all the REMIC Pool's assets.
An entity that fails to meet the safe harbor may nevertheless demonstrate that
it holds no more than a de minimis amount of nonqualified assets. A REMIC also
must provide "reasonable arrangements" to prevent its residual interest from
being held by "disqualified organizations" and must furnish applicable tax
information to transferors or agents that violate this requirement. The Pooling
Agreement for each Series will contain a provision designed to meet this
requirement. See "Taxation of Residual Certificates--Tax-Related Restrictions
on Transfer of Residual Certificates--Disqualified Organizations".
A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC Pool on
the Startup Day in exchange for Regular Certificates or Residual Certificates
or is purchased by the REMIC Pool within a three-month period thereafter
pursuant to a fixed price contract in effect on the Startup Day. Qualified
mortgages include whole mortgage loans, such as the Mortgage Loans,
certificates of beneficial interest in a grantor trust that holds mortgage
loans, regular interests in another REMIC, loans secured by timeshare interests
and loans secured by shares held by a tenant stockholder in a cooperative
housing corporation, provided, in general, (i) the fair market value of the
real property securing the mortgage (including buildings and structural
components thereof) is at least 80% of the principal balance of the related
Mortgage Loan or underlying mortgage loan either at origination of the relevant
loan or as of the Startup Day (an original loan-to-value ratio of not more than
125% with respect to the real property securing the mortgage) or (ii)
substantially all the proceeds of the Mortgage Loan or the underlying mortgage
loan were used to acquire, improve or protect an interest in real property
that, at the origination date, was the only security for the Mortgage Loan or
underlying mortgage loan. If the Mortgage Loan has been substantially modified
other than in connection with a default or reasonably foreseeable default, it
must meet the loan-to-value test in (i) of the preceding sentence as of the
date of the last such modification or at closing. A qualified mortgage includes
a qualified replacement mortgage, which is any property that would have been
treated as a qualified mortgage if it were transferred to the REMIC Pool on the
Startup Day and that is received either (i) in exchange for any qualified
mortgage within a three-month period thereafter or (ii) in exchange for a
"defective obligation" within a two-year period thereafter. A "defective
obligation" includes (i) a mortgage in default or as to which default is
reasonably foreseeable, (ii) a mortgage as to which a customary representation
or warranty made at the time of transfer to the REMIC Pool has been breached,
(iii) a mortgage that was fraudulently procured by the mortgagor, and (iv) a
mortgage that was not in fact principally secured by real property (but only if
such mortgage is disposed of within 90 days of discovery). A Mortgage Loan that
is "defective" as described in clause (iv) that is not sold or, if within two
years of the Startup Day, exchanged, within 90 days of discovery, ceases to be
a qualified mortgage after such 90-day period. A qualified mortgage also
includes any regular interest in a FASIT transferred to the REMIC Pool on the
Startup Day in exchange for Regular Certificates or Residual Certificates, or
purchased by the REMIC Pool within three months after the Startup Day pursuant
to a fixed price
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contract in effect on the Startup Day, provided that at least 95% of the value
of the FASIT assets is at all times attributable to obligations principally
secured by interests in real property and which are transferred to, or
purchased by, a REMIC as provided in this sentence.
Permitted investments include cash flow investments, qualified reserve
assets, and foreclosure property. A cash flow investment is an investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not exceeding 13 months,
until distributed to holders of interests in the REMIC Pool. A qualified
reserve asset is any intangible property (other than a REMIC residual interest)
held for investment that is part of any reasonably required reserve maintained
by the REMIC Pool to provide for payments of expenses of the REMIC Pool or
amounts due on the regular or residual interests in the event of defaults
(including delinquencies) on the qualified mortgages, lower than expected
reinvestment returns, prepayment interest shortfalls and certain other
contingencies. The reserve fund will be disqualified if more than 30% of the
gross income from the assets in such fund for the year is derived from the sale
or other disposition of property held for less than three months, unless
required to prevent a default on the regular interests caused by a default on
one or more qualified mortgages. A reserve fund must be reduced "promptly and
appropriately" as payments on the Mortgage Loans are received. Foreclosure
property is real property acquired by the REMIC Pool in connection with the
default or imminent default of a qualified mortgage and generally held beyond
the close of the third calendar year following the acquisition of the property
by REMIC Pool for not more than two years, with possible extensions granted by
the Internal Revenue Service (the "Service") of up to an additional four years.
In addition to the foregoing requirements, the various interests in a
REMIC Pool also must meet certain requirements. All of the interests in a REMIC
Pool must be either of the following: (i) one or more classes of regular
interests or (ii) a single class of residual interests on which distributions,
if any, are made pro rata. A regular interest is an interest in a REMIC Pool
that is issued on the Startup Day with fixed terms, is designated as a regular
interest, and unconditionally entitles the holder to receive a specified
principal amount (or other similar amount), and provides that interest payments
(or other similar amounts), if any, at or before maturity either are payable
based on a fixed rate or a qualified variable rate, or consist of a specified,
nonvarying portion of the interest payments on qualified mortgages. Such a
specified portion may consist of a fixed number of basis points, a fixed
percentage of the total interest, or a fixed or qualified variable or inverse
variable rate on some or all of the qualified mortgages minus a different fixed
or qualified variable rate. The specified principal amount of a regular
interest that provides for interest payments consisting of a specified,
nonvarying portion of interest payments on qualified mortgages may be zero. A
residual interest is an interest in a REMIC Pool other than a regular interest
that is issued on the Startup Day and that is designated as a residual
interest. An interest in a REMIC Pool may be treated as a regular interest even
if payments of principal with respect to such interest are subordinated to
payments on other regular interests or the residual interest in the REMIC Pool,
and are dependent on the absence of defaults or delinquencies on qualified
mortgages or permitted investments, lower than reasonably expected returns on
permitted investments, unanticipated expenses incurred by the REMIC Pool or
prepayment interest shortfalls. Accordingly, the Regular Certificates of a
series will constitute one or more classes of regular interests, and the
Residual Certificates with respect to that series will constitute a single
class of residual interests on which distributions are made pro rata.
If an entity, such as the REMIC Pool, fails to comply with one or more of
the ongoing requirements of the Code for REMIC status during any taxable year,
the Code provides that the entity will not be treated as a REMIC for such year
and thereafter. In this event, an entity with multiple classes of ownership
interests may be treated as a separate association taxable as a corporation
under Treasury regulations, and the Regular Certificates may be treated as
equity interests therein. The Code, however, authorizes the Treasury Department
to issue regulations that address situations where failure to meet one or more
of the requirements for REMIC status occurs inadvertently and in good faith,
and disqualification of the REMIC Pool would occur absent regulatory relief.
Investors should be aware, however, that the Conference Committee Report to the
Tax Reform Act of 1986 (the "1986 Act") indicates that the relief may be
accompanied by sanctions, such as the imposition of a corporate tax on all or a
portion of the REMIC Pool's income for the period of time in which the
requirements for REMIC status are not satisfied.
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TAXATION OF REGULAR CERTIFICATES
General
In general, interest, original issue discount and market discount on a
Regular Certificate will be treated as ordinary income to a holder of the
Regular Certificate (the "Regular Certificateholder") as they accrue, and
principal payments on a Regular Certificate will be treated as a return of
capital to the extent of the Regular Certificateholder's basis in the Regular
Certificate allocable thereto. Regular Certificateholders must use the accrual
method of accounting with regard to Regular Certificates, regardless of the
method of accounting otherwise used by such Regular Certificateholders.
Original Issue Discount
Certificates on which interest is not paid currently ("Compound Interest
Certificates") will be, and other Classes of Regular Certificates may be,
issued with "original issue discount" within the meaning of Code Section
1273(a). Holders of any Class of Regular Certificates having original issue
discount generally must include original issue discount in ordinary income for
federal income tax purposes as it accrues, in accordance with the constant
yield method that takes into account the compounding of interest, in advance of
receipt of the cash attributable to such income. The following discussion is
based in part on temporary and final Treasury regulations issued on February 2,
1994, as amended on June 14, 1996, (the "OID Regulations") under Code Sections
1271 through 1273 and 1275 and in part on the provisions of the 1986 Act.
Regular Certificateholders should be aware, however, that the OID Regulations
do not adequately address certain issues relevant to prepayable securities,
such as the Regular Certificates. To the extent such issues are not addressed
in such regulations, the Depositor intends to apply the methodology described
in the Conference Committee Report to the 1986 Act. No assurance can be
provided that the Service will not take a different position as to those
matters not currently addressed by the OID Regulations. Moreover, the OID
Regulations include an anti-abuse rule allowing the Service to apply or depart
from the OID Regulations where necessary or appropriate to ensure a reasonable
tax result in light of the applicable statutory provisions. A tax result will
not be considered unreasonable under the anti-abuse rule in the absence of a
substantial effect on the present value of a taxpayer's tax liability.
Investors are advised to consult their own tax advisors as to the discussion
herein and the appropriate method for reporting interest and original issue
discount with respect to the Regular Certificates.
Each Regular Certificate will be treated as a single installment
obligation for purposes of determining the original issue discount includible
in a Regular Certificateholder's income. The total amount of original issue
discount on a Regular Certificate is the excess of the "stated redemption price
at maturity" of the Regular Certificate over its "issue price". The issue price
of a Class of Regular Certificates offered pursuant to this Prospectus
generally is the first price at which a substantial amount of Regular
Certificates of that Class is sold to the public (excluding bond houses,
brokers and underwriters). Although unclear under the OID Regulations, the
Depositor intends to treat the issue price of a Class as to which there is no
substantial sale as of the issue date or that is retained by the Depositor as
the fair market value of that Class as of the issue date. The issue price of a
Regular Certificate also includes the amount paid by an initial Regular
Certificateholder for accrued interest that relates to a period prior to the
issue date of the Regular Certificate, unless the Regular Certificateholder
elects on its federal income tax return to exclude such amount from the issue
price and to recover it on the first Distribution Date. The stated redemption
price at maturity of a Regular Certificate always includes the original
principal amount of the Regular Certificate, but generally will not include
distributions of stated interest if such interest distributions constitute
"qualified stated interest". Under the OID Regulations, qualified stated
interest generally means interest payable at a single fixed rate or a qualified
variable rate (as described below) provided that such interest payments are
unconditionally payable at intervals of one year or less during the entire term
of the Regular Certificate. Because there is no penalty or default remedy in
the case of nonpayment of interest with respect to a Regular Certificate, it is
possible that no interest on any Class of Regular Certificates will be treated
as qualified stated interest. However, except as provided in the following
three sentences or in the applicable Prospectus Supplement, because the
underlying Mortgage Loans provide for remedies in the event of default, the
Depositor intends to treat interest with respect to
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the Regular Certificates as qualified stated interest. Distributions of
interest on a Compound Interest Certificate, or on other Regular Certificates
with respect to which deferred interest will accrue, will not constitute
qualified stated interest, in which case the stated redemption price at
maturity of such Regular Certificates includes all distributions of interest as
well as principal thereon. Likewise, the Depositor intends to treat an
"interest only" class, or a class on which interest is substantially
disproportionate to its principal amount (a so-called "super-premium" class) as
having no qualified stated interest. Where the interval between the issue date
and the first Distribution Date on a Regular Certificate is shorter than the
interval between subsequent Distribution Dates, the interest attributable to
the additional days will be included in the stated redemption price at
maturity.
Under a de minimis rule, original issue discount on a Regular Certificate
will be considered to be zero if such original issue discount is less than
0.25% of the stated redemption price at maturity of the Regular Certificate
multiplied by the weighted average maturity of the Regular Certificate. For
this purpose, the weighted average maturity of the Regular Certificate is
computed as the sum of the amounts determined by multiplying the number of full
years (i.e., rounding down partial years) from the issue date until all
distributions in reduction of are scheduled to be made by a fraction, the
numerator of which is the amount of each distribution included in the stated
redemption price at maturity of the Regular Certificate and the denominator of
which is the stated redemption price at maturity of the Regular Certificate.
The Conference Committee Report to the 1986 Act provides that the schedule of
such distributions should be determined in accordance with the assumed rate of
prepayment of the Mortgage Loans (the "Prepayment Assumption") and the
anticipated reinvestment rate, if any, relating to the Regular Certificates.
The Prepayment Assumption with respect to a Series of Regular Certificates will
be set forth in the related Prospectus Supplement. Holders generally must
report de minimis original issue discount pro rata as principal payments are
received, and such income will be capital gain if the Regular Certificate is
held as a capital asset. However, under the OID Regulations, Regular
Certificateholders may elect to accrue all de minimis original issue discount
as well as market discount and market premium under the constant yield method.
See "--Election to Treat All Interest Under the Constant Yield Method".
A Regular Certificateholder generally must include in gross income for any
taxable year the sum of the "daily portions," as defined below, of the original
issue discount on the Regular Certificate accrued during an accrual period for
each day on which it holds the Regular Certificate, including the date of
purchase but excluding the date of disposition. The Depositor will treat the
monthly period ending on the day before each Distribution Date as the accrual
period. With respect to each Regular Certificate, a calculation will be made of
the original issue discount that accrues during each successive full accrual
period (or shorter period from the date of original issue) that ends on the day
before the related Distribution Date on the Regular Certificate. The Conference
Committee Report to the 1986 Act states that the rate of accrual of original
issue discount is intended to be based on the Prepayment Assumption. The
original issue discount accruing in a full accrual period would be the excess,
if any, of (i) the sum of (a) the present value of all of the remaining
distributions to be made on the Regular Certificate as of the end of that
accrual period that are included in the Regular Certificate's stated redemption
price at maturity and (b) the distributions made on the Regular Certificate
during the accrual period that are included in the Regular Certificate's stated
redemption price at maturity, over (ii) the adjusted issue price of the Regular
Certificate at the beginning of the accrual period. The present value of the
remaining distributions referred to in the preceding sentence is calculated
based on (i) the yield to maturity of the Regular Certificate at the issue
date, (ii) events (including actual prepayments) that have occurred prior to
the end of the accrual period and (iii) the Prepayment Assumption. For these
purposes, the adjusted issue price of a Regular Certificate at the beginning of
any accrual period equals the issue price of the Regular Certificate, increased
by the aggregate amount of original issue discount with respect to the Regular
Certificate that accrued in all prior accrual periods and reduced by the amount
of distributions included in the Regular Certificate's stated redemption price
at maturity that were made on the Regular Certificate in such prior periods.
The original issue discount accruing during any accrual period (as determined
in this paragraph) will then be divided by the number of days in the period to
determine the daily portion of original issue discount for each day in the
period. With respect to an initial accrual period shorter than a full accrual
period, the daily portions of original issue discount must be determined
according to an appropriate allocation under any reasonable method.
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Under the method described above, the daily portions of original issue
discount required to be included in income by a Regular Certificateholder
generally will increase to take into account prepayments on the Regular
Certificates as a result of prepayments on the Mortgage Loans that exceed the
Prepayment Assumption, and generally will decrease (but not below zero for any
period) if the prepayments are slower than the Prepayment Assumption. An
increase in prepayments on the Mortgage Loans with respect to a Series of
Regular Certificates can result in both a change in the priority of principal
payments with respect to certain Classes of Regular Certificates and either an
increase or decrease in the daily portions of original issue discount with
respect to such Regular Certificates.
Acquisition Premium
A purchaser of a Regular Certificate at a price greater than its adjusted
issue price but less than its stated redemption price at maturity will be
required to include in gross income the daily portions of the original issue
discount on the Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over such adjusted issue
price and the denominator of which is the excess of the remaining stated
redemption price at maturity over the adjusted issue price. Alternatively, such
a subsequent purchaser may elect to treat all such acquisition premium under
the constant yield method, as described below under the heading "Election to
Treat All Interest Under the Constant Yield Method".
Variable Rate Regular Certificates
Regular Certificates may provide for interest based on a variable rate.
Under the OID Regulations, interest is treated as payable at a variable rate
if, generally, (i) the issue price does not exceed the original principal
balance by more than a specified de minimis amount and (ii) the interest
compounds or is payable at least annually at current values of (a) one or more
"qualified floating rates", (b) a single fixed rate and one or more qualified
floating rates, (c) a single "objective rate", or (d) a single fixed rate and a
single objective rate that is a "qualified inverse floating rate". A floating
rate is a qualified floating rate if variations in the rate can reasonably be
expected to measure contemporaneous variations in the cost of newly borrowed
funds, or where such rate is subject to a fixed multiple that is greater than
0.65, but not more than 1.35. Such rate may also be increased or decreased by a
fixed spread or subject to a fixed cap or floor, or a cap or floor that is not
reasonably expected as of the issue date to affect the yield of the instrument
significantly. Two or more qualified floating rates will be treated as a single
qualified floating rate if all such qualified floating rates can reasonably be
expected to have approximately the same values throughout the terms of the
instrument. This requirement will be conclusively presumed to be satisfied if
the values of all such qualified floating rates are within 0.25% of each other
on the issue date. An objective rate (other than a qualified floating rate) is
a rate that is determined using a single fixed formula and that is based on
objective financial or economic information, provided that such information is
not (i) within the control of the issuer or a related party or (ii) unique to
the circumstances of the issuer or a related party. A qualified inverse
floating rate is an objective rate that is equal to a fixed rate minus a
qualified floating rate that inversely reflects contemporaneous variations in
the cost of newly borrowed funds; an inverse floating rate that is not a
qualified floating rate may nevertheless be an objective rate. A Class of
Regular Certificates may be issued under this Prospectus that does not have a
variable rate under the OID Regulations, for example, a Class that bears
different rates at different times during the period it is outstanding such
that it is considered significantly "front-loaded" or "back-loaded" within the
meaning of the OID Regulations. It is possible that such a Class may be
considered to bear "contingent interest" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to Regular Certificates. However,
if final regulations dealing with contingent interest with respect to Regular
Certificates apply the same principles as the OID Regulations, such regulations
may lead to different timing of income inclusion than would be the case under
the OID Regulations. Furthermore, application of such principles could lead to
the characterization of gain on the sale of contingent interest Regular
Certificates as ordinary income. Investors should consult their tax advisors
regarding the appropriate treatment of any Regular Certificate that does not
pay interest at a fixed rate or variable rate as described in this paragraph.
Under the REMIC Regulations, a Regular Certificate (i) bearing a rate that
qualifies as a variable rate under the OID Regulations that is tied to current
values of a variable rate (or the highest, lowest or
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average of two or more variable rates), including a rate based on the average
cost of funds of one or more financial institutions, or a positive or negative
multiple of such a rate (plus or minus a specified number of basis points), or
that represents a weighted average of rates on some or all of the Mortgage
Loans which bear interest at a fixed rate or at a qualifying variable rate
under the REMIC Regulations, including such a rate that is subject to one or
more caps or floors, or (ii) bearing one or more such variable rates for one or
more periods or one or more fixed rates for one or more periods, and a
different variable rate or fixed rate for other periods qualifies as a regular
interest in a REMIC. Accordingly, unless otherwise indicated in the applicable
Prospectus Supplement, the Depositor intends to treat Regular Certificates that
qualify as regular interests under this rule in the same manner as obligations
bearing a variable rate for original issue discount reporting purposes.
The amount of original issue discount with respect to a Regular
Certificate bearing a variable rate of interest will accrue in the manner
described above under "Original Issue Discount" with the yield to maturity and
future payments on such Regular Certificate generally to be determined by
assuming that interest will be payable for the life of the Regular Certificate
based on the initial rate (or, if different, the value of the applicable
variable rate as of the pricing date) for the relevant Class. Unless otherwise
specified in the applicable Prospectus Supplement, the Depositor intends to
treat such variable interest as qualified stated interest, other than variable
interest on an interest-only or super-premium Class, which will be treated as
non-qualified stated interest includible in the stated redemption price at
maturity. Ordinary income reportable for any period will be adjusted based on
subsequent changes in the applicable interest rate index.
Although unclear under the OID Regulations, unless required otherwise by
applicable final regulations, the Depositor intends to treat Regular
Certificates bearing an interest rate that is a weighted average of the net
interest rates on Mortgage Loans or Mortgage Certificates having fixed or
adjustable rates, as having qualified stated interest, except to the extent
that initial "teaser" rates cause sufficiently "back-loaded" interest to create
more than de minimis original issue discount. The yield on such Regular
Certificates for purposes of accruing original issue discount will be a
hypothetical fixed rate based on the fixed rates, in the case of fixed rate
Mortgage Loans, and initial "teaser rates" followed by fully indexed rates, in
the case of adjustable rate Mortgage Loans. In the case of adjustable rate
Mortgage Loans, the applicable index used to compute interest on the Mortgage
Loans in effect on the pricing date (or possibly the issue date) will be deemed
to be in effect beginning with the period in which the first weighted average
adjustment date occurring after the issue date occurs. Adjustments will be made
in each accrual period either increasing or decreasing the amount of ordinary
income reportable to reflect the actual Pass-Through Rate on the Regular
Certificates.
Deferred Interest
Under the OID Regulations, all interest on a Regular Certificate as to
which there may be deferred interest is includible in the stated redemption
price at maturity thereof. Accordingly, any deferred interest that accrues with
respect to a Class of Regular Certificates may constitute income to the holders
of such Regular Certificates prior to the time distributions of cash with
respect to such deferred interest are made.
Market Discount
A purchaser of a Regular Certificate also may be subject to the market
discount rules of Code Section 1276 through 1278. Under these Code sections and
the principles applied by the OID Regulations in the context of original issue
discount, "market discount" is the amount by which the purchaser's original
basis in the Regular Certificate (i) is exceeded by the then-current principal
amount of the Regular Certificate or (ii) in the case of a Regular Certificate
having original issue discount, is exceeded by the adjusted issue price of such
Regular Certificate at the time of purchase. Such purchaser generally will be
required to recognize ordinary income to the extent of accrued market discount
on such Regular Certificate as distributions includible in the stated
redemption price at maturity thereof are received, in an amount not exceeding
any such distribution. Such market discount would accrue in a manner to be
provided in Treasury regulations and should take into account the Prepayment
Assumption. The Conference Committee Report to the 1986 Act provides that until
such regulations are issued, such market discount would accrue either (i) on
the basis of a constant interest rate or (ii) in the ratio of stated interest
allocable
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to the relevant period to the sum of the interest for such period plus the
remaining interest as of the end of such period, or in the case of a Regular
Certificate issued with original issue discount, in the ratio of original issue
discount accrued for the relevant period to the sum of the original issue
discount accrued for such period plus the remaining original issue discount as
of the end of such period. Such purchaser also generally will be required to
treat a portion of any gain on a sale or exchange of the Regular Certificate as
ordinary income to the extent of the market discount accrued to the date of
disposition under one of the foregoing methods, less any accrued market
discount previously reported as ordinary income as partial distributions in
reduction of the stated redemption price at maturity were received. Such
purchaser will be required to defer deduction of a portion of the excess of the
interest paid or accrued on indebtedness incurred to purchase or carry a
Regular Certificate over the interest distributable thereon. The deferred
portion of such interest expense in any taxable year generally will not exceed
the accrued market discount on the Regular Certificate for such year. Any such
deferred interest expense is, in general, allowed as a deduction not later than
the year in which the related market discount income is recognized or the
Regular Certificate is disposed of. As an alternative to the inclusion of
market discount in income on the foregoing basis, the Regular Certificateholder
may elect to include market discount in income currently as it accrues on all
market discount instruments acquired by such Regular Certificateholder in that
taxable year or thereafter, in which case the interest deferral rule will not
apply. See "Election to Treat All Interest Under the Constant Yield Method"
below regarding an alternative manner in which such election may be deemed to
be made.
Market discount with respect to a Regular Certificate will be considered
to be zero if such market discount is less than 0.25% of the remaining stated
redemption price at maturity of such Regular Certificate multiplied by the
weighted average maturity of the Regular Certificate (determined as described
above in the third paragraph under "Original Issue Discount") remaining after
the date of purchase. It appears that de minimis market discount should be
reported in a manner similar to de minimis original issue discount. See
"Original Issue Discount" above. Treasury regulations implementing the market
discount rules have not yet been issued, and therefore investors should consult
their own tax advisors regarding the application of these rules. Investors
should also consult Revenue Procedure 92-67 concerning the elections to include
market discount in income currently and to accrue market discount on the basis
of the constant yield method.
Premium
A Regular Certificate purchased at a cost greater than its remaining
stated redemption price at maturity generally is considered to be purchased at
a premium. If the Regular Certificateholder holds such Regular Certificate as a
"capital asset" within the meaning of Code Section 1221, the Regular
Certificateholder may elect under Code Section 171 to amortize such premium
under the constant yield method. The Conference Committee Report to the 1986
Act indicates a Congressional intent that the same rules that will apply to the
accrual of market discount on installment obligations will also apply to
amortizing bond premium under Code Section 171 on installment obligations such
as the Regular Certificates, although it is unclear whether the alternatives to
the constant yield method described above under "Market Discount" are
available. Amortizable bond premium will be treated as an offset to interest
income on a Regular Certificate rather than as a separate deduction item. See
"Election to Treat All Interest Under the Constant Yield Method" below
regarding an alternative manner in which the Code Section 171 election may be
deemed to be made.
Election to Treat All Interest Under the Constant Yield Method
A holder of a debt instrument such as a Regular Certificate may elect to
treat all interest that accrues on the instrument using the constant yield
method, with none of the interest being treated as qualified stated interest.
For purposes of applying the constant yield method to a debt instrument subject
to such an election, (i) "interest" includes stated interest, original issue
discount, de minimis original issue discount, market discount and de minimis
market discount, as adjusted by any amortizable bond premium or acquisition
premium and (ii) the debt instrument is treated as if the instrument were
issued on the holder's acquisition date in the amount of the holder's adjusted
basis immediately after acquisition. It is unclear whether, for this purpose,
the initial Prepayment Assumption would continue to apply or if a new
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prepayment assumption as of the date of the holder's acquisition would apply. A
holder generally may make such an election on an instrument by instrument basis
or for a class or group of debt instruments. However, if the holder makes such
an election with respect to a debt instrument with amortizable bond premium or
with market discount, the holder is deemed to have made elections to amortize
bond premium or to report market discount income currently as it accrues under
the constant yield method, respectively, for all debt instruments acquired by
the holder in the same taxable year or thereafter. The election is made on the
holder's federal income tax return for the year in which the debt instrument is
acquired and is irrevocable except with the approval of the Service. Investors
should consult their own tax advisors regarding the advisability of making such
an election.
Sale or Exchange of Regular Certificates
If a Regular Certificateholder sells or exchanges a Regular Certificate,
the Regular Certificateholder will recognize gain or loss equal to the
difference, if any, between the amount received and its adjusted basis in the
Regular Certificate. The adjusted basis of a Regular Certificate generally will
equal the cost of the Regular Certificate to the seller, increased by any
original issue discount or market discount previously included in the seller's
gross income with respect to the Regular Certificate and reduced by amounts
included in the stated redemption price at maturity of the Regular Certificate
that were previously received by the seller, by any amortized premium and by
previously recognized losses.
Except as described above with respect to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a
Regular Certificate realized by an investor who holds the Regular Certificate
as a capital asset will be capital gain or loss and will be long-term or
short-term depending on whether the Regular Certificate has been held for the
long-term capital gain holding period (currently more than one year). Such gain
will be treated as ordinary income (i) if a Regular Certificate is held as part
of a "conversion transaction" as defined in Code Section 1258(c), up to the
amount of interest that would have accrued on the Regular Certificateholder's
net investment in the conversion transaction at 120% of the appropriate
applicable Federal rate under Code Section 1274(d) in effect at the time the
taxpayer entered into the transaction minus any amount previously treated as
ordinary income with respect to any prior distribution of property that was
held as a part of such transaction, (ii) in the case of a non-corporate
taxpayer, to the extent such taxpayer has made an election under Code Section
163(d)(4) to have net capital gains taxed as investment income at ordinary
rates, or (iii) to the extent that such gain does not exceed the excess, if
any, of (a) the amount that would have been includible in the gross income of
the holder if its yield on such Regular Certificate were 110% of the applicable
Federal rate as of the date of purchase, over (b) the amount of income actually
includible in the gross income of such holder with respect to the Regular
Certificate. In addition, gain or loss recognized from the sale of a Regular
Certificate by certain banks or thrift institutions will be treated as ordinary
income or loss pursuant to Code Section 582(c). Capital gains of certain
non-corporate taxpayers are subject to a lower maximum tax rate (28%) than
ordinary income of such taxpayers (39.6%), and still a lower maximum rate (20%)
for property held for more than 18 months. The maximum tax rate for
corporations is the same with respect to both ordinary income and capital
gains.
Treatment of Losses
Holders of Regular Certificates will be required to report income with
respect to Regular Certificates on the accrual method of accounting, without
giving effect to delays or reductions in distributions attributable to defaults
or delinquencies on the Mortgage Loans allocable to a particular class of
Regular Certificates, except to the extent it can be established that such
losses are uncollectible. Accordingly, the holder of a Regular Certificate may
have income, or may incur a diminution in cash flow as a result of a default or
delinquency, but may not be able to take a deduction (subject to the discussion
below) for the corresponding loss until a subsequent taxable year. In this
regard, investors are cautioned that while they may generally cease to accrue
interest income if it reasonably appears that the interest will be
uncollectible, the Internal Revenue Service may take the position that original
issue discount must continue to be accrued in spite of its uncollectibility
until the debt instrument is disposed of in a taxable transaction or becomes
worthless in accordance with the rules of Code Section 166. To the extent the
rules of Code Section 166 regarding bad debts are applicable, it appears that
holders of Regular Certificates
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that are corporations or that otherwise hold the Regular Certificates in
connection with a trade or business should in general be allowed to deduct as
an ordinary loss any such loss sustained during the taxable year on account of
any such Regular Certificates becoming wholly or partially worthless, and that,
in general, holders of Regular Certificates that are not corporations and do
not hold the Regular Certificates in connection with a trade or business will
be allowed to deduct as a short-term capital loss any loss with respect to
principal sustained during the taxable year on account of a portion of any
class or subclass of such Regular Certificates becoming wholly worthless.
Although the matter is not free from doubt, non-corporate holders of Regular
Certificates should be allowed a bad debt deduction at such time as the
principal balance of any class or subclass of such Regular Certificates is
reduced to reflect losses resulting from any liquidated Mortgage Loans. The
Service, however, could take the position that non-corporate holders will be
allowed a bad debt deduction to reflect such losses only after all Mortgage
Loans remaining in the Trust Fund have been liquidated or such class of Regular
Certificates has been otherwise retired. The Service could also assert that
losses on the Regular Certificates are deductible based on some other method
that may defer such deductions for all holders, such as reducing future cash
flow for purposes of computing original issue discount. This may have the
effect of creating "negative" original issue discount which would be deductible
only against future positive original issue discount or otherwise upon
termination of the Class. Holders of Regular Certificates are urged to consult
their own tax advisors regarding the appropriate timing, amount and character
of any loss sustained with respect to such Regular Certificates. While losses
attributable to interest previously reported as income should be deductible as
ordinary losses by both corporate and non-corporate holders, the Internal
Revenue Service may take the position that losses attributable to accrued
original issue discount may only be deducted as short-term capital losses by
non-corporate holders not engaged in a trade or business. Special loss rules
are applicable to banks and thrift institutions, including rules regarding
reserves for bad debts. Such taxpayers are advised to consult their tax
advisors regarding the treatment of losses on Regular Certificates.
TAXATION OF RESIDUAL CERTIFICATES
Taxation of REMIC Income
Generally, the "daily portions" of REMIC taxable income or net loss will
be includible as ordinary income or loss in determining the federal taxable
income of holders of Residual Certificates ("Residual Certificateholders"), and
will not be taxed separately to the REMIC Pool. The daily portions of REMIC
taxable income or net loss of a Residual Certificateholder are determined by
allocating the REMIC Pool's taxable income or net loss for each calendar
quarter ratably to each day in such quarter and by allocating such daily
portion among the Residual Certificateholders in proportion to their respective
holdings of Residual Certificates in the REMIC Pool on such day. REMIC taxable
income is generally determined in the same manner as the taxable income of an
individual using the accrual method of accounting, except that (i) the
limitations on deductibility of investment interest expense and expenses for
the production of income do not apply, (ii) all bad loans will be deductible as
business bad debts and (iii) the limitation on the deductibility of interest
and expenses related to tax-exempt income will apply. The REMIC Pool's gross
income includes interest, original issue discount income and market discount
income, if any, on the Mortgage Loans, reduced by amortization of any premium
on the Mortgage Loans, plus income from amortization of issue premium, if any,
on the Regular Certificates, plus income on reinvestment of cash flows and
reserve assets, plus any cancellation of indebtedness income upon allocation of
realized losses to the Regular Certificates. The REMIC Pool's deductions
include interest and original issue discount expense on the Regular
Certificates, servicing fees on the Mortgage Loans, other administrative
expenses of the REMIC Pool and realized losses on the Mortgage Loans. The
requirement that Residual Certificateholders report their pro rata share of
taxable income or net loss of the REMIC Pool will continue until there are no
Certificates of any class of the related series outstanding.
The taxable income recognized by a Residual Certificateholder in any
taxable year will be affected by, among other factors, the relationship between
the timing of recognition of interest and original issue discount or market
discount income or amortization of premium with respect to the Mortgage Loans,
on the one hand, and the timing of deductions for interest (including original
issue discount) on the Regular Certificates or income from amortization of
issue premium on the Regular Certificates, on the other hand.
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In the event that an interest in the Mortgage Loans is acquired by the REMIC
Pool at a discount, and one or more of such Mortgage Loans is prepaid, the
Residual Certificateholder may recognize taxable income without being entitled
to receive a corresponding amount of cash because (i) the prepayment may be
used in whole or in part to make distributions in reduction of principal on the
Regular Certificates and (ii) the discount on the Mortgage Loans which is
includible in income may exceed the deduction allowed upon such distributions
on those Regular Certificates on account of any unaccrued original issue
discount relating to those Regular Certificates. When there is more than one
class of Regular Certificates that distribute principal sequentially, this
mismatching of income and deductions is particularly likely to occur in the
early years following issuance of the Regular Certificates when distributions
in reduction of principal are being made in respect of earlier classes of
Regular Certificates to the extent that such classes are not issued with
substantial discount. If taxable income attributable to such a mismatching is
realized, in general, losses would be allowed in later years as distributions
on the later classes of Regular Certificates are made. Taxable income may also
be greater in earlier years than in later years as a result of the fact that
interest expense deductions, expressed as a percentage of the outstanding
principal amount of such a series of Regular Certificates, may increase over
time as distributions in reduction of principal are made on the lower yielding
classes of Regular Certificates, whereas to the extent that the REMIC Pool
includes fixed rate Mortgage Loans, interest income with respect to any given
Mortgage Loan will remain constant over time as a percentage of the outstanding
principal amount of that loan. Consequently, Residual Certificateholders must
have sufficient other sources of cash to pay any federal, state or local income
taxes due as a result of such mismatching or unrelated deductions against which
to offset such income, subject to the discussion of "excess inclusions" below
under "--Limitations on Offset or Exemption of REMIC Income." The timing of
such mismatching of income and deductions described in this paragraph, if
present with respect to a series of Certificates, may have a significant
adverse effect upon the Residual Certificateholder's after-tax rate of return.
In addition, a Residual Certificateholder's taxable income during certain
periods may exceed the income reflected by such Residual Certificateholder for
such periods in accordance with generally accepted accounting principles.
Investors should consult their own accountants concerning the accounting
treatment of their investment in Residual Certificates.
Basis and Losses
The amount of any net loss of the REMIC Pool that may be taken into
account by the Residual Certificateholder is limited to the adjusted basis of
the Residual Certificate as of the close of the quarter (or time of disposition
of the Residual Certificate if earlier), determined without taking into account
the net loss for the quarter. The initial adjusted basis of a purchaser of a
Residual Certificate is the amount paid for such Residual Certificate. Such
adjusted basis will be increased by the amount of taxable income of the REMIC
Pool reportable by the Residual Certificateholder and will be decreased (but
not below zero), first, by a cash distribution from the REMIC Pool and, second,
by the amount of loss of the REMIC Pool reportable by the Residual
Certificateholder. Any loss that is disallowed on account of this limitation
may be carried over indefinitely with respect to the Residual Certificateholder
as to whom such loss was disallowed and may be used by such Residual
Certificateholder only to offset any income generated by the same REMIC Pool.
A Residual Certificateholder will not be permitted to amortize directly
the cost of its Residual Certificate as an offset to its share of the taxable
income of the related REMIC Pool. However, that taxable income will not include
cash received by the REMIC Pool that represents a recovery of the REMIC Pool's
basis in its assets. Such recovery of basis by the REMIC Pool will have the
effect of amortization of the issue price of the Residual Certificates over
their life. However, in view of the possible acceleration of the income of
Residual Certificateholders described above under "Taxation of REMIC Income",
the period of time over which such issue price is effectively amortized may be
longer than the economic life of the Residual Certificates.
A Residual Certificate may have a negative value if the net present value
of anticipated tax liabilities exceeds the present value of anticipated cash
flows. The REMIC Regulations appear to treat the issue price of such a residual
interest as zero rather than such negative amount for purposes of determining
the
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REMIC Pool's basis in its assets. The preamble to the REMIC Regulations states
that the Service may provide future guidance on the proper tax treatment of
payments made by a transferor of such a residual interest to induce the
transferee to acquire the interest, and Residual Certificateholders should
consult their own tax advisors in this regard.
Further, to the extent that the initial adjusted basis of a Residual
Certificateholder (other than an original holder) in the Residual Certificate
is greater that the corresponding portion of the REMIC Pool's basis in the
Mortgage Loans, the Residual Certificateholder will not recover a portion of
such basis until termination of the REMIC Pool unless future Treasury
regulations provide for periodic adjustments to the REMIC income otherwise
reportable by such holder. The REMIC Regulations currently in effect do not so
provide. See "--Treatment of Certain Items of REMIC Income and Expense--Market
Discount" below regarding the basis of Mortgage Loans to the REMIC Pool and
"--Sale or Exchange of a Residual Certificate" below regarding possible
treatment of a loss upon termination of the REMIC Pool as a capital loss.
Treatment of Certain Items of REMIC Income and Expense
Although the Depositor intends to compute REMIC income and expense in
accordance with the Code and applicable regulations, the authorities regarding
the determination of specific items of income and expense are subject to
differing interpretations. The Depositor makes no representation as to the
specific method that it will use for reporting income with respect to the
Mortgage Loans and expenses with respect to the Regular Certificates, and
different methods could result in different timing of reporting of taxable
income or net loss to Residual Certificateholders or differences in capital
gain versus ordinary income.
Original Issue Discount and Premium. Generally, the REMIC Pool's
deductions for original issue discount and income from amortization of issue
premium will be determined in the same manner as original issue discount income
on Regular Certificates as described above under "Taxation of Regular
Certificates--Original Issue Discount" and "--Variable Rate Regular
Certificates," without regard to the de minimis rule described therein, and
"--Acquisition Premium."
Deferred Interest. Any deferred interest that accrues with respect to any
adjustable rate Mortgage Loans held by the REMIC Pool will constitute income to
the REMIC Pool and will be treated in a manner similar to the deferred interest
that accrues with respect to Regular Certificates as described above under
"Taxation of Regular Certificates--Deferred Interest".
Market Discount. The REMIC Pool will have market discount income in
respect of Mortgage Loans if, in general, the basis of the REMIC Pool allocable
to such Mortgage Loans is exceeded by their unpaid principal balances. The
REMIC Pool's basis in such Mortgage Loans is generally the fair market value of
the Mortgage Loans immediately after the transfer thereof to the REMIC Pool.
The REMIC Regulations provide that such basis is equal in the aggregate to the
issue prices of all regular and residual interests in the REMIC Pool (or the
fair market value thereof at the Closing Date, in the case of a retained
Class). In respect of Mortgage Loans that have market discount to which Code
Section 1276 applies, the accrued portion of such market discount would be
recognized currently as an item of ordinary income in a manner similar to
original issue discount. Market discount income generally should accrue in the
manner described above under "Taxation of Regular Certificates--Market
Discount".
Premium. Generally, if the basis of the REMIC Pool in the Mortgage Loans
exceeds the unpaid principal balances thereof, the REMIC Pool will be
considered to have acquired such Mortgage Loans at a premium equal to the
amount of such excess. As stated above, the REMIC Pool's basis in Mortgage
Loans is the fair market value of the Mortgage Loans, based on the aggregate of
the issue prices (or the fair market value of retained Classes) of the regular
and residual interests in the REMIC Pool immediately after the transfer thereof
to the REMIC Pool. In a manner analogous to the discussion above under
"Taxation of Regular Certificates--Premium", a REMIC Pool that holds a Mortgage
Loan as a capital asset under Code Section 1221 may elect under Code Section
171 to amortize premium on whole mortgage loans or mortgage loans underlying
mortgage backed securities ("MBS") that were originated after September 27,
1985 or MBS that are REMIC regular interests under the constant yield method.
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Amortizable bond premium will be treated as an offset to interest income on the
Mortgage Loans, rather than as a separate deduction item. To the extent that
the mortgagors with respect to the Mortgage Loans are individuals, Code Section
171 will not be available for premium on Mortgage Loans (including underlying
mortgage loans) originated on or prior to September 27, 1985. Premium with
respect to such Mortgage Loans may be deductible in accordance with a
reasonable method regularly employed by the holder thereof. The allocation of
such premium pro rata among principal payments should be considered a
reasonable method; however, the Service may argue that such premium should be
allocated in a different manner, such as allocating such premium entirely to
the final payment of principal.
Limitations on Offset or Exemption of REMIC Income
A portion or all of the REMIC taxable income includible in determining the
federal income tax liability of a Residual Certificateholder will be subject to
special treatment. That portion, referred to as the "excess inclusion", is
equal to the excess of REMIC taxable income for the calendar quarter allocable
to a Residual Certificate over the daily accruals for such quarterly period of
(i) 120% of the long-term applicable Federal rate that would have applied to
the Residual Certificate (if it were a debt instrument) on the Startup Day
under Code Section 1274(d), multiplied by (ii) the adjusted issue price of such
Residual Certificate at the beginning of such quarterly period. For this
purpose, the adjusted issue price of a Residual Certificate at the beginning of
a quarter is the issue price of the Residual Certificate, plus the amount of
such daily accruals of REMIC income described in this paragraph for all prior
quarters, decreased by any distributions made with respect to such Residual
Certificate prior to the beginning of such quarterly period. Accordingly, the
portion of the REMIC Pool's taxable income that will be treated as excess
inclusions will be a larger portion of such income as the adjusted issue price
of the Residual Certificates diminishes.
The portion of a Residual Certificateholder's REMIC taxable income
consisting of the excess inclusions generally may not be offset by other
deductions, including net operating loss carry forwards, on such Residual
Certificateholder's return. However, net operating loss carryovers are
determined without regard to excess inclusion income. Further, if the Residual
Certificateholder is an organization subject to the tax on unrelated business
income imposed by Code Section 511, the Residual Certificateholder's excess
inclusions will be treated as unrelated business taxable income of such
Residual Certificateholder for purposes of Code Section 511. In addition, REMIC
taxable income is subject to 30% withholding tax with respect to certain
persons who are not U.S. Persons (as defined below under "Tax-Related
Restrictions on Transfer of Residual Certificates--Foreign Investors"), and the
portion thereof attributable to excess inclusions is not eligible for any
reduction in the rate of withholding tax (by treaty or otherwise). See
"Taxation of Certain Foreign Investors--Residual Certificates" below. Finally,
if a real estate investment trust or a regulated investment company owns a
Residual Certificate, a portion (allocated under Treasury regulations yet to be
issued) of dividends paid by the real estate investment trust or a regulated
investment company could not be offset by net operating losses of its
shareholders, would constitute unrelated business taxable income for tax-exempt
shareholders, and would be ineligible for reduction of withholding to certain
persons who are not U.S. Persons. The SBJPA of 1996 has eliminated the special
rule permitting Section 593 institutions ("thrift institutions") to use net
operating losses and other allowable deductions to offset their excess
inclusion income from Residual Certificates that have "significant value"
within the meaning of the REMIC Regulations, effective for taxable years
beginning after December 31, 1995, except with respect to Residual Certificates
continuously held by thrift institutions since November 1, 1995.
In addition, the SBJPA of 1996 provides three rules for determining the
effect of excess inclusions on the alternative minimum taxable income of a
Residual Certificateholder. First, alternative minimum taxable income for a
Residual Certificateholder is determined without regard to the special rule,
discussed above, that taxable income cannot be less than excess inclusions.
Second, a Residual Certificateholder's alternative minimum taxable income for a
taxable year cannot be less than the excess inclusions for the year. Third, the
amount of any alternative minimum tax net operating loss deduction must be
computed without regard to any excess inclusions. These rules are effective for
taxable years beginning after December 31, 1996, unless a Residual
Certificateholder elects to have such rules apply only to taxable years
beginning after August 20, 1996.
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Tax-Related Restrictions on Transfer of Residual Certificates
Disqualified Organizations. If any legal or beneficial interest in a
Residual Certificate is transferred to a Disqualified Organization (as defined
below) other than in connection with the formation of a REMIC Pool, if the
Disqualified organization is required, pursuant to a binding contract, to sell
such Residual Certificate, which sale occurs within seven days after the
Startup Day, a tax would be imposed in an amount equal to the product of (i)
the present value of the total anticipated excess inclusions with respect to
such Residual Certificate for periods after the transfer and (ii) the highest
marginal federal income tax rate applicable to corporations. The REMIC
Regulations provide that the anticipated excess inclusions are based on actual
prepayment experience to the date of the transfer and projected payments based
on the Prepayment Assumption. The present value rate equals the applicable
Federal rate under Code Section 1274(d) as of the date of the transfer for a
term ending with the last calendar quarter in which excess inclusions are
expected to accrue. Such a tax generally would be imposed on the transferor of
the Residual Certificate, except that where such transfer is through an agent
(including a broker, nominee or other middleman) for a Disqualified
Organization, the tax would instead be imposed on such agent. However, a
transferor of a Residual Certificate would in no event be liable for such tax
with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a Disqualified Organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. The tax also may be waived by the Treasury Department if
the Disqualified Organization promptly disposes of the residual interest and
the transferor pays income tax at the highest corporate rate on the excess
inclusions for the period the Residual Certificate is actually held by the
Disqualified Organization.
In addition, if a "Pass-Through Entity" (as defined below) has excess
inclusion income with respect to a Residual Certificate during a taxable year
and a Disqualified Organization is the record holder of an equity interest in
such entity, then a tax is imposed on such entity equal to the product of (i)
the amount of excess inclusions on the Residual Certificate that are allocable
to the interest in the Pass-Through Entity during the period such interest is
held by such Disqualified Organization, and (ii) the highest marginal federal
corporate income tax rate. Such tax would be deductible from the ordinary gross
income of the Pass-Through Entity for the taxable year. The Pass-Through Entity
would not be liable for such tax if it has received an affidavit from such
record holder that it is not a Disqualified Organization or stating such
holder's taxpayer identification number and, during the period such person is
the record holder of the Residual Certificate, the Pass-Through Entity does not
have actual knowledge that such affidavit is false.
For these purposes, (i) "Disqualified Organization" means the United
States, any state or political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of the
foregoing (provided, that such term does not include an instrumentality if all
of its activities are subject to tax and, except in the case of the Federal
Home Loan Mortgage Corporation, a majority of its board of directors is not
selected by any such governmental entity), any cooperative organization
furnishing electric energy or providing telephone service to persons in rural
areas as described in Code Section 1381(a)(2)(C), and any organization (other
than a farmers' cooperative described in Code Section 521) that is exempt from
taxation under the Code unless such organization is subject to the tax on
unrelated business income imposed by Code Section 511, and (ii) "Pass-Through
Entity" means any regulated investment company, real estate investment trust,
common trust fund, partnership, trust or estate and certain corporations
operating on a cooperative basis. Except as may be provided in Treasury
regulations, any person holding an interest in a Pass-Through Entity as a
nominee for another will, with respect to such interest, be treated as a
Pass-Through Entity.
The Pooling Agreement with respect to a series of Certificates will
provide that no legal or beneficial interest in a Residual Certificate may be
transferred unless (i) the proposed transferee provides to the transferor and
the Trustee an affidavit providing its taxpayer identification number and
stating that such transferee is the beneficial owner of the Residual
Certificate, is not a Disqualified Organization and is not purchasing such
Residual Certificates on behalf of a Disqualified Organization (i.e., as a
broker, nominee or middleman thereof), and (ii) the transferor provides a
statement in writing to the Depositor and the Trustee that it has no actual
knowledge that such affidavit is false. Moreover, the Pooling Agreement will
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provide that any attempted or purported transfer in violation of these transfer
restrictions will be null and void and will vest no rights in any purported
transferee. Each Residual Certificate with respect to a series will bear a
legend referring to such restrictions on transfer, and each Residual
Certificateholder will be deemed to have agreed, as a condition of ownership
thereof, to any amendments to the related Pooling Agreement required under the
Code or applicable Treasury regulations to effectuate the foregoing
restrictions. Information necessary to compute an applicable excise tax must be
furnished to the Service and to the requesting party within 60 days of the
request, and the Depositor or the Trustee may charge a fee for computing and
providing such information.
Noneconomic Residual Interests. The REMIC Regulations would disregard
certain transfers of Residual Certificates, in which case the transferor would
continue to be treated as the owner of the Residual Certificates and thus would
continue to be subject to tax on its allocable portion of the net income of the
REMIC Pool. Under the REMIC Regulations, a transfer of a "noneconomic residual
interest" (as defined below) to a Residual Certificateholder (other than a
Residual Certificateholder who is not a U.S. Person, as defined below under
"Foreign Investors") is disregarded for all federal income tax purposes if a
significant purpose of the transferor is to impede the assessment or collection
of tax. A residual interest in a REMIC (including a residual interest with a
positive value at issuance) is a "noneconomic residual interest" unless, at the
time of the transfer, (i) the present value of the expected future
distributions on the residual interest at least equals the product of the
present value of the anticipated excess inclusions and the highest corporate
income tax rate in effect for the year in which the transfer occurs, and (ii)
the transferor reasonably expects that the transferee will receive
distributions from the REMIC at or after the time at which taxes accrue on the
anticipated excess inclusions in an amount sufficient to satisfy the accrued
taxes. The anticipated excess inclusions and the present value rate are
determined in the same manner as set forth above under "Disqualified
Organizations". The REMIC Regulations explain that a significant purpose to
impede the assessment or collection of tax exists if the transferor, at the
time of the transfer, either knew or should have known that the transferee
would be unwilling or unable to pay taxes due on its share of the taxable
income of the REMIC. A safe harbor is provided if (i) the transferor conducted,
at the time of the transfer, a reasonable investigation of the financial
condition of the transferee and found that the transferee historically had paid
its debts as they came due and found no significant evidence to indicate that
the transferee would not continue to pay its debts as they came due in the
future, and (ii) the transferee represents to the transferor that it
understands that, as the holder of the noneconomic residual interest, the
transferee may incur tax liabilities in excess of cash flows generated by the
interest and that the transferee intends to pay taxes associated with holding
the residual interest as they become due. The Pooling Agreement with respect to
each series of Certificates will require the transferee of a Residual
Certificate to certify to the matters in the preceding sentence as part of the
affidavit described above under the heading "Disqualified Organizations". The
transferor must have no actual knowledge or reason to know that such statements
are false.
Foreign Investors. The REMIC Regulations provide that the transfer of a
Residual Certificate that has "tax avoidance potential" to a "foreign person"
will be disregarded for all federal tax purposes. This rule appears intended to
apply to a transferee who is not a "U.S. Person" (as defined below), unless
such transferee's income is effectively connected with the conduct of a trade
or business within the United States or not otherwise subject to a withholding
tax. A Residual Certificate is deemed to have tax avoidance potential unless,
at the time of the transfer, (i) the future value of expected distributions
equals at least 30% of the anticipated excess inclusions after the transfer,
and (ii) the transferor reasonably expects that the transferee will receive
sufficient distributions from the REMIC Pool at or after the time at which the
excess inclusions accrue and prior to the end of the next succeeding taxable
year for the accumulated withholding tax liability to be paid. If the non-U.S.
Person transfers the Residual Certificate back to a U.S. Person, the transfer
will be disregarded and the foreign transferor will continue to be treated as
the owner unless arrangements are made so that the transfer does not have the
effect of allowing the transferor to avoid tax on accrued excess inclusions.
The Prospectus Supplement relating to a series of Certificates may provide
that a Residual Certificate may not be purchased by or transferred to any
person that is not a U.S. Person or may describe the circumstances and
restrictions pursuant to which such a transfer may be made. The term "U.S.
Person"
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means a citizen or resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the United States or
any State, an estate that is subject to United States federal income tax
regardless of the source of its income or a trust if (A) for taxable years
beginning after December 31, 1996 (or for taxable years ending after August 20,
1996, if the trustee has made an applicable election), a court within the
United States is able to exercise primary supervision over the administration
of such trust, and one or more United States persons have the authority to
control all substantial decisions of such trust, or (B) for all other taxable
years, such trust is subject to United States federal income tax regardless of
the source of its income (or, to the extent provided in applicable Treasury
Regulations, certain trusts in existence on August 20, 1996 which are eligible
to elect to be treated as U.S. Persons).
Sale or Exchange of a Residual Certificate
Upon the sale or exchange of a Residual Certificate, the Residual
Certificateholder will recognize gain or loss equal to the excess, if any, of
the amount realized over the adjusted basis (as described above under "Taxation
of Residual Certificates--Basis and Losses") of such Residual Certificateholder
in such Residual Certificate at the time of the sale or exchange. In addition
to reporting the taxable income of the REMIC Pool, a Residual Certificateholder
will have taxable income to the extent that any cash distribution to it from
the REMIC Pool exceeds such adjusted basis on that Distribution Date. Such
income will be treated as gain from the sale or exchange of the Residual
Certificate. It is possible that the termination of the REMIC Pool may be
treated as a sale or exchange of a Residual Certificateholder's Residual
Certificate, in which case, if the Residual Certificateholder has an adjusted
basis in such Residual Certificateholder's Residual Certificate remaining when
its interest in the REMIC Pool terminates, and if such Residual
Certificateholder holds such Residual Certificate as a capital asset under Code
Section 1221, then such Residual Certificateholder will recognize a capital
loss at that time in the amount of such remaining adjusted basis.
Any gain on the sale of a Residual Certificate will be treated as ordinary
income (i) if a Residual Certificate is held as part of a "conversion
transaction" as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Residual Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate
in effect at the time the taxpayer entered into the transaction minus any
amount previously treated as ordinary income with respect to any prior
disposition of property that was held as a part of such transaction or (ii) in
the case of a non-corporate taxpayer, to the extent such taxpayer has made an
election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary income rates. In addition, gain or loss
recognized from the sale of a Residual Certificate by certain banks or thrift
institutions will be treated as ordinary income or loss pursuant to Code
Section 582(c).
The Conference Committee Report to the 1986 Act provides that, except as
provided in Treasury regulations yet to be issued, the wash sale rules of Code
Section 1091 will apply to dispositions of Residual Certificates where the
seller of the Residual Certificate, during the period beginning six months
before the sale or disposition of the Residual Certificate and ending six
months after such sale or disposition, acquires (or enters into any other
transaction that results in the application of Section 1091) any residual
interest in any REMIC or any interest in a "taxable mortgage pool" (such as a
non-REMIC owner trust) that is economically comparable to a Residual
Certificate.
Mark to Market Regulations
The Service has issued regulations (the "Mark to Market Regulations")
under Code Section 475 relating to the requirement that a securities dealer
mark to market securities held for sale to customers. This mark-to-market
requirement applies to all securities of a dealer, except to the extent that
the dealer has specifically identified a security as held for investment. The
Mark to Market Regulations provide that, for purposes of this mark-to-market
requirement, a Residual Certificate is not treated as a security and thus may
not be marked to market. The Mark to Market Regulations apply to all Residual
Certificates acquired on or after January 4, 1995.
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TAXES THAT MAY BE IMPOSED ON THE REMIC POOL
Prohibited Transactions
Income from certain transactions by the REMIC Pool, called prohibited
transactions, will not be part of the calculation of income or loss includible
in the federal income tax returns of Residual Certificateholders, but rather
will be taxed directly to the REMIC Pool at a 100% rate. Prohibited
transactions generally include (i) the disposition of a qualified mortgage
other than pursuant to a (a) substitution within two years of the Startup Day
for a defective (including a defaulted) obligation (or repurchase in lieu of
substitution of a defective (including a defaulted) obligation at any time) or
for any qualified mortgage within three months of the Startup Day, (b)
foreclosure, default or imminent default of a qualified mortgage, (c)
bankruptcy or insolvency of the REMIC Pool or (d) qualified (complete)
liquidation, (ii) the receipt of income from assets that are not the type of
mortgages or investments that the REMIC Pool is permitted to hold, (iii) the
receipt of compensation for services or (iv) the receipt of gain from
disposition of cash flow investments other than pursuant to a qualified
liquidation. Notwithstanding (i) and (iv), it is not a prohibited transaction
to sell REMIC Pool property to prevent a default on Regular Certificates as a
result of a default on qualified mortgages or to facilitate a clean-up call
(generally, an optional termination to save administrative costs when no more
than a small percentage of the Certificates is outstanding). The REMIC
Regulations indicate that the modification of a Mortgage Loan generally will
not be treated as a disposition if it is occasioned by a default or reasonably
foreseeable default, an assumption of the Mortgage Loan, the waiver of a
due-on-sale or due-on-encumbrance clause or the conversion of an interest rate
by a mortgagor pursuant to the terms of a convertible adjustable rate Mortgage
Loan.
Contributions to the REMIC Pool After the Startup Day
In general, the REMIC Pool will be subject to a tax at a 100% rate on the
value of any property contributed to the REMIC Pool after the Startup Day.
Exceptions are provided for cash contributions to the REMIC Pool (i) during the
three months following the Startup Day, (ii) made to a qualified reserve fund
by a Residual Certificateholder, (iii) in the nature of a guarantee, (iv) made
to facilitate a qualified liquidation or clean-up call and (v) as otherwise
permitted in Treasury regulations yet to be issued.
Net Income from Foreclosure Property
The REMIC Pool will 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. Generally,
property acquired by deed in lieu of foreclosure would be treated as
"foreclosure property" for a period of two years, with possible extensions of
up to an additional four years. Net income from foreclosure property generally
means gain from the sale of a foreclosure property that is inventory property
and gross income from foreclosure property other than qualifying rents and
other qualifying income for a real estate investment trust.
It is not anticipated that the REMIC Pool will receive income or
contributions subject to tax under the preceding three paragraphs, except as
described in the applicable Prospectus Supplement with respect to net income
from foreclosure property on a commercial or multifamily residential property
that secured a Mortgage Loan. In addition, unless otherwise disclosed in the
applicable Prospectus Supplement, it is not anticipated that any material state
income or franchise tax will be imposed on a REMIC Pool.
LIQUIDATION OF THE REMIC POOL
If a REMIC Pool adopts a plan of complete liquidation, within the meaning
of Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in
the REMIC Pool's final tax return a date on which such adoption is deemed to
occur, and sells all of its assets (other than cash) within a 90-day period
beginning on the date of the adoption of the plan of liquidation, the REMIC
Pool will not be subject to the prohibited transaction rules on the sale of its
assets, provided that the REMIC Pool credits or distributes in liquidation all
of the sale proceeds plus its cash (other than amounts retained to meet claims)
to holders of Regular Certificates and Residual Certificateholders within the
90-day period.
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ADMINISTRATIVE MATTERS
The REMIC Pool will be required to maintain its books on a calendar year
basis and to file federal income tax returns for federal income tax purposes in
a manner similar to a partnership. The form for such income tax return is Form
1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return. The
Trustee will be required to sign the REMIC Pool's returns. Treasury regulations
provide that, except where there is a single Residual Certificateholder for an
entire taxable year, the REMIC Pool will be subject to the procedural and
administrative rules of the Code applicable to partnerships, including the
determination by the Service of any adjustments to, among other things, items
of REMIC income, gain, loss, deduction or credit in a unified administrative
proceeding. The Residual Certificateholder owning the largest percentage
interest in the Residual Certificates will be obligated to act as "tax matters
person", as defined in applicable Treasury regulations, with respect to the
REMIC Pool. Each Residual Certificateholder will be deemed, by acceptance of
such Residual Certificates, to have agreed (i) to the appointment of the tax
matters person as provided in the preceding sentence and (ii) to the
irrevocable designation of the Master Servicer as agent for performing the
functions of the tax matters person.
LIMITATIONS ON DEDUCTION OF CERTAIN EXPENSES
An investor who is an individual, estate or trust will be subject to
limitation with respect to certain itemized deductions described in Code
Section 67, to the extent that such itemized deductions, in the aggregate, do
not exceed 2% of the investor's adjusted gross income. In addition, Code
Section 68 provides that itemized deductions otherwise allowable for a taxable
year of an individual taxpayer will be reduced by the lesser of (i) 3% of the
excess, if any, of adjusted gross income over $124,500 for the taxable year
beginning in 1998 ($62,250 in the case of a married individual filing a
separate return) (subject to adjustments for inflation in subsequent years) or
(ii) 80% of the amount of itemized deductions otherwise allowable for such
year. In the case of a REMIC Pool, such deductions may include deductions under
Code Section 212 for the servicing fee and all administrative and other
expenses relating to the REMIC Pool, or any similar expenses allocated to the
REMIC Pool with respect to a regular interest it holds in another REMIC. Such
investors who hold REMIC Certificates either directly or indirectly through
certain pass-through entities may have their pro rata share of such expenses
allocated to them as additional gross income, but may be subject to such
limitation on deductions. In addition, such expenses are not deductible at all
for purposes of computing the alternative minimum tax, and may cause such
investors to be subject to significant additional tax liability. Temporary
Treasury regulations provide that the additional gross income and corresponding
amount of expenses generally are to be allocated entirely to the holders of
Residual Certificates in the case of a REMIC Pool that would not qualify as a
fixed investment trust in the absence of a REMIC election. However, such
additional gross income and limitation on deductions will apply to the
allocable portion of such expenses to holders of Regular Certificates, as well
as holders of Residual Certificates, where such Regular Certificates are issued
in a manner that is similar to pass-through certificates in a fixed investment
trust. In general, such allocable portion will be determined based on the ratio
that a REMIC Certificateholder's income, determined on a daily basis, bears to
the income of all holders of Regular Certificates and Residual Certificates
with respect to a REMIC Pool. As a result, individuals, estates or trusts
holding REMIC Certificates (either directly or indirectly through a grantor
trust, partnership, S corporation, REMIC, or certain other pass-through
entities described in the foregoing temporary Treasury regulations) may have
taxable income in excess of the interest income at the pass-through rate on
Regular Certificates that are issued in a single Class or otherwise
consistently with fixed investment trust status or in excess of cash
distributions for the related period on Residual Certificates. Unless otherwise
indicated in the applicable Prospectus Supplement, all such expenses will be
allocable to the Residual Certificates.
TAXATION OF CERTAIN FOREIGN INVESTORS
Regular Certificates
Interest, including original issue discount, distributable to Regular
Certificateholders who are non-resident aliens, foreign corporations, or other
Non-U.S. Persons (as defined below), will be considered "portfolio interest"
and, therefore, generally will not be subject to 30% United States
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withholding tax, provided that such Non-U.S. Person (i) is not a "10-percent
shareholder" within the meaning of Code Section 871(h)(3)(B) or a controlled
foreign corporation described in Code Section 881(c)(3)(C) and (ii) provides
the Trustee, or the person who would otherwise be required to withhold tax from
such distributions under Code Section 1441 or 1442, with an appropriate
statement, signed under penalties of perjury, identifying the beneficial owner
and stating, among other things, that the beneficial owner of the Regular
Certificate is a Non-U.S. Person. If such statement, or any other required
statement, is not provided, 30% withholding will apply unless reduced or
eliminated pursuant to an applicable tax treaty or unless the interest on the
Regular Certificate is effectively connected with the conduct of a trade or
business within the United States by such Non-U.S. Person. In the latter case,
such Non-U.S. Person will be subject to United States federal income tax at
regular rates. Prepayment Premiums distributable to Regular Certificateholders
who are Non-U.S. Persons may be subject to 30% United States withholding tax.
Investors who are Non-U.S. Persons should consult their own tax advisors
regarding the specific tax consequences to them of owning a Regular
Certificate. The term "Non-U.S. Person" means any person who is not a U.S.
Person.
Residual Certificates
The Conference Committee Report to the 1986 Act indicates that amounts
paid to Residual Certificateholders who are Non-U.S. Persons are treated as
interest for purposes of the 30% (or lower treaty rate) United States
withholding tax. Treasury regulations provide that amounts distributed to
Residual Certificateholders may qualify as "portfolio interest", subject to the
conditions described in "Regular Certificates" above, but only to the extent
that (i) the Mortgage Loans (including mortgage loans underlying MBS) were
issued after July 18, 1984 and (ii) the Trust Fund or segregated pool of assets
therein (as to which a separate REMIC election will be made), to which the
Residual Certificate relates, consists of obligations issued in "registered
form" within the meaning of Code Section 163(f)(1). Generally, whole mortgage
loans will not be, but MBS and regular interests in another REMIC Pool will be,
considered obligations issued in registered form. Furthermore, a Residual
Certificateholder will not be entitled to any exemption from the 30%
withholding tax (or lower treaty rate) to the extent of that portion of REMIC
taxable income that constitutes an "excess inclusion". See "Taxation of
Residual Certificates--Limitations on Offset or Exemption of REMIC Income". If
the amounts paid to Residual Certificateholders who are Non-U.S. Persons are
effectively connected with the conduct of a trade or business within the United
States by such Non-U.S. Persons, 30% (or lower treaty rate) withholding will
not apply. Instead, the amounts paid to such Non-U.S. Persons will be subject
to United States federal income tax at regular rates. If 30% (or lower treaty
rate) withholding is applicable, such amounts generally will be taken into
account for purposes of withholding only when paid or otherwise distributed (or
when the Residual Certificate is disposed of) under rules similar to
withholding upon disposition of debt instruments that have original issue
discount. See "Tax-Related Restrictions on Transfer of Residual
Certificates--Foreign Investors" above concerning the disregard of certain
transfers having "tax avoidance potential". Investors who are Non-U.S. Persons
should consult their own tax advisors regarding the specific tax consequences
to them of owning Residual Certificates.
BACKUP WITHHOLDING
Distributions made on the Regular Certificates, and proceeds from the sale
of the Regular Certificates to or through certain brokers, may be subject to a
"backup" withholding tax under Code Section 3406 of 31% on "reportable
payments" (including interest distributions, original issue discount, and,
under certain circumstances, principal distributions) unless the Regular
Certificateholder complies with certain reporting and/or certification
procedures, including the provision of its taxpayer identification number to
the Trustee, its agent or the broker who effected the sale of the Regular
Certificate, or such Certificateholder is otherwise an exempt recipient under
applicable provisions of the Code. Any amounts to be withheld from distribution
on the Regular Certificates would be refunded by the Service or allowed as a
credit against the Regular Certificateholder's federal income tax liability.
REPORTING REQUIREMENTS
Reports of accrued interest, original issue discount and information
necessary to compute the accrual of any market discount on the Regular
Certificates will be made annually to the Service and to individuals,
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estates, non-exempt and non-charitable trusts, and partnerships who are either
holders of record of Regular Certificates or beneficial owners who own Regular
Certificates through a broker or middleman as nominee. All brokers, nominees
and all other non-exempt holders of record of Regular Certificates (including
corporations, non-calendar year taxpayers, securities or commodities dealers,
real estate investment trusts, investment companies, common trust funds, thrift
institutions and charitable trusts) may request such information for any
calendar quarter by telephone or in writing by contacting the person designated
in Service Publication 938 with respect to a particular Series of Regular
Certificates. Holders through nominees must request such information from the
nominee.
The Service's Form 1066 has an accompanying Schedule Q, Quarterly Notice
to Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation.
Treasury regulations require that Schedule Q be furnished by the REMIC Pool to
each Residual Certificateholder by the end of the month following the close of
each calendar quarter (41 days after the end of a quarter under proposed
Treasury regulations) in which the REMIC Pool is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual
Certificateholders, furnished annually, if applicable, to holders of Regular
Certificates, and filed annually with the Service concerning Code Section 67
expenses (see "Limitations on Deduction of Certain Expenses" above) allocable
to such holders. Furthermore, under such regulations, information must be
furnished quarterly to Residual Certificateholders, furnished annually to
holders of Regular Certificates, and filed annually with the Service concerning
the percentage of the REMIC Pool's assets meeting the qualified asset tests
described above under "Status of REMIC Certificates".
FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS TO WHICH NO REMIC ELECTION
IS MADE
STANDARD CERTIFICATES
General
In the event that no election is made to treat a Trust Fund (or a
segregated pool of assets therein) with respect to a series of Certificates
that are not designated as "Stripped Certificates", as described below, as a
REMIC (Certificates of such a series hereinafter referred to as "Standard
Certificates"), the Trust Fund will be classified as a grantor trust under
subpart E, Part 1 of subchapter J of the Code and not as an association taxable
as a corporation or a "taxable mortgage pool" within the meaning of Code
Section 7701(i). Where there is no fixed retained yield with respect to the
Mortgage Loans underlying the Standard Certificates, the holder of each such
Standard Certificate (a "Standard Certificateholder") in such series will be
treated as the owner of a pro rata undivided interest in the ordinary income
and corpus portions of the Trust Fund represented by its Standard Certificate
and will be considered the beneficial owner of a pro rata undivided interest in
each of the Mortgage Loans, subject to the discussion below under
"Recharacterization of Servicing Fees". Accordingly, the holder of a Standard
Certificate of a particular series will be required to report on its federal
income tax return its pro rata share of the entire income from the Mortgage
Loans represented by its Standard Certificate, including interest at the coupon
rate on such Mortgage Loans, original issue discount (if any), prepayment fees,
assumption fees, and late payment charges received by the Master Servicer, in
accordance with such Standard Certificateholder's method of accounting. A
Standard Certificateholder generally will be able to deduct its share of the
servicing fee and all administrative and other expenses of the Trust Fund in
accordance with its method of accounting, provided that such amounts are
reasonable compensation for services rendered to that Trust Fund. However,
investors who are individuals, estates or trusts who own Standard Certificates,
either directly or indirectly through certain pass-through entities, will be
subject to limitation with respect to certain itemized deductions described in
Code Section 67, including deductions under Code Section 212 for the servicing
fee and all such administrative and other expenses of the Trust Fund, to the
extent that such deductions, in the aggregate, do not exceed two percent of an
investor's adjusted gross income. In addition, Code Section 68 provides that
itemized deductions otherwise allowable for a taxable year of an individual
taxpayer will be reduced by the lesser of (i) 3% of the excess, if any, of
adjusted gross income over $124,500 for the taxable year beginning in 1998
($62,250 in the case of a married individual filing a
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separate return) (subject to adjustments for inflation in subsequent years), or
(ii) 80% of the amount of itemized deductions otherwise allowable for such
year. As a result, such investors holding Standard Certificates, directly or
indirectly through a pass-through entity, may have aggregate taxable income in
excess of the aggregate amount of cash received on such Standard Certificates
with respect to interest at the pass-through rate on such Standard
Certificates. In addition, such expenses are not deductible at all for purposes
of computing the alternative minimum tax, and may cause such investors to be
subject to significant additional tax liability. Moreover, where there is fixed
retained yield with respect to the Mortgage Loans underlying a series of
Standard Certificates or where the servicing fee is in excess of reasonable
servicing compensation, the transaction will be subject to the application of
the "stripped bond" and "stripped coupon" rules of the Code, as described below
under "Stripped Certificates" and "Recharacterization of Servicing Fees",
respectively.
Tax Status
Standard Certificates will have the following status for federal income
tax purposes:
1. A Standard Certificate owned by a "domestic building and loan
association" within the meaning of Code Section 7701(a)(19) will be considered
to represent "loans . . . secured by an interest in real property which
is . . . residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), provided that the real property securing the Mortgage Loans
represented by that Standard Certificate is of the type described in such
section of the Code.
2. A Standard Certificate owned by a real estate investment trust will be
considered to represent "real estate assets" within the meaning of Code Section
856(c)(4)(A) to the extent that the assets of the related Trust Fund consist of
qualified assets, and interest income on such assets will be considered
"interest on obligations secured by mortgages on real property" to such extent
within the meaning of Code Section 856(c)(3)(B).
3. A Standard Certificate owned by a REMIC will be considered to represent
an "obligation . . . which is principally secured by an interest in real
property" within the meaning of Code Section 860G(a)(3)(A) to the extent that
the assets of the related Trust Fund consist of "qualified mortgages" within
the meaning of Code Section 860G(a)(3).
Premium and Discount
Standard Certificateholders are advised to consult with their tax advisors
as to the federal income tax treatment of premium and discount arising either
upon initial acquisition of Standard Certificates or thereafter.
Premium. The treatment of premium incurred upon the purchase of a Standard
Certificate will be determined generally as described above under .
Original Issue Discount. The original issue discount rules will be
applicable to a Standard Certificateholder's interest in those Mortgage Loans
as to which the conditions for the application of those sections are met. Rules
regarding periodic inclusion of original issue discount income are applicable
to mortgages of corporations originated after May 27, 1969, mortgages of
noncorporate mortgagors (other than individuals) originated after July 1, 1982,
and mortgages of individuals originated after March 2, 1984. Under the OID
Regulations, such original issue discount could arise by the charging of points
by the originator of the mortgages in an amount greater than a statutory de
minimis exception, including a payment of points currently deductible by the
borrower under applicable Code provisions or, under certain circumstances, by
the presence of "teaser rates" on the Mortgage Loans.
Original issue discount must generally be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest, in advance of the cash attributable to such
income. Unless indicated otherwise in the applicable Prospectus Supplement, no
prepayment assumption will be assumed for purposes of such accrual. However,
Code Section 1272 provides for a reduction in the amount of original issue
discount includible in the income of a holder of an obligation that acquires
the obligation after its initial issuance at a price greater than the sum of
the
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original issue price and the previously accrued original issue discount, less
prior payments of principal. Accordingly, if such Mortgage Loans acquired by a
Standard Certificateholder are purchased at a price equal to the then unpaid
principal amount of such Mortgage Loans, no original issue discount
attributable to the difference between the issue price and the original
principal amount of such Mortgage Loans (i.e., points) will be includible by
such holder.
Market Discount. Standard Certificateholders also will be subject to the
market discount rules to the extent that the conditions for application of
those sections are met. Market discount on the Mortgage Loans will be
determined and will be reported as ordinary income generally in the manner
described above under "Material Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Market Discount", except that
the ratable accrual methods described therein will not apply and it is unclear
whether a Prepayment Assumption would apply. Rather, the holder will accrue
market discount pro rata over the life of the Mortgage Loans, unless the
constant yield method is elected. Unless indicated otherwise in the applicable
Prospectus Supplement, no prepayment assumption will be assumed for purposes of
such accrual.
Recharacterization of Servicing Fees. If the servicing fee paid to the
Master Servicer were deemed to exceed reasonable servicing compensation, the
amount of such excess would represent neither income nor a deduction to
Certificateholders. In this regard, there are no authoritative guidelines for
federal income tax purposes as to either the maximum amount of servicing
compensation that may be considered reasonable in the context of this or
similar transactions or whether, in the case of the Standard Certificate, the
reasonableness of servicing compensation should be determined on a weighted
average or loan-by-loan basis. If a loan-by-loan basis is appropriate, the
likelihood that such amount would exceed reasonable servicing compensation as
to some of the Mortgage Loans would be increased. Service guidance indicates
that a servicing fee in excess of reasonable compensation ("excess servicing")
will cause the Mortgage Loans to be treated under the "stripped bond" rules.
Such guidance provides safe harbors for servicing deemed to be reasonable and
requires taxpayers to demonstrate that the value of servicing fees in excess of
such amounts is not greater than the value of the services provided.
Accordingly, if the Service's approach is upheld, a servicer who receives
a servicing fee in excess of such amounts would be viewed as retaining an
ownership interest in a portion of the interest payments on the Mortgage Loans.
Under the rules of Code Section 1286, the separation of ownership of the right
to receive some or all of the interest payments on an obligation from the right
to receive some or all of the principal payments on the obligation would result
in treatment of such Mortgage Loans as "stripped coupons" and "stripped bonds".
Subject to the de minimis rule discussed below under "--Stripped Certificates",
each stripped bond or stripped coupon could be considered for this purpose as a
non-interest bearing obligation issued on the date of issue of the Standard
Certificates, and the original issue discount rules of the Code would apply to
the holder thereof. While Standard Certificateholders would still be treated as
owners of beneficial interests in a grantor trust for federal income tax
purposes, the corpus of such trust could be viewed as excluding the portion of
the Mortgage Loans the ownership of which is attributed to the Master Servicer,
or as including such portion as a second class of equitable interest.
Applicable Treasury regulations treat such an arrangement as a fixed investment
trust, since the multiple classes of trust interests should be treated as
merely facilitating direct investments in the trust assets and the existence of
multiple classes of ownership interests is incidental to that purpose. In
general, such a recharacterization should not have any significant effect upon
the timing or amount of income reported by a Standard Certificateholder, except
that the income reported by a cash method holder may be slightly accelerated.
See "Stripped Certificates" below for a further description of the federal
income tax treatment of stripped bonds and stripped coupons.
Sale or Exchange of Standard Certificates. Upon sale or exchange of a
Standard Certificate, a Standard Certificateholder will recognize gain or loss
equal to the difference between the amount realized on the sale and its
aggregate adjusted basis in the Mortgage Loans and the other assets represented
by the Standard Certificate. In general, the aggregate adjusted basis will
equal the Standard Certificateholder's cost for the Standard Certificate,
increased by the amount of any income previously reported with respect to the
Standard Certificate and decreased by the amount of any losses previously
reported with respect to the Standard Certificate and the amount of any
distributions received thereon. Except as
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provided above with respect to market discount on any Mortgage Loans, and
except for certain financial institutions subject to the provisions of Code
Section 582(c), any such gain or loss would be capital gain or loss if the
Standard Certificate was held as a capital asset. However, gain on the sale of
a Standard Certificate will be treated as ordinary income (i) if a Standard
Certificate is held as part of a "conversion transaction" as defined in Code
Section 1258(c), up to the amount of interest that would have accrued on the
Standard Certificateholder's net investment in the conversion transaction at
120% of the appropriate applicable Federal rate in effect at the time the
taxpayer entered into the transaction minus any amount previously treated as
ordinary income with respect to any prior disposition of property that was held
as a part of such transaction or (ii) in the case of a non-corporate taxpayer,
to the extent such taxpayer has made an election under Code Section 163(d)(4)
to have net capital gains taxed as investment income at ordinary income rates.
Capital gains of certain non-corporate taxpayers are subject to a lower maximum
tax rate (28%) than ordinary income of such taxpayers (39.6%) for property held
for more than one year but not more than 18 months, and a still lower maximum
rate (20%) for property held for more than 18 months. The maximum tax rate for
corporations is the same with respect to both ordinary income and capital
gains.
STRIPPED CERTIFICATES
General
Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the principal payments on an obligation from ownership
of the right to receive some or all of the interest payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. For purposes of this discussion,
Certificates that are subject to those rules will be referred to as "Stripped
Certificates". Stripped Certificates include "Stripped Interest Certificates"
and "Stripped Principal Certificates" (as defined in this Prospectus) as to
which no REMIC election is made.
The Certificates will be subject to those rules if (i) the Depositor or
any of its affiliates retains (for its own account or for purposes of resale),
in the form of fixed retained yield or otherwise, an ownership interest in a
portion of the payments on the Mortgage Loans, (ii) the Master Servicer is
treated as having an ownership interest in the Mortgage Loans to the extent it
is paid (or retains) servicing compensation in an amount greater than
reasonable consideration for servicing the Mortgage Loans (see "Standard
Certificates--Recharacterization of Servicing Fees" above) and (iii)
Certificates are issued in two or more classes or subclasses representing the
right to non-pro-rata percentages of the interest and principal payments on the
Mortgage Loans.
In general, a holder of a Stripped Certificate will be considered to own
"stripped bonds" with respect to its pro rata share of all or a portion of the
principal payments on each Mortgage Loan and/or "stripped coupons" with respect
to its pro rata share of all or a portion of the interest payments on each
Mortgage Loan, including the Stripped Certificate's allocable share of the
servicing fees paid to the Master Servicer, to the extent that such fees
represent reasonable compensation for services rendered. See discussion above
under "Standard Certificates--Recharacterization of Servicing Fees". Although
not free from doubt, for purposes of reporting to Stripped Certificateholders,
the servicing fees will be allocated to the Stripped Certificates in proportion
to the respective entitlements to distributions of each class (or subclass) of
Stripped Certificates for the related period or periods. The holder of a
Stripped Certificate generally will be entitled to a deduction each year in
respect of the servicing fees, as described above under "Standard
Certificates--General", subject to the limitation described therein.
Code Section 1286 treats a stripped bond or a stripped coupon as an
obligation issued at an original issue discount on the date that such stripped
interest is purchased. Although the treatment of Stripped Certificates for
federal income tax purposes is not clear in certain respects at this time,
particularly where such Stripped Certificates are issued with respect to a
Mortgage Pool containing variable-rate Mortgage Loans, the Depositor has been
advised by counsel that (i) the Trust Fund will be treated as a grantor trust
under subpart E, Part 1 of subchapter J of the Code and not as an association
taxable as a corporation or a "taxable mortgage pool" within the meaning of
Code Section 7701(i), and (ii) each Stripped Certificate should be treated as a
single installment obligation for purposes of calculating original issue
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discount and gain or loss on disposition. This treatment is based on the
interrelationship of Code Section 1286, Code Sections 1272 through 1275, and
the OID Regulations. While under Code Section 1286 computations with respect to
Stripped Certificates arguably should be made in one of the ways described
below under "Taxation of Stripped--Certificates--Possible Alternative
Characterizations," the OID Regulations state, in general, that two or more
debt instruments issued by a single issuer to a single investor in a single
transaction should be treated as a single debt instrument for original issue
discount purposes. The Pooling Agreement requires that the Trustee make and
report all computations described below using this aggregate approach, unless
substantial legal authority requires otherwise.
Furthermore, Treasury regulations issued December 28, 1992 assume that a
Stripped Certificate will be treated as a single debt instrument issued on the
date it is purchased for purposes of calculating any original issue discount
and that the interest component of such a Stripped Certificate would be treated
as qualified stated interest under the OID Regulations. Further pursuant to
these final regulations the purchaser of such a Stripped Certificate will be
required to account for any discount as market discount rather than original
issue discount unless either (i) the initial discount with respect to the
Stripped Certificate was treated as zero under the de minimis rule of Code
Section 1273(a)(3), or (ii) no more than 100 basis points in excess of
reasonable servicing is stripped off the related Mortgage Loans. Any such
market discount would be reportable as described under "Material Federal Income
Tax Consequences for REMIC Certificates--Taxation of Regular
Certificates--Market Discount," without regard to the de minimis rule therein,
assuming that a prepayment assumption is employed in such computation.
Status of Stripped Certificates
No specific legal authority exists as to whether the character of the
Stripped Certificates, for federal income tax purposes, will be the same as
that of the Mortgage Loans. Although the issue is not free from doubt, counsel
has advised the Depositor that Stripped Certificates owned by applicable
holders should be considered to represent "real estate assets" within the
meaning of Code Section 856(c)(4)(A), "obligation[s] principally secured by an
interest in real property" within the meaning of Code Section 860G(a)(3)(A),
and "loans . . . secured by an interest in real property which is . . .
residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), and interest (including original issue discount) income
attributable to Stripped Certificates should be considered to represent
"interest on obligations secured by mortgages on real property" within the
meaning of Code Section 856(c)(3)(B), provided that in each case the Mortgage
Loans and interest on such Mortgage Loans qualify for such treatment.
Taxation of Stripped Certificates
Original Issue Discount. Except as described above under "General", each
Stripped Certificate will be considered to have been issued at an original
issue discount for federal income tax purposes. Original issue discount with
respect to a Stripped Certificate must be included in ordinary income as it
accrues, in accordance with a constant interest method that takes into account
the compounding of interest, which may be prior to the receipt of the cash
attributable to such income. Based in part on the OID Regulations and the
amendments to the original issue discount sections of the Code made by the 1986
Act, the amount of original issue discount required to be included in the
income of a holder of a Stripped Certificate (referred to in this discussion as
a "Stripped Certificateholder") in any taxable year likely will be computed
generally as described above under "Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Original Issue Discount" and
"--Variable Rate Regular Certificates". However, with the apparent exception of
a Stripped Certificate qualifying as a market discount obligation, as described
above under "General", the issue price of a Stripped Certificate will be the
purchase price paid by each holder thereof, and the stated redemption price at
maturity will include the aggregate amount of the payments, other than
qualified stated interest to be made on the Stripped Certificate to such
Stripped Certificateholder, presumably under the Prepayment Assumption.
If the Mortgage Loans prepay at a rate either faster or slower than that
under the Prepayment Assumption, a Stripped Certificateholder's recognition of
original issue discount will be either accelerated or decelerated and the
amount of such original issue discount will be either increased or decreased
depending on the relative interests in principal and interest on each Mortgage
Loan represented by such
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Stripped Certificateholder's Stripped Certificate. While the matter is not free
from doubt, the holder of a Stripped Certificate should be entitled in the year
that it becomes certain (assuming no further prepayments) that the holder will
not recover a portion of its adjusted basis in such Stripped Certificate to
recognize an ordinary loss equal to such portion of unrecoverable basis.
As an alternative to the method described above, the fact that some or all
of the interest payments with respect to the Stripped Certificates will not be
made if the Mortgage Loans are prepaid could lead to the interpretation that
such interest payments are "contingent" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to prepayable securities such as
the Stripped Certificates. However, if final regulations dealing with
contingent interest with respect to the Stripped Certificates apply the same
principles as the OID Regulations, such regulations may lead to different
timing of income inclusion that would be the case under the OID Regulations.
Furthermore, application of such principles could lead to the characterization
of gain on the sale of contingent interest Stripped Certificates as ordinary
income. Investors should consult their tax advisors regarding the appropriate
tax treatment of Stripped Certificates.
Sale or Exchange of Stripped Certificates. Sale or exchange of a Stripped
Certificate prior to its maturity will result in gain or loss equal to the
difference, if any, between the amount received and the Stripped
Certificateholder's adjusted basis in such Stripped Certificate, as described
above under "Material Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Sale or Exchange of Regular
Certificates". To the extent that a subsequent purchaser's purchase price is
exceeded by the remaining payments on the Stripped Certificates, such
subsequent purchaser will be required for federal income tax purposes to accrue
and report such excess as if it were original issue discount in the manner
described above. It is not clear for this purpose whether the assumed
prepayment rate that is to be used in the case of a Stripped Certificateholder
other than an original Stripped Certificateholder should be the Prepayment
Assumption or a new rate based on the circumstances at the date of subsequent
purchase.
Purchase of More Than One Class of Stripped Certificates. Where an
investor purchases more than one class of Stripped Certificates, it is
currently unclear whether for federal income tax purposes such classes of
Stripped Certificates should be treated separately or aggregated for purposes
of the rules described above.
Possible Alternative Characterizations. The characterizations of the
Stripped Certificates discussed above are not the only possible interpretations
of the applicable Code provisions. For example, the Stripped Certificateholder
may be treated as the owner of (i) one installment obligation consisting of
such Stripped Certificate's pro rata share of the payments attributable to
principal on each Mortgage Loan and a second installment obligation consisting
of such Stripped Certificate's pro rata share of the payments attributable to
interest on each Mortgage Loan, (ii) as many stripped bonds or stripped coupons
as there are scheduled payments of principal and/or interest on each Mortgage
Loan or (iii) a separate installment obligation for each Mortgage Loan,
representing the Stripped Certificate's pro rata share of payments of principal
and/or interest to be made with respect thereto. Alternatively, the holder of
one or more classes of Stripped Certificates may be treated as the owner of a
pro rata fractional undivided interest in each Mortgage Loan to the extent that
such Stripped Certificate, or classes of Stripped Certificates in the
aggregate, represent the same pro rata portion of principal and interest on
each such Mortgage Loan, and a stripped bond or stripped coupon (as the case
may be), treated as an installment obligation or contingent payment obligation,
as to the remainder. Final regulations issued on December 28, 1992 regarding
original issue discount on stripped obligations make the foregoing
interpretations less likely to be applicable. The preamble to those regulations
states that they are premised on the assumption that an aggregation approach is
appropriate for determining whether original issue discount on a stripped bond
or stripped coupon is de minimis, and solicits comments on appropriate rules
for aggregating stripped bonds and stripped coupons under Code Section 1286.
Because of these possible varying characterizations of Stripped
Certificates and the resultant differing treatment of income recognition,
Stripped Certificateholders are urged to consult their own tax advisors
regarding the proper treatment of Stripped Certificates for federal income tax
purposes.
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FEDERAL INCOME TAX CONSEQUENCES FOR FASIT CERTIFICATES
If and to the extent set forth in the Prospectus Supplement relating to a
particular Series of Certificates, an election may be made to treat the related
Trust Fund or one or more segregated pools of assets therein as one or more
financial asset securitization investment trusts ( "FASITs") within the meaning
of Code Section 860L(a). Qualification as a FASIT requires ongoing compliance
with certain conditions. With respect to each series of FASIT Certificates,
O'Melveny & Myers LLP, counsel to the Depositor, will advise the Depositor that
in the firm's opinion, assuming (i) the making of such an election, (ii)
compliance with the Pooling Agreement and (iii) compliance with any changes in
the law, including any amendments to the Code or applicable Treasury
Regulations thereunder, each FASIT Pool will qualify as a FASIT. In such case,
the Regular Certificates will be considered to be "regular interests" in the
FASIT and will be treated for federal income tax purposes as if they were newly
originated debt instruments, and the Residual Certificate will be considered
the "ownership interest" in the FASIT Pool. The Prospectus Supplement for each
series of Certificates will indicate whether one or more FASIT elections will
be made with respect to the related Trust Fund.
FASIT treatment has become available pursuant to recently enacted
legislation, and no Treasury Regulations have as yet been issued detailing the
circumstances under which a FASIT election may be made or the consequences of
such an election. If a FASIT election is made with respect to any Trust Fund or
as to any segregated pool of assets therein, the related Prospectus Supplement
will describe the Federal income tax consequences of such election.
REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
The Trustee will furnish, within a reasonable time after the end of each
calendar year, to each Standard Certificateholder or Stripped Certificateholder
at any time during such year, such information (prepared on the basis described
above) as the Trustee deems to be necessary or desirable to enable such
Certificateholders to prepare their federal income tax returns. Such
information will include the amount of original issue discount accrued on
Certificates held by persons other than Certificateholders exempted from the
reporting requirements. The amounts required to be reported by the Trustee may
not be equal to the proper amount of original issue discount required to be
reported as taxable income by a Certificateholder, other than an original
Certificateholder that purchased at the issue price. In particular, in the case
of Stripped Certificates, unless provided otherwise in the applicable
Prospectus Supplement, such reporting will be based upon a representative
initial offering price of each class of Stripped Certificates. The Trustee will
also file such original issue discount information with the Service. If a
Certificateholder fails to supply an accurate taxpayer identification number or
if the Secretary of the Treasury determines that a Certificateholder has not
reported all interest and dividend income required to be shown on his federal
income tax return, 31% backup withholding may be required in respect of any
reportable payments, as described above under "Material Federal Income Tax
Consequences for REMIC Certificates--Backup Withholding".
TAXATION OF CERTAIN FOREIGN INVESTORS
To the extent that a Certificate evidences ownership in Mortgage Loans
that are issued on or before July 18, 1984, interest or original issue discount
paid by the person required to withhold tax under Code Section 1441 or 1442 to
nonresident aliens, foreign corporations, or other Non-U.S. Persons generally
will be subject to 30% United States withholding tax, or such lower rate as may
be provided for interest by an applicable tax treaty. Accrued original issue
discount recognized by the Standard Certificateholder or Stripped
Certificateholder on original issue discount recognized by the Standard
Certificateholder or Stripped Certificateholders on the sale or exchange of
such a Certificate also will be subject to federal income tax at the same rate.
Treasury regulations provide that interest or original issue discount paid
by the Trustee or other withholding agent to a Non-U.S. Person evidencing
ownership interest in Mortgage Loans issued after July 18, 1984 will be
"portfolio interest" and will be treated in the manner, and such persons will
be subject to the same certification requirements, described above under
"Material Federal Income Tax Consequences for REMIC Certificates--Taxation of
Certain Foreign Investors--Regular Certificates".
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STATE AND OTHER TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Material
Federal Income Tax Consequences", potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of
the Offered Certificates. State tax law may differ substantially from the
corresponding federal law, and the discussion above does not purport to
describe any aspect of the tax laws of any state or other jurisdiction.
Therefore, prospective investors should consult their own tax advisors with
respect to the various tax consequences of investments in the Offered
Certificates.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain requirements on employee benefit plans subject to ERISA ("ERISA
Plans") and prohibits certain transactions between ERISA Plans and persons who
are "parties in interest" (as defined under ERISA) with respect to assets of
such Plans. Section 4975 of the Code prohibits a similar set of transactions
between certain plans ("Code Plans," and together with ERISA Plans, "Plans")
and persons who are "disqualified persons" (as defined in the Code) with
respect to Code Plans. Certain employee benefit plans, such as governmental
plans and church plans (if no election has been made under Section 410(d) of
the Code) are not subject to the requirements of ERISA or Section 4975 of the
Code, and assets of such plans may be invested in Certificates, subject to the
provisions of other applicable federal and state law. Any such governmental or
church plan which is qualified under Section 401 (a) of the Code and exempt
from taxation under Section 501(a) of the Code is, however, subject to the
prohibited transaction rules set forth in Section 503 of the Code. Investments
by ERISA Plans are subject to ERISA's general fiduciary requirements, including
the requirement of investment prudence and diversification and the requirement
that investments be made in accordance with the documents governing the ERISA
Plan. Before investing in a Certificate, an ERISA Plan fiduciary should
consider, among other factors, whether to do so is appropriate in view of the
overall investment policy and liquidity needs of the ERISA Plan. Such fiduciary
should especially consider the sensitivity of the investments to the rate of
principal payments (including prepayments) on the Mortgage Loans, as discussed
in the Prospectus Supplement related to a Series.
PROHIBITED TRANSACTIONS
Section 406 of ERISA and Section 4975 of the Code prohibit parties in
interest with respect to ERISA Plans and disqualified persons with respect to
the Code Plans from engaging in certain transactions involving such Plans or
"plan assets" of such Plans, unless a statutory or administrative exemption
applies to the transaction. Section 4975 of the Code and Sections 502(i) and
502(l) of ERISA provide for the imposition of excise taxes and civil penalties
on certain persons that engage or participate in such prohibited transactions.
The Depositor, the Underwriter, the Master Servicer, the Special Servicer, if
any, or the Trustee or certain affiliates thereof may be considered or may
become parties in interest or disqualified persons with respect to a Plan. If
so, the acquisition or holding of Certificates by, on behalf of or with "plan
assets" of such Plan may be considered to give rise to a "prohibited
transaction" within the meaning of ERISA and/or Section 4975 of the Code,
unless an administrative exemption described below or some other exemption is
available.
Further, if the underlying assets included in a Trust Fund were deemed to
constitute "plan assets," certain transactions involved in the operation of the
Trust Fund may be deemed to constitute prohibited transactions under ERISA
and/or the Code. Neither ERISA nor Section 4975 of the Code defines the term
"plan assets."
Special caution should be exercised before assets of a Plan are used to
purchase a Certificate if, with respect to such assets, the Depositor, the
Underwriter, the Master Servicer, the Special Servicer, if any, or the Trustee
or an affiliate thereof either (a) has discretionary authority or control with
respect to the investment or management of such assets, including the
purchasing or sale of securities or other property, or (b) has authority or
responsibility to give, or regularly gives, investment advice with respect to
such assets pursuant to an agreement or understanding that such advice will
serve as a primary basis for investment decisions with respect to such assets
and that such advice will be based on the particular needs of the Plan.
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The U.S. Department of Labor (the "Department") has issued regulations
(the "Plan Asset Regulations") concerning whether a Plan's assets will be
considered to include an undivided interest in each of the underlying assets of
an entity (such as the Trust Fund) for purposes of the general fiduciary
responsibility provisions of ERISA and the prohibited transaction provisions of
ERISA and Section 4975 of the Code, if the Plan acquires an "equity interest"
(such as a Certificate) in an entity.
Certain exceptions are provided in the Plan Asset Regulations whereby an
investing Plan's assets would be considered merely to include its interest in
the Certificates instead of being deemed to include an undivided interest in
each of the underlying assets of the Trust Fund. However, it cannot be
predicted in advance, nor can there be a continuing assurance whether such
exceptions may be applicable, because of the factual nature of certain of the
rules set forth in the Regulations. For example, one of the exceptions in the
Plan Asset Regulations states that the underlying assets of an entity will not
be considered "plan assets" if less than 25% of the value of each class of
equity interests is held by "Benefit Plan Investors," which are defined as
ERISA Plans, Code Plans, individual retirement accounts and employee benefit
plans not subject to ERISA (for example, governmental plans). This exemption is
tested immediately after each acquisition of an equity interest in the entity
whether upon initial issuance or in the secondary market. Absent any
restricrtions on purchase or transfer, it cannot be assured that benefit plan
investors will own less than 25% of each class of Certificates.
Pursuant to the Plan Asset Regulations, if the assets of the Trust Fund
were deemed to be "plan assets" by reason of the investment of assets of a Plan
in any Certificates, the "plan assets" of such Plan would include an undivided
interest in the Mortgage Loans, the mortgages underlying the Mortgage Loans and
any other assets held in the Trust Fund. Therefore, because the Mortgage Loans
and other assets held in the Trust Fund may be deemed to be "plan assets" of
each Plan that purchases Certificates, in the absence of an exemption, the
purchase, sale or holding of Certificates of any Series or Class by or with the
assets of a Plan could result in a prohibited transaction and the imposition of
civil penalties or excise taxes. Depending on the relevant facts and
circumstances, certain prohibited transaction exemptions may apply to the
purchase, sale or holding of Certificates of any Series or Class by a Plan--for
example, Prohibited Transaction Class Exemption ("PTCE") 95-60, which exempts
certain transactions between insurance company general accounts and parties in
interest; PTCE 91-38, which exempts certain transactions between bank
collective investment funds and parties in interest; PTCE 90-1, which exempts
certain transactions between insurance company pooled separate accounts and
parties in interest; or PTCE 84-14, which exempts certain transactions
effected on behalf of a Plan by a "qualified professional asset manager."
There can be no assurance that any of these exemptions will apply with
respect to any Plan's investment in any Certificates or, even if an exemption
were deemed to apply, that any exemption would apply to all prohibited
transactions that may occur in connection with such investment. Also, the
Department has issued individual administrative exemptions from application of
certain prohibited transaction restrictions of ERISA and the Code to most
underwriters of mortgage-backed securities (each, an "Underwriter's
Exemption"). Such an Underwriter's Exemption can only apply to mortgage-backed
securities which, among other conditions, are sold in an offering with respect
to which such an underwriter serves as the sole or a managing underwriter, or
as a selling or placement agent. If such an Underwriter's Exemption might be
applicable to a Series of Certificates, the related Prospectus Supplement will
refer to such possibility. Further, the related Prospectus Supplement may
provide that certain Classes or Series of Certificates may not be purchased by,
or transferred to, Plans or may only be purchased by, or transferred to, an
insurance company for its general account under circumstances that would not
result in a prohibited transaction.
ANY FIDUCIARY OR OTHER PLAN INVESTOR WHO PROPOSES TO INVEST "PLAN ASSETS"
OF A PLAN IN CERTIFICATES OF ANY SERIES OR CLASS SHOULD CONSULT WITH ITS
COUNSEL WITH RESPECT TO THE POTENTIAL CONSEQUENCES UNDER ERISA AND SECTION 4975
OF THE CODE OF ANY SUCH ACQUISITION AND OWNERSHIP OF SUCH CERTIFICATES.
UNRELATED BUSINESS TAXABLE INCOME-RESIDUAL INTERESTS
The purchase of a Certificate evidencing an interest in the Residual
Interest in a Series that is treated as a REMIC by any employee benefit or
other plan that is exempt from taxation under Code Section
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501(a), including most varieties of Plans, may give rise to "unrelated business
taxable income" as described in Code Sections 511-515 and 860E. Further, prior
to the purchase of an interest in a Residual Interest, a prospective transferee
may be required to provide an affidavit to a transferor that it is not, nor is
it purchasing an interest in a Residual Interest on behalf of, a "Disqualified
Organization," which term as defined above includes certain tax-exempt entities
not subject to Code Section 511, such as certain governmental plans, as
discussed above under "MATERIAL FEDERAL INCOME TAX CONSEQUENCES--Taxation of
Holders of Residual Certificates" and "--Restrictions on Ownership and Transfer
of Residual Certificates."
DUE TO THE COMPLEXITY OF THESE RULES AND THE PENALITIES IMPOSED UPON
PERSONS INVOLVED IN PROHIBITED TRANSACTIONS, IT IS PARTICULARLY IMPORTANT THAT
INDIVIDUALS RESPONSIBLE FOR INVESTMENT DECISIONS WITH RESPECT TO ERISA PLANS
AND CODE PLANS CONSULT WITH THEIR COUNSEL REGARDING THE CONSEQUENCES UNDER
ERISA AND/OR THE CODE OF THEIR ACQUISITION AND OWNERSHIP OF CERTIFICATES.
THE SALE OF CERTIFICATES TO A PLAN IS IN NO RESPECT A REPRESENTATION BY THE
DEPOSITOR, THE APPLICABLE UNDERWRITER OR ANY OTHER SERVICE PROVIDER WITH
RESPECT TO THE CERTIFICATES, SUCH AS THE TRUSTEE, THE MASTER SERVICER AND THE
SPECIAL SERVICER, IF ANY, THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL
REQUIREMENTS WITH RESPECT TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR
PLAN OR THAT THIS INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY OR ANY
PARTICULAR PLAN.
LEGAL INVESTMENT
The Offered Certificates will constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended
("SMMEA"), only if so specified in the related Prospectus Supplement. The
appropriate characterization of those Certificates not qualifying as "mortgage
related securities" ("Non-SMMEA Certificates") under various legal investment
restriction, and thus the ability of investors subject to these restrictions to
purchase such Certificates, may be subject to significant interpretive
uncertainties. Accordingly, investors whose investment authority is subject to
legal restrictions should consult their own legal advisors to determine whether
and to what extent the Non-SMMEA Certificates constitute legal investments for
them.
Generally, only classes of Offered Certificates that (i) are rated in one
of the two highest rating categories by one or more Rating Agencies, (ii) are
part of a series evidencing interests in a Trust Fund consisting of loans
originated by certain types of Originators as specified in SMMEA and (iii) are
part of a series evidencing interests in a Trust Fund consisting of mortgage
loans each of which is secured by a first lien on (a) a single parcel of real
estate on which is located a residential and/or mixed residential and
commercial structure or (b) one or more parcels of real estate upon which are
located one or more commercial structures will be "mortgage related securities"
for purposes of SMMEA. As "mortgage related securities," such classes will
constitute legal investments, for persons, trusts, corporations, partnerships,
associations, business trusts and business entities (including depository
institutions, insurance companies, trustees and pension funds) created pursuant
to or existing under the laws of the United States or of any state (including
the District of Columbia and Puerto Rico) whose authorized investments are
subject to state regulation, to the same extent that obligations issued by or
guaranteed as to principal and interest by the United States or any agency or
instrumentality thereof constitute legal investments for such entities under
applicable law. Under SMMEA, a number of states enacted legislation on or prior
to the October 3, 1991 cut-off for such enactments limiting to various extends
the ability of certain entities (in particular, insurance companies) to invest
in "mortgage related securities," secured by liens on residential, or mixed
residential and commercial properties, in most cases by requiring the affected
investors to rely solely upon existing state law, and not SMMEA. Pursuant to
Section 347 of the Riegle Community Development and Regulatory Improvement Act
of 1994, states are authorized to enact legislation, on or before September 23,
2001, prohibiting or restricting the purchase, holding or investment by state
regulated entities in certificates satisfying the rating and qualified
Originator requirements for "mortgage related securities," but evidencing
interests in a Trust Fund consisting, in whole or in part, of first liens on
one or more parcels of real estate upon which are located one or more
commercial structures. Accordingly, the investors affected by such legislation
will be authorized to invest in Offered Certificates qualifying as "mortgage
related securities" only to the extent provided in such legislation.
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SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in such securities, and
national banks may purchase such securities for their own account without
regard to the limitations generally applicable to investment securities set
forth in 12 U.S.C. Section 24 (Seventh), subject in each case to such
regulations as the applicable federal regulatory authority may prescribe. In
this connection, effective December 31, 1996, the Office of the Comptroller of
the Currency (the "OCC") has amended 12 C.F.R. Part 1 to authorize national
banks to purchase and sell for their own account, without limitation as to a
percentage of the bank's capital and surplus (but subject to compliance with
certain general standards in 12 C.F.R. Section 1.5 concerning "safety and
soundness" and retention of credit information), certain "Type IV securities,"
defined in 12 C.F.R. Section 1.2(1) to include certain "commercial
mortgage-related securities" and "residential mortgage-related securities." As
so defined, "commercial mortgage-related security" and "residential
mortgage-related security" mean, in relevant part, "mortgage related security"
within the meaning of SMMEA, provided that, in the case of a "commercial
mortgage-related security," it "represents ownership of a promissory note or
certificate of interest or participation that is directly secured by a first
lien on one or more parcels of real estate upon which one or more commercial
structures are located and that is fully secured by interests in a pool of
loans to numerous obligors." In the absence of any rule or administrative
interpretation by the OCC defining the term "numerous obligors," no
representation is made as to whether any class of Certificates will qualify as
"commercial mortgage-related securities," and thus as "Type IV securities," for
investment by national banks. federal credit unions should review NCUA Letter
to Credit Unions No. 96, as modified by Letter to Credit Unions No. 108, which
includes guidelines to assist federal credit unions in making investment
decisions for mortgage related securities. The NCUA has adopted rules, codified
as 12 C.F.R. Section Section 703.5(f)-(k), which prohibit federal credit
unions from investing in certain mortgage related securities (including
securities such as certain classes of the Offered Certificates), except under
limited circumstances. Effective January 1, 1998, the NCUA has amended its
rules governing investments by federal credit unions at 12 C.F.R. Part 703; the
revised rules will permit investments in "mortgage related securities" under
certain limited circumstances, but will prohibit investments in stripped
mortgage related securities, residual interests in mortgage related securities,
and commercial mortgage related securities, unless the credit union has
obtained written approval from the NCUA to participate in the "investment pilot
program" described in 12 C.F.R. Section 703.140.
All depository institutions considering an investment in the Offered
Certificates should review the "Supervisory Policy Statement on Securities
Activities" dated January 28, 1992, as revised April 15, 1994 (the "Policy
Statement") of the Federal Financial Institutions Examination Council (the
"FFIEC"). The Policy Statement, which has been adopted by the Board of
Governors of the Federal Reserve System, the OCC, the Federal Depository
Insurance Company and the Office of Thrift Supervision, and by the NCUA (with
certain modifications), prohibits depository institutions from investing in
certain "high-risk mortgage securities" (including securities such as certain
classes of the Offered Certificates), except under limited circumstances, and
sets forth certain investment practices deemed to be unsuitable for regulated
institutions. On September 29, 1997, the FFEIC released for public comment a
proposed "Supervisory Policy Statement on Investment Securities and End-User
Derivatives Activities" (the "1997 Statement"), which would replace the Policy
Statement. As proposed, the 1997 Statement would delete the specific "high-risk
mortgage securities" tests, and substitute general guidelines which depository
institutions should follow in managing risks (including market, credit,
liquidity, operational (transactional), and legal risks) applicable to all
securities (including mortgage pass-through securities and mortgage-derivative
products) used for investment purposes.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any class of
the Offered Certificates, as certain classes may be deemed unsuitable
investments, or may otherwise be restricted, under such rules, policies or
guidelines (in certain instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but
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not limited to, "prudent investor" provisions, percentage-of-assets limits,
provisions which may restrict or prohibit investment in securities which are
not "interest bearing" or "income paying," and, with regard to any class of the
Offered Certificates issued in book-entry form, provisions which may restrict
or prohibit investments in securities which are issued in book-entry form.
Except as to the status of certain classes of Offered Certificates as
"mortgage related securities," no representations are made as to the proper
characterization of any class of Offered Certificates for legal investment
purposes, financial institution regulatory purposes, or other purposes, or as
to the ability of particular investors to purchase any class of Offered
Certificates under applicable legal investment restrictions. These
uncertainties (and any unfavorable future determinations concerning legal
investment or financial institution regulatory characteristics of the Offered
Certificates) may adversely affect the liquidity of any class of Offered
Certificates.
Accordingly, all investors whose investment activities are subject to
legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their own legal advisors
in determining whether and to what extent the Offered Certificates of any class
constitute legal investments or are subject to investment, capital or other
restrictions.
PLAN OF DISTRIBUTION
The Depositor may sell the Certificates offered hereby in Series either
directly or through underwriters. The related Prospectus Supplement or
Prospectus Supplements for each Series will describe the terms of the offering
for that Series and will state the public offering or purchase price of each
Class of Certificates of such Series, or the method by which such price is to
be determined, and the net proceeds to the Depositor from such sale.
If the sale of any Certificates is made pursuant to an underwriting
agreement pursuant to which one or more underwriters agree to act in such
capacity, such Certificates will be acquired by such underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices to be determined at the time of sale or at the time of
commitment therefor. Firm commitment underwriting and public reoffering by
underwriters may be done through underwriting syndicates or through one or more
firms acting alone.
The specific managing underwriter or underwriters, if any, with respect to
the offer and sale of a particular Series of Certificates will be set forth on
the cover of the Prospectus Supplement related to such Series and the members
of the underwriting syndicate, if any, will be named in such Prospectus
Supplement. The Prospectus Supplement will describe any discounts and
commissions to be allowed or paid by the Depositor to the underwriters, any
other items constituting underwriting compensation and any discounts and
commissions to be allowed or paid to the dealers. The obligations of the
underwriters will be subject to certain conditions precedent. The underwriters
with respect to a sale of any Class of Certificates will generally be obligated
to purchase all such Certificates if any are purchased. Pursuant to each such
underwriting agreement, the Depositor will indemnify the related underwriters
against certain civil liabilities, including liabilities under the 1933 Act.
If any Certificates are offered other than through underwriters pursuant
to such underwriting agreements, the related Prospectus Supplement or
Prospectus Supplements will contain information regarding the terms of such
offering and any agreements to be entered into in connection with such
offering.
Purchasers of Certificates, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the 1933 Act in connection with reoffers and sales by them of
Certificates. Certificateholders should consult with their legal advisors in
this regard prior to any such reoffer and sale.
LEGAL MATTERS
Certain legal matters relating to the Certificates offered hereby will be
passed upon for the Depositor by O'Melveny & Myers LLP, New York, New York, and
for the Underwriters as specified in the related Prospectus Supplement.
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FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each Series of
Certificates and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related Series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement.
RATING
It is a condition to the issuance of any Class of Offered Certificates
that they shall have been rated not lower than investment grade, that is. in
one of the four highest categories, by a Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by certificateholders of all distributions on the underlying mortgage
loans. These ratings address the structural, legal and issuer-related aspects
associated with such certificates. the nature of the underlying mortgage loans
and the credit quality of the guarantor, if any. Ratings on mortgage
pass-through certificates do not represent any assessment of the likelihood of
principal prepayments by mortgagors or of the degree by which such prepayments
might differ from those originally anticipated. As a result, certificateholders
might suffer a lower than anticipated yield, and, in addition. holders of
stripped interest certificates in extreme cases might fail to recoup the
initial investments.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning
rating organization. Each security rating should be evaluated independently of
any other security, rating.
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INDEX OF SIGNIFICANT DEFINITIONS
DEFINITIONS PAGE
- ----------- ----
1933 Act................................................................... 2
1986 Act.................................................................. 53
ACMs...................................................................... 45
Agreement.................................................................. 6
Bankruptcy Code........................................................... 39
CERCLA.................................................................15, 44
Certificateholders........................................................ 17
Certificates............................................................... 1
Classes.................................................................... 1
Closing Date.............................................................. 23
Code...................................................................... 51
Code Plans................................................................ 77
Collection Account........................................................ 18
Commission................................................................. 2
Compound Interest Certificates............................................ 54
Credit Enhancement........................................................ 32
Credit Enhancement Limitations............................................ 10
Cut-off Date.............................................................. 18
Department................................................................ 78
Depositor.................................................................. 1
Disqualified Organization................................................. 64
Distribution Account....................................................... 5
Distribution Date......................................................... 17
EPA....................................................................... 46
ERISA..................................................................... 77
ERISA Plans............................................................... 77
Escrow Account............................................................ 25
Escrow Payments........................................................... 25
Event of Default.......................................................... 30
Fannie Mae................................................................ 17
FASIT..................................................................... 51
FHLMC..................................................................... 17
Forfeiture Laws........................................................... 50
Form 8-K.................................................................. 23
Garn-St Germain Act....................................................... 46
GNMA...................................................................... 17
Hazardous Materials....................................................... 45
Installment Contracts..................................................... 22
Lead Paint Act............................................................ 46
LEGAL INVESTMENT........................................................... 8
Master Servicer........................................................... 25
Master Servicer Remittance Date........................................... 18
Modifications, Waivers and Amendments..................................... 26
Mortgage.................................................................. 22
Mortgage Loan Groups...................................................... 23
Mortgage Loan Schedule.................................................... 23
Mortgage Loan Seller...................................................... 24
Mortgage Loans............................................................. 1
Mortgage Pool.............................................................. 1
Mortgaged Property........................................................ 22
NCUN...................................................................... 48
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Note...................................................................... 22
Offered Certificates....................................................... 1
Pass-Through Rate.......................................................... 2
Permitted Investments..................................................... 19
Plans..................................................................... 77
Policy Statement.......................................................... 80
Prepayment Assumption..................................................... 55
Property Protection Expenses.............................................. 18
Rating Agency............................................................. 16
reasonably equivalent value............................................... 39
Registration Statement..................................................... 2
Regular Certificateholder................................................. 54
REITs..................................................................... 23
Relief Act................................................................ 47
REMIC...................................................................... 1
REMIC Regulations......................................................... 51
REO Account............................................................... 18
Reserve Account........................................................... 17
Reserve Fund.............................................................. 33
SBJPA of 1996............................................................. 52
Senior Certificates....................................................... 32
Series..................................................................... 1
Service................................................................... 53
SMMEA..................................................................... 79
S&P....................................................................... 19
Special Servicer........................................................... 4
Special Servicing Fee..................................................... 28
Specially Serviced Mortgage Loans......................................... 25
Startup Day............................................................... 52
Stripped Certificates..................................................... 70
Subordinate Certificates.................................................. 32
Title V................................................................... 48
Title VIII................................................................ 48
Trust Fund............................................................. 1, 16
Trustee................................................................... 21
USTs...................................................................... 46
Voting Rights............................................................. 15
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===============================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
DEPOSITOR OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE DEPOSITOR SINCE SUCH DATE.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Available Information ................................................. S-5
Incorporation of Certain Information by Reference ..................... S-5
Executive Summary ..................................................... S-6
Summary of Terms ...................................................... S-17
Risk Factors .......................................................... S-25
Description of the Mortgage Pool ...................................... S-35
Mortgage Loan Sellers ................................................. S-64
Description of The Certificates ....................................... S-67
Yield And Maturity Considerations ..................................... S-82
Master Servicer and Special Servicer .................................. S-91
The Pooling And Servicing Agreement ................................... S-91
Material Federal Income Tax Consequences .............................. S-107
ERISA Considerations .................................................. S-108
Legal Investment ...................................................... S-111
Plan Of Distribution .................................................. S-112
Use Of Proceeds ....................................................... S-112
Legal Matters ......................................................... S-112
Ratings ............................................................... S-112
Index of Significant Definitions ...................................... S-114
Annex A -- Loan Characteristics
Annex B -- Additional Multifamily Loan Characteristics
Annex C -- Structural and Collateral Term Sheet
Annex D -- Affiliated Borrowers
Annex E -- Statement to Certificateholders
PROSPECTUS
Prospectus Supplement ................................................. 2
Additional Information ................................................ 2
Incorporation of Certain Information by Reference ..................... 2
Reports ............................................................... 3
Summary of Prospectus ................................................. 7
Risk Factors .......................................................... 12
The Depositor ......................................................... 19
Use of Proceeds ....................................................... 19
Description of the Certificates ....................................... 19
The Mortgage Pools .................................................... 25
Servicing of the Mortgage Loans ....................................... 28
Credit Enhancement .................................................... 35
Certain Legal Aspects of the Mortgage Loans ........................... 38
Material Federal Income Tax Consequences .............................. 54
State and Other Tax Considerations .................................... 80
ERISA Considerations .................................................. 80
Legal Investment ...................................................... 82
Plan of Distribution .................................................. 84
Legal Matters ......................................................... 84
Financial Information ................................................. 85
Rating ................................................................ 85
Index of Significant Definitions ...................................... 86
===============================================================================
===============================================================================
$1,018,589,000
COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES,
SERIES 1998-C1
PRUDENTIAL SECURITIES SECURED
FINANCING CORP.
-----------------------------------
PROSPECTUS SUPPLEMENT
-----------------------------------
PRUDENTIAL SECURITIES INCORPORATED
CIBC OPPENHEIMER CORP.
AUGUST , 1998
===============================================================================
