<PAGE>
Filed Pursuant to Rule 424(b)(3)
Registration File No.: 333-50445
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 31, 1998)
$1,016,619,000 (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 21 Classes of Certificates, designated as
the Class A-1A1 Certificates, Class A-1A2 Certificates, Class A-1A3
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-1A1, Class
A-1A2, Class A-1A3, 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>
SCHEDULED FINAL WEIGHTED
INITIAL CERTIFICATE PASS-THROUGH RATINGS DISTRIBUTION AVERAGE LIFE
CLASS BALANCE (1) RATE MOODY'S/S&P DATE(2) (YEARS)
- ------------- ------------------- -------------- ------------- ------------------ --------------
<S> <C> <C> <C> <C> <C>
Class A-1A1 .. $ 74,855,000 6.105% Aaa/AAA November 15, 2002 2.312
- ------------- ------------------- -------------- ------------- ------------------ --------------
Class A-1A2 .. $ 73,406,000 6.172% Aaa/AAA October 15, 2004 5.128
- ------------- ------------------- -------------- ------------- ------------------ --------------
Class A-1A3 .. $109,787,000 6.350% Aaa/AAA September 15, 2007 7.920
- ------------- ------------------- -------------- ------------- ------------------ --------------
Class A-1B.... $385,568,000 6.506% Aaa/AAA July 15, 2008 9.503
- ------------- ------------------- -------------- ------------- ------------------ --------------
Class A-2MF .. $174,842,000 6.455% Aaa/AAA July 15, 2008 9.570
- ------------- ------------------- -------------- ------------- ------------------ --------------
Class B....... $ 57,438,000 6.649% Aa2/AA July 15, 2008 9.900
- ------------- ------------------- -------------- ------------- ------------------ --------------
Class C....... $ 63,181,000 6.742% A2/A May 15, 2010 11.081
- ------------- ------------------- -------------- ------------- ------------------ --------------
Class D....... $ 60,310,000 7.285%(3) Baa2/BBB January 15, 2013 13.170
- ------------- ------------------- -------------- ------------- ------------------ --------------
Class E....... $ 17,232,000 7.400%(4) 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 D Certificates accrue interest at
the Weighted Average Net Mortgage Rate less 0.115%.
(4) Initial Pass-Through Rate. The Class E Certificates accrue interest at
the Weighted Average Net Mortgage Rate.
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 $1,029,406,000 plus, with respect to the
Class A-1A1, Class A-1A2, Class A-1A3, 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 12, 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
25 properties
$75,673,936
6.6% of total
PENNSYLVANIA
12 properties
$38,380,408
3.3% of total
NEW YORK
16 properties
$70,717,153
6.2% of total
NEW HAMPSHIRE
1 property
$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
0.6% 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
4.3% 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 40 Mortgage
Loans, representing approximately 17.87% 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 82.13% 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-six 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 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-1A1, Class A-1A2, Class A-1A3, 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") are principal and
interest certificates and, the Class A-EC and the Class N-2 Certificates are
interest only certificates and 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-1A1, Class A-1A2, Class A-1A3, 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
S-3
<PAGE>
to such rights of the holders 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-four of the
Mortgage Loans, having aggregate principal balances as of the Cut-off Date
representing approximately 32.51% 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. Forty of the Mortgage Loans, having aggregate
principal balances as of the Cut-off Date representing approximately 21.51%
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 in
amounts equal to or greater than the amounts payable under the related
promissory note on each such date (or, in the case of the ARD Loans, through
the related Anticipated Repayment Dates, including prepayment in full on
their related Anticipated Repayment Dates) and upon satisfaction of certain
other conditions. Four of the Mortgage Loans, having aggregate principal
balances as of the Cut-off Date representing approximately 1.88% 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 casualty 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 particularly when 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) in reverse sequential order, until the
Certificate Balances thereof are reduced to zero, and then among the Class
A-1A1, Class
S-4
<PAGE>
A-1A2, Class A-1A3, 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-1A1, Class A-1A2, Class A-1A3, 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-1A1, Class
A-1A2, Class A-1A3, 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. See the "Index of Significant
Definitions" herein and in the Prospectus.
<TABLE>
<CAPTION>
INITIAL APPROXIMATE
CERTIFICATE APPROXIMATE PERCENTAGE OF
BALANCE OR RATINGS PERCENTAGE OF INITIAL SUBORDINATED
CLASS NOTIONAL AMOUNT MOODY'S/S&P POOL BALANCE SECURITIES
- --------------- --------------- ------------- --------------------- ---------------
<S> <C> <C> <C> <C>
Offered Certificates
- --------------------------------------------------------------------------------------
Class A-1A1 $ 74,855,000 Aaa/AAA 6.52% 28.75%
- --------------- --------------- ------------- --------------------- ---------------
Class A-1A2 $ 73,406,000 Aaa/AAA 6.39% 28.75%
- --------------- --------------- ------------- --------------------- ---------------
Class A-1A3 $ 109,787,000 Aaa/AAA 9.56% 28.75%
- --------------- --------------- ------------- --------------------- ---------------
Class A-1B $ 385,568,000 Aaa/AAA 33.56% 28.75%
- --------------- --------------- ------------- --------------------- ---------------
Class A-2MF $ 174,842,000 Aaa/AAA 15.22% 28.75%
- --------------- --------------- ------------- --------------------- ---------------
Class B $ 57,438,000 Aa2/AA 5.00% 23.75%
- --------------- --------------- ------------- --------------------- ---------------
Class C $ 63,181,000 A2/A 5.50% 18.25%
- --------------- --------------- ------------- --------------------- ---------------
Class D $ 60,310,000 Baa2/BBB 5.25% 13.00%
- --------------- --------------- ------------- --------------------- ---------------
Class E $ 17,232,000 Baa3/BBB- 1.50% 11.50%
- --------------- --------------- ------------- --------------------- ---------------
Private Certificates (not offered hereby)
- --------------------------------------------------------------------------------------
Class A-EC(1) $1,148,733,684 Aaa/AAAr N/A N/A
- --------------- --------------- ------------- --------------------- ---------------
Class F $ 25,848,000 Ba1/BB+ 2.25% 9.25%
- --------------- --------------- ------------- --------------------- ---------------
Class G $ 28,719,000 NR(2)/BB+ 2.50% 6.75%
- --------------- --------------- ------------- --------------------- ---------------
Class H $ 8,617,000 Ba2/BB 0.75% 6.00%
- --------------- --------------- ------------- --------------------- ---------------
Class J $ 11,488,000 Ba3/NR(2) 1.00% 5.00%
- --------------- --------------- ------------- --------------------- ---------------
Class K $ 17,232,000 NR(2)/B+ 1.50% 3.50%
- --------------- --------------- ------------- --------------------- ---------------
Class L $ 14,360,000 B2/NR(2) 1.25% 2.25%
- --------------- --------------- ------------- --------------------- ---------------
Class M $ 8,617,000 B3/NR(2) 0.75% 1.50%
- --------------- --------------- ------------- --------------------- ---------------
Class N-1(3) $ 17,233,684 NR(2)/NR(2) 1.50% N/A
- --------------- --------------- ------------- --------------------- ---------------
Class N-2(4) $ 17,233,684 NR(2)/NR(2) N/A N/A
- --------------- --------------- ------------- --------------------- ---------------
</TABLE>
- ------------
(1) Interest only strip with Notional Balance equal to the aggregate of the
Certificate Balances of Classes A-1A1 through N-1.
(2) Rating not obtained by Depositor from such Rating Agency.
(3) Principal only certificates.
(4) 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-1A1 6.105% 2.312 9/1998 -11/2002
--------------- ----------------- ---------------- ------------------
Class A-1A2 6.172% 5.128 11/2002 -10/2004
--------------- ----------------- ---------------- ------------------
Class A-1A3 6.350% 7.920 10/2004 -9/2007
--------------- ----------------- ---------------- ------------------
Class A-1B 6.506% 9.503 9/2007 -7/2008
--------------- ----------------- ---------------- ------------------
Class A-2MF 6.455% 9.570 4/2005 -7/2008
--------------- ----------------- ---------------- ------------------
Class B 6.649% 9.900 7/2008 -7/2008
--------------- ----------------- ---------------- ------------------
Class C 6.742% 11.081 7/2008 -5/2010
--------------- ----------------- ---------------- ------------------
Class D 7.285%(2) 13.170 5/2010 -1/2013
--------------- ----------------- ---------------- ------------------
Class E 7.400%(3) 14.400 1/2013 -1/2013
--------------- ----------------- ---------------- ------------------
Private Certificates (not offered hereby)
-----------------------------------------------------------------------
Class A-EC TBD%(4) N/A N/A
--------------- ----------------- ---------------- ------------------
Class F TBD%(5) 14.414 1/2013 -2/2013
--------------- ----------------- ---------------- ------------------
Class G TBD%(6) 14.539 2/2013 -4/2013
--------------- ----------------- ---------------- ------------------
Class H TBD%(7) 14.650 4/2013 -4/2013
--------------- ----------------- ---------------- ------------------
Class J TBD% 14.686 4/2013 -5/2013
--------------- ----------------- ---------------- ------------------
Class K 6.172% 14.838 5/2013 -9/2013
--------------- ----------------- ---------------- ------------------
Class L 6.172% 16.079 9/2013 -9/2015
--------------- ----------------- ---------------- ------------------
Class M 6.172% 18.277 9/2015 -12/2017
--------------- ----------------- ---------------- ------------------
Class N-1 N/A 19.501 12/2017 -7/2018
--------------- ----------------- ---------------- ------------------
Class N-2 6.172% 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 0.115%
(such percentage the "Class D Strip").
(3) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum
rate equal to the Weighted Average Net Mortgage Rate (such percentage
the "Class E Strip").
(4) 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-1A1, Class
A-1A2, Class A-1A3, Class A-1B, Class A-2MF, Class B, Class C, Class
J, Class K, Class L and Class M Certificates multiplied by the sum of
the Class A-1A1, Class A-1A2, Class A-1A3, Class A-1B, Class A-2MF,
Class B, Class C, Class J, Class K, Class L and Class M Certificate
Balances, (ii) the Class D Strip multiplied by the Class D
Certificate Balance, (iii) the Class E Strip multiplied by the Class
E Certificate Balance, (iv) the Class F Strip multiplied by the Class
F Certificate Balance, (v) the Class G Strip multiplied by the Class
G Certificate Balance and (vi) the Class H Strip multiplied by the
Class H Certificate Balance, and the denominator of which is the
Class A-EC Notional Balance.
(5) 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").
(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 G 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 H 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-1A1 ..... November 15, 2002
Class A-1A2...... October 15, 2004
Class A-1A3...... 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-1A1, Class A-1A2, Class A-1A3, Class A-1B
and Class A-2MF Certificates may be
purchased by employee benefit plans that are
subject to ERISA.
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-1A1, Class
A-1A2, Class A-1A3 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 (with interest
accrued thereon), 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-1A1, Class A-1A2, Class
A-1A3, 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-1A1, Class A-1A2, Class A-1A3,
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-1A1, Class A-1A2, Class A-1A3,
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-1A1, Class A-1A2,
Class A-1A3, 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 MORTGAGE LOAN CHARACTERISTICS
(AS OF THE CUT-OFF DATE)
<TABLE>
<CAPTION>
MORTGAGE POOL LOAN GROUP 1 LOAN GROUP 2
-------------- -------------- --------------
<S> <C> <C> <C>
Initial Balance ................................. $1,148,733,684 $943,452,384 $205,281,300
Number of Loans ................................. 254 214 40
Average Mortgage Loan Balance ................... $4,522,574 $4,408,656 $5,132,033
Maximum Mortgage Loan Principal Balance ........ $30,380,396 $30,380,396 $19,538,162
Minimum Mortgage Loan Principal Balance ........ $631,769 $631,769 $884,001
Weighted Average Mortgage Rate (Gross) ......... 7.422% 7.483% 7.140%
Weighted Average Mortgage Rate (Net) ............ 7.349% 7.415% 7.048%
Range of Remaining Term to the Earlier of
Maturity or Anticipated Repayment Date ........ 51-239 51-239 80-119
Weighted Average Remaining Amortization Terms .. 317 312 341
Range of Amortization Terms ..................... 107-360 107-360 230-359
Weighted Average DSCRs .......................... 1.41 1.41 1.38
Range of DSCR ................................... 1.00-2.57 1.00-2.57 1.00-2.13
Weighted Average LTV (Current) .................. 71.8% 71.2% 74.9%
Range of LTVs (Current) ......................... 11.3%-94.8% 30.6%-94.8% 11.3%-80.4%
Weighted Average Balloon/ARD LTV(including fully
amortizing loans) .............................. 54.32% 52.27% 63.76%
Percentage of Initial Pool Balance made up of:
Fully Amortizing Loans .......................... 4.19% 5.11% 0.00%
Balloon Loans (including ARD Loans) ............. 95.81% 94.89% 100.00%
</TABLE>
S-11
<PAGE>
CUT-OFF DATE PRINCIPAL BALANCES
<TABLE>
<CAPTION>
RANGE OF CUT-OFF DATE PRINCIPAL PERCENT OF INITIAL NUMBER OF
BALANCE POOL BALANCE MORTGAGE LOANS
- -------------------------------------- ------------------ --------------
<S> <C> <C>
$ 500,000-$1,000,000 .................. 0.87% 11
$1,000,001-$2,000,000 ................. 7.61% 58
$2,000,001-$3,000,000 ................. 11.65% 54
$3,000,001-$4,000,000 ................. 11.98% 39
$4,000,001-$5,000,000 ................. 7.84% 20
$5,000,001-$6,000,000 ................. 6.25% 13
$6,000,001-$7,000,000 ................. 6.34% 11
$7,000,001-$8,000,000 ................. 7.13% 11
$8,000,001-$9,000,000 ................. 5.14% 7
$9,000,001-$10,000,000 ................ 8.31% 10
$10,000,001-$11,000,000 ............... 3.59% 4
$11,000,001-$12,000,000 ............... 3.04% 3
$12,000,001-$13,000,000 ............... 2.14% 2
$13,000,001-$14,000,000 ............... 2.38% 2
$14,000,001-$15,000,000 ............... 3.81% 3
$16,000,001-$17,000,000 ............... 1.43% 1
$19,000,001-$20,000,000 ............... 1.70% 1
$22,000,001-$23,000,000 ............... 1.98% 1
$23,000,001-$24,000,000 ............... 2.07% 1
$24,000,001-$25,000,000 ............... 2.10% 1
$30,000,001-$31,000,000 ............... 2.64% 1
------------------ --------------
Total ................................. 100.00% 254
------------------ --------------
</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 PERCENT OF INITIAL NUMBER OF
RATIOS POOL BALANCE MORTGAGE LOANS
- ------------------- ------------------ --------------
<S> <C> <C>
1.00-1.05x ......... 1.82% 3
1.16-1.20x ......... 1.61% 2
1.21-1.25x ......... 3.59% 11
1.26-1.30x ......... 19.77% 48
1.31-1.35x ......... 22.34% 48
1.36-1.40x ......... 11.93% 37
1.41-1.45x ......... 11.89% 32
1.46-1.50x ......... 6.14% 20
1.51-1.55x ......... 6.99% 17
1.56-1.60x ......... 3.81% 5
1.61-1.65x ......... 2.03% 8
1.66-1.70x ......... 2.20% 6
1.71-1.75x ......... 1.31% 5
1.76-1.80x ......... 0.39% 2
1.81-1.85x ......... 2.51% 4
1.91-1.95x ......... 0.49% 2
1.96-2.00x ......... 0.12% 1
2.11-2.15x ......... 0.16% 1
2.41-2.45x ......... 0.87% 1
Greater than 2.50x 0.05% 1
------------------ --------------
Total .............. 100.00% 254
</TABLE>
S-12
<PAGE>
ORIGINAL LOAN TO VALUE RATIOS
<TABLE>
<CAPTION>
PERCENT OF INITIAL NUMBER OF
RANGE OF LOAN TO VALUE RATIOS POOL BALANCE MORTGAGE LOANS
- ----------------------------- ------------------ --------------
<S> <C> <C>
10.01%-15.00% ................ 0.10% 1
30.01%-35.00% ................ 0.20% 1
35.01%-40.00% ................ 0.12% 1
40.01%-45.00% ................ 0.30% 2
45.01%-50.00% ................ 0.47% 3
50.01%-55.00% ................ 2.47% 10
55.01%-60.00% ................ 0.52% 3
60.01%-65.00% ................ 9.64% 31
65.01%-70.00% ................ 19.81% 44
70.01%-75.00% ................ 36.42% 100
75.01%-80.00% ................ 27.11% 53
80.01%-85.00% ................ 1.12% 3
90.01%-95.00% ................ 1.71% 2
------------------ --------------
Total ........................ 100.00% 254
</TABLE>
PROPERTY TYPES
<TABLE>
<CAPTION>
PERCENT OF INITIAL NUMBER OF
PROPERTY TYPES POOL BALANCE MORTGAGED PROPERTIES
- --------------------------- ------------------ --------------------
<S> <C> <C>
Assisted Living Facilities 2.36% 5
Hotel ...................... 6.60% 17
Industrial ................. 7.01% 28
Mixed Use .................. 3.02% 10
Mobile Home Park ........... 0.88% 4
Multifamily ................ 24.82% 62
Nursing Home ............... 1.37% 4
Office ..................... 16.72% 53
Office/Industrial .......... 0.89% 3
Retail-Anchored ............ 17.10% 32
Retail-Single Tenant ....... 4.95% 20
Retail-Unanchored .......... 10.64% 49
Retail-Shadow Anchored .... 1.23% 4
Self-Storage ............... 0.20% 1
Warehouse .................. 2.20% 9
------------------ --------------------
Total ...................... 100.00% 301
</TABLE>
S-13
<PAGE>
MATURITY/ARD YEARS
<TABLE>
<CAPTION>
PERCENT 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 .... 14.05% 34
2008 .... 52.15% 129
2009 .... 1.46% 9
2010 .... 4.25% 10
2011 .... 0.34% 1
2012 .... 1.21% 4
2013 .... 15.78% 37
2015 .... 1.76% 3
2016 .... 0.38% 2
2017 .... 0.81% 3
2018 .... 3.96% 15
------------------ --------------
Total ... 100.00% 254
</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 8/02
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Lockout/Defeasance (2) ........... 54.0% 54.1% 36.4% 35.4% 32.0%
Greater of Yield Maintenance or
Percentage Premium of:
5.00% or greater ................ 25.8 25.7 25.7 25.6 25.9
4.00% to 4.99% .................. 0.3 0.3 0.3 0.3 0.3
3.00% to 3.99% .................. 9.8 9.7 9.7 9.6 9.3
2.00% to 2.99% .................. 2.5 2.5 2.5 2.6 2.8
1.00% to 1.99% .................. 7.5 7.5 24.3 25.4 27.4
0.00% to 0.99% .................. 0.1 0.1 0.1 0.1 0.1
Total Yield Maintenance .......... 46.0 45.9 62.7 63.7 65.8
Total of Yield Maintenance and
Lockout/Defeasance: .............. 100.0 100.0 99.1 99.1 97.8
Percentage Premium:
5.00% or greater ................ 0.0 0.0 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 0.9 0.0 0.0
2.00% to 2.99% .................. 0.0 0.0 0.0 0.9 0.0
1.00% to 1.99% .................. 0.0 0.0 0.0 0.0 0.9
Total Percentage Premium ......... 0.0 0.0 0.9 0.9 0.9
Open (no call protection) ........ 0.0 0.0 0.0 0.0 1.2
Total all Categories ............. 100.0 100.0 100.0 100.0 100.0
Current Pool Balance ($ millions). 1,148.7 1,133.7 1,117.4 1,099.6 1,080.3
Pool Factor (3) .................. 100.0 98.7 97.3 95.7 94.0
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL POOL BALANCE BY PREPAYMENT RESTRICTION OR DEFEASANCE FEATURE
ASSUMING 0% CPR(1)
- -------------------------------------------------------------------------------------
8/03 8/04 8/05 8/06 8/07
--------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Lockout/Defeasance (2) ........... 21.7% 20.9% 21.3% 21.3% 11.7%
Greater of Yield Maintenance or
Percentage Premium of:
5.00% or greater ................ 25.4 25.2 25.8 12.2 10.0
4.00% to 4.99% .................. 0.0 0.0 0.0 0.1 0.0
3.00% to 3.99% .................. 9.4 8.9 8.7 4.6 3.6
2.00% to 2.99% .................. 2.3 2.0 2.0 0.5 0.3
1.00% to 1.99% .................. 38.8 39.2 40.1 38.4 30.5
0.00% to 0.99% .................. 0.1 0.1 0.1 0.1 0.1
Total Yield Maintenance .......... 75.9 75.4 76.7 55.9 44.5
Total of Yield Maintenance and
Lockout/Defeasance: .............. 97.7 96.3 98.0 77.2 56.2
Percentage Premium:
5.00% or greater ................ 0.3 0.0 0.1 11.5 1.1
4.00% to 4.99% .................. 0.0 0.3 0.0 0.1 0.0
3.00% to 3.99% .................. 0.0 0.0 0.5 3.2 0.7
2.00% to 2.99% .................. 0.5 0.0 0.0 0.8 0.0
1.00% to 1.99% .................. 1.4 1.5 1.5 5.2 0.4
Total Percentage Premium ......... 2.3 1.8 2.0 20.7 2.2
Open (no call protection) ........ 0.0 1.9 0.0 2.0 41.6
Total all Categories ............. 100.0 100.0 100.0 100.0 100.0
Current Pool Balance ($ millions). 1,037.8 1,015.7 965.3 940.2 889.5
Pool Factor (3) .................. 90.3 88.4 84.0 81.8 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, the related borrower 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 in amounts equal to or
greater than the amounts payable on the related Mortgage Loan on each
such date (or, in the case of the ARD Loans, through the related
Anticipated Repayment Dates including prepayment in full on the related
Anticipated Repayment Dates), and upon satisfaction of certain other
conditions. Four of the Mortgage Loans, having aggregate principal
balances as of the Cut-off Date representing approximately 1.88% 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 21.4 17.1 15.8 14.6
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL POOL BALANCE BY PREPAYMENT RESTRICTION OR DEFEASANCE
FEATURE ASSUMING 0% CPR(1)
- -----------------------------------------------------------------------------
8/13 8/14 8/15 8/16 8/17
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Lockout/Defeasance (2) ........... 21.2% 19.9% 6.8% 5.4% 3.2%
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 2.0 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, the related borrower 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 in amounts equal to or
greater than the amounts payable on the related Mortgage Loan on each
such date (or, in the case of the ARD Loans, through the related
Anticipated Repayment Dates including prepayment in full on the related
Anticipated Repayment Dates), and upon satisfaction of certain other
conditions. Four of the Mortgage Loans, having aggregate principal
balances as of the Cut-off Date representing approximately 1.88% 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 the "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 .............. $74,855,000.00 initial aggregate principal
balance ("Certificate Balance") of Class
A-1A1 Certificates;
$73,406,000.00 initial Certificate Balance
of Class A-1A2 Certificates;
$109,787,000.00 initial Certificate Balance
of Class A-1A3 Certificates;
$385,568,000.00 initial Certificate Balance
of Class A-1B Certificates;
$174,842,000.00 initial Certificate Balance
of Class A-2MF Certificates;
$1,148,733,684.05 initial Notional Balance
of Class A-EC Certificates;
$57,438,000.00 initial Certificate Balance
of Class B Certificates;
$63,181,000.00 initial Certificate Balance
of Class C Certificates;
$60,310,000.00 initial Certificate Balance
of Class D Certificates;
$17,232,000.00 initial Certificate Balance
of Class E Certificates;
$25,848,000.00 initial Certificate Balance
of Class F Certificates;
$28,719,000.00 initial Certificate Balance
of Class G Certificates;
$8,617,000.00 initial Certificate Balance of
Class H Certificates;
$11,488,000.00 initial Certificate Balance
of Class J Certificates;
$17,232,000.00 initial Certificate Balance
of Class K Certificates;
$14,360,000.00 initial Certificate Balance
of Class L Certificates;
$8,617,000.00 initial Certificate Balance of
Class M Certificates;
$17,233,684.05 initial Certificate Balance
of Class N-1 Certificates;
$17,233,684.05 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-1A1, CLASS A-1A2, CLASS
A-1A3, 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
S-17
<PAGE>
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.
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,
Texas 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.
S-18
<PAGE>
Denominations ................. The Class A-1A1, Class A-1A2, Class A-1A3,
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 $25,000 and integral
multiples of $1.00 in excess thereof and
will be registered in the name of a nominee
of The Depository Trust 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 (with interest accrued thereon). 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-1A1,
Class A-1A2, Class A-1A3 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.
<PAGE>
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
S-19
<PAGE>
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 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, the Workout Fee and
the Disposition 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 (with
interest accrued thereon), 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-1A1, Class A-1A2, Class
A-1A3, 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. The remainder of the Pooled Principal
Distribution Amount will be distributed to
the Class A-1A1, Class A-1A2, Class A-1A3,
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
S-20
<PAGE>
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 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 Trustee becomes the successor Master
Servicer, the Trustee, as successor Master
Servicer, subject to the standards
applicable to the Master Servicer, will be
S-21
<PAGE>
required to make P&I Advances.
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 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-1A1, Class A-1A2, Class A-1A3, 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.
<PAGE>
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, regard-
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less 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 the
rate of 0% CPR, but with 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-1A1,
Class A-1A2, Class A-1A3, 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-1A1, Class A-1A2, Class A-1A3, 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-1A1,
Class A-1A2, Class A-1A3, 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.
<PAGE>
A security rating is not a recommendation to
buy, sell or hold securities and may be
S-23
<PAGE>
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 Yield Maintenance Charges any allocation
of Prepayment Interest shortfalls or the
likelihood of collection by the Master
Servicer of Default Interest.
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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<PAGE>
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 Mortgage Lending Generally. Commercial and
multifamily mortgage 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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<PAGE>
"--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 6.60% 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 16.72% 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 7.17% 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).
S-26
<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 33.92% 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 17.10% of the Mortgage Loans (based on
Initial Pool Balance) are secured by multi-tenant retail properties that are
"anchored properties." Approximately 10.64% 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.
S-27
<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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<PAGE>
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
S-29
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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 NRF and
identified as Control #210, 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
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
certain conditions specified therein 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-1A1, Class A-1A2, Class A-1A3, 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-1A1, Class A-1A2, Class A-1A3, 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 as to which an Appraisal Reduction
Event occurs will continue to generate collections at the same rate it had
prior to such 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
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amount of Available Funds will include the principal portion of any
Appraisal Reduction actually collected and the portion of the interest
payments actually collected that is equal to interest accrued on unreversed
Appraisal Reductions 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 Charges 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 of the
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
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can be given that the obligation to pay a Yield Maintenance Charge or other
Prepayment Premium will be 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 254 multifamily and commercial "whole"
mortgage loans (the "Mortgage Loans"). The Mortgage Loans have an aggregate
Cut-off Date Principal Balance of approximately $1,148,733,684 (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
"Pool Balance" as of any date will be the aggregate of the outstanding
principal balances of the Mortgage Loans in both Loan Groups as of such date.
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 40 Mortgage Loans, representing approximately 17.87% 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 82.13% 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
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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 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>
PERCENT OF INITIAL NUMBER OF
PROPERTY TYPE POOL BALANCE MORTGAGED PROPERTIES
- ------------------------- ------------------ --------------------
<S> <C> <C>
Assisted Living .......... 2.36% 5
Hotel .................... 6.60% 17
Industrial ............... 7.01% 28
Mixed Use ................ 3.02% 10
Mobile Home Park ......... 0.88% 4
Multifamily .............. 24.82% 62
Nursing Home ............. 1.37% 4
Office ................... 16.72% 53
Office/Industrial ........ 0.89% 3
Retail -Anchored ......... 17.10% 32
Retail -Single Tenant ... 4.95% 20
Retail -Unanchored ....... 10.64% 49
Retail -Shadow Anchored . 1.23% 4
Self-Storage ............. 0.20% 1
Warehouse ................ 2.20% 9
------------------ --------------------
Total .................... 100.00% 301
</TABLE>
Except for one Mortgage Loan, representing approximately 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 143, 71, 29 and 11
Mortgage Loans (representing approximately 49.99%, 32.11%, 15.80%, 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 4.37% 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 2.59% 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 1.79% 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 fifty-three of
the Mortgage Loans, representing approximately 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 2.56% 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 five years after the date
of origination. Five Mortgage Loans, representing approximately 3.42% 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
approximately 25.97% of the Initial Pool Balance, bear interest at their
respective Mortgage Rates until an Anticipated Repayment Date. Commencing on
the respective
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<PAGE>
Anticipated 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 5.0%, 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 eighty-eight of the Mortgage Loans
(the "Balloon Loans"), representing approximately 69.84% 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 approximately
56.7%.
Forty-seven Mortgage Loans, representing approximately 25.97% by Initial
Pool Balance, are anticipated repayment date Mortgage Loans (the "ARD Loans")
which generally accrue interest at a higher rate following a date specified
in the related Mortgage (the applicable "Anticipated Repayment Date"),
generally the tenth anniversary of the first Due 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 the related Excess Cash
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<PAGE>
Flow collected after such date will be applied towards the prepayment of
such ARD Loan and, after the principal balance thereof 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"). Forty of the Mortgage Loans, representing approximately
21.51% of the Initial Pool Balance, provide defeasance options; four of
which, representing 1.88% of the Initial Pool Balance, give the borrower the
option either 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-four of the Mortgage Loans,
representing approximately 96.01% 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.
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<PAGE>
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 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. Forty of the Mortgage Loans, representing approximately 21.51%
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 in amounts equal to or greater than the amounts payable under
the related promissory note on each such date (or, in the case of the ARD
Loans, through the related Anticipated Repayment Dates, including prepayment
in full on the related Anticipated Repayment Dates). 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 1.88% 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 casualty or condemnation) or except during
certain periods beginning not more than one year prior to the related
maturity date or Anticipated Repayment Date.
"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 except upon
confirmation from each Rating Agency that such consent or waiver will not
result in the downgrade, withdrawal or qualification of its then current
rating of any Class of Certificates).
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,
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<PAGE>
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
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
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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.
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
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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 the "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
(representing approximately 2.6% of the Initial Pool Balance) and an
aggregate LTV of 66.2%, and were underwritten 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: 81.71% 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 (representing
approximately 2.1% of the Initial Pool Balance) and an LTV of 74.8%, 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.
which occupies 94% of the building pursuant to a lease that is co-terminus to
the Anticipated Repayment Date and 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 (representing approximately 2.1% 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 eighteen
fee mortgages, each encumbering one of eighteen properties. Six of the
related Mortgaged Properties are Office Properties; four are Industrial
Properties; and eight are Retail Properties. 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: 85.5% 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
(representing approximately 2.0% of the Intial Pool Balance) and a 69.1% 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 (representing approximately 1.7% of Initial
Pool Balance) and a 72.9% 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
(representing approximately 1.7% of the Initial Pool Balance) and an 79.7%
LTV, and was
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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.
Pebblebrook Apartments. The Pebblebrook Apartments Mortgage Loan has a
Scheduled Principal Balance as of the Cut-off Date of $16.4 million
(representing approximately 1.4% of the Initial Pool Balance) and a 79.1%
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 (representing approximately 1.3% of
the Initial Pool Balance) and a 94.8% 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 HD 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 (the "Home Depot 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 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 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, the sponsors of the HD borrower named
above 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 (representing approximately 1.3% of
the Initial Pool Balance) and a 61.2% LTV, and was underwritten at a 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 $39.9 (representing approximately 3.5% of the Initial Pool Balance) and a
68.9% 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
(1.3% 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 Mortgage Loan 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
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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.
Seventeen Mortgage Loans, representing approximately 12.62% 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, 25, 16 and 16 of the Mortgage Loans, representing
approximately 15.33%, 12.08%, 6.59%, 6.16% and 5.68% 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 within
12 months of the respective dates as of which the Mortgage Loans were
originated or purchased by the related Mortgage Loan Seller. 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 NRF, representing less than 0.1% 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
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Properties. One of these Mortgage Loans (Control #35, Westpark Towne Center,
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.
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. 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/or (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%); and/or (e) certain other
conditions set forth in the Pooling and Servicing Agreement must be met. See
"--'Due-on-Encumbrance' and 'Due-on-sale' Provisions" above. With respect to
20 of the Mortgage Loans, representing approximately 6.88% 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. Such Mortgage Loans are identified in
Annex A.
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 17.32% 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
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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 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
S-47
<PAGE>
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.
(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/ARD LTV" for any Mortgage Loan is calculated in the same
manner as LTV, except that the Balloon Amount or ARD 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).
S-48
<PAGE>
(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, in the case of the ARD Loans, assuming prepayment in full on the
related Anticipated Repayment Date) 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.
(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.
(20) "ARD Amount" for any ARD Loan is equal to the Scheduled Principal
Balance as of the related Anticipated Repayment Date.
COLLATERAL CONTRIBUTORS
<TABLE>
<CAPTION>
SCHEDULED
PERCENT OF WEIGHTED PRINCIPAL
NUMBER INITIAL AVERAGE WEIGHTED BALANCE AS OF
COLLATERAL OF POOL INTEREST AVERAGE THE CUT-OFF
CONTRIBUTORS LOANS BALANCE RATE DSCR DATE
- -------------- -------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
NRF ........... 143 49.99% 7.37% 1.43 $ 574,221,931
PMCC .......... 71 32.11% 7.17% 1.36 $ 368,823,327
CIBC .......... 29 15.80% 7.92% 1.43 $ 181,446,213
Other ......... 11 2.11% 8.63% 1.46 $ 24,242,213
-------- ------------ ---------- ---------- ---------------
Total ....... 254 100.00% 7.42% 1.41 $1,148,733,684
======== ============ ========== ========== ===============
</TABLE>
PAYMENT TYPES
<TABLE>
<CAPTION>
SCHEDULED
PERCENT OF WEIGHTED WEIGHTED WEIGHTED PRINCIPAL
NUMBER INITIAL AVERAGE AVERAGE AVERAGE WEIGHTED BALANCE AS OF
OF POOL INTEREST REMAINING ORIGINAL AVERAGE THE CUT-OFF
PAYMENT TYPES LOANS BALANCE RATE TERM LTV DSCR DATE
- ----------------- -------- ------------ ---------- ----------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fully Amortizing 19 4.19% 7.51% 199.28 69.3 1.35 $ 48,168,576
Balloon .......... 188 69.84% 7.34% 135.91 71.9 1.42 $ 802,254,763
ARD .............. 47 25.97% 7.62% 111.87 73.4 1.39 $ 298,310,345
-------- ------------ ---------- ----------- ---------- ---------- ---------------
Total .......... 254 100.00% 7.42% 132.33 72.2 1.41 $1,148,733,684
======== ============ ========== =========== ========== ========== ===============
</TABLE>
S-49
<PAGE>
RANGE OF CUT-OFF DATE PRINCIPAL BALANCES
<TABLE>
<CAPTION>
SCHEDULED
WEIGHTED WEIGHTED PRINCIPAL
NUMBER PERCENT OF AVERAGE AVERAGE WEIGHTED BALANCE
RANGE OF CUT-OFF DATE OF INITIAL WEIGHTED AVERAGE REMAINING ORIGINAL AVERAGE AS OF THE
PRINCIPAL BALANCES LOANS POOL BALANCE INTEREST RATE TERM LTV DSCR CUT-OFF DATE
- -------------------------- -------- -------------- ---------------- ----------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 500,000-$1,000,000 ..... 11 0.87% 7.775% 160.61 65.1 1.53 $ 9,963,642
$1,000,001-$2,000,000 .... 58 7.61% 7.568% 139.95 67.4 1.43 $ 87,475,729
$2,000,001-$3,000,000 .... 54 11.65% 7.569% 138.13 69.9 1.42 $ 133,788,340
$3,000,001-$4,000,000 .... 39 11.98% 7.487% 135.39 70.7 1.38 $ 137,569,884
$4,000,001-$5,000,000 .... 20 7.84% 7.346% 127.66 72.5 1.44 $ 90,042,489
$5,000,001-$6,000,000 .... 13 6.25% 7.402% 134.59 69.9 1.44 $ 71,825,072
$6,000,001-$7,000,000 .... 11 6.34% 7.428% 119.22 74.8 1.41 $ 72,865,984
$7,000,001-$8,000,000 .... 11 7.13% 7.366% 156.09 71.7 1.41 $ 81,893,978
$8,000,001-$9,000,000 .... 7 5.14% 7.260% 115.73 74.8 1.33 $ 59,009,195
$9,000,001-$10,000,000 ... 10 8.31% 7.214% 118.92 76.0 1.42 $ 95,442,720
$10,000,001-$11,000,000 .. 4 3.59% 7.240% 144.16 75.0 1.37 $ 41,203,397
$11,000,001-$12,000,000 .. 3 3.04% 8.012% 110.41 73.0 1.32 $ 34,949,605
$12,000,001-$13,000,000 .. 2 2.14% 7.578% 113.44 65.2 1.52 $ 24,554,212
$13,000,001-$14,000,000 .. 2 2.38% 7.263% 145.26 76.2 1.32 $ 27,397,113
$14,000,001-$15,000,000 .. 3 3.81% 7.217% 141.45 75.5 1.38 $ 43,709,426
$16,000,001-$17,000,000 .. 1 1.43% 6.950% 140.00 79.3 1.55 $ 16,444,888
$19,000,001-$20,000,000 .. 1 1.70% 7.240% 116.00 80.0 1.30 $ 19,538,162
$22,000,001-$23,000,000 .. 1 1.98% 7.490% 173.00 69.1 1.60 $ 22,800,000
$23,000,001-$24,000,000 .. 1 2.07% 8.155% 113.00 77.9 1.43 $ 23,799,051
$24,000,001-$25,000,000 .. 1 2.10% 7.040% 119.00 74.8 1.35 $ 24,080,401
$30,000,001-$31,000,000 .. 1 2.64% 7.250% 113.00 66.6 1.31 $ 30,380,396
-------- -------------- ---------------- ----------- ---------- ---------- ---------------
Total .................. 254 100.00% 7.422% 132.33 72.2 1.41 $1,148,733,684
======== ============== ================ =========== ========== ========== ===============
</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 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 8.75% 6.916% 140.37 75.8 1.39 $ 100,479,094
7.001%-7.250% .......... 67 32.27% 7.133% 125.61 73.9 1.37 $ 370,735,847
7.251%-7.500% .......... 86 34.10% 7.394% 141.25 70.8 1.44 $ 391,757,909
7.501%-7.750% .......... 35 8.48% 7.607% 141.30 71.5 1.40 $ 97,468,182
7.751%-8.000% .......... 19 5.36% 7.878% 131.02 71.6 1.34 $ 61,533,556
8.001%-8.250% .......... 10 5.60% 8.118% 112.49 72.4 1.43 $ 64,381,219
8.251%-8.500% .......... 5 1.63% 8.423% 103.51 68.3 1.43 $ 18,683,222
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 ................ 254 100.00% 7.422% 132.33 72.2 1.41 $1,148,733,684
</TABLE>
S-50
<PAGE>
RANGE OF REMAINING TERMS TO MATURITY (MONTHS)
<TABLE>
<CAPTION>
SCHEDULED
WEIGHTED WEIGHTED PRINCIPAL
REMAINING TERMS NUMBER PERCENT OF AVERAGE AVERAGE WEIGHTED BALANCE
TO MATURITY OF INITIAL WEIGHTED AVERAGE REMAINING ORIGINAL AVERAGE AS OF THE
(MONTHS) 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 2.69% 8.606% 106.96 73.7 1.28 $ 30,898,082
108.1 -120.0 ...... 159 63.51% 7.384% 115.36 72.6 1.39 $ 729,584,994
120.1 -132.0 ...... 7 1.20% 8.456% 128.45 66.1 1.49 $ 13,779,683
132.1 -144.0 ...... 12 4.50% 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 16.55% 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 1.51% 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 4.77% 7.440% 234.99 73.4 1.41 $ 54,805,368
-------- -------------- ---------------- ----------- ---------- ---------- ---------------
Total ........... 254 100.00% 7.422% 132.33 72.2 1.41 $1,148,733,684
======== ============== ================ =========== ========== ========== ===============
</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
MATURITY 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 ........... 34 14.05% 7.981% 110.46 71.7 1.34 $ 161,393,042
2008 ........... 129 52.15% 7.286% 116.24 72.9 1.40 $ 599,090,035
2009 ........... 9 1.46% 8.362% 129.60 67.6 1.49 $ 16,720,446
2010 ........... 10 4.25% 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 15.78% 7.377% 174.76 70.1 1.43 $ 181,281,498
2015 ........... 3 1.76% 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 3.96% 7.376% 235.63 73.5 1.42 $ 45,469,402
-------- -------------- ---------------- ----------- ---------- ---------- --------------
Total ........ 254 100.00% 7.422% 132.33 72.2 1.41 $1,148,733,684
======== ============== ================ =========== ========== ========== ==============
</TABLE>
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 ............ 87 38.42% 7.761% 125.34 70.9 1.39 $ 441,324,299
1998 ............ 167 61.58% 7.210% 136.68 73.0 1.42 $ 707,409,385
-------- -------------- ---------------- ----------- ---------- ---------- ---------------
Total ......... 254 100.00% 7.422% 132.33 72.2 1.41 $1,148,733,684
======== ============== ================ =========== ========== ========== ===============
</TABLE>
S-51
<PAGE>
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 0.47% 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 9.64% 7.566% 121.05 62.8 1.53 $ 110,776,589
65.01 -70.00% . 44 19.81% 7.561% 134.92 68.0 1.47 $ 227,572,893
70.01 -75.00% . 100 36.42% 7.466% 134.16 73.5 1.37 $ 418,364,978
75.01 -80.00% . 53 27.11% 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 ........ 254 100.00% 7.422% 132.33 72.2 1.41 $1,148,733,684
======== ============== ================ =========== ========== ========== ===============
</TABLE>
RANGE OF MORTGAGED PROPERTY AGES
<TABLE>
<CAPTION>
SCHEDULED
NUMBER WEIGHTED WEIGHTED PRINCIPAL
OF PERCENT OF AVERAGE AVERAGE WEIGHTED BALANCE
MORTGAGED INITIAL WEIGHTED AVERAGE REMAINING ORIGINAL AVERAGE AS OF THE
AGE (YEARS) PROPERTIES POOL BALANCE INTEREST RATE TERM LTV DSCR CUT-OFF DATE
- ---------------- ------------ -------------- ---------------- ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Less than 1 ..... 7 3.66% 7.239% 125.28 73.3 1.36 $ 42,019,369
1 -5 ............ 98 34.77% 7.475% 140.92 72.9 1.42 $ 399,454,513
6 -10 ........... 58 21.50% 7.257% 130.50 73.2 1.41 $ 246,934,301
11 -15 .......... 58 16.92% 7.484% 119.58 71.1 1.39 $ 194,339,679
16 -20 .......... 21 7.37% 7.787% 125.92 71.6 1.35 $ 84,711,185
21 -25 .......... 24 9.25% 7.222% 130.27 70.6 1.47 $ 106,221,308
26 -30 .......... 11 2.45% 7.366% 164.74 65.7 1.50 $ 28,178,773
Greater than 30 22 4.02% 7.565% 124.79 72.9 1.32 $ 46,215,761
N/A ............. 2 0.06% 8.155% 113.00 77.9 1.43 $ 658,796
------------ -------------- ---------------- ----------- ---------- ---------- --------------
Total ......... 301 100.00% 7.422% 132.33 72.2 1.41 $1,148,733,684
============ ============== ================ =========== ========== ========== ==============
</TABLE>
S-52
<PAGE>
RANGE OF DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
SCHEDULED
WEIGHTED WEIGHTED PRINCIPAL
NUMBER PERCENT OF AVERAGE AVERAGE WEIGHTED BALANCE
OF INITIAL WEIGHTED AVERAGE REMAINING ORIGINAL AVERAGE AS OF THE
DSCR(X) 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 1.82% 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 3.59% 7.439% 138.55 75.8 1.24 $ 41,215,956
1.26 -1.30 ........ 48 19.77% 7.367% 131.59 74.7 1.28 $ 227,058,716
1.31 -1.35 ........ 48 22.34% 7.315% 124.53 72.2 1.33 $ 256,628,490
1.36 -1.40 ........ 37 11.93% 7.428% 133.22 73.9 1.38 $ 137,006,118
1.41 -1.45 ........ 32 11.89% 7.550% 138.41 73.9 1.43 $ 136,576,495
1.46 -1.50 ........ 20 6.14% 7.655% 126.01 69.4 1.48 $ 70,501,892
1.51 -1.55 ........ 17 6.99% 7.364% 135.98 71.7 1.53 $ 80,272,381
1.56 -1.60 ........ 5 3.81% 7.381% 158.63 68.7 1.60 $ 43,735,192
1.61 -1.65 ........ 8 2.03% 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 1.31% 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 2.51% 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 ........... 254 100.00% 7.422% 132.33 72.2 1.41 $1,148,733,684
======== ============== ====================== =========== ========== ========== ===============
</TABLE>
PROPERTY TYPES
<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
PROPERTY TYPE PROPERTIES POOL BALANCE INTEREST RATE TERM LTV DSCR CUT-OFF DATE
- -------------------------- ------------ -------------- ---------------- ----------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assisted Living Facilities 5 2.36% 7.444% 151.90 74.1 1.59 $ 27,158,978
Hotel .................... 17 6.60% 7.717% 134.79 67.9 1.56 $ 75,783,825
Industrial ............... 28 7.01% 7.321% 127.31 67.8 1.34 $ 80,505,010
Mixed Use ................ 10 3.02% 7.814% 141.60 67.1 1.37 $ 34,718,715
Mobile Home Park ......... 4 0.88% 7.033% 114.09 63.9 1.72 $ 10,151,136
Multifamily .............. 62 24.82% 7.149% 130.86 74.5 1.40 $ 285,127,770
Nursing Home ............. 4 1.37% 7.399% 139.73 68.5 2.14 $ 15,765,735
Office ................... 53 16.72% 7.514% 134.50 73.0 1.35 $ 192,027,500
Office/Industrial ........ 3 0.89% 7.256% 115.82 69.4 1.35 $ 10,251,604
Retail-Anchored .......... 32 17.10% 7.505% 128.78 72.6 1.40 $ 196,419,338
Retail-Single Tenant ..... 20 4.95% 7.638% 166.12 74.4 1.31 $ 56,870,053
Retail-Unanchored ........ 49 10.64% 7.509% 123.00 71.5 1.39 $ 122,276,346
Retail-Shadow Anchored ... 4 1.23% 7.657% 116.65 74.1 1.33 $ 14,130,214
Self-Storage ............. 1 0.20% 7.570% 113.00 74.2 1.43 $ 2,270,622
Warehouse ................ 9 2.20% 7.216% 123.69 72.6 1.39 $ 25,276,838
------------ -------------- ---------------- ----------- ---------- ---------- ---------------
Total .................. 301 100.00% 7.422% 132.33 72.2 1.41 $1,148,733,684
============ ============== ================ =========== ========== ========== ===============
</TABLE>
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<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 15.33% 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 5.68% 7.340% 116.10 75.3 1.34 $ 65,197,219
GA ........ 6 2.80% 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 4.94% 7.304% 149.67 75.5 1.55 $ 56,742,069
KS ........ 4 1.50% 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 2.54% 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 3.87% 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 2.24% 7.329% 145.67 72.9 1.48 $ 25,695,518
NY ........ 16 6.16% 7.537% 137.04 73.1 1.33 $ 70,717,153
OH ........ 25 6.59% 7.269% 134.56 70.3 1.37 $ 75,673,936
OK ........ 5 0.77% 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 3.34% 7.340% 127.11 75.4 1.38 $ 38,380,408
RI ........ 2 0.55% 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 12.08% 7.485% 146.33 70.3 1.36 $ 138,726,765
VA ........ 6 4.25% 7.231% 143.95 71.5 1.44 $ 48,850,998
WA ........ 5 2.12% 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 ..... 301 100.00% 7.422% 132.33 72.2 1.41 $1,148,733,684
============ ============== ================ =========== ========== ========== ===============
</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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<PAGE>
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 substantially similar 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. Under the Pooling and Servicing Agreement, the Depositor will assign
its rights under the Mortgage Loan Purchase 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 within 85 days of receiving
notice of any such breach (as such period may be extended as set forth in the
Pooling and Servicing Agreement).
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 related Mortgage Loan 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 related Mortgage Loan Seller
has no actual knowledge that such information is incorrect, inaccurate or
incomplete following the reasonable and customary due diligence performed
by the related Mortgage Loan Seller in connection with its origination of
the Mortgage Loans.
(ii) Mortgage Loan 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 the related 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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<PAGE>
the enforceability of the Mortgage Loan and effective transfer, sale and
assignment thereof and of the related promissory note), the originator
and/or 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 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 law or
statute), and is 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 except in the case of
one Mortgage Loan (Control #56, parcel adjacent to 100-30 Spring Garden
St., Philadelphia) as to which an unimproved parcel not given value in the
related LTV calculation is subject to release at no charge upon
satisfaction of certain legal requirements set forth in the related
mortgage loan documents, and in the case of certain Mortgaged Properties
securing cross collateralized Mortgage Loans, upon payment of a portion of
the Mortgage Loan, determined as specified in the related mortgage loan
documents.
(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
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<PAGE>
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, subordinated or rescinded, 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 and fifteen days after the
Closing Date or include other conditions precedent the satisfaction of
which will ensure that the exercise of such feature will not cause either
REMIC to fail to be a REMIC and, in some cases, 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, or 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 relied upon in the origination 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. To the best of the related Mortgage Loan
Seller's knowledge, 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
or the payment of the outstanding principal balance of or accrued interest
on such Mortgage Loan.
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(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 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 its
origination or purchase thereof), (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
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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.
(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 or 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.
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(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:
(1) as of the date of the Closing of the related Mortgage Loan, such
Ground Lease is in full force and effect, and such Ground Lease or a
memorandum thereof has been recorded in the applicable real estate
records and, to the knowledge of the related Mortgage Loan Seller (A)
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 (B) 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 (except where such Mortgage Loan provides that the related
borrower or its agent may hold and disburse such proceeds with respect
to any loss or taking less than a stipulated amount not greater than
$50,000), or to the payment of the outstanding principal balance of or
accrued interest on such Mortgage Loan.
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(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.
(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. 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 or assignment of 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. Subject to the exceptions
specified herein under "Description of the Mortgage Pool--Certain
Characteristics of the Mortgage Pool--Environmental Risks," 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
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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) such borrower 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, 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 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 four
Mortgage Loans sold by NRFinance as to which such inspection occurred
approximately 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 (which consent may be
withheld in such lenders sole discretion) as described above under
"--Certain Characteristics of the Mortgage Pool--Other Financing."
(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 value of the Mortgaged Property or
likelihood of the borrower to continue to perform its obligations under
the related Mortgage Loan.
(xli) Assisted Living Loans and Nursing Home Loans. With respect to each
Assisted Living 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);
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(b) each such operator, manager, borrower and facility holds (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;
(c) 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;
(d) 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;
(e) 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;
(f) 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;
(g) 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;
(h) 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
(i) 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 a 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 of the term specified in Annex A 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.
(xliii) Due-on-Sale. Subject to a one-time (or, in the case of certain
Mortgage Loans, a multiple-time) transfer right allowed in accordance with
certain provisions set forth in the related Mortgage securing each
Mortgage Loan, such Mortgage contains a "due-on-sale" clause that provides
for the acceleration of the payment of the unpaid principal balance of
such Mortgage Loan if, without the prior written consent of the lender,
the Mortgaged Property subject to such Mortgage is transferred or sold.
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.
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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.
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.
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, New Jersey, and Kansas City,
and expects to open an office in San Francisco prior to December 31, 1998.
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 PMCF 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. ("CIBOPCO") 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 by CIBCOPCO (i) will not be insured by the
Federal Deposit Insurance Corporation, (ii)will not be deposits or other
obligations
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of Canadian Imperial Bank of Commerce, (iii) will not be endorsed or
guaranteed by Canadian Imperial Bank of Commerce, 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 value
of 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.
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
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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 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 21 Classes to be designated as the Class A-1A1
Certificates, Class A-1A2 Certificates, Class A-1A3 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-1A1, Class A-1A2, Class A-1A3, 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 $25,000, 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-1A1, Class A-1A2, Class A-1A3, 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-1A1, Class A-1A2, Class A-1A3, 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 Servicer 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 Distribution 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, calculated as a fixed percentage of the
amount of principal to be prepaid 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 following 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 Appraisal
Reductions and 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, Workout Fees and
Disposition 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 amount of interest
accrued on the Mortgage Loans at the related Mortgage Rates during the
related Interest Accrual Period, weighted on the basis of the Scheduled
Principal Balances thereof 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-1A1 Certificates, Class A-1A2 Certificates, Class A-1A3 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-1A1, Class A-1A2, Class A-1A3, 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-1A1 Certificates until the Certificate Balance of the
Class A-1A1 Certificates has been reduced to zero, second to the Class
A-1A2 Certificates until the Certificate Balance of the Class A-1A2
Certificates has been reduced to zero, third to the Class A-1A3
Certificates until the Certificate Balance of the Class A-1A3 Certificates
has been reduced to zero, fourth 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-1A1 Certificates, Class A-1A2 Certificates, Class
A-1A3 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;
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(vii) after the Certificate Balances of the Class A-1A1, Class A-1A2,
Class A-1A3, 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;
(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;
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(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;
(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;
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(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;
(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-1A1, Class A-1A2, Class A-1A3,
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-1A1, Class A-1A2, Class A-1A3, 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.
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Prepayment Premiums and Yield Maintenance Charges collected during any
Collection Period will be allocated first, as between two groups of Classes
of Certificates deemed to be supported by either Loan Group 1 on the one
hand, or by Loan Group 2 on the other, and, second as among all of the
Classes that are supported by either such Loan Group. For such purposes, the
Class A-2MF Certificates will be deemed to be supported by Loan Group 2 and
all other Classes will be deemed to be supported by Loan Group 1, except that
the Class A-EC Certificates will be deemed to be supported by both Loan
Groups. The Class A-2MF and Class A-EC Certificates are the "Group 2
Supported Classes" and all other classes, together with the Class A-EC
Certificates, are the "Group 1 Supported Classes".
In the event that either (a) collections in respect of scheduled principal
payments on Mortgage Loans in Loan Group 2 or any principal collections with
respect to Loan Group 1 are to be distributed to the Class A-2MF
Certificateholders pursuant to the sequential payment priorities described
above, or (b) any portion of the Class A-2MF Principal Distribution Amount is
distributed to any Class of Certificates other than the Class A-2MF
Certificates, then any Prepayment Premiums and Yield Maintenance Charges
associated with such principal collections will be allocated as between the
Group 1 Supported Classes and the Group 2 Supported Classes on a pro rata
basis, based on the amounts of such principal distribution allocated to all
Classes that are Group 1 supported Classes or Group 2 Supported Classes
respectively. Such a cross-over principal distribution will occur with
respect to clause (a) above if the Class A-1B Certificate Balance is reduced
to zero before the Class A-2MF Certificate Balance is reduced to zero, or
with respect to clause (b) above if the Class A-2MF Certificate Balance is
reduced to zero before the principal balances of the Mortgage Loans in Group
2 are reduced to zero.
Yield Maintenance Charges allocated to the Group 2 Supported Classes as
described above will be further allocated as between the Class A-2MF
Certificates and the Class A-EC Certificates based on the Base Interest
Fraction. The product of the Base Interest Fraction and the aggregate amount
of Yield Maintenance Charges allocated to the Group 2 supported Classes as
described above will be distributed to the Class A-2MF Certificates. The
remainder of such Yield Maintenance Charges will be distributed to the Class
A-EC Certificates.
Similarly, Yield Maintenance Charges allocated to the Group 1 Supported
Classes will be further allocated as between the Class A-EC Certificates and
all other Group 1 Supported Classes based on the Base Interest Fraction. The
product of (a) the amount of principal distributed to each such Class as a
percentage of the principal distributed to all such Classes multiplied by (b)
the Base Interest Fraction and multiplied by (c) the amount of Yield
Maintenance Charges allocated to the Group 1 supported Classes will be
distributed to each such Class. The remainder of such Yield Maintenance
Charges will be allocated to the Class A-EC Certificates.
Twenty-five percent of the Prepayment Premiums allocated to the Group 2
supported Certificates, as described above, will be allocated to the Class
A-2MF Certificates and the remainder of such Prepayment Premiums will be
allocated to the Class A-EC Certificates. Similarly, 25% of the Prepayment
Premiums allocated to the Group 1 Supported Classes will be allocated to such
Classes on a pro rata basis, based on the amount of principal distributed to
each such Class as a percentage of the amount of principal distributed to all
such Classes. The remainder of such Prepayment Premiums will be allocated to
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.
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-1A1, Class A-1A2, Class A-1A3, 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.
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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 of 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-1A1 ..... November 15, 2002
Class A-1A2...... October 15, 2004
Class A-1A3...... 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,
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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, finally, to the Class A-1A1, Class
A-1A2, Class A-1A3, 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, Yield
Maintenance Charges or Excess Interest 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-1A1, Class A-1A2,
Class A-1A3, 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
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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 $25,000 initial Certificate Balance or Notional
Balance 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 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.
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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.
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
$25,000 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-1A1, Class
A-1A2, Class A-1A3, 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.
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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 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-1A1
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 as to which an Appraisal Reduction
Event occurs will generate collections at the same rate it had prior to such
Appraisal Reduction Event. Under such circumstances, the more senior
outstanding Classes of
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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 actually collected and the
portion of the interest payments actually collected that is equal to interest
accrued on unreversed Appraisal Reductions 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 of principal payments could
result in an actual yield to such investor that is lower than the anticipated
yield. In general, the
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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-1A1, Class A-1A2, Class A-1A3, 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-1A1, Class A-1A2,
Class A-1A3, 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-1A1, Class
A-1A2, Class A-1A3, 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 significant loss, or in some cases a
complete loss, of an investor's
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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-1A1, Class A-1A2, Class A-1A3, 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-1A1, Class A-1A2, Class A-1A3, 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 Control #63 and Control #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%", "7%", "10%" and "15%" assume that, with the exception of
Control #63 and Control #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 Lockout 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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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 17, 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 of 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-1A1
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.............. 80 80 80 80 80 80
August 15, 2000.............. 58 58 58 58 57 57
August 15, 2001.............. 34 34 33 33 32 31
August 15, 2002.............. 9 7 7 6 5 3
August 15, 2003.............. 0 0 0 0 0 0
August 15, 2004.............. 0 0 0 0 0 0
August 15, 2005.............. 0 0 0 0 0 0
August 15, 2006.............. 0 0 0 0 0 0
August 15, 2007.............. 0 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
Weighted Average Life(2) .... 2.31 2.29 2.28 2.27 2.26 2.23
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CLASS A-1A2
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.............. 51 49 48 47 46 43
August 15, 2004.............. 21 18 16 15 12 9
August 15, 2005.............. 0 0 0 0 0 0
August 15, 2006.............. 0 0 0 0 0 0
August 15, 2007.............. 0 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
Weighted Average Life(2) .... 5.13 5.09 5.07 5.05 5.02 4.97
</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 of 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-87
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
(OR NOTIONAL BALANCE)
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS A-1A3
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.......... 75 73 72 71 69 67
August 15, 2006.......... 52 48 45 43 40 34
August 15, 2007.......... 6 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
Weighted Average
Life(2)................. 7.92 7.82 7.75 7.70 7.62 7.51
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<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
Weighted Average
Life(2)................. 9.50 9.49 9.48 9.47 9.45 9.42
</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 of 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 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
Weighted Average Life(2) 9.57 9.55 9.53 9.52 9.50 9.47
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<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
Weighted Average Life(2) 9.90 9.90 9.90 9.90 9.90 9.90
</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 of 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 C
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........... 92 90 89 87 85 82
August 15, 2009........... 57 53 50 47 43 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
Weighted Average Life(2) 11.08 11.01 10.96 10.92 10.86 10.75
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CLASS D
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........... 100 100 100 100 100 100
August 15, 2009........... 100 100 100 100 100 100
August 15, 2010........... 77 73 70 68 64 57
August 15, 2011........... 54 45 39 34 25 12
August 15, 2012........... 30 17 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
Weighted Average Life(2) 13.17 12.93 12.78 12.65 12.49 12.29
</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 of 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>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
(OR NOTIONAL BALANCE)
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS E
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........... 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 61 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
Weighted Average Life(2) 14.40 14.40 14.38 14.32 14.09 13.68
</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 of 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-91
<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 Servicer 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 Servicer 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 Servicer 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;
S-92
<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,
public recording office 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 Servicer 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 originator;
(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
S-93
<PAGE>
and similar documents and any other written agreements relating to each
Mortgage Loan (collectively, the "Master Servicer 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 earlier of (a) any acceleration of
maturity based on a default other than the non-payment of Excess Interest or
principal in excess of the principal component of the related Scheduled
Monthly Payment or (b) 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
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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 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 Trustee becomes the successor Master Servicer, the Trustee, as
successor Master Servicer 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.
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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, unless the outstanding Scheduled Principal Balance
of the Mortgage Loan is $1,000,000 or less, 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
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recoverable from the Trust Fund. Based upon such appraisal, internal
valuation or, as described in the 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
two Business Days 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 but not limited to 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+" or its equivalent by
each Rating Agency 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
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therein, and BBB or its equivalent or (ii) a segregated trust account or
accounts maintained with a federally or state chartered depository
institution or trust 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 and the Distribution 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, Yield Maintenance Charges, Excess Interest and Appraisal Reduction
Excess Collections 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 (provided that the Trustee
will also have the right to withdraw such amounts for such applications);
(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
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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) 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, and
such borrower creates any such lien or other encumbrance, 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 downgrade, withdraw or qualify 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 30, 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
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12 months or (ii) extends the maturity date of any mortgage loan beyond the
Scheduled Final Distribution Date for the Class N-1 Certificates 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.
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.
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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.
If the Master Servicer fails to make any required Advance, the Trustee, as
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") with
respect to each Mortgage Loan and for each Distribution Date equal to
one-twelfth ( 1/12) of a per annum rate (the related "Servicing Fee Rate")
ranging from 0.1573% to 0.0573% (in the case of the Mortgage Loans sold to
the Transferor by NRFinance and PMCF) and equal to 0.0573% (in the case of
the Mortgage Loans sold to the Transferor by any other Mortgage Loan Seller
or originator) multiplied by the Scheduled Principal Balance of such Mortgage
Loan as of the Due Date in the month preceding the month in which such
Distribution Date occurs. 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, Yield Maintenance Charges, Excess Interest,
Appraisal Reduction Excess Collections 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
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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 as and when due (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 after such
default); (vii) the Master Servicer proposes to commence foreclosure or other
workout arrangements; or (viii) the Master Servicer otherwise determines that
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 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. If any such removal that is made without cause, then the costs
associated with the transfer of servicing to a successor Special Servicer
shall be paid by the removing Certificateholders, as described in the Pooling
and Servicing Agreement.
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
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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 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;
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(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;
(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
Reductions 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. Also, certain information
made available in the Distribution Date Statements may be obtained by
accessing a World Wide Website maintained by the Trustee at
http://www.globaltrustservices.com.
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 in accordance with the Servicing
Standard 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
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necessary or appropriate), also make available any information relating to
the Mortgage Loans, the Mortgaged Properties or the borrowers 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 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-1A1, Class A-1A2, Class A-1A3,
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.
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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
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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
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(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.
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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.
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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 17, 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>
PRUDENTIAL SECURITIES AGGREGATE INITIAL
CLASS INCORPORATED CIBC OPPENHEIMER CORP. CERTIFICATE BALANCE
- ------------- --------------------- ---------------------- -------------------
<S> <C> <C> <C>
Class A-1A1 $ 63,028,000 $11,827,000 $ 74,855,000
Class A-1A2 $ 61,808,000 $11,598,000 $ 73,406,000
Class A-1A3 $ 92,441,000 $17,346,000 $109,787,000
Class A-1B $324,648,000 $60,920,000 $385,568,000
Class A-2MF $147,217,000 $27,625,000 $174,842,000
Class B $ 48,363,000 $ 9,075,000 $ 57,438,000
Class C $ 53,198,000 $ 9,983,000 $ 63,181,000
Class D $ 50,781,000 $ 9,529,000 $ 60,310,000
Class E $ 14,509,000 $ 2,723,000 $ 17,232,000
</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-1A1, Class A-1A2, Class A-1A3, 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"
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<PAGE>
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
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-114
<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-95
Advances................................................................ S-95
Annual Debt Service..................................................... S-48
Anticipated Repayment Date.............................................. S-38
Appraisal Reduction..................................................... S-96
Appraisal Reduction Excess Collections.................................. S-34
Appraised LTV........................................................... S-48
Appraised Value......................................................... S-49
ARD Loans............................................................... S-38
Asset Status Report.................................................... S-101
Assisted Living Loans................................................... S-36
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 Payment......................................................... S-38
Balloon/ARD LTV......................................................... S-48
Base Interest Fraction.................................................. S-75
Beneficial Owners....................................................... S-79
Book-Entry Certificate.................................................. S-78
Cash Flow......................................................... S-47, S-48
Casualty................................................................ S-42
CERCLA.................................................................. S-29
Certificate Balance..................................................... S-17
Certificate Registrar................................................... S-81
Certificates....................................................... S-1, S-17
CIBC..................................................................... S-3
Class A-EC Notional Balance............................................. S-67
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
Closing Date............................................................ S-18
Code............................................................. S-23, S-108
Collection Account...................................................... S-97
Collection Period................................................. S-18, S-69
Commission............................................................... S-5
Condemnation............................................................ S-42
Condemnation Proceeds................................................... S-68
Cooperative Loans....................................................... S-36
Cooperative Properties.................................................. S-36
Corrected Mortgage Loan................................................ S-104
S-115
<PAGE>
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-104
Distribution Account.................................................... S-97
Distribution Date.................................................. S-3, S-67
DSCR.............................................................. 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-98
EPA..................................................................... S-29
ERISA.................................................................. S-109
ESA..................................................................... S-45
Excess Cash Flow........................................................ S-38
Excess Interest......................................................... S-38
Fee Interest............................................................ S-60
Final Recovery Determination............................................ S-76
FIRREA.................................................................. S-65
Form 8-K................................................................ S-55
Ground Lease............................................................ S-60
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-36
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
Master Servicer Mortgage File........................................... S-94
Mini Warehouse Loans.................................................... S-36
Mini Warehouse Properties............................................... S-36
Mobile Home Park Loans.................................................. S-36
S-116
<PAGE>
Mobile Home Park Properties............................................. S-36
Monthly Payment......................................................... S-68
Moody's................................................................. S-23
Mortgage................................................................ S-35
Mortgage File........................................................... S-94
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-47
Net REO Proceeds........................................................ S-69
NOI..................................................................... S-47
Nonrecoverable Advance................................................. S-103
Notional Balances....................................................... S-68
NRF...................................................................... S-3
NRFinance................................................................ S-3
Nursing Home Loans...................................................... S-36
Nursing Home Properties................................................. S-36
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-98
P&I Advance....................................................... S-21, S-94
P&I Certificates......................................................... S-3
Plan Asset Regulations................................................. S-110
Plans.................................................................. S-109
PMCC..................................................................... S-3
PMCF..................................................................... S-3
Pool Balance............................................................ S-35
Pooled Principal Distribution Amount.............................. S-21, S-70
Pooling and Servicing Agreement.............................. S-5, S-17, S-92
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
Property Advances....................................................... S-95
PSCC..................................................................... S-3
RCRA.................................................................... S-30
S-117
<PAGE>
Record Date....................................................... S-18, S-67
Regular Certificates............................................... S-1, S-22
Remaining Amortization Term............................................. S-49
Remaining Term to Maturity.............................................. S-48
REMIC.................................................. S-5, S-8, S-22, S-108
REMIC I............................................................ S-5, S-22
REMIC II........................................................... S-5, S-22
Remittance Date......................................................... S-94
REO Account............................................................. S-67
REO Mortgage Loan....................................................... S-71
REO Property........................................................... S-103
Residual Certificates.................................................... S-1
Restricted Group................................................ S-110, S-111
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, S-77
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-103
Servicing Fee Rate..................................................... S-103
Similar Law............................................................ S-109
SMMEA............................................................ S-24, S-112
S&P..................................................................... S-23
Special Servicer......................................................... S-5
Special Servicing Fee.................................................. S-104
Subordinate Certificates................................................. S-3
Transferor.......................................................... S-3, S-64
Trust Fund............................................................... S-3
Trust REMICs............................................................. S-5
Trustee.................................................................. S-5
Trustee Mortgage File................................................... S-92
Underlying Mortgage Loan Purchase Agreements............................ S-36
Underwriters...................................................... S-1, S-113
Underwriting Agreement................................................. S-113
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
Workout Fee............................................................ S-104
Year Built.............................................................. S-49
Year Renovated.......................................................... S-49
Yield Maintenance Charge................................................ S-39
Yield Maintenance Period................................................ S-39
S-118
<PAGE>
Yield Rate.............................................................. S-39
Zoning Laws............................................................. S-32
S-119
<PAGE>
ANNEX A
EXPLANATORY NOTES
Shaded Loans signify either single notes secured by multiple mortgages, or
cross-collateralized/cross-defaulted notes and mortgages.
Crossed loans include a summation of certain loan parameters (e.g. Cut-off
date balance) on the top line of the loan group, therefore some loan totals
are duplicated and must be adjusted to attain portfolio totals.
"NRF", "PMCC", "CIBC" and "Midland" denote National Realty Finance L.C.,
Prudential Mortgage Capital Funding, LLC, CIBC Inc. and Midland Loans
Services, Inc., respectively, as Sellers.
Sets of Mortgage Loans that have identical numeric coding designate multiple
Mortgage Loans that cross-collateralized and cross-defaulted.
Certain ratios including Cut-Off Date Balance/Unit or SF, DSCR, LTV and
Balloon LTV are calculated on a combined basis for Mortgage Loans that are
secured by multiple Mortgaged Properties or are cross-collateralized and
cross-defaulted.
"ARD" indicates the Anticipated Repayment Date.
The Amortization Term shown is the basis for determining the fixed monthly
principal and interest payment as set forth in the related Note. For those
Mortgage Loans utilizing an actual/360 interest calculation methodology, the
actual amortization to a zero balance may require more monthly payments than
indicated.
In general for each Mortgaged Property, "Physical Occupancy Percent" was
determined based on a rent roll provided by the related Borrower. In certain
cases, "Physical Occupancy Percent" was determined based on an appraisal,
operating statement or occupancy report.
"Largest Tenant" refers to the tenant that represents the greatest percentage
of the total square footage at the related Mortgaged Property.
Indicates prepayment provisions from the first regularly scheduled payment
date, as stated in the Mortgage Loan. "YM" represents yield maintenance.
"YM1", "YM2", "YM3" and "YM5" represent the greater of yield maintenance or
one percent, two percent, three percent and five percent of the outstanding
principal balance at such time, respectively. The stated percentages
represent specified percentage Prepayment Premiums. "Open" represents a
period during which principal prepayments are permitted without payment of a
Prepayment Premium. For each Mortgage Loan, the sum of the numbers set forth
under the Prepayment Description category represents the number of months in
the original term to maturity.
"Seasoning" represents the approximate number of months elapsed from the date
of the first regularly scheduled payment to the Cut-Off Date.
All Mortgage Loans are first liens with the exception of loan number 1376
which is a second lien cross-collateralized and cross-defaulted with the
existing first lien on loan number 1908B.
NOI numbers which are blank were either not available or were obtained from a
period of time that such information was not comparable.
<PAGE>
ANNEX A
LOAN CHARACTERISTICS
<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
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CONTROL PROPERTY PROPERTY ZIP
NUMBER PROPERTY ADDRESS PROPERTY CITY STATE CODE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Various Various Various Various
11048-11056 Shady Trail Dallas TX 75229
2210 Hutton Drive Carrollton TX 75006
12901 Hutton Dr.; 2000 Academy Ln.; 12900 & 12920 Senlac Dr. Farmers Branch TX 75234
1702 & 1712 Old Minter Chapel Road Grapevine TX 76051
8701 John W. Carpenter Freeway Dallas TX 75247
1825 E. Plano Parkway Plano TX 75074
10503 Forest Lane Dallas TX 75243
1517 W. North Carrier Parkway Grand Prairie TX 75050
9000 Southwest Freeway/Various St. Nos. on Commerce Park Dr. Houston TX 77074
2 2355 Dulles Corner Blvd. Herndon VA 22071
3 Various Various Various Various
900 W. Northland Ave. Appleton WI 54911
1125 Atlantic Avenue Atlantic City NJ 08401
8025 Black Horse Pike West Atlantic City NJ 08401
Loop 250 and Midkiff Road Midland TX 79701
501 Birdwell Lane Big Spring TX 79720
2820 South Padre Island Drive Corpus Christi TX 78469
560 Broad Street Newark NJ 07102
1015 Springfield Ave. Irvington NJ 07111
309,313,315, U.S. Route 202 Hunterdon County NJ 08822
92018th Avenue Newark NJ 07102
240 Martin Luther King Ave. Morris Township NJ 07950
2020 Corlies Avenue Neptune City NJ 10105
631 Joyce Kilmer Ave. New Brunswick NJ 08901
35 Branca Road East Rutherford NJ 07073
2546 Fire Road Egg Harbor NJ 08213
Memorial Parkway & 291 Pickford Ave. Phillipsburg NJ 08865
436 Central Avebue East Orange NJ 07018
214 East Main Street Patchogue NY 11772
4 1600 Viceroy Drive Dallas TX 75235
5 2200 Monroe Street Santa Clara CA 95050
Various Various Various Various
6 404 Odlin Road Bangor ME 04401
7 1200 Fifth Street, S. W. Charlottesville VA 22901
8 510-522 Main Street Bangor ME 04401
9 215 High Street Ellsworth ME 04605
11 46 Brittany Farms Road New Britain CT 06053
12 700 Broadview Village Square Broadview IL 60153
14 1704 North Dixie Highway Elizabethtowne KY 42701
13 Various Various Various Various
16801 Addison Road Addison TX 75001
1779 Wells Branch Parkway Austin TX 78728
990 N. Walnut Creek Drive Mansfield TX 76063
821 E. Southeast Loop 323 Tyler TX 75701
2201 Brookhollow Plaza Arlington TX 76010
2101 Bedford Road Bedford TX 76021
5555 Rufe Snow Drive N. Richardson HillsTX 76180
15 100-700 Juniper Drive Delmar NY 12054
16 Various Various Various Various
1401 N. Central Expressway Richardson TX 75080
3201 Airport Freeway Bedford TX 76021
9333 Forest Lane Dallas TX 75243
3200 Troup Highway Tyler TX 75701
1425 Gross Road Mesquite TX 75149
747 N. Central Expressway Richardson TX 75080
2201 Loy Lake Road Sherman TX 75090
2222 Spring Creek Parkway Plano TX 75023
3200-3300 W. Anderson Austin TX 78731
17 500-520 North Dearborn, 52-56 West Illinois, and 501-521 North Clark Chicago IL 60610
18 3253 Walters Lane Forestville MD 20747
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CONTROL
NUMBER PROPERTY TYPE BORROWER NAME
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Industrial AIP-SWAG Operating Partnership, LP
Industrial AIP-SWAG Operating Partnership, LP
Industrial AIP-SWAG Operating Partnership, LP
Industrial AIP-SWAG Operating Partnership, LP
Industrial AIP-SWAG Operating Partnership, LP
Industrial AIP-SWAG Operating Partnership, LP
Industrial AIP-SWAG Operating Partnership, LP
Industrial AIP-SWAG Operating Partnership, LP
Industrial AIP-SWAG Operating Partnership, LP
Industrial AIP-SWAG Operating Partnership, LP
2 Office Mayfair Joint Venture, L.L.C. and 2355 Associates L.P.
3 Various Various
Retail - Anchored Northland Mall LLC, c/o DID Acquisition Company, Inc.
Office 1125 Atlantic Avenue LLC, c/o DID Acquisition Company, Inc.
Office Bayport One, LLC c/o DID Acquisition Company, Inc.
Retail - Unanchored U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc.
Retail - Unanchored U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc.
Office U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc.
Office U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc.
Retail - Unanchored U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc.
Retail - Unanchored Aetna Realty Financial Note Corp., c/o DID Acquisition Company, Inc.
Retail - Unanchored Aetna Realty Financial Note Corp., c/o DID Acquisition Company, Inc.
Industrial U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc.
Office U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc.
Industrial U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc.
Industrial Aetna Realty Financial Note Corp., c/o DID Acquisition Company, Inc.
Industrial U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc.
Office U.S. Realty Financial Corp., c/o DID Acquisition Company, Inc.
Retail - Unanchored Aetna Realty Financial Note Corp., c/o DID Acquisition Company, Inc.
Retail - Unanchored Aetna Realty Financial Note Corp., c/o DID Acquisition Company, Inc.
4 Office Lepercq Corporate Income Fund L.P.
5 Multifamily Old Orchard
Hotel Various
6 Hotel Penobscot Yacht Club
7 Hotel Morris Creek Yacht Club
8 Hotel Kenduskeag Yacht Club
9 Hotel Union River Yacht Club
11 Multifamily Brittany Farms Associates, LP
12 Retail - Single Tenant HD - TB, LLC
14 Retail - Anchored Towne Mall LLC
13 Various Aberfeldy III, LP
Office Aberfeldy III, LP
Retail - Unanchored Aberfeldy III, LP
Office Aberfeldy III, LP
Office Aberfeldy III, LP
Mixed Use Aberfeldy III, LP
Retail - Unanchored Aberfeldy III, LP
Retail - Unanchored Aberfeldy III, LP
15 Multifamily Adams Station, LLC
16 Various Aberfeldy I, LP
Office Aberfeldy I, LP
Mixed Use Aberfeldy I, LP
Mixed Use Aberfeldy I, LP
Office Aberfeldy I, LP
Retail - Unanchored Aberfeldy I, LP
Retail - Unanchored Aberfeldy I, LP
Retail - Unanchored Aberfeldy I, LP
Office Aberfeldy I, LP
Retail - Unanchored Aberfeldy I, LP
17 Mixed Use The Boyce Building Group, LLC
18 Multifamily Amerwood Apartments, LLC
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
CONTROL ORIGINAL PRINCIPAL CUT-OFF DATE GROSS MORTGAGE NET MORTGAGE
NUMBER BALANCE BALANCE LOAN TYPE RATE RATE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $30,550,000.00 $30,380,396.31 Fixed 7.250% 7.193%
1,225,463.27 1,218,659.89 Fixed 7.250% 7.193%
1,352,005.67 1,344,499.77 Fixed 7.250% 7.193%
4,995,094.83 4,967,363.69 Fixed 7.250% 7.193%
2,464,246.78 2,450,566.09 Fixed 7.250% 7.193%
1,265,424.02 1,258,398.80 Fixed 7.250% 7.193%
2,197,841.73 2,185,640.02 Fixed 7.250% 7.193%
7,392,740.35 7,351,698.26 Fixed 7.250% 7.193%
2,197,841.73 2,185,640.02 Fixed 7.250% 7.193%
7,459,341.62 7,417,929.77 Fixed 7.250% 7.193%
2 24,100,000.00 24,080,400.83 Fixed 7.040% 6.983%
3 23,933,899.00 23,799,050.85 Fixed 8.155% 8.098%
3,961,440.00 3,939,120.50 Fixed 8.155% 8.098%
4,519,500.00 4,494,036.30 Fixed 8.155% 8.098%
2,247,960.00 2,235,294.59 Fixed 8.155% 8.098%
2,160,763.00 2,148,588.80 Fixed 8.155% 8.098%
1,649,863.00 1,640,567.33 Fixed 8.155% 8.098%
1,964,263.00 1,953,195.98 Fixed 8.155% 8.098%
863,863.00 858,995.81 Fixed 8.155% 8.098%
1,178,263.00 1,171,624.46 Fixed 8.155% 8.098%
785,263.00 780,838.70 Fixed 8.155% 8.098%
309,733.00 307,987.92 Fixed 8.155% 8.098%
1,099,663.00 1,093,467.28 Fixed 8.155% 8.098%
785,263.00 780,838.70 Fixed 8.155% 8.098%
580,903.00 577,630.11 Fixed 8.155% 8.098%
474,793.00 472,117.95 Fixed 8.155% 8.098%
494,443.00 491,657.19 Fixed 8.155% 8.098%
426,858.00 424,452.97 Fixed 8.155% 8.098%
235,671.00 234,343.17 Fixed 8.155% 8.098%
195,394.00 194,293.09 Fixed 8.155% 8.098%
4 22,800,000.00 22,800,000.00 Fixed 7.490% 7.433%
5 19,600,000.00 19,538,161.94 Fixed 7.240% 7.183%
19,455,000.00 19,419,037.69 Fixed 7.310% 7.253%
6 7,163,000.00 7,149,759.29 Fixed 7.310% 7.253%
7 5,397,000.00 5,387,023.72 Fixed 7.310% 7.253%
8 3,584,000.00 3,577,375.02 Fixed 7.310% 7.253%
9 3,311,000.00 3,304,879.66 Fixed 7.310% 7.253%
11 16,500,000.00 16,444,887.90 Fixed 6.950% 6.893%
12 15,000,000.00 14,977,310.09 Fixed 6.780% 6.723%
14 14,500,000.00 14,371,537.62 Fixed 7.390% 7.333%
13 14,437,000.00 14,360,578.55 Fixed 7.500% 7.443%
3,254,383.69 3,237,156.80 Fixed 7.500% 7.443%
1,627,191.85 1,618,578.40 Fixed 7.500% 7.443%
1,038,633.09 1,033,135.15 Fixed 7.500% 7.443%
3,808,321.34 3,788,162.20 Fixed 7.500% 7.443%
2,008,023.98 1,997,394.62 Fixed 7.500% 7.443%
969,390.89 964,259.47 Fixed 7.500% 7.443%
1,731,055.16 1,721,891.91 Fixed 7.500% 7.443%
15 13,840,000.00 13,817,378.84 Fixed 7.030% 6.973%
16 13,652,000.00 13,579,733.95 Fixed 7.500% 7.443%
2,390,005.31 2,377,353.95 Fixed 7.500% 7.443%
1,955,458.89 1,945,107.78 Fixed 7.500% 7.443%
1,086,366.05 1,080,615.43 Fixed 7.500% 7.443%
1,050,153.85 1,044,594.92 Fixed 7.500% 7.443%
1,303,639.26 1,296,738.52 Fixed 7.500% 7.443%
832,880.64 828,471.83 Fixed 7.500% 7.443%
1,050,153.85 1,044,594.92 Fixed 7.500% 7.443%
1,339,851.46 1,332,759.03 Fixed 7.500% 7.443%
2,643,490.69 2,629,497.57 Fixed 7.500% 7.443%
17 12,500,000.00 12,414,270.00 Fixed 8.193% 8.136%
18 12,150,000.00 12,139,942.08 Fixed 6.950% 6.893%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CONTROL 1ST INTEREST 1ST INT. & PRIN. INTEREST GRACE PAYMENT
NUMBER NOTE DATE PAYMENT DATE PAYMENT DATE ACCRUAL METHOD DUE DATE PERIOD FREQUENCY
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 12/30/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/30/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/30/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/30/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/30/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/30/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/30/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/30/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/30/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/30/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
2 07/01/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
3 12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
12/31/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
4 12/30/97 02/01/98 02/01/00 30/360 1st of the month 10 Monthly
5 03/17/98 05/01/98 05/01/98 30/360 1st of the month 5 Monthly
06/04/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
6 06/04/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
7 06/04/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
8 06/04/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
9 06/04/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
11 03/30/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
12 06/29/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
14 11/05/97 01/01/98 01/01/98 Actual/360 1st of the month 7 Monthly
13 12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
15 05/28/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
16 12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
17 07/31/97 09/01/97 09/01/97 Actual/360 1st of the month 10 Monthly
18 06/26/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CONTROL CROSS COLLATERALIZED PREPAYMENT YIELD MAINTENANCE
NUMBER MONTHLY PAYMENT / CROSS DEFAULTED DESCRIPTION DESCRIPTION
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 $208,475.41 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
8,362.65 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
9,226.18 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
34,086.89 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
16,816.20 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
8,635.35 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
14,998.23 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
50,448.59 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
14,998.23 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
50,903.09 6102551 A-I LO(25),YM1(89),O(6) Treasury Flat
2 160,985.84 LO(49),YM1(65),O(6) Treasury Flat
3 183,046.81 24 A-R LO(24),DEF(90),O(6) NAP
30,297.15 24 A-R LO(24),DEF(90),O(6) NAP
34,565.20 24 A-R LO(24),DEF(90),O(6) NAP
17,192.43 24 A-R LO(24),DEF(90),O(6) NAP
16,525.55 24 A-R LO(24),DEF(90),O(6) NAP
12,618.18 24 A-R LO(24),DEF(90),O(6) NAP
15,022.71 24 A-R LO(24),DEF(90),O(6) NAP
6,606.84 24 A-R LO(24),DEF(90),O(6) NAP
9,011.37 24 A-R LO(24),DEF(90),O(6) NAP
6,005.70 24 A-R LO(24),DEF(90),O(6) NAP
2,368.84 24 A-R LO(24),DEF(90),O(6) NAP
8,410.24 24 A-R LO(24),DEF(90),O(6) NAP
6,005.70 24 A-R LO(24),DEF(90),O(6) NAP
4,442.75 24 A-R LO(24),DEF(90),O(6) NAP
3,631.22 24 A-R LO(24),DEF(90),O(6) NAP
3,781.51 24 A-R LO(24),DEF(90),O(6) NAP
3,264.62 24 A-R LO(24),DEF(90),O(6) NAP
1,802.42 24 A-R LO(24),DEF(90),O(6) NAP
1,494.38 24 A-R LO(24),DEF(90),O(6) NAP
4 168,341.71 YM5(144),5%(12),4%(12),O(12) Treasury Flat
5 133,573.64 LO(25),YM1(89),O(6) Treasury Flat
154,475.69 6102944, 6102945, 6102946, 6102947 LO(37),DEF(83) NAP
6 56,875.32 6102945, 6102946, 6102947 LO(37),DEF(83) NAP
7 42,853.01 6102944, 6102946, 6102947 LO(37),DEF(83) NAP
8 28,457.51 6102944, 6102945, 6102947 LO(37),DEF(83) NAP
9 26,289.85 6102944, 6102945, 6102946 LO(37),DEF(83) NAP
11 109,221.40 YM1(120),1%(12),O(12) Treasury Flat
12 107,439.91 LO(25),DEF(171),O(3) NAP
14 106,118.39 LO(24),DEF(29),O(6) NAP
13 100,945.60 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
22,755.12 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
11,377.56 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
7,262.27 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
26,628.34 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
14,040.40 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
6,778.12 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
12,103.79 1907 A-G YM1(144),1%(24),O(12) Treasury Flat
15 92,356.88 YM5(96),5%(12),O(12) Treasury Flat
16 95,456.76 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
16,711.26 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
13,672.85 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
7,596.03 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
7,342.83 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
9,115.23 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
5,823.62 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
7,342.83 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
9,368.44 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
18,483.67 1905 A-I YM1(144),1%(24),O(12) Treasury Flat
17 93,407.90 LO(60),YM1(54),O(6) Treasury Flat
18 80,426.67 YM5(96),5%(12),O(12) Treasury Flat
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CONTROL ORIGINAL ORIGINAL TERM TO MATURITY REMAINING AMORTI- REMAINING TERM
NUMBER AMORTIZATION TERM MATURITY OR ARD DATE OR ARD ZATION PERIOD TO MATURITY OR ARD
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 360 120 01/01/08 353 113
360 120 01/01/08 353 113
360 120 01/01/08 353 113
360 120 01/01/08 353 113
360 120 01/01/08 353 113
360 120 01/01/08 353 113
360 120 01/01/08 353 113
360 120 01/01/08 353 113
360 120 01/01/08 353 113
360 120 01/01/08 353 113
2 360 120 07/01/08 359 119
3 324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
324 120 01/01/08 317 113
4 300 180 01/01/13 293 173
5 360 120 04/01/08 356 116
240 120 07/01/08 239 119
6 240 120 07/01/08 239 119
7 240 120 07/01/08 239 119
8 240 120 07/01/08 239 119
9 240 120 07/01/08 239 119
11 360 144 04/01/10 356 140
12 276 199 01/31/15 275 198
14 300 59 11/01/02 292 51
13 360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
15 360 120 06/01/08 358 118
16 360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
17 360 120 08/01/07 348 108
18 360 120 07/01/08 359 119
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CONTROL BALLOON, FULLY BALLOON/ARD BALLOON/ARD
NUMBER SEASONING AMORTIZING OR ARD BALANCE LTV RATIO DUE ON SALE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 7 Balloon $26,405,903.36 57.6% Yes
7 Balloon 1,059,229.61 57.6% Yes
7 Balloon 1,168,606.58 57.6% Yes
7 Balloon 4,317,511.99 57.6% Yes
7 Balloon 2,129,972.58 57.6% Yes
7 Balloon 1,093,769.71 57.6% Yes
7 Balloon 1,899,705.28 57.6% Yes
7 Balloon 6,389,917.75 57.6% Yes
7 Balloon 1,899,705.28 57.6% Yes
7 Balloon 6,447,484.58 57.6% Yes
2 1 ARD 20,700,203.18 64.3% Yes
3 7 ARD 20,576,548.80 67.0% Yes
7 ARD 3,405,745.38 67.6% Yes
7 ARD 3,885,523.17 67.6% Yes
7 ARD 1,932,626.04 67.6% Yes
7 ARD 1,857,658.72 67.6% Yes
7 ARD 1,418,426.20 67.5% Yes
7 ARD 1,688,724.51 67.5% Yes
7 ARD 742,683.20 67.5% Yes
7 ARD 1,012,981.52 67.5% Yes
7 ARD 675,110.02 67.5% Yes
7 ARD 266,285.37 67.4% Yes
7 ARD 945,406.47 67.5% Yes
7 ARD 675,110.02 67.5% Yes
7 ARD 499,417.13 67.5% Yes
7 ARD 408,191.66 67.5% Yes
7 ARD 425,084.03 67.5% Yes
7 ARD 366,979.38 72.0% Yes
7 ARD 202,611.76 58.7% Yes
7 ARD 167,984.21 33.9% Yes
4 7 Balloon 16,029,606.36 48.6% Yes
5 4 ARD 16,912,974.00 69.0% Yes
1 Balloon 13,123,138.94 49.3% Yes
6 1 Balloon 4,831,716.64 50.6% Yes
7 1 Balloon 3,640,482.09 46.1% Yes
8 1 Balloon 2,417,544.73 50.6% Yes
9 1 Balloon 2,233,395.48 50.6% Yes
11 4 Balloon 13,441,244.39 64.6% Yes
12 1 Balloon 4,114,681.11 26.0% Yes
14 8 ARD 13,396,892.86 57.0% Yes
13 7 Balloon 10,889,347.18 52.2% Yes
7 Balloon 2,454,672.99 52.2% Yes
7 Balloon 1,227,336.49 52.2% Yes
7 Balloon 783,406.27 52.2% Yes
7 Balloon 2,872,489.66 52.2% Yes
7 Balloon 1,514,585.46 52.2% Yes
7 Balloon 731,179.19 52.2% Yes
7 Balloon 1,305,677.12 52.2% Yes
15 2 Balloon 11,884,801.93 68.7% Yes
16 7 Balloon 10,297,249.88 54.6% Yes
7 Balloon 1,802,701.57 54.6% Yes
7 Balloon 1,474,937.65 54.6% Yes
7 Balloon 819,409.81 54.6% Yes
7 Balloon 792,096.14 54.6% Yes
7 Balloon 983,291.77 54.6% Yes
7 Balloon 628,214.18 54.6% Yes
7 Balloon 792,096.14 54.6% Yes
7 Balloon 1,010,605.43 54.6% Yes
7 Balloon 1,993,897.10 54.6% Yes
17 12 ARD 11,228,988.76 61.1% Yes
18 1 Balloon 10,413,908.67 53.4% Yes
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
CONTROL DUE ON FUTURE SUBORDINATE APPRAISAL VALUE
NUMBER ENCUMBRANCE FINANCING APPRAISAL VALUE "AS OF" DATE CURRENT LTV RATIO
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Yes No $45,870,000 Various 66.2%
Yes No 1,840,000 01/23/98 66.2%
Yes No 2,030,000 01/23/98 66.2%
Yes No 7,500,000 01/23/98 66.2%
Yes No 3,700,000 01/29/98 66.2%
Yes No 1,900,000 01/22/98 66.2%
Yes No 3,300,000 01/23/98 66.2%
Yes No 11,100,000 01/23/98 66.2%
Yes No 3,300,000 01/22/98 66.2%
Yes No 11,200,000 01/23/98 66.2%
2 Yes No 32,200,000 05/13/98 74.8%
3 Yes No 30,720,000 Various 77.5%
Yes No 5,040,000 07/01/97 78.2%
Yes No 5,750,000 07/01/97 78.2%
Yes No 2,860,000 07/01/97 78.2%
Yes No 2,750,000 07/01/97 78.1%
Yes No 2,100,000 07/01/97 78.1%
Yes No 2,500,000 07/01/97 78.1%
Yes No 1,100,000 07/01/97 78.1%
Yes No 1,500,000 07/01/97 78.1%
Yes No 1,000,000 07/01/97 78.1%
Yes No 395,000 07/01/97 78.0%
Yes No 1,400,000 07/01/97 78.1%
Yes No 1,000,000 07/01/97 78.1%
Yes No 740,000 07/01/97 78.1%
Yes No 605,000 07/01/97 78.0%
Yes No 630,000 07/01/97 78.0%
Yes No 510,000 03/01/98 83.2%
Yes No 345,000 03/01/98 67.9%
Yes No 495,000 03/01/98 39.3%
4 Yes No 33,000,000 12/10/97 69.1%
5 Yes No 24,500,000 01/08/98 79.7%
Yes No 26,625,000 Various 72.9%
6 Yes No 9,540,000 06/30/98 74.9%
7 Yes No 7,900,000 04/21/98 68.2%
8 Yes No 4,775,000 04/23/99 74.9%
9 Yes No 4,410,000 06/30/98 74.9%
11 Yes No 20,800,000 03/19/98 79.1%
12 Yes No 15,800,000 04/07/98 94.8%
14 Yes No 23,500,000 08/31/97 61.2%
13 Yes No 20,850,000 Various 68.9%
Yes No 4,700,000 09/17/97 68.9%
Yes No 2,350,000 09/04/97 68.9%
Yes No 1,500,000 09/17/97 68.9%
Yes No 5,500,000 09/02/97 68.9%
Yes No 2,900,000 09/15/97 68.9%
Yes No 1,400,000 10/01/97 68.9%
Yes No 2,500,000 10/01/97 68.9%
15 Yes No 17,300,000 04/20/98 79.9%
16 Yes No 18,850,000 Various 72.0%
Yes No 3,300,000 09/10/97 72.0%
Yes No 2,700,000 12/01/97 72.0%
Yes No 1,500,000 09/15/97 72.0%
Yes No 1,450,000 09/02/97 72.0%
Yes No 1,800,000 09/05/97 72.0%
Yes No 1,150,000 08/29/97 72.0%
Yes No 1,450,000 09/08/97 72.0%
Yes No 1,850,000 09/17/97 72.0%
Yes No 3,650,000 09/16/97 72.0%
17 Yes No 18,390,000 04/10/97 67.5%
18 Yes Yes 19,500,000 04/20/98 62.3%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CONTROL
NUMBER YEAR BUILT YEAR RENOVATED OWNERSHIP INTEREST NET RENTABLE SF / UNITS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Various Fee 1,070,795
1984 Fee 67,945
1984 Fee 52,607
1986 Fee 137,581
1985 Fee 73,644
1983 Fee 44,114
1984 Fee 69,011
1979-1986 Fee 257,505
1984 Fee 82,146
1971, 1974 Fee 286,242
2 1988 Fee 178,815
3 Various Various Fee 824,619
1970 1984 Fee 185,046
1900 Fee 86,680
1987 Fee 73,416
1986 Fee 68,671
1962 1972 Fee 171,471
1984 Fee 64,038
1920 Fee 32,800
1931 Fee 26,069
1983 1993 Fee 7,425
1947 1989 Fee 9,600
1960 Fee 17,600
1963 Fee 13,886
1949 Fee 23,860
1965 Fee 3,465
1940 Fee 21,840
N/A Fee 6,572
N/A Fee 2,400
1945 Fee 9,780
4 1986 1996 Fee 242,032
5 1976 1997 Fee 220
Various Various Fee 561
6 1969, 1971 1987, 1998 Fee 207
7 1973 1982 Fee 130
8 1960, 1966 1984-1987, 1992-1994 Fee 121
9 1972-1973 1977 Fee 103
11 1974 Fee 486
12 1994 Fee 135,351
14 1985 Fee 354,167
13 Various Fee 371,516
1982 Fee 69,566
1987 Fee 28,374
1987 Fee 36,277
1985 Fee 94,007
1984 Fee 73,915
1983 Fee 21,282
1983 Fee 48,095
15 1987 Fee & Leasehold 282
16 Various Fee 322,877
1982 Fee 51,527
1986 Fee 37,796
1970 Fee 49,860
1984 Fee 45,632
1986 Fee 23,855
1958 1994 Fee 12,300
1984 Fee 35,661
1985 Fee 27,281
1977 Fee 38,965
17 1914 1997 Fee 172,359
18 1975 Fee 599
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
CONTROL LARGEST TENANT SF PHYSICAL
NUMBER LARGEST TENANT NAME LARGEST TENANT SF AS A % OF TOTAL OCCUPANCY %
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Various Various Various Various
Pooled Source, Inc. 8,120 12.0% 79.4%
Moore Business Forms, Inc. 41,541 79.0% 79.0%
TM Century, Inc. 46,645 33.9% 93.4%
ABB Service. Inc. 11,756 16.0% 45.8%
Sabredata, Inc. 11,772 26.7% 81.3%
Control Manufacturing, Inc. 20,610 29.9% 82.9%
PlasmaQuest, Inc. 29,131 11.3% 85.9%
Cam-Tech Manufacturing, Inc. 10,089 12.3% 100.0%
Federal Express Corporation 39,990 14.0% 76.8%
2 AT&T 168,612 94.3% 99.5%
3 Various Various Various Various
Kohl's 81,525 44.1% 94.1%
Cooper, Perskie, April, Nied 31,118 35.9% 99.0%
Kallister, Westmoreland 11,421 15.6% 73.3%
Creative Schoolhouse, Inc. 10,123 14.7% 82.0%
State of Texas 26,584 15.5% 35.0%
Shiner, Moseley, & Assoc. 8,567 13.4% 93.7%
Concentra Health Services 16,400 50.0% 50.0%
Rite Aid of NJ 13,230 50.7% 51.0%
Pizza Hut 3,100 41.8% 100.0%
Franca Corporation 9,600 100.0% 100.0%
New Jersey Bell Telephone Co. 17,600 100.0% 100.0%
Meridian Health Realty Corp. 13,886 100.0% 100.0%
New Jersey Bell Telephone Co. 23,860 100.0% 100.0%
New Jersey Bell Telephone Co. 3,465 100.0% 100.0%
Bell Atlantic 21,840 100.0% 100.0%
Vista Bancorp 6,572 100.0% 100.0%
Kentucky Fried Chicken 2,400 100.0% 100.0%
Anarik Enterprises, Inc. 9,780 100.0% 100.0%
4 FirstPlus Financial Group, Inc. 242,032 100.0% 100.0%
5 98.6%
Various
6 71.4%
7 65.1%
8 55.2%
9 54.1%
11 96.7%
12 Home Depot 135,351 100.0% 100.0%
14 Sears 69,400 19.6% 85.6%
13 Various Various Various Various
Entex Information Services 10,304 14.8% 97.3%
Players Billards 6,170 21.7% 100.0%
Bank One 10,838 29.9% 96.3%
Health Care Partners 37,313 39.7% 94.8%
Bizmart/Office Max 15,930 21.6% 100.0%
Floors and Windows 4,041 19.0% 88.2%
Con-Way Transportation 28,385 59.0% 100.0%
15 95.4%
16 Various Various Various Various
Professional Court Reporting School 25,079 48.7% 89.2%
Fort Worth Star-Telegram 17,800 47.1% 94.9%
Vingcard 49,860 100.0% 100.0%
Blue Cross & Blue Shield 6,479 14.2% 85.6%
TownBank 5,603 23.5% 100.0%
Wizards 12,300 100.0% 100.0%
Texas Dept. of Human Services 12,215 34.3% 80.6%
Centex Title Company 5,806 21.3% 94.0%
High Fidelity, Inc. 7,820 20.1% 100.0%
17 Health Systems Consultants 43,593 25.3% 98.0%
18 90.7%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
CONTROL OCCUPANCY ORIGINAL UNDERWRITTEN UNDERWRITTEN ANNUAL UNDERWRITTEN
NUMBER AS OF DATE LTV RATIO 1996 NOI 1997 NOI NOI NET CASH FLOW REPLACEMENT RESERVES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Various 66.6% 3,044,616 3,906,929 4,085,568 3,267,164 439,026
06/30/98 66.6% 196,453 198,415 239,478 187,676 27,857
06/30/98 66.6% 173,461 203,625 284,953 244,940 21,569
06/30/98 66.6% 526,927 631,630 641,801 528,327 56,408
06/30/98 66.6% 272,069 319,036 104,850 59,686 30,194
06/30/98 66.6% 174,216 153,996 163,782 129,770 18,087
06/30/98 66.6% 284,243 343,378 307,015 253,329 28,295
06/30/98 66.6% 880,697 888,874 1,106,276 908,964 105,577
06/30/98 66.6% 213,727 260,682 361,677 293,707 33,680
06/30/98 66.6% 322,823 907,293 875,736 660,765 117,359
2 06/23/98 74.8% 0 3,671,176 2,869,920 2,604,307 17,882
3 Various 77.9% 2,877,998 3,683,522 3,773,967 3,131,136 153,309
06/08/98 78.6% 449,185 555,739 665,813 521,361 37,009
06/04/98 78.6% 232,835 500,743 615,711 513,034 17,336
05/31/98 78.6% 336,363 578,280 407,306 337,260 11,012
06/08/98 78.6% 353,874 364,772 410,183 360,738 10,522
05/29/98 78.6% 329,650 329,728 309,721 235,511 36,200
05/01/98 78.6% 275,105 290,334 342,460 258,418 9,603
06/08/98 78.5% 131,916 125,865 186,819 160,497 4,920
05/31/98 78.6% 51,926 214,379 151,197 136,495 3,910
05/29/98 78.5% 133,496 115,939 102,544 100,937 244
05/31/98 78.4% 38,190 47,773 46,451 41,075 1,920
05/29/98 78.5% 106,893 120,721 111,175 97,922 3,520
05/31/98 78.5% 98,135 95,926 111,921 101,190 2,756
05/29/98 78.5% 84,014 94,174 79,143 62,705 4,772
05/29/98 78.5% 64,340 65,544 62,687 59,602 864
05/29/98 78.5% 67,683 66,056 64,835 48,976 5,460
05/29/98 83.7% 56,893 63,301 60,113 54,911 1,314
05/31/98 68.3% 42,779 35,625 26,249 23,919 480
05/29/98 39.5% 24,721 18,623 19,641 16,585 1,467
4 12/24/97 69.1% 0 0 3,223,866 3,223,866 0
5 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 12/31/97 75.1% 936,042 1,160,799 1,156,753 1,041,038 38,572
7 12/31/97 68.3% 728,018 807,980 810,759 735,348 25,137
8 12/31/97 75.1% 419,928 584,980 610,194 524,874 28,440
9 12/31/97 75.1% 477,434 647,683 540,777 478,461 20,772
11 02/25/98 79.3% 1,795,256 2,154,345 2,034,668 2,034,668 109,350
12 04/07/98 94.9% 0 0 1,326,094 1,326,094 0
14 11/30/97 61.7% 2,440,666 2,732,952 2,556,759 2,308,546 70,833
13 Various 69.2% 1,408,394 1,847,532 1,968,496 1,603,391 91,106
04/27/98 69.2% 255,242 367,664 423,003 333,166 17,417
12/31/97 69.2% 137,373 219,804 229,119 206,035 6,733
12/23/97 69.2% 114,151 173,982 146,622 115,342 9,069
01/01/98 69.2% 309,414 454,390 489,942 385,459 23,479
12/23/97 69.2% 355,074 323,856 307,481 253,470 16,733
12/31/97 69.2% 149,628 104,624 141,497 123,104 4,173
12/31/97 69.2% 87,512 203,212 230,832 186,815 13,502
15 03/04/98 80.0% 1,337,351 1,473,828 1,456,121 1,456,121 51,550
16 Various 72.4% 1,521,280 1,770,473 1,791,958 1,529,168 71,276
03/25/98 72.4% 93,898 186,737 212,339 148,155 7,729
03/31/98 72.4% 298,047 284,092 316,371 282,973 13,505
03/31/98 72.4% 129,561 189,187 136,850 121,125 7,479
03/31/98 72.4% 113,337 164,701 156,731 103,687 11,408
03/31/98 72.4% 132,369 192,884 173,099 157,560 6,013
03/31/98 72.4% 110,250 119,033 123,151 116,008 1,845
03/31/98 72.4% 133,746 132,425 155,484 136,354 6,933
03/25/98 72.4% 141,814 154,336 164,661 135,311 7,158
03/31/98 72.4% 368,258 347,078 353,272 327,995 9,206
17 01/01/98 68.0% 427,104 1,711,782 1,732,420 1,544,882 25,457
18 05/31/98 62.3% 1,395,449 1,597,734 1,615,858 1,615,858 149,750
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CONTROL ANNUAL UNDERWRITTEN REPLACEMENT UNDERWRITTEN UNDERWRITTEN NET ORIGINAL LOAN CUT-OFF DATE PAID TO
NUMBER RESERVES PER UNIT/SF NOI DSCR CASH FLOW DSCR PER UNIT/SF LOAN PER UNIT/SF DATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 0.41 1.63 1.31 $28.53 $28.37 08/01/98
0.41 1.63 1.31 28.53 28.37 08/01/98
0.41 1.63 1.31 28.53 28.37 08/01/98
0.41 1.63 1.31 28.53 28.37 08/01/98
0.41 1.63 1.31 28.53 28.37 08/01/98
0.41 1.63 1.31 28.53 28.37 08/01/98
0.41 1.63 1.31 28.53 28.37 08/01/98
0.41 1.63 1.31 28.53 28.37 08/01/98
0.41 1.63 1.31 28.53 28.37 08/01/98
0.41 1.63 1.31 28.53 28.37 08/01/98
2 0.10 1.49 1.35 134.78 134.67 08/01/98
3 0.19 1.72 1.43 29.02 28.86 08/01/98
0.20 1.83 1.43 21.41 21.29 08/01/98
0.20 1.48 1.24 52.14 51.85 08/01/98
0.15 1.97 1.63 30.62 30.45 08/01/98
0.15 2.07 1.82 31.47 31.29 08/01/98
0.21 2.05 1.56 9.62 9.57 08/01/98
0.15 1.90 1.43 30.67 30.50 08/01/98
0.15 2.36 2.02 26.34 26.19 08/01/98
0.15 1.40 1.26 45.20 44.94 08/01/98
0.03 1.42 1.40 105.76 105.16 08/01/98
0.20 1.63 1.44 32.26 32.08 08/01/98
0.20 1.10 0.97 62.48 62.13 08/01/98
0.20 1.55 1.40 56.55 56.23 08/01/98
0.20 1.48 1.18 24.35 24.21 08/01/98
0.25 1.44 1.37 137.03 136.25 08/01/98
0.25 1.43 1.08 22.64 22.51 08/01/98
0.20 1.53 1.40 64.95 64.59 08/01/98
0.20 1.21 1.11 98.20 97.64 08/01/98
0.15 1.10 0.92 19.98 19.87 08/01/98
4 - 1.60 1.60 94.20 94.20 08/01/98
5 214.00 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
6 186.34 1.69 1.53 34,603.86 34,539.90 08/01/98
7 193.36 1.58 1.43 41,515.38 41,438.64 08/01/98
8 235.04 1.79 1.54 29,619.83 29,565.08 08/01/98
9 201.67 1.71 1.52 32,145.63 32,086.21 08/01/98
11 225.00 1.55 1.55 33,950.62 33,837.22 08/01/98
12 - 1.03 1.03 110.82 110.66 08/01/98
14 0.20 2.01 1.81 40.94 40.58 08/01/98
13 0.25 1.63 1.32 38.86 38.65 08/01/98
0.25 1.63 1.32 38.86 38.65 08/01/98
0.24 1.63 1.32 38.86 38.65 08/01/98
0.25 1.63 1.32 38.86 38.65 08/01/98
0.25 1.63 1.32 38.86 38.65 08/01/98
0.23 1.63 1.32 38.86 38.65 08/01/98
0.20 1.63 1.32 38.86 38.65 08/01/98
0.28 1.63 1.32 38.86 38.65 08/01/98
15 182.80 1.31 1.31 49,078.01 48,997.80 08/01/98
16 0.22 1.56 1.33 42.28 42.06 08/01/98
0.15 1.56 1.33 42.28 42.06 08/01/98
0.36 1.56 1.33 42.28 42.06 08/01/98
0.15 1.56 1.33 42.28 42.06 08/01/98
0.25 1.56 1.33 42.28 42.06 08/01/98
0.25 1.56 1.33 42.28 42.06 08/01/98
0.15 1.56 1.33 42.28 42.06 08/01/98
0.19 1.56 1.33 42.28 42.06 08/01/98
0.26 1.56 1.33 42.28 42.06 08/01/98
0.24 1.56 1.33 42.28 42.06 08/01/98
17 0.15 1.55 1.38 72.52 72.03 08/01/98
18 250.00 1.67 1.67 20,283.81 20,267.02 08/01/98
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CONTROL REPAIR & REMEDIATION TI/LC RESERVE P&I RESERVE ENVIRONMENTAL ECONOMIC
NUMBER RESERVE HOLDBACK HOLDBACK HOLDBACK RESERVE HOLDBACK RESERVE HOLDBACK TOTAL RESERVE HOLDBACK
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 216,563.00 258,364.73 14,637.00 489,564.73
2 8,750.00 212,042.00 220,792.00
3
4 3,223,584.00 3,223,584.00
5 144,163.65 144,163.65
6 78,820.52 750.00 79,570.52
7 54,616.31 750.00 55,366.31
8 28,457.51 750.00 29,207.51
9 26,289.85 750.00 27,039.85
11 310,000.00 310,000.00
12
14 17,574.39 17,574.39
13 11,731.66 11,731.66
15
16 28,633.54 28,633.54
17
18 12,480.00 1,125.00 13,605.00
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
CONTROL MONTHLY REPLA- MONTHLY MONTHLY INSUR- MONTHLY TI/LC
NUMBER CEMENT RESERVES TAX ESCROW ANCE ESCROW PAYMENT
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 65,634.47 6,666.68
2 1,483.00 26,521.73 2,407.58 20,644.00
3
10,342.25 2,250.00
6,875.92 1,808.33
5,568.25 1,366.67
2,374.00 841.67
1,461.33 1,725.00
5,368.25 691.67
2,252.75 733.33
3,473.83 800.00
3,827.58 16.67
1,126.42 266.67
1,458.83 700.00
2,279.83 66.67
2,034.92 600.00
854.17 133.33
1,488.08 333.33
1,163.08 225.00
3,670.92 33.33
1,631.33 525.00
4
5 3,923.33 4,519.59 2,147.09
6 10,396.86 10,673.67 874.67
7 7,832.94 2,601.12 1,176.33
8 5,201.26 7,824.78 1,402.58
9 4,805.94 5,106.01 1,452.25
11 20,082.19 5,666.67
12
14 6,788.00 17,582.25 2,166.67 2,500.00
13 26,097.60
15 27,601.88 2,430.22
16 23,520.72
17 2,122.00 32,763.35 2,265.75
18 17,294.74 5,993.42
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
CONTROL LOAN LOAN
NUMBER NUMBER GROUP ORIGINATOR PROPERTY NAME
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 Philly 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
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CONTROL PROPERTY PROPERTY ZIP
NUMBER PROPERTY ADDRESS PROPERTY CITY STATE CODE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
19 4141 N. St. Augustine Road Dallas TX 75228
20 Various Various Various Various
10660 Plano Road/10720 Miller Road Dallas TX 75238
4141 N. St. Augustine Road Dallas TX 75228
1219 & 1221 Abrams Road Richardson TX 75243
1800-1820 Shiloh Road Tyler TX 75701
21 2700 Route 22 Union NJ 07083
22 8990-8996 Miramar Road San Diego CA 92126
23 NWC Alma School Road and Southern Avenue Mesa AZ 85202
24 700 Broadway Westwood NJ 07675
25 1841 Highway 69 Prescott AZ 86301
26 2000 White Swan Drive Greece NY 14626
27 1820 Georgia Highway 20/138 Conyers GA 30013
28 3131 Knights Road Bensalem PA 19020
29 6501 South Cass Avenue Westmont IL 60559
30 1750 South Erie Blvd. Hamilton OH 45011
31 8701 Chestnut Circle Kansas City MO 64131
32 600 Memorial Drive Cambridge MA 02139
33 1825 Tamiami Trail Port Charlotte FL 33948
34 13418 Dottie Drive Tampa FL 33617
35 267-655 N. Milwaukee Boise ID 83704
36 23550 Commerce Park Road Beachwood OH 44122
37 5900 University Drive Huntsville AL 35816
38 16350 Harbor Boulevard Fountain Valley CA 92704
41 3429 Canyon Crest Drive Riverside CA 92507
Various Various WA Various
39 12223 NE 116th Kirkland WA 98034
40 15901 West Valley Highway Tukwila WA 98188
Various Various WA Various
42 15750 NE 15th Bellevue WA 98008
43 2901 "I" Steet N.E. Auburn WA 98002
44 8787 Southside Blvd. Jacksonville FL 32256
45 5407-5447 Kings Highway Brooklyn NY 11203
46 5915 Landerbrook Drive Mayfield Heights OH 44124
47 40-42 Old Ridgebury Road Danbury CT 06810
48 10303 Metcalf Avenue Overland Park KS 66212
49 US Highway 12 & Willowbrook Road Coldwater MI 49036
50 500-530 North Sepulveda El Segundo CA 90245
51 16100 Pearl Road Strongsville OH 44136
52 8800-8820 Burnet Road & 9070 Research Blvd. Austin TX 78757
53 1445 Monroe Drive Atlanta GA 30324
55 Del Mar Blvd. And San Dario Ave. Laredo TX 78045
54 455 Racine Drive Wilmington NC 28403
56 Philadelphia PA 19123
100 - 30 Spring Garden Street Philadelphia PA 19123
1004 - 36 Spring Garden Street Philadelphia PA 19123
511 - 19 North Broad Street Philadelphia PA 19123
2901 Grant Avenue Philadelphia PA 19123
57 1600 Emmet Street Charlottesville VA 22901
58 12052 North Shore Drive Reston VA 20190
59 2900 Tree Lane Jeffersontown KY 40299
Various Various Various Various
61 303 Route 35 N Eatontown NJ 07799
62 1000-1206 Nesconset Highway Nesconset NY 11787
60 Watt Street and Route 7 Schenectady NY 12304
63 524 North Ely Kennewick WA 99336
64 1150 Northpoint Blvd. Waukegan IL 60085
65 42200 Margarita Road Temecula CA 92592
66 2708 North 68th Street Scottsdale AZ 85257
67 6303 Dry Creek Parkway Longmont CO 80503
68 7540 Dodge Street Omaha NE 68114
70 Various Various Various Various
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CONTROL
NUMBER PROPERTY TYPE BORROWER NAME
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
19 Office Aberfeldy IV, LP
20 Office Aberfeldy IV, LP
Office Aberfeldy IV, LP
Office Aberfeldy IV, LP
Office Aberfeldy IV, LP
Office Aberfeldy IV, LP
21 Retail - Anchored 2700 Route 22, LLC
22 Retail - Unanchored Miramar Commercial Center, Ltd.
23 Retail - Anchored Fiesta Village Shopping Centers, INC.,
24 Retail - Anchored First Real Estate Investment Trust of New Jersey
25 Retail - Anchored Grace Investment Co.
26 Multifamily Creek House Housing Partners, LP
27 Retail - Anchored F.S. Associates, LP
28 Multifamily B-S Partners, LP
29 Nursing Home Westmont Convalescent Center, LP. American National Bank and Trust of Chicago, as
successor trustee to Bank of Ravenwood
30 Retail - Anchored Hamilton Crossings, LP
31 Multifamily Chestnut Hill, LLC
32 Office MCE-MCC Joint Venture, LLC
33 Retail - Anchored CMC/Village Marketplace LP and McKinley RetailSouth LP
34 Multifamily Wildwood Acres Development, Inc. and Wildwood Acres Development, Inc.
35 Retail-Shadow Anchored Walla Walla Shopping Center Associates and Paul Revere
36 Industrial Mercantile Exchange, LP
37 Retail - Anchored NP Huntsville, LLC
38 Multifamily Pacific Woods, LLC
41 Multifamily Crest 220, LP
Hotel Shuh-Wen Liu and Kin-Luan Liu
39 Hotel Shuh-Wen Liu and Kin-Luan Liu
40 Hotel Shuh-Wen Liu and Kin-Luan Liu
Various Various
42 Assisted Living John W. Underwood, Mary Ann Underwood, H. C. Chavers, Ruth B. Chavers, Mark A. Chavers,
Kathy Chavers, and Crossroads Retirement Center, Inc.
43 Multifamily John W. Underwood, Mary Ann Underwood, Hosea C. Chavers, Ruth B. Chavers, Mark A.
Chavers, and Parkside West, Inc.
44 Multifamily DonCo of Florida, Inc.
45 Multifamily King Clarendon Associates, LP
46 Office Landerbrook Place, LP
47 Office United Value Realty Investments, LLC
48 Retail - Anchored 103 Investors, LP
49 Retail - Anchored Willowbrook Village, LP
50 Retail - Anchored New Group-El Segundo, LLC
51 Multifamily Hunters Hollow Apartments LLC
52 Retail - Unanchored Sage-Interwest Associates, Ltd.
53 Multifamily Capstone Morningside Chase, LP
55 Retail - Anchored North Creek Group, Ltd.
54 Multifamily Campus Walk Associates, GP
56 Various
Retail - Unanchored Front and Spring Garden Street Associates
Retail - Unanchored Spring-Ten Associates
Office 511 Associates
Industrial Grant Plaza Associates
57 Hotel Lake Monticello Yacht Club
58 Assisted Living Tall Oaks at Reston, LC
59 Multifamily Hunters Ridge Apartments, L.P
Retail - Unanchored Various
61 Retail - Unanchored D.J. Associates, GP
62 Retail - Unanchored J.J.J.D. Associates, GP
60 Retail - Anchored Crosstown Plaza, LLC
63 Assisted Living HCRC, LLC
64 Office Northpoint Business Center, LP and American National Bank and Trust Company of Chicago,
as Trustee
65 Multifamily Ventana Properties, LLC
66 Retail - Unanchored 68th & Thomas, Inc.
67 Warehouse North Star, Inc.
68 Retail - Anchored Heritage Plaza, LLC
70 Office 1021 Hennepin Associates
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
CONTROL ORIGINAL PRINCIPAL CUT-OFF DATE GROSS MORTGAGE NET MORTGAGE
NUMBER BALANCE BALANCE LOAN TYPE RATE RATE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
19 4,900,000.00 4,688,861.61 Fixed 7.500% 7.443%
20 7,308,000.00 7,269,315.49 Fixed 7.500% 7.443%
1,421,000.00 1,413,478.01 Fixed 7.500% 7.443%
1,827,000.00 1,817,328.87 Fixed 7.500% 7.443%
3,383,333.33 3,365,423.84 Fixed 7.500% 7.443%
676,666.67 673,084.77 Fixed 7.500% 7.443%
21 12,000,000.00 11,941,357.72 Fixed 7.490% 7.433%
22 11,850,000.00 11,775,785.52 Fixed 7.340% 7.283%
23 11,300,000.00 11,232,461.35 Fixed 9.270% 9.213%
24 10,600,000.00 10,550,904.41 Fixed 7.380% 7.323%
25 10,500,000.00 10,435,138.96 Fixed 7.410% 7.353%
26 10,200,000.00 10,166,394.89 Fixed 7.020% 6.963%
27 10,100,000.00 10,050,958.39 Fixed 7.140% 7.043%
28 10,000,000.00 9,991,899.64 Fixed 7.060% 6.963%
29 10,000,000.00 9,964,362.44 Fixed 7.280% 7.223%
30 9,850,000.00 9,814,729.59 Fixed 7.250% 7.193%
31 9,750,000.00 9,726,770.04 Fixed 7.190% 7.092%
32 9,750,000.00 9,658,948.78 Fixed 7.440% 7.383%
33 9,450,000.00 9,426,395.33 Fixed 6.950% 6.850%
34 9,300,000.00 9,255,675.11 Fixed 7.280% 7.123%
35 9,300,000.00 9,243,672.60 Fixed 7.510% 7.453%
36 9,200,000.00 9,188,714.70 Fixed 7.040% 6.983%
37 9,190,000.00 9,171,551.61 Fixed 7.140% 7.083%
38 9,000,000.00 8,955,522.70 Fixed 7.050% 6.948%
41 8,800,000.00 8,792,843.45 Fixed 7.040% 6.933%
8,875,000.00 8,842,805.14 Fixed 7.490% 7.433%
39 4,885,000.00 4,867,279.23 Fixed 7.490% 7.433%
40 3,990,000.00 3,975,574.84 Fixed 7.490% 7.433%
8,825,000.00 8,762,713.48 Fixed 7.400% 7.343%
42 4,925,000.00 4,890,239.54 Fixed 7.400% 7.343%
43 3,900,000.00 3,872,473.95 Fixed 7.400% 7.343%
44 8,400,000.00 8,372,756.68 Fixed 7.100% 6.995%
45 8,300,000.00 8,288,540.62 Fixed 7.200% 7.143%
46 8,273,000.00 8,260,458.89 Fixed 7.410% 7.304%
47 8,250,000.00 8,207,768.97 Fixed 7.750% 7.693%
48 8,200,000.00 8,131,303.84 Fixed 7.310% 7.204%
49 8,050,000.00 7,974,435.12 Fixed 7.280% 7.223%
50 7,800,000.00 7,762,935.61 Fixed 7.250% 7.141%
51 7,700,000.00 7,688,808.86 Fixed 6.990% 6.933%
52 7,700,000.00 7,670,715.34 Fixed 7.350% 7.293%
53 7,520,000.00 7,483,557.38 Fixed 7.150% 7.040%
55 7,450,000.00 7,352,642.31 Fixed 7.380% 7.323%
54 7,400,000.00 7,395,401.18 Fixed 7.020% 6.909%
56 7,180,000.00 7,114,208.93 Fixed 8.425% 8.368%
2,060,000.00 2,041,124.01 Fixed 8.425% 8.368%
790,000.00 782,761.15 Fixed 8.425% 8.368%
2,180,000.00 2,160,024.44 Fixed 8.425% 8.368%
2,150,000.00 2,130,299.33 Fixed 8.425% 8.368%
57 7,045,000.00 7,032,198.86 Fixed 7.450% 7.393%
58 7,000,000.00 6,978,982.54 Fixed 7.490% 7.433%
59 7,000,000.00 6,971,981.17 Fixed 7.180% 7.066%
6,900,000.00 6,788,711.69 Fixed 8.670% 8.613%
61 2,900,000.00 2,853,226.65 Fixed 8.670% 8.613%
62 4,000,000.00 3,935,485.04 Fixed 8.670% 8.613%
60 6,880,000.00 6,838,503.74 Fixed 8.435% 8.378%
63 6,750,000.00 6,717,088.22 Fixed 7.500% 7.443%
64 6,625,000.00 6,619,580.25 Fixed 7.010% 6.953%
65 6,625,000.00 6,603,087.37 Fixed 7.000% 6.943%
66 6,600,000.00 6,584,292.19 Fixed 7.250% 7.132%
67 6,600,000.00 6,600,000.00 Fixed 7.020% 6.963%
68 6,500,000.00 6,455,832.51 Fixed 7.540% 7.483%
70 6,300,000.00 6,231,189.11 Fixed 7.950% 7.893%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CONTROL 1ST INTEREST 1ST INT. & PRIN. INTEREST GRACE PAYMENT
NUMBER NOTE DATE PAYMENT DATE PAYMENT DATE ACCRUAL METHOD DUE DATE PERIOD FREQUENCY
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
19 12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
20 12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
21 12/08/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
22 11/21/97 01/01/98 01/01/98 30/360 1st of the month 10 Monthly
23 05/30/97 07/01/97 07/01/97 Actual/360 1st of the month 7 Monthly
24 01/08/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
25 10/24/97 01/01/98 01/01/98 30/360 1st of the month 7 Monthly
26 03/24/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
27 01/16/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
28 06/11/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
29 04/22/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
30 04/02/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
31 04/21/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
32 11/13/97 01/01/98 01/01/98 30/360 1st of the month 10 Monthly
33 04/21/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
34 03/27/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
35 11/24/97 01/01/98 01/01/98 30/360 1st of the month 10 Monthly
36 07/01/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
37 04/10/98 06/01/98 06/01/98 Actual/360 1st of the month 5 Monthly
38 01/28/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
41 06/17/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
05/28/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
39 05/28/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
40 05/28/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
01/30/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
42 01/30/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
43 01/30/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
44 03/31/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
45 05/21/98 07/01/98 07/01/98 Actual/360 1st of the month 7 Monthly
46 05/05/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
47 11/21/97 01/01/98 01/01/98 Actual/360 1st of the month 7 Monthly
48 12/11/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
49 01/23/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
50 01/09/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
51 05/08/98 07/01/98 07/01/98 Actual/360 1st of the month 10 Monthly
52 03/31/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
53 01/13/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
55 12/30/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
54 06/05/98 08/01/98 08/01/98 Actual/360 1st of the month 10 Monthly
56 09/17/97 11/01/97 11/01/97 Actual/360 1st of the month 7 Monthly
09/17/97 11/01/97 11/01/97 Actual/360 1st of the month 7 Monthly
09/17/97 11/01/97 11/01/97 Actual/360 1st of the month 7 Monthly
09/17/97 11/01/97 11/01/97 Actual/360 1st of the month 7 Monthly
09/17/97 11/01/97 11/01/97 Actual/360 1st of the month 7 Monthly
57 06/04/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
58 03/20/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
59 02/09/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
09/12/97 11/01/97 11/01/97 30/360 1st of the month 10 Monthly
61 09/12/97 11/01/97 11/01/97 30/360 1st of the month 10 Monthly
62 09/12/97 11/01/97 11/01/97 30/360 1st of the month 10 Monthly
60 08/26/97 10/01/97 10/01/97 Actual/360 1st of the month 7 Monthly
63 12/30/97 02/01/98 02/01/98 Actual/360 1st of the month 5 Monthly
64 06/15/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
65 03/02/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
66 06/01/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
67 01/30/98 04/01/98 04/01/00 30/360 1st of the month 10 Monthly
68 10/08/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
70 09/24/97 11/01/97 11/01/97 30/360 1st of the month 10 Monthly
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
CONTROL MONTHLY CROSS COLLATERALIZED/ PREPAYMENT YIELD MAINTENANCE
NUMBER PAYMENT CROSS DEFAULTED DESCRIPTION DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
19 60,226.78 1908 YM5(96),5%(12),O(6) Treasury Flat
20 51,098.60 1376 YM1(144),1%(24),O(12) Treasury Flat
9,935.84 1376 YM1(144),1%(24),O(12) Treasury Flat
12,774.65 1376 YM1(144),1%(24),O(12) Treasury Flat
23,656.76 1376 YM1(144),1%(24),O(12) Treasury Flat
4,731.35 1376 YM1(144),1%(24),O(12) Treasury Flat
21 83,823.59 LO(24),DEF(90),O(6) NAP
22 81,562.53 YM5(114),O(6) Treasury Flat
23 93,126.14 LO(48),DEF(66),O(6) NAP
24 73,247.69 YM1(156),1%(12),O(12) Treasury Flat
25 72,771.52 LO(24),3%(12),2%(12),1%(66),O(6) Treasury Flat
26 67,997.92 YM5(144),5%(12),4%(12),O(12) Treasury Flat
27 68,147.86 LO(30),DEF(84),O(6) NAP
28 66,933.69 LO(49),YM1(65),O(6) Treasury Flat
29 72,474.08 YM5(120),3%(12),O(12) Treasury Flat
30 71,196.48 YM5(96),1%(12),O(12) Treasury Flat
31 66,115.86 LO(49),YM1(65),O(6) Treasury Flat
32 71,671.55 YM3(96),O(24) Treasury Flat
33 62,554.08 LO(25),YM1(90),O(6) Treasury Flat
34 67,400.89 YM2(60),YM1(36),1%(12),O(12) Treasury Flat
35 65,090.64 YM1(114),O(6) Treasury Flat
36 65,258.63 LO(49),DEF(71) NAP
37 62,007.80 LO(48),YM1(69),O(3) Treasury Flat
38 60,179.75 LO(25), YM1(89),O(6) Treasury Flat
41 58,783.21 LO(36),DEF(78),O(6) NAP
71,442.14 2498, 2499 YM5(96),5%(12),O(12) Treasury Flat
39 39,323.36 2499 YM5(96),5%(12),O(12) Treasury Flat
40 32,118.78 2498 YM5(96),5%(12),O(12) Treasury Flat
64,643.03 1224, 1269 YM3(120),3%(96),1%(12),O(12) Treasury Flat
42 36,075.57 1269 (Cross-defaulted only) YM3(120),3%(96),1%(12),O(12) Treasury Flat
43 28,567.46 1224 (Cross-defaulted only) YM3(120),3%(96),1%(12),O(12) Treasury Flat
44 56,450.68 LO(25),YM1(89),O(6) Treasury Flat
45 56,339.42 LO(24),DEF(90),O(6) NAP
46 57,337.03 LO(26),DEF(88),O(6) NAP
47 59,104.01 LO(24),DEF(90),O(6) NAP
48 59,587.51 LO(25),YM1(89),O(6) Treasury Flat
49 61,241.15 YM3(120),2%(12),1%(12),O(36) Treasury Flat
50 53,209.75 LO(25), YM1(209),O(6) Treasury Flat
51 51,176.58 LO(60), YM1(114),O(6) Treasury Flat
52 54,416.75 LO(24),YM1(84),O(12) Treasury Flat
53 50,790.59 LO(25),YM1(89),O(6) Treasury Flat
55 59,471.23 YM5(120),5%(12),4%(12),O(36) Treasury Flat
54 49,331.82 LO(49),YM1(65),O(6) Treasury Flat
56 57,452.87 7A - D LO(24),DEF(54),O(6) NAP
16,483.69 7A - D LO(24),DEF(54),O(6) NAP
6,321.42 7A - D LO(24),DEF(54),O(6) NAP
17,443.91 7A - D LO(24),DEF(54),O(6) NAP
17,203.85 7A - D LO(24),DEF(54),O(6) NAP
57 56,538.85 LO(37),DEF(203) NAP
58 48,897.09 YM3(156),3%(12),O(12) Treasury Flat
59 47,420.44 LO(25),YM1(89),O(6) Treasury Flat
60,624.28 940906323, 940906324 YM5(96),5%(12),O(12) Treasury Flat
61 25,479.77 940906324 YM5(96),5%(12),O(12) Treasury Flat
62 35,144.51 940906323 YM5(96),5%(12),O(12) Treasury Flat
60 52,584.64 LO(24),DEF(90),O(6) NAP
63 47,196.98 LO(60),YM1(54),O(6) Treasury plus 140 bp
64 44,120.79 YM3(108),3%(12),O(24) Treasury Flat
65 44,076.29 YM5(114),O(6) Treasury Flat
66 47,705.25 LO(25),YM1(88),O(6) Treasury Flat
67 43,998.65 YM5(96),O(24) Treasury Flat
68 45,627.11 YM5(96),5%(12),O(12) Treasury Flat
70 48,415.93 1057 A-B YM3(60),3%(6),2%(6),O(12) Treasury Flat
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CONTROL ORIGINAL ORIGINAL TERM TO MATURITY REMAINING AMORTI- REMAINING TERM
NUMBER AMORTIZATION TERM MATURITY OR ARD DATE OR ARD ZATION PERIOD TO MATURITY OR ARD
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
19 114 114 07/01/07 107 107
20 360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
360 180 01/01/13 353 173
21 360 120 01/01/08 353 113
22 360 120 12/01/07 352 112
23 360 120 06/01/07 346 106
24 360 180 02/01/13 354 174
25 360 120 12/01/07 352 112
26 360 180 04/01/13 356 176
27 360 120 02/01/08 354 114
28 360 120 07/01/08 359 119
29 300 144 05/01/10 297 141
30 300 120 05/01/08 297 117
31 360 120 05/01/08 357 117
32 300 120 12/01/07 292 112
33 360 121 06/01/08 357 118
34 300 120 04/01/08 296 116
35 360 120 12/01/07 352 112
36 300 120 07/01/08 299 119
37 360 120 05/01/08 357 117
38 360 120 02/01/08 354 114
41 360 120 07/01/08 359 119
240 120 06/01/08 238 118
39 240 120 06/01/08 238 118
40 240 120 06/01/08 238 118
300 240 02/01/18 294 234
42 300 240 02/01/18 294 234
43 300 240 02/01/18 294 234
44 360 120 04/01/08 356 116
45 360 120 06/01/08 358 118
46 360 120 06/01/08 358 118
47 360 120 12/01/07 352 112
48 300 120 01/01/08 293 113
49 264 180 02/01/13 258 174
50 360 240 02/01/18 354 234
51 360 180 06/01/13 358 178
52 330 120 04/01/08 326 116
53 360 120 02/01/08 354 114
55 240 180 01/01/13 233 173
54 360 120 07/01/08 359 119
56 300 84 10/01/04 290 74
300 84 10/01/04 290 74
300 84 10/01/04 290 74
300 84 10/01/04 290 74
300 84 10/01/04 290 74
57 240 240 07/01/18 239 239
58 360 180 04/01/13 356 176
59 360 120 03/01/08 355 115
240 120 10/01/07 230 110
61 240 120 10/01/07 230 110
62 240 120 10/01/07 230 110
60 360 120 09/01/07 349 109
63 360 120 01/01/08 353 113
64 360 144 07/01/10 359 143
65 360 120 04/01/08 356 116
66 300 119 05/01/08 298 117
67 360 120 03/01/08 355 115
68 360 120 11/01/07 351 111
70 300 84 10/01/04 290 74
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CONTROL BALLOON, FULLY BALLOON/ARD BALLOON/ARD
NUMBER SEASONING AMORTIZING OR ARD BALANCE LTV RATIO DUE ON SALE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
19 7 Fully Amortizing 0.00 0.0% Yes
20 7 Balloon 5,512,179.46 51.0% Yes
7 Balloon 1,071,812.67 51.0% Yes
7 Balloon 1,378,044.86 51.0% Yes
7 Balloon 2,551,934.93 51.0% Yes
7 Balloon 510,386.99 51.0% Yes
21 7 ARD 10,595,060.89 66.2% Yes
22 8 Balloon 10,248,632.47 61.0% Yes
23 14 ARD 10,396,043.38 67.6% Yes
24 6 Balloon 7,959,920.26 56.1% Yes
25 8 ARD 9,095,314.95 64.6% Yes
26 4 Balloon 7,555,770.64 58.6% Yes
27 6 Balloon 8,695,381.73 61.7% Yes
28 1 ARD 8,593,312.34 68.7% Yes
29 3 Balloon 7,296,222.55 50.0% Yes
30 3 Balloon 7,799,251.96 61.9% Yes
31 3 ARD 8,403,725.66 68.9% Yes
32 8 Balloon 7,759,969.82 59.7% Yes
33 3 Balloon 8,084,062.97 68.5% Yes
34 4 Balloon 7,369,803.79 59.0% Yes
35 8 Balloon 8,073,711.00 64.6% Yes
36 1 Balloon 7,242,380.92 55.7% Yes
37 3 Balloon 8,047,147.69 69.1% Yes
38 6 Balloon 7,732,173.82 54.8% Yes
41 1 Balloon 7,558,580.27 65.7% Yes
2 Balloon 6,021,271.72 41.4% Yes
39 2 Balloon 3,314,243.65 49.8% Yes
40 2 Balloon 2,707,028.07 34.3% Yes
6 Balloon 3,233,693.06 27.2% Yes
42 6 Balloon 1,804,638.90 26.9% Yes
43 6 Balloon 1,429,054.17 27.5% Yes
44 4 ARD 7,225,107.56 68.8% Yes
45 2 ARD 7,278,122.99 69.3% Yes
46 2 ARD 7,166,241.72 64.0% Yes
47 8 ARD 7,332,426.19 67.9% Yes
48 7 Balloon 6,503,423.43 59.1% Yes
49 6 Balloon 4,021,106.61 39.4% Yes
50 6 Balloon 4,532,306.39 43.6% Yes
51 2 Balloon 5,889,770.60 52.6% Yes
52 4 Balloon 6,419,922.38 55.8% Yes
53 6 Balloon 6,475,679.84 55.3% Yes
55 7 Balloon 1,430,509.96 13.0% Yes
54 1 ARD 6,459,096.63 68.0% Yes
56 10 ARD 6,458,134.64 63.3% Yes
10 ARD 1,852,891.00 63.3% Yes
10 ARD 710,574.70 63.3% Yes
10 ARD 1,960,826.40 63.3% Yes
10 ARD 1,933,842.55 63.3% Yes
57 1 Fully Amortizing 0.00 0.0% Yes
58 4 Balloon 5,277,931.74 49.8% Yes
59 5 Balloon 6,032,058.39 60.9% Yes
10 Balloon 4,853,951.29 45.4% Yes
61 10 Balloon 2,040,066.46 43.4% Yes
62 10 Balloon 2,813,884.83 46.9% Yes
60 11 ARD 6,213,710.55 61.5% Yes
63 7 Balloon 5,961,216.28 69.3% Yes
64 1 Balloon 5,406,387.18 65.1% Yes
65 4 Balloon 5,685,070.40 68.2% Yes
66 2 Balloon 5,241,930.50 59.6% Yes
67 5 Balloon 5,917,964.91 66.8% Yes
68 9 Balloon 5,646,634.46 67.6% Yes
70 10 Balloon 5,552,664.02 65.5% Yes
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
CONTROL DUE ON FUTURE SUBORDINATE APPRAISAL VALUE
NUMBER ENCUMBRANCE FINANCING APPRAISAL VALUE "AS OF" DATE CURRENT LTV RATIO
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
19 Yes No 5,200,000 11/01/97 90.2%
20 Yes No 10,800,000 Various 71.7%
Yes No 2,100,000 09/15/97 71.7%
Yes No 2,700,000 11/01/97 71.7%
Yes No 5,000,000 09/16/97 71.7%
Yes No 1,000,000 09/02/97 71.7%
21 Yes No 16,000,000 10/01/97 74.6%
22 Yes No 16,800,000 11/01/97 70.1%
23 Yes No 15,390,000 03/03/97 73.0%
24 Yes No 14,200,000 12/05/97 74.3%
25 Yes No 14,070,000 09/26/97 74.2%
26 Yes No 12,900,000 01/27/98 78.8%
27 Yes No 14,100,000 11/26/97 71.3%
28 Yes No 12,500,000 03/25/98 79.9%
29 Yes No 14,600,000 03/23/98 68.2%
30 Yes No 12,600,000 03/10/98 77.9%
31 Yes No 12,200,000 03/21/98 79.7%
32 Yes No 13,000,000 09/15/97 74.3%
33 Yes No 11,800,000 01/29/98 79.9%
34 Yes No 12,500,000 03/13/98 74.0%
35 Yes No 12,500,000 10/01/97 73.9%
36 Yes No 13,000,000 04/27/98 70.7%
37 Yes No 11,650,000 03/12/98 78.7%
38 Yes No 14,100,000 10/03/97 63.5%
41 Yes No 11,500,000 01/28/98 76.5%
Yes Various 14,550,000 04/21/98 60.8%
39 Yes No 6,650,000 04/21/98 73.2%
40 Yes Yes 7,900,000 04/21/98 50.3%
Yes Various 11,900,000 Various 73.6%
42 Yes No 6,700,000 12/10/97 73.0%
43 Yes Yes 5,200,000 12/15/97 74.5%
44 Yes No 10,500,000 01/28/98 79.7%
45 Yes No 10,500,000 02/10/98 78.9%
46 Yes No 11,200,000 01/26/98 73.8%
47 Yes No 10,800,000 09/15/97 76.0%
48 Yes No 11,000,000 10/02/97 73.9%
49 Yes No 10,200,000 12/15/97 78.2%
50 Yes No 10,400,000 10/12/97 74.6%
51 Yes No 11,200,000 04/01/98 68.7%
52 Yes No 11,500,000 03/12/98 66.7%
53 Yes No 11,700,000 10/10/97 64.0%
55 Yes No 11,000,000 12/11/97 66.8%
54 Yes No 9,500,000 04/06/98 77.8%
56 Yes No 10,200,000 Various 69.7%
Yes No 2,800,000 05/14/97 69.7%
Yes No 1,200,000 05/14/97 69.7%
Yes No 2,300,000 06/27/97 69.7%
Yes No 3,900,000 05/14/97 69.7%
57 Yes No 10,000,000 04/21/98 70.3%
58 Yes No 10,600,000 02/05/98 65.8%
59 Yes No 9,900,000 12/05/97 70.4%
Yes No 10,700,000 04/29/97 63.4%
61 Yes No 4,700,000 04/29/97 60.7%
62 Yes No 6,000,000 05/01/97 65.6%
60 Yes No 10,100,000 05/12/97 67.7%
63 Yes No 8,600,000 11/25/97 78.1%
64 Yes No 8,300,000 04/14/98 79.8%
65 Yes No 8,330,000 12/12/97 79.3%
66 Yes No 8,800,000 12/04/97 74.8%
67 Yes No 8,860,000 10/17/97 74.5%
68 Yes No 8,350,000 09/23/97 77.3%
70 Yes Yes 8,480,000 Various 73.5%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CONTROL
NUMBER YEAR BUILT YEAR RENOVATED OWNERSHIP INTEREST NET RENTABLE SF / UNITS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
19 1979 1997 Fee 121,924
20 Various Various Fee 353,522
1982 Fee 74,688
1979 1997 Fee 121,924
1985 Fee 117,832
1983 Fee 39,078
21 1968 1997 Fee 111,133
22 1986 Fee 163,182
23 1980 Fee 150,612
24 1981 Fee 173,854
25 1994 Leasehold 210,108
26 1997 Fee 240
27 1988-1990 Fee 136,626
28 1965 1995-1998 Fee 344
29 1976 1993 Fee 215
30 1989 Fee 208,277
31 1970, 1975 Fee 389
32 1925 1996 Fee 75,282
33 1984, 1985 1996 Fee 178,247
34 1967 1998 Fee 337
35 1990 Fee 104,046
36 1970-1974 Fee 297,103
37 1997 Fee 82,392
38 1976 Fee 232
41 1984 Fee 220
Various Fee 256
39 1985 Fee 110
40 1986 Fee 146
Various Fee 192
42 1974 Fee 105
43 1993 Fee 87
44 1996-1997 Fee 132
45 1952 Fee 224
46 1989 Fee 77,664
47 1981 Fee 118,849
48 1974, 1987 Fee 190,957
49 1992 Fee 179,741
50 1997 Fee 45,668
51 1989 Fee 208
52 1982 Fee 99,141
53 1975 1990's Fee 201
55 1993 Fee 104,403
54 1990 Fee 288
56 Various Various Fee 207,864
1948 1986 Fee 27,850
1948 1986 Fee 22,156
1911 1993 Fee 63,046
1960 1994 Fee 94,812
57 1960, 1963, 1972 Fee 198
58 1989 Fee 120
59 1969 1993-1998 Fee 384
Various Fee 72,235
61 1986 Fee 31,951
62 1985 Fee 40,284
60 1972 1995 Fee 211,139
63 1967 1995 Fee 136
64 1992 Fee 103,720
65 1990 Fee 143
66 1976 1995, 1997 Fee 101,953
67 1991 Fee 158,127
68 1982 Fee 103,514
70 Various Fee 165,469
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
CONTROL LARGEST TENANT SF PHYSICAL
NUMBER LARGEST TENANT NAME LARGEST TENANT SF AS A % OF TOTAL OCCUPANCY %
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
19 General Services Adminstration/INS 121,924 100.0% 100.0%
20 Various Various Various Various
Computer Resources 6,020 8.1% 86.6%
General Services Adminstration/INS 121,924 100.0% 100.0%
Richland College 18,192 15.4% 84.6%
Medical Team Care 5,129 13.1% 96.6%
21 Circuit City 43,163 38.8% 94.0%
22 Plummers 19,540 12.0% 94.5%
23 Office Max 41,562 27.6% 96.0%
24 K-Mart 84,254 48.5% 95.7%
25 Target 90,000 42.8% 98.5%
26 92.5%
27 A&P 52,816 38.7% 97.1%
28 94.0%
29 94.9%
30 K-Mart 91,723 44.0% 98.3%
31 93.8%
32 Modern Continental Enterprises 35,280 46.9% 96.0%
33 Winn Dixie 42,400 23.8% 96.0%
34 93.5%
35 Ross Stores 28,875 27.8% 96.2%
36 Office Max, Inc. 96,097 32.3% 91.1%
37 Circuit City (National Props., Inc.) 37,591 45.6% 100.0%
38 98.7%
41 92.7%
Various
39 74.5%
40 84.9%
Various
42 88.6%
43 64.4%
44 90.2%
45 99.6%
46 Victoria Financial Corporation 24,762 31.9% 95.0%
47 PHH (HFS Mobility) 30,000 25.2% 92.0%
48 Payless 42,714 22.4% 89.0%
49 Wal-Mart 90,576 50.4% 100.0%
50 Ralph's Supermarket 43,086 94.3% 98.9%
51 98.1%
52 Trudy's North Star 8,700 8.8% 95.8%
53 93.5%
55 Marshalls 40,000 38.3% 87.0%
54 90.6%
56 Various Various Various Various
Delilah's Den of Philadelphia 11,000 39.5% 100.0%
The Spaghetti Warehouse 16,156 72.9% 100.0%
Assessment & Treatment Alternative 9,225 14.6% 100.0%
Busy Body 20,300 21.4% 100.0%
57 70.5%
58 93.3%
59 84.6%
Seaman's Furniture Various Various Various
61 Seaman's Furniture 23,956 75.0% 75.0%
62 Seaman's Furniture 23,000 57.1% 100.0%
60 Caldor 88,680 42.0% 96.0%
63 90.4%
64 Abbott Labs 103,720 100.0% 100.0%
65 100.0%
66 Dean Warren 24,759 24.3% 89.6%
67 Case Logic, Inc. 158,127 1 100.0%
68 Toys R Us 35,534 34.3% 98.0%
70 Various Various Various Various
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
CONTROL OCCUPANCY ORIGINAL UNDERWRITTEN UNDERWRITTEN ANNUAL UNDERWRITTEN
NUMBER AS OF DATE LTV RATIO 1996 NOI 1997 NOI NOI NET CASH FLOW REPLACEMENT RESERVES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
19 12/31/97 94.2% 0 0 725,553 725,553 0
20 Various 72.8% 855,115 1,202,126 998,268 795,351 70,471
12/23/97 72.8% 166,182 206,692 189,799 137,838 13,633
12/31/97 72.8% 169,821 358,312 310,034 310,034 12,277
12/23/97 72.8% 443,565 530,302 393,668 281,638 29,458
12/31/97 72.8% 75,547 106,820 104,767 65,841 15,103
21 07/01/97 75.0% 0 1,487,952 1,531,143 1,476,854 16,669
22 03/17/98 70.5% 1,417,254 1,420,515 1,427,643 1,283,737 46,264
23 03/01/98 73.4% 1,392,938 1,434,459 1,390,656 1,317,675 22,592
24 02/23/98 74.6% 1,380,322 1,286,951 1,243,157 1,204,407 35,807
25 03/01/98 74.6% 879,012 1,276,660 1,178,980 1,096,549 31,516
26 03/06/98 79.1% 0 318,848 1,035,317 1,035,317 60,000
27 05/01/98 71.6% 1,431,966 1,401,865 1,422,253 1,310,932 46,453
28 04/20/98 80.0% 862,514 875,502 1,130,737 1,044,737 86,000
29 03/31/98 68.5% 1,576,844 1,748,375 2,103,387 2,103,387 53,750
30 03/12/98 78.2% 1,306,148 1,253,305 1,208,672 1,148,245 31,242
31 04/06/98 79.9% 1,123,211 1,124,390 1,111,131 1,013,881 97,250
32 03/01/98 75.0% 0 1,278,838 1,218,667 1,100,935 18,821
33 03/31/98 80.1% 534,595 476,408 1,029,045 940,754 35,649
34 03/05/98 74.4% 894,381 1,151,628 1,116,509 1,116,509 84,250
35 03/25/98 74.4% 1,004,127 1,224,358 1,073,724 1,015,558 15,606
36 05/19/98 70.8% 1,104,564 1,165,265 1,266,717 993,287 103,986
37 03/26/98 78.9% 0 0 1,038,725 1,017,115 6,720
38 04/24/98 63.8% 971,331 1,315,339 1,177,081 1,110,497 66,584
41 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 01/28/98 73.5% 938,884 1,078,773 758,510 758,510 114,103
40 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 01/06/98 73.5% 683,691 751,938 693,753 693,753 26,250
43 05/27/98 75.0% 609,405 595,275 525,694 525,694 21,750
44 05/25/98 80.0% 0 391,807 872,912 849,812 23,100
45 02/28/98 79.0% 769,694 953,898 908,714 852,714 56,000
46 04/01/98 73.9% 1,035,846 876,381 1,038,458 907,670 13,988
47 08/01/97 76.4% 0 1,027,112 1,070,394 920,125 23,769
48 05/01/98 74.5% 1,173,154 1,076,272 1,092,171 914,924 55,055
49 04/30/98 78.9% 1,015,884 1,001,974 952,110 925,619 26,961
50 04/20/98 75.0% 0 0 954,268 921,081 6,849
51 03/19/98 68.8% 956,174 757,737 939,871 939,871 52,000
52 01/31/98 67.0% 1,077,505 1,068,481 1,008,664 940,777 14,871
53 03/31/98 64.3% 742,751 726,032 1,041,351 981,051 60,300
55 11/01/97 67.7% 784,476 1,071,793 937,587 901,244 15,654
54 05/23/98 77.9% 947,689 957,303 906,355 848,754 57,601
56 Various 70.4% 617,160 996,580 1,167,189 1,002,111 44,487
06/04/98 70.4% 254,552 345,717 285,515 253,279 6,140
06/04/98 70.4% 90,329 108,515 105,949 88,202 4,437
06/04/98 70.4% - 267,348 380,878 330,583 13,110
06/04/98 70.4% 272,279 275,000 394,847 330,047 20,800
57 12/31/97 70.5% 1,275,987 1,306,548 1,038,865 958,649 26,739
58 03/02/98 66.0% 1,031,904 1,043,276 1,072,211 1,072,211 30,000
59 05/25/98 70.7% 721,833 809,757 828,698 723,098 105,600
Various 64.5% 1,445,759 0 1,146,586 1,091,512 10,634
61 11/01/96 61.7% 671,140 0 473,775 450,524 4,793
62 11/01/96 66.7% 774,619 0 672,811 640,988 5,841
60 04/01/98 68.1% 872,547 932,424 994,377 919,686 31,698
63 10/31/97 78.5% 899,652 559,349 823,437 823,437 27,200
64 06/01/98 79.8% 713,837 733,246 691,591 691,591 34,228
65 01/25/98 79.5% 509,319 714,714 705,080 705,080 25,740
66 05/06/98 75.0% 529,104 581,927 787,863 731,908 15,293
67 04/16/98 74.5% 715,524 0 750,860 714,606 15,813
68 03/31/98 77.8% 889,935 705,990 776,012 745,133 15,522
70 Various 74.3% 756,367 756,575 923,120 760,771 27,442
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CONTROL ANNUAL UNDERWRITTEN REPLACEMENT UNDERWRITTEN UNDERWRITTEN NET ORIGINAL LOAN CUT-OFF DATE PAID TO
NUMBER RESERVES PER UNIT/SF NOI DSCR CASH FLOW DSCR PER UNIT/SF LOAN PER UNIT/SF DATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
19 - 1.00 1.00 40.19 38.46 08/01/98
20 0.20 1.40 1.19 23.54 23.19 08/01/98
0.18 1.40 1.19 23.54 23.19 08/01/98
0.10 1.40 1.19 23.54 23.19 08/01/98
0.25 1.40 1.19 23.54 23.19 08/01/98
0.39 1.40 1.19 23.54 23.19 08/01/98
21 0.15 1.52 1.47 107.98 107.45 08/01/98
22 0.28 1.46 1.31 72.62 72.16 08/01/98
23 0.15 1.24 1.18 75.03 74.58 08/01/98
24 0.21 1.41 1.37 60.97 60.69 08/01/98
25 0.15 1.35 1.26 49.97 49.67 08/01/98
26 250.00 1.27 1.27 42,500.00 42,359.98 08/01/98
27 0.34 1.74 1.60 73.92 73.57 08/01/98
28 250.00 1.41 1.30 29,069.77 29,046.22 08/01/98
29 250.00 2.42 2.42 46,511.63 46,345.87 08/01/98
30 0.15 1.41 1.34 47.29 47.12 08/01/98
31 250.00 1.40 1.28 25,064.27 25,004.55 08/01/98
32 0.25 1.42 1.28 129.51 128.30 08/01/98
33 0.20 1.37 1.25 53.02 52.88 08/01/98
34 250.00 1.38 1.38 27,596.44 27,464.91 08/01/98
35 0.15 1.37 1.30 89.38 88.84 08/01/98
36 0.35 1.62 1.27 30.97 30.93 08/01/98
37 0.08 1.40 1.37 111.54 111.32 08/01/98
38 287.00 1.63 1.54 38,793.10 38,601.39 08/01/98
41 212.00 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 1,037.30 1.61 1.61 44,409.09 44,247.99 08/01/98
40 965.79 1.59 1.59 27,328.77 27,229.96 08/01/98
250.00 1.57 1.57 45,963.54 45,639.13 08/01/98
42 250.00 1.60 1.60 46,904.76 46,573.71 08/01/98
43 250.00 1.53 1.53 44,827.59 44,511.19 08/01/98
44 175.00 1.29 1.25 63,636.36 63,429.97 08/01/98
45 250.00 1.34 1.26 37,053.57 37,002.41 08/01/98
46 0.18 1.51 1.32 106.52 106.36 08/01/98
47 0.20 1.51 1.30 69.42 69.06 08/01/98
48 0.29 1.53 1.28 42.94 42.58 08/01/98
49 0.15 1.30 1.26 44.79 44.37 08/01/98
50 0.15 1.49 1.44 170.80 169.99 08/01/98
51 250.00 1.53 1.53 37,019.23 36,965.43 08/01/98
52 0.15 1.54 1.44 77.67 77.37 08/01/98
53 300.00 1.71 1.61 37,412.94 37,231.63 08/01/98
55 0.15 1.31 1.26 71.36 70.43 08/01/98
54 200.00 1.53 1.43 25,694.44 25,678.48 08/01/98
56 0.21 1.69 1.45 34.54 34.23 08/01/98
0.22 1.69 1.45 34.54 34.23 08/01/98
0.20 1.69 1.45 34.54 34.23 08/01/98
0.21 1.69 1.45 34.54 34.23 08/01/98
0.22 1.69 1.45 34.54 34.23 08/01/98
57 135.05 1.53 1.41 35,580.81 35,516.16 08/01/98
58 250.00 1.83 1.83 58,333.33 58,158.19 08/01/98
59 275.00 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 0.15 1.55 1.47 90.76 89.30 08/01/98
62 0.14 1.60 1.52 99.30 97.69 08/01/98
60 0.15 1.58 1.46 32.59 32.39 08/01/98
63 200.00 1.45 1.45 49,632.35 49,390.35 08/01/98
64 0.33 1.31 1.31 63.87 63.82 08/01/98
65 180.00 1.33 1.33 46,328.67 46,175.44 08/01/98
66 0.15 1.38 1.28 64.74 64.58 08/01/98
67 0.10 1.42 1.35 41.74 41.74 08/01/98
68 0.15 1.42 1.36 62.79 62.37 08/01/98
70 0.17 1.59 1.31 38.07 37.66 08/01/98
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CONTROL REPAIR & REMEDIATION TI/LC RESERVE P&I RESERVE ENVIRONMENTAL ECONOMIC
NUMBER RESERVE HOLDBACK HOLDBACK HOLDBACK RESERVE HOLDBACK RESERVE HOLDBACK TOTAL RESERVE HOLDBACK
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
19
20
21 79,064.99 79,064.99
22
23 73,145.45 73,145.45
24 15,156.00 15,156.00
25
26
27 48,375.00 96,068.03 144,443.03
28 165,312.00 84,329.77 249,641.77
29
30 36,750.00 36,750.00
31 66,115.86 618.75 66,734.61
32
33 312.50 81,305.84 81,618.34
34 750.00 750.00
35
36
37 448.20 448.20
38 70,651.56 70,651.56
41
39 9,030.00 9,030.00
40 11,750.00 11,750.00
42 1,125.00 1,125.00
43
44 72,257.24 72,257.24
45 138,187.50 138,187.50
46 25,000.00 80,035.64 105,035.64
47 32,337.68 32,337.68
48 220,000.00 55,588.00 275,588.00
49
50 58,147.58 58,147.58
51 10,058.00 10,058.00
52
53 56,200.00 65,870.20 500.00 122,570.20
55 54,000.00 54,000.00
54 64,015.03 64,015.03
56 80,847.00 80,847.00
57 68,863.35 750.00 69,613.35
58
59 64,233.24 64,233.24
61
62
60 35,702.53 35,702.53
63 45,144.21 45,144.21
64
65
66 4,950.00 4,950.00
67 124,000.00 124,000.00
68
70 200,000.00 3,332.30 203,332.30
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
CONTROL MONTHLY REPLA- MONTHLY MONTHLY INSUR- MONTHLY TI/LC
NUMBER CEMENT RESERVES TAX ESCROW ANCE ESCROW PAYMENT
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
19
20 12,505.76
21 1,674.35 6,552.80 650.00 8,333.33
22 12,374.21 1,057.71
23 1,618.83 17,629.54
24 57,774.80 210.92
25
26 17,195.26 1,925.85
27 2,277.08 9,971.67 1,837.75 4,166.67
28 7,167.00 10,229.08
29 5,855.66 3,750.00
30 4,569.01 2,703.17
31 8,104.00 8,387.84 3,419.08
32 29,052.06
33 3,286.00 11,735.18 3,730.58
34 9,143.75 5,271.00
35 13,647.84 635.75
36 8,720.00 13,215.01 1,368.42
37 224.00 1,480.66 955.25
38 5,822.55 4,649.26
41 8,930.72 1,259.83
39 9,030.00 5,869.61 2,154.63
40 11,750.00 8,813.43 2,154.63
42 5,885.73 542.33
43 4,862.15 367.67
44 2,762.00 11,990.00 1,054.56
45 4,666.67 18,833.33 2,240.67
46 1,166.00 12,315.27 822.34 8,333.00
47 2,404.98 14,737.91 1,666.67 4,583.33
48 4,588.00 22,890.20 1,132.50
49 8,938.69 1,079.83
50 570.00 3,813.25 554.58
51 5,029.00 16,018.50 2,111.50
52 15,044.00 1,794.75
53 3,977.00 10,082.19 1,020.42
55 16,828.66 5,427.83 9,000.00
54 4,800.00 6,026.79 3,856.42
56 3,312.00 12,296.88 2,741.25 8,983.00
57 6,683.00 4,753.58 887.92
58 5,851.92 638.83
59 8,800.00 4,753.10 3,259.70
61 8,154.23
62 9,517.72 583.33
60 849.93 17,183.31 1,120.85 1,667.67
63 215.50 5,795.75 2,066.50
64
65 8,406.86 1,075.00
66 680.00 6,926.36 146.67
67 13,359.94 6,000.00
68 6,690.63 787.42
70 27,734.61 1,297.42 256.33
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
CONTROL LOAN LOAN
NUMBER NUMBER GROUP ORIGINATOR PROPERTY NAME
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CONTROL PROPERTY PROPERTY ZIP
NUMBER PROPERTY ADDRESS PROPERTY CITY STATE CODE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
950-984 & 1007-1049 10th Ave. S.E. Minneapolis MN 55414
7221, 7261 & 7271 Ohms Lane Edina MN 55439
69 7548 Greenhaven Drive Sacramento CA 95831
71 15420 Livingston Avenue Lutz FL 33549
72 6000 Rockside Woods Boulevard Independence OH 44131
73 5601-5851 Riverdale Rd. Riverdale MD 20737
74 215 Chestnut Street Chattanooga TN 37402
75 3900 Sheraton Drive Macon GA 31210
76 700 Elm Street Manchester NH 03101
77 101 Valley Blvd. Walnut CA 91789
78 1845 North Broadway Escondido CA 92026
82 750 Builders Way Niagara Falls NY 14304
79 4375 E. Sunset Road Henderson NV 89014
80 4240-4292 Lincoln Blvd. Marina Del Rey CA 90292
81 30 S. La Patera Lane Goleta CA 93117
83 710 East Ball Road Anaheim CA 92805
84 1201 Carlisle Rd York PA 17404
87 8530 West Sahara Avenue Las Vegas NV 89117
88 43195 Business Park Drive Temecula CA 92590
89 6107 W. 119th Street Overland Park KS 66209
90 40 Robbie Road Avon MA 02322
91 5751 Main Street Jacksonville FL 32208
92 5910 Princess Garden Parkway Lanham MD 20706
93 1532 South Price Road Tempe AZ 85281
85 5097 Shady Oak Road Minooka IL 60447
94 3501 Woodhaven Road Philadelphia PA 19154
95 130 S. State College Brea CA 92821
97 244 Tunnel Road Asheville NC 28805
96 6316-56 S. Pecos Las Vegas NV 89120
98 202 College Park Dr. Weatherford TX 76086
99 140 Industrial Boulevard Toano VA 23168
100 2024 Watson Boulevard Warner Robins GA 31093
101 300 Forest Glen Boulevard Daytona Beach FL 32114
102 45 Mayhill Street Saddlebrook NJ 07663
103 8 Winter Street Boston MA 02108
106 4705-4757 Transit Road Lancaster NY 14043-5004
104 9450 Watson Road Crestwood MO 63126
105 1484 First Avenue New York NY 10021
107 210 Stone Mill Road Lancaster PA 17603
108 463 Prospect Avenue West Hartford CT 06105
109 7751 SW Bird Road Miami FL 33155
110 1739 SW Loop 410 San Antonio TX 78227
111 801 La Prada Drive Garland TX 75043
112 2835-2897 E. Thousand Oaks Boulevard Thousand Oaks CA 91362
113 3407-3423 Washington Street Lemon Grove CA 91945
116 11420 Colorado Kansas City MO 64137
114 514-549 Palisades Drive Pacific Palisades CA 90272
115 250 S. Stemmons Freeway Lewisville TX 75057
117 6315 - 6381 Old Branch Avenue Camp Springs MD 20748
118 4900 Thoroughbred Lane Nashville/BrentwoodTN 32027
119 1307 Southern Hills West Plains MO 65775
120 17 Corporate Drive Halfmoon NY 12065
121 22290 La Palma Avenue Yorba Linda CA 92687
122 1401 Corporate Center Parkway Santa Rosa CA 95407
123 1444-1466-1488 Pioneer Way El Cajon CA 92020
124 5400 South University Drive Davie FL 33328
125 550 W. Main Street Merced CA 95340
126 813 E. Harmony Road Fort Collins CO 80525
127 17825 N. 7th St. Phoenix AZ 85022
128 990 N. State Rd. 434 Altamonte Springs FL 32701
129 535 Centerville Road Warwick RI 02886
130 1735 and 1700 Main Street West Warwick RI 02893
131 4044 Eagle Rock Boulevard Los Angeles CA 90065
132 214 East Fourth Street St. Paul MN 55101
133 1111-1181 Riley Street Folsom CA 95630
134 22800 Lakeshore Blvd. Euclid OH 44123
135 4710 & 4760 W. Dewey Drive Las Vegas NV 89118
136 3732 Darrow Road Stow OH 44224
137 6105-6125 W. Tropicana Ave. Las Vegas NV 89103
138 3600 E. Cork Street Kalamazoo MI 49001
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CONTROL
NUMBER PROPERTY TYPE BORROWER NAME
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Office 1021 Hennepin Associates
Office 1021 Hennepin Associates
69 Assisted Living Grand Court - Sacramento Associates
71 Multifamily Palms I Partner, Ltd.
72 Office C Center, Ltd
73 Retail - Anchored Riverdale Plaza Shopping Center, LP
74 Hotel McKibbon Hotel Group of Chattenooga, TN, LP
75 Hotel McKibbon Hotel Group of Macon, GA, LLC
76 Hotel JPA III Development Company
77 Office/Industrial Vogel Properties, Inc.
78 Multifamily River Village Apartments, Ltd.
82 Retail - Single Tenant Benderson-Niagara Associates, Inc.
79 Multifamily The Chiou Partnership, GP
80 Retail - Unanchored Marina Associates
81 Industrial La Patera, LLC
83 Industrial East Ball Road Property
84 Retail - Anchored Delco Mall Corp.
87 Multifamily Santal Corporation
88 Warehouse RSR Agri-Corp., Inc.
89 Retail - Unanchored La Paloma Plaza, LLC
90 Industrial New Avon, LP
91 Retail - Anchored The Development Group, Inc.
92 Hotel Capital Beltway, LP
93 Multifamily Tempe Riviera Investors, LP II
85 Mobile Home Park Manufactured Housing Communites, LP
94 Multifamily Townhomes of Liberty Bell Associates
95 Office Brea D Investors
97 Hotel McKibbon Hotel Group of Ashville, NC, LLP
96 Retail - Unanchored American Pacific Capital Sahara Royale Co., LLC
98 Multifamily College Park Development Associates, LP
99 Warehouse First Virginia Warehouse, LP
100 Hotel McKibbon Hotel Group of Warner Robins, GA, LP
101 Multifamily Baron Capital of Daytona, Inc.
102 Industrial Jos. L. Muscarelle, Inc
103 Office Winter 8 Associates, LLC
106 Mixed Use Forestream Village Inc.
104 Retail - Single Tenant Neal A. Morse, Joseph Bouquet, Palisades Investors Inc. and Elaine Hoffman
105 Office Prize Network Group, LLC
107 Multifamily Conestoga West Realty Associates, LP
108 Retail - Anchored HPE Boulevard, LLC
109 Retail - Anchored Tropicaire Development Inc.
110 Retail - Anchored Windward Partners II, LTD
111 Multifamily Grand Court - Garland Associates
112 Retail - Unanchored San Marcos View Estates, LP
113 Multifamily Golden Grove Terrace Apartment, LP
116 Multifamily Knightsbridge Associates, LP
114 Retail - Unanchored Highland Partners, LLC
115 Office Hamilton Trust
117 Mixed Use Old Branch Crossing, LLLP
118 Retail - Unanchored Merchant's Walk, LP
119 Retail - Anchored Southern Hills Center, Ltd.
120 Office Sitterly Associates II
121 Retail - Unanchored Mercado Del Rio Investors, LLC
122 Office John K. Bugay and Reta G. Bugay
123 Office Argus Associates, LP, and MacHutchin Investments, LP
124 Office University Park Properties, LP
125 Office Captial Corp of the West
126 Retail - Single Tenant Smitmart, LLC, Seazona Propeties, Ltd., and Ruffin Tech Center, Ltd.
127 Mobile Home Park CIC Arizona, LLC
128 Retail - Unanchored REC I/Brantley Hall, LP
129 Office Mutual Property Associates, LLP
130 Multifamily Mutual Apartment Properties, LP
131 Retail - Single Tenant Papock Tuttle LP
132 Mixed Use La Tete Maison, Ltd.
133 Retail - Anchored Folsom Central, LLC
134 Retail - Anchored Lakeshore Plaza, LLC
135 Office/Industrial Cameron Dewey, LP
136 Retail - Anchored Coral Stow, LP
137 Retail - Unanchored New Foothills, Inc.
138 Hotel Kal Motel Real Estate, LLC and Kal Motel, Inc.
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
CONTROL ORIGINAL PRINCIPAL CUT-OFF DATE GROSS MORTGAGE NET MORTGAGE
NUMBER BALANCE BALANCE LOAN TYPE RATE RATE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4,814,150.94 4,761,569.04 Fixed 7.950% 7.893%
1,485,849.06 1,469,620.07 Fixed 7.950% 7.893%
69 6,280,000.00 6,265,446.58 Fixed 7.330% 7.273%
71 6,000,000.00 5,965,909.13 Fixed 7.140% 7.016%
72 6,000,000.00 5,957,316.75 Fixed 7.350% 7.226%
73 6,000,000.00 5,953,925.22 Fixed 7.860% 7.803%
74 5,907,000.00 5,860,481.05 Fixed 8.040% 7.983%
75 5,760,000.00 5,714,638.71 Fixed 8.040% 7.983%
76 5,500,000.00 5,473,910.55 Fixed 7.310% 7.253%
77 5,500,000.00 5,477,985.22 Fixed 7.180% 7.123%
78 5,300,000.00 5,295,542.98 Fixed 6.870% 6.813%
82 5,300,000.00 5,158,057.88 Fixed 7.970% 7.913%
79 5,250,000.00 5,237,039.89 Fixed 7.010% 6.877%
80 5,200,000.00 5,183,496.56 Fixed 7.210% 7.153%
81 5,200,000.00 5,159,744.69 Fixed 6.810% 6.753%
83 5,000,000.00 4,991,497.34 Fixed 7.095% 6.958%
84 5,000,000.00 4,990,095.04 Fixed 7.190% 7.133%
87 4,800,000.00 4,787,986.80 Fixed 6.940% 6.799%
88 4,800,000.00 4,800,000.00 Fixed 7.120% 7.063%
89 4,550,000.00 4,544,436.35 Fixed 7.060% 6.915%
90 4,500,000.00 4,478,592.21 Fixed 8.050% 7.993%
91 4,500,000.00 4,478,447.89 Fixed 7.210% 7.064%
92 4,480,000.00 4,459,511.42 Fixed 7.540% 7.483%
93 4,400,000.00 4,389,578.72 Fixed 7.220% 7.163%
85 4,365,000.00 4,342,787.45 Fixed 6.720% 6.663%
94 4,300,000.00 4,283,982.40 Fixed 7.000% 6.850%
95 4,300,000.00 4,276,182.90 Fixed 7.270% 7.213%
97 4,240,000.00 4,206,609.04 Fixed 8.040% 7.983%
96 4,218,750.00 4,208,698.57 Fixed 7.190% 7.133%
98 4,200,000.00 4,168,686.68 Fixed 7.620% 7.563%
99 4,200,000.00 4,160,989.55 Fixed 7.370% 7.313%
100 4,060,000.00 4,028,026.59 Fixed 8.040% 7.983%
101 4,000,000.00 3,986,795.65 Fixed 7.010% 6.853%
102 4,000,000.00 3,986,685.69 Fixed 7.260% 7.203%
103 4,000,000.00 3,986,036.49 Fixed 7.410% 7.353%
106 4,000,000.00 3,942,124.60 Fixed 7.670% 7.613%
104 3,975,000.00 3,952,223.81 Fixed 7.790% 7.733%
105 3,950,000.00 3,950,000.00 Fixed 7.240% 7.083%
107 3,800,000.00 3,795,979.79 Fixed 6.920% 6.763%
108 3,800,000.00 3,791,843.32 Fixed 7.330% 7.273%
109 3,800,000.00 3,777,195.55 Fixed 8.000% 7.943%
110 3,775,000.00 3,760,359.07 Fixed 7.340% 7.283%
111 3,721,875.00 3,698,090.20 Fixed 7.850% 7.793%
112 3,600,000.00 3,591,714.14 Fixed 7.460% 7.303%
113 3,600,000.00 3,591,473.48 Fixed 7.220% 7.063%
116 3,550,000.00 3,486,530.84 Fixed 7.820% 7.763%
114 3,500,000.00 3,497,136.73 Fixed 7.010% 6.853%
115 3,500,000.00 3,491,788.56 Fixed 7.340% 7.283%
117 3,500,000.00 3,484,171.01 Fixed 7.610% 7.553%
118 3,500,000.00 3,483,450.16 Fixed 7.330% 7.173%
119 3,500,000.00 3,482,345.60 Fixed 6.920% 6.863%
120 3,500,000.00 3,458,955.27 Fixed 7.970% 7.913%
121 3,450,000.00 3,436,808.71 Fixed 7.320% 7.163%
122 3,400,000.00 3,389,503.85 Fixed 7.350% 7.293%
123 3,335,000.00 3,301,697.43 Fixed 7.830% 7.773%
124 3,300,000.00 3,292,276.32 Fixed 7.280% 7.223%
125 3,300,000.00 3,275,872.16 Fixed 7.806% 7.749%
126 3,258,000.00 3,227,583.37 Fixed 7.490% 7.433%
127 3,175,000.00 3,158,160.02 Fixed 7.490% 7.433%
128 3,150,000.00 3,147,740.65 Fixed 7.670% 7.613%
129 3,150,000.00 3,137,903.28 Fixed 7.390% 7.333%
130 3,150,000.00 3,133,652.53 Fixed 7.600% 7.543%
131 3,100,000.00 3,084,919.13 Fixed 7.510% 7.453%
132 3,100,000.00 3,077,723.55 Fixed 7.620% 7.563%
133 3,050,000.00 3,025,280.03 Fixed 7.520% 7.363%
134 3,050,000.00 3,020,074.43 Fixed 7.440% 7.383%
135 3,000,000.00 2,996,389.44 Fixed 7.160% 7.103%
136 3,000,000.00 2,993,130.07 Fixed 7.390% 7.333%
137 3,000,000.00 2,990,867.98 Fixed 8.900% 8.843%
138 3,000,000.00 2,980,065.44 Fixed 7.780% 7.723%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CONTROL 1ST INTEREST 1ST INT. & PRIN. INTEREST GRACE PAYMENT
NUMBER NOTE DATE PAYMENT DATE PAYMENT DATE ACCRUAL METHOD DUE DATE PERIOD FREQUENCY
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
09/24/97 11/01/97 11/01/97 30/360 1st of the month 10 Monthly
09/24/97 11/01/97 11/01/97 30/360 1st of the month 10 Monthly
69 04/28/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
71 12/31/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
72 01/30/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
73 12/16/97 01/01/98 01/01/98 30/360 1st of the month 10 Monthly
74 11/04/97 01/01/98 01/01/98 Actual/360 1st of the month 7 Monthly
75 11/04/97 01/01/98 01/01/98 Actual/360 1st of the month 7 Monthly
76 03/24/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
77 02/13/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
78 06/16/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
82 10/09/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
79 05/01/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
80 03/16/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
81 01/14/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
83 06/05/98 08/01/98 08/01/98 Actual/360 1st of the month 10 Monthly
84 04/20/98 06/01/98 06/01/98 Actual/360 1st of the month 5 Monthly
87 05/01/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
88 12/23/97 02/01/98 02/01/99 30/360 1st of the month 10 Monthly
89 07/01/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
90 11/22/97 01/01/98 01/01/98 Actual/360 1st of the month 7 Monthly
91 01/08/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
92 03/19/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
93 04/30/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
85 01/09/98 03/01/98 03/01/98 Actual/360 1st of the month 10 Monthly
94 04/23/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
95 12/23/97 02/01/98 02/01/98 30/360 1st of the month 7 Monthly
97 11/04/97 01/01/98 01/01/98 Actual/360 1st of the month 7 Monthly
96 03/31/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
98 09/25/97 11/01/97 11/01/97 30/360 1st of the month 10 Monthly
99 02/25/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
100 11/04/97 01/01/98 01/01/98 Actual/360 1st of the month 7 Monthly
101 03/25/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
102 02/02/98 04/01/98 04/01/98 Actual/360 1st of the month 7 Monthly
103 04/03/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
106 11/24/97 01/01/98 01/01/98 30/360 1st of the month 10 Monthly
104 11/17/97 01/01/98 01/01/98 30/360 1st of the month 10 Monthly
105 05/01/98 06/01/98 06/01/01 30/360 1st of the month 10 Monthly
107 06/26/98 08/01/98 08/01/98 Actual/360 1st of the month 10 Monthly
108 05/12/98 07/01/98 07/01/98 Actual/360 1st of the month 7 Monthly
109 09/19/97 11/01/97 11/01/97 Actual/360 1st of the month 7 Monthly
110 02/11/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
111 10/14/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
112 05/28/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
113 04/23/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
116 09/29/97 11/01/97 11/01/97 30/360 1st of the month 10 Monthly
114 07/01/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
115 05/21/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
117 03/26/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
118 03/24/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
119 03/10/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
120 02/01/98 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
121 03/11/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
122 03/12/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
123 10/17/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
124 04/16/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
125 12/22/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
126 11/24/97 01/01/98 01/01/98 30/360 1st of the month 10 Monthly
127 12/16/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
128 06/26/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
129 01/29/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
130 12/04/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
131 12/30/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
132 03/19/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
133 12/11/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
134 12/31/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
135 06/15/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
136 04/27/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
137 05/13/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
138 01/28/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CONTROL CROSS COLLATERALIZED PREPAYMENT YIELD MAINTENANCE
NUMBER MONTHLY PAYMENT / CROSS DEFAULTED DESCRIPTION DESCRIPTION
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
36,997.08 1057 A-B YM3(60),3%(6),2%(6),O(12) Treasury Flat
11,418.85 1057 A-B YM3(60),3%(6),2%(6),O(12) Treasury Flat
69 43,181.96 LO(28),DEF(86),O(6) NAP
71 40,483.88 LO(25),YM1(89),O(6) Treasury Flat
72 43,755.72 LO(25),YM1(149),O(6) Treasury Flat
73 45,753.90 YM2(96),1%(6),O(19) Treasury Flat
74 45,747.82 LO(24),DEF(90),O(6) NAP
75 44,609.35 LO(24),DEF(90),O(6) NAP
76 39,967.23 YM5(60),YM3(60),YM(36),O(24) Treasury Flat
77 37,258.92 YM3(60),1%(48),O(12) Treasury Flat
78 34,799.52 YM3(96),3%(12),O(12) Treasury Flat
82 50,557.81 LO(48),YM5%(120),O(12) Treasury Flat
79 34,963.65 LO(61),YM1(113),O(6) Treasury Flat
80 35,332.20 YM5(60),YM3(36),3%(12),O(12) Treasury Flat
81 36,124.66 YM5(120),5%(12),O(12) Treasury Flat
83 39,050.58 LO(60),DEF(120) NAP
84 33,905.57 LO(60),YM1(57),O(3) Treasury Flat
87 31,741.33 LO(61), YM1(113),O(6) Treasury Flat
88 32,322.29 YM3(78),O(6) Treasury Flat
89 32,332.82 LO(25),YM1(89),O(6) Treasury Flat
90 33,176.39 LO(24),DEF(90),O(6) NAP
91 30,575.94 LO(24),YM1(90),O(6) Treasury Flat
92 33,223.46 YM3(156),3%(12),O(12) Treasury Flat
93 29,926.28 YM5(96),5%(12),O(12) Treasury Flat
85 28,224.32 LO(24),DEF(90),O(6) NAP
94 30,391.51 LO(25),YM1(56),O(3) Treasury Flat
95 29,391.93 LO(24),DEF(102),O(6) NAP
97 32,837.44 LO(24),DEF(90),O(6) NAP
96 28,607.82 LO(60),YM1(48),O(12) Treasury Flat
98 29,712.89 YM5(96),5%(12),O(12) Treasury Flat
99 33,501.84 YM5(96),5%(12),O(12) Treasury Flat
100 31,443.40 LO(24),DEF(90),O(6) NAP
101 26,638.97 LO(25),YM1(53),O(6) Treasury Flat
102 27,314.19 LO(24),DEF(90),O(6) NAP
103 29,325.88 YM4(60),YM3(24),YM1(24),O(12) Treasury Flat
106 32,640.80 YM5(168),5%(12),4%(12),3%(12),1%(12),O(24) Treasury Flat
104 28,587.34 YM5(156),5%(24),4%(12),3%(12),2%(12),1%(12),O(12) Treasury Flat
105 23,831.67 LO(25),YM1(125),O(6) Treasury Flat
107 26,663.99 LO(49),YM1(65),O(6) Treasury Flat
108 27,662.82 LO(60),5%(12),4%(12),3%(12),2%(12),1%(6),O(6) Treasury Flat
109 27,883.05 LO(24),DEF(90),O(6) NAP
110 25,983.00 LO(60),YM1(114),O(6) Treasury Flat
111 26,921.62 YM5(96),5%(12),O(12) Treasury Flat
112 26,510.09 LO(25),YM1(89),O(6) Treasury Flat
113 24,485.14 LO(25),YM1(90),O(6) Treasury Flat
116 29,297.18 YM1(96),1%(12),O(12) Treasury Flat
114 23,309.10 LO(25),DEF(89),O(6) NAP
115 25,501.54 YM3(48),YM2(24),O(12) Treasury Flat
117 26,115.64 YM5(96),5%(12),O(12) Treasury Flat
118 25,478.91 LO(25),YM1(91),O(4) Treasury Flat
119 24,558.94 YM5(96),5%(12),O(12) Treasury Flat
120 29,210.10 LO(24),DEF(90),O(6) NAP
121 24,312.80 LO(25),YM1(89),O(6) Treasury Flat
122 23,425.05 YM5(96),5%(12),O(12) Treasury Flat
123 25,365.63 YM1(96),1%(12),O(12) Treasury Flat
124 22,579.01 YM5(96),5%(12),O(12) Treasury Flat
125 25,047.30 LO(24),DEF(90),O(6) NAP
126 24,055.14 YM5(144),5%(12),4%(12),O(12) Treasury Flat
127 22,178.33 YM3(96),3%(12),O(12) Treasury Flat
128 22,393.10 YM2(96),1%(12),O(12) Treasury Flat
129 21,788.48 YM3(144),3%(72),O(24) Treasury Flat
130 22,241.35 YM1(144),1%(72),O(24) Treasury Flat
131 21,696.88 LO(24),DEF(120),3%(12),2%(10),O(6) Treasury Flat
132 25,201.35 YM5(96),5%(12),O(12) Treasury Flat
133 22,578.92 LO(61), YM1(113),O(6) Treasury Flat
134 23,106.22 LO(25),YM1(89),O(6) Treasury Flat
135 21,510.56 YM5(96),5%(12),O(12) Treasury Flat
136 20,750.93 YM3(96),3%(12),O(12) Treasury Flat
137 26,799.14 YM5(96),5%(12),O(12) Treasury Flat
138 22,718.98 YM5(96),5%(12),O(12) Treasury Flat
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CONTROL ORIGINAL ORIGINAL TERM TO MATURITY REMAINING AMORTI- REMAINING TERM
NUMBER AMORTIZATION TERM MATURITY OR ARD DATE OR ARD ZATION PERIOD TO MATURITY OR ARD
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
300 84 10/01/04 290 74
300 84 10/01/04 290 74
69 360 120 05/01/08 357 117
71 360 120 01/01/08 353 113
72 300 180 02/01/13 294 174
73 300 121 01/01/08 292 113
74 300 120 12/01/07 292 112
75 300 120 12/01/07 292 112
76 300 180 04/01/13 296 176
77 360 120 03/01/08 355 115
78 360 120 07/01/08 359 119
82 180 180 11/01/12 171 171
79 360 180 05/01/13 357 177
80 360 120 04/01/08 356 116
81 300 144 02/01/10 294 138
83 240 180 07/01/13 239 179
84 360 120 05/01/08 357 117
87 360 180 05/01/13 357 177
88 360 84 01/01/05 353 77
89 300 120 07/01/08 299 119
90 360 120 12/01/07 352 112
91 360 120 02/01/08 354 114
92 300 180 04/01/13 296 176
93 360 120 05/01/08 357 117
85 360 120 02/01/08 354 114
94 300 84 05/01/05 297 81
95 360 132 01/01/09 353 125
97 300 120 12/01/07 292 112
96 360 120 05/01/08 357 117
98 360 120 10/01/07 350 110
99 240 120 03/01/08 235 115
100 300 120 12/01/07 292 112
101 360 84 04/01/05 356 80
102 360 120 03/01/08 355 115
103 300 120 05/01/08 297 117
106 240 240 12/01/17 232 232
104 360 240 12/01/17 352 232
105 300 156 05/01/11 297 153
107 300 120 07/01/08 299 119
108 300 120 06/01/08 298 118
109 360 120 10/01/07 350 110
110 360 180 03/01/13 355 175
111 360 120 11/01/07 351 111
112 300 120 06/01/08 298 118
113 360 121 05/31/08 357 118
116 240 120 10/01/07 230 110
114 360 120 07/01/08 359 119
115 300 84 06/01/05 298 82
117 300 120 04/01/08 296 116
118 300 120 04/01/08 296 116
119 300 120 04/01/08 296 116
120 240 120 01/01/08 233 113
121 330 120 04/01/08 326 116
122 360 120 04/01/08 356 116
123 300 120 11/01/07 291 111
124 360 120 05/01/08 357 117
125 300 120 01/01/08 293 113
126 300 180 12/01/12 292 172
127 360 120 01/01/08 353 113
128 360 120 07/01/08 359 119
129 360 240 03/01/18 355 235
130 360 240 01/01/18 353 233
131 360 172 05/01/12 353 165
132 240 120 04/01/08 236 116
133 300 180 01/01/13 293 173
134 276 120 01/01/08 269 113
135 300 120 07/01/08 299 119
136 360 120 05/01/08 357 117
137 240 120 06/01/08 238 118
138 300 120 02/01/08 294 114
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CONTROL BALLOON, FULL BALLOON/ARD BALLOON/ARD
NUMBER SEASONING AMORTIZING OR ARD BALANCE LTV RATIO DUE ON SALE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10 Balloon 4,243,073.45 65.5% Yes
10 Balloon 1,309,590.57 65.5% Yes
69 3 Balloon 5,430,120.04 68.6% Yes
71 7 Balloon 5,165,572.82 68.9% Yes
72 6 Balloon 3,710,615.92 39.1% Yes
73 8 Balloon 4,814,334.23 59.4% Yes
74 8 ARD 4,873,498.09 57.3% Yes
75 8 ARD 4,752,217.54 59.4% Yes
76 4 Balloon 3,395,326.84 31.7% Yes
77 5 Balloon 4,739,474.69 61.5% Yes
78 1 Balloon 4,534,051.57 68.2% Yes
82 9 Fully Amortizing 0.00 0.0% Yes
79 3 Balloon 3,887,494.61 58.5% Yes
80 4 Balloon 4,484,041.83 59.8% Yes
81 6 Balloon 3,732,621.33 43.8% Yes
83 1 Balloon 2,081,282.55 26.5% Yes
84 3 Balloon 4,383,931.70 55.5% Yes
87 3 Balloon 3,544,629.52 59.1% Yes
88 7 Balloon 4,461,968.05 66.9% Yes
89 1 Balloon 3,583,829.89 57.3% Yes
90 8 ARD 4,028,484.12 66.0% Yes
91 6 ARD 3,880,420.52 68.7% Yes
92 4 Balloon 2,793,985.02 41.3% Yes
93 3 Balloon 3,795,057.20 66.6% Yes
85 6 ARD 3,776,627.34 45.5% Yes
94 3 Balloon 3,726,722.33 69.0% Yes
95 7 ARD 3,627,453.27 59.5% Yes
97 8 ARD 3,498,159.94 55.1% Yes
96 3 Balloon 3,636,227.42 64.6% Yes
98 10 Balloon 3,654,962.16 67.9% Yes
99 5 Balloon 2,838,552.73 45.8% Yes
100 8 ARD 3,349,653.34 57.8% Yes
101 4 ARD 3,646,463.06 63.1% Yes
102 5 ARD 3,513,632.39 54.9% Yes
103 3 Balloon 3,181,007.57 59.5% Yes
106 8 Fully Amortizing 0.00 0.0% Yes
104 8 Balloon 2,377,902.93 44.9% Yes
105 3 Balloon 3,126,761.77 56.9% Yes
107 1 Balloon 3,033,131.71 61.6% Yes
108 2 ARD 3,071,420.49 55.8% Yes
109 10 ARD 3,397,949.76 61.8% Yes
110 5 Balloon 2,830,565.77 57.3% Yes
111 9 Balloon 3,254,827.54 65.1% Yes
112 2 Balloon 2,866,758.19 59.7% Yes
113 3 ARD 3,099,242.85 68.9% Yes
116 10 Balloon 2,433,753.51 51.8% Yes
114 1 ARD 3,004,139.22 62.6% Yes
115 2 Balloon 3,052,301.24 64.9% Yes
117 4 Balloon 2,798,280.96 59.5% Yes
118 4 Balloon 2,777,362.48 55.5% Yes
119 4 Balloon 2,745,974.22 41.5% Yes
120 7 ARD 2,464,605.24 44.8% Yes
121 4 Balloon 2,874,322.52 61.5% Yes
122 4 Balloon 2,941,197.17 63.6% Yes
123 9 Balloon 2,681,741.93 58.9% Yes
124 3 Balloon 2,850,183.88 64.8% Yes
125 7 ARD 2,703,688.55 60.8% Yes
126 8 Balloon 2,027,410.81 33.8% Yes
127 7 Balloon 2,755,132.34 65.6% Yes
128 1 Balloon 2,744,184.84 66.9% Yes
129 5 Balloon 1,844,473.51 43.9% Yes
130 7 Balloon 1,865,504.53 41.9% Yes
131 7 ARD 2,473,456.02 61.8% Yes
132 4 Balloon 2,111,921.18 33.8% Yes
133 7 Balloon 1,900,485.29 37.1% Yes
134 7 Balloon 2,305,842.26 56.2% Yes
135 1 Balloon 2,369,533.85 52.1% Yes
136 3 Balloon 2,597,501.47 60.4% Yes
137 2 Balloon 2,124,635.91 44.7% Yes
138 6 Balloon 2,409,236.86 53.5% Yes
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
CONTROL DUE ON FUTURE SUBORDINATE APPRAISAL VALUE
NUMBER ENCUMBRANCE FINANCING APPRAISAL VALUE "AS OF" DATE CURRENT LTV RATIO
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Yes Yes 6,480,000 07/20/97 73.5%
Yes Yes 2,000,000 07/14/97 73.5%
69 Yes No 7,910,000 04/01/98 79.2%
71 Yes No 7,500,000 11/25/97 79.5%
72 Yes Yes 9,500,000 10/23/97 62.7%
73 Yes No 8,100,000 10/12/97 73.5%
74 Yes No 8,500,000 10/07/97 68.9%
75 Yes No 8,000,000 10/01/97 71.4%
76 Yes Yes 10,700,000 01/30/98 51.2%
77 Yes No 7,710,000 01/07/98 71.1%
78 Yes No 6,650,000 05/28/98 79.6%
82 Yes No 7,600,000 06/20/97 67.9%
79 Yes No 6,650,000 01/23/98 78.8%
80 Yes No 7,500,000 11/19/97 69.1%
81 Yes No 8,525,000 12/08/97 60.5%
83 Yes Yes 7,850,000 04/13/98 63.6%
84 Yes No 7,900,000 09/12/97 63.2%
87 Yes No 6,000,000 12/04/97 79.8%
88 Yes No 6,670,000 12/02/97 72.0%
89 Yes No 6,250,000 01/22/98 72.7%
90 Yes No 6,100,000 07/29/97 73.4%
91 Yes No 5,650,000 10/30/97 79.3%
92 Yes Yes 6,760,000 02/25/98 66.0%
93 Yes No 5,700,000 04/03/98 77.0%
85 Yes No 8,300,000 11/20/97 52.3%
94 Yes No 5,400,000 02/05/98 79.3%
95 Yes No 6,100,000 11/18/97 70.1%
97 Yes No 6,350,000 09/17/97 66.2%
96 Yes No 5,625,000 03/23/98 74.8%
98 Yes No 5,385,000 08/14/97 77.4%
99 Yes No 6,200,000 02/10/98 67.1%
100 Yes No 5,800,000 10/01/97 69.4%
101 Yes No 5,775,000 03/03/98 69.0%
102 Yes No 6,400,000 11/10/97 62.3%
103 Yes No 5,350,000 02/01/98 74.5%
106 Yes Yes 5,500,000 10/08/97 71.7%
104 Yes No 5,300,000 08/28/97 74.6%
105 Yes No 5,500,000 01/20/98 71.8%
107 Yes No 4,920,000 05/06/98 77.2%
108 Yes No 5,500,000 01/07/98 68.9%
109 Yes No 5,500,000 06/17/97 68.7%
110 Yes No 4,940,000 10/21/97 76.1%
111 Yes No 5,000,000 08/09/97 74.0%
112 Yes No 4,800,000 01/11/98 74.8%
113 Yes No 4,500,000 02/20/98 79.8%
116 Yes No 4,700,000 07/25/97 74.2%
114 Yes No 4,800,000 05/11/98 72.9%
115 Yes No 4,700,000 04/09/98 74.3%
117 Yes No 4,700,000 03/10/98 74.1%
118 Yes No 5,000,000 01/09/98 69.7%
119 Yes No 6,610,000 02/10/98 52.7%
120 Yes No 5,500,000 12/15/97 62.9%
121 Yes No 4,670,000 01/28/98 73.6%
122 Yes No 4,625,000 02/03/98 73.3%
123 Yes No 4,550,000 09/05/97 72.6%
124 Yes No 4,400,000 02/24/98 74.8%
125 Yes No 4,450,000 10/31/97 73.6%
126 Yes No 6,000,000 11/07/97 53.8%
127 Yes No 4,200,000 11/07/97 75.2%
128 Yes No 4,100,000 03/09/98 76.8%
129 Yes No 4,200,000 01/13/98 74.7%
130 Yes No 4,450,000 10/28/97 70.4%
131 Yes No 4,000,000 08/12/97 77.1%
132 Yes Yes 6,250,000 02/20/98 49.2%
133 Yes No 5,125,000 10/13/97 59.0%
134 Yes No 4,100,000 10/31/97 73.7%
135 Yes No 4,550,000 05/20/98 65.9%
136 Yes No 4,300,000 03/01/98 69.6%
137 Yes No 4,750,000 01/15/98 63.0%
138 Yes No 4,500,000 12/31/97 66.2%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CONTROL
NUMBER YEAR BUILT YEAR RENOVATED OWNERSHIP INTEREST NET RENTABLE SF / UNITS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1985 Fee 139,252
1982 Fee 26,217
69 1989 Fee 149
71 1986 Fee 236
72 1980 1995 Fee 89,966
73 1966 Fee 131,113
74 1996 Leasehold 76
75 1996 Fee 78
76 1984 1997 Fee 250
77 1981 Fee 113,751
78 1988 Fee 123
82 1994 Fee 110,668
79 1989 Fee 120
80 1987 Fee 26,120
81 1951 1989 Fee & Leasehold 175,214
83 1973 1994 Fee 133,000
84 1972 Fee 367,485
87 1989 Fee 120
88 1991 Fee 160,561
89 1989, 1990 Fee 47,064
90 1972 1985 Fee 152,875
91 1989 Fee 73,000
92 1971 1993 Fee 169
93 1980 Fee 165
85 1965 1994 Fee 318
94 1972 1995-1997 Fee 159
95 1983 1996, 1997 Fee 43,449
97 1996 Leasehold 78
96 1997 Fee 35,091
98 1985 Fee 168
99 1991 Fee 211,649
100 1972 1997 Fee 152
101 1985 1994 Fee 116
102 1964 Fee 205,086
103 1917 1990 Fee 39,508
106 1989 Fee 65,928
104 1994 Fee 44,864
105 1921 1998 Fee 14,000
107 1967 1988 Fee 121
108 1961 1988 Fee 24,551
109 1994 Leasehold 296,437
110 1985 1995 Fee 91,420
111 1983 Fee 114
112 1978 Fee 36,772
113 1987, 1993 Fee 103
116 1974 Fee 207
114 1987 Fee 25,080
115 1970 1993 Fee 40,374
117 1989 Fee 99,086
118 1987 Fee 47,932
119 1975 Fee 168,342
120 1997 Fee 51,420
121 1990 Fee 38,461
122 1989 Fee 52,320
123 1974 Fee 101,645
124 1990 Fee 53,040
125 1997 Fee 28,860
126 1991 Fee 106,080
127 1976 Fee 137
128 1989 Fee 33,580
129 1986 1997 Fee 36,830
130 1988 Fee 84
131 1962 1987 Fee 32,209
132 1920 1998 Fee 69,554
133 1996, 1997 Fee 32,231
134 1951 1986 Fee 79,651
135 1997 Fee 66,800
136 1993 Fee 51,620
137 1979 Fee 66,953
138 1978 1995 Fee 156
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
CONTROL LARGEST TENANT SF PHYSICAL
NUMBER LARGEST TENANT NAME LARGEST TENANT SF AS A % OF TOTAL OCCUPANCY %
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Norwest Bank 45,063 32.4% 100.0%
Northwestern Travel Services (7271) 26,217 100.0% 100.0%
69 91.3%
71 92.0%
72 Realty One, Inc. 44,596 49.6% 92.4%
73 Giant Food 22,344 17.0% 92.8%
74 83.6%
75 81.0%
76 68.4%
77 Utility Trailer 11,600 10.2% 98.1%
78 95.1%
82 Builders Square 110,668 100.0% 100.0%
79 99.2%
80 Pain Net, Inc. 7,863 30.1% 96.3%
81 Powell Manufacturing 68,819 39.3% 100.0%
83 Paragon Industries, Inc. 133,000 100.0% 100.0%
84 K-Mart 89,491 24.4% 93.1%
87 96.0%
88 Endar Corp. 160,561 100.0% 100.0%
89 Contemporary Concepts 11,645 24.7% 100.0%
90 Haemonetics 48,000 31.4% 100.0%
91 Food Lion 29,000 39.7% 99.2%
92 60.4%
93 94.5%
85 98.9%
94 96.0%
95 Capital Group 43,449 100.0% 100.0%
97 76.2%
96 Bedtime Mattress 6,272 17.9% 97.9%
98 98.8%
99 Owens Brockway 211,649 100.0% 100.0%
100 73.8%
101 98.3%
102 Pam International 132,086 64.4% 100.0%
103 Consumer Credit Counseling 13,960 35.3% 100.0%
106 Record Theatre 10,000 15.2% 95.8%
104 Best Buy 44,864 100.0% 100.0%
105 New York Presbyterian Hospital 14,000 100.0% 100.0%
107 95.0%
108 CVS 9,180 37.4% 93.5%
109 Target 139,549 47.1% 100.0%
110 Hobby Lobby Store 40,040 43.8% 90.2%
111 84.2%
112 Lassens Health Foods 5,528 15.0% 92.0%
113 97.0%
116 89.9%
114 Collar & Leash 3,200 12.8% 90.5%
115 BankOne 10,358 25.7% 94.7%
117 Lite House 41,400 41.8% 86.5%
118 Pargo's (Shoney's Ground Lse) 6,097 12.7% 100.0%
119 Big Lots 26,000 15.4% 99.4%
120 NFC 51,420 100.0% 100.0%
121 Fanatics Athletic Club 8,903 23.1% 98.7%
122 Discovery Office Systems 30,868 59.0% 100.0%
123 Ababa Bolts 16,512 16.2% 98.7%
124 UPS 17,680 33.3% 98.5%
125 County Bank 28,860 100.0% 100.0%
126 Builder's Square 106,080 100.0% 100.0%
127 97.8%
128 Outback Steakhouse 6,200 18.5% 96.4%
129 Daly & Wolcott 16,753 45.5% 96.1%
130 90.5%
131 Thrifty Drug 32,209 100.0% 100.0%
132 Continental Cable 19,081 27.4% 96.0%
133 Kinko's Copies 8,500 26.4% 87.8%
134 Marc Glassman, Inc. 30,861 38.7% 93.7%
135 Jack of Diamonds Auto Body 16,000 24.0% 100.0%
136 Marc's 30,600 59.3% 94.2%
137 Sampler Shoppe 40,533 60.5% 98.1%
138 73.7%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
CONTROL OCCUPANCY ORIGINAL UNDERWRITTEN UNDERWRITTEN ANNUAL UNDERWRITTEN
NUMBER AS OF DATE LTV RATIO 1996 NOI 1997 NOI NOI NET CASH FLOW REPLACEMENT RESERVES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/01/97 74.3% 756,367 666,009 704,503 570,163 20,888
10/01/97 74.3% 0 90,566 218,617 190,608 6,554
69 02/10/98 79.4% 1,040,789 927,528 783,893 783,893 36,750
71 03/31/98 80.0% 576,641 755,329 732,656 679,556 53,100
72 04/23/98 63.2% 851,043 826,024 798,081 669,221 11,777
73 12/16/97 74.1% 603,895 609,221 730,236 689,212 19,667
74 04/30/98 69.5% 0 842,486 884,040 801,080 82,960
75 04/30/98 72.0% 0 1,016,179 995,860 913,500 82,360
76 02/28/98 51.4% 1,382,139 726,301 876,409 876,409 298,048
77 04/02/98 71.3% 749,728 771,874 679,444 615,006 30,711
78 06/04/98 79.7% 543,806 561,285 565,577 565,577 25,055
82 10/09/97 69.7% 842,900 0 789,726 749,227 16,600
79 04/30/98 78.9% 668,896 704,512 652,008 606,408 45,600
80 02/28/98 69.3% 567,566 677,144 643,282 613,823 6,530
81 01/01/98 61.0% 0 646,991 707,470 648,720 35,933
83 05/27/98 63.7% 733,200 733,200 667,560 647,610 19,950
84 06/30/98 63.3% 775,937 918,404 892,144 653,277 55,125
87 04/30/98 80.0% 552,886 610,043 581,946 554,946 27,000
88 03/18/98 72.0% 0 0 607,457 570,837 16,056
89 01/22/98 72.8% 551,317 563,612 580,551 539,478 14,119
90 03/01/98 73.8% 520,522 595,633 545,311 485,710 30,575
91 04/01/98 79.6% 551,506 596,258 527,962 461,237 21,170
92 01/01/98 66.3% 703,549 943,933 665,148 665,148 120,030
93 04/02/98 77.2% 477,875 431,959 495,189 495,189 41,250
85 10/31/97 52.6% 585,058 677,589 680,881 661,801 19,080
94 04/30/98 79.6% 277,041 58,808 553,053 496,290 56,763
95 10/01/97 70.5% 482,924 388,063 503,258 461,981 8,690
97 12/31/97 66.8% 0 518,374 603,759 510,309 93,450
96 03/10/98 75.0% 0 0 549,136 511,250 3,514
98 09/24/97 78.0% 546,619 541,803 516,520 516,520 33,600
99 02/25/98 67.7% 645,249 678,189 607,872 581,159 21,165
100 04/30/98 70.0% 669,466 555,042 659,654 573,246 86,408
101 05/12/98 69.3% 493,625 474,779 452,903 422,395 30,508
102 03/31/98 62.5% 247,852 433,326 522,492 431,229 30,763
103 02/25/98 74.8% 458,566 629,417 520,576 450,219 9,790
106 03/19/98 72.7% 683,484 702,453 631,832 565,466 17,470
104 10/20/97 75.0% 0 0 456,864 456,864 7,690
105 05/01/98 71.8% 0 0 395,747 393,647 2,100
107 05/14/98 77.2% 380,638 438,519 441,555 416,992 24,563
108 12/24/97 69.1% 512,135 549,456 492,577 470,955 13,513
109 10/19/97 69.1% 460,367 435,956 434,465 428,536 5,929
110 05/06/98 76.4% 229,698 514,401 490,123 411,313 31,997
111 09/05/97 74.4% 505,605 0 448,318 448,318 24,416
112 05/14/98 75.0% 429,864 500,609 481,909 440,758 5,516
113 02/27/98 80.0% 377,749 443,143 425,571 398,689 26,882
116 05/11/98 75.5% 471,277 480,452 470,739 470,739 53,033
114 04/02/98 72.9% 400,647 396,200 403,753 376,339 6,018
115 05/01/98 74.5% 441,351 496,467 455,738 407,930 10,093
117 11/14/97 74.5% 574,873 602,759 481,094 432,355 14,863
118 06/01/98 70.0% 496,936 523,401 461,074 392,694 12,942
119 04/23/98 53.0% 369,061 367,905 591,095 489,668 24,882
120 08/01/97 63.6% 0 221,699 522,049 465,536 7,713
121 05/29/98 73.9% 104,238 258,597 435,457 404,186 7,771
122 02/25/98 73.5% 0 299,438 420,644 369,775 11,510
123 01/01/98 73.3% 316,947 337,953 420,479 387,377 17,302
124 03/01/98 75.0% 0 417,440 430,547 366,436 13,260
125 10/01/97 74.2% 0 479,075 460,610 425,978 5,772
126 01/23/98 54.3% 0 0 429,723 429,723 13,790
127 02/27/98 75.6% 305,969 320,035 357,896 357,896 6,850
128 03/12/98 76.8% 483,335 410,042 393,909 376,606 3,358
129 04/27/98 75.0% 369,973 100,443 378,124 341,150 9,208
130 05/01/98 70.8% 373,518 368,355 362,724 362,724 21,453
131 10/16/97 77.5% 0 0 349,809 327,978 4,831
132 06/01/98 49.6% 240,919 248,558 446,046 399,396 13,911
133 05/01/98 59.5% 0 312,006 439,279 410,223 3,223
134 05/22/98 74.4% 507,629 541,175 404,574 340,490 19,913
135 06/05/98 65.9% 0 34,760 407,178 348,421 10,020
136 03/04/98 69.8% 454,404 454,876 409,103 377,806 7,743
137 06/09/98 63.2% 366,781 428,458 442,011 422,936 10,043
138 10/31/97 66.7% 380,619 540,699 467,233 467,233 75,660
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CONTROL ANNUAL UNDERWRITTEN REPLACEMENT UNDERWRITTEN UNDERWRITTEN NET ORIGINAL LOAN CUT-OFF DATE PAID TO
NUMBER RESERVES PER UNIT/SF NOI DSCR CASH FLOW DSCR PER UNIT/SF LOAN PER UNIT/SF DATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0.15 1.59 1.31 38.07 37.66 08/01/98
0.25 1.59 1.31 38.07 37.66 08/01/98
69 246.64 1.51 1.51 42,147.65 42,049.98 08/01/98
71 225.00 1.51 1.40 25,423.73 25,279.28 08/01/98
72 0.13 1.52 1.27 66.69 66.22 08/01/98
73 0.15 1.33 1.26 45.76 45.41 08/01/98
74 1,091.58 1.61 1.46 77,723.68 77,111.59 08/01/98
75 1,055.90 1.86 1.71 73,846.15 73,264.60 08/01/98
76 1,192.19 1.83 1.83 22,000.00 21,895.64 08/01/98
77 0.27 1.52 1.38 48.35 48.16 08/01/98
78 203.70 1.35 1.35 43,089.43 43,053.19 08/01/98
82 0.15 1.30 1.23 47.89 46.61 08/01/98
79 380.00 1.55 1.45 43,750.00 43,642.00 08/01/98
80 0.25 1.52 1.45 199.08 198.45 08/01/98
81 0.21 1.63 1.50 29.68 29.45 08/01/98
83 0.15 1.42 1.38 37.59 37.53 08/01/98
84 0.15 2.19 1.61 13.61 13.58 08/01/98
87 225.00 1.53 1.46 40,000.00 39,899.89 08/01/98
88 0.10 1.57 1.47 29.90 29.90 08/01/98
89 0.30 1.50 1.39 96.68 96.56 08/01/98
90 0.20 1.37 1.22 29.44 29.30 08/01/98
91 0.29 1.44 1.26 61.64 61.35 08/01/98
92 710.24 1.67 1.67 26,508.88 26,387.64 08/01/98
93 250.00 1.38 1.38 26,666.67 26,603.51 08/01/98
85 60.00 2.01 1.95 13,726.42 13,656.56 08/01/98
94 357.00 1.52 1.36 27,044.03 26,943.29 08/01/98
95 0.20 1.43 1.31 98.97 98.42 08/01/98
97 1,198.08 1.53 1.30 54,358.97 53,930.89 08/01/98
96 0.10 1.60 1.49 120.22 119.94 08/01/98
98 200.00 1.45 1.45 25,000.00 24,813.61 08/01/98
99 0.10 1.51 1.45 19.84 19.66 08/01/98
100 568.47 1.75 1.52 26,710.53 26,500.17 08/01/98
101 263.00 1.42 1.32 34,482.76 34,368.93 08/01/98
102 0.15 1.59 1.32 19.50 19.44 08/01/98
103 0.25 1.48 1.28 101.25 100.89 08/01/98
106 0.26 1.61 1.44 60.67 59.79 08/01/98
104 0.17 1.33 1.33 88.60 88.09 08/01/98
105 0.15 1.38 1.38 282.14 282.14 08/01/98
107 203.00 1.38 1.30 31,404.96 31,371.73 08/01/98
108 0.55 1.48 1.42 154.78 154.45 08/01/98
109 0.02 1.30 1.28 12.82 12.74 08/01/98
110 0.35 1.57 1.32 41.29 41.13 08/01/98
111 214.18 1.39 1.39 32,648.03 32,439.39 08/01/98
112 0.15 1.51 1.39 97.90 97.68 08/01/98
113 260.99 1.45 1.36 34,951.46 34,868.67 08/01/98
116 256.20 1.34 1.34 17,149.76 16,843.14 08/01/98
114 0.24 1.44 1.35 139.55 139.44 08/01/98
115 0.25 1.49 1.33 86.69 86.49 08/01/98
117 0.15 1.54 1.38 35.32 35.16 08/01/98
118 0.27 1.51 1.28 73.02 72.67 08/01/98
119 0.15 2.01 1.66 20.79 20.69 08/01/98
120 0.15 1.49 1.33 68.07 67.27 08/01/98
121 0.20 1.49 1.39 89.70 89.36 08/01/98
122 0.22 1.50 1.32 64.98 64.78 08/01/98
123 0.17 1.38 1.27 32.81 32.48 08/01/98
124 0.25 1.59 1.35 62.22 62.07 08/01/98
125 0.20 1.53 1.42 114.35 113.51 08/01/98
126 0.13 1.49 1.49 30.71 30.43 08/01/98
127 50.00 1.34 1.34 23,175.18 23,052.26 08/01/98
128 0.10 1.47 1.40 93.81 93.74 08/01/98
129 0.25 1.45 1.30 85.53 85.20 08/01/98
130 255.39 1.36 1.36 37,500.00 37,305.39 08/01/98
131 0.15 1.34 1.26 96.25 95.78 08/01/98
132 0.20 1.47 1.32 44.57 44.25 08/01/98
133 0.10 1.62 1.51 94.63 93.86 08/01/98
134 0.25 1.46 1.23 38.29 37.92 08/01/98
135 0.15 1.58 1.35 44.91 44.86 08/01/98
136 0.15 1.64 1.52 58.12 57.98 08/01/98
137 0.15 1.37 1.32 44.81 44.67 08/01/98
138 485.00 1.71 1.71 19,230.77 19,102.98 08/01/98
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CONTROL REPAIR & REMEDIATION TI/LC RESERVE P&I RESERVE ENVIRONMENTAL ECONOMIC
NUMBER RESERVE HOLDBACK HOLDBACK HOLDBACK RESERVE HOLDBACK RESERVE HOLDBACK TOTAL RESERVE HOLDBACK
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
69
71 346,000.00 59,946.67 405,946.67
72 66,958.06 66,958.06
73 76,125.00 76,125.00
74 35.64 35.64
75 34.70 34.70
76 87,750.00 87,750.00
77
78
82
79 13,563.00 43,611.03 57,174.03
80
81
83 43,868.64 43,868.64
84 469,721.20 469,721.20
87
88 80,000.00 80,000.00
89 6,000.00 45,737.35 51,737.35
90 5,867.42 5,867.42
91 2,063.00 41,653.16 43,716.16
92 103,325.00 3,475.00 106,800.00
93 55,376.00 1,125.00 56,501.00
85
94 9,750.00 42,727.66 52,477.66
95
97 25.54 25.54
96
98 34,702.03 34,702.03
99 300,000.00 300,000.00
100 24.46 24.46
101 38,069.29 38,069.29
102 5,000.00 5,000.00
103 17,856.00 4,300.00 22,156.00
106
104
105 29,256.73 29,256.73
107 36,254.00 36,254.00
108 5,000.00 5,000.00
109 27,883.05 27,883.05
110 45,750.00 33,614.98 79,364.98
111
112 48,000.00 27,483.00 29,084.64 69,645.00 174,212.64
113 32,579.27 32,579.27
116
114 175,102.00 28,074.00 203,176.00
115 1,472.90 1,472.90
117
118 113,125.00 45,000.00 34,088.87 192,213.87
119
120 11,777.40 11,777.40
121 11,676.00 10,160.00 28,699.46 50,535.46
122
123
124
125
126
127 575.00 575.00
128 25,000.00 25,000.00
129
130
131
132 200,000.00 200,000.00
133 27,767.70 27,767.70
134 30,922.41 30,922.41
135
136 42,000.00 42,000.00
137 41,250.00 255,000.00 1,125.00 297,375.00
138 5,456.72 5,456.72
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
CONTROL MONTHLY REPLA- MONTHLY MONTHLY INSUR- MONTHLY TI/LC
NUMBER CEMENT RESERVES TAX ESCROW ANCE ESCROW PAYMENT
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
69 3,940.75 2,094.80
71 4,425.00 10,778.12 4,259.67
72 1,309.00 8,849.44 1,689.08
73 10,843.66 1,305.83
74 6,610.75 7,208.33 1,448.43
75 6,098.17 5,291.67 1,170.06
76 19,895.40 23,950.00
77 5,409.23 409.83
78 4,058.15 1,035.75
82
79 3,020.00 4,783.88 843.50
80 6,353.46 3,768.58
81 4,558.43 3,213.00
83 1,662.50 2,873.97 281.59
84 10,139.58 11,047.49 4,400.83
87 2,250.00 4,368.73 1,055.04
88 4,972.19 1,341.67
89 854.00 11,045.37 834.25 700.00
90 2,547.92 6,369.83 833.33
91 2,130.00 6,370.56 1,326.66 1,250.00
92 10,003.00 2,764.13 1,345.67
93 3,438.00 3,510.24 1,018.42
85 1,590.00 3,474.63 652.50
94 3,498.00 6,457.82 2,380.33
95 516.67 3,360.03
97 5,523.42 4,208.33 1,144.32
96 892.35 762.00
98 5,478.79 1,195.20
99
100 8,150.92 4,195.83 1,480.50
101 2,900.00 7,338.16 1,192.16
102 2,904.17 16,783.33 1,518.07 1,250.00
103 22,857.00 473.42 5,952.00
106 10,632.65 1,829.42
104
105 4,913.15 511.91
107 2,581.00 5,017.10 1,991.50
108 204.60 4,166.67 833.33
109
110 2,134.00 4,726.56 771.42
111 8,095.45 1,970.25
112 2,238.41 336.14
113 2,635.00 4,748.38 710.75
116 4,251.53 1,609.25
114 501.00 3,823.74 463.41
115 2,729.05 523.66 347.90
117 4,938.35 690.53
118 1,268.00 6,731.21 610.75
119 3,125.89 1,418.67
120 642.85 398.24 401.17 1,667.00
121 787.00 3,086.91 512.75
122 4,000.00 258.71
123 2,619.84 1,250.75
124 7,201.24 1,640.25
125 691.67
126
127 2,372.58 390.92
128 4,876.54 611.25
129 2,380.87 341.67
130 8,776.43 727.92
131
132 5,789.72 1,150.06
133 4,667.20 521.58
134 1,551.00 3,853.83 1,097.25 2,000.00
135 314.17 640.50
136 4,529.72 1,000.00
137 2,926.68 799.58 5,000.00
138 6,250.00 9,196.03 2,543.83
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
CONTROL LOAN LOAN
NUMBER NUMBER GROUP ORIGINATOR PROPERTY NAME
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
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
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
CONTROL PROPERTY PROPERTY ZIP
NUMBER PROPERTY ADDRESS PROPERTY CITY STATE CODE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
139 8008-8080 Clairemont Mesa Blvd. San Diego CA 92121
142 1310-1340 West Valley Parkway Escondido CA 92029
140 2410 Brodhead Road Bethlehem PA 18020
143 610 State Street Santa Barbara CA 93101
141 6275 & 6325 Corporate Drive Colorado Springs CO 80919
144 1345 North Kingsley Drive Los Angeles CA 90027
145 24775 Lorain Road North Olmsted OH 44070
146 99 Union Road Spring Valley NY 10977
147 1062 Barnes Road Wallingford CT 06492
148 7469 South Avenue Boardman OH 44512
149 104 & 106 East 29th Street Loveland CO 80538
150 23266-23300 Lorain Road North Olmsted OH 44070
151 2014 West Colonial Drive Orlando FL 32804
152 One Sherington Drive Bluffton SC 29910
153 4090 Commonwealth Ave. Eau Claire WI 54701
154 126 Cusick Road Alcoa TN 37701
155 1170 W. San Bernardino Road Covina CA 91722
157 Various Various Various Various
1715 48th St. Woodward OK 73801
3311 22nd St. Woodward OK 73801
156 304 South Kelly Avenue Edmond OK 73003
158 51 Morgan Drive Norwood MA 02062
159 4 East Gateway Boulevard Savannah GA 31419
160 519 W. 27th Street South Wichita KS 67217
161 800 South Tallahassee Street Hazlehurst GA 31539
162 4850 Lawing Lane Orlando FL 32819
163 1520 Woods Road Winston-Salem NC 27106
164 735 SW 20th Place Portland OR 97205
165 Reservoir & Chestnut St Lancaster PA 17602
167 727 S.W. Rogue River Ave. Grants Pass OR 97526-2799
166 7475 , 7461 , 7433 N. First Street Fresno CA 93720
168 2005 - 2025 F Avenue National City CA 91950
169 1115-1155 Maxwell Ave & 6910-6918 Dale St. Fullerton/Buena ParCA 92833/90621
170 7461 & 7481 Lake Mead Blvd. Las Vegas NV 89128
171 2401 Pullman Street Santa Ana CA 92705
172 206 Vine Street Wilder KY 41076
173 3031 North 120th Street Omaha NE 68144
174 5338-5378 Mayfield Road Lyndhurst OH 44124
175 U.S. Route 45 South Gilman IL 60938
176 468 Mission Road San Marcos CA 92069
177 1751 W. University Ave San Diego CA 92103
180 1245 Roosa Avenue Durango CO 81301
181 5400-5450 West Atlantic Blvd. Margate FL 33063
182 2520 - 2540 Iowa Street Lawrence KS 66046
183 330 West Washington Street Village of Bath NY 14810
184 1531 West 32nd St. Joplin MO 64804
185 13460 Admiral Park Blvd. Ft. Myers FL 33912
186 2903 N. Perkins Rd. Stillwater OK 74075
189 2060-2190 White Lane Bakersfield CA 93304
188 NEC Highway MM and Miller Road House Springs MO 63051
187 900 South Boardman Ave. Gallup NM 87301
190 200 Admiral Weinel Blvd. Columbia IL 62236
191 101 East Via Ghiglieri Toluca IL 61369
192 6301-6321 San Mateo Blvd, NE Albuquerque NM 87110
193 2610-2790 S. Broadway Avenue Boise ID 83706
196 100 Urton Lane Louisville KY 40243
194 14379-14425 Pearl Road Strongsville OH 44136
195 12412 Victory Blvd. North Hollywood CA 91606
197 6807-6891 Ridge Road Parma OH 44129
198 1216 Patricia Avenue Simi Valley CA 93065
199 471 and 485 Baybrook Court Boise ID 83712
200 9450 Royal Lane Dallas TX 75243
201 1155 East Flamingo Road Las Vegas NV 89119
202 11002-11022 E. 51st St. and 5115-5123 S. 101st E. Avenue Tulsa OK 74146
203 1710 Red Soils Court Oregon City OR 97045
205 8686 Coy Drive Baton Rouge LA 70810
204 1334 & 1348 Ames Avenue St. Paul MN 55106
206 224 East 48th Street New York NY 10016
207 1235 S. State College Anaheim CA 92805
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CONTROL
NUMBER PROPERTY TYPE BORROWER NAME
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
139 Retail - Unanchored Mercury Plaza LLC
142 Mixed Use Valley Parkway-Vineyard Partnership
140 Industrial Unireal Corp.
143 Retail - Single Tenant PDJ Partnership
141 Industrial Elite Properties of America, Inc.
144 Multifamily North Kingsley, LP #151
145 Retail - Unanchored Miles G. Carter
146 Multifamily Empire of Spring Valley LLC
147 Office Landmark of Wallingford, Inc.
148 Retail - Single Tenant WHC II Properties LP
149 Mixed Use USF/Palmer LP
150 Retail - Unanchored 23300 Lorain Road Company, LLC
151 Hotel Finnane Investments, Inc.
152 Retail - Unanchored Carolina Partners, LLC
153 Retail - Single Tenant Eau Claire Equity Fund LP
154 Hotel Alten, LP
155 Multifamily Rose Street Investors, LLC
157 Multifamily Tommy W. Weder and Micah K. Weder
Multifamily Tommy W. Weder and Micah K. Weder
Multifamily Tommy W. Weder and Micah K. Weder
156 Retail - Anchored Kelly Plaza Associates, LLC
158 Industrial Morgan Drive Associates LP
159 Hotel Zeus Properties LLC
160 Multifamily Kingston Cove
161 Retail - Anchored COAB, LLC
162 Retail - Single Tenant MDR Health Club LP
163 Multifamily Gelwin Woods LLC
164 Office PBH, Inc., and Peter B. Hoffman
165 Retail - Anchored 825 East Chestnut Co. LLC
167 Assisted Living OLRC, LLC
166 Office B.C.C.D. Partnership
168 Multifamily Primavera Investments, LLC
169 Multifamily Maxwell Investors, LLC
170 Retail - Unanchored American Pacific Capital Summerhill Pads Company, LLC
171 Warehouse Hamilton Airway I, LLC
172 Self-Storage GFC, Investments, LLC
173 Retail - Single Tenant Wilmington Trust Company, as Trustee for JSI 28 Delaware Business Trust
174 Retail - Unanchored Tower Plaza LLC
175 Nursing Home Gilman Associates and LaSalle National Bank
176 Industrial Homan, LLC
177 Multifamily B. H. Group, Inc.
180 Multifamily TAMU Joint Venture
181 Retail - Unanchored Trademark Developers, Ltd.
182 Retail - Unanchored Tower Plaza Center
183 Retail - Unanchored Cavalier Development Ltd.
184 Office Hillside Medical Plaza Associates, LP
185 Retail - Single Tenant Wilmington Trust Company, as Trustee of JSI 71 Delaware Business Trust
186 Multifamily David M. Henneberry and Shida R. Henneberry
189 Retail-Shadow Anchored White & Hughes Associates, LP
188 Mobile Home Park Sycamore Springs, LLC
187 Multifamily Orleans Manor
190 Warehouse Budnick Converting, Inc.
191 Nursing Home Monte Cassino Healthcare Center, L.P.and LaSalle National Trust, N.A.
192 Retail - Unanchored Platinum Properties, LLC
193 Retail-Shadow Anchored Gateway Shopping Center LP
196 Retail - Single Tenant Wilmington Trust Company, as Trustee for JSI 63 Delaware Business Trust
194 Retail - Unanchored Coral Strongsville LP
195 Office Kenyon North Hollywood, LLC
197 Retail - Anchored Ridge and Day Plaza, Ltd.
198 Multifamily River Ridge Villas, LLC
199 Office Ivan Strand
200 Multifamily Dallas Fox Hollow LP
201 Multifamily YONY Properties, Inc.
202 Office/Industrial Wilshire Square, LLC, 38th Street Investment Corp., and R.H.M., LLC
203 Warehouse RS #7 LLC
205 Multifamily Baton Associates
204 Multifamily 1334 Ames Avenue LLP
206 Multifamily 224 East 48th Street LLC
207 Industrial State College Property, GP
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
CONTROL ORIGINAL PRINCIPAL CUT-OFF DATE GROSS MORTGAGE NET MORTGAGE
NUMBER BALANCE BALANCE LOAN TYPE RATE RATE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
139 2,900,000.00 2,882,887.92 Fixed 7.360% 7.303%
142 2,900,000.00 2,840,882.47 Fixed 7.460% 7.403%
140 2,880,000.00 2,863,557.23 Fixed 7.120% 6.963%
143 2,860,000.00 2,836,077.69 Fixed 7.320% 7.263%
141 2,850,000.00 2,847,807.48 Fixed 7.320% 7.263%
144 2,850,000.00 2,835,997.95 Fixed 7.080% 6.923%
145 2,850,000.00 2,832,534.46 Fixed 7.120% 7.063%
146 2,800,000.00 2,794,512.07 Fixed 7.230% 7.173%
147 2,800,000.00 2,790,193.27 Fixed 7.460% 7.403%
148 2,800,000.00 2,789,591.60 Fixed 7.290% 7.233%
149 2,780,000.00 2,757,610.36 Fixed 7.560% 7.503%
150 2,760,000.00 2,756,803.03 Fixed 7.400% 7.243%
151 2,750,000.00 2,744,064.54 Fixed 7.860% 7.703%
152 2,700,000.00 2,696,760.81 Fixed 7.180% 7.023%
153 2,600,000.00 2,581,210.32 Fixed 7.250% 7.193%
154 2,600,000.00 2,562,489.39 Fixed 9.720% 9.663%
155 2,572,000.00 2,557,414.97 Fixed 7.150% 6.993%
157 2,513,000.00 2,490,410.20 Fixed 7.640% 7.583%
1,114,817.51 1,104,796.22 Fixed 7.640% 7.583%
1,398,182.49 1,385,613.98 Fixed 7.640% 7.583%
156 2,500,000.00 2,490,550.38 Fixed 7.470% 7.413%
158 2,500,000.00 2,487,295.07 Fixed 7.780% 7.723%
159 2,475,000.00 2,459,937.80 Fixed 8.820% 8.763%
160 2,450,000.00 2,427,942.84 Fixed 7.720% 7.663%
161 2,400,000.00 2,388,415.74 Fixed 7.200% 7.043%
162 2,400,000.00 2,370,509.38 Fixed 7.890% 7.833%
163 2,350,000.00 2,343,982.36 Fixed 7.010% 6.853%
164 2,350,000.00 2,329,725.37 Fixed 7.770% 7.713%
165 2,330,000.00 2,320,121.55 Fixed 7.430% 7.373%
167 2,325,000.00 2,307,220.77 Fixed 7.550% 7.493%
166 2,320,000.00 2,308,126.07 Fixed 7.670% 7.613%
168 2,300,000.00 2,297,187.61 Fixed 7.060% 7.003%
169 2,300,000.00 2,293,339.38 Fixed 7.030% 6.873%
170 2,300,000.00 2,292,829.04 Fixed 7.300% 7.243%
171 2,300,000.00 2,283,326.01 Fixed 7.230% 7.173%
172 2,300,000.00 2,270,622.39 Fixed 7.570% 7.413%
173 2,300,000.00 2,269,787.09 Fixed 8.990% 8.933%
174 2,250,000.00 2,237,513.00 Fixed 7.260% 7.203%
175 2,223,000.00 2,219,049.12 Fixed 7.630% 7.573%
176 2,210,000.00 2,207,340.22 Fixed 7.160% 7.003%
177 2,200,000.00 2,200,000.00 Fixed 7.050% 6.993%
180 2,150,000.00 2,144,817.65 Fixed 7.170% 7.113%
181 2,135,000.00 2,119,522.19 Fixed 7.230% 7.173%
182 2,100,000.00 2,095,958.92 Fixed 6.980% 6.923%
183 2,100,000.00 2,091,887.52 Fixed 7.360% 7.303%
184 2,100,000.00 2,086,283.58 Fixed 7.740% 7.683%
185 2,100,000.00 2,072,414.40 Fixed 8.990% 8.933%
186 2,050,000.00 2,045,534.41 Fixed 7.590% 7.533%
189 2,032,500.00 2,012,491.64 Fixed 7.920% 7.863%
188 2,025,000.00 2,018,419.48 Fixed 7.090% 7.033%
187 2,024,000.00 2,021,703.90 Fixed 7.530% 7.473%
190 2,000,000.00 1,990,617.62 Fixed 7.380% 7.323%
191 2,000,000.00 1,986,258.83 Fixed 7.570% 7.513%
192 2,000,000.00 1,969,733.59 Fixed 7.620% 7.563%
193 1,965,000.00 1,945,778.70 Fixed 7.960% 7.903%
196 1,960,000.00 1,934,253.35 Fixed 8.990% 8.933%
194 1,950,000.00 1,943,300.45 Fixed 7.510% 7.453%
195 1,950,000.00 1,938,565.42 Fixed 8.280% 8.223%
197 1,950,000.00 1,913,892.04 Fixed 7.430% 7.373%
198 1,825,000.00 1,823,901.78 Fixed 7.125% 6.968%
199 1,800,000.00 1,789,603.91 Fixed 7.750% 7.693%
200 1,800,000.00 1,789,495.77 Fixed 7.430% 7.373%
201 1,800,000.00 1,788,899.61 Fixed 7.080% 7.023%
202 1,800,000.00 1,777,229.67 Fixed 7.650% 7.593%
203 1,800,000.00 1,767,760.63 Fixed 7.040% 6.983%
205 1,735,000.00 1,708,197.15 Fixed 8.130% 8.073%
204 1,725,000.00 1,716,856.20 Fixed 7.340% 7.283%
206 1,700,000.00 1,698,888.23 Fixed 6.850% 6.693%
207 1,700,000.00 1,697,131.04 Fixed 7.145% 6.988%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CONTROL 1ST INTEREST 1ST INT. & PRIN. INTEREST GRACE PAYMENT
NUMBER NOTE DATE PAYMENT DATE PAYMENT DATE ACCRUAL METHOD DUE DATE PERIOD FREQUENCY
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
139 01/30/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
142 10/31/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
140 04/06/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
143 12/20/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
141 06/08/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
144 01/07/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
145 02/18/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
146 04/20/98 06/01/98 06/01/98 Actual/360 1st of the month 7 Monthly
147 04/22/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
148 05/07/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
149 12/18/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
150 06/05/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
151 05/12/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
152 06/24/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
153 01/15/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
154 05/21/97 07/01/97 07/01/97 Actual/360 1st of the month 5 Monthly
155 12/12/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
157 02/06/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
02/06/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
02/06/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
156 02/04/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
158 11/22/97 01/01/98 01/01/98 Actual/360 1st of the month 7 Monthly
159 12/30/97 02/01/98 02/01/98 Actual/360 1st of the month 7 Monthly
160 11/03/97 01/01/98 01/01/98 30/360 1st of the month 10 Monthly
161 03/30/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
162 12/04/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
163 06/19/98 08/01/98 08/01/98 30/360 1st of the month 15 Monthly
164 03/05/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
165 03/23/98 05/01/98 05/01/98 Actual/360 1st of the month 5 Monthly
167 12/30/97 02/01/98 02/01/98 Actual/360 1st of the month 5 Monthly
166 12/15/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
168 06/29/98 08/01/98 08/01/98 30/360 1st of the month 5 Monthly
169 03/26/98 05/01/98 05/01/98 Actual/360 1st of the month 7 Monthly
170 03/03/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
171 01/05/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
172 12/30/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
173 05/08/97 07/01/97 07/01/97 30/360 1st of the month 10 Monthly
174 12/24/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
175 06/15/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
176 06/23/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
177 07/01/98 09/01/98 09/01/98 30/360 1st of the month 10 Monthly
180 05/29/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
181 01/12/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
182 07/01/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
183 02/27/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
184 10/20/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
185 05/08/97 07/01/97 07/01/97 30/360 1st of the month 10 Monthly
186 06/23/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
189 10/22/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
188 03/20/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
187 06/09/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
190 03/25/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
191 01/16/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
192 01/26/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
193 10/30/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
196 05/08/97 07/01/97 07/01/97 30/360 1st of the month 10 Monthly
194 04/30/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
195 10/01/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
197 01/30/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
198 06/24/98 08/01/98 08/01/98 Actual/360 1st of the month 10 Monthly
199 11/19/97 01/01/98 01/01/98 30/360 1st of the month 10 Monthly
200 02/27/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
201 01/30/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
202 12/01/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
203 03/09/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
205 10/13/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
204 03/30/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
206 06/25/98 08/01/98 08/01/98 Actual/360 1st of the month 10 Monthly
207 06/05/98 08/01/98 08/01/98 Actual/360 1st of the month 10 Monthly
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
CONTROL CROSS COLLATERALIZED PREPAYMENT YIELD MAINTENANCE
NUMBER MONTHLY PAYMENT / CROSS DEFAULTED DESCRIPTION DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
139 21,167.36 YM5(96),5%(12),O(12) Treasury Flat
142 24,435.30 YM5(180),5%(12),1%(12),O(12) Treasury Flat
140 22,536.53 LO(85),YM1(149),O(6) Treasury Flat
143 20,801.44 YM3(108),O(36) Treasury Flat
141 19,577.52 LO(25),YM1(89),O(6) Treasury Flat
144 19,114.49 LO(25),YM1(149),O(6) Treasury Flat
145 20,361.90 YM3(96),3%(12),O(12) Treasury Flat
146 19,062.97 LO(24),DEF(90),O(6) NAP
147 20,618.96 YM5(96),3%(12),O(12) Treasury Flat
148 22,198.44 YM5(96),5%(12),O(12) Treasury Flat
149 20,652.57 YM2(96),1%(12),O(12) Treasury Flat
150 20,216.97 YM3(96),3%(12),O(12) Treasury Flat
151 20,970.54 LO(25),YM1(89),O(6) Treasury Flat
152 19,394.19 LO(49),YM1(65),O(6) Treasury Flat
153 18,792.98 YM5(96),5%(12),O(12) Treasury Flat
154 23,900.93 LO(36),DEF(81),O(3) NAP
155 17,371.46 LO(25), YM1(89),O(6) Treasury Flat
157 20,460.23 1781A-B YM5(144),5%(12),4%(12),O(12) Treasury Flat
9,076.57 1781B YM5(144),5%(12),4%(12),O(12) Treasury Flat
11,383.66 1781A YM5(144),5%(12),4%(12),O(12) Treasury Flat
156 17,429.04 LO(25),YM1(149),O(6) Treasury Flat
158 17,962.16 LO(24),DEF(90),O(6) NAP
159 20,465.89 LO(60),YM1(54),O(6) Treasury Flat
160 18,457.33 YM5(144),5%(12),4%(12),O(12) Treasury Flat
161 17,270.13 LO(25), YM1(209),O(6) Treasury Flat
162 19,910.57 YM2(144),1.5%(12),1%(12),O(12) Treasury Flat
163 19,745.56 LO(49),YM1(149),O(6) Treasury Flat
164 20,235.94 YM5(144),5%(12),4%(12),3%(12),2%(12),1%(6),O(18) Treasury Flat
165 17,112.55 LO(120),YM1(117),O(3) Treasury Flat
167 17,257.23 LO(60),YM1(54),O(6) Treasury plus 145 bp
166 16,492.69 YM3(96),3%(12),O(12) Treasury Flat
168 16,344.06 YM5(96),5%(12),O(12) Treasury Flat
169 15,348.33 LO(25),YM1(89),O(6) Treasury Flat
170 15,768.13 LO(60),YM2(48),YM1(60),O(12) Treasury Flat
171 16,594.93 YM3(108),O(12) Treasury Flat
172 18,627.21 LO(25), YM1(89),O(6) Treasury Flat
173 19,285.77 YM5(120),5%(12),O(12) Treasury Flat
174 15,364.24 YM5(96),5%(12),O(12) Treasury Flat
175 18,085.46 YM5(96),5%(12),O(12) Treasury Flat
176 15,846.11 LO(49),DEF(71) NAP
177 14,710.60 YM5(96),5%(12),O(12) Treasury Flat
180 15,429.71 YM3(96),2%(12),O(12) Treasury Flat
181 15,404.43 YM5(96),5%(12),O(12) Treasury Flat
182 16,256.08 LO(49),YM1(65),O(6) Treasury Flat
183 14,482.72 YM5(120),5%(12),O(12) Treasury Flat
184 15,030.15 YM5(108),O(12) Treasury Flat
185 17,608.74 YM5(120),5%(12),O(12) Treasury Flat
186 17,431.84 YM5(144),5%(12),4%(12),3%(12),2%(12),O(24) Treasury Flat
189 15,579.60 YM5(120),5%(12),O(12) Treasury Flat
188 13,595.00 YM2(60),YM1(36),1%(12),O(12) Treasury Flat
187 14,996.70 YM5(144),5%(12),4%(12),O(12) Treasury Flat
190 14,624.07 YM5(204),5%(12),4%(12),O(12) Treasury Flat
191 14,871.01 YM5(120),3%(30),O(30) Treasury Flat
192 18,676.89 YM5(144),5%(12),4%(12),O(12) Treasury Flat
193 15,114.16 YM1(96),1%(12),O(12) Treasury Flat
196 16,434.83 YM5(120),5%(12),O(12) Treasury Flat
194 14,423.01 YM3(96),3%(12),O(12) Treasury Flat
195 14,690.85 YM5(120),5%(12),4%(12),3%(12),O(36) Treasury Flat
197 17,999.26 LO(25),YM1(149),O(6) Treasury Flat
198 12,295.36 LO(49),YM1(125),O(6) Treasury Flat
199 12,895.42 YM5(96),5%(12),O(12) Treasury Flat
200 13,219.99 YM5(144),5%(12),4%(12),O(12) Treasury Flat
201 12,814.03 YM5(96),5%(12),O(12) Treasury Flat
202 14,666.22 YM2(96),2%(12),O(12) Treasury Flat
203 18,549.26 YM3(60),YM1(24),5%(12),4%(12),3%(12),2%(12),O(12) Treasury Flat
205 14,652.92 YM5(96),5%(12),O(12) Treasury Flat
204 12,568.61 YM5(96),5%(12),O(12) Treasury Flat
206 11,139.41 LO(25),YM1(89),O(6) Treasury Flat
207 13,328.45 LO(61),DEF(119) NAP
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CONTROL ORIGINAL ORIGINAL TERM TO MATURITY REMAINING AMORTI- REMAINING TERM
NUMBER AMORTIZATION TERM MATURITY OR ARD DATE OR ARD ZATION PERIOD TO MATURITY OR ARD
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
139 300 120 03/01/08 295 115
142 216 216 11/01/15 207 207
140 240 240 05/01/18 237 237
143 300 144 01/01/10 293 137
141 360 120 07/01/08 359 119
144 360 180 02/01/13 354 174
145 300 120 03/01/08 295 115
146 360 120 05/01/08 357 117
147 300 120 05/01/08 297 117
148 240 120 06/01/08 238 118
149 300 120 01/01/08 293 113
150 300 120 07/01/08 299 119
151 300 120 06/01/08 298 118
152 300 120 07/01/08 299 119
153 300 120 02/01/08 294 114
154 264 120 06/01/07 250 106
155 360 120 01/01/08 353 113
157 240 180 03/01/13 235 175
240 180 03/01/13 235 175
240 180 03/01/13 235 175
156 360 180 03/01/13 355 175
158 360 120 12/01/07 352 112
159 300 120 01/01/08 293 113
160 300 180 12/01/12 292 172
161 300 240 04/01/18 296 236
162 240 180 01/01/13 233 173
163 204 204 07/01/15 203 203
164 216 216 04/01/16 212 212
165 300 240 04/01/18 296 236
167 300 120 01/01/08 293 113
166 360 120 01/01/08 353 113
168 300 120 07/01/08 299 119
169 360 120 04/01/08 356 116
170 360 180 04/01/13 356 176
171 300 120 02/01/08 294 114
172 240 120 01/01/08 233 113
173 300 144 06/01/09 286 130
174 360 120 01/01/08 353 113
175 240 120 07/01/08 239 119
176 300 120 07/01/08 299 119
177 360 120 08/01/08 360 120
180 300 120 06/01/08 298 118
181 300 120 02/01/08 294 114
182 240 120 07/01/08 239 119
183 360 144 03/01/10 355 139
184 360 120 11/01/07 351 111
185 300 144 06/01/09 286 130
186 216 216 07/01/16 215 215
189 300 144 11/01/09 291 135
188 360 120 04/01/08 356 116
187 300 180 07/01/13 299 179
190 300 240 04/01/18 296 236
191 300 180 02/01/13 294 174
192 180 180 03/01/13 175 175
193 300 120 11/01/07 291 111
196 300 144 06/01/09 286 130
194 300 120 05/01/08 297 117
195 360 192 11/01/13 351 183
197 180 180 02/01/13 174 174
198 360 180 07/01/13 359 179
199 360 120 12/01/07 352 112
200 300 180 03/01/13 295 175
201 300 120 03/01/08 295 115
202 240 120 01/01/08 233 113
203 144 144 04/01/10 140 140
205 240 120 11/01/07 231 111
204 300 120 04/01/08 296 116
206 360 120 07/01/08 359 119
207 240 180 07/01/13 239 179
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CONTROL BALLOON, FULLY BALLOON/ARD BALLOON/ARD
NUMBER SEASONING AMORTIZING OR ARD BALANCE LTV RATIO DUE ON SALE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
139 5 Balloon 2,303,116.42 56.2% Yes
142 9 Fully Amortizing 0.00 0.0% Yes
140 3 Fully Amortizing 0.00 0.0% Yes
143 7 Balloon 1,841,576.86 42.3% Yes
141 1 ARD 2,463,751.03 64.8% Yes
144 6 Balloon 2,116,058.04 55.7% Yes
145 5 Balloon 2,248,566.22 59.2% Yes
146 3 ARD 2,457,556.54 70.2% Yes
147 3 Balloon 2,229,701.25 59.5% Yes
148 2 Balloon 1,887,484.12 35.6% Yes
149 7 Balloon 2,219,691.99 49.3% Yes
150 1 Balloon 2,194,303.32 59.3% Yes
151 2 Balloon 2,213,044.40 54.0% Yes
152 1 Balloon 2,133,757.20 60.1% Yes
153 6 Balloon 2,058,685.79 52.1% Yes
154 14 ARD 2,084,891.22 52.1% Yes
155 7 Balloon 2,214,820.71 67.1% Yes
157 5 Balloon 1,017,690.16 30.2% Yes
5 Balloon 451,467.89 30.2% Yes
5 Balloon 566,222.27 30.2% Yes
156 5 Balloon 1,883,590.39 49.1% Yes
158 8 ARD 2,223,575.05 61.8% Yes
159 7 ARD 2,086,188.13 54.9% Yes
160 8 Balloon 1,539,995.25 27.0% Yes
161 4 ARD 868,032.70 27.3% Yes
162 7 Balloon 984,512.35 29.0% Yes
163 1 Fully Amortizing 0.00 0.0% Yes
164 4 Fully Amortizing 0.00 0.0% Yes
165 4 Balloon 953,626.48 34.7% Yes
167 7 Balloon 1,890,559.75 59.1% Yes
166 7 Balloon 2,021,113.93 63.2% Yes
168 1 Balloon 1,811,606.55 60.4% Yes
169 4 ARD 2,007,915.55 68.8% Yes
170 4 Balloon 1,465,544.17 47.7% Yes
171 6 Balloon 1,820,147.02 59.1% Yes
172 7 Balloon 1,564,426.25 50.5% Yes
173 14 Balloon 1,770,787.57 49.2% Yes
174 7 Balloon 1,942,423.11 62.7% Yes
175 1 Balloon 1,514,931.43 47.7% Yes
176 1 Balloon 1,745,557.11 59.2% Yes
177 0 Balloon 1,890,087.05 60.0% Yes
180 2 Balloon 1,698,634.89 60.7% Yes
181 6 Balloon 1,689,571.25 62.8% Yes
182 1 Balloon 1,401,319.75 44.5% Yes
183 5 Balloon 1,730,997.79 59.9% Yes
184 9 Balloon 1,832,203.67 65.2% Yes
185 14 Balloon 1,616,807.73 49.7% Yes
186 1 Fully Amortizing 0.00 0.0% Yes
189 9 Balloon 1,514,620.70 55.9% Yes
188 4 Balloon 1,741,362.16 63.3% Yes
187 1 Balloon 1,261,728.18 49.9% Yes
190 4 Balloon 731,899.64 27.4% Yes
191 6 Balloon 1,248,956.79 44.8% Yes
192 5 Fully Amortizing 0.00 0.0% Yes
193 9 Balloon 1,585,382.81 57.7% Yes
196 14 Balloon 1,509,019.00 47.2% Yes
194 3 Balloon 1,554,906.67 59.8% Yes
195 9 Balloon 1,209,745.38 46.5% Yes
197 6 Fully Amortizing 0.00 0.0% Yes
198 1 ARD 1,404,882.43 57.9% Yes
199 8 Balloon 1,570,795.19 53.6% Yes
200 5 Balloon 1,117,150.20 33.9% Yes
201 5 Balloon 1,418,569.47 43.6% Yes
202 7 Balloon 1,227,441.34 47.2% Yes
203 4 Fully Amortizing 0.00 0.0% Yes
205 9 Balloon 1,200,905.49 51.7% Yes
204 4 Balloon 1,369,214.41 59.5% Yes
206 1 ARD 1,477,111.61 61.5% Yes
207 1 Balloon 709,915.73 26.3% Yes
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
CONTROL DUE ON FUTURE SUBORDINATE APPRAISAL VALUE
NUMBER ENCUMBRANCE FINANCING APPRAISAL VALUE "AS OF" DATE CURRENT LTV RATIO
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
139 Yes No 4,100,000 12/12/97 70.3%
142 Yes No 4,650,000 09/29/97 61.1%
140 Yes No 3,900,000 01/15/98 73.4%
143 Yes No 4,350,000 12/03/97 65.2%
141 Yes No 3,800,000 03/10/98 74.9%
144 Yes No 3,800,000 10/21/97 74.6%
145 Yes No 3,800,000 12/12/97 74.5%
146 Yes No 3,500,000 02/10/98 79.8%
147 Yes No 3,750,000 01/20/98 74.4%
148 Yes No 5,300,000 03/02/98 52.6%
149 Yes No 4,500,000 10/23/97 61.3%
150 Yes No 3,700,000 03/18/98 74.5%
151 Yes No 4,100,000 02/13/98 66.9%
152 Yes No 3,550,000 04/29/98 76.0%
153 Yes No 3,950,000 12/12/97 65.3%
154 Yes No 4,000,000 03/01/97 64.1%
155 Yes No 3,300,000 10/07/97 77.5%
157 Yes No 3,370,000 Various 73.9%
Yes No 1,495,000 12/30/97 73.9%
Yes No 1,875,000 12/30/97 73.9%
156 Yes No 3,835,000 11/04/97 64.9%
158 Yes No 3,600,000 09/05/97 69.1%
159 Yes No 3,800,000 08/13/97 64.7%
160 Yes No 5,707,000 10/06/97 42.5%
161 Yes No 3,175,000 01/20/98 75.2%
162 Yes No 3,400,000 08/05/97 69.7%
163 Yes No 7,650,000 03/13/98 30.6%
164 Yes No 3,350,000 01/06/98 69.5%
165 Yes No 2,750,000 12/04/97 84.4%
167 Yes No 3,200,000 12/01/97 72.1%
166 Yes No 3,200,000 10/08/97 72.1%
168 Yes No 3,000,000 06/02/98 76.6%
169 Yes No 2,920,000 01/23/98 78.5%
170 Yes No 3,075,000 01/28/98 74.6%
171 Yes No 3,080,000 12/09/97 74.1%
172 Yes No 3,100,000 09/20/97 73.2%
173 Yes No 3,600,000 02/17/97 63.0%
174 Yes No 3,100,000 12/01/97 72.2%
175 Yes No 3,175,000 12/31/97 69.9%
176 Yes No 2,950,000 05/15/98 74.8%
177 Yes No 3,150,000 06/02/98 69.8%
180 Yes No 2,800,000 02/19/98 76.6%
181 Yes No 2,690,000 11/20/97 78.8%
182 Yes No 3,150,000 04/29/98 66.5%
183 Yes No 2,890,000 12/31/97 72.4%
184 Yes No 2,810,000 08/18/97 74.2%
185 Yes No 3,250,000 02/26/97 63.8%
186 Yes No 2,565,000 04/28/98 79.7%
189 Yes No 2,710,000 09/19/97 74.3%
188 Yes No 2,750,000 02/18/98 73.4%
187 Yes No 2,530,000 04/02/98 79.9%
190 Yes No 2,675,000 02/11/98 74.4%
191 Yes No 2,790,000 12/11/97 71.2%
192 Yes No 2,900,000 01/10/98 67.9%
193 Yes No 2,750,000 10/01/97 70.8%
196 Yes No 3,200,000 03/04/97 60.4%
194 Yes No 2,600,000 03/01/98 74.7%
195 Yes No 2,600,000 08/06/97 74.6%
197 Yes Yes 3,000,000 11/19/97 63.8%
198 Yes No 2,425,000 03/31/98 75.2%
199 Yes No 2,930,000 10/10/97 61.1%
200 Yes No 3,300,000 02/03/98 54.2%
201 Yes No 3,250,000 12/11/97 55.0%
202 Yes No 2,600,000 08/21/97 68.4%
203 Yes No 2,700,000 02/02/98 65.5%
205 Yes No 2,325,000 08/28/97 73.5%
204 Yes No 2,300,000 03/02/98 74.6%
206 Yes No 2,400,000 04/07/98 70.8%
207 Yes Yes 2,700,000 04/13/98 62.9%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CONTROL
NUMBER YEAR BUILT YEAR RENOVATED OWNERSHIP INTEREST NET RENTABLE SF / UNITS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
139 1980 1989 Fee 28,516
142 1985 Fee 35,141
140 1997 Fee 100,080
143 1997 Fee 23,500
141 1995, 1996 Fee 50,665
144 1987 Fee 65
145 1968 Fee 43,110
146 1964 Fee 86
147 1988 Fee 38,573
148 1989 Fee 106,118
149 1985 Fee 56,915
150 1996 Fee 46,000
151 1967 1997 Fee 111
152 1995 Fee 33,450
153 1990 Fee 45,515
154 1995 Fee 91
155 1971 Fee 82
157 Various Various Fee 329
1976 1981 Fee 111
1970 1983 Fee 218
156 1984 Fee 86,439
158 1980 Fee 62,998
159 1972 1995 Fee 82
160 1968 Fee 251
161 1976 1997 Fee 73,120
162 1988 Fee 26,000
163 1972 Fee 209
164 1946 1997 Fee 31,743
165 1997 Fee 21,180
167 1960 1977 Fee 86
166 1995 Fee 22,100
168 1965 Fee 97
169 1963 Fee 58
170 1997 Fee 10,500
171 1969 1997 Fee 45,411
172 1986, 1989 Fee 722
173 1993 Fee 52,207
174 1989 Fee 29,025
175 1973 1993 Fee 99
176 1989 Fee 62,884
177 1935 Fee 58
180 1996 Fee 40
181 1988 Fee 26,176
182 1993 Fee 33,525
183 1963 1995 Fee 100,670
184 1990 Fee 29,795
185 1995 Fee 43,839
186 1965 Fee 120
189 1997 Fee 25,400
188 1990 Fee 176
187 1975 Fee 100
190 1997 Fee 48,825
191 1976 Fee 104
192 1986 Leasehold 48,200
193 1989 Fee 22,587
196 1995 Fee 52,373
194 1989 Leasehold 41,116
195 1961 1997 Fee 35,155
197 1976 Fee 39,170
198 1989 Fee 30
199 1988 Fee 28,476
200 1979 1997 Fee 132
201 1977 Fee 102
202 1984 Fee 69,178
203 1997 Fee 39,000
205 1974 Fee 127
204 1970 1993 Fee 84
206 1928 Renovated over the years Fee 24
207 1969 1996 Fee 34,680
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
CONTROL LARGEST TENANT SF PHYSICAL
NUMBER LARGEST TENANT NAME LARGEST TENANT SF AS A % OF TOTAL OCCUPANCY %
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
139 PC Club 8,171 28.7% 93.6%
142 San Diego Blood Bank 3,999 11.4% 92.2%
140 Modern Publishing 100,080 100.0% 100.0%
143 Stroud's 23,500 100.0% 100.0%
141 Arlun Floors 23,312 46.0% 100.0%
144 95.4%
145 E & B Discount Marine 13,800 32.0% 95.1%
146 93.0%
147 Sentry Insurance 8,419 21.8% 100.0%
148 Sam's Club 106,118 100.0% 100.0%
149 Northern Auto 5,400 9.5% 98.4%
150 Levin Furniture Gallery 40,000 87.0% 100.0%
151 73.0%
152 Discount Flooring 13,555 40.5% 100.0%
153 Best Buy 45,515 100.0% 100.0%
154 74.6%
155 98.8%
157 Various
96.4%
86.2%
156 Big Lots Consolidated Stores 30,844 35.7% 95.2%
158 94.0%
159 76.5%
160 96.8%
161 Food Lion 29,000 39.7% 98.6%
162 Bally's Health & Fitness Club 26,000 100.0% 100.0%
163 87.6%
164 Summit Mtg. 5,590 17.6% 95.5%
165 RiteAid of PA, Inc. 11,180 52.8% 100.0%
167 86.0%
166 Paychex 7,800 35.3% 100.0%
168 93.8%
169 96.6%
170 Las Vegas Discount Golf & Tennis 6,000 57.1% 100.0%
171 Westar Nutrition 45,411 100.0% 100.0%
172 99.5%
173 JumboSports, Inc. 52,207 100.0% 100.0%
174 The Ohio Motorists (AAA) 8,270 28.5% 100.0%
175 86.9%
176 Across Town Movers 62,884 100.0% 100.0%
177 100.0%
180 100.0%
181 Gotrocks Raw Bar & Grill 3,140 12.0% 94.9%
182 Colorport Paint 7,000 20.9% 100.0%
183 Corning Building Corp. 30,000 29.8% 87.1%
184 Regional Eye Center 5,561 18.7% 96.0%
185 JumboSports, Inc. 43,839 100.0% 100.0%
186 97.5%
189 Peter Piper Pizza 8,400 33.1% 80.3%
188 97.7%
187 97.0%
190 Budnick Converting, Inc. 48,825 100.0% 100.0%
191 79.8%
192 General Cinema of New Mexico 32,200 66.8% 100.0%
193 New Images Academy of Beauty 4,515 20.0% 100.0%
196 JumboSports, Inc. 52,373 100.0% 100.0%
194 Tuesday Morning 4,800 11.7% 97.1%
195 College of Dental and Medical Assistants 35,155 100.0% 100.0%
197 Revco Drug/CVS Pharmacy 10,500 26.8% 88.9%
198 100.0%
199 EDS 13,570 47.7% 100.0%
200 93.2%
201 92.2%
202 J.C. Penney 17,914 25.9% 88.3%
203 Michaels of Oregon 39,000 100.0% 100.0%
205 100.0%
204 97.6%
206 100.0%
207 Bedrosians 34,680 100.0% 100.0%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
CONTROL OCCUPANCY ORIGINAL UNDERWRITTEN UNDERWRITTEN ANNUAL UNDERWRITTEN
NUMBER AS OF DATE LTV RATIO 1996 NOI 1997 NOI NOI NET CASH FLOW REPLACEMENT RESERVES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
139 07/15/98 70.7% 364,831 390,528 366,522 342,100 5,988
142 12/31/97 62.4% 408,869 485,556 456,547 422,336 6,255
140 05/22/98 73.8% 0 0 395,553 380,403 15,150
143 03/19/98 65.7% 0 0 343,585 328,389 3,525
141 06/01/98 75.0% 0 394,590 342,996 310,811 5,067
144 03/31/98 75.0% 332,820 299,081 349,855 336,855 13,000
145 04/28/98 75.0% 410,220 418,931 342,140 317,962 17,490
146 01/30/98 80.0% 162,510 363,428 314,546 293,046 21,500
147 04/02/98 74.7% 364,697 395,470 377,198 327,964 9,643
148 03/01/98 52.8% 480,306 479,987 439,885 404,565 15,918
149 03/31/98 61.8% 365,962 370,320 370,769 330,456 14,228
150 05/14/98 74.6% 0 340,843 359,831 338,304 4,600
151 12/31/97 67.1% 276,148 416,435 430,542 378,110 26,216
152 06/01/98 76.1% 305,947 336,812 335,684 312,735 3,346
153 01/15/98 65.8% 0 0 393,613 393,613 6,857
154 12/31/97 65.0% 472,247 542,593 560,417 506,434 53,983
155 05/01/98 77.9% 317,052 309,976 310,426 288,368 22,058
157 Various 74.6% 343,123 567,168 298,623 298,623 82,250
05/31/98 74.6% 182,797 277,554 130,529 130,529 28,000
05/31/98 74.6% 160,326 289,614 168,094 168,094 54,250
156 05/01/98 65.2% 323,331 334,700 348,125 287,554 12,844
158 03/01/98 69.4% 360,414 332,943 317,827 285,411 12,600
159 12/30/97 65.1% 469,893 479,043 423,910 379,299 44,611
160 12/31/97 42.9% 373,654 452,933 387,037 387,037 75,300
161 03/03/98 75.6% 0 80,173 299,471 266,989 15,182
162 09/01/97 70.6% 0 355,515 322,320 307,291 5,200
163 06/11/98 30.7% 477,609 475,120 471,731 397,745 73,986
164 02/19/98 70.1% 0 221,045 344,366 316,617 7,970
165 03/03/98 84.7% 0 0 288,512 280,941 3,177
167 10/31/97 72.7% 380,851 211,386 294,370 294,370 17,200
166 03/19/98 72.5% 82,038 185,248 288,957 266,167 5,525
168 05/26/98 76.7% 208,365 278,444 276,026 276,026 19,200
169 05/29/98 78.8% 246,463 268,621 252,924 236,046 16,878
170 03/02/98 74.8% 0 0 282,504 270,236 2,189
171 11/05/97 74.7% 0 0 280,531 267,640 4,541
172 04/30/98 74.2% 371,256 354,659 328,946 320,282 8,664
173 04/01/97 63.9% 0 0 356,364 342,633 6,787
174 03/31/98 72.6% 315,432 323,614 288,316 267,989 4,359
175 05/01/98 70.0% 308,075 254,427 326,159 326,159 24,750
176 06/23/98 74.9% 0 377,304 275,536 262,042 13,494
177 05/27/98 69.8% 223,769 255,519 221,717 221,717 14,250
180 05/20/98 76.8% 119,913 295,612 260,248 260,248 8,000
181 03/25/98 79.4% 293,625 270,901 283,643 265,228 7,853
182 04/08/98 66.7% 337,523 337,759 285,142 257,657 3,353
183 01/15/98 72.7% 128,735 248,423 298,453 259,924 13,751
184 03/25/98 74.7% 285,874 307,878 279,048 249,586 7,449
185 02/01/97 64.6% 0 0 318,902 308,876 3,946
186 05/18/98 79.9% 282,723 258,343 258,343 30,000
189 03/02/98 75.0% 0 94,299 288,185 269,308 2,552
188 02/25/98 73.6% 292,362 335,443 256,528 256,527 8,800
187 03/31/98 80.0% 262,817 277,598 253,069 253,069 28,000
190 03/01/98 74.8% 0 0 256,292 244,139 7,324
191 01/06/98 71.7% 349,691 437,006 329,405 329,405 31,200
192 12/31/97 69.0% 383,266 371,572 342,115 312,191 29,160
193 12/31/97 71.5% 266,214 232,765 248,012 234,641 3,388
196 02/01/97 61.3% 0 0 385,224 347,231 5,237
194 03/04/98 75.0% 295,114 268,197 246,722 223,006 14,870
195 03/01/98 75.0% 0 0 233,913 223,469 7,031
197 05/04/98 65.0% 397,877 355,722 322,757 277,992 12,611
198 05/01/98 75.3% 211,076 216,144 194,186 184,586 9,600
199 09/01/97 61.4% 236,624 255,295 242,533 199,038 7,119
200 06/02/98 54.5% 143,919 235,132 236,740 236,740 33,000
201 11/10/97 55.4% 348,498 323,690 328,077 328,077 24,350
202 12/31/97 69.2% 297,234 315,881 258,949 220,887 12,709
203 02/25/98 66.7% 0 0 290,525 283,801 7,020
205 04/01/98 74.6% 243,048 266,869 249,077 249,077 31,750
204 03/30/98 75.0% 187,172 224,952 209,735 209,735 21,000
206 06/19/98 70.8% 80,178 174,523 193,881 187,905 5,976
207 06/01/98 63.0% 249,696 249,696 227,357 222,005 5,352
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CONTROL ANNUAL UNDERWRITTEN REPLACEMENT UNDERWRITTEN UNDERWRITTEN NET ORIGINAL LOAN CUT-OFF DATE PAID TO
NUMBER RESERVES PER UNIT/SF NOI DSCR CASH FLOW DSCR PER UNIT/SF LOAN PER UNIT/SF DATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
139 0.21 1.44 1.35 101.70 101.10 08/01/98
142 0.18 1.56 1.44 82.52 80.84 08/01/98
140 0.15 1.46 1.41 28.78 28.61 08/01/98
143 0.15 1.38 1.32 121.70 120.68 08/01/98
141 0.10 1.46 1.32 56.25 56.21 08/01/98
144 200.00 1.53 1.47 43,846.15 43,630.74 08/01/98
145 0.41 1.40 1.30 66.11 65.70 08/01/98
146 250.00 1.38 1.28 32,558.14 32,494.33 08/01/98
147 0.25 1.52 1.33 72.59 72.34 08/01/98
148 0.15 1.65 1.52 26.39 26.29 08/01/98
149 0.25 1.50 1.33 48.84 48.45 08/01/98
150 0.10 1.48 1.39 60.00 59.93 08/01/98
151 236.18 1.71 1.50 24,774.77 24,721.30 08/01/98
152 0.10 1.44 1.34 80.72 80.62 08/01/98
153 0.15 1.75 1.75 57.12 56.71 08/01/98
154 593.22 1.95 1.77 28,571.43 28,159.22 08/01/98
155 269.00 1.49 1.38 31,365.85 31,187.99 08/01/98
157 250.00 1.22 1.22 7,638.30 7,569.64 08/01/98
252.25 1.22 1.22 7,638.30 7,569.64 08/01/98
248.85 1.22 1.22 7,638.30 7,569.64 08/01/98
156 0.15 1.66 1.37 28.92 28.81 08/01/98
158 0.20 1.47 1.32 39.68 39.48 08/01/98
159 544.04 1.73 1.54 30,182.93 29,999.24 08/01/98
160 300.00 1.75 1.75 9,760.96 9,673.08 08/01/98
161 0.21 1.45 1.29 32.82 32.66 08/01/98
162 0.20 1.35 1.29 92.31 91.17 08/01/98
163 354.00 1.99 1.68 11,244.02 11,215.23 08/01/98
164 0.25 1.42 1.30 74.03 73.39 08/01/98
165 0.15 1.40 1.37 110.01 109.54 08/01/98
167 200.00 1.42 1.42 27,034.88 26,828.15 08/01/98
166 0.25 1.46 1.34 104.98 104.44 08/01/98
168 197.94 1.41 1.41 23,711.34 23,682.35 08/01/98
169 291.00 1.37 1.28 39,655.17 39,540.33 08/01/98
170 0.21 1.49 1.43 219.05 218.36 08/01/98
171 0.10 1.41 1.34 50.65 50.28 08/01/98
172 12.00 1.47 1.43 3,185.60 3,144.91 08/01/98
173 0.13 1.54 1.48 44.06 43.48 08/01/98
174 0.15 1.56 1.45 77.52 77.09 08/01/98
175 250.00 1.50 1.50 22,454.55 22,414.64 08/01/98
176 0.21 1.45 1.38 35.14 35.10 08/01/98
177 245.69 1.26 1.26 37,931.03 37,931.03 08/01/98
180 200.00 1.41 1.41 53,750.00 53,620.44 08/01/98
181 0.30 1.53 1.43 81.56 80.97 08/01/98
182 0.10 1.46 1.32 62.64 62.52 08/01/98
183 0.14 1.72 1.50 20.86 20.78 08/01/98
184 0.25 1.55 1.38 70.48 70.02 08/01/98
185 0.09 1.51 1.46 47.90 47.27 08/01/98
186 250.00 1.24 1.24 17,083.33 17,046.12 08/01/98
189 0.10 1.54 1.44 80.02 79.23 08/01/98
188 50.00 1.57 1.57 11,505.68 11,468.29 08/01/98
187 280.00 1.41 1.41 20,240.00 20,217.04 08/01/98
190 0.15 1.46 1.39 40.96 40.77 08/01/98
191 300.00 1.85 1.85 19,230.77 19,098.64 08/01/98
192 0.60 1.53 1.39 41.49 40.87 08/01/98
193 0.15 1.37 1.29 87.00 86.15 08/01/98
196 0.10 1.95 1.76 37.42 36.93 08/01/98
194 0.36 1.43 1.29 47.43 47.26 08/01/98
195 0.20 1.33 1.27 55.47 55.14 08/01/98
197 0.32 1.49 1.29 49.78 48.86 08/01/98
198 320.00 1.32 1.25 60,833.33 60,796.73 08/01/98
199 0.25 1.57 1.29 63.21 62.85 08/01/98
200 250.00 1.49 1.49 13,636.36 13,556.79 08/01/98
201 238.73 2.13 2.13 17,647.06 17,538.23 08/01/98
202 0.18 1.47 1.26 26.02 25.69 08/01/98
203 0.18 1.31 1.27 46.15 45.33 08/01/98
205 250.00 1.42 1.42 13,661.42 13,450.37 08/01/98
204 250.00 1.39 1.39 20,535.71 20,438.76 08/01/98
206 249.00 1.45 1.41 70,833.33 70,787.01 08/01/98
207 0.15 1.42 1.39 49.02 48.94 08/01/98
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CONTROL REPAIR & REMEDIATION TI/LC RESERVE P&I RESERVE ENVIRONMENTAL ECONOMIC
NUMBER RESERVE HOLDBACK HOLDBACK HOLDBACK RESERVE HOLDBACK RESERVE HOLDBACK TOTAL RESERVE HOLDBACK
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
139 1,125.00 1,125.00
142
140 30,970.20 30,970.20
143
141 25,155.85 25,155.85
144 24,380.09 24,380.09
145
146
147 92,000.00 92,000.00
148 3,000.00 3,000.00
149
150
151 35,700.00 29,230.24 675.00 65,605.24
152 8,375.00 21,124.47 29,499.47
153
154
155
157
156 4,375.00 22,237.27 26,612.27
158 5,867.42 5,867.42
159
160 54,383.41 1,125.00 55,508.41
161 20,535.50 20,535.50
162 5,000.00 5,000.00
163 26,704.44 1,500.00 28,204.44
164 5,834.00 5,834.00
165 1,382.10 1,382.10
167 7,595.67 7,595.67
166
168 70,500.00 1,125.00 71,625.00
169 11,280.00 11,280.00
170
171
172 29,475.00 5,667.03 20,612.82 55,754.85
173
174 23,125.00 23,125.00
175
176 9,450.00 18,905.00 28,355.00
177 15,200.00 15,200.00
180
181
182 130,000.00 23,856.79 153,856.79
183 20,625.00 340,000.00 360,625.00
184
185
186
189 132,500.00 132,500.00
188
187 1,125.00 1,125.00
190
191 2,250.00 2,250.00
192
193
196
194
195
197 2,125.00 60,000.00 22,623.50 84,748.50
198 16,195.92 16,195.92
199 49,600.00 49,600.00
200 76,000.00 76,000.00
201
202
203
205
204 1,125.00 1,125.00
206 750.00 17,283.63 10,875.00 28,908.63
207 15,146.08 15,146.08
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
CONTROL MONTHLY REPLA- MONTHLY MONTHLY INSUR- MONTHLY TI/LC
NUMBER CEMENT RESERVES TAX ESCROW ANCE ESCROW PAYMENT
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
139 2,976.25 623.17
142 3,028.06 512.49
140 1,263.00 5,775.25 1,395.42
143
141 422.25 4,777.66 378.17
144 1,083.00 3,258.10 924.50
145 4,832.30
146 1,791.67 12,666.67 710.75
147 4,685.75 252.50
148 3,000.00
149 6,066.59 443.00
150 5,238.22
151 4,366.00 2,207.70 1,686.00
152 278.75 868.28 583.25
153
154 4,044.00 3,554.82 2,123.67
155 1,825.00 2,045.44 723.92
157 2,457.08 7,308.92
156 1,071.00 2,109.81 794.09 833.33
158 1,000.00 4,583.33 833.33
159 4,741.00 3,956.49 1,205.42
160 3,702.22 2,476.83
161 2,026.00 672.04 567.33
162 4,714.98
163 5,166.80 1,132.50
164 1,376.34 355.92 2,917.00
165 344.89 1,470.94 752.00
167 144.72 6,384.49 1,062.67
166 1,810.00 390.00
168 1,518.33 345.50
169 1,409.00 2,706.36 644.25
170 1,627.56 458.33
171
172 330.00 1,095.94 559.67
173
174 4,698.88
175 3,526.60 1,409.83
176 1,124.47 1,537.56 396.84
177 2,227.24 1,464.83
180 870.86 253.17
181 2,568.25 1,355.93
182 143.85 7,040.35 416.59
183 4,697.40 1,484.97
184 2,023.33 416.58
185
186 1,185.31 1,100.25
189 255.64 119.17
188 2,068.34 292.50
187 2,023.71 1,298.50
190
191 938.85 1,186.83
192 4,296.41 465.50
193 3,618.77 464.42
196
194 4,569.22
195 1,416.02
197 985.25 3,175.41 463.58
198 800.00 1,816.80 1,283.76
199 3,531.23 562.92 2,800.00
200 4,934.03 1,327.11
201 1,824.70 444.08
202 1,819.50 481.00
203
205 1,250.00 1,942.33
204 4,554.80 787.71
206 436.00 5,550.62 157.60
207 446.00 1,273.21 98.42
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
CONTROL LOAN LOAN
NUMBER NUMBER GROUP ORIGINATOR PROPERTY NAME
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CONTROL PROPERTY PROPERTY ZIP
NUMBER PROPERTY ADDRESS PROPERTY CITY STATE CODE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
208 3601 Walnut Street Harrisburg PA 17104
209 7411 Riggs Road Adelphi MD 20783
210 1081 Jericho Turnpike Huntington NY 11743
211 1300 N. Greenwood Street Spring Valley IL 61362
212 8301 Country Square Tampa FL 33615
213 650 and 670 Franklin Street Schenectady NY 12305
214 4920 NE Stallings Drive Nacogdoches TX 75961
215 3701 19th St. and 3702 20th St. Lubbock TX 79499
216 7777 Mentor Ave Mentor OH 44060
217 7110 Ambassador Rd. Baltimore MD 21244
218 3650 Boston Road Lexington KY 40503
219 17100 East Shea Blvd Fountain Hills AZ 85262
221 6930 Portwest Drive Houston TX 77024
220 3902 College View Drive Joplin MO 64801
222 4330 Keller Road Holt MI 48842
223 20078 State Route 4 Marysville OH 43040
224 11 Morgan Street Irvine CA 92718
225 8730 Santa Monica Blvd. West Hollywood CA 90069
226 4215-4245 Sussex Drive Lower Paxton Town PA 17109
227 8687 West Sahara Drive Las Vegas NV 89117
228 8376-8396 Mentor Avenue Mentor OH 44060
229 28700 Chagrin Boulevard Woodmere OH 44122
230 18650-678 Van Horn Road Woodhaven MI 48183
231 102 Curiosity Creek Lane Tampa FL 33612
232 5455 Noth Federal Highway Boca Raton FL 33431
233 104 East Park Drive Brentwood TN 37027
234 3003 South Loop West Houston TX 77454
236 9648 Kenwood Road Blue Ash OH 45242
235 28605 Ranney Parkway Westlake OH 44145
237 15001 Farm Creek Drive Woodbridge VA 22192
238 35 West 81st Street New York NY 10024
239 4040 Denton Highway Haltom City TX 76117
240 840-860 East Walnut Street Carson CA 90746
241 37 Hwy. 35 Eatontown NJ 07781
242 12144 Lebanon Road Sharonville OH 45241
243 62 and 64 Church Street Yalesville CT 06492
244 404 West Beach Boulevard Long Beach MS 39560
245 2265-2285 Huntington Drive San Marino CA 91108
246 11517 Clifton Blvd. Cleveland OH 44102
247 2270 Romig Road Akron OH 44320
248 1219 East Perkins Avenue Sandusky OH 44870
249 9039 Katy Freeway Hedwig Village TX 77055
250 3150 Wade Hampton Boulevard Greenville County SC 29687
251 919 E. 14th Avenue North Kansas City MO 64116
252 4220 Lasata Drive St. Louis MO 63123
253 6330 Mayfield Road Mayfield Heights OH 44124
254 24910 Lorain Road North Olmsted OH 44070
255 785 Tucker Road, Units A-K Tehachapi CA 93561
256 1101-1111 Brookside Avenue Independence MO 64053
257 1515 South University Blvd. Mobile AL 36606
86 5097 Shady Oak Road Minooka IL 60447
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CONTROL
NUMBER PROPERTY TYPE BORROWER NAME
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
208 Retail - Single Tenant The Porsch Company, LLC
209 Office Llarby Company LC
210 Retail - Single Tenant Frank's Nursery & Crafts, Inc.
211 Nursing Home Spring Valley Nursing Center-LP and American National Bank and Trust Company of Chicago
212 Multifamily Country Square Apartments, Ltd
213 Office Shamlo Realty Co., Inc.
214 Office NMC Investors, Ltd.
215 Retail - Unanchored American Realty Trust, Inc.
216 Retail - Unanchored Miles G. Carter
217 Warehouse Ambassador Operating Associates, LP
218 Retail - Single Tenant Wilmington Trust Company, as Trustee of JSI 19 Delaware Business Trust
219 Office FHOC, LLC
221 Industrial Mary May Moore, as Trustee under the Mary May Moore Revocable Living Trust
220 Multifamily Royal Orleans Associates, L.P.
222 Multifamily Keller-Orchard, LLC
223 Industrial United Rotary Brush Corporation
224 Industrial Stason Industrial Corporation
225 Retail - Unanchored 8730 Santa Monica Blvd. Investors, LLC
226 Multifamily Chester Cassell
227 Office Marion J. Dudek
228 Retail - Unanchored Realty One Plaza, Ltd.
229 Retail - Anchored Chagrin Plaza Co., LP
230 Multifamily Wellington Investments, LLC
231 Multifamily Curiosity Creek Apartments, Ltd.
232 Office Frank L. Rubin
233 Office Winston Place, LLC
234 Office Transcontinental Realty Investors, Inc.
236 Retail - Anchored TransBlueAsh, LLC
235 Office Miles G. Carter
237 Warehouse Farm Creek LP
238 Multifamily 81st Dwellers Inc.
239 Multifamily HC Cornerstone Partners, LP
240 Industrial Allen Schor, as Trustee of The Walnut Warehouse Trust
241 Retail - Unanchored Tower Market Incorporated
242 Retail - Single Tenant O'Connor / MCI Associates #1, LLC
243 Mixed Use Sixty Church Street, LLC
244 Multifamily Adjor Associates, LP
245 Retail - Unanchored Pence Family Partners, Ltd.
246 Retail - Single Tenant LDC Clifton Limited
247 Retail - Unanchored Miles G. Carter
248 Multifamily Ranchview Gardens, Ltd.
249 Office 9039 Katy Freeway I, Ltd.
250 Retail - Single Tenant Wilmington Trust Company, as Trustee for JSI 12 Delaware Business Trust
251 Warehouse P.R. Investments, LLC
252 Multifamily Breihan Family LP
253 Retail - Single Tenant May-Gold Properties, Ltd.
254 Retail - Unanchored Miles G. Carter
255 Retail-Shadow Anchored Red Apple Plaza Associates, LP
256 Multifamily C.W.T. Shelter / Management, Inc.
257 Retail - Single Tenant William J. Wade, as Trustee of JSI 13 Delaware Business Trust
86 Mobile Home Park Shady Oaks II, LP
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
CONTROL ORIGINAL PRINCIPAL CUT-OFF DATE GROSS MORTGAGE NET MORTGAGE
NUMBER BALANCE BALANCE LOAN TYPE RATE RATE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
208 1,625,000.00 1,622,330.30 Fixed 7.320% 7.163%
209 1,625,000.00 1,617,485.03 Fixed 7.470% 7.413%
210 1,625,000.00 1,597,549.57 Fixed 9.100% 9.043%
211 1,600,000.00 1,596,064.44 Fixed 7.610% 7.553%
212 1,600,000.00 1,595,119.06 Fixed 7.410% 7.253%
213 1,600,000.00 1,584,582.08 Fixed 8.735% 8.678%
214 1,560,000.00 1,548,583.34 Fixed 7.470% 7.413%
215 1,540,000.00 1,517,202.24 Fixed 8.480% 8.423%
216 1,506,000.00 1,499,900.45 Fixed 7.120% 7.063%
217 1,500,000.00 1,496,580.54 Fixed 7.520% 7.463%
218 1,500,000.00 1,480,296.02 Fixed 8.990% 8.933%
219 1,470,000.00 1,466,613.61 Fixed 7.360% 7.303%
221 1,465,000.00 1,441,617.19 Fixed 7.860% 7.803%
220 1,450,000.00 1,444,629.61 Fixed 7.320% 7.263%
222 1,425,000.00 1,423,260.30 Fixed 7.070% 7.013%
223 1,425,000.00 1,417,221.80 Fixed 7.490% 7.433%
224 1,400,000.00 1,398,916.52 Fixed 7.290% 7.133%
225 1,400,000.00 1,398,578.13 Fixed 7.110% 6.953%
226 1,400,000.00 1,398,233.10 Fixed 6.860% 6.703%
227 1,400,000.00 1,392,806.18 Fixed 7.650% 7.593%
228 1,400,000.00 1,374,076.31 Fixed 7.430% 7.373%
229 1,350,000.00 1,325,002.16 Fixed 7.430% 7.373%
230 1,300,000.00 1,298,412.90 Fixed 7.070% 7.013%
231 1,300,000.00 1,296,957.34 Fixed 7.280% 7.123%
232 1,300,000.00 1,295,440.14 Fixed 7.380% 7.323%
233 1,300,000.00 1,289,160.38 Fixed 7.340% 7.283%
234 1,289,000.00 1,274,741.55 Fixed 8.490% 8.433%
236 1,275,000.00 1,258,851.53 Fixed 7.640% 7.583%
235 1,270,000.00 1,268,993.42 Fixed 7.170% 7.113%
237 1,225,000.00 1,211,402.89 Fixed 7.430% 7.373%
238 1,200,000.00 1,200,000.00 Fixed 6.900% 6.843%
239 1,200,000.00 1,199,065.74 Fixed 7.260% 7.203%
240 1,200,000.00 1,193,321.09 Fixed 7.330% 7.173%
241 1,200,000.00 1,191,218.15 Fixed 7.170% 7.113%
242 1,190,000.00 1,187,172.33 Fixed 7.260% 7.203%
243 1,190,000.00 1,178,814.69 Fixed 8.210% 8.153%
244 1,150,000.00 1,141,464.53 Fixed 7.080% 6.923%
245 1,100,000.00 1,096,286.65 Fixed 7.620% 7.563%
246 1,050,000.00 1,042,315.71 Fixed 7.470% 7.413%
247 1,040,000.00 1,035,097.89 Fixed 7.350% 7.293%
248 1,000,000.00 994,494.83 Fixed 7.420% 7.363%
249 1,000,000.00 992,538.53 Fixed 8.040% 7.983%
250 1,000,000.00 986,863.91 Fixed 8.990% 8.933%
251 975,000.00 966,160.71 Fixed 7.570% 7.513%
252 950,000.00 945,717.26 Fixed 7.630% 7.573%
253 945,000.00 939,701.88 Fixed 7.270% 7.213%
254 940,000.00 934,239.43 Fixed 7.120% 7.063%
255 937,500.00 928,271.05 Fixed 7.920% 7.863%
256 890,000.00 884,000.67 Fixed 7.690% 7.633%
257 770,000.00 759,885.25 Fixed 8.990% 8.933%
86 635,000.00 631,768.64 Fixed 6.720% 6.663%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CONTROL 1ST INTEREST 1ST INT. & PRIN INTEREST GRACE PAYMENT
NUMBER NOTE DATE PAYMENT DATE PAYMENT DATE ACCRUAL METHOD DUE DATE PERIOD FREQUENCY
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
208 06/16/98 08/01/98 08/01/98 Actual/360 1st of the month 10 Monthly
209 03/03/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
210 08/19/97 10/01/97 10/01/97 30/360 1st of the month 10 Monthly
211 06/01/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
212 03/03/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
213 08/26/97 10/01/97 10/01/97 Actual/360 1st of the month 7 Monthly
214 03/27/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
215 10/06/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
216 02/18/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
217 05/07/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
218 05/08/97 07/01/97 07/01/97 30/360 1st of the month 10 Monthly
219 04/27/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
221 10/21/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
220 05/14/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
222 06/30/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
223 04/02/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
224 06/24/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
225 06/09/98 08/01/98 08/01/98 Actual/360 1st of the month 10 Monthly
226 06/30/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
227 12/10/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
228 01/30/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
229 01/30/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
230 06/30/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
231 04/20/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
232 04/17/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
233 12/16/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
234 08/20/97 10/01/97 10/01/97 30/360 1st of the month 10 Monthly
236 12/17/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
235 06/11/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
237 01/07/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
238 11/04/97 12/01/97 30/360 1st of the month 10 Monthly
239 06/04/98 08/01/98 08/01/98 30/360 1st of the month 10 Monthly
240 04/27/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
241 01/13/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
242 05/15/98 07/01/98 07/01/98 30/360 1st of the month 10 Monthly
243 10/20/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
244 01/08/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
245 04/23/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
246 03/25/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
247 03/06/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
248 04/15/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
249 12/22/97 02/01/98 02/01/98 30/360 1st of the month 10 Monthly
250 05/08/97 07/01/97 07/01/97 30/360 1st of the month 10 Monthly
251 02/24/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
252 03/31/98 05/01/98 05/01/98 30/360 1st of the month 10 Monthly
253 04/08/98 06/01/98 06/01/98 30/360 1st of the month 10 Monthly
254 02/18/98 04/01/98 04/01/98 30/360 1st of the month 10 Monthly
255 10/22/97 12/01/97 12/01/97 30/360 1st of the month 10 Monthly
256 01/29/98 03/01/98 03/01/98 30/360 1st of the month 10 Monthly
257 05/08/97 07/01/97 07/01/97 30/360 1st of the month 10 Monthly
86 01/09/98 03/01/98 03/01/98 Actual/360 1st of the month 10 Monthly
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
CONTROL CROSS COLLATERALIZED PREPAYMENT YIELD MAINTENANCE
NUMBER MONTHLY PAYMENT / CROSS DEFAULTED DESCRIPTION DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
208 12,912.62 LO(61), YM1(173),O(6) Treasury Flat
209 11,976.91 YM2(96),1%(12),O(12) Treasury Flat
210 14,725.22 YM3(96),2%(6),1%(6),O(12) Treasury Flat
211 11,938.58 YM5(96),5%(12),O(12) Treasury Flat
212 11,088.99 LO(49),YM1(65),O(6) Treasury Flat
213 13,138.00 LO(24),DEF(90),O(6) NAP
214 12,538.65 YM5(180),5%(12),4%(12),3%(12),2%(12),O(12) Treasury Flat
215 13,344.99 YM3(36),YM2(12),YM1(60),O(12) Treasury Flat
216 10,141.12 YM3(96),3%(12),O(12) Treasury Flat
217 11,104.39 LO(27),DEF(87),O(6) NAP
218 12,577.67 YM5(120),5%(12),O(12) Treasury Flat
219 10,137.90 YM5(96),5%(12),O(12) Treasury Flat
221 12,126.51 YM3(180),2%(12),1%(12),O(36) Treasury Flat
220 11,522.03 YM1(96),1%(12),O(12) Treasury Flat
222 10,135.33 YM5(96),5%(12),O(12) Treasury Flat
223 11,470.99 YM3(60),YM2(36),1%(12),O(36) Treasury Flat
224 9,588.48 LO(25),YM1(89),O(6) Treasury Flat
225 9,993.37 LO(49),YM1(65),O(6) Treasury Flat
226 9,770.23 LO(49),YM1(65),O(6) Treasury Flat
227 9,933.20 YM5(96),5%(12),O(12) Treasury Flat
228 12,922.55 LO(25),YM1(149),O(6) Treasury Flat
229 12,461.03 LO(25),YM1(149),O(6) Treasury Flat
230 9,246.26 YM5(96),5%(12),O(12) Treasury Flat
231 8,894.76 LO(25),YM1(89),O(6) Treasury Flat
232 9,505.64 YM5(96),5%(12),O(12) Treasury Flat
233 9,472.00 YM5(120),5%(12),O(12) Treasury Flat
234 10,370.69 LO(36),YM1(72),O(12) Treasury Flat
236 10,380.74 YM(180) Treasury Flat
235 8,594.83 YM3(96),3%(12),O(12) Treasury Flat
237 9,816.15 YM5(96),5%(12),O(12) Treasury Flat
238 6,900.00 YM1(115),O(6) Treasury Flat
239 8,194.26 LO(61),YM1(113),O(6) Treasury Flat
240 9,542.76 LO(25),YM1(89),O(6) Treasury Flat
241 8,611.93 YM3(84),3%(12),2%(12),O(12) Treasury Flat
242 8,609.07 YM3(60),YM2(60),O(24) Treasury Flat
243 9,350.77 YM5(96),5%(12),O(12) Treasury Flat
244 8,186.74 LO(25),YM1(89),O(6) Treasury Flat
245 8,214.96 YM3(144),3%(12),2%(12),O(12) Treasury Flat
246 8,439.48 YM5(96),YM4(12),O(12) Treasury Flat
247 7,584.32 YM3(96),3%(12),O(12) Treasury Flat
248 8,007.09 LO(61), YM1(113),O(6) Treasury Flat
249 7,744.69 YM5(144),5%(12),4%(12),O(12) Treasury Flat
250 8,385.12 YM5(120),5%(12),O(12) Treasury Flat
251 7,896.32 YM5(120),5%(24),O(96) Treasury Flat
252 7,100.94 YM5(144),5%(12),4%(12),3%(12),2%(12),1%(12),O(36)Treasury Flat
253 7,480.51 YM5(96),5%(12),O(12) Treasury Flat
254 6,715.86 YM3(96),3%(12),O(12) Treasury Flat
255 7,186.16 YM5(120),5%(12),O(12) Treasury Flat
256 6,687.41 YM5(96),5%(12),O(12) Treasury Flat
257 6,456.54 YM5(120),5%(12),O(12) Treasury Flat
86 4,105.94 LO(24),DEF(90),O(6) NAP
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CONTROL ORIGINAL ORIGINAL TERM TO MATURITY REMAINING AMORTI- REMAINING TERM
NUMBER AMORTIZATION TERM MATURITY OR ARD DATE OR ARD ZATION PERIOD TO MATURITY OR ARD
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
208 240 240 07/01/18 239 239
209 300 120 04/01/08 296 116
210 240 120 09/01/07 229 109
211 300 120 06/01/08 298 118
212 360 120 04/01/08 356 116
213 300 120 09/01/07 289 109
214 240 240 04/01/18 236 236
215 240 120 11/01/07 231 111
216 360 120 03/01/08 355 115
217 300 120 06/01/08 298 118
218 300 144 06/01/09 286 130
219 360 120 05/01/08 357 117
221 240 240 11/01/17 231 231
220 240 120 06/01/08 238 118
222 300 120 07/01/08 299 119
223 240 144 05/01/10 237 141
224 360 120 07/01/08 359 119
225 300 120 07/01/08 299 119
226 300 120 07/01/08 299 119
227 360 120 01/01/08 353 113
228 180 180 02/01/13 174 174
229 180 180 02/01/13 174 174
230 300 120 07/01/08 299 119
231 360 120 05/01/08 357 117
232 300 120 05/01/08 297 117
233 300 144 01/01/10 293 137
234 300 120 09/01/07 289 109
236 240 180 01/01/13 233 173
235 360 120 07/01/08 359 119
237 240 120 02/01/08 234 114
238 IO 121 12/01/07 IO 112
239 360 180 07/01/13 359 179
240 240 120 05/01/08 237 117
241 300 120 02/01/08 294 114
242 300 144 06/01/10 298 142
243 300 120 11/01/07 291 111
244 300 120 02/01/08 294 114
245 300 180 05/01/13 297 177
246 240 120 04/01/08 236 116
247 300 120 04/01/08 296 116
248 240 240 05/01/18 237 237
249 300 180 01/01/13 293 173
250 300 144 06/01/09 286 130
251 240 240 03/01/18 235 235
252 300 240 04/01/18 296 236
253 240 120 05/01/08 237 117
254 300 120 03/01/08 295 115
255 300 144 11/01/09 291 135
256 300 120 02/01/08 294 114
257 300 144 06/01/09 286 130
86 360 120 02/01/08 354 114
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CONTROL BALLOON, FULL BALLOON/ARD BALLOON/ARD
NUMBER SEASONING AMORTIZING OR ARD BALANCE LTV RATIO DUE ON SALE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
208 1 Fully Amortizing 59,074.90 2.9% Yes
209 4 Balloon 1,294,370.05 58.8% Yes
210 11 Balloon 1,157,482.86 46.3% Yes
211 2 Balloon 1,279,214.15 49.9% Yes
212 4 ARD 1,385,953.43 63.4% Yes
213 11 ARD 1,345,724.15 51.8% Yes
214 4 Fully Amortizing 0.00 0.0% Yes
215 9 Balloon 1,077,262.36 47.6% Yes
216 5 Balloon 1,295,959.34 64.2% Yes
217 2 Balloon 1,196,401.21 63.0% Yes
218 14 Balloon 1,154,863.03 49.1% Yes
219 3 Balloon 1,271,920.83 63.6% Yes
221 9 Fully Amortizing 0.00 0.0% Yes
220 2 Balloon 978,396.51 42.5% Yes
222 1 Balloon 1,122,721.39 59.1% Yes
223 3 Balloon 826,509.28 43.5% Yes
224 1 Balloon 1,209,443.11 44.0% Yes
225 1 Balloon 1,124,116.08 48.5% Yes
226 1 Balloon 1,096,521.91 60.9% Yes
227 7 Balloon 1,219,111.80 64.8% Yes
228 6 Fully Amortizing 0.00 0.0% Yes
229 6 Fully Amortizing 0.00 0.0% Yes
230 1 Balloon 1,024,237.06 58.5% Yes
231 3 ARD 1,122,799.65 46.3% Yes
232 3 Balloon 1,032,990.48 57.4% Yes
233 7 Balloon 950,439.95 52.8% Yes
234 11 Balloon 1,053,768.15 39.0% Yes
236 7 Balloon 516,337.79 30.4% Yes
235 1 Balloon 1,094,136.18 56.7% Yes
237 6 Balloon 829,509.89 48.8% Yes
238 9 Balloon 1,200,000.00 11.3% Yes
239 1 Balloon 897,088.44 52.8% Yes
240 3 Balloon 809,969.88 40.5% Yes
241 6 Balloon 948,075.28 49.9% Yes
242 2 Balloon 867,659.90 54.6% Yes
243 9 Balloon 966,173.55 56.8% Yes
244 6 Balloon 906,309.01 63.8% Yes
245 3 Balloon 688,429.18 45.3% Yes
246 4 Balloon 711,920.37 48.8% Yes
247 4 Balloon 825,721.37 58.8% Yes
248 3 Fully Amortizing 0.00 0.0% Yes
249 7 Balloon 637,213.45 28.3% Yes
250 14 Balloon 769,906.97 49.7% Yes
251 5 Fully Amortizing 0.00 0.0% Yes
252 4 Balloon 353,284.63 23.6% Yes
253 3 Balloon 636,613.04 47.2% Yes
254 5 Balloon 741,632.37 58.6% Yes
255 9 Balloon 698,625.78 55.9% Yes
256 6 Balloon 713,063.04 61.5% Yes
257 14 Balloon 592,828.98 53.9% Yes
86 6 ARD 549,406.86 45.8% Yes
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
CONTROL DUE ON FUTURE SUBORDINATE APPRAISAL VALUE
NUMBER ENCUMBRANCE FINANCING APPRAISAL VALUE "AS OF" DATE CURRENT LTV RATIO
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
208 Yes No 2,065,000 04/17/98 78.6%
209 Yes No 2,200,000 12/11/97 73.5%
210 Yes No 2,500,000 06/10/97 63.9%
211 Yes No 2,565,000 12/31/97 62.2%
212 Yes No 2,185,000 01/22/98 73.0%
213 Yes No 2,600,000 05/13/97 60.9%
214 Yes No 2,200,000 02/21/98 70.4%
215 Yes No 2,265,000 05/20/97 67.0%
216 Yes No 2,020,000 12/10/97 74.3%
217 Yes No 1,900,000 03/25/98 78.8%
218 Yes No 2,350,000 02/19/97 63.0%
219 Yes No 2,000,000 03/07/98 73.3%
221 Yes No 2,220,000 09/24/97 64.9%
220 Yes No 2,300,000 04/16/98 62.8%
222 Yes No 1,900,000 05/28/98 74.9%
223 Yes Yes 1,900,000 02/13/98 74.6%
224 Yes No 2,750,000 02/27/98 50.9%
225 Yes No 2,320,000 04/02/98 60.3%
226 Yes No 1,800,000 04/21/98 77.7%
227 Yes No 1,880,000 10/22/97 74.1%
228 Yes Yes 2,300,000 10/30/97 59.7%
229 Yes Yes 3,500,000 10/28/97 37.9%
230 Yes No 1,750,000 05/21/98 74.2%
231 Yes No 2,425,000 03/18/98 53.5%
232 Yes No 1,800,000 03/03/98 72.0%
233 Yes No 1,800,000 11/12/97 71.6%
234 Yes No 2,700,000 07/18/97 47.2%
236 Yes No 1,700,000 11/18/97 74.1%
235 Yes No 1,930,000 04/23/98 65.8%
237 Yes No 1,700,000 12/12/97 71.3%
238 Yes No 10,600,000 10/21/97 11.3%
239 Yes No 1,700,000 12/17/97 70.5%
240 Yes No 2,000,000 02/15/98 59.7%
241 Yes No 1,900,000 10/15/97 62.7%
242 Yes No 1,590,000 04/09/98 74.7%
243 Yes No 1,700,000 09/29/97 69.3%
244 Yes No 1,420,000 12/01/97 80.4%
245 Yes Yes 1,520,000 03/11/98 72.1%
246 Yes No 1,460,000 03/04/98 71.4%
247 Yes No 1,405,000 01/23/98 73.7%
248 Yes No 2,000,000 10/31/97 49.7%
249 Yes No 2,250,000 11/05/97 44.1%
250 Yes No 1,550,000 02/28/97 63.7%
251 Yes No 1,300,000 01/30/98 74.3%
252 Yes No 1,500,000 03/02/98 63.0%
253 Yes No 1,350,000 02/24/98 69.6%
254 Yes No 1,265,000 12/12/97 73.9%
255 Yes No 1,250,000 09/22/97 74.3%
256 Yes No 1,160,000 12/17/97 76.2%
257 Yes No 1,100,000 03/06/97 69.1%
86 Yes No 1,200,000 11/20/97 52.6%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CONTROL
NUMBER YEAR BUILT YEAR RENOVATED OWNERSHIP INTEREST NET RENTABLE SF / UNITS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
208 1998 Fee 10,106
209 1964 1994 Fee 55,164
210 1969 1983 Fee 19,779
211 1973 Fee 98
212 1981 1997 Fee 73
213 1965 Fee 67,271
214 1997 Fee/Leasehold 14,448
215 1979 Leasehold 45,623
216 1988 Fee 15,070
217 1967 Fee 42,842
218 1990 Fee 35,264
219 1997 Fee 16,098
221 1997 Fee 26,720
220 1973 Fee 113
222 1970 Fee 96
223 1965 1997 Fee 71,825
224 1982 Fee 37,149
225 1952 1987, 1997 Fee 10,058
226 1986 Fee 56
227 1997 Fee 11,447
228 1988 Fee 22,590
229 1981 1996 Fee 22,500
230 1966 1996 Fee 64
231 1982 Fee 81
232 1988 Fee 24,882
233 1985 Fee 20,889
234 1979 Fee 68,713
236 1996 Fee 9,956
235 1988 1993 Fee 28,800
237 1987 Fee 37,000
238 1908 1940 Fee 73
239 1964 1995-1997 Fee 74
240 1974 Fee 49,837
241 1989 Fee 23,000
242 1997 Fee 6,500
243 1980 Fee 30,930
244 1977 Fee 72
245 1991 Fee 5,028
246 1997 Fee 7,488
247 1986 Fee 27,900
248 1967 Fee 90
249 1974 Fee 57,794
250 1989 Fee 35,040
251 1910 1971 Fee 167,000
252 1963 Fee 46
253 1995 Fee 5,429
254 1990 Fee 12,000
255 1995 Fee 12,300
256 1968 Fee 54
257 1990 Fee 35,040
86 1965 1994 Fee 46
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
CONTROL LARGEST TENANT SF PHYSICAL
NUMBER LARGEST TENANT NAME LARGEST TENANT SF AS A % OF TOTAL OCCUPANCY %
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
208 Rite Aid of Pennsylvania, Inc. 10,106 100.0% 100.0%
209 Capital Primary Care 4,000 7.3% 91.1%
210 Frank's Nursery & Crafts 19,779 100.0% 100.0%
211 82.7%
212 98.6%
213 Davis Vision 21,611 32.1% 92.0%
214 Tenet Healthcare, Ltd 14,448 100.0% 100.0%
215 Rodolfo Martinez 4,437 9.7% 92.1%
216 Pier 1 Imports 9,970 66.2% 100.0%
217 Giant of Maryland, Inc. 42,842 100.0% 100.0%
218 JumboSports Inc. 35,264 100.0% 100.0%
219 FHOC Suites 3,298 20.5% 100.0%
221 DHL 26,720 100.0% 100.0%
220 92.0%
222 92.7%
223 United Rotary Brush Plant 71,825 100.0% 100.0%
224 Stason Pharmaceutical, Inc. 37,149 100.0% 100.0%
225 Paschal Photography 1,630 16.2% 100.0%
226 100.0%
227 Great American Capital 3,478 30.4% 100.0%
228 Realty One 10,250 45.4% 100.0%
229 Realty One 7,200 32.0% 100.0%
230 93.8%
231 97.6%
232 Internetwork Publishing 4,404 17.7% 94.5%
233 Professional Center 7,000 33.5% 100.0%
234 Savings of America 24,694 35.9% 90.8%
236 Kinko's 6,688 67.2% 100.0%
235 Electronic Data Systems 28,800 100.0% 100.0%
237 Featherstone Gymnastics 8,500 23.0% 100.0%
238 98.6%
239 93.0%
240 El Mar Plastics 26,000 52.2% 100.0%
241 West Coast Video 3,250 14.1% 85.9%
242 Blockbuster Videos, Inc. 6,500 100.0% 100.0%
243 National Golf 7,000 22.6% 96.1%
244 97.2%
245 Fashion Dry Cleaners #7 1,750 34.8% 100.0%
246 Hollywood Entertainment 7,488 100.0% 100.0%
247 Diversified Inventory 11,500 41.2% 95.7%
248 100.0%
249 Saltgrass, Inc. 6,457 11.2% 85.7%
250 JumboSports, Inc. 35,040 100.0% 100.0%
251 P. R. & G. 35,600 21.3% 51.3%
252 89.1%
253 Men's Warehouse 5,429 100.0% 100.0%
254 Lampshader 5,000 41.7% 100.0%
255 Propath, Inc. 2,400 19.5% 90.2%
256 96.3%
257 JumboSports, Inc. 35,040 100.0% 100.0%
86 100.0%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
CONTROL OCCUPANCY ORIGINAL UNDERWRITTEN UNDERWRITTEN ANNUAL UNDERWRITTEN
NUMBER AS OF DATE LTV RATIO 1996 NOI 1997 NOI NOI NET CASH FLOW REPLACEMENT RESERVES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
208 06/11/98 78.7% 0 0 188,059 187,048 1,011
209 12/03/97 73.9% 244,160 277,238 276,447 212,796 13,801
210 06/10/97 65.0% 0 0 254,414 243,140 4,648
211 05/01/98 62.4% 127,961 273,895 234,718 234,718 24,500
212 04/30/98 73.2% 191,723 183,212 185,501 169,076 16,425
213 04/01/98 61.5% 270,549 256,019 243,370 197,355 13,123
214 04/21/98 70.9% 0 0 206,374 192,183 3,612
215 06/15/97 68.0% 312,783 0 273,956 245,478 6,843
216 04/28/98 74.6% 216,601 230,555 190,755 176,208 2,349
217 04/01/98 78.9% 179,017 193,318 185,435 173,903 4,284
218 02/01/97 63.8% 0 0 260,918 251,031 3,879
219 03/17/98 73.5% 0 0 181,548 163,704 4,040
221 09/01/97 66.0% 0 0 195,448 184,219 2,672
220 04/14/98 63.0% 203,470 170,346 182,218 182,218 28,331
222 06/03/98 75.0% 0 195,642 202,131 202,131 24,000
223 02/28/97 75.0% 0 0 190,300 179,667 7,183
224 02/27/98 50.9% 213,890 271,714 231,094 225,522 5,572
225 06/09/98 60.3% 205,778 266,772 214,759 196,528 1,710
226 04/21/98 77.8% 198,078 188,691 176,115 153,715 22,400
227 04/30/98 74.5% 0 0 189,665 169,042 2,862
228 05/04/98 60.9% 254,968 259,896 234,912 215,214 4,518
229 04/23/98 38.6% 352,500 364,185 319,111 289,482 12,150
230 06/03/98 74.3% 177,961 177,089 167,141 167,141 19,111
231 06/01/98 53.6% 204,563 222,661 213,240 184,890 28,350
232 03/31/98 72.2% 118,024 159,254 186,905 163,496 6,221
233 12/04/97 72.2% 173,540 182,738 177,925 155,878 6,058
234 07/29/97 47.7% 245,262 0 234,143 165,047 13,597
236 03/01/98 75.0% 0 142,969 173,128 168,880 996
235 06/01/98 65.8% 176,392 171,537 182,812 150,458 7,200
237 05/12/98 72.1% 183,645 188,107 168,014 150,924 8,806
238 09/01/97 11.3% 130,454 116,989 828,270 828,270 21,600
239 04/01/98 70.6% -1,644 124,782 142,998 125,460 17,538
240 05/27/98 60.0% 155,438 165,875 158,257 143,446 7,476
241 04/01/98 63.2% 209,256 237,937 186,084 168,042 3,450
242 06/01/98 74.8% 0 0 145,905 140,250 708
243 12/31/97 70.0% 173,339 214,724 168,917 142,594 10,516
244 04/01/98 81.0% 168,378 161,539 152,521 137,905 14,616
245 10/06/97 72.4% 141,761 157,633 138,611 132,642 955
246 05/17/98 71.9% 0 0 136,398 136,398 1,193
247 04/28/98 74.0% 161,040 158,569 132,225 114,477 14,982
248 04/23/98 50.0% 142,634 137,002 184,626 157,356 27,270
249 03/31/98 44.4% 172,675 202,155 189,996 125,044 13,464
250 02/01/97 64.5% 0 0 159,679 150,614 4,906
251 02/01/98 75.0% 0 82,578 156,528 145,455 16,700
252 02/25/98 63.3% 132,772 131,621 116,680 116,680 11,500
253 03/12/98 70.0% 0 0 122,929 116,840 543
254 04/28/98 74.3% 129,856 101,995 122,313 113,382 1,800
255 03/02/98 75.0% 112,704 144,478 136,521 129,206 1,230
256 05/01/98 76.7% 118,590 120,562 111,254 111,254 13,500
257 04/01/97 70.0% 0 0 135,584 124,456 5,957
86 10/31/97 52.9% 126,757 128,026 129,238 126,478 2,760
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CONTROL ANNUAL UNDERWRITTEN REPLACEMENT UNDERWRITTEN UNDERWRITTEN NET ORIGINAL LOAN CUT-OFF DATE PAID TO
NUMBER RESERVES PER UNIT/SF NOI DSCR CASH FLOW DSCR PER UNIT/SF LOAN PER UNIT/SF DATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
208 0.10 1.21 1.21 160.80 160.53 08/01/98
209 0.25 1.92 1.48 29.46 29.32 08/01/98
210 0.23 1.44 1.38 82.16 80.77 08/01/98
211 250.00 1.64 1.64 16,326.53 16,286.37 08/01/98
212 225.00 1.39 1.27 21,917.81 21,850.95 08/01/98
213 0.20 1.54 1.25 23.78 23.56 08/01/98
214 0.25 1.37 1.28 107.97 107.18 08/01/98
215 0.15 1.71 1.53 33.75 33.26 08/01/98
216 0.16 1.57 1.45 99.93 99.53 08/01/98
217 0.10 1.39 1.31 35.01 34.93 08/01/98
218 0.11 1.73 1.66 42.54 41.98 08/01/98
219 0.25 1.49 1.35 91.32 91.11 08/01/98
221 0.10 1.34 1.27 54.83 53.95 08/01/98
220 250.72 1.32 1.32 12,831.86 12,784.33 08/01/98
222 250.00 1.66 1.66 14,843.75 14,825.63 08/01/98
223 0.10 1.38 1.31 19.84 19.73 08/01/98
224 0.15 2.01 1.96 37.69 37.66 08/01/98
225 0.17 1.79 1.64 139.19 139.05 08/01/98
226 400.00 1.50 1.31 25,000.00 24,968.45 08/01/98
227 0.25 1.59 1.42 122.30 121.67 08/01/98
228 0.20 1.51 1.39 61.97 60.83 08/01/98
229 0.54 2.13 1.94 60.00 58.89 08/01/98
230 298.61 1.51 1.51 20,312.50 20,287.70 08/01/98
231 350.00 2.00 1.73 16,049.38 16,011.82 08/01/98
232 0.25 1.64 1.43 52.25 52.06 08/01/98
233 0.29 1.57 1.37 62.23 61.71 08/01/98
234 0.20 1.88 1.33 18.76 18.55 08/01/98
236 0.10 1.39 1.36 128.06 126.44 08/01/98
235 0.25 1.77 1.46 44.10 44.06 08/01/98
237 0.24 1.43 1.28 33.11 32.74 08/01/98
238 295.89 1.00 1.00 16,438.36 16,438.36 08/01/98
239 237.00 1.45 1.28 16,216.22 16,203.59 08/01/98
240 0.15 1.38 1.25 24.08 23.94 08/01/98
241 0.15 1.80 1.63 52.17 51.79 08/01/98
242 0.11 1.41 1.36 183.08 182.64 08/01/98
243 0.34 1.51 1.27 38.47 38.11 08/01/98
244 203.00 1.55 1.40 15,972.22 15,853.67 08/01/98
245 0.19 1.41 1.35 218.77 218.04 08/01/98
246 0.16 1.35 1.35 140.22 139.20 08/01/98
247 0.54 1.45 1.26 37.28 37.10 08/01/98
248 303.00 1.92 1.64 11,111.11 11,049.94 08/01/98
249 0.23 2.04 1.35 17.30 17.17 08/01/98
250 0.14 1.59 1.50 28.54 28.16 08/01/98
251 0.10 1.65 1.54 5.84 5.79 08/01/98
252 250.00 1.37 1.37 20,652.17 20,559.07 08/01/98
253 0.10 1.37 1.30 174.07 173.09 08/01/98
254 0.15 1.52 1.41 78.33 77.85 08/01/98
255 0.10 1.58 1.50 76.22 75.47 08/01/98
256 250.00 1.39 1.39 16,481.48 16,370.38 08/01/98
257 0.17 1.75 1.61 21.97 21.69 08/01/98
86 60.00 2.62 2.57 13,804.35 13,734.10 08/01/98
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CONTROL REPAIR & REMEDIATION TI/LC RESERVE P&I RESERVE ENVIRONMENTAL ECONOMIC
NUMBER RESERVE HOLDBACK HOLDBACK HOLDBACK RESERVE HOLDBACK RESERVE HOLDBACK TOTAL RESERVE HOLDBACK
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
208 12,969.00 12,969.00
209 2,625.00 2,625.00
210 50,000.00 50,000.00
211 1,125.00 1,125.00
212 8,125.00 450.00 8,575.00
213 9,084.39 9,084.39
214 24,000.00 24,000.00
215
216 18,332.00 18,332.00
217 1,212.63 1,212.63
218
219
221
220 31,000.00 1,125.00 32,125.00
222
223
224 13,140.00 13,140.00
225 3,577.50 469.00 12,634.23 16,680.73
226 14,363.65 300.00 14,663.65
227
228 8,563.00 15,745.01 24,308.01
229 5,625.00 15,883.63 2,880.00 24,388.63
230
231 13,346.22 742.00 14,088.22
232
233
234
236
235
237 12,750.00 12,750.00
238 2,250.00 2,250.00
239 19,125.00 12,726.11 675.00 32,526.11
240 43,402.00 24,314.00 13,371.82 81,087.82
241
242 500.00 500.00
243 9,150.00 6,920.00 16,070.00
244 8,156.00 13,326.32 21,482.32
245
246
247 28,769.00 28,769.00
248 1,938.00 13,599.32 15,537.32
249
250
251
252 675.00 24,400.00 25,075.00
253
254 4,448.00 4,448.00
255
256
257
86
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
CONTROL MONTHLY REPLA- MONTHLY MONTHLY INSUR- MONTHLY TI/LC
NUMBER CEMENT RESERVES TAX ESCROW ANCE ESCROW PAYMENT
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
208 56.15
209 2,019.44 509.17
210 2,879.86
211 3,335.95 1,342.42
212 1,368.75 1,920.81 763.12
213 2,641.49 6,851.41 747.24 833.33
214 1,588.92 448.83
215 4,350.03 221.08
216 1,509.63 4,583.00
217 1,798.23 129.50 87.63
218
219 2,496.16 764.50
221 4,977.97 247.50
220 973.35 1,260.67
222 3,154.67 385.08
223 1,824.43
224 464.36 2,587.61 500.00
225 143.00 1,002.93 1,025.93 469.00
226 1,867.00 1,826.59 274.83
227 1,778.85 681.67
228 373.00 2,038.79 410.67
229 3,361.35 61.25
230 3,204.60 359.83
231 1,687.50 1,905.86 858.10
232 2,346.58 863.03
233 1,436.33 264.92
234 3,587.38 640.58 4,350.00
236 890.07
235 2,455.93
237 1,529.28 650.58
238 8,907.06 452.00
239 1,462.00 1,787.02 1,282.83
240 605.00 1,772.48 1,451.58
241 3,613.27 407.92
242 98.08 500.00
243 2,517.20 446.75 865.00
244 1,417.00 1,890.24 1,832.34
245 854.65 801.83
246 463.90 143.42
247 2,595.82
248 1,875.00 2,977.23 740.00
249 2,414.69 610.58
250
251 1,005.47 107.83
252
253
254 1,529.05 1,112.00
255 907.05 132.75
256 985.00 471.42
257
86 230.00 55.69 97.50
</TABLE>
<PAGE>
ANNEX B
ADDITIONAL MULTIFAMILY LOAN CHARACTERISTICS
<PAGE>
<TABLE>
<CAPTION>
CUTOFF
CONTROL LOAN LOAN DATE
NUMBER NUMBER GROUP ORIGINATOR BALANCE
- --------- --------- ------- ------------ -------------------
<S> <C> <C> <C> <C>
005 6102628 2 PMCC $ 19,538,161.94
015 2534 2 NRF $ 13,817,378.84
018 3423 2 NRF $ 12,139,942.08
028 6102876 2 PMCC $ 9,991,899.64
031 6102859 2 PMCC $ 9,726,770.04
034 2358 2 NRF $ 9,255,675.11
038 6102452 2 PMCC $ 8,955,522.70
041 3083 2 NRF $ 8,792,843.45
044 6102663 2 PMCC $ 8,372,756.68
045 34 2 CIBC $ 8,288,540.62
053 7608323 2 PMCC $ 7,483,557.38
054 6102880 2 PMCC $ 7,395,401.18
059 6102533 2 PMCC $ 6,971,981.17
065 1585 2 NRF $ 6,603,087.37
071 6102541 2 PMCC $ 5,965,909.13
078 3218 2 NRF $ 5,295,542.98
093 2910 2 NRF $ 4,389,578.72
094 6102765 2 PMCC $ 4,283,982.40
098 1013 2 NRF $ 4,168,686.68
101 6102769 2 PMCC $ 3,986,795.65
107 6102974 2 PMCC $ 3,795,979.79
113 6102705 2 PMCC $ 3,591,473.48
116 1022 2 NRF $ 3,486,530.84
146 35 2 CIBC $ 2,794,512.07
155 6102460 2 PMCC $ 2,557,414.97
168 2917 2 NRF $ 2,297,187.61
169 6102648 2 PMCC $ 2,293,339.38
180 2463 2 NRF $ 2,144,817.65
201 1720 2 NRF $ 1,788,899.61
204 2055 2 NRF $ 1,716,856.20
205 1060 2 NRF $ 1,708,197.15
212 6102656 2 PMCC $ 1,595,119.06
220 1001 2 NRF $ 1,444,629.61
222 2815 2 NRF $ 1,423,260.30
226 6102943 2 PMCC $ 1,398,230.34
230 2456 2 NRF $ 1,298,412.90
231 6102840 2 PMCC $ 1,296,957.34
238 1030 2 NRF $ 1,200,000.00
244 6102540 2 PMCC $ 1,141,464.53
256 1991 2 NRF $ 884,000.67
011 2555 1 NRF $ 16,444,887.90
026 2052 1 NRF $ 10,166,394.89
043 1269 1 NRF $ 3,872,473.95
051 3645 1 KEY $ 7,688,808.84
079 6102708 1 PMCC $ 5,237,039.89
087 6102709 1 PMCC $ 4,787,986.80
111 1108 1 NRF $ 3,698,090.20
130 1089 1 NRF $ 3,133,652.53
144 7608309 1 PMCC $ 2,835,997.95
157 1781-A 1 NRF $ 2,490,410.22
157 1781-B 1 NRF
160 1440 1 NRF $ 2,427,942.84
163 6102834 1 PMCC $ 2,343,982.36
177 3182 1 NRF $ 2,200,000.00
186 2660 1 NRF $ 2,045,534.41
187 2392 1 NRF $ 2,021,703.90
198 6102904 1 PMCC $ 1,823,901.78
200 1015 1 NRF $ 1,789,495.77
206 6102970 1 PMCC $ 1,698,888.23
239 6102770 1 PMCC $ 1,199,065.74
248 6102531 1 PMCC $ 994,494.83
252 2115 1 NRF $ 945,717.26
<CAPTION>
ALL NUMBER
ARE UTILITIES OF
CONTROL PROPERTY THERE LANDLORD STUDIO
NUMBER PROPERTY NAME PROPERTY COUNTY ZIP ELEVATORS? PAID? UNITS
- --------- ----------------------------------------------- ------------------------- ---------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
005 Old Orchard Apartments Santa Clara 95050 No No 0
015 Adams Station Apartments Albany 12054 No No 0
018 Amberwood Apartments Prince George's 20747 No Yes 0
028 Bucks Meadow Apartments Bucks 19020 No No 0
031 Chestnut Hills and Chestnut Towers Apartments Jackson 64131 Yes No 0
034 Wildwood Acres Apartments Hillsborough 33617 No No 0
038 Pacific Woods Apartments Orange 92704 No No 0
041 The Crest Apartments Riverside 92507 No No 18
044 The Preserve At Paradise Island - Phase IV Duval 32256 No No 0
045 Clarendon Gardens Kings County 11203 No No 0
053 Morningside Chase Apartments Fulton 30324 No No 0
054 Campus Walk Apartment Complex New Hanover 28403 No No 0
059 Taylor's Crossing Apartments Jefferson 40299 No Yes 0
065 Margarita Summit Apartments Riverside 92592 No No 0
071 The Palms at Livingston Phase I Apartments Hillsborough 33549 No No 0
078 River Village Apartments San Diego 92026 No No 0
093 Riviera Village Maricopa 85281 No No 0
094 Townhomes at Regency Place Philadelphia 19154 No No 0
098 The College Park Apartments Parker 76086 No No 32
101 Forest Glen Phase II Apartments Volusia 32114 No No 0
107 Conestoga West Apartments Lancaster County 17603 No No 0
113 Golden Grove Terrace Apartments San Diego 91945 No No 0
116 Knightsbridge Apartments Jackson 64137 No No 5
146 Royal Gardens Rockland County 10977 No No 3
155 Covina Plaza Apartments Los Angeles 91722 No No 0
168 Villa Primera Apartments San Diego 91950 No No 0
169 Park Village Apartments Orange County 90621 No No 0
180 Preserve Apartments La Plata 81301 No No 0
201 Libertwo Apartments Clark 89119 No No 88
204 Johnson Parkway Apartments Ramsey 55106 No No 12
205 Broussard Plaza Apartments East Baton Rouge Parish 70810 No No 0
212 Country Square Apartments Phase I Hillsborough 33615 No No 14
220 Royal Orleans Apartments Jasper 64801 No No 0
222 Old Orchard Apartments Ingham 48842 No No 0
226 Sussex Court Apartments Dauphin 17109 No No 0
230 Wellington Manor Apartments Wayne 48183 No No 4
231 Curiosity Creek Apartments Hillsborough 33612 No No 16
238 35 W. 81st Street New York 10024 Yes No 24
244 Sandcastle Apartments Harrison 39560 No No 0
256 Brookside Apartments Jackson 64053 No No 0
011 Pebblebrook Apartments Hartford 06053 Yes No 0
026 Creek House Commons Apartments Monroe 14626 Yes No 0
043 Parkside West Retirement Facility King 98002 Yes Yes 0
051 Hunters Hollow Apartments Cuyahoga 44136 No No 0
079 Village of Santa De La Paz Apartments Clark 89014 No No 0
087 Village of Santo Domingo Apartments Clark 89117 No No 0
111 Oakwood Village Retirement Center Dallas 75043 Yes Yes 3
130 River's Edge and Cowesett Terrace Kent 02893 No No 0
144 Kingsley Apartments Los Angeles 90027 Yes No 2
157 Tara Apartments Woodward 73801 No No 0
157 Briarwood No 0
160 Kingston Cove Apartments Sedgwick 67217 No No 5
163 The Woods Apartments Forsyth 27106 Yes Yes 0
177 Casa Grande Apartments San Diego 92103 Yes No 17
186 Oak Park Apartments Payne 74075 No No 0
187 Orleans Manor Apartments McKinnley 87301 No Yes 0
198 River Ridge Villas Ventura 93065 No No 0
200 Fox Hollow Dallas 75243 No No 0
206 224 East 48th Street New York 10016 Yes No 0
239 Cornerstone Apartments Tarrant 76117 No No 0
248 Ranchview Gardens Apartments Erie 44870 No No 0
252 Indian Hills Apartments South St. Louis 63123 No No 0
<CAPTION>
AVERAGE AVERAGE AVERAGE
AVERAGE NUMBER RENT NUMBER RENT NUMBER RENT
RENT OF ONE ONE OF TWO TWO OF THREE THREE
CONTROL STUDIO BEDROOM BEDROOM BEDROOM BEDROOM BEDROOM BEDROOM TOTAL
NUMBER UNITS UNITS UNITS UNITS UNITS UNITS UNITS APTS COMMENTS
- --------- --------- --------- --------- --------- --------- ---------- --------- ------ --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
005 $ 0 98 $1,053 122 $1,184 0 $ 0 220
015 94 $ 635 188 $ 737 0 282
018 97 $ 569 427 $ 645 75 $ 822 599
028 $ 0 170 $ 536 130 $ 637 44 $ 773 344
031 $ 0 145 $ 450 244 $ 528 0 $ 0 389
034 1 $ 750 332 $ 551 4 $ 778 337
038 $ 0 148 $ 723 84 $ 884 0 $ 0 232
041 $523 72 $ 562 130 $ 716 0 220
044 $ 0 36 $ 725 96 $ 896 0 $ 0 132
045 $ 0 160 $ 615 64 $ 708 0 $ 0 224
053 $ 0 72 $ 725 113 $ 895 16 $1,295 201
054 $ 0 288 $ 425 0 $ 0 0 $ 0 288
059 $ 0 72 $ 430 252 $ 469 60 $ 550 384
065 0 140 $ 702 3 $ 885 143
071 $ 0 176 $ 460 60 $ 612 0 $ 0 236
078 59 $ 576 64 $ 674 0 123
093 80 $ 489 85 $ 552 0 165
094 $ 0 0 $ 0 141 $ 650 18 $ 725 159
098 $379 56 $ 410 80 $ 476 0 168
101 $ 0 0 $ 0 76 $ 612 40 $ 688 116
107 $ 0 55 $ 535 66 $ 600 0 $ 0 121
113 $ 0 36 $ 505 67 $ 610 0 $ 0 103
116 $353 60 $ 385 94 $ 463 48 $ 582 207
146 $598 65 $ 638 16 $ 709 2 $ 933 86
155 $ 0 61 $ 580 21 $ 738 0 $ 0 82
168 96 $ 418 0 $ 0 0 96
169 $ 0 16 $ 558 40 $ 673 2 $ 850 58
180 20 $ 638 20 $ 820 0 40
201 $431 14 $ 495 0 0 102
204 $361 38 $ 427 34 $ 528 0 84
205 24 $ 310 79 $ 344 24 $ 383 127
212 $329 51 $ 409 8 $ 529 0 $ 0 73
220 72 $ 337 41 $ 407 0 113
222 64 $ 392 32 $ 452 0 96
226 $ 0 56 $ 566 0 $ 0 0 $ 0 56
230 $410 32 $ 442 24 $ 497 4 $ 600 64
231 $345 59 $ 404 6 $ 497 0 $ 0 81
238 $387 24 $ 724 24 $1,174 72
244 $ 0 0 $ 0 72 $ 397 0 $ 0 72
256 38 $ 300 16 $ 394 0 54
011 171 $ 645 315 $ 724 0 486
026 0 152 $ 574 88 $ 671 240
043 81 $1,234 6 $1,505 0 87
051 40 $ 695 168 $ 843 0 208
079 $ 0 48 $ 612 72 $ 675 0 $ 0 120
087 $ 0 40 $ 621 80 $ 725 0 $ 0 120
111 $768 85 $1,105 24 $1,408 0 114 includes 2 employee units
130 6 $ 579 78 $ 680 0 84
144 $438 2 $ 650 60 $ 763 1 $1,150 65
157 4 $ 270 104 $ 309 3 $ 428 111
157 88 $ 258 118 $ 312 11 $ 382 218 includes 1 employee unit
160 $329 140 $ 372 105 $ 430 1 $ 555 251
163 $ 0 82 $ 480 103 $ 587 24 $ 695 209
177 $451 36 $ 567 4 $ 768 0 57
186 40 $ 336 80 $ 397 0 120
187 12 $ 475 80 $ 510 8 $ 585 100
198 $ 0 12 $ 748 18 $ 841 0 $ 0 30
200 100 $ 378 32 $ 545 0 132
206 $ 0 24 $1,144 0 $ 0 0 $ 0 24
239 $ 0 24 $ 349 44 $ 434 6 $ 593 74
248 $ 0 24 $ 360 64 $ 420 2 $ 470 90
252 16 $ 339 28 $ 474 2 $ 550 46
</TABLE>
<PAGE>
ANNEX C
STEP LOANS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
LOAN MONTHLY STEP
NUMBER PROPERTY NAME PERIOD PAYMENT DATE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1755 North Creek Plaza 1 $59,471.23 2/1/98
61 $68,555.37 2/1/03
1512 Strouds 1 $20,801.44 2/1/98
61 $23,179.61 2/1/03
1912 7461 & 7481 Lake Mead Blvd. 1 $15,768.13 5/1/98
61 $17,251.60 5/1/03
121 $17,304.30 5/1/08
1041 12412 Victory Blvd. 1 $14,690.85 12/1/97
61 $15,886.73 12/1/02
6103107 Home Depot 1 $107,439.91 8/1/98
79 $118,490.68 2/1/05
140 $130,646.54 2/1/10
</TABLE>
INTEREST ONLY LOANS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
LOAN ORIGINAL INTEREST REMAINING INTEREST
NUMBER PROPERTY NAME ONLY PERIOD ONLY PERIOD
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1548 FirstPlus Financial Headquarters 24 17
1782 6303 Dry Creek Parkway 24 19
1152 An Industrial Building (Endar Building) 12 5
6102707 1484 First Avenue 36 33
1030 35 W. 81st Street 120 111
</TABLE>
<PAGE>
ANNEX D
AFFILIATED BORROWERS
<TABLE>
<CAPTION>
PERCENT
CUT-OFF RELATIONSHIP OF CROSS COLLATERALIZED AND
LOAN NUMBERS BALANCE BORROWER CROSS DEFAULTED
- ----------------------------------- --------- ------------------- ----------------------------------------
<S> <C> <C> <C>
1376 & 1908 are cross-collateralized and
1376, 1905, 1907, 1908 3.47% Affiliated Entities cross-defaulted
- ----------------------------------- --------- ------------------- ----------------------------------------
6102944, 6102945, 6102946, 6102947, cross-collateralized and cross-defaulted
6102950 2.30% Affiliated Entities (Not including loan 6102950)
- ----------------------------------- --------- ------------------- ----------------------------------------
1, 9 1.89% 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 1.01% 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 0.79% 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 0.55% 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 0.35% 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
- ----------------------------------- --------- ------------------- ----------------------------------------
</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>
<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
4
<PAGE>
PAGE
--------
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
5
<PAGE>
PAGE
--------
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>
6
<PAGE>
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each
Series of Certificates contained in the Prospectus Supplement to be prepared
and delivered in connection with the offering of 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-
7
<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
8
<PAGE>
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 Series.
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."
9
<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"
10
<PAGE>
("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.
11
<PAGE>
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
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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
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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
<TABLE>
<CAPTION>
<S> <C>
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-92
The Pooling And Servicing Agreement.......... S-92
Material Federal Income Tax Consequences .... S-108
ERISA Considerations......................... S-109
Legal Investment............................. S-112
Plan Of Distribution......................... S-113
Use Of Proceeds.............................. S-113
Legal Matters................................ S-113
Ratings...................................... S-113
Index of Significant Definitions............. S-115
Annex A--Loan Characteristics
Annex B--Additional Multifamily Loan
Characteristics
Annex C--Step Loans and Interest Only Loans
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
</TABLE>
$1,016,619,000
COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES,
SERIES 1998-C1
PRUDENTIAL SECURITIES SECURED
FINANCING CORP.
PROSPECTUS SUPPLEMENT
PRUDENTIAL SECURITIES INCORPORATED
CIBC OPPENHEIMER CORP.
AUGUST 12, 1998
