<PAGE>
Rule No. 424(b)(4)
Registration No. 33-53527
PROSPECTUS
$92,400,000
[LOGO OF GREEN TREE FINANCIAL APPEARS HERE]
GREEN TREE SECURITIZED NET INTEREST MARGIN TRUST 1994-B
7.85% SECURITIZED NET INTEREST MARGIN CERTIFICATES
-----------
Green Tree Securitized Net Interest Margin Trust 1994-B (the "Trust") will be
formed pursuant to a Trust Agreement, dated as of June 1, 1994, among Green
Tree Manufactured Housing Net Interest Margin Finance Corp. I ("Finance I"), a
wholly owned subsidiary of Green Tree Financial Corporation ("Green Tree"),
Green Tree Manufactured Housing Net Interest Margin Finance Corp. II ("Finance
II"), a wholly owned subsidiary of Green Tree, and Wilmington Trust Company, as
Trustee. The Trust will issue $92,400,000 aggregate principal amount of 7.85%
Securitized Net Interest Margin Certificates (the "Certificates"). The assets
of the Trust will consist of (i) the residual cashflow from four real estate
mortgage investment conduits ("REMICs"), whose assets consist of pools of
manufactured housing contracts sold by Green Tree to investors in March 1994
(the "1994-1 Securitized Pool"), May 1994 (the "1994-2 Securitized Pool" and
the "1994-3 Securitized Pool") and June 1994 (the "1994-4 Securitized Pool"),
and (ii) a limited recourse note (the "Finance I Note") issued by Finance I,
and certain related property (as described herein). The Finance I Note will be
secured by, and will be payable solely from, a Guarantee Fee payable with
respect to the 1994-1 Securitized Pool and certain related property, all as
described herein.
The Certificates offered hereby represent fractional undivided interests in
the Trust. Principal and interest, at one-twelfth of the interest rate of 7.85%
per annum, will be distributed to the Certificateholders on the 15th day of
each month (each, a "Distribution Date"), beginning August 15, 1994. It is a
condition of issuance that the Certificates be rated "BBB+" by Fitch Investors
Service, Inc. ("Fitch").
The Final Scheduled Distribution Date for the Certificates will be July 15,
2004. However, payment in full of the Certificates is expected to occur earlier
than such date, as described herein. Investors may be unable to invest payments
of principal received on the Certificates at a rate equal to the interest rate
on the Certificates.
The Certificates initially will be represented by certificates registered in
the name of Cede & Co., the nominee of the Depository Trust Company ("DTC").
The interests of beneficial owners of the Certificates ("Certificate Owners")
will be represented by book entries on the records of the participating member
of DTC. Definitive Certificates will be available only under the limited
circumstances described herein. See "Description of the Certificates--
Registration of the Certificates."
Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the "Underwriters") intend to make a secondary market in the Certificates, but
have no obligation to do so. There can be no assurance that a secondary market
for the Certificates will develop, or if it does develop, that it will
continue.
The Certificates will not be insured or guaranteed by any governmental agency
or instrumentality, by Green Tree or any of its affiliates, or by the
Underwriters or any of their affiliates, and will be payable only from amounts
held by or owed to the Trust.
FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE CERTIFICATES, SEE "SPECIAL CONSIDERATIONS" HEREIN.
-----------
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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Price to Underwriting Proceeds to
Public (1) Discount(2) the Trust (3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Certificate.......................... 99.984375% 2.00% 97.984375%
- --------------------------------------------------------------------------------
Total.................................... $92,385,563 $1,848,000 $90,537,563
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from July 27, 1994.
(2) Green Tree has agreed to indemnify the Underwriters against certain
liabilities under the Securities Act of 1933. See "Underwriting."
(3) Before deducting expenses, estimated to be $907,000.
-----------
The Certificates are offered subject to prior sale, when and if issued by the
Trust 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 Certificates
will be made in book-entry form only through the Same Day Funds Settlement
system of DTC on or about July 27, 1994.
-----------
LEHMAN BROTHERS MERRILL LYNCH & CO.
July 20, 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CERTIFICATES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Until October 20, 1994, all dealers effecting transactions in the
Certificates, whether or not participating in this distribution, may be
required to deliver a Prospectus. This is in addition to the obligation of
dealers to deliver a Prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
REPORTS TO CERTIFICATEHOLDERS
The Trust will cause to be provided to the holders of the Certificates
certain monthly and annual reports concerning the Certificates and the Trust as
further described in this Prospectus under "Description of the Certificates--
Reports to Certificateholders."
ADDITIONAL INFORMATION
This Prospectus contains a summary of certain material terms of certain of
the documents referred to herein, but does not contain all of the information
set forth in the Registration Statement of which this Prospectus is a part (the
"Registration Statement"). For further information, reference is made to such
Registration Statement and the exhibits thereto which Green Tree has filed with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended. Statements contained in this Prospectus describing a
provision of any agreement or other document referred to are summaries, and if
this Prospectus indicates that such agreement or other document has been filed
as an exhibit to the Registration Statement, reference is made to the copy of
the agreement or other document filed as an exhibit, each such statement being
qualified in all respects by reference to the actual provision being described.
Copies of the Registration Statement can be inspected and, upon payment of the
Commission's prescribed charges, copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at certain of its Regional Offices located as
follows: New York Regional Office, Seven World Trade Center, 13th Floor, New
York, New York 10048, and Chicago Regional Office, Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661.
2
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus.
Issuer.................. Green Tree Securitized Net Interest Margin Trust
1994-B (the "Trust"), a Delaware business trust to be
formed on or about July 27, 1994 (the "Closing Date")
by Green Tree Manufactured Housing Net Interest Mar-
gin Finance Corp. I ("Finance I") pursuant to a Trust
Agreement dated as of June 1, 1994 (the "Trust Agree-
ment") among Finance I, Green Tree Manufactured Hous-
ing Net Interest Margin Finance Corp. II ("Finance
II") and Wilmington Trust Company, as Trustee (the
"Trustee").
Securities Offered...... $92,400,000 aggregate principal amount of 7.85%
Securitized Net Interest Margin Certificates
("SNIMCs" or the "Certificates"), issued pursuant to
the Trust Agreement. The Trust will also issue cer-
tificates representing subordinated interests in the
Trust (the "Subordinated Certificates"), which are
not offered hereby, to Finance I and Finance II.
Trust Property.......... The Certificates will be secured by, and payable
solely from, the Trust Property. The Trust Property
will consist of (i) a limited recourse note in the
initial amount of $34,700,000 (the "Finance I Note")
issued by Finance I, which in turn will be secured
by, and payable solely from, the Guarantee Fee (as
described below), (ii) the "residual interests" in
four trusts (the "Residual Assets"), and (iii) the
related property described below. The Trust Property
represents the residual cashflow (net interest
margin) payable from four pools of manufactured
housing contracts (the "Contracts") sold by Green
Tree between March and June, 1994 (collectively, the
"Securitized Pools"). The initial principal amount of
the Certificates is equal to approximately 72% of the
sum of (i) the estimated present value of the
Guarantee Fee securing the Finance I Note
($47,497,498) and (ii) the estimated present value of
the Residual Assets ($80,838,781), all as further
described in the diagram on page 10, but such
estimates are based on a number of assumptions about
the future performance of the Guarantee Fee and the
Residual Assets. See "Special Considerations" and
"Yield, Average Life and Prepayment Considerations."
In particular, the prepayment assumptions used in
calculating the estimated present value of the Trust
Property are disclosed graphically on page 20 on the
curve entitled "Base Case," and in the table on page
21 under the heading "Green Tree Manufactured Housing
Contract Prepayment Information."
A. Finance I Note..... The Finance I Note will be a limited recourse obliga-
tion of Finance I, payable solely from certain assets
(the "Guarantee Fee") acquired by Finance I from
Green Tree. The Finance I Note bears interest at a
rate of 7.85% per annum, and principal and interest
thereon is payable on the fifteenth day (or, if such
day is not a business day, the next succeeding busi-
ness day) of each month, beginning August 15, 1994.
Green
3
<PAGE>
Tree is entitled to receive the Guarantee Fee for
providing a specified level of recourse to Green Tree
against delinquencies, defaults and net liquidation
losses on Contracts included in the 1994-1
Securitized Pool (the "Guarantee Fee"). The Guarantee
Fee has a stated maximum amount of 260 basis points
of the outstanding principal balance of the 1994-1
Securitized Pool before servicing fees, expenses and
losses. The initial principal amount of the Finance I
Note is equal to approximately 72% of the estimated
present value of the Guarantee Fee (as further de-
scribed in the diagram on page 10), but such estimate
is based on a number of assumptions about the future
performance of the 1994-1 Securitized Pool. See "The
Trust Property--The Guarantee Fee" and "Yield, Aver-
age Life and Prepayment Considerations."
B. Residual Assets.... The Residual Assets were issued by four trusts cre-
ated by Green Tree between March and June 1994 in
connection with Green Tree's periodic securitizations
of manufactured housing contracts originated and
serviced by Green Tree. The Residual Asset with re-
spect to each such trust represents the excess
cashflow remaining after payment of amounts due in-
vestors in such pool, servicing fees and other speci-
fied trust expenses. The excess cashflow with respect
to the Residual Assets issued by the 1994-2
Securitized Pool, the 1994-3 Securitized Pool and the
1994-4 Securitized Pool, which do not pay a Guarantee
Fee, is 282 basis points, 306 basis points and 349
basis points, respectively, of the outstanding prin-
cipal balance of such pool, before servicing fees,
losses and expenses. The excess cashflow with respect
to the Residual Asset issued by the 1994-1
Securitized Pool is payable only after the payment of
the Guarantee Fee, and accordingly is expected to
generate cash flow only periodically, when the excess
cashflow exceeds the Guarantee Fee. Each of the Re-
sidual Assets constitutes the "residual interest" in
a "real estate mortgage investment conduit"
("REMIC"). See "The Trust Property--The Residual As-
sets" and "Yield, Average Life and Prepayment Consid-
erations."
C. Inside Refinancing
Payments............
In connection with the assignments by Green Tree to
Finance I and Finance II of the Guarantee Fee and the
Residual Assets, Green Tree will agree that, with re-
spect to any Contract that is refinanced by the cus-
tomer through Green Tree (an "inside refinancing"),
Green Tree will pay to Finance I and/or Finance II,
as applicable, an amount intended to equal the esti-
mated present value of the net excess cashflow that
would have been generated by that Contract had it not
been refinanced (an "inside refinancing payment").
The right to receive such inside refinancing payments
will be assigned by Finance I and Finance II to the
Trust. Any such inside refinancing payments relating
to the Guarantee Fee will be applied to pay interest
and principal on the Finance I Note, and any such in-
side refinancing payments relating to the Residual
Assets will be paid directly to the Trust, and in ei-
ther case will be used by the Trust to pay interest
and principal on the Certificates. See "The Trust
Property--Inside Refinancing Payments."
4
<PAGE>
Contract Originator and
Servicer............... Green Tree originated all of the Contracts. See
"Green Tree Financial Corporation." Finance I and Fi-
nance II are wholly owned special purpose subsidiar-
ies of Green Tree.
Trustee................. Wilmington Trust Company, as Trustee under the Trust
Agreement. See "Description of the Trust Documents--
the Trustee."
Administrator........... First Trust National Association, St. Paul, Minneso-
ta. The Administrator will perform various adminis-
trative functions on behalf of the Trust.
Terms of the
Certificates........... The principal terms of the Certificates will be as
described below.
A. Distribution
Dates................ Principal and interest on the Certificates will be
payable on the fifteenth day (or, if such day is not
a business day, the next succeeding business day) of
each month, beginning August 15, 1994 (each, a "Dis-
tribution Date") to holders of record as of the busi-
ness day immediately preceding the related Distribu-
tion Date (the "Record Date"). Distributions of in-
terest and principal on the Certificates on any Dis-
tribution Date will be made only from amounts on de-
posit in the Certificate Account on such Distribution
Date (the "Amount Available"). In the event that the
Amount Available is not sufficient to make a full
distribution of amounts due on any Distribution Date,
the amount of the deficiency will be carried forward
as an amount that the Certificateholders are entitled
to receive on the next Distribution Date. Any amount
carried forward will, to the extent legally permissi-
ble, bear interest at the Interest Rate (as defined
below).
B. Interest........... 7.85% per annum (the "Interest Rate") payable monthly
at one-twelfth of the annual rate (calculated on the
basis of a 360-day year of 30-day months).
On each Distribution Date, the Trustee will distrib-
ute pro rata to Certificateholders accrued and unpaid
interest at the Interest Rate on the aggregate out-
standing principal amount of the Certificates (the
"Certificateholders' Interest Distributable Amount").
Interest in respect of a Distribution Date will ac-
crue from the most recent Distribution Date to which
interest has been paid to but excluding such Distri-
bution Date. Finance I and Finance II will receive a
distribution of interest on August 15, 1994 equal to
the interest accrued on the initial principal amount
of the Certificates at the Interest Rate from June
15, 1994 to the Closing Date. Certificateholders of
record on August 12, 1994 will receive a distribution
of interest on August 15, 1994 equal to the interest
accrued on the initial principal amount of the Cer-
tificates at the Interest Rate from the Closing Date
to August 15, 1994.
In the event that the Amount Available (as defined
below) in the Certificate Account (as defined below)
is not sufficient to make a full distribution of the
Certificateholders' Interest Distributable Amount,
the amount of the deficiency will be carried forward
as an amount that the Certificateholders are entitled
to receive on the next Distribution Date. Any amount
carried forward will, to the extent legally permissi-
ble, bear interest at the Interest Rate.
C. Principal.......... On each Distribution Date, all funds held by the
Trust in the Certificate Account after payment of the
Certificateholders' Interest Distributable Amount
will be payable as principal on the Certificates (the
"Certificateholders' Principal Distributable
Amount"). The distribution of principal on August 15,
1994 will represent collections on the Trust Property
for July 15 and August 15, 1994.
5
<PAGE>
D. Optional
Prepayment........... The holders of the Subordinated Certificates may, on
any Distribution Date when the outstanding principal
amount of the SNIMCs is less than 10% of the original
principal amount of the SNIMCs, cause the Trust to
prepay the SNIMCs in whole but not in part by con-
tributing cash to the Trust in an amount equal to the
unpaid principal amount of the SNIMCs (plus any ac-
crued and unpaid interest on the SNIMCs).
E. Subordination of
Subordinated
Certificates....... The Subordinated Certificates will have an estimated
initial principal value of $35,936,279. No payments
of principal or interest will be made on the Subordi-
nated Certificates (which are not being offered here-
by) until the SNIMCs have been paid in full.
Certain Federal Income
Tax Consequences....... In the opinion of Dorsey & Whitney, counsel to the
Trust, for federal income tax purposes, the Trust
will not be characterized as an association (or a
publicly traded partnership) taxable as a corpora-
tion. Although there are no regulations, published
rulings or judicial decisions involving the charac-
terization for federal income tax purposes of inter-
ests with the same terms as the Certificates, and al-
though the result is not free from doubt, on balance,
in the opinion of Dorsey & Whitney, the Certificates
will be classified as debt for federal income tax
purposes. Alternative characterizations of the Cer-
tificates are possible, but would not result in mate-
rially adverse tax consequences to the
Certificateholders. See "Certain Federal Income Tax
Consequences."
ERISA Considerations.... The Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and the Internal Revenue Code
of 1986, as amended (the "Code"), impose certain re-
quirements on those pension, profit sharing and other
employee benefit plans to which they apply and on
those persons who are fiduciaries with respect to
such plans. Prospective investors who are subject to
ERISA and the relevant provisions of the Code should
consult their legal advisors about applicable re-
strictions taking into account that the Underwriters
have advised Green Tree that they intend (although
they are not obligated) to make a market in the Cer-
tificates and to distribute the Certificates in a
manner that will result in the Certificates initially
being held by more than 100 unrelated investors. In
accordance with ERISA's fiduciary standards, before
investing in the Certificates a fiduciary should de-
termine whether such an investment is permitted under
the documents and instruments governing the plan and
is appropriate for the plan in view of its overall
investment policy and the composition and diversifi-
cation of its investment portfolio. See "ERISA Con-
siderations."
Legal Investment
Considerations......... The Certificates may not be acquired by a "disquali-
fied organization" (as defined herein). By acceptance
of a Certificate, each purchaser will be deemed to
represent that it is not a disqualified organization.
See "Restrictions on Transfer."
The Certificates will not constitute "mortgage re-
lated securities" for purposes of the Secondary Mort-
gage Market Enhancement Act of 1984.
6
<PAGE>
Accordingly, institutions whose investment activities
are subject to review by federal or state regulatory
authorities should consult with their counsel or the
applicable authorities to determine whether and to
what extent the Certificates constitute legal invest-
ments for them. See "Legal Investment Considera-
tions."
Rating.................. It is a condition to the issuance of the Certificates
that they be rated "BBB+" by Fitch. The rating of the
Certificates by Fitch addresses the likelihood of the
timely payment of interest and ultimate payment of
principal on the Certificates. 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 rating agency.
Green Tree has not requested a rating of the Certifi-
cates from any rating agency other than Fitch. Howev-
er, there can be no assurance that another rating
agency will not rate the Certificates or, if one
does, what rating would be assigned by such rating
agency.
7
<PAGE>
SPECIAL CONSIDERATIONS
Prospective Certificateholders should consider, among other things, the
following factors in connection with the purchase of the Certificates:
1. Limited Liquidity. The Certificates will not constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). Accordingly, many institutions with
legal authority to invest in SMMEA securities will not be able to invest in
the Certificates, limiting the market for such securities.
There currently is no secondary market for the Certificates. The
Underwriters expect, but are not obligated, to make a market in the
Certificates. There can be no assurance that any such market will develop
or continue.
2. Credit Risks; Limited Assets. Because of the nature of the Trust
Property and the complexity of analyzing the credit risks associated
therewith, the Certificates are an appropriate investment only for persons
familiar with manufactured housing contract performance and asset-backed
security structures. The Trust will not have, nor is it permitted or
expected to have, any significant assets or sources of funds other than the
Finance I Note and the Residual Assets. Finance I likewise will not have,
nor is it permitted or expected to have, any available assets or sources of
funds other than the Guarantee Fee. Certificateholders must therefore rely
for repayment solely upon payments on the Guarantee Fee and the Residual
Assets.
3. Risks of Manufactured Housing Contracts. Losses on the Contracts above
certain assumed levels, as described in "Yield, Average Life and Prepayment
Considerations," would adversely affect the yield on the Certificates. Loss
experience on the Contracts may be affected by, among other things, a
downturn in regional or local economic conditions. These regional or local
economic conditions may be volatile, and historically have affected the
delinquency, loan loss and repossession experience of the Contracts.
Moreover, regardless of its location, manufactured housing generally
depreciates in value. Consequently, the market value of certain
manufactured homes could be or become lower than the principal balance of
the Contracts they secure.
4. Subordination of Trust Property. As described in "The Trust Property,"
payments of principal and interest on the manufactured housing contracts in
the the Securitized Pools will be available to make payments on the
Certificates only after required payments have been made on the related
securities issued in such prior offerings. The order of priority for
monthly distribution of all collected funds in a Securitized Pool is (i)
Class A principal and interest, (ii) Class B principal and interest, and
(iii) the Trust Property. Accordingly, losses on the Contracts generally
will be absorbed by the Trust Property before being allocated to the
related securities issued in such prior offerings. In addition, the only
credit enhancement available to the holders of the Certificates is the
estimated overcollateralization of the Finance I Note and the estimated
overcollateralization of the Certificates.
The yield on the Certificates may also be affected by an extremely fast
rate of principal payments on the Contracts (including defaults and
voluntary prepayments) and by an unusually rapid prepayment of Contracts
with higher than average interest rates. Investors in the Certificates
should consider the risk that, if the Contracts experience extreme
prepayment rates, Certificateholders may experience a reduction in yield or
fail to recoup fully their initial investments. See "Yield, Average Life
and Prepayment Considerations."
Unlike standard corporate bonds, the timing and amount of principal
payments on the Certificates is not fixed and will be determined by the
timing and amount of cash flows in the Trust Property, which in turn will
be dependent on the rate of prepayments and by the timing and amount of
delinquencies and losses realized on the Contracts. The timing of principal
payments on manufactured housing contracts is affected by a variety of
economic, geographic, legal and social factors, primarily because
manufactured housing contracts may be prepaid by the borrowers at any time.
8
<PAGE>
5. Certain Matters Relating to Insolvency. Green Tree intends that the
assignment of the Guarantee Fee and the Residual Assets to Finance I and
Finance II and then the issuance of the Finance I Note and the transfer of
the Residual Assets to the Trust constitute a sale, rather than a pledge of
the Guarantee Fee and the Residual Assets to secure indebtedness of Green
Tree. However, if Green Tree were to become a debtor under the federal
bankruptcy code, it is possible that a creditor or trustee in bankruptcy of
Green Tree or Green Tree as debtor-in-possession may argue that the sale of
the Guarantee Fee and the Residual Assets by Green Tree was a pledge of the
Guarantee Fee and the Residual Assets rather than a sale. This position, if
presented to or accepted by a court, could result in a delay in or
reduction of distributions to the Certificateholders.
In addition, Dorsey & Whitney, counsel to Green Tree, will render an
opinion to the effect that, in the event Green Tree were to become a debtor
under the federal bankruptcy code, a court would not order that the assets
and liabilities of Finance I, Finance II and Green Tree should be
consolidated. Such opinion is subject to a number of assumptions,
qualifications and exceptions, and any such consolidation in the event of
Green Tree's bankruptcy could result in a delay in or reduction of
distributions to the Certificateholders.
The steps necessary to perfect the security interest in a manufactured
home will vary from state to state, and in any given state may vary
depending on the nature and location of the individual manufactured home.
Because of the expense and administrative inconvenience involved, Green
Tree did not amend any certificates of title or file any assignments of
mortgage to record the interest of the purchaser of each Contract.
Consequently, in the absence of such amendment or recordation, the
assignment to the trustee of the Securitized Pool of the security interest
in the manufactured home may not be effective in favor of such pool trustee
or the assignment of the security interest may not be effective against
creditors of Green Tree or a trustee in bankruptcy of Green Tree. Green
Tree's insolvency and subsequent termination as servicer of the Contracts
might accordingly result in increased delays and expense in liquidating
Contracts secured by manufactured homes located in some states.
SUMMARY OF TRANSACTION
On the Closing Date, Green Tree will assign the Guarantee Fee and the
Residual Assets to Finance I and Finance II (collectively, the "Subordinated
Certificateholders"), pursuant to two substantially similar Assignments, dated
as of June 1, 1994 (each an "Assignment," and collectively the "Assignments").
The Subordinated Certificateholders will in turn establish the Trust by the
issuance of the Finance I Note and the transfer of the Residual Assets to the
Trust pursuant to a Transfer Agreement, dated as of June 1, 1994 (the "Transfer
Agreement"). The Trust will then issue the Certificates pursuant to the Trust
Agreement, and remit the proceeds of the sale of the Certificates (net of
certain expenses) to Finance I and Finance II. The Subordinated Certificates,
which are not being offered hereby, will be issued to Finance I and Finance II.
On each Distribution Date, Finance I will remit to the Trustee on behalf of
the Trust (i) interest then due and payable on the Finance I Note, plus (ii)
principal then due and payable on the Finance I Note (equal to the Guarantee
Fee collections remitted to Finance I on such Distribution Date, net of the
interest paid on the Finance I Note). On each Distribution Date, the Trustee
will also receive all distributions on the Residual Assets, plus any inside
refinancing payments and repurchase payments made by Green Tree as described
herein.
On each Distribution Date, from (i) payments received on the Finance I Note
and (ii) distributions received on the Residual Assets, the Trustee on behalf
of the Trust will make the required payments on the SNIMCs, first to pay
interest then due and payable, then to pay any expenses of the Trust which
Green Tree or the Subordinated Certificateholders were obligated to pay but did
not pay, and then all remaining collected funds will be applied to reduce the
principal amount of the SNIMCs. The Subordinated Certificates will receive no
distributions until the SNIMCs are paid in full.
9
<PAGE>
[INSERT STRUCTURAL DIAGRAM]
[TO BE SUPPLIED]
10
<PAGE>
GREEN TREE FINANCIAL CORPORATION
GENERAL
Green Tree purchases, pools, sells and services conditional sales contracts
for manufactured housing throughout the nation. Green Tree is currently the
largest servicer of manufactured housing government insured or guaranteed
contracts, and is one of the largest servicers of conventional manufactured
housing contracts, in the United States. Green Tree operates its business
through 40 regional service centers throughout the United States, serving the
48 contiguous states and Alaska. Green Tree's principal executive offices are
located at 1100 Landmark Towers, 345 St. Peter Street, St. Paul, Minnesota
55102-1639 (telephone (612) 293-3400). Set forth below are summary consolidated
financial data of Green Tree for each of the years in the five-year period
ended December 31, 1993 and for the period ended March 31, 1994. Green Tree is
not guaranteeing or otherwise obligated with respect to the Certificates,
except to the extent of its obligations under the Trust Documents as described
herein. Green Tree's Annual Report on Form 10-K for the year ended December 31,
1993, most recent Proxy Statement and, when available, subsequent quarterly and
annual reports are available from Green Tree upon written request.
<TABLE>
<CAPTION>
AT AND
FOR THE
PERIOD ENDED
MARCH 31, AT AND FOR THE YEAR ENDED DECEMBER 31,
------------ ------------------------------------------------
1994 1993 1992 1991 1990 1989
------------ ---------- ---------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Income.................. $ 104,798 $ 366,680 $ 246,615 $214,765 $175,675 $143,953
Net Earnings............ 38,492 116,423 55,015 56,688 36,542 29,356
Total Assets............ 1,491,880 1,739,502 1,167,055 969,161 814,662 743,800
Total Debt.............. 308,387 515,004 376,043 361,410 335,757 329,157
Stockholders' Equity.... 591,536 549,429 298,834 237,544 192,478 171,323
</TABLE>
CONTRACT ORIGINATION
Green Tree originated all of the Contracts. Through its regional service
centers, Green Tree arranges to purchase manufactured housing contracts from
manufactured housing dealers located throughout the United States. Green Tree's
regional service center personnel contact dealers located in their region and
explain Green Tree's available financing plans, terms, prevailing rates and
credit and financing policies. If the dealer wishes to use Green Tree's
available customer financing, the dealer must make an application for dealer
approval. Upon satisfactory results of Green Tree's investigation of the
dealer's creditworthiness and general business reputation, Green Tree and the
dealer execute a dealer agreement. Green Tree also originates manufactured
housing installment loan agreements directly with customers.
The dealer or customer submits the customer's credit application and purchase
order to one of Green Tree's regional service centers where Green Tree's
personnel conduct an analysis of the creditworthiness of the proposed buyer.
The analysis includes a review of the applicant's paying habits, length and
likelihood of continued employment, and certain other factors. If the
application meets Green Tree's guidelines and the credit is approved, Green
Tree agrees to fund the contract after the home is delivered and the customer
has moved in.
For manufactured housing contracts, Green Tree uses a proprietary automated
credit scoring system which was initially implemented in 1988 and subsequently
refined and statistically re-validated in 1991. It is a statistically based
scoring system which quantifies responses using variables obtained from
customers' credit applications. As of December 31, 1993, this credit scoring
system had been used in making credit determinations on approximately 1,140,000
applications. Green Tree believes the use of this proprietary credit scoring
system has contributed to the reduction in the number of repossessions incurred
as a percentage of Green Tree's servicing portfolio, as indicated in the table
below.
11
<PAGE>
POOLING AND DISPOSITION OF CONTRACTS
Green Tree generally pools contracts for sale to investors within 15 to 120
days of purchase. With respect to conventional manufactured housing contracts,
Green Tree sells pools of contracts through the asset securitization vehicles
described under "The Trust Property" below.
SERVICING
Green Tree services all of the manufactured housing contracts it originates
or purchases from other originators, collecting loan payments, taxes and
insurance payments where applicable and other payments from borrowers and
remitting principal and interest payments to the holders of the conventional
contracts. Green Tree management is not aware of any trends or anomalies which
have adversely affected the delinquency, loan loss or repossession experience
of the Contracts.
The following table sets forth the delinquency experience at December 31 for
each of the past five years and at March 31, 1994 of the portfolio of
manufactured housing contracts serviced by Green Tree (other than contracts
already in repossession) (excluding contracts serviced for others).
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
AT DECEMBER 31, MARCH 31,
--------------------------------------- ------------
1989 1990 1991 1992 1993 1994
------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts Out-
standing (1) ............ 191,108 216,641 248,352 273,383 332,330 345,639
Number of Contracts Delin-
quent (2):
30-59 Days.............. 2,619 2,434 2,862 2,464 2,577 2,023
60-89 Days.............. 843 910 987 855 912 782
90 Days or More......... 1,008 1,268 1,676 1,598 1,643 1,604
Total Contracts Delin-
quent.................... 4,470 4,612 5,525 4,917 5,132 4,409
Delinquencies as a Percent
of Contracts Outstanding
(3):
30-59 Days.............. 1.37% 1.12% 1.15% 0.90% 0.78% 0.59%
60-89 Days.............. 0.44% 0.42% 0.40% 0.31% 0.27% 0.23%
90 Days or More......... 0.53% 0.59% 0.67% 0.58% 0.49% 0.46%
Total Delinquencies..... 2.34% 2.13% 2.22% 1.80% 1.54% 1.28%
Conventional Contracts as
a Percentage of Number of
Contracts Outstanding.... 63.94% 62.25% 61.11% 64.28% 71.48% 73.27%
</TABLE>
- --------
(1) Excludes contracts already in repossession.
(2) The period of delinquency is based on the number of days payments are
contractually past due (assuming 30-day months). Consequently, a contract
due on the first day of a month is not 30 days delinquent until the first
day of the next month.
(3) By number of contracts.
12
<PAGE>
The following table sets forth the loan loss and repossession experience for
the periods indicated of the portfolio of manufactured housing contracts
serviced by Green Tree (excluding contracts serviced for others).
LOAN LOSS/REPOSSESSION EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
AT DECEMBER 31, MARCH 31,
------------------------------------------------------ ------------
1989 1990 1991 1992 1993 1994
---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts
Serviced (1)........... 192,876 218,707 250,813 275,154 334,238 347,617
Principal Balance of
Contracts Serviced (1). $3,315,700 $3,800,836 $4,412,066 $4,936,514 $6,491,504 $6,851,228
Contract Liquidations:
Number................ 6,062 5,374 5,978 6,899 5,781 1,384
Percentage (2)........ 3.33% 2.61% 2.55% 2.62% 1.90% 0.41%
Net Losses:
Dollars (3)........... $ 40,473 $ 33,829 $ 38,583 $ 55,031 $ 49,405 $ 11,463
Percentage (4)........ 1.30% 0.95% 0.94% 1.18% 0.86% 0.17%
Repossession Inventory:
Number................ 1,768 2,066 2,461 1,771 1,908 1,978
Percentage (5)........ 0.92% 0.94% 0.98% 0.64% 0.57% 0.57%
Conventional Contracts
as a Percentage of
Outstanding Principal
Balance................ 60.38% 57.89% 56.15% 60.70% 71.33% 73.71%
</TABLE>
- --------
(1) As of period end. Includes contracts already in repossession.
(2) As a percentage of the average number of contracts being serviced during
the period.
(3) The calculation of net loss includes unpaid interest to the date of
repossession and all expenses of repossession and liquidation.
(4) As a percentage of the average principal balance of contracts being
serviced during the period.
(5) As a percentage of the number of contracts being serviced as of period end.
Finance I and Finance II are wholly owned special purpose subsidiaries of
Green Tree.
THE TRUST
The Issuer, Green Tree Securitized Net Interest Margin Trust 1994-B, is a
business trust formed under the laws of the State of Delaware pursuant to the
Trust Agreement for the transactions described in this Prospectus. Prior to the
issuance of the Finance I Note and the transfer of the Residual Assets to the
Trust, the Trust will have no assets or obligations. After its formation, the
Trust will not engage in any activity other than (i) acquiring and holding the
Trust Property and the proceeds therefrom, (ii) issuing the Certificates and
the Subordinated Certificates, (iii) making payments on the Certificates and
(iv) engaging in other activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith.
The Trust's principal offices are in Wilmington, Delaware, in care of
Wilmington Trust Company, as Trustee, at the address listed below under "The
Trustee."
THE TRUSTEE
Wilmington Trust Company is the Trustee under the Trust Agreement. Wilmington
Trust Company is a Delaware banking corporation and its principal offices are
located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001. Green Tree and its affiliates may maintain commercial banking
relations with the Trustee and its affiliates. The Trustee will perform limited
administrative functions under the Trust Agreement, including making
distributions from the Certificate Account. The Trustee's liability in
connection with the issuance and sale of the Certificates is limited solely to
the express obligations of the Trustee set forth in the Trust Agreement. The
Trustee may resign at any time, in which event the Subordinated
Certificateholders will be obligated to appoint a successor trustee. The
Subordinated Certificateholders may also remove the Trustee if the Trustee
ceases to be eligible to continue as Trustee under the Trust Agreement or if
the Trustee becomes insolvent. In such circumstances, the Subordinated
Certificateholders will be obligated to appoint a successor trustee. Any
resignation or removal of a Trustee and appointment of a successor trustee will
not become effective until acceptance of the appointment by the successor
trustee.
13
<PAGE>
THE TRUST PROPERTY
The Trust Property will consist of the Finance I Note and the Residual
Assets. Finance I's obligation under the Finance I Note is limited to paying
all proceeds of the Guarantee Fee to the Trust until the Finance I Note is
paid in full. The Trust has no recourse against Finance I for a default on the
Finance I Note other than to foreclose upon and sell the Guarantee Fee pledged
to secure the Finance I Note, and Finance I thus has a right of offset
relative to the Guarantee Fee and the Finance I Note. The Guarantee Fee and
the Residual Assets represent the residual cashflow (net interest margin)
payable from the four Securitized Pools. Each of the Securitized Pools is
described in greater detail in Appendix I to this Prospectus. The table below
identifies each of the Securitized Pools and the Guarantee Fee (as applicable)
and Residual Assets produced by it. All the statistical information provided
below and in Appendix I was derived from Green Tree's financial books and
records.
NET INTEREST MARGIN SEGMENTATION
<TABLE>
<CAPTION>
POOL PRINCIPAL WEIGHTED AVERAGE SERVICING
TRANSACTION BALANCE INTEREST MARGIN(1) FEE GUARANTEE FEE RESIDUAL ASSET
- ----------- -------------- ------------------ --------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
GTFC 1994-1............. $ 551,168,299 3.07% 0.50% 2.60% (2)
GTFC 1994-2............. 384,448,700 2.82 0.50 N/A Remaining Excess
GTFC 1994-3............. 196,312,406 3.06 0.50 N/A Remaining Excess
GTFC 1994-4............. 307,948,034 3.49 0.50 N/A Remaining Excess
--------------
Total.................. $1,439,877,439
==============
</TABLE>
- --------
(1) Represents the gross interest spread between the weighted average loan
rate and the weighted average investor rate for each pool as of the Cut-
off Date stated as a percentage of the outstanding pool balance before
losses, servicing fee and other trust expenses.
(2) The 1994-1 Securitized Pool Residual Asset generally is not expected to
receive significant amounts of net excess cash flow due to the existence
of the Guarantee Fee which is expected to consume substantially all net
excess cash flow.
The estimated present value of each component of the Trust Property
described on pages 14-15 was calculated based on a number of assumptions about
the future performance of the Contracts. Those assumptions were in turn based
upon an extensive loan-by-loan statistical analysis of the historical
performance of Green Tree's servicing portfolio of manufactured housing
contracts since 1976. This Prospectus first describes the characteristics of
the Guarantee Fee and the Residual Assets; it then describes the historical
and base-case projected prepayment, default and recovery experience of Green
Tree's servicing portfolio; finally, pages 25-26 disclose the projected
performance of the Certificates under Green Tree management's base-case
projections of Contract prepayment, default and recovery, and the performance
of the Certificates under a variety of alternative default and interest rate
scenarios.
Additional information with respect to the Securitized Pools is included in
Appendix I.
THE GUARANTEE FEE
The Finance I Note will have an initial principal amount of $34,700,000. The
Guarantee Fee has an estimated present value as of June 1, 1994 of
approximately $47,497,498, but such estimate is based on a number of
assumptions about the future performance of the 1994-1 Securitized Pool, as
described below under "Yield, Average Life and Prepayment Considerations."
Pursuant to the Pooling and Servicing Agreement creating the 1994-1
Securitized Pool, Green Tree is obligated to pay the amount, if any, by which
the collected funds available to make the monthly distribution of principal
and interest on the Class B-2 Certificates sold to investors is less than the
scheduled distribution amount for such month. These Class B-2 Certificates are
themselves subordinated to other classes of securities issued by the 1994-1
Securitized Pool and sold to investors. Green Tree's guarantee with respect to
such pool is not limited as to amount. As compensation for providing such
guarantee, Green Tree is entitled to receive
14
<PAGE>
a Guarantee Fee equal to the net excess cashflow produced by the related pool
of contracts after payment of principal and interest due investors, payment of
Green Tree's servicing fee, and payment of certain expenses of the related
trust not otherwise paid by the servicer (but in no event greater than one-
twelth of 2.60% of the outstanding balance of the 1994-1 Securitized Pool).
Because the Guarantee Fee is determined only after all available funds have
been applied to pay interest and principal on the investor securities, the
Guarantee Fee is adversely affected by delinquencies and liquidation losses on
the related contracts, and Green Tree will be obligated to make payments under
its guarantee only when the Guarantee Fee was zero (because all available
cashflow had been used to pay investor principal and interest). With respect to
the 1994-2 Securitized Pool, the 1994-3 Securitized Pool and the 1994-4
Securitized Pool, Green Tree is obligated to provide such recourse, but is not
entitled to receive a Guarantee Fee; Green Tree did, however, receive the
Residual Asset in each such pool. See "--The Residual Assets" below.
The Pooling and Servicing Agreement with respect to the 1994-1 Securitized
Pool provides that the Guarantee Fee continues to be payable to Green Tree
notwithstanding any failure by Green Tree to perform its limited guarantee
obligations.
On the Closing Date, Green Tree will assign to Finance I the right to receive
the Guarantee Fee. Finance I will in turn pledge the right to receive the
Guarantee Fee to secure payments on the Finance I Note.
THE RESIDUAL ASSETS
The Residual Assets have an aggregate estimated present value as of June 1,
1994 (or July 1, 1994, with respect to the 1994-4 Securitized Pool) (the "Cut-
off Date") (based on the assumptions described under "Yield, Average Life and
Prepayment Considerations" below) of $80,838,781. With respect to all the
Securitized Pools, an election was made to treat the related trust as a "Real
Estate Mortgage Investment Conduit" ("REMIC") for federal income tax purposes.
The REMIC regulations require that the REMIC issue a single class of "residual
interest," in addition to one or more classes of "regular interests." The
securities sold by Green Tree to investors were "regular interests," and Green
Tree or a subsidiary retained the residual interest issued by each REMIC.
The Residual Asset with respect to the 1994-1 Securitized Pool represents the
right to receive all net excess cashflow each month after payment of principal
and interest due investors, payment of Green Tree's servicing fee, payment of
Green Tree's Guarantee Fee, and payment of certain expenses of the related
trust not otherwise paid by the servicer. Because of the existence of the
Guarantee Fee, the net interest margin payable with respect to the 1994-1
Securitized Pool Residual Asset is not very large. The Residual Assets with
respect to the 1994-2 Securitized Pool, the 1994-3 Securitized Pool and the
1994-4 Securitized Pool represent the right to receive all net excess cashflow
each month after payment of principal and interest due investors, payment of
Green Tree's servicing fee, and payment of certain expenses of the related
trust not otherwise paid by the servicer. The 1994-2 Securitized Pool, the
1994-3 Securitized Pool and the 1994-4 Securitized Pool do not provide for the
payment of a Guarantee Fee, and the monthly cashflow payable to the holder of
the related Residual Assets is similar in character to the net excess cashflow
payable as the Guarantee Fee with respect to the 1994-1 Securitized Pool. The
net interest margins payable with respect to the 1994-2 Securitized Pool
Residual Asset, the 1994-3 Securitized Pool Residual Asset and the 1994-4
Securitized Pool Residual Asset are estimated to be 282 basis points, 306 basis
points and 349 basis points, respectively, before servicing fees, losses and
expenses.
On the Closing Date, Green Tree will assign the Residual Assets to Finance I
and Finance II. Finance I and Finance II will in turn assign the Residual
Assets to the Trust.
INSIDE REFINANCING PAYMENTS
Obligors on existing Green Tree manufactured housing contracts sometimes
refinance their Contracts. When a customer inquires about a payoff balance for
the purpose of considering refinancing, Green Tree will advise the customer of
its current rates and terms for such a refinancing. Green Tree may from time to
time or under certain circumstances solicit customers to refinance their
Contracts. If the customer on a Contract for any reason refinances his or her
Contract with Green Tree, the consequence to the Trust of such an "inside
15
<PAGE>
refinancing" is (i) a prepayment in full of the Contract, with the resulting
termination of the net excess cashflow being generated by that Contract, and
(ii) the origination of a new contract, which Green Tree may sell in a future
securitization, which would thereby generate net excess cashflow that would be
owned by Green Tree. To protect Certificateholders against the effect of such
prepayments, Green Tree has agreed in the Assignments to pay an amount with
respect to each Contract that has been the subject of an inside refinancing
(the "inside refinancing payment") which is intended to equal the estimated
present value of the net excess cashflow that could have been generated by that
Contract had it not been refinanced. Such payment will be based on a
precomputed factor with respect to the related Securitized Pool, calculated for
each Distribution Date as of the Closing Date, multiplied by the remaining
principal balance of such Contract. Such payments will be remitted to the Trust
on the Distribution Date following the month in which the Contract was
refinanced. Historically, approximately 50% of the Contracts that Green Tree
believes were prepaid as a result of voluntary refinancings were refinanced
through Green Tree.
Green Tree, as servicer of the Contracts in the Securitized Pools, has the
right to repurchase the Contracts in any pool when the outstanding principal
balance of such pool has declined to 10% or less of its initial principal
balance. Any such repurchase would have the effect of a prepayment of all the
Contracts in that pool, and Green Tree has agreed to make a similar payment
with respect to any such repurchased Contracts. Green Tree has also agreed to
make a similar payment for any Contract which is repurchased by Green Tree
because of a breach of certain representations and warranties contained in the
applicable Pooling and Servicing Agreement.
HISTORICAL AND PROJECTED NET EXCESS CASHFLOW
The following graphs depict the projected net excess cashflow and other items
for the Securitized Pools beginning in March 1994, based on a number of
assumptions about future performance of the Contracts as described in "Yield,
Average Life and Prepayment Considerations." Each of the Securitized Pools are
described in further detail in "The Trust Property" and in Appendix I hereto.
The projected cashflow scenarios are provided by Green Tree to assist
potential investors in an evaluation of the Certificates offered hereby. These
projections are not to be viewed as fact and should not be relied upon as an
accurate representation of future results. Furthermore, because such
projections are based on estimates and assumptions about circumstances and
events that have not yet taken place and are subject to variations, the actual
circumstances and events may not be consistent with those assumed herein and
the differences between actual and projected results may be material.
16
<PAGE>
[TOTAL SECURITIZED CONVENTIONAL CASHFLOWS GRAPH]
[TO BE SUPPLIED]
17
<PAGE>
YIELD, AVERAGE LIFE AND PREPAYMENT CONSIDERATIONS
GENERAL
The yield, average life and expected maturity of the Certificates may be
affected by a number of factors that may affect the amounts and timing of the
distributions on the Trust Property. The two primary factors are defaults and
voluntary prepayments on the Contracts, which in turn are influenced by changes
in borrowers' housing needs, job transfers, unemployment and borrowers' net
equity in the manufactured homes. All the Contracts may be prepaid at any time
without penalty, and have due-on-sale clauses.
An acceleration in the prepayment of the Contracts will generally result in
reduced cashflow to the Trust, resulting in slower payments of principal on the
Certificates. Conversely, if the rate of prepayments on the Contracts
decreases, the Trust generally would be expected to receive increased cashflow,
resulting in faster payments of principal on the Certificates. Moreover,
because the classes of investor securities in any Securitized Pool have
different interest rates, and because the lower-rate classes often are entitled
to receive principal distributions first, prepayments on the Contracts may
increase the weighted average interest rate on the investor securities,
reducing the net excess cashflow available to the Trust.
If the purchaser of a Certificate offered at a discount from its initial
principal amount calculates its anticipated yield to maturity based on a rate
of principal payments on the Certificates that is faster than that actually
experienced, the actual yield to maturity will be lower than that so
calculated.
PORTFOLIO PREPAYMENT EXPERIENCE
The following graph is provided by Green Tree and presents the historical
monthly prepayment experience (both defaults and voluntary prepayments) of
Green Tree's manufactured housing servicing portfolio, on a loan-by-loan basis,
from January 1984 through April 1994, expressed on a weighted average
conditional prepayment rate (CPR) basis.
WEIGHTED AVERAGE HISTORICAL MONTHLY PREPAYMENT RATES (CPR)
[TO BE SUPPLIED]
18
<PAGE>
The following graphs present Green Tree management's best estimate of the
weighted average projected CPR (both defaults and voluntary prepayments) of all
the Contracts included in the Securitized Pools, under varying interest rate
scenarios. The graphs depict the weighted average projected CPR curve, assuming
Contract defaults occur at 100% of the Manufactured Housing Projected Default
Assumption, for assumed immediate interest rate shifts of -300 basis points
through +300 basis points from the current Green Tree Contract Rate of 11.75%
with respect to conventional Contracts. The graphs also disclose in the legends
the constant CPR rate, which is equivalent to the average of such curve, for
each such interest rate scenario. Green Tree's estimate of future prepayments
is based on a detailed statistical analysis of historical voluntary
prepayments, defaults and recoveries on all conventional loans originated by
Green Tree from 1976 through the third quarter of 1993, including voluntary
prepayment behavior during recent periods of dramatic interest rate declines.
The manufactured housing contracts in Green Tree's portfolio that were prepaid
were analyzed by a number of variables, including loan type (conventional),
seasoning, seasonality, collateral characteristics (new or used, single- or
multi-wide), refinancing incentive (the probability that obligors will
refinance as interest rates decline), prepayment burnout (pools of manufactured
housing loans that experience refinancing incentive for an extended period of
time show increasing prepayment activity in the beginning of the period but a
slowing of the prepayment rate over time), and a number of other factors. By
applying the results of the statistical analysis of voluntary prepayments,
defaults and recoveries to the Contracts on a loan-by-loan basis and
calculating the weighted average of all loans in the portfolio, Green Tree has
derived its estimate of future prepayments as depicted below.
The weighted average projected CPRs on the Contracts shown below present
Green Tree management's best estimate of future principal prepayments and
defaults on the Contracts, based on historical CPR experience as described
above. It is not likely that the Contracts will prepay at any constant CPR to
maturity or that all Contracts will prepay at the same rate.
19
<PAGE>
WEIGHTED AVERAGE PROJECTED PREPAYMENT RATES (CPR)
INCREASING INTEREST RATE SCENARIOS
WEIGHTED AVERAGE PROJECTED PREPAYMENT RATES (CPR)
DECREASING INTEREST RATE SCENARIOS
[TO BE SUPPLIED]
20
<PAGE>
GREEN TREE MANUFACTURED HOUSING CONTRACT PREPAYMENT INFORMATION(1)
<TABLE>
<CAPTION>
PERCENTAGE WEIGHTED WEIGHTED
BOND BOND POOL AVERAGE AVERAGE
VALUE VALUE PRINCIPAL WAM INVESTOR INTEREST
TRANSACTION AMOUNT(2) AMOUNT BALANCE (MONTHS) WAC RATE(%) MARGIN(%)(3)
- ----------- ------------ ---------- -------------- -------- ----- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
GTFC 1994-1..... $ 47,497,498 37.01% $ 551,168,299 207 9.80% 6.73% 3.07%
GTFC 1994-2..... 29,314,761 22.84 384,448,700 204 10.29 7.47 2.82
GTFC 1994-3..... 17,273,717 13.46 196,312,406 211 10.67 7.61 3.06
GTFC 1994-4..... 34,250,303 26.69 307,948,034 214 11.03 7.54 3.49
------------ ------ --------------
Total........... $128,336,279 100.00% $1,439,877,439
============ ====== ==============
Weighted Average. 208 10.31% 7.22% 3.09%
=== ===== ==== ====
<CAPTION>
LOAN-BY-LOAN PREPAYMENT PROJECTIONS
(CPR%)(4)
---------------------------------------
TRANSACTION 6 MTHS 12 MTHS 36 MTHS 60 MTHS 120 MTHS
- ----------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
GTFC 1994-1..... 2.7% 3.1% 4.0% 4.2% 4.4%
GTFC 1994-2..... 2.5 3.0 4.0 4.3 4.5
GTFC 1994-3..... 2.3 2.9 4.0 4.3 4.5
GTFC 1994-4..... 2.3 2.9 4.1 4.3 4.5
Total...........
Weighted Average.
</TABLE>
- ----
(1)As of the Cut-off Date.
(2)Represents the present value of the net interest margin cash flow for each
transaction, after servicing fees, projected losses and expenses.
(3)Before servicing fees, losses and expenses.
(4) Projected prepayment CPRs have been calculated and stated on a loan-by-
loan basis, for each pool, taking into account the actual WAC and
amortization schedule for each loan in the pool.
BOND VALUE SEGMENTATION(1)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED BOND VALUE SEGMENTATION(3)
POOL AVERAGE AVERAGE --------------------------------------------
PRINCIPAL WAM INVESTOR INTEREST GUARANTEE
TRANSACTION BALANCE (MONTHS) WAC RATE(%) MARGIN(%)(2) FEE RESIDUAL ASSETS TOTAL BOND VALUE
- ----------- -------------- -------- ----- -------- ------------ ----------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GTFC 1994-1............ $ 551,168,299 207 9.80% 6.73% 3.07% $47,497,498 $ 0 $ 47,497,498
GTFC 1994-2............ 384,448,700 204 10.29 7.47 2.82 N/A 29,314,761 29,314,761
GTFC 1994-3............ 196,312,406 211 10.67 7.61 3.06 N/A 17,273,717 17,273,717
GTFC 1994-4............ 307,948,034 214 11.03 7.54 3.49 N/A 34,250,303 34,250,303
-------------- ----------- ----------- ------------
Total.................. $1,439,877,439 $47,497,498 $80,838,781 $128,336,279
============== =========== =========== ============
Weighted Average....... 208 10.31% 7.22% 3.09%
=== ===== ==== ====
</TABLE>
- ----
(1)As of the Cut-off Date.
(2)Before servicing fees, losses and expenses.
(3)Represents the present value of the Guarantee Fee, Residual Asset and net
interest margin cash flow for each transaction, after servicing fees,
projected losses and expenses.
21
<PAGE>
MANUFACTURED HOUSING PROJECTED DEFAULT ASSUMPTION
The following graph presents Green Tree management's best estimate of the
weighted average conditional default rate (CDR) of all the Contracts for each
month beginning in June 1994. The CDR for a Contract as of any month is the
estimated probability that the Contract, having reached that age, will default
sometime during the subsequent month. This projection was derived through a
loan-by-loan analysis employing detailed statistical processes, based on the
default experience of Green Tree's actual portfolio of manufactured housing
contracts originated between 1976 and November 1993. Each manufactured housing
contract in Green Tree's portfolio that defaulted was analyzed according to a
number of variables, including loan-to-value ratio at origination; original
term to maturity; year of origination; whether the financed manufactured home
was new or used at the date of origination; whether the contract was
conventional; the seasoning of the contract; the prevailing rate of
unemployment in that state; and a number of other factors. Based on this
historical default analysis of contracts with identical loan attributes, each
Contract was assigned a CDR for each month of its projected remaining life. The
individual CDRs for each Contract were then aggregated into a weighted average
for each month.
The following graph presents Green Tree management's best estimate of
weighted average projected defaults on the Contracts. There can be no assurance
that the actual default experience of the Contracts will not be substantially
worse than this estimate, and it is likely that the default experience of the
aggregate pool of Contracts in any given month will differ from the estimate
provided here.
WEIGHTED AVERAGE PROJECTED DEFAULT RATES
[TO BE SUPPLIED]
22
<PAGE>
MANUFACTURED HOUSING PROJECTED RECOVERY ASSUMPTION
The following graph presents Green Tree management's best estimate of the
weighted average recovery rate (expressed as a percentage of the estimated
defaults) of all the Contracts following a default for each month beginning in
June 1994. This projection was derived through a loan-by-loan analysis
employing detailed statistical processes, based on Green Tree's actual recovery
experience on its portfolio of manufactured housing contracts originated
between 1976 and November 1993. Each manufactured housing contract in Green
Tree's portfolio that defaulted was analyzed according to a number of
variables, including the seasoning of the contract; whether or not the contract
was conventional; the type of manufactured home financed (new or used, single-
or multi-wide); the location of the manufactured home; and a number of other
variables. Each Contract was assigned an estimated recovery rate for each month
of its life based on the historical recovery experience of contracts with
identical loan attributes. The individual recovery rates for each Contract were
then aggregated into a weighted average for each month.
The following graph presents Green Tree management's best estimate of
weighted average projected recovery rates on Contracts following a default.
There can be no assurance that the actual recovery rate experience of the
Contracts will not be substantially worse than this estimate, and it is likely
that the recovery rate experience of the aggregate pool of Contracts in any
given month will differ from the estimate provided here.
WEIGHTED AVERAGE PROJECTED RECOVERY RATES
[TO BE SUPPLIED]
23
<PAGE>
CERTIFICATE PRINCIPAL AMORTIZATION TABLES
The following tables present the weighted average life of the Certificates
under a range of assumed rates of default on the Contracts and a range of
assumed prevailing interest rates (expressed in terms of Green Tree's current
average Contract Rate, the interest rate on new manufactured housing contract
originations by Green Tree). The following information is given solely to
illustrate the effect of different assumed rates of default and different
prevailing interest rates on the projected weighted average life of the
Certificates under the numerous assumptions described in this Prospectus and is
not a prediction of the weighted average life that might actually be
experienced on the Certificates.
The weighted average lives of the Certificates in the following tables, and
the graphs included in Appendix I, were determined using the following
assumptions and specifications:
(i) no delinquencies are experienced on the Contracts;
(ii) the Contracts have the characteristics described in Appendix I;
(iii) each Contract's cash flow is applied under the related Securitized
Pool in the manner described in Appendix I and the documents relating to
such Securitized Pool and other features described therein and in "The
Trust Property";
(iv) all Contract balances, security balances and any related collateral
balances were calculated as of June 1, 1994 (or July 1, 1994, with respect
to the Contracts in the 1994-4 Securitized Pool);
(v) Green Tree continues to service the Contracts and to perform all its
obligations under the documents relating to each Securitized Pool;
(vi) any cash held by the Securitized Pools is reinvested at 3% per
annum;
(vii) the Certificates bear an Interest Rate of 8.00%;
(viii) the original principal amount of the Certificates is $92,400,000;
(ix) Green Tree does not exercise its right to repurchase any of the
Contracts held in the Securitized Pools, as described under "The Trust
Property--Inside Refinancing Payments";
(x) the Subordinated Certificateholders do not exercise their right to
cause the Trust to redeem the Certificates;
(xi) the Certificates are issued on June 15, 1994, and distributions are
made on the Certificates on the 15th of each month, commencing July 15,
1994;
(xii) there is no delay between a default on a Contract and final
liquidation of the Contract; and
(xiii) the recovery on each Contract following a default is equal to 100%
of the Manufactured Housing Projected Recovery Assumption.
The first three tables presented below assume that 50% of all prepayments due
to refinancing of the Contracts are refinanced by Green Tree (with
corresponding inside refinancing payments made by Green Tree). The next three
tables below assume that 25% of all prepayments due to refinancing of the
Contracts are refinanced by Green Tree (with corresponding inside refinancing
payments made by Green Tree).
24
<PAGE>
CERTIFICATE PRINCIPAL AMORTIZATION TABLE (1)
(WITH 50% INSIDE REFINANCING PAYMENTS (2))
<TABLE>
<CAPTION>
100% OF DEFAULT ASSUMPTION 125% OF DEFAULT ASSUMPTION
---------------------------------------- -----------------------------------------
INTEREST RATE SHIFTS (3) INTEREST RATE SHIFTS (3)
---------------------------------------- -----------------------------------------
-300 -200 -100 0 +100 +200 +300 -300 -200 -100 0 +100 +200 +300
---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AT JUNE 15,
Initial Percent-
age............. 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
1995............ 70 72 73 73 73 73 73 70 73 73 73 73 73 73
1996............ 47 49 49 49 49 49 49 49 51 51 51 51 51 51
1997............ 31 30 29 29 29 29 29 36 35 34 34 34 34 34
1998............ 18 12 11 11 11 11 11 24 19 18 18 18 18 18
1999............ 6 0 0 0 0 0 0 14 5 2 2 2 2 2
2000............ 0 0 0 0 0 0 0 5 0 0 0 0 0 0
2001............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2002............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2003............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Projected
CPR (4)......... 8.6% 5.3% 4.4% 4.4% 4.4% 4.4% 4.4% 8.8% 5.5% 4.6% 4.6% 4.6% 4.6% 4.6%
Weighted Average
Life (in
years) (5)...... 2.24 2.15 2.14 2.14 2.14 2.14 2.14 2.51 2.34 2.32 2.32 2.32 2.32 2.32
Expected Matu-
rity Date: 1/00 3/99 2/99 2/99 2/99 2/99 2/99 3/01 11/99 8/99 8/99 8/99 8/99 8/99
<CAPTION>
150% OF DEFAULT ASSUMPTION
------------------------------------------
INTEREST RATE SHIFTS (3)
------------------------------------------
-300 -200 -100 0 +100 +200 +300
----- ------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
AT JUNE 15,
Initial Percent-
age............. 100% 100% 100% 100% 100% 100% 100%
1995............ 71 73 74 74 74 74 74
1996............ 52 53 54 54 54 54 54
1997............ 40 39 39 39 39 39 39
1998............ 31 27 25 25 25 25 25
1999............ 22 14 12 12 12 12 12
2000............ 15 3 0 0 0 0 0
2001............ 9 0 0 0 0 0 0
2002............ 4 0 0 0 0 0 0
2003............ 0 0 0 0 0 0 0
Projected
CPR (4)......... 9.0% 5.8% 4.9% 4.9% 4.9% 4.9% 4.9%
Weighted Average
Life (in
years) (5)...... 2.96 2.61 2.57 2.57 2.57 2.57 2.57
Expected Matu-
rity Date: 5/03 10/00 6/00 6/00 6/00 6/00 6/00
</TABLE>
- ----
(1) Stated as a percent of the original Certificate principal amount.
(2) Assumes Green Tree refinances 50% of all refinanced loans. See "The Trust
Property--Inside Refinancing Payments."
(3) The Interest Rate Shifts represent shifts in Green Tree's average Contract
Rate. Green Tree's current average Contract Rate is equal to 11.75%. Green
Tree believes that, as an approximation for future movements in its
average Contract Rate, investors can use as a reference changes in the 7-
year Treasury Note rate.
(4) The Projected CPR is the 120-month weighted average constant prepayment
rate that would exist for the corresponding Interest Rate shift in Green
Tree's average Contract Rate, rounded to the nearest whole number. A -100
bps shift is equal to a 100 basis point decrease in Green Tree's average
Contract Rate, which would indicate that current obligors could refinance
if they chose to do so at 100 basis points below where they could have
previously refinanced. Therefore the 100 basis point decrease in Contract
Rate implies a higher incentive to refinance.
(5) The Weighted Average Life of a Certificate is determined by (i)
multiplying the amount of each principal payment on such Certificate on
each Distribution Date by the number of years from the date of issuance of
such Certificate to such Distribution Date, (ii) adding the results, and
(iii) dividing the sum by the initial principal amount of such
Certificate.
25
<PAGE>
CERTIFICATE PRINCIPAL AMORTIZATION TABLE (1) (WITH 25% INSIDE REFINANCING
PAYMENTS (2))
<TABLE>
<CAPTION>
100% OF DEFAULT ASSUMPTION 125% OF DEFAULT ASSUMPTION
---------------------------------------- -----------------------------------------
INTEREST RATE SHIFTS (3) INTEREST RATE SHIFTS (3)
---------------------------------------- -----------------------------------------
-300 -200 -100 0 +100 +200 +300 -300 -200 -100 0 +100 +200 +300
---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AT JUNE 15,
Initial Percent-
age............. 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
1995............ 72 73 73 73 73 73 73 73 73 73 73 73 73 73
1996............ 51 49 49 49 49 49 49 54 52 51 51 51 51 51
1997............ 37 31 29 29 29 29 29 42 36 34 34 34 34 34
1998............ 25 14 11 11 11 11 11 32 21 18 18 18 18 18
1999............ 15 0 0 0 0 0 0 23 7 2 2 2 2 2
2000............ 5 0 0 0 0 0 0 15 0 0 0 0 0 0
2001............ 0 0 0 0 0 0 0 9 0 0 0 0 0 0
2002............ 0 0 0 0 0 0 0 3 0 0 0 0 0 0
2003............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2004............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2005............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2006............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2007............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2008............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2009............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Projected
CPR (4)......... 8.6% 5.3% 4.4% 4.4% 4.4% 4.4% 4.4% 8.8% 5.5% 4.6% 4.6% 4.6% 4.6% 4.6%
Weighted Average
Life (in
years) (5)...... 2.58 2.19 2.14 2.14 2.14 2.14 2.14 3.01 2.40 2.32 2.32 2.32 2.32 2.32
Expected Matu-
rity Date: 2/01 4/99 2/99 2/99 2/99 2/99 2/99 1/03 12/99 8/99 8/99 8/99 8/99 8/99
<CAPTION>
150% OF DEFAULT ASSUMPTION
-------------------------------------------
INTEREST RATE SHIFTS (3)
-------------------------------------------
-300 -200 -100 0 +100 +200 +300
------ ------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
AT JUNE 15,
Initial Percent-
age............. 100% 100% 100% 100% 100% 100% 100%
1995............ 73 74 74 74 74 74 74
1996............ 56 54 54 54 54 54 54
1997............ 46 41 39 39 39 39 39
1998............ 38 28 25 25 25 25 25
1999............ 31 16 12 12 12 12 12
2000............ 25 5 0 0 0 0 0
2001............ 20 0 0 0 0 0 0
2002............ 16 0 0 0 0 0 0
2003............ 12 0 0 0 0 0 0
2004............ 9 0 0 0 0 0 0
2005............ 7 0 0 0 0 0 0
2006............ 4 0 0 0 0 0 0
2007............ 2 0 0 0 0 0 0
2008............ * 0 0 0 0 0 0
2009............ 0 0 0 0 0 0 0
Projected
CPR (4)......... 9.0% 5.8% 4.9% 4.9% 4.9% 4.9% 4.9%
Weighted Average
Life (in
years) (5)...... 3.91 2.68 2.57 2.57 2.57 2.57 2.57
Expected Matu-
rity Date: 10/08 12/00 6/00 6/00 6/00 6/00 6/00
</TABLE>
- ----
* Represents less than 0.5%
(1) Stated as a percent of the original Certificate principal amount.
(2) Assumes Green Tree refinances 25% of all refinanced loans. See "The Trust
Property--Inside Refinancing Payments."
(3) The Interest Rate Shifts represent shifts in Green Tree's average Contract
Rate. Green Tree's current average Contract Rate is equal to 11.75%. Green
Tree believes that, as an approximation for future movements in its
average Contract Rate, investors can use as a reference changes in the 7-
year Treasury Note rate.
(4) The Projected CPR is the 120-month weighted average constant prepayment
rate that would exist for the corresponding Interest Rate shift in Green
Tree's average Contract Rate, rounded to the nearest whole number. A -100
bps shift is equal to a 100 basis point decrease in Green Tree's average
Contract Rate, which would indicate that current obligors could refinance
if they chose to do so at 100 basis points below where they could have
previously refinanced. Therefore the 100 basis point decrease in Contract
Rate implies a higher incentive to refinance.
(5) The Weighted Average Life of a Certificate is determined by (i)
multiplying the amount of each principal payment on such Certificate on
each Distribution Date by the number of years from the date of issuance of
such Certificate to such Distribution Date, (ii) adding the results, and
(iii) dividing the sum by the initial principal amount of such
Certificate.
26
<PAGE>
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust Agreement,
a form of which has been filed as an exhibit to the Registration Statement. A
copy of the Trust Agreement will be filed with the Commission following the
issuance of the Certificates. Whenever provisions of the Trust Agreement are
referred to, such provisions are incorporated herein by reference.
DISTRIBUTIONS
Distributions of interest and principal to Certificateholders will be made on
each Distribution Date in an amount equal to their respective Percentage
Interests multiplied by the Certificateholder's Interest Distributable Amount
and the Certificateholders' Principal Distributable Amount, if any.
Distributions will be applied first to the payment of interest and then to the
payment of principal from the Amount Available (as defined below). In the event
that the Amount Available in the Certificate Account is not sufficient to make
a full distribution to the Certificateholders of the Certificateholders'
Interest Distributable Amount, the amount of the deficiency will be carried
forward as an amount that the Certificateholders are entitled to receive on the
next Distribution Date. Any amount carried forward will, to the extent legally
permissible, bear interest at the Interest Rate.
Each distribution with respect to a Book-Entry Certificate will be paid to
DTC, which will credit the amount of such distribution to the accounts of its
Participants in accordance with its normal procedures. Each Participant will be
responsible for disclosing such distribution to the Certificate Owners that it
represents and to each indirect participating brokerage firm (a "brokerage
firm" or "indirect participating firm") for which it acts as agent. Each
brokerage firm will be responsible for disbursing funds to the Certificate
Owners that it represents. All such credits and disbursements with respect to a
Book-Entry Certificate are to be made by DTC and the Participants in accordance
with DTC's rules.
Green Tree, as servicer, will furnish to the Trustee, and the Trustee will
send with each distribution on a Distribution Date to each Certificateholder, a
statement setting forth, among other things, (i) the amount of such
distribution allocable to interest and (ii) the amount of such distribution
allocable to principal. Such amounts will be expressed as a dollar amount per
$1,000 of the original principal amount of the Certificates.
DISTRIBUTIONS OF INTEREST INCOME
On each Distribution Date, commencing August 15, 1994, the Certificateholders
will be entitled to distributions in an amount equal to the amount of interest
accrued on the outstanding principal amount of the Certificates at the Interest
Rate (the "Certificateholders' Interest Distributable Amount"). Interest
distributable on a Distribution Date will accrue from the most recent
Distribution Date on which interest distributions have been made to but
excluding such Distribution Date and will be calculated on the basis of a 360-
day year consisting of twelve 30-day months. Interest distributions due for any
Distribution Date but not distributed on such Distribution Date will be due on
the next Distribution Date together with interest on such amount at the
Interest Rate (to the extent legally permissible). Interest distributions with
respect to the Certificates will be made from the Amount Available in the
Certificate Account before the payment of accrued and unpaid trustee's fees and
other administrative fees of the Trust. Finance I and Finance II will receive a
distribution of interest on August 15, 1994 equal to the interest accrued on
the initial principal amount of the Certificates at the Interest Rate from June
15, 1994 to the Closing Date. Certificateholders of record on August 12, 1994
will receive a distribution of interest on August 15, 1994 equal to the
interest accrued on the initial principal amount of the Certificates at the
Interest Rate from the Closing Date to August 15, 1994.
DISTRIBUTIONS OF PRINCIPAL PAYMENTS
Certificateholders will be entitled to receive, as payments of principal, the
Certificateholders' Principal Distributable Amount to the extent of the
Remaining Amount Available (as defined below) in the Certificate Account on
each Distribution Date. Distributions with respect to principal payments will
be made from the
27
<PAGE>
Amount Available in the Certificate Account after payment of the
Certificateholders' Interest Distributable Amount and any accrued and unpaid
Trustee's fees and other administrative fees of the Trust which Green Tree or
the Subordinated Certificateholders were obligated to pay but failed to pay
(the "Remaining Amount Available"). The distribution of principal on August 15,
1994 will represent collections on the Trust Property for July 15 and August
15, 1994.
REPORTS TO CERTIFICATEHOLDERS
Green Tree will furnish to the Trustee, and the Trustee will include with
each distribution to a Certificateholder, a statement in respect of the related
Distribution Date setting forth, among other things:
(a) the Certificateholders' Interest Distributable Amount;
(b) the Certificateholders' Principal Distributable Amount;
(c) the outstanding principal amount of the Certificates, after giving
effect to all payments reported under (b) above on such date;
(d) the present value of the projected remaining aggregate cashflow of
the Trust Property;
(e) the weighted average CPR of the Contracts for the prior month;
(f) the weighted average conditional default rate of the Contracts for
the prior month;
(g) the annualized net loss percentage of the Contracts for the prior
month; and
(h) information regarding delinquent Contracts as of the prior month.
Each amount set forth pursuant to subclauses (a) and (b) will be expressed as a
dollar amount per $1,000 of the original principal amount of the Certificates.
In addition, within a reasonable period of time after the end of each
calendar year, Green Tree, as servicer, will furnish a report to each
Certificateholder of record at any time during such calendar year as to
aggregate amounts reported pursuant to (a) and (b) above for such calendar
year.
For the purposes hereof, the following terms shall have the following
meanings:
"Amount Available" means, with respect to any Distribution Date, the sum of
the amounts contained in the Certificate Account for any Monthly Period.
"Certificateholders' Interest Distributable Amount" means, with respect to
any Distribution Date (other than the first Distribution Date), one month's
interest at the Interest Rate on the outstanding principal amount of the
Certificates (computed on the basis of a 360-day year of twelve 30-day months),
plus any accrued and unpaid interest with respect to a prior Distribution Date
together (to the extent legally permissible) with interest thereon at the
Interest Rate.
"Certificateholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the lesser of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date or the Remaining Amount
Available for such Distribution Date; provided, however, that the
Certificateholders' Principal Distributable Amount shall not exceed the
outstanding principal amount of the Certificates.
"Remaining Amount Available" means, with respect to any Distribution Date,
the amount remaining in the Certificate Account after payment of the
Certificateholders' Interest Distributable Amount and payment to the Trustee of
any accrued and unpaid trustee fees, to the extent not paid by Green Tree or
the Subordinated Certificateholders.
LISTS OF CERTIFICATEHOLDERS
At such time, if any, as Definitive Certificates (as defined below) have been
issued, the Trustee will, upon written request by three or more
Certificateholders or one or more holders of Certificates evidencing not less
28
<PAGE>
than 25% of the outstanding principal balance of the Certificates, within five
Business Days after provision to the Trustee of a statement of the applicants'
desire to communicate with other Certificateholders about their rights under
the Trust Agreement or the Certificates and a copy of the communication that
the applicants propose to transmit, afford such Certificateholders access
during business hours to the current list of Certificateholders for purposes of
communicating with other Certificateholders with respect to their rights under
the Trust Agreement. The Trust Agreement will not provide for holding any
annual or other meetings of Certificateholders.
OPTIONAL PREPAYMENT
If the Subordinated Certificateholders exercise their option to prepay the
Certificates when the aggregate outstanding principal amount of the
Certificates declines to 10% or less of the original principal amount of the
Certificates, Certificateholders will receive an amount in respect of the
Certificates equal to the aggregate outstanding principal amount of the
Certificates together with all accrued and unpaid interest, which distribution
will effect early retirement of the Certificates. See "Description of the Trust
Agreement--Termination."
RESTRICTIONS ON TRANSFER
The Certificates will be subject to the following restrictions on transfer,
and each Certificate will contain a legend describing such restrictions.
The Certificates may not be acquired by a "disqualified organization" (as
defined below). By acceptance of a Certificate, each purchaser will be deemed
to represent that it is not a disqualified organization. Accordingly, a
purchase by a disqualified organization shall be void and of no effect. A
"disqualified organization" means (i) the United States, any State or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of the foregoing (not including instrumentalities
described in Section 168(h)(2)(D) of the Code or the Federal Home Loan Mortgage
Corporation), (ii) any organization (other than a cooperative described in
Section 521 of the Code) that is exempt from federal income tax, unless it is
subject to the tax imposed by Section 511 of the Code or (iii) any organization
described in Section 1381(a)(2)(C) of the Code.
A pass-through entity may acquire Certificates. Such investors should be
aware, however, that if the Internal Revenue Service were successfully to
assert that the Certificates did not represent debt for federal income tax
purposes, a tax may be imposed on a pass-through entity which has (i) a
disqualified organization (as defined above) as a record holder of an interest
therein and (ii) excess inclusion income, as defined in the REMIC provisions of
the Code, as a result of its investment in the Certificates. For these
purposes, a "pass-through entity" means any regulated investment company, real
estate investment trust, trust, partnership or certain other entities described
in Section 860E(e)(6) of the Code. In addition, a person holding an interest in
a pass-through entity as a nominee for another person will, with respect to
such interest, be treated as a pass-through entity. Pass-through entities
considering an investment in Certificates are urged to consult with their own
tax advisor with respect to these matters.
The Trust Agreement will 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.
REGISTRATION OF THE CERTIFICATES
The Certificates will initially be registered in the name of Cede & Co., the
nominee of DTC. 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 the provisions of Section 17A of the
1934 Act. DTC accepts securities for deposit from its participating
organizations ("Participants") and facilitates the clearance and settlement of
securities transactions between Participants in such securities through
electronic book-entry changes in accounts of Participants, thereby eliminating
the need for physical movement of certificates. Participants include securities
brokers and dealers, banks and trust companies and clearing corporations and
29
<PAGE>
may include certain other organizations. Indirect access to the DTC system is
also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly ("indirect participants").
Certificate Owners who are not Participants but desire to purchase, sell or
otherwise transfer ownership of the Certificates may do so only through
Participants (unless and until Definitive Certificates, as defined below, are
issued). In addition, Certificate Owners will receive all distributions of
principal of, and interest on, the Certificates from the Trustee through DTC
and Participants. Certificate Owners will not receive or be entitled to receive
certificates representing their respective interests in the Certificates,
except under the limited circumstances described below.
Unless and until Definitive Certificates (as defined below) are issued, it is
anticipated that the only "Certificateholder" of the Certificates will be Cede
& Co., as nominee of DTC. Certificate Owners will not be recognized by the
Trustee as Certificateholders as that term is used in the Trust Agreement.
Certificate Owners are only permitted to exercise the rights of
Certificateholders indirectly through Participants and DTC.
While Certificates are outstanding (except under the circumstances described
below), under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry transfers
among Participants on whose behalf it acts with respect to the Certificates and
is required to receive and transmit distributions of principal of, and interest
on, the Certificates. Participants with whom Certificate Owners have accounts
with respect to Certificates are similarly required to make book-entry
transfers and receive and transmit such distributions on behalf of their
respective Certificate Owners. Accordingly, although Certificate Owners will
not possess certificates, the Rules provide a mechanism by which Certificate
Owners will receive distributions and will be able to transfer their interests.
Certificates will be issued in registered form to Certificate Owners, or
their nominees, rather than to DTC (such Certificates being referred to herein
as "Definitive Certificates"), only if (i) DTC, the Administrator or Finance I
advise the Trustee in writing that DTC is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Certificates and the Administrator Finance I is unable to locate a
qualified successor, (ii) Finance I at its sole option advises the Trustee in
writing that it elects to terminate the book-entry system through DTC or (iii)
if an Event of Default shall have occurred and be continuing, Certificate
Owners having a beneficial interest in the Certificates at least equal to a
majority of the aggregate outstanding principal amount of the Certificates
advise the Trustee, through DTC, that continuation of a book-entry system is no
longer in their best interests. Upon issuance of Definitive Certificates to
Certificate Owners, such Certificates will be transferable directly (and not
exclusively on a book-entry basis) and registered holders will deal directly
with the Trustee with respect to transfers, notices and distributions.
DTC has advised Finance I that, unless and until Definitive Certificates are
issued, DTC will take any action permitted to be taken by a Certificateholder
under the Trust Agreement only at the direction of one or more Participants to
whose DTC accounts the Certificates are credited. DTC has advised Finance I
that DTC will take such action with respect to any fractional interest of the
Certificates only at the direction of and on behalf of such Participants
beneficially owning a corresponding fractional interest of the Certificates.
DTC may take actions, at the direction of the related Participants, with
respect to some Certificates which conflict with actions taken with respect to
other Certificates.
Issuance of Certificates in book-entry form rather than as physical
certificates may adversely affect the liquidity of the Certificates in the
secondary market and the ability of Certificate Owners to pledge them. In
addition, since distributions on the Certificates will be made by the Trustee
to DTC and DTC will credit such distributions to the accounts of its
Participants, with the Participants further crediting such distributions to the
accounts of indirect participants or Certificate Owners, Certificate Owners may
experience delays in the receipt of such distributions.
30
<PAGE>
DESCRIPTION OF THE TRUST DOCUMENTS
The following summary describes certain terms of the Finance I Note, the
Trust Agreement, the Transfer Agreement and the Assignments (together, the
"Trust Documents"). Forms of the Trust Documents have been filed as exhibits to
the Registration Statement. Copies of the Trust Documents will be filed with
the Commission following the issuance of the Certificates.
CERTIFICATE ACCOUNT
Pursuant to the Trust Agreement, the Trustee will establish and maintain an
account, in the name of the Trust, in which amounts available for distribution
to Certificateholders will be deposited and from which all distributions to
Certificateholders will be made (the "Certificate Account").
EVENTS OF DEFAULT
Pursuant to the Trust Agreement, "Events of Default" will consist of (i) any
failure in the payment of the Certificateholders' Interest Distributable Amount
with respect to a Distribution Date, which failure has continued for a period
of 6 months after such Distribution Date or (ii) any failure to pay the full
principal amount of the Certificates on or before the Distribution Date
occurring in July 2004.
Pursuant to the Finance I Note, "Events of Default" will consist of (i) any
failure to make timely installments of interest due thereunder, which failure
has continued for a period of 6 months after such Distribution Date, or (ii)
any failure to pay the full principal amount of the Finance I Note on or before
the Distribution Date occurring in July 2004.
If an Event of Default with respect to the Certificates occurs and is
continuing, the Trustee or Certificate Owners beneficially owning at least 25%
in aggregate outstanding principal amount of the Certificates may declare the
entire principal amount of the Certificates to be due and payable immediately.
Such declaration may, under certain circumstances, be rescinded by a
Certificate Majority (as defined in the Trust Agreement).
If the Certificates have been declared due and payable following an Event of
Default, the Trustee may liquidate all or any portion of the Trust Property, or
elect to maintain possession of the Trust Property and continue to apply
collections from the Trust Property as if there had been no declaration of
acceleration. The Trustee will be prohibited from selling the Trust Property
following an Event of Default, unless (i) the holders of all the outstanding
Certificates consent to such sale; or (ii) the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on the
outstanding Certificates at the time of such sale; or (iii) the Trustee
determines that the collections on the Trust Property will not be sufficient on
an ongoing basis to make all payments of interest on the Certificates as such
payments become due and to pay the outstanding principal amount of the
Certificates at maturity, and the Trustee obtains the consent of the holders of
66 2/3% of the aggregate outstanding amount of the Certificates.
The Trustee and the Certificate Owners will have similar rights to liquidate
the Guarantee Fee following an Event of Default under the Finance I Note.
AMENDMENT
The Trust Agreement may be amended by the Subordinated Certificateholders and
the Trustee but without the consent of any of the Certificateholders, to cure
any ambiguity or to correct or supplement any provision therein, provided that
such action will not, in the opinion of counsel (which may be internal counsel
to the Subordinated Certificateholders) materially and adversely affect the
interests of any Certificateholder. The Trust Agreement may also be amended by
the Subordinated Certificateholders and the Trustee and a Certificate Majority
for the purpose of adding any provisions to or changing in any manner or
eliminating
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<PAGE>
any of the provisions of the Trust Agreement or of modifying, in any manner,
the rights of the Certificateholders. No such amendment may (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of, or
distributions that are required to be made on any Certificate or the Interest
Rate or (ii) reduce the percentage of the aggregate outstanding principal
amount of the Certificates required to consent to any such amendment, without
the consent of the holders of all Certificates then outstanding.
The Transfer Agreement may be amended by all of the parties thereto; provided
that no amendment may materially and adversely affect the interests of the
Certificateholders.
TERMINATION
The Trust and the respective obligations of the Subordinated
Certificateholders and the Trustee pursuant to the related Trust Documents will
terminate upon the latest of (i) the Distribution Date immediately following
the maturity of the Finance I Note or the retirement of the last Residual Asset
or other liquidation of the last item of Trust Property, (ii) the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
related Trust Documents, (iii) following the payment in full of all principal
and accrued interest on the Certificates, by vote of all the Subordinated
Certificateholders, or (iv) the occurrence of a Liquidation Event (as described
below).
In order to avoid excessive administrative expense, the Subordinated
Certificateholders will be permitted, at their option, to cause the Trust to
redeem the Certificates on any Distribution Date in which the aggregate
outstanding principal amount of the Certificates is equal to or less than 10%
of the original principal amount of the Certificates at a price equal to the
unpaid principal amount of the Certificates plus all accrued and unpaid
interest thereon.
In the event that a Dissolution Event (as defined in the Trust Agreement)
shall occur with respect to one but not both Subordinated Certificateholders,
the remaining Subordinated Certificateholder shall, within 90 days of such
Dissolution Event, (i) select a successor Subordinated Certificateholder and
(ii) deliver to the Trustee an opinion of counsel to the effect that the Trust
will not be an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes. In the event that (i) the
remaining Subordinated Certificateholder is unable to locate a successor
Subordinated Certificateholder or to obtain such an opinion or (ii) a
Dissolution Event occurs with respect to both Subordinated Certificateholders
(either such event being referred to as a "Liquidation Event"), the Trust will
terminate.
The Trustee will give written notice of the final distribution with respect
to the Certificates to each Certificateholder of record. The final distribution
to any Certificateholder will be made only upon surrender and cancellation of
such holder's Certificate at the office or agency of the Trustee with respect
to Certificates specified in the notice of termination. In the event that all
Certificateholders do not surrender their Certificates for cancellation within
6 months after the date specified in the notice of termination, the Trustee
shall give a second written notice to the remaining Certificateholders. If
within one year after the second written notice all Certificates have not been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates. Any funds
remaining in the Trust, after the Trustee has taken such measures to locate any
remaining Certificateholders and such measures have failed, will be distributed
to The United Way and the Certificateholders, by acceptance of their
Certificates, will waive any rights with respect to such funds.
THE TRUSTEE
The Trustee, in its individual capacity or otherwise, and any of its
affiliates may hold Certificates in their own names or as pledgee. In addition,
for the purpose of meeting the legal requirements of certain jurisdictions, the
Trustee and the Administrator, acting jointly, with the consent of Finance I,
shall have the power to appoint co-trustees or separate trustees of all or any
part of the Trust. In the event of such appointment, all rights, powers, duties
and obligations conferred or imposed upon the Trustee by the Trust Documents
will be conferred or imposed upon the Trustee and such separate trustee or co-
trustee jointly, or, in any jurisdiction where the Trustee is incompetent or
unqualified to perform certain acts, singly upon such separate trustee or co-
trustee who shall exercise and perform such rights, powers, duties and
obligations solely at the direction of the Trustee.
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<PAGE>
The Trustee may resign at any time, in which event the Subordinated
Certificateholders will be obligated to appoint a successor trustee. The
Subordinated Certificateholders may also remove the Trustee, if the Trustee
ceases to be eligible to serve, becomes legally unable to act, is adjudged
insolvent or is placed in receivership or similar proceedings. In such
circumstances, the Subordinated Certificateholders will be obligated to
appoint a successor 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.
DUTIES OF THE TRUSTEE
The Trustee will make no representation as to the validity or sufficiency of
any Trust Document, the Certificates (other than its execution of the
Certificates) or any related documents, and will not be accountable for the
use or application by Green Tree of any funds in respect of the Certificates
prior to deposit in the Certificate Account.
The Trustee will be required to perform only those duties specifically
required of it under the Trust Agreement. Generally, those duties will be
limited to the receipt of the various certificates, reports or other
instruments required to be furnished by Green Tree to the Trustee under the
Trust Agreement, in which case it will only be required to examine such
certificates, reports or instruments to determine whether they conform
substantially to the requirements of the Trust Agreement.
The Trustee will be under no obligation to exercise any of the rights or
powers vested in it by the Trust Agreement or to institute, conduct, or defend
any litigation thereunder or in relation thereto at the request, order or
direction of any Subordinated Certificateholders, unless such Subordinated
Certificateholders have offered the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby. No Certificate Owner will have any right under the Trust Documents to
institute any proceeding with respect to such Trust Documents, unless such
Certificate Owner has given the Trustee written notice of default and unless
Certificate Owners beneficially owning not less than 25% of the aggregate
principal balance of the Certificates then outstanding have made written
request to the Trustee to institute such proceeding in its own name as Trustee
thereunder and have offered to the Trustee reasonable indemnity, and the
Trustee for 30 days after the receipt of such notice, request and offer to
indemnify has neglected or refused to institute any such proceedings.
USE OF PROCEEDS
Approximately $34,700,000 of the net proceeds of the sale of the
Certificates will be loaned to Finance I in return for the Finance I Note. The
remaining net proceeds of the sale of the Certificates will be paid to Finance
I and Finance II, as the holders of the Subordinated Certificates. Finance I
and Finance II will in turn remit substantially all such proceeds to Green
Tree in the form of a dividend. Green Tree will use such funds for general
corporate purposes, including the origination of additional manufactured
housing contracts, the costs of carrying such contracts until sold and other
expenses of pooling and selling such contracts, and to fund Green Tree's
future growth.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain federal income tax
consequences relating to the purchase, ownership, and disposition of the
Certificates. The discussion is based upon the current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the Treasury
Regulations promulgated thereunder and judicial or ruling authority, all of
which are subject to change, which change may be retroactive. The discussion
does not purport to deal with federal income tax consequences applicable to
all categories of investors, some of which may be subject to special rules.
Moreover, there are no cases or Internal Revenue Service (the "Service")
rulings on similar transactions involving the issuance of interests with terms
similar to those of the Certificates. As a result, the Service may disagree
with all or a part of the discussion below. INVESTORS SHOULD CONSULT THEIR OWN
TAX ADVISORS TO DETERMINE THE FEDERAL, STATE, LOCAL, AND ANY OTHER TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP, AND DISPOSITION OF CERTIFICATES.
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<PAGE>
The Trust will be provided with an opinion of Dorsey & Whitney, counsel to
Green Tree, regarding certain federal income tax matters discussed below. Such
an opinion, however, is not binding on the Service or the courts. No ruling on
any of the issues discussed below will be sought from the Service.
TAX CHARACTERIZATION OF THE TRUST
The Subordinated Certificateholders and the Trustee will agree to treat the
Trust as a partnership for federal income tax purposes. Dorsey & Whitney will
deliver its opinion that the Trust will not be an association (or publicly
traded partnership) taxable as a corporation for federal income tax purposes,
with the result that the Trust itself will not be subject to federal income
tax. This opinion will be based on the assumption that the terms of the Trust
Agreement and related documents will be complied with, and on counsel's
conclusions that (1) the Trust will not have certain characteristics necessary
for a business trust to be classified as an association taxable as a
corporation and (2) the nature of the interests in and the income of the Trust,
including the status of the Finance I Note as debt for federal income tax
purposes, will exempt it from the rule that certain taxable mortgage pools or
publicly traded partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax purposes,
the Trust would be subject to corporate income tax on its taxable income. Any
such corporate income tax could materially reduce cash available to make
payments on the Certificates.
TAX CONSEQUENCES TO HOLDERS OF CERTIFICATES
Treatment of Certificates as Indebtedness. The Trustee and the Subordinated
Certificateholders will agree, and the Certificateholders will agree by their
purchase of Certificates, to treat the Certificates as debt for federal income
tax purposes. Although there are no regulations, published rulings or judicial
decisions involving the characterization for federal income tax purposes of
interests with the same terms as the Certificates, and although the result is
not free from doubt in view of the treatment of this transaction by Green Tree
for purposes of its financial statements prepared in accordance with generally
accepted accounting principles and certain other features of the Certificates,
on balance, in the opinion of Dorsey & Whitney the Certificates will be
classified as debt for federal income tax purposes. The discussion below
assumes this characterization of the Certificates is correct.
Interest Income on the Certificates. As a general rule, interest paid or
accrued on the Certificates, as well as market discount and original issue
discount, if any, will be treated as ordinary income to the holders thereof. A
Certificateholder using the accrual method of accounting for federal income tax
purposes is required to include interest paid or accrued on the Certificates in
ordinary income as such interest accrues, while a Certificateholder using the
cash receipts and disbursements method of accounting for federal income tax
purposes must include such interest in ordinary income when payments are
received (or made available for receipt) by such holder. It is anticipated that
the Certificates will not be issued with "original issue discount" ("OID")
within the meaning of Section 1273 of the Code, and that the Trust will not
take any OID deduction with respect thereto.
Market Discount. The Certificates, whether or not issued with original issue
discount, will be subject to the "market discount rules" of section 1276 of the
Code. In general, these rules provide that if the holder of a Certificate
purchases it at a market discount (i.e., a discount from its original issue
price plus any accrued original issue discount) that exceeds a de minimis
amount specified in the Code, and thereafter recognizes gain upon a
disposition, the lesser of (i) such gain or (ii) the accrued market discount
will be taxed as ordinary interest income. Generally, the accrued market
discount will be the total market discount on the Certificate multiplied by a
fraction, the numerator of which is the number of days the holder held the
Certificate and the denominator of which is the number of days from the date
the holder acquired the Certificate until its maturity date. The holder may
elect, however, to determine accrued market discount under the constant-yield
method.
Limitations imposed by the Code which are intended to match deductions with
the taxation of income may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to
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<PAGE>
purchase or carry a Certificate with accrued market discount. A
Certificateholder may elect to include market discount in gross income as it
accrues and, if such Certificateholder makes such an election, is exempt from
this rule. The adjusted basis of a Certificate subject to such election will be
increased to reflect market discount included in gross income, thereby reducing
any gain or increasing any loss on a sale or taxable disposition.
Amortizable Bond Premium. In general, if a Certificateholder purchases a
Certificate at a premium (i.e., an amount in excess of the amount payable upon
the maturity thereof), such Certificateholder will be considered to have
purchased such Certificate with "amortizable bond premium" equal to the amount
of such excess. Such Certificateholder may elect to deduct the amortizable bond
premium as it accrues under a constant-yield method over the remaining term of
the Certificate. Such Certificateholder's tax basis in the Certificate will be
reduced by the amount of the amortizable bond premium deducted. Any such
election shall apply to all debt instruments (other than instruments the
interest on which is excludible from gross income) held by the
Certificateholder at the beginning of the first taxable year to which the
election applies or thereafter acquired and is irrevocable without the consent
of the Service. Bond premium on a Certificate held by a Certificateholder who
does not elect to deduct the premium will decrease the gain or increase the
loss otherwise recognized on the disposition of the Certificate.
Sale or Other Disposition. If a Certificateholder sells a Certificate, the
Certificateholder will recognize gain or loss in an amount equal to the
difference between the amount realized on the sale and the Certificateholder's
adjusted tax basis in the Certificate. The adjusted tax basis of a Certificate
to a particular Certificateholder generally will equal the Certificateholder's
cost for the Certificate, increased by any market discount, OID and gain
previously included by such Certificateholder in income with respect to the
Certificate and decreased by principal payments previously received by such
Certificateholder and the amount of bond premium previously amortized with
respect to the Certificate. Any such gain or loss will be capital gain or loss
if the Certificate was held as a capital asset, except for gain representing
accrued interest and accrued market discount not previously included in income,
and will be long-term capital gain or loss if the Certificate was held for more
than one year. Capital losses generally may be used only to offset capital
gains.
Foreign Holders. Generally, interest paid to a Certificateholder who is a
nonresident alien individual or a foreign corporation and who does not hold the
Certificate in connection with a United States trade or business will be
treated as "portfolio interest" and therefore will be exempt from the 30%
withholding tax. Such a Certificateholder will be entitled to receive interest
payments on the Certificates free of United States federal income tax provided
that such Certificateholder periodically provides the Trustee (or other person
who would otherwise be required to withhold tax) with a statement certifying
under penalty of perjury that such Certificateholder is not a United States
person and provides the name and address of such Certificateholder. Such a
Certificateholder will not be subject to federal income tax on gain from the
disposition of a Certificate unless the Certificateholder is an individual who
is present in the United States for 183 days or more during the taxable year in
which the disposition takes place and certain other requirements are met. See
"Possible Alternative Treatment of the Certificates" regarding potential
alternative tax consequences to foreign holders.
Tax Administration and Reporting. The Trustee will furnish to each
Certificateholder with each distribution a statement setting forth the amount
of such distribution allocable to principal and to interest. Reports will be
made annually to the Service and to holders of record that are not excepted
from the reporting requirements regarding information as may be required with
respect to interest and original issue discount, if any, with respect to the
Certificates.
Backup Withholding. Under certain circumstances, a Certificateholder may be
subject to "backup withholding" at a 31% rate. Backup withholding may apply to
a Certificateholder who is a United States person if the holder, among other
circumstances, fails to furnish such holder's Social Security number or other
taxpayer identification number to the Trustee. Backup withholding may apply,
under certain circumstances, to a Certificateholder who is a foreign person if
the Certificateholder fails to provide the Trustee or the Certificateholder's
securities broker with the statement necessary to establish the exemption from
federal income and withholding tax on interest on the Certificate. Backup
withholding, however, does
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<PAGE>
not apply to payments on a Certificate made to certain exempt recipients, such
as corporations and tax-exempt organizations, and to certain foreign persons.
Certificateholders should consult their tax advisors for additional information
concerning the potential application of backup withholding to payments received
by them with respect to a Certificate.
Possible Alternative Treatment of the Certificates. If the Service were
successfully to assert that the Certificates did not represent debt for federal
income tax purposes, the Certificates would probably be treated as equity
interests in the Trust. If so treated, the Trust might be taxable as a
corporation with the adverse consequences described above (and the taxable
corporation would not be able to reduce its taxable income by deductions for
interest expense on Certificates recharacterized as equity). Alternatively,
based on the opinion of Dorsey & Whitney, because the Finance I Note will be
treated as debt for federal income tax purposes, the Trust would not be
characterized as a publicly traded partnership and would therefore continue to
be treated as an entity that is not taxable as a corporation. See "Tax
Characterization of the Trust," above. Under these circumstances, the Trust
would report each Certificateholder's allocable share of items of Trust income
and expense to Certificateholders and the Service on Schedule K-1. However, any
such characterization of the Certificates as equity interests is not expected
to result in a materially different amount of taxable income being realized by
Certificateholders as compared to the amount of income expected to be realized
from treatment of the Certificates as indebtedness of the Trust. Nonetheless,
treatment of the Certificates as equity interests in such a partnership could
have adverse tax consequences to certain holders. For example, (i) a portion of
the income allocated to Certificateholders may not be offset by other
deductions on such holder's return, including net operating loss carryforwards;
(ii) a portion of the income allocated to Certificateholders who are subject to
the tax on unrelated business income imposed by Section 511 of the Code may be
treated as unrelated business taxable income; (iii) income to foreign holders
generally would be subject to federal tax and federal tax return filing and
withholding requirements and (iv) individual holders might be subject to
certain limitations on their ability to deduct their share of Trust expenses.
If the Certificates were treated as equity interests in a partnership, each
Certificateholder would be required to separately take into account such
holder's allocated share of income, gains, losses, deductions and credits of
the Trust. The Trust's income will consist primarily of interest income
attributable to the Finance I Note and income attributable to the Residual
Interests. The tax items of a partnership are allocable to its partners in
accordance with the Code, Treasury Regulations and the partnership agreement
(here, the Trust Agreement and related documents). The Trust Agreement will
provide, in general, that, if appropriate, the Certificateholders would be
allocated taxable income of the Trust for each month equal to the sum of (i)
the interest that accrues on the Certificates in accordance with their terms
for such month; and (ii) any other amounts of income payable to the
Certificateholders for such month. All remaining taxable income of the Trust
would be allocated to the Subordinated Certificateholders. Based on the
economic arrangement of the parties, this approach for allocating Trust income
should be permissible under applicable Treasury Regulations, although no
assurance can be given that the Service would not require a greater amount of
income to be allocated to Certificateholders. Moreover, even under the
foregoing method of allocation, Certificateholders may be allocated income
equal to the entire Interest Rate plus the other items described above even
though the Trust might not have sufficient cash to make current cash
distributions of such amount. Thus, cash basis holders will in effect be
required to report income from the Certificates on the accrual basis and
Certificateholders may become liable for taxes on Trust income even if they
have not received cash from the Trust to pay such taxes.
Under this approach, a Certificateholder's allocated share of expenses of the
Trust (including fees to the Trustee but not interest expense) would be
miscellaneous itemized deductions. An individual, an estate, or a trust that
holds a Certificate either directly or through a pass-through entity would be
allowed to deduct such expenses under Section 212 of the Code only to the
extent that, in the aggregate and combined with certain other itemized
deductions, they exceed 2% of the adjusted gross income of the
Certificateholder. In addition, Section 68 of the Code provides that the amount
of itemized deductions (including those provided for in Section 212 of the
Code) otherwise allowable for the taxable year for an individual whose adjusted
gross income exceeds a threshold amount specified in the Code ($111,800 in
1994, in the case of a joint return)
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<PAGE>
will be reduced by the lesser of (i) 3% of the excess of adjusted gross income
over the specified threshold amount or (ii) 80% of the amount of itemized
deductions otherwise allowable for such taxable year. To the extent that a
Certificateholder is not permitted to deduct servicing fees allocable to a
Certificate, the taxable income of the Certificateholder attributable to that
Certificate would exceed the net cash distributions related to such income.
Other Tax Consequences. No advice has been received as to local income,
franchise, personal property, or other taxation in any state or locality, or as
to the tax effect of ownership of Certificates in any state or locality.
Certificateholders are advised to consult their own tax advisors with respect
to any state or local income, franchise, personal property, or other tax
consequences arising out of their ownership of Certificates.
THE DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON
A CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF CERTIFICATES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on those employee benefit plans,
including individual Retirement Accounts and Individual Retirement Annuities
(collectively "IRAs"), to which they apply ("Plans") and on those persons who
are fiduciaries with respect to such Plans. In accordance with ERISA's general
fiduciary standards, before investing in the Certificates, a Plan fiduciary
should determine whether such an investment 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.
Other provisions of ERISA and the Code prohibit certain transactions involving
the assets of a Plan and persons who have certain specified relationships to
the Plan ("parties in interest" within the meaning of ERISA or "disqualified
persons" within the meaning of the Code). Prohibited transactions may generate
excise taxes and other liabilities; prohibited transactions involving IRAs may
result in the disqualification of the IRAs. Thus, a Plan fiduciary considering
an investment in the Certificates should also consider whether such an
investment might constitute or give rise to a prohibited transaction under
ERISA or the Code.
Certain transactions involved in the operation of the Trust might be deemed
to constitute prohibited transactions under ERISA and the Code, if assets of
the Trust were deemed to be assets of an investing Plan. ERISA and the Code do
not define "plan assets." The U.S. Department of Labor (the "DOL") has
published a regulation (the "Regulation") which took effect March 13, 1987,
concerning whether or not a Plan's assets will be deemed to include an interest
in the underlying assets of an entity (such as the Trust) for purposes of the
reporting and disclosure and fiduciary responsibility provisions of ERISA and
of the excise tax provisions related to prohibited transactions in the Code if
the Plan acquires an "equity interest" in such entity. The Regulation only
applies to the purchase by a Plan of an "equity interest" in an entity. An
equity interest is defined in the Regulation as an interest in an entity other
than an instrument which is treated as debt under applicable local law, has no
substantial equity features, and which is not a beneficial interest in a trust
or a profit interest in a partnership. If under ERISA the Certificates are not
deemed to be an "equity interest" in the Trust, the Trust's assets would not be
treated as Plan assets solely as a result of the purchase of the Certificates
by a Plan.
The Regulation also contains an exception that provides that if a Plan
acquires a "publicly-offered security," the issuer of the security is not
deemed to hold Plan assets. A publicly-offered security is a security that is
(i) freely transferable, (ii) part of a class of securities that is owned by
100 or more investors
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independent of the issuer and of one another by the conclusion of the offering
and (iii) either is (A) part of a class of securities registered under section
12(b) or 12(g) of the Securities Exchange Act of 1934, or (B) sold to the Plan
as part of an offering of securities to the public pursuant to an effective
registration statement under the Securities Act of 1933 and the class of
securities of which such security is a part is registered under the Securities
Exchange Act of 1934 within 120 days (or such later time as may be allowed by
the Securities and Exchange Commission) after the end of the fiscal year of the
issuer during which the offering of such securities to the public occurred.
It is anticipated that the Certificates will meet the criteria of publicly-
offered securities as set forth above. It is expected (although no assurance
can be given) that the Certificates will be held beneficially by 100
independent persons by the conclusion of the offering; there are no
restrictions imposed on the transfer of the Certificates (other than the
prohibition on transfers to certain "disqualified organizations," as described
under ("Description of the Certificates--Restrictions on Transfer") and the
Certificates will be sold as part of an offering pursuant to an effective
registration statement under the Securities Act of 1933, and they will be
timely registered under the Securities Exchange Act of 1934.
If the Certificates were deemed to be an extension of credit for ERISA
purposes, the purchase of the Certificates by a Plan with respect to which
Green Tree or one of its affiliates is a "party in interest" or "disqualified
person" might be considered a prohibited extension of credit under Section 406
of ERISA and Section 4975 of the Code unless an exemption is applicable. There
are at least three prohibited transaction class exemptions issued by the DOL
that might apply, depending in part on who decided to acquire the Certificates
for the Plan: DOL Prohibited Transaction Exemption ("PTE") 84-14 (Class
Exemption for Plan Asset Transactions determined by Independent Qualified
Professional Asset Managers); PTE 91-38 (Class Exemption for Certain
Transactions Involving Bank Collective Investment Funds); and PTE 90-1 (Class
Exemption for Certain Transactions Involving Insurance Company Pooled Separate
Accounts).
Moreover, whether the Certificates are debt or equity for ERISA purposes, a
possible violation of the prohibited transaction rules could occur if the
Certificates were purchased during the offering with assets of a Plan if Green
Tree, the Trustee, any Underwriter or any of their affiliates were a fiduciary
with respect to such Plan. Under ERISA and the Code, a person is a "fiduciary"
with respect to a Plan to the extent that such person (i) exercises any
discretionary authority or discretionary control respecting management of such
Plan or exercises any authority or control respecting management or disposition
of its assets, (ii) renders investment advice for a fee or other compensation,
direct or indirect, with respect to any moneys or other property of such Plan,
or has any authority or responsibility to do so, or (iii) has any discretionary
authority or discretionary responsibility in the administration of such Plan.
Accordingly, the fiduciaries of any Plan should not purchase the Certificates
during the offering with assets of any Plan if Green Tree, the Trustee, the
Underwriters or any of their affiliates is a fiduciary with respect to the
Plan.
In light of the foregoing, fiduciaries of Plans, including insurance
companies (whether investing assets for their general or separate accounts),
considering the purchase of the Certificates should consult their own tax or
other appropriate counsel regarding the application of ERISA and the Code to
their purchase of the Certificates.
LEGAL INVESTMENT CONSIDERATIONS
No representations or warranties are made concerning whether the Certificates
are legal investments under any federal or state law, regulation, rule or order
of any court. The Certificates do not constitute "mortgage related securities"
within the meaning of the Secondary Mortgage Market Enhancement Act of 1984, as
amended, which may adversely affect their liquidity.
Prospective investors should consider the applicability of statutes, rules,
regulations, orders, guidelines or agreements generally governing investments
made by a particular investor including, but not limited to, "prudent investor"
provisions and percentage-of-assets limits. Investors should consult their own
legal advisors in determining whether and to what extent the Certificates
constitute legal investment for such investors.
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<PAGE>
UNDERWRITING
The Underwriters named below have severally agreed, subject to the terms and
conditions of the Underwriting Agreement, to purchase from the Trust the
respective principal amounts of the Certificates set forth opposite their names
below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER CERTIFICATES
----------- ------------
<S> <C>
Lehman Brothers Inc. ......................................... $73,900,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................... $18,500,000
-----------
Total................................................. $92,400,000
===========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Certificates
offered hereby if any Certificates are purchased. In the event of default by an
Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the Underwriting Agreement may be terminated.
The Underwriters propose to offer the Certificates in part directly to
purchasers at the initial public offering price set forth on the cover page of
this Prospectus and in part to certain securities dealers at such prices less
concessions not to exceed 0.50% of the original principal balance of the
Certificates. The Underwriters may allow, and such dealers may reallow,
concessions not to exceed 0.25% of the original principal balance of the
Certificates to certain brokers and dealers. After the Certificates are
released for sale to the public, the offering price and other selling terms may
be varied by the Underwriters.
The Underwriting Agreement provides that Green Tree will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, or contribute to payments the Underwriters may be
required to make in respect thereof.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Trust by Dorsey & Whitney, Minneapolis, Minnesota, and for the Underwriters
by Brown & Wood, New York, New York. The material federal income tax
consequences of the Certificates will be passed upon for the Trust by Dorsey &
Whitney.
39
<PAGE>
APPENDIX I
I. THE CONTRACTS
Set forth below is a description of certain additional characteristics of the
Contracts as of June 1, 1994 (or July 1, 1994, with respect to Contracts
included in the 1994-4 Securitized Pool) (the "Cut-off Date").
GEOGRAPHICAL DISTRIBUTION
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS % OF ALL AGGREGATE % OF ALL CONTRACTS BY
AS OF CONTRACTS BY NUMBER PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
CUT- OFF OF CONTRACTS AS OUTSTANDING AS OF BALANCE AS OF
DATE OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
--------- ------------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Alabama................. 2,914 5.26% $ 70,924,846.38 4.93%
Alaska.................. 1 0.00 11,306.13 0.00
Arizona................. 1,176 2.12 34,813,997.91 2.42
Arkansas................ 1,225 2.21 27,986,971.19 1.94
California.............. 939 1.69 28,032,488.47 1.95
Colorado................ 1,452 2.62 38,448,734.14 2.67
Connecticut............. 12 0.02 251,035.23 0.02
Delaware................ 199 0.36 5,516,905.86 0.38
District of Columbia.... 5 0.01 102,841.04 0.01
Florida................. 3,962 7.15 108,127,688.02 7.51
Georgia................. 3,160 5.70 81,639,868.96 5.67
Hawaii.................. 2 0.00 30,052.14 0.00
Idaho................... 384 0.69 11,857,266.47 0.82
Illinois................ 946 1.71 22,134,589.02 1.54
Indiana................. 1,011 1.82 24,249,824.42 1.68
Iowa.................... 875 1.58 21,041,607.11 1.46
Kansas.................. 726 1.31 19,178,345.59 1.33
Kentucky................ 1,513 2.73 33,957,946.88 2.36
Louisiana............... 1,120 2.02 24,709,048.38 1.72
Maine................... 272 0.49 6,295,399.94 0.44
Maryland................ 325 0.59 7,612,824.68 0.53
Massachusetts........... 23 0.04 541,170.64 0.04
Michigan................ 2,391 4.31 66,200,780.38 4.60
Minnesota............... 954 1.72 21,673,513.44 1.50
Mississippi............. 1,257 2.27 27,768,730.76 1.93
Missouri................ 1,624 2.93 35,779,330.66 2.48
Montana................. 440 0.79 13,276,233.03 0.92
Nebraska................ 267 0.48 6,380,895.86 0.44
Nevada.................. 635 1.15 22,375,341.01 1.55
New Hampshire........... 120 0.22 2,571,744.48 0.18
New Jersey.............. 26 0.05 630,482.35 0.04
New Mexico.............. 1,300 2.35 37,111,256.27 2.58
New York................ 936 1.69 22,190,009.35 1.54
North Carolina.......... 5,081 9.17 140,671,804.25 9.77
North Dakota............ 179 0.32 4,055,870.18 0.28
Ohio.................... 1,119 2.02 25,992,308.46 1.81
Oklahoma................ 1,212 2.19 30,661,362.79 2.13
Oregon.................. 727 1.31 26,264,001.16 1.82
Pennsylvania............ 670 1.21 14,632,310.99 1.02
Rhode Island............ 1 0.00 33,659.31 0.00
South Carolina.......... 3,071 5.54 84,914,884.94 5.90
South Dakota............ 315 0.57 7,877,730.73 0.55
Tennessee............... 2,162 3.90 48,032,250.50 3.33
Texas................... 4,769 8.61 128,529,673.03 8.93
Utah.................... 281 0.51 8,092,616.53 0.56
Vermont................. 54 0.10 1,180,512.74 0.08
Virginia................ 737 1.33 15,786,082.05 1.10
Washington.............. 979 1.77 35,369,657.72 2.46
West Virginia........... 832 1.50 18,578,720.38 1.29
Wisconsin............... 745 1.34 17,327,968.35 1.20
Wyoming................. 296 0.53 8,452,948.14 0.59
------ ------ ----------------- ------
Total.................. 55,422 100.00% $1,439,877,438.44 100.00%
====== ====== ================= ======
</TABLE>
40
<PAGE>
CONTRACT TYPE
<TABLE>
<CAPTION>
AGGREGATE % OF ALL CONTRACTS BY WEIGHTED
PRINCIPAL BALANCE OUTSTANDING PRINCIPAL ORIGINAL AVERAGE
OUTSTANDING AS OF BALANCE AS OF ORIGINAL TERM WAM CONTRACT
CUT-OFF DATE CUT-OFF DATE BALANCE (MONTHS) (MONTHS) RATE
----------------- --------------------- ----------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Conventional ........... $1,411,001,528.37 97.99% $1,419,920,925.47 211 209 10.31%
FHA/VA.................. 28,875,910.07 2.01 29,324,039.31 165 161 10.35
----------------- ------ ----------------- --- --- -----
Total.................. $1,439,877,438.44 100.00% $1,449,244,964.78
================= ====== =================
Weighted Average.................................................................. 210 208 10.31%
=== === =====
</TABLE>
YEAR OF ORIGINATION OF CONTRACTS
<TABLE>
<CAPTION>
% OF ALL
NUMBER OF CONTRACTS BY
CONTRACTS NUMBER OF AGGREGATE % OF ALL CONTRACTS BY
AS OF CONTRACTS PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
CUT-OFF AS OF CUT- OUTSTANDING AS OF BALANCE AS OF
YEAR OF ORIGINATION DATE OFF DATE CUT-OFF DATE CUT-OFF DATE
- ------------------- --------- ------------ ----------------- ---------------------
<S> <C> <C> <C> <C>
1980.................... 2 0.00% $ 34,116.71 0.00%
1981.................... 1 0.00 18,045.16 0.00
1982.................... 13 0.02 130,105.97 0.01
1983.................... 31 0.06 422,230.44 0.03
1984.................... 84 0.15 1,090,415.97 0.08
1985.................... 175 0.32 2,676,818.74 0.19
1986.................... 130 0.23 2,164,647.51 0.15
1987.................... 136 0.25 2,423,750.41 0.17
1988.................... 250 0.45 5,377,386.05 0.37
1989.................... 516 0.93 11,420,198.51 0.79
1990.................... 740 1.34 17,133,052.20 1.19
1991.................... 528 0.95 12,589,114.73 0.87
1992.................... 148 0.27 3,182,880.88 0.22
1993.................... 9,500 17.14 260,896,387.02 18.12
1994.................... 43,168 77.89 1,120,318,288.14 77.81
------ ------ ----------------- ------
Total................ 55,422 100.00% $1,439,877,438.44 100.00%
====== ====== ================= ======
</TABLE>
41
<PAGE>
DISTRIBUTION OF ORIGINAL CONTRACT AMOUNTS
<TABLE>
<CAPTION>
AGGREGATE % OF ALL CONTRACTS BY
PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
ORIGINAL CONTRACT NUMBER OF CONTRACTS OUTSTANDING AS OF BALANCE AS OF
AMOUNT (IN DOLLARS)(1) AS OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
- ---------------------- ------------------- ----------------- ---------------------
<S> <C> <C> <C>
Less than 10,000.00.... 3,658 $ 28,832,531.33 2.00%
10,000- 19,999.99...... 17,410 263,188,843.16 18.28
20,000- 29,999.99...... 16,760 408,803,743.67 28.39
30,000- 39,999.99...... 9,236 318,167,279.49 22.10
40,000- 49,999.99...... 5,061 223,617,592.10 15.53
50,000- 59,999.99...... 2,087 112,715,792.97 7.83
60,000- 69,999.99...... 742 47,329,140.12 3.29
70,000- 79,999.99...... 290 21,437,777.27 1.49
80,000- 89,999.99...... 115 9,637,993.72 0.67
90,000- 99,999.99...... 51 4,837,499.15 0.33
100,000-109,999.99...... 6 615,130.23 0.04
110,000-119,999.99...... 5 573,895.61 0.04
120,000-129,999.99...... 1 120,219.62 0.01
------ ----------------- ------
Total............... 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
- --------
(1) The largest original Contract amount is $120,544.62.
DISTRIBUTION OF CURRENT CONTRACT AMOUNTS
<TABLE>
<CAPTION>
AGGREGATE % OF ALL CONTRACTS BY
PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
CURRENT CONTRACT NUMBER OF CONTRACTS OUTSTANDING AS OF BALANCE AS OF
AMOUNT (IN DOLLARS) AS OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
- ------------------- ------------------- ----------------- ---------------------
<S> <C> <C> <C>
Less than 5,000.00...... 124 $ 540,601.17 0.04%
5,000- 9,999.99...... 3,818 31,016,398.43 2.15
10,000- 14,999.99...... 7,913 100,086,172.91 6.95
15,000- 19,999.99...... 9,589 167,679,793.40 11.65
20,000- 24,999.99...... 9,403 211,277,470.29 14.67
25,000- 29,999.99...... 7,189 196,285,883.81 13.63
30,000- 34,999.99...... 5,089 165,029,194.68 11.46
35,000- 39,999.99...... 4,062 151,843,490.46 10.55
40,000- 44,999.99...... 3,001 127,121,391.96 8.83
45,000- 49,999.99...... 2,008 95,127,546.05 6.61
50,000- 54,999.99...... 1,256 65,760,128.19 4.57
55,000- 59,999.99...... 792 45,420,117.19 3.15
60,000- 64,999.99...... 457 28,427,726.50 1.97
65,000- 69,999.99...... 262 17,666,577.98 1.23
70,000- 74,999.99...... 175 12,638,253.38 0.88
75,000- 79,999.99...... 108 8,330,523.56 0.58
80,000- 84,999.99...... 77 6,343,370.11 0.44
85,000- 89,999.99...... 39 3,405,866.11 0.24
90,000- 94,999.99...... 23 2,121,226.19 0.15
95,000- 99,999.99...... 26 2,546,288.85 0.18
100,000-104,999.99...... 3 303,924.75 0.02
105,000-109,999.99...... 2 211,377.24 0.01
110,000-114,999.99...... 3 337,796.83 0.02
Over 115,000............ 3 356,318.40 0.02
------ ----------------- ------
Total............... 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
42
<PAGE>
DISTRIBUTION OF ORIGINAL LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
AGGREGATE % OF ALL CONTRACTS BY
PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
NUMBER OF CONTRACTS OUTSTANDING AS OF BALANCE AS OF
LOAN-TO-VALUE RATIO(1) AS OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
- ---------------------- ------------------- ----------------- ---------------------
<S> <C> <C> <C>
Less than 60.00%........ 2,441 $ 43,691,001.31 3.03%
60.01%-65.00%......... 824 18,225,394.34 1.26
65.01%-70.00%......... 1,232 28,647,518.91 1.99
70.01%-75.00%......... 2,104 49,960,971.71 3.47
75.01%-80.00%......... 5,501 132,560,300.15 9.21
80.01%-85.00%......... 7,479 195,393,048.30 13.57
85.01%-90.00%......... 31,154 813,994,794.10 56.53
90.01%-95.00%......... 4,182 151,699,536.48 10.54
Over 95.00%........... 505 5,704,873.14 0.40
------ ----------------- ------
Total............... 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
- --------
(1) Rounded to the nearest 1%. The loan-to-value ratios on certain Contracts,
particularly Contracts originated by the Company to refinance a loan made
by another lender; Land-and-Home Contracts; and Contracts with respect to
which the Obligor granted the Company a lien on the related real estate in
lieu of a down payment, may vary from the tabular presentation, due largely
to discrepancies in information input by Company personnel and variances in
the methodology used to calculate loan-to-value ratios. The Contracts in
the categories described above represented 17.01% of all Contracts by
outstanding principal balance as of the Cut-Off Date.
43
<PAGE>
REMAINING MONTHS TO MATURITY
<TABLE>
<CAPTION>
% OF ALL CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
MONTHS REMAINING NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
AS OF CUT-OFF DATE AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
- ------------------ ------------------- ------------------- ---------------------
<S> <C> <C> <C>
0- 14................. 1 $ 3,491.22 0.00%
15- 30................. 17 77,263.10 0.01
31- 45................. 160 1,216,323.57 0.08
46- 60................. 1,129 10,020,226.59 0.70
61- 75................. 612 6,651,021.56 0.46
76- 90................. 4,929 73,175,660.10 5.08
91-105................. 1,114 14,009,919.02 0.97
106-120................. 4,900 76,340,195.11 5.30
121-135................. 480 9,599,696.72 0.67
136-150................. 2,832 50,205,156.39 3.49
151-165................. 155 3,642,772.36 0.25
166-180................. 15,407 337,858,983.96 23.46
181-195................. 329 9,454,032.51 0.66
196-210................. 344 10,170,017.89 0.71
211-225................. 121 3,711,425.12 0.26
226-240................. 19,545 661,623,650.47 45.95
241-255................. 1 21,770.02 0.00
256-270................. 0 0.00 0.00
271-285................. 3 117,469.39 0.01
286-300................. 3,343 171,978,363.34 11.94
------ ----------------- ------
Total............... 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
SEASONING
<TABLE>
<CAPTION>
% OF ALL CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
MONTHS SINCE NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
ORIGINATION AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
------------ ------------------- ------------------- ---------------------
<S> <C> <C> <C>
0- 12......... 55,371 $1,438,943,042.65 99.94%
13- 24......... 34 694,539.65 0.05
25- 36......... 1 24,610.96 0.00
37- 48......... 0 0.00 0.00
49- 60......... 0 0.00 0.00
61- 72......... 0 0.00 0.00
73- 84......... 2 30,299.22 0.00
85- 96......... 6 111,299.64 0.01
97-108......... 3 28,166.73 0.00
109-120......... 4 36,547.94 0.00
121-132......... 1 8,931.65 0.00
------ ----------------- ------
Total....... 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
44
<PAGE>
ORIGINAL TERM
<TABLE>
<CAPTION>
% OF CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
ORIGINAL TERM (MONTHS) AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
- ---------------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
13- 24.................... 9 $ 35,593.74 0.00%
25- 36.................... 63 402,075.67 0.02
37- 48.................... 193 1,514,833.23 0.11
49- 60.................... 1,012 9,035,594.78 0.63
61- 72.................... 527 5,487,793.71 0.38
73- 84.................... 4,852 71,802,738.41 4.99
85- 96.................... 1,059 13,092,261.14 0.91
97-108.................... 355 5,278,251.79 0.37
109-120.................... 4,687 72,879,762.35 5.06
121-132.................... 345 6,805,529.36 0.47
133-144.................... 2,839 49,913,730.95 3.47
145-156.................... 267 5,954,444.04 0.41
157-168.................... 106 2,438,000.27 0.17
169-180.................... 15,380 336,968,104.32 23.40
181-192.................... 209 5,884,743.63 0.41
193-204.................... 319 9,342,106.17 0.65
205-216.................... 272 8,156,877.17 0.57
217-228.................... 36 1,143,744.49 0.08
229-240.................... 19,545 661,623,650.47 45.95
241-252.................... 1 21,770.02 0.00
253-264.................... 0 0.00 0.00
265-276.................... 0 0.00 0.00
277-288.................... 2 80,585.00 0.00
289-300.................... 3,344 172,015,247.73 11.95
------ ----------------- ------
Total.................. 55,422 $1,439,877,438.44 100.00%
====== ================= ======
ADDITIONAL COLLATERAL CHARACTERISTICS
<CAPTION>
% OF CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
WIDTH OF MANUFACTURED HOMES AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
- --------------------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
Single Wide................ 30,572 $ 556,508,114.23 38.65%
Multi Wide................. 24,850 883,369,324.21 61.35
------ ----------------- ------
Total.................. 55,422 $1,439,877,438.44 100.00%
====== ================= ======
<CAPTION>
% OF CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
LOCATION OF PROPERTY AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
- -------------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
Park....................... 20,696 $ 434,901,043.63 30.20%
Private.................... 34,726 1,004,976,394.81 69.80
------ ----------------- ------
Total.................. 55,422 $1,439,877,438.44 100.00%
====== ================= ======
<CAPTION>
% OF CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
NEW/USED UNITS AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
- -------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
New........................ 37,228 $1,121,358,566.73 77.88%
Used....................... 18,194 318,518,871.71 22.12
------ ----------------- ------
Total.................. 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
45
<PAGE>
CONTRACT RATE
<TABLE>
<CAPTION>
% OF CONTRACT POOL
RANGE OF AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
CONTRACTS BY NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
CONTRACT RATE AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
Less than 8.01%.. 464 $ 17,969,439.19 1.25%
8.01%-8.25%...... 543 18,041,945.85 1.25
8.26%-8.50%...... 1,126 36,638,749.32 2.55
8.51%-8.75%...... 1,501 50,692,144.19 3.52
8.76%-9.00%...... 1,496 57,658,003.30 4.01
9.01%-9.25%...... 918 35,255,591.41 2.45
9.26%-9.50%...... 3,046 101,949,641.42 7.08
9.51%-9.75%...... 3,589 123,572,996.28 8.58
9.76%-10.00%..... 5,463 172,766,999.60 12.00
10.01%-10.25%.... 5,608 154,120,112.70 10.70
10.26%-10.50%.... 5,896 145,828,466.89 10.13
10.51%-10.75%.... 5,343 134,342,938.49 9.33
10.76%-11.00%.... 4,419 102,281,813.76 7.10
11.01%-11.25%.... 4,331 95,238,168.59 6.62
11.26%-11.50%.... 3,844 69,853,494.05 4.85
11.51%-11.75%.... 2,677 48,184,374.76 3.35
11.76%-12.00%.... 1,545 22,680,778.05 1.58
12.01%-12.25%.... 1,258 19,063,160.83 1.32
12.26%-12.50%.... 757 10,993,443.46 0.76
12.51%-12.75%.... 837 12,214,657.87 0.85
12.76%-13.00%.... 372 5,134,804.76 0.36
13.01%-13.25%.... 303 4,050,865.36 0.28
13.26%-13.50%.... 56 1,012,951.88 0.07
13.51%-13.75%.... 15 204,392.42 0.01
13.76%-14.00%.... 3 22,916.67 0.00
14.01%-14.25%.... 2 19,730.00 0.00
14.26%-14.50%.... 3 26,610.28 0.00
14.51%-14.75%.... 0 0.00 0.00
14.76%-15.00%.... 4 37,002.48 0.00
15.01%-15.25%.... 0 0.00 0.00
15.26%-15.50%.... 1 3,189.95 0.00
15.51%-15.75%.... 0 0.00 0.00
15.76%-16.00%.... 2 18,054.63 0.00
------ ----------------- ------
Total........ 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
46
<PAGE>
II. THE SECURITIZED POOLS
TOTAL SECURITIZED POOL INFORMATION(1)
<TABLE>
<CAPTION>
ORIGINAL WEIGHTED AVERAGE WEIGHTED AVERAGE
POOL PRINCIPAL TOTAL CERTIFICATE WAM WAM WAC INVESTOR RATE INTEREST MARGIN
TRANSACTION BALANCE BALANCE (MONTHS) (MONTHS) (%) (%) (%)(2)
- ------------------------ -------------- ----------------- -------- -------- ----- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
GTFC 1994-1............. $ 551,168,299 $ 551,168,299 211 207 9.80% 6.73% 3.07%
GTFC 1994-2............. 384,448,700 384,448,700 206 204 10.29 7.47 2.82
GTFC 1994-3............. 196,312,406 197,004,761(3) 211 211 10.67 7.61 3.06
GTFC 1994-4............. 307,948,034 307,948,034 214 214 11.03 7.54 3.49
-------------- --------------
Total................. $1,439,877,439 $1,440,569,794
============== ==============
Weighted Average...... 210 208 10.31% 7.22% 3.09%
=== === ===== ==== ====
</TABLE>
- ----
(1) As of the Cut-off Date.
(2) Before servicing fees, losses and expenses.
(3) Includes $692,355 representing prepayments of principal received on the
Contracts in the 1994-3 Securitized Pool prior to June 1, 1994, which amount
will be distributed to the related certificateholders on July 15, 1994.
PREPAYMENT PROJECTIONS COMPARISON
<TABLE>
<CAPTION>
LOAN-BY-LOAN SINGLE LINE COLLATERAL POOL
PREPAY PROJECTIONS (CPR%)(1) PREPAY PROJECTIONS (CPR%)(2)
-------------------------------------- --------------------------------------
TRANSACTION 1 MO. 6 MO. 12 MO. 60 MO. 1 MO. 6 MO. 12 MO. 60 MO.
----------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GTFC 1994-1............. 2.5% 2.7% 3.1% 4.2% 3.3% 3.5% 3.9% 5.4%
GTFC 1994-2............. 2.4 2.5 3.0 4.3 3.2 3.3 3.7 5.4
GTFC 1994-3............. 2.4 2.3 2.9 4.3 3.1 3.0 3.6 5.3
GTFC 1994-4............. 2.3 2.3 2.9 4.3 2.9 2.9 3.6 5.2
<CAPTION>
SINGLE LINE COLLATERAL POOL
PREPAY PROJECTIONS (MHP%)(3)
---------------------------------------
TRANSACTION 1 MO. 6 MO. 12 MO. 60 MO.
----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
GTFC 1994-1............. 81.0% 81.9% 85.4% 94.5%
GTFC 1994-2............. 80.7 78.0 83.5 95.1
GTFC 1994-3............. 81.9 75.3 82.8 94.6
GTFC 1994-4............. 78.2 72.5 83.7 93.8
</TABLE>
- ----
(1) The CPRs have been calculated and stated on a loan-by-loan basis, for each
pool, taking into account the actual WAC and amortization schedule for
each loan in the pool.
(2) The CPRs have been calculated assuming that each transaction pool consists
of a single loan with characteristics equal to the weighted average WAM
and WAC of the pool. The CPRs are calculated using the WAC and schedule
amortization of such single loan, not the actual WAC and schedule
amortization for each loan in the pool.
(3) Prepayments on the Contracts may be measured by a prepayment standard or
model. The Manufactured Housing Prepayment Model ("MHP") is based on an
assumed rate of prepayments each month of the then unpaid principal
balance of a pool of new Contracts. A prepayment assumption of 100% MHP
assumes constant prepayment rates of 3.7% per annum of the then unpaid
principal balance of such Contracts in the first month of the life of the
Contracts and an additional 0.1% per annum in each month thereafter until
the 24th month. Beginning in the 24th month and in each month thereafter
during the life of the Contracts, 100% MHP assumes a constant prepayment
rate of 6.0% per annum each month.
47
<PAGE>
GTFC 1994-4
Issue Date: June 1994.
<TABLE>
<CAPTION>
Bond Value Segmentation
-----------------------
Residual Total Bond
Asset Value
----------- -----------
<S> <C> <C>
$34,250,303 $34,250,303
Pass-
Current Through
Description of Securities: Balance Rate
- ------------------------- ----------- -------
Class A-1; Senior $91,000,000 6.55%
Class A-2; Senior $47,000,000 7.35%
Class A-3; Senior $31,000,000 7.70%
Class A-4; Senior $45,000,000 7.95%
Class A-5; Senior $61,613,000 8.30%
Class B-1; Subordinate $12,318,000 8.20%
Class B-2; Subordinate $20,017,033 8.60%
</TABLE>
Principal Amortization:
Prior to the Class B Cross-over Date (as defined below),
holders of the Class A Certificates will receive payments of
principal sequentially, first to the Class A-1
Certificateholders until the Class A-1 Principal Balance has
been reduced to zero, then to the Class A-2
Certificateholders until the Class A-2 Principal Balance has
been reduced to zero, then to the Class A-3
Certificateholders until the Class A-3 Principal Balance has
been reduced to zero, then to the Class A-4
Certificateholders until the Class A-4 Principal Balance has
been reduced to zero, and then to the Class A-5
Certificateholders until the Class A-5 Principal Balance has
been reduced to zero.
Pursuant to the terms of the Pooling and Servicing
Agreement, the Class B Cross-over Date is the later of (A)
August 1999 or (B) the first Remittance Date on which the
Class B Principal Balance represents 21% or more of the Pool
Scheduled Principal Balance. On each Remittance Date on or
after the Class B Cross-over Date and prior to the
Remittance Date on which the Class A Principal Balance is
reduced to zero, holders of the Class B-1 and Class B-2
Certificates will be entitled to distributions of principal
only if certain "Class B Principal Distribution Tests" (as
defined in the Pooling and Servicing Agreement) are
satisfied. The Class B-2 Certificateholders are not entitled
to any distributions of principal until the Class B-1
Principal Balance has been reduced to zero.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates, and the Class B-1 Certificates
are supported by the subordination of the Class B-2
Certificates. The Class B-2 Certificateholders are entitled
to a Green Tree Guarantee. To the extent that funds in the
Certificate Account are insufficient to distribute the Class
B-2 Formula Distribution Amount, Green Tree is obligated to
pay the Guarantee Payment.
Nature of Net Excess Cashflow:
Class C Certificate (Residual).
48
<PAGE>
GRAPH--$
[TO BE SUPPLIED]
49
<PAGE>
GTFC 1994-3
Issue Date: May 1994.
<TABLE>
<CAPTION>
Bond Value Segmentation
-----------------------
Residual Total Bond
Asset Value
<S> ----------- -----------
<C> <C>
$17,273,717 $17,273,717
Pass-
Current Through
Description of Securities: Balance Rate
- ------------------------- ----------- -------
Class A-1; Senior $59,000,000 6.60%
Class A-2; Senior $31,000,000 7.45%
Class A-3; Senior $20,000,000 7.80%
Class A-4; Senior $27,000,000 8.05%
Class A-5; Senior $38,334,000 8.40%
Class B-1; Subordinate $ 8,865,000 8.30%
Class B-2; Subordinate $12,805,761 8.65%
</TABLE>
Principal Amortization:
Prior to the Class B Cross-over Date (as defined below),
holders of the Class A Certificates will receive payments of
principal sequentially, first to the Class A-1
Certificateholders until the Class A-1 Principal Balance has
been reduced to zero, then to the Class A-2
Certificateholders until the Class A-2 Principal Balance has
been reduced to zero, then to the Class A-3
Certificateholders until the Class A-3 Principal Balance has
been reduced to zero, then to the Class A-4
Certificateholders until the Class A-4 Principal Balance has
been reduced to zero, and then to the Class A-5
Certificateholders until the Class A-5 Principal Balance has
been reduced to zero.
Pursuant to the terms of the Pooling and Servicing
Agreement, the Class B Cross-over Date is the later of (A)
July 1999 or (B) the first Remittance Date on which the
Class B Principal Balance represents 22% or more of the Pool
Scheduled Principal Balance. On each Remittance Date on or
after the Class B Cross-over Date and prior to the
Remittance Date on which the Class A Principal Balance is
reduced to zero, holders of the Class B-1 and Class B-2
Certificates will be entitled to distributions of principal
only if certain "Class B Principal Distribution Tests" (as
defined in the Pooling and Servicing Agreement) are
satisfied. The Class B-2 Certificateholders are not entitled
to any distributions of principal until the Class B-1
Principal Balance has been reduced to zero.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates, and the Class B-1 Certificates
are supported by the subordination of the Class B-2
Certificates. The Class B-2 Certificateholders are entitled
to a Green Tree Guarantee. To the extent that funds in the
Certificate Account are insufficient to distribute the Class
B-2 Formula Distribution Amount, Green Tree is obligated to
pay the Guarantee Payment.
Nature of Net Excess Cashflow:
Class C Certificate (Residual).
50
<PAGE>
GRAPH--$
[TO BE SUPPLIED]
51
<PAGE>
GTFC 1994-2
Issue Date: May 1994.
<TABLE>
<CAPTION>
Bond Value Segmentation
-----------------------
Residual Total Bond
Asset Value
----------- -----------
<S> <C> <C>
$29,314,761 $29,314,761
Pass-
Current Through
Description of Securities: Balance Rate
- -------------- ------------ -------
Class A-1; Senior $121,659,582 6.45%
Class A-2; Senior $ 55,000,000 7.35%
Class A-3; Senior $ 45,000,000 7.70%
Class A-4; Senior $ 50,000,000 7.90%
Class A-5; Senior $ 70,130,000 8.30%
Class B-1; Subordinate $ 17,450,000 8.25%
Class B-2; Subordinate $ 25,209,118 8.55%
</TABLE>
Principal Amortization:
Prior to the Class B Cross-over Date (as defined below),
holders of the Class A Certificates will receive payments of
principal sequentially, first to the Class A-1
Certificateholders until the Class A-1 Principal Balance has
been reduced to zero, then to the Class A-2
Certificateholders until the Class A-2 Principal Balance has
been reduced to zero, then to the Class A-3
Certificateholders until the Class A-3 Principal Balance has
been reduced to zero, then to the Class A-4
Certificateholders until the Class A-4 Principal Balance has
been reduced to zero, and then to the Class A-5
Certificateholders until the Class A-5 Principal Balance has
been reduced to zero.
Pursuant to the terms of the Pooling and Servicing
Agreement, the Class B Cross-over Date is the later of (A)
June 1999 or (B) the first Remittance Date on which the
Class B Principal Balance represents 22% or more of the Pool
Scheduled Principal Balance. On each Remittance Date on or
after the Class B Cross-over Date and prior to the
Remittance Date on which the Class A Principal Balance is
reduced to zero, holders of the Class B-1 and Class B-2
Certificates will be entitled to distributions of principal
only if certain "Class B Principal Distribution Tests" (as
defined in the Pooling and Servicing Agreement) are
satisfied. The Class B-2 Certificateholders are not entitled
to any distributions of principal until the Class B-1
Principal Balance has been reduced to zero.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates, and the Class B-1 Certificates
are supported by the subordination of the Class B-2
Certificates. The Class B-2 Certificateholders are entitled
to a Green Tree Guarantee. To the extent that funds in the
Certificate Account are insufficient to distribute the Class
B-2 Formula Distribution Amount, Green Tree is obligated to
pay the Guarantee Payment.
Nature of Net Excess Cashflow:
Class C Certificate (Residual).
52
<PAGE>
GRAPH--$
[TO BE SUPPLIED]
53
<PAGE>
GTFC 1994-1
Issue Date: March 1994.
<TABLE>
<CAPTION>
Bond Value Segmentation
-----------------------
Residual Total Bond
Guarantee Fee Asset Value
------------- -------- -----------
<S> <C> <C> <C>
$47,497,498 $0 $47,497,498
Pass-
Current Through
Description of Securities Balance Rate
- ------------------------- ------------ -------
Class A-1; Senior $164,554,139 5.60%
Class A-2; Senior $ 90,000,000 6.50%
Class A-3; Senior $ 55,000,000 6.90%
Class A-4; Senior $ 67,513,000 7.20%
Class A-5; Senior $112,323,539 7.65%
Class B-1; Subordinate $ 25,272,000 7.60%
Class B-2; Subordinate $ 36,505,621 7.85%
</TABLE>
Principal Amortization:
Prior to the Class B Cross-over Date (as defined below),
holders of the Class A Certificates will receive payments of
principal sequentially, first to the Class A-1
Certificateholders until the Class A-1 Principal Balance has
been reduced to zero, then to the Class A-2
Certificateholders until the Class A-2 Principal Balance has
been reduced to zero, then to the Class A-3
Certificateholders until the Class A-3 Principal Balance has
been reduced to zero, then to the Class A-4
Certificateholders until the Class A-4 Principal Balance has
been reduced to zero, and then to the Class A-5
Certificateholders until the Class A-5 Principal Balance has
been reduced to zero.
Pursuant to the terms of the Pooling and Servicing
Agreement, the Class B Cross-over Date is the later of (A)
April 1999 or (B) the first Remittance Date on which the
Class B Principal Balance represents 22% or more of the Pool
Scheduled Principal Balance. On each Remittance Date on or
after the Class B Cross-over Date and prior to the
Remittance Date on which the Class A Principal Balance is
reduced to zero, holders of the Class B-1 and Class B-2
Certificates will be entitled to distributions of principal
only if certain "Class B Principal Distribution Tests" (as
defined in the Pooling and Servicing Agreement) are
satisfied. The Class B-2 Certificateholders are not entitled
to any distributions of principal until the Class B-1
Principal Balance has been reduced to zero.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates, and the Class B-1 Certificates
are supported by the subordination of the Class B-2
Certificates. The Class B-2 Certificateholders are entitled
to a Green Tree Guarantee. To the extent that funds in the
Certificate Account are insufficient to distribute the Class
B-2 Formula Distribution Amount, Green Tree is obligated to
pay the Guarantee Payment.
Nature of Net Excess Cashflow:
1. A Guarantee Fee equal to the lesser of Monthly Excess
Cashflow and 260 basis points.
2. Class C Certificate (Residual).
54
<PAGE>
GRAPH--$
[TO BE SUPPLIED]
55
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE TRUST OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE CERTIFICATES IN
ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
AFFAIRS OF THE TRUST SINCE THE DATE HEREOF.
---------------
TABLE OF CONTENTS
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports to Certificateholders.............................................. 2
Additional Information..................................................... 2
Summary of Terms........................................................... 3
Special Considerations..................................................... 8
Summary of Transaction..................................................... 9
Green Tree Financial Corporation........................................... 11
The Trust.................................................................. 13
The Trust Property......................................................... 14
Historical and Projected Net Excess Cashflow............................... 16
Yield, Average Life and Prepayment Considerations.......................... 18
Description of the Certificates............................................ 27
Description of the Trust Documents......................................... 31
Use of Proceeds............................................................ 33
Certain Federal Income Tax Consequences.................................... 33
ERISA Considerations....................................................... 37
Legal Investment Considerations............................................ 38
Underwriting............................................................... 39
Legal Matters.............................................................. 39
Appendix I................................................................. 40
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$92,400,000
[LOGO OF GREEN TREE FINANCIAL CORPORATION APPEARS HERE]
GREEN TREE SECURITIZED
NET INTEREST MARGIN
TRUST 1994-B
7.85% SECURITIZED NET INTEREST
MARGIN CERTIFICATES
---------------
PROSPECTUS
July 20, 1994
---------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
