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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 18, 1994
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GREEN TREE FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MINNESOTA 41-1263905
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1100 LANDMARK TOWERS
345 ST. PETER STREET
SAINT PAUL, MINNESOTA 55102-1639
(612) 293-3400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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DREW S. BACKSTRAND
1100 LANDMARK TOWERS
345 ST. PETER STREET
SAINT PAUL, MINNESOTA 55102-1639
(612) 293-3400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
CHARLES F. SAWYER CATHY M. KAPLAN
DORSEY & WHITNEY BROWN & WOOD
220 SOUTH SIXTH STREET ONE WORLD TRADE CENTER
MINNEAPOLIS, MINNESOTA 55402 NEW YORK, NEW YORK 10048
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Securitized Net Interest
Margin Certificates.... $539,000,000 100% $539,000,000 $185,862.06
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(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum aggregate offering price, pursuant to Rule
457(c).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION--PRELIMINARY PROSPECTUS DATED JANUARY 18 , 1994
PROSPECTUS
$539,000,000 (APPROXIMATE)
LOGO OF GREENTREE
GREEN TREE SECURITIZED NET INTEREST MARGIN TRUST 1994-A
% SECURITIZED NET INTEREST MARGIN CERTIFICATES
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Green Tree Securitized Net Interest Margin Trust 1994-A (the "Trust") will be
formed pursuant to a Trust Agreement, dated as of January 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 , as Trustee. The Trust
will issue $539,000,000 (approximate) aggregate principal amount of %
Securitized Net Interest Margin Certificates (the "Certificates"). The assets
of the Trust will consist of (i) the residual cashflow from 26 real estate
mortgage investment conduits ("REMICs"), whose assets consist of pools of
manufactured housing contracts sold by or on behalf of Green Tree to investors
between 1987 and 1993, 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, (i)
Guarantee Fees payable with respect to 15 pools of manufactured housing
contracts created by or on behalf of Green Tree between 1987 and 1993, (ii) the
excess servicing fees payable with respect to 28 such pools, and (iii) certain
excess spread payable with respect to manufactured housing contract GNMA
Certificates sold by Green Tree between 1978 and 1993, 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 %
per annum, will be distributed to the Certificateholders on a monthly basis
beginning February 15, 1994 (each, a "Distribution Date"). It is a condition of
issuance that the Certificates be rated "BBB" by at least one nationally
recognized statistical rating organization.
The Final Scheduled Distribution Date for the Certificates will be January
15, 2004. However, payment in full of the Certificates is expected to occur
earlier than such date, as described herein.
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."
There currently is no secondary market for the Certificates. The Underwriters
expect, but are not obligated, to make a market in the Certificates. There is
no assurance that any such market will develop or 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>
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Price to Underwriting Proceeds to
Public (1) Discount Company (2)
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<S> <C> <C> <C>
Per Certificate............................. % % %
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Total....................................... $ $ $
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(1) Plus accrued interest, if any, from , 1994.
(2) Before deducting expenses, estimated to be $ .
-----------
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 , 1994.
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LEHMAN BROTHERS MERRILL LYNCH & CO.
January , 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 , 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 contract or other document referred to are summaries, and if
this Prospectus indicates that such contract or other document has been filed
as an exhibit to the Registration Statement, reference is made to the copy of
the contract 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 10007, 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-A (the "Trust"), a Delaware business trust to be
formed on or about , 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 January 1, 1994 (the "Trust
Agreement") among Finance I, Green Tree Manufactured
Housing Net Interest Margin Finance Corp. II ("Fi-
nance II") and , as Trustee (the "Trust-
ee").
Securities Offered...... $539,000,000 (approximate) aggregate principal amount
of % 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
from, all of the property of the Trust. The Trust
Property will consist of a limited recourse note (the
"Finance I Note") issued by Finance I, the "residual
interests" in certain trusts (the "Residual Assets")
and certain related property. The Trust Property rep-
resents the net interest margin payable to Green Tree
from certain pools of manufactured housing contracts
(the "Contracts") issued by or on behalf of Green
Tree between 1978 and 1993. The initial principal
amount of the Certificates is equal to the initial
principal amount of the Finance I Note plus approxi-
mately 78% of the estimated present value of the Re-
sidual Assets, but such estimate is based on a number
of assumptions about the future performance of the
Residual Assets. See "Special Considerations" and
"Yield, Average Life and Prepayment Considerations."
A. Finance I Note..... The Finance I Note will be a limited recourse obliga-
tion of Finance I, payable solely from certain assets
of Finance I (the "Fee Assets") acquired by Finance I
from Green Tree. The Finance I Note bears interest at
a rate of % 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, commencing February 15,
1994. The Fee Assets consist of (i) Green Tree's
right to fees for providing specified levels of re-
course to Green Tree against delinquencies, defaults
and net liquidation losses on certain pools of Con-
tracts ("Guarantee Fees"), (ii) excess spread on cer-
tain pools of Contracts evidenced by GNMA Certifi-
cates ("GNMA excess spread"), and (iii) the excess
portion of fees for servicing certain pools of Con-
tracts ("excess servicing"). The Guarantee Fees and
GNMA excess spread have a stated maximum amount rang-
ing from 295 to 485 basis points of the outstanding
balance of the related pool before servicing fees,
expenses and losses. Green Tree's stated servicing
fee with respect to the pools giving rise to the ex-
cess servicing is generally 100 basis points, of
which the excess servicing included in the Fee Assets
is generally 50 basis points, subject to the avail-
ability of funds remaining after payment of amounts
due investors in such pool and other specified trust
expenses (including the
3
<PAGE>
normal servicing fee being retained by Green Tree).
The initial principal amount of the Finance I Note is
equal to approximately 78% of the estimated present
value of the Fee Assets, but such estimate is based
on a number of assumptions about the future perfor-
mance of the Fee Assets. See "The Trust Property--The
Fee Assets" and "Yield, Average Life and Prepayment
Considerations."
B. Residual Assets.... The Residual Assets were issued by 26 trusts created
by or for Green Tree between 1987 and 1993 in connec-
tion with Green Tree's quarterly securitizations of
manufactured housing contracts originated and serv-
iced by Green Tree. The Residual Asset with respect
to each such trust represents the excess cashflow re-
maining after payment of amounts due investors in
such pool, servicing fees and other specified trust
expenses. The net excess cashflows with respect to
the Residual Assets issued by the 13 trusts that do
not pay Guarantee Fees has generally ranged from 315
to 575 basis points of the outstanding balance of the
related pool, before servicing fees, losses and ex-
penses. The net excess cashflows with respect to the
Residual Assets issued by the remaining 13 trusts are
payable only after the payment of a Guarantee Fee,
and accordingly are expected to generate cash flow
only periodically, when the net excess cashflow ex-
ceeds the applicable Guarantee Fee. Certain of the
Residual Assets also represent the right to receive
funds held in Reserve Funds by the related trust when
released by the trust. Each of these Residual Assets
constitutes the "residual interest" in a "real estate
mortgage investment conduit" ("REMIC"). See "The
Trust Property--The Residual Assets" and "Yield, Av-
erage Life and Prepayment Considerations."
C. Inside Refinancing
Payments.............
In connection with the transfers by Green Tree to Fi-
nance I and Finance II of the Fee Assets and the Re-
sidual 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 or Finance II, as
applicable, an amount intended to equal the estimated
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 Fee Assets will be applied to pay interest and
principal on the Finance I Note, and any such inside
refinancing payments relating to the Residual Assets
would be paid directly to the Trust, and in either
case will be used by the Trust to pay interest and
principal on the Certificates. See "The Trust Proper-
ty--Inside Refinancing Payments."
Contract Originator and
Servicer...............
Green Tree originated substantially all of the Con-
tracts. See "Green Tree Financial Corporation." Fi-
nance I and Finance II are wholly owned special pur-
pose subsidiaries of Green Tree.
Trustee................. , 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.
4
<PAGE>
Terms of the The principal terms of the Certificates will be as
Certificates........... described below.
A. Distribution Principal and interest on the Certificates will be
Dates................ payable on the fifteenth day (or, if such day is not
a business day, the next succeeding business day) of
each month, commencing February 15, 1994 (each, a
"Distribution Date").
B. Interest........... % 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 Outstanding Cer-
tificate Balance (the "Certificateholders' Interest
Distributable Amount"). Interest in respect of a Dis-
tribution Date will accrue from , 1994 or from
the most recent Distribution Date to which interest
has been paid to but excluding such Distribution
Date. Green Tree will be the record holder of all the
Certificates with respect to the distribution to be
made in February 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").
D. Optional The holders of the Subordinated Certificates may, on
Prepayment........... any Distribution Date when the outstanding principal
amount of the Certificates is less than 10% of the
original principal amount of the Certificates, cause
the Trust to prepay the Certificates in whole but not
in part by contributing cash to the Trust in an
amount equal to the unpaid principal amount of the
Certificates (plus any accrued and unpaid interest on
the Certificates).
E. Subordination of
Subordinated
Certificates.........
The Subordinated Certificates will have an initial
principal amount of 22% of the estimated present
value of the Trust Property. No payments of principal
or interest will be made on the Subordinated Certifi-
cates (which are not being offered hereby) until the
Certificates 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
5
<PAGE>
involving the characterization for federal income tax
purposes of interests with the same terms as the Cer-
tificates, and although the result is not free from
doubt, on balance, in the opinion of Dorsey & Whitney
the Certificates will be classified as debt for fed-
eral income tax purposes. Alternative characteriza-
tions of the Certificates are possible, but would not
result in materially 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 The Certificates will not constitute "mortgage re-
Considerations......... lated securities" for purposes of the Secondary Mort-
gage Market Enhancement Act of 1984. Accordingly, in-
stitutions 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 investments for
them. See "Legal Investment Considerations."
The Certificates may not be acquired by or on behalf
of a "disqualified organization" (as defined in "De-
scription of Certificates--Restrictions on Trans-
fer"). See "Description of Certificates--Restrictions
on Transfer."
Rating.................. It is a condition to the issuance of the Certificates
that they be rated "BBB" by at least one nationally
recognized statistical rating organization. The rat-
ing of the Certificates addresses the likelihood of
the ultimate payment of principal and interest on the
Certificates. A security rating is not a recommenda-
tion to buy, sell or hold securities and may be sub-
ject to revision or withdrawal at any time by the
rating agency.
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<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.
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 receivable 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. Certificateholders must therefore
rely for repayment solely upon payments on the Finance I Note and the
Residual Assets. Finance I likewise will not have, nor is it permitted or
expected to have, any significant assets or sources of funds other than the
Fee 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 herein, payments of
principal and interest on the manufactured housing contracts in the 28
pools of manufactured housing contracts sold by or on behalf of Green Tree
to investors in Green Tree's quarterly securitizations of manufactured
housing contracts between 1987 and 1993 (the "Securitized Pools"), and all
of the pools of manufactured housing contracts securing GNMA Certificates
sold by Green Tree between 1978 and 1993 (the "GNMA 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.
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, the estimated overcollateralization of the
Certificates, and any funds in the Reserve Funds held by certain of the
Securitized Pools.
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 to 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.
5. Certain Matters Relating to Insolvency. Green Tree intends that the
transfer of the Fee Assets and the Residual Assets to Finance I and Finance
II and then the issuance of the Finance I Note and
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<PAGE>
the transfer of the Residual Assets to the Trust constitute a sale, rather
than a pledge of the Fee Assets 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 Fee Assets and the Residual Assets by Green
Tree was a pledge of the Fee Assets 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 GNMA or the trustee of the Securitized Pool, as applicable,
of the security interest in the manufactured home may not be effective in
favor of GNMA or 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 transfer the Fee Assets and the Residual
Assets to Finance I and Finance II (collectively, the "Subordinated
Certificateholders"), pursuant to two substantially similar Transfer
Agreements, dated as of January 1, 1994 (each a "Transfer Agreement," and
collectively the "Transfer Agreements"). The Subordinated Certificateholders
will in turn establish the Trust by transferring the Finance I Note and the
Residual Assets to the Trust. 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 all Fee Asset
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 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 Certificates, 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 Certificates. The Subordinated Certificates will
receive no distributions until the Certificates are paid in full.
8
<PAGE>
[GRAPHIC APPEARS HERE]
9
<PAGE>
GREEN TREE FINANCIAL CORPORATION
GENERAL
Green Tree is a Minnesota corporation which, as of September 30, 1993, had
stockholders' equity of approximately $519,090,000. 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). Green Tree's Annual Report on Form 10-K for the year ended December
31, 1992, most recent Proxy Statement and, when available, subsequent quarterly
and annual reports are available from Green Tree upon written request.
CONTRACT ORIGINATION
Green Tree originated substantially all of the Contracts. Less than 2% of the
Contracts were originated by other lenders and subsequently purchased by Green
Tree. 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 credit
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.
POOLING AND DISPOSITION OF CONTRACTS
Green Tree generally pools contracts for sale to investors within 15 to 120
days of purchase. In the case of FHA-insured and VA-guaranteed manufactured
housing contracts, Green Tree generally issues GNMA Certificates. The GNMA
Certificates, which provide for the payment by Green Tree to registered holders
of GNMA Certificates of monthly payments of principal and interest and the
"pass-through" of any prepayments of the contracts, are described under "The
Trust Property--GNMA Excess Spread" below.
In the case of conventional manufactured housing contracts, Green Tree sells
pools of contracts through the asset securitization vehicles described under
"The Trust Property" below.
10
<PAGE>
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 or of the GNMA Certificates.
The following table sets forth the delinquency experience at December 31 for
each of the past five years of the portfolio of manufactured housing contracts
serviced by Green Tree (other than contracts already in repossession).
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------------------------
1989 1990 1991 1992 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Number of Contracts Outstanding (1): . 191,108 216,641 248,352 273,383 332,330
Number of Contracts Delinquent (2):
30-59 Days.......................... 2,619 2,434 2,862 2,464 2,577
60-89 Days.......................... 843 910 987 855 912
90 Days or More..................... 1,008 1,268 1,676 1,598 1,643
Total Contracts Delinquent............ 4,470 4,612 5,525 4,917 5,132
Delinquencies as a Percent of Con-
tracts Outstanding (3):
30-59 Days.......................... 1.37% 1.12% 1.15% 0.90% 0.78%
60-89 Days.......................... 0.44% 0.42% 0.40% 0.31% 0.27%
90 Days or More..................... 0.53% 0.59% 0.67% 0.58% 0.49%
Total Delinquencies................. 2.34% 2.13% 2.22% 1.80% 1.54%
</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.
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.
LOAN LOSS/REPOSSESSION EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------------------------
1989 1990 1991 1992 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Number of Contracts Serviced
(1)......................... 192,876 218,707 250,813 275,154 334,238
Principal Balance of Con-
tracts Serviced (1)......... 3,315,700 3,800,836 4,412,066 4,936,514 6,491,504
Contract Liquidations:
Number..................... 6,062 5,374 5,978 6,899 5,781
Percentage (2)............. 3.33% 2.61% 2.55% 2.62% 1.90%
Net Losses:
Dollars (3)................ 40,473 33,829 38,583 55,031 49,405
Percentage (4)............. 1.30% 0.95% 0.94% 1.18% 0.86%
Repossession Inventory:
Number..................... 1,768 2,066 2,461 1,771 1,908
Percentage (2)(5).......... 0.92% 0.94% 0.98% 0.64% 0.57%
</TABLE>
- --------
(1) As of period end.
(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.
11
<PAGE>
Finance I and Finance II are wholly owned special purpose subsidiaries of
Green Tree. Because Finance I's only assets consist of the Fee Assets and its
only liability is the Finance I Note, Finance I has a right of offset relative
to the Fee Assets and the Finance I Note.
THE TRUST
The Issuer, Green Tree Securitized Net Interest Margin Trust 1994-A, 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
transfer of the Finance I Note and 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. Except as otherwise
specifically provided in the Trust Agreement, neither the Trustee nor the
Subordinated Certificateholders shall have the power to vary the investment of
the holders of the Certificates within the meaning of Treasury Regulations (S)
301.7701-4(c).
Each Certificate will represent a fractional undivided interest in the Trust.
The capitalization of the Trust will consist of $539,000,000 (approximate)
aggregate initial principal amount of Certificates, and $151,954,931
(approximate) aggregate initial principal amount of Subordinated Certificates,
which will be issued to the Subordinated Certificateholders.
The Trusts principal offices are in , Delaware, in care of
, as Trustee, at the address listed below under "The Trustee."
THE TRUSTEE
is the Trustee under the Trust Agreement. is a Delaware
corporation and its principal offices are located at , Delaware .
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.
12
<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 Fee Assets 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 Fee Assets pledged to
secure the Finance I Note. Each of the 28 Securitized Pools and all of the
GNMA Pools, which are the transactions giving rise to the Fee Assets and the
Residual Assets, are described in greater detail in Appendix I to this
Prospectus. Some of these descriptions assume amendments or changes in credit
enhancement which have not yet occurred, but which Green Tree expects to occur
prior to issuance of the Certificates. The table below identifies each
Securitized Pool and the components of the Fee Assets and Residuals produced
by it.
NET INTEREST MARGIN ALLOCATION
<TABLE>
<CAPTION>
INTEREST GUARANTEE FEE/
POOL PRINCIPAL MARGIN NORMAL EXCESS GNMA EXCESS
DEAL BALANCE PERCENTAGE(1) SERVICING SERVICING SPREAD RESIDUAL ASSET
- ---- -------------- ------------- --------- --------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
GTFC 1993-4............. $ 725,268,946 3.67% 0.50% 0.50% N/A All Excess
GTFC 1993-3............. 652,007,005 4.63 0.50 0.50 3.00% (2)
GTFC 1993-2............. 435,797,896 4.80 0.50 0.50 3.00 (2)
GTFC 1993-1............. 236,104,561 5.03 0.50 0.50 3.00 (2)
GTFC 1992-2............. 265,470,962 3.92 0.50 0.50 3.00 (2)
GTFC 1992-1............. 226,641,593 5.31 0.50 0.50 4.00 (3) (2)
MLMI 1992D.............. 189,990,855 4.71 0.50 0.50 N/A All Excess
MLMI 1992B.............. 483,294,276 5.78 0.50 0.50 N/A All Excess
MLMI 1991I.............. 123,555,345 5.26 0.50 0.50 N/A All Excess
MLMI 1991G.............. 121,379,160 5.14 0.50 0.50 N/A All Excess
MLMI 1991D.............. 93,829,333 4.99 0.50 0.50 N/A All Excess
MLMI 1991B.............. 66,264,904 4.68 0.50 0.50 N/A All Excess
MLMI 1990I.............. 74,101,263 4.68 0.50 0.50 N/A All Excess
MLMI 1990G.............. 83,531,009 4.12 0.50 0.50 4.00 (2)
MLMI 1990D.............. 69,668,275 4.21 0.50 0.50 3.35 (2)
MLMI 1990B.............. 48,269,548 3.83 0.50 0.50 2.99 (2)
MLMI 1989H.............. 71,112,650 4.23 0.50 0.50 3.00 (2)
MLMI 1989F.............. 82,230,042 4.16 0.50 0.50 3.00 (2)
MLMI 1989D.............. 59,700,188 3.92 0.50 0.50 N/A All Excess
MLMI 1989B.............. 29,132,241 3.33 0.50 0.50 N/A All Excess
MLMI 1988X.............. 50,008,613 3.48 0.50 0.50 N/A All Excess
MLMI 1988Q.............. 63,284,419 3.81 0.50 0.50 N/A All Excess
MLMI 1988H.............. 40,480,263 3.27 0.50 0.50 N/A All Excess
MLMI 1988E.............. 44,405,568 3.96 0.50 0.50 All Excess (2)
MLMI 1987C.............. 42,596,425 3.57 0.50 0.50 All Excess (2)
MLMI 1987B.............. 26,386,246 4.31 0.50 0.50 All Excess (2)
MaHCs 1987-B............ 52,621,317 4.37 0.50 1.00 All Excess (2)
MaHCs 1987-A............ 18,590,024 4.10 0.50 1.00 All Excess (2)
GNMA 1993............... 221,105,289 2.94 0.50 N/A 2.95 N/A
GNMA 1992............... 238,863,432 2.95 0.50 N/A 2.95 N/A
GNMA 1991............... 388,095,511 2.97 0.50 N/A 2.95 N/A
GNMA 1990............... 279,427,260 2.98 0.50 N/A 2.95 N/A
GNMA 1989............... 188,876,035 2.98 0.50 N/A 2.95 N/A
GNMA 1988............... 109,121,981 2.94 0.50 N/A 2.95 N/A
GNMA 1987............... 121,004,885 2.92 0.50 N/A 2.95 N/A
GNMA 1986............... 106,004,912 2.91 0.50 N/A 2.95 N/A
GNMA Pre 1986........... 126,311,766 2.86 0.50 N/A 2.95 N/A
-------------- ----
Total.................. $6,254,443,998
==============
</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 before losses, servicing fee and other Trust expenses.
(2) Indicates a Residual Asset which generally is not expected to receive
significant amounts of net excess cash flow due to the existence of a high
Guarantee Fee.
(3) Deal has a Guarantee Fee of 4.00% for the first 72 months. Thereafter, all
excess cash is residual.
The following description of generic types of transaction structures is
qualified in its entirety by the information included in Appendix I.
13
<PAGE>
THE FEE ASSETS
The Finance I Note will have an initial principal amount of $ . The Fee
Assets have an estimated present value as of the Cut-off Date of approximately
$ , but such estimate is based on a number of assumptions about the future
performance of the Fee Assets, as described below under "Yield, Average Life
and Prepayment Considerations." The Fee Assets consist of (i) the Guarantee
Fees; (ii) the excess servicing with respect to the Securitized Pools; and
(iii) the GNMA excess spread. Each of these assets is described in greater
detail below.
THE GUARANTEE FEES
The Guarantee Fees have an aggregate estimated present value as of the Cut-
off Date (based on the assumptions described under "Yield, Average Life and
Prepayment Considerations" below) of $ . Fifteen of the 28 Securitized Pools
provide for the payment to Green Tree or a subsidiary of a Guarantee Fee, as
compensation for providing a limited guarantee against delinquencies and losses
on the related Contracts, and (in some cases) arranging for additional credit
enhancement from third parties. The Guarantee Fees have a stated maximum
ranging from 340 to 485 basis points before servicing fees, expenses and
losses. The limited guarantee and other credit enhancement provided to
investors has taken several basic forms.
With respect to 5 Securitized Pools, Green Tree or a subsidiary is obligated
to advance delinquent payments and to repurchase Contracts that have defaulted
(i.e., the servicer has repossessed the manufactured home, or the Contract has
become 120 or more days delinquent). Green Tree's guarantee obligation with
respect to each of these 5 pools is subject to the limit of a "Guarantee
Amount," which was set initially at a level necessary to obtain the desired
rating on the securities sold to investors, and is thereafter reduced by the
amount of losses on defaulted contracts when such contracts are liquidated and
by unrecovered delinquencies. Green Tree's guarantees on these pools are
supplemented by financial guaranty insurance policies issued by Financial
Security Assurance Inc. ("FSA") with respect to the investor securities. As
compensation for providing such guarantees and arranging such additional credit
enhancement, Green Tree is entitled to receive 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. Because Green Tree is obligated to pay the full amount of all
delinquencies and to repurchase all defaulted contracts, the Guarantee Fees
paid by these 5 pools will not be affected by delinquencies and defaults on the
contracts (although such Guarantee Fees would be reduced due to the prepayment
of the contracts upon default), so long as Green Tree continues to perform
under its limited guarantee obligation. If, however, Green Tree were for any
reason to fail to make a limited guarantee payment required with respect to one
of these pools, the Guarantee Fee payable for that month with respect to that
pool would be reduced by the amount necessary to make such limited guarantee
payment, and thus could be reduced to zero. If the Guarantee Amount for any
such pool were exhausted, Green Tree would have no further obligation with
respect to delinquencies and defaults, but the Guarantee Fee would continue to
be subordinated in right of payment to monthly interest and principal due on
the investor securities, and as a result the Guarantee Fee would be adversely
affected by delinquencies and defaults.
With respect to 15 Securitized Pools, Green Tree is obligated to pay the
amount by which the collected funds available to make the monthly distribution
of principal and interest on a specified class of securities sold to investors
is less than the scheduled distribution amount for such month. These investor
securities are themselves subordinated to other classes of securities sold to
investors. Green Tree's guarantees with respect to 3 of these pools are limited
to specified amounts that are reduced over time by losses on the contracts, by
payments made under the guarantee obligation, or by some combination of the
foregoing. Green Tree's guarantee with respect to the other 12 pools is not
limited as to amount. Green Tree's guarantee obligations with respect to 3
pools are supported by financial guaranty insurance policies issued by FSA; and
Green Tree's obligation with respect to another 3 of these pools is supported
by a reserve fund (consisting of cash or marketable securities) that would be
drawn upon if Green Tree failed to honor its guarantee obligation. As
compensation for providing such guarantees and arranging such additional credit
enhancement, Green Tree
14
<PAGE>
is entitled with respect to 10 of such 15 pools to receive 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. Because these Guarantee Fees are determined
only after all available funds have been applied to pay interest and principal
on the investor securities, these Guarantee Fees are 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 related
Guarantee Fee was zero (because all available cashflow had been used to pay
investor principal and interest). With respect to 5 of such 15 pools, Green
Tree is obligated to provide such recourse, but is not entitled to receive a
Guarantee Fee; Green Tree did, however, receive the Residual Assets in such
pools. See "--The Residual Assets" below.
A number of the Guarantee Fees are subject to "triggers": the servicer is
obligated to compute certain ratios of delinquencies, losses, and loss coverage
each month. If any of the specified ratios fall below a specified level of pool
performance, the related Pooling and Servicing Agreement provides that all net
excess cashflow will not be paid as a Guarantee Fee but will instead be
deposited in a reserve fund or paid to a subordinated class of investor
securities as "accelerated principal distributions" to provide additional
credit enhancement for the subordinated investor securities. Many of the
Pooling and Servicing Agreements provide that such deposits cease once the
ratios have returned to a specified level of pool performance for a specified
period, and some of the Pooling and Servicing Agreements provide for a release
of the captured net excess cashflow if the ratios maintain a specified level of
pool performance for a longer specified period. The principal amortization
tables under "Yield, Average Life and Prepayment Considerations" below give
effect to the application of these triggers.
The Pooling and Servicing Agreements with respect to these 15 pools all
provide that the Guarantee Fee, if any, 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
all Guarantee Fees. Finance I will in turn pledge the right to receive all
Guarantee Fees to secure payments on the Finance I Note.
EXCESS SERVICING
The excess servicing with respect to the 28 Securitized Pools has an
aggregate estimated present value as of the Cut-off Date (based on the
assumptions described under "Yield, Average Life and Prepayment Considerations"
below) of $ . With respect to all 28 Securitized Pools, Green Tree
continues to act as servicer of the Contracts. See "Green Tree Financial
Corporation--Servicing." With respect to 2 Securitized Pools, Green Tree's
stated servicing fee is equal to 1.5% per annum of the outstanding principal
balance of the Contracts, payable monthly; with respect to the other 26
Securitized Pools, Green Tree's stated servicing fee is equal to 1% per annum,
payable monthly.
Green Tree will assign to Finance I the right to receive the "excess
servicing," equal to .50% per annum (or 1.0% per annum, with respect to the 2
pools that provide for a monthly servicing fee equal to 1.5% per annum) of the
monthly servicing fee. Green Tree will retain the remaining .50% per annum of
such monthly servicing fees, plus any late fees and extension fees paid by
obligors on the Contracts (the "normal servicing fee"). The normal servicing
fee, and all servicing fees payable to any replacement servicer, would be paid
by the related trust prior to any payment of the excess servicing or any other
Fee Assets or the related Residual Asset.
With respect to 7 Securitized Pools, the related Pooling and Servicing
Agreement provides that the monthly servicing fee is to be paid to the servicer
(whether the servicer is Green Tree or a successor servicer) out of available
funds prior to the payment of principal and interest due investors; with
respect to 6 Securitized Pools, the related Pooling and Servicing Agreement
provides that the monthly servicing fee is to be paid to the servicer (whether
the servicer is Green Tree or a successor servicer) out of available funds
after the payment of principal and interest due investors; and with respect to
15 Securitized Pools, the related Pooling and Servicing Agreement provides
that, so long as Green Tree is the servicer, the monthly servicing
15
<PAGE>
fee is payable out of available funds only after payment of principal and
interest due to investors and after payment of certain expenses of the trust
not otherwise paid by the servicer, but that if Green Tree is no longer the
servicer the monthly servicing fee is to be paid to the successor servicer
prior to the payment of principal and interest due investors. As a result, the
excess servicing fees with respect to 21 Securitized Pools could be adversely
affected by higher than anticipated delinquencies and liquidation losses on the
related Contracts.
The Pooling and Servicing Agreements for all 28 Securitized Pools provide
that, upon a "Servicer Termination Event," the Trustee or the holders of a
specified percentage of the investor securities may terminate all of Green
Tree's rights and responsibilities as servicer. In such event, the Trustee of
such Securitized Pool would be required to locate a replacement servicer, and
pay such replacement servicer a negotiated servicing fee. If such replacement
servicer required a servicing fee greater than .50%, the excess servicing
assigned by Green Tree to Finance I would be correspondingly reduced. The
Pooling and Servicing Agreements generally define a "Servicer Termination
Event" as including the bankruptcy or insolvency of the servicer or any
material failure on the servicer's part to perform its servicing obligations.
On the Closing Date, Green Tree will assign the excess servicing to Finance
I. Finance I will in turn pledge the right to receive the excess servicing to
secure payments on the Finance I Note.
GNMA EXCESS SPREAD
The GNMA excess spread has an estimated present value as of the Cut-off Date
(based on the assumptions described under "Yield, Average Life and Prepayment
Considerations" below) of $ . As described under "Green Tree Financial
Corporation--Pooling and Disposition of Contracts," Green Tree sells
substantially all of the FHA-insured and VA-guaranteed manufactured housing
contracts it originates in the form of GNMA Certificates.
Green Tree periodically assembles pools of FHA/VA contracts and assigns such
contracts to GNMA. GNMA's regulations prescribe the permissible composition of
each contract pool, including the permissible range of interest rates for the
contracts included in a single pool and the permissible pass-through rate of
the related GNMA Certificate. Green Tree then sells the GNMA Certificates to
investors. The difference between the interest rate on the contracts and the
interest rate on the related GNMA Certificates is generally 3.25%, but GNMA is
entitled to payment of a guaranty fee equal to .30% per annum of the
outstanding balance of the contract pool, payable monthly. Accordingly, the
"GNMA excess spread" Green Tree is entitled to receive is generally equal to
2.95% of the outstanding balance of the contract pool, payable monthly.
As servicer of the GNMA Pools, Green Tree is obligated to service the related
Contracts, including liquidating contracts and submitting claims to FHA or VA,
as applicable, when necessary. In addition, Green Tree is obligated to pay the
expenses of administering the contract pool (such as preparing reports to
investors in the related GNMA Certificate), and to repurchase any contracts
found not to conform to Green Tree's representations and warranties upon
formation of the contract pool.
As servicer, Green Tree is also obligated to pay the FHA insurance premiums
on all FHA-insured contracts (with the exception of a small number of FHA-
insured contracts where the obligor pays the premium). The FHA premium is
calculated with respect to each individual contract, and is payable to FHA
annually on the anniversary of the origination of that contract; as a result,
Green Tree is obligated to pay FHA insurance premiums in each month. With
respect to contracts originated prior to October 1989, the FHA insurance
premium payable annually is equal to 0.54% of the original amount financed.
With respect to contracts originated after October 1989, the total FHA
insurance premium payable over the life of the contract is equal to the product
of 0.50% times the original amount financed times the original term of the
contract (in years). The amount payable per year during the first several years
after origination varies based on the original term of the contract, but once
the total FHA insurance premium is paid no further premium payments are
required with respect to that contract. No such premium or fee is required on
VA-guaranteed contracts.
16
<PAGE>
All collections on the GNMA Pools, consisting of regular payments of
principal and interest by obligors, voluntary prepayments by obligors, and
proceeds of liquidated contracts, are remitted daily to a custodial account.
As servicer, Green Tree is obligated to remit all claims paid by FHA or VA as
received, together with a payment by Green Tree of the unpaid amount of the
contract not covered by FHA insurance or the VA guarantee, as applicable. FHA's
insurance claim procedures require Green Tree to repossess and resell the
manufactured home prior to submitting a claim. In general, FHA insurance will
pay 90% of the sum of (i) the unpaid principal amount of the contract at the
date of default and uncollected interest computed at the contract rate earned
to the date of default, (ii) accrued and unpaid interest on the unpaid amount
of the contract from the date of default to the date of submission of the claim
plus 15 calendar days (but in no event more than nine months) computed at a
rate of 7% per annum, (iii) uncollected court costs, (iv) legal fees, not to
exceed $500, and (v) expenses for recording the assignment to FHA of the
security interest in the manufactured home. FHA insurance available to Green
Tree is subject to the limit of a reserve amount which will be increased by an
amount equal to ten percent of the lesser of the principal balance of the
purchase price of insured loans subsequently originated or purchased of record
by Green Tree, and which will be reduced by all FHA insurance claims paid to
Green Tree and by an annual reduction in the reserve amount of ten percent of
the reserve amount. As of December 31, 1993, Green Tree's FHA insurance reserve
amount was equal to approximately $134,383,000. These insurance reserves were
available to cover losses on approximately $1,783,263,000 of FHA-insured
manufactured housing contracts and approximately $237,800,000 of FHA-insured
home improvement loans. If the FHA reserve amount were for any reason reduced
to zero, Green Tree would remain obligated to remit the amount of all unpaid
principal and interest on liquidated contracts to the custodial account for the
GNMA Certificates. The maximum guarantee that may be issued by the VA for a VA-
guaranteed contract is the lesser of (a) the lesser of $20,000 and 40% of the
principal amount of the contract and (b) the maximum amount of guaranty
entitlement available to the obligor veteran (which may range from $20,000 to
zero). The amount payable under the guarantee will be the percentage of the VA
contract originally guaranteed applied to indebtedness outstanding as of the
applicable date of computation specified in the VA regulations, interest
accrued on the unpaid balance of the loan to the appropriate date of
computation and limited expenses of the contract holder, but in each case only
to the extent that such amounts have not been recovered through resale of the
manufactured home. The amount payable under the VA guarantee may in no event
exceed the amount of the original guarantee.
In addition, Green Tree is also obligated to deposit in the GNMA custodial
account, from its own funds, (i) any shortfall in a full month's interest paid
on a contract due to a full or partial prepayment of principal on that contract
in that month, and (ii) all losses on a contract if the FHA or VA denies
insurance coverage for that contract for any reason. On the tenth day of each
month, Green Tree is also obligated to deposit in the custodial account the
amount of all payments due but not received during the prior month; Green Tree
may, however, instead of advancing its own funds for these delinquencies, use
funds in the custodial account deposited as collections during the first 10
days of the current month.
On the Closing Date, Green Tree will assign to Finance I the GNMA excess
spread, net of (i) the FHA insurance premiums paid by Green Tree with respect
to the contracts, (ii) an amount to reimburse Green Tree for its cost of
servicing the contracts, equal to .50% per annum, payable monthly, of the
outstanding balance of the contract pool, (iii) the amount of any prepayment
shortfalls paid by Green Tree with respect to the prior month, and (iv) all
liquidation losses paid by Green Tree upon payment of the FHA or VA claim
during the prior month. Finance I will in turn pledge the GNMA excess spread to
secure payments on the Finance I Note.
THE RESIDUAL ASSETS
The Residual Assets have an aggregate estimated present value as of the Cut-
off Date (based on the assumptions described under "Yield, Average Life and
Prepayment Considerations" below) of $ . With respect to 26 of the 28
Securitized Pools, an election was made to treat the related trust as a "Real
17
<PAGE>
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.
Thirteen of the Residual Assets 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. These 13 REMICs do not
provide for the payment of a Guarantee Fee, and the monthly cashflow payable to
the holder of the Residual Asset is similar to the net excess cashflow payable
as a Guarantee Fee. The net interest margin payable with respect to the
Residual Assets issued by these 13 trusts has generally ranged from 315 to 575
basis points, before servicing fees, losses and expenses.
With respect to 8 pools, Green Tree has established cash reserve funds as
credit enhancement for the investors, either in lieu of or to supplement a
Green Tree limited guarantee obligation. An aggregate of $68,409,000 was held
in these reserve funds as of December 31, 1993. The related Pooling and
Servicing Agreements generally provide that funds held in these reserve funds
may be released over time as the contract pool amortizes (subject to certain
tests of contract pool performance). Any such partial releases of funds, and
all releases of funds upon termination of the related pool, are required to be
paid to the holder of the Residual Asset. Accordingly, such funds would be
applied to payments on the Certificates, if they are still outstanding at such
time. Because of the uncertainty in estimating the timing of such releases of
funds, the estimated current present values of the Residual Assets stated above
does not include the value of such funds. These funds represent an additional
source of credit enhancement for the Certificates.
With respect to 7 pools, the related Pooling and Servicing Agreement provides
for "Accelerated Principal Distributions" to be made to the investors in the
subordinate class of securities. Any Accelerated Principal Distributions are to
be made out of excess cashflow after payment of the interest and principal
payable on the senior class of investor securities and interest on the
subordinate class (and payment of the servicing fee, with respect to 1 pool),
and would be used to amortize the principal balance of the subordinate class of
investor securities. Such Accelerated Principal Distributions will cause the
principal balance of the investor securities to be less than the outstanding
principal amount of the contracts in the related pool. As a result, upon
termination of the related trust, whether due to the servicer's exercise of its
option to repurchase the related contracts when the aggregate balance of such
contracts has declined to less than 10% of its initial amount or due to the
payment in full of the investor securities, the holder of the Residual Asset
will receive either (i) cash equal to the difference between the amount paid by
the servicer to repurchase the contracts and the outstanding balance of the
investor securities (together with a payment by Green Tree directly to the
Trust, as described under "Inside Refinancing Payments"), or (ii) all cashflow
from the remaining contracts after payment in full of the investor securities.
All such cash or proceeds of such Contracts would be applied to payments on the
Certificates, if they are still outstanding at such time.
As with the Guarantee Fees, the monthly cashflow to many of the Residual
Assets is subject to "triggers," whereby the net excess cashflow otherwise
payable to the Residual Asset holder may instead be deposited in a reserve fund
or paid as Accelerated Principal Distributions if certain tests of pool
performance are not satisfied, to provide additional credit enhancement for the
subordinate class of investor securities.
On the Closing Date, Green Tree will assign all the Residual Assets to
Finance I and Finance II. Finance I and Finance II will in turn assign all 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
18
<PAGE>
or under certain circumstances solicit customers to refinance their contracts.
If the customer on a Contract included in one of the Securitized Pools for any
reason refinances his or her Contract with Green Tree, the consequence to the
Trust of such an "inside 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 or GNMA Pool, 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 Transfer Agreements 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 payments will be remitted to the Trust on the
Distribution Date following the month in which the Contract was refinanced.
Green Tree, as Servicer of the Contracts in each Securitized Pool, 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.
HISTORICAL AND PROJECTED NET EXCESS CASHFLOW
The following graphs depict the net excess cashflow produced by the 28
Securitized Pools and by the GNMA Pools in each month between January 1987 and
November 1993. The Securitized Pools were issued by or on behalf of Green Tree
in March, June, September and December of each year between March 1987 and
December 1993, and the 2,385 GNMA Pools were issued by Green Tree from time to
time between 1978 and 1993. Accordingly, the aggregate outstanding pool
balances for the Securitized Pools and the GNMA Pools were increasing
throughout this time period. For purposes of description in this Prospectus,
the GNMA Pools have been grouped into 9 pools by year of issuance of the
related GNMA Certificate with all GNMA Certificates issued prior to 1986 being
grouped into a single pool. The graphs also indicate liquidation losses on the
Contracts and certain other items that affect the net excess cashflow, as
further described under "The Trust Property." Each of the Securitized Pools and
the GNMA Pools are described in further detail in "The Trust Property" and in
Appendix I hereto.
The graphs also show the projected net excess cashflow and other items for
the Securitized Pools and the GNMA Pools beginning in December 1993, based on a
number of assumptions about future performance of the Contracts as described in
"Yield, Average Life and Prepayment Considerations."
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, there can
be no assurance that the actual circumstances and events will be consistent
with those assumed herein and that the differences between actual and projected
results will not be material.
19
<PAGE>
[TOTAL GNMA AND SECURITIZED CONVENTIONAL CASHFLOWS GRAPH]
20
<PAGE>
[TOTAL SECURITIZED CONVENTIONAL CASHFLOWS GRAPH]
21
<PAGE>
[TOTAL GNMA CASHFLOWS GRAPH]
22
<PAGE>
YIELD, AVERAGE LIFE AND PREPAYMENT CONSIDERATIONS
GENERAL
The yield, average life and expected maturity of the Certificates may be
affected by a complex interplay of factors that may affect the amounts and
timing of the distributions on the Trust Property. The two primary such factors
are defaults and voluntary prepayments on the Contracts, which in turn are
influenced by changes in borrowers' housing needs, job transfers, unemployment,
borrowers' net equity in the manufactured homes and servicing decisions. 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.
The timing of changes in the rate of prepayments on the Contracts may also
affect an investor's actual yield to maturity, even if the average rate of
principal payments is consistent with an investor's expectation. In general,
the earlier a prepayment of principal on the Contracts, the greater the effect
on an investor's yield to maturity. The effect on an investor's yield of
principal payments occurring at a rate higher (or lower) than the rate
anticipated by the investor during the period immediately following the
issuance of the Certificates may not be offset by a subsequent like decrease
(or increase) in the rate of principal payments.
23
<PAGE>
PORTFOLIO PREPAYMENT EXPERIENCE
The following graph presents the historical prepayment experience (both
defaults and voluntary prepayments) of Green Tree's entire portfolio of
manufactured housing contracts, on a loan-by-loan basis, from January 1987
through November 1993, expressed on a weighted average constant prepayment rate
(CPR) basis.
WEIGHTED AVERAGE HISTORICAL PREPAYMENT RATES
24
<PAGE>
The following graph presents Green Tree's best estimate of the weighted
average CPR (both defaults and voluntary prepayments) of all the Contracts, in
the underlying Securitized Pools and GNMA Pools, under varying interest rate
scenarios. The graph depicts the projected CPR, assuming Contract defaults
occur at 100% of the Manufactured Housing Projected Default Assumption, for -
300 basis points through +300 basis points from the current Green Tree Contract
Rate of 10.25%. Green Tree's estimate of future prepayments is based on a
detailed statistical analysis of historical voluntary prepayments, defaults and
recoveries on all conventional and FHA/VA 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. Each manufactured
housing contract in Green Tree's portfolios that prepaid was analyzed by a
number of variables, including loan type (FHA/VA or conventional), seasoning,
seasonality, collateral characteristics (single wide vs. double-wide, new vs.
used), 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
prepayment 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, Green Tree has derived its estimate
of future prepayments as depicted below.
The projected CPRs on the Contracts shown below present Green Tree
management's best estimate of future principal payments 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.
25
<PAGE>
WEIGHTED AVERAGE PROJECTED PREPAYMENT RATES (CPR)
DECREASING INTEREST RATE SCENARIOS
WEIGHTED AVERAGE PROJECTED PREPAYMENT RATES (CPR)
INCREASING INTEREST RATE SCENARIOS
26
<PAGE>
GREEN TREE MANUFACTURED HOUSING CONTRACT PREPAYMENT INFORMATION
<TABLE>
<CAPTION>
HISTORICAL
PREPAYMENT
PERCENTAGE EXPERIENCE (CPR%)
BOND VALUE BOND VALUE POOL PRINCIPAL CURRENT BOND MARGIN -----------------------
DEAL AMOUNT AMOUNT BALANCE WAM WAC COUPON PERCENTAGE 6 MTHS 12 MTHS LIFE
---- ------------ ---------- -------------- ------- ----- ------ ---------- ------ ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GTFC 1993-4..... $ 97,195,673 14.07% $ 725,268,946 202 9.73% 6.06% 3.67% N/A N/A N/A
GTFC 1993-3..... 106,817,857 15.46 652,007,005 199 10.23 5.61 4.63 N/A N/A N/A
GTFC 1993-2..... 63,830,622 9.24 435,797,896 197 10.65 5.85 4.80 4.5 N/A N/A
GTFC 1993-1..... 37,603,419 5.44 236,104,561 197 11.35 6.32 5.03 6.8 N/A N/A
GTFC 1992-2..... 27,264,988 3.95 265,470,962 189 11.26 7.35 3.92 7.2 6.1 N/A
GTFC 1992-1..... 34,229,531 4.95 226,641,593 183 11.88 6.56 5.31 10.4 8.0 7.5
MLMI 1992D...... 30,293,412 4.38 189,990,855 172 12.20 7.49 4.71 11.7 9.0 7.7
MLMI 1992B...... 77,478,688 11.21 483,294,276 108 13.44 7.67 5.78 14.4 12.1 11.0
MLMI 1991I...... 20,979,261 3.04 123,555,345 155 13.06 7.80 5.26 16.3 13.2 11.2
MLMI 1991G...... 20,383,360 2.95 121,379,160 156 13.50 8.35 5.14 17.9 14.6 11.9
MLMI 1991D...... 8,448,810 1.22 93,829,333 137 14.20 9.21 4.99 19.1 15.2 11.4
MLMI 1991B...... 12,458,048 1.80 66,264,904 140 14.12 9.44 4.68 18.9 15.8 12.0
MLMI 1990I...... 15,840,115 2.29 74,101,263 149 14.05 9.37 4.68 20.8 17.6 12.2
MLMI 1990G...... 4,493,508 2.24 83,531,009 147 14.19 10.07 4.12 19.6 15.7 11.3
MLMI 1990D...... 4,264,230 0.62 69,668,275 139 14.22 10.01 4.21 19.4 16.0 11.5
MLMI 1990B...... 3,129,656 0.45 48,269,548 142 13.96 10.14 3.83 20.0 16.5 12.0
MLMI 1989H...... 4,225,746 0.61 71,112,650 140 13.71 9.49 4.23 19.4 15.8 10.9
MLMI 1989F...... 5,713,147 0.83 82,230,042 131 13.91 9.75 4.16 18.6 14.8 10.5
MLMI 1989D...... 2,374,940 0.34 59,700,188 131 14.37 10.45 3.92 18.8 16.4 11.5
MLMI 1989B...... 1,220,321 0.18 29,132,241 124 14.13 10.80 3.33 18.8 15.7 10.6
MLMI 1988X...... 2,442,435 0.35 50,008,613 122 13.73 10.25 3.48 18.3 14.0 9.8
MLMI 1988Q...... 3,690,536 0.53 63,284,419 122 13.61 9.80 3.81 16.8 13.2 9.2
MLMI 1988H...... 1,857,480 0.27 40,480,263 118 12.97 9.70 3.27 16.5 13.5 8.7
MLMI 1988E...... 4,355,939 0.63 44,405,568 103 13.51 9.55 3.96 14.3 11.7 8.3
MLMI 1987C...... 3,355,691 0.49 42,596,425 112 13.67 10.10 3.57 17.1 13.0 9.0
MLMI 1987B...... 2,470,845 0.36 26,386,246 96 14.51 10.20 4.31 18.0 13.8 8.1
MaHCs 1987-B.... 4,889,327 0.71 52,621,317 90 12.92 9.55 4.37 12.9 10.8 8.7
MaHCs 1987-A.... 1,568,250 0.23 18,590,024 99 12.65 8.55 4.10 13.9 11.7 7.9
GNMA 1993....... 14,631,009 2.12 221,015,289 202 9.76 6.82 2.94 3.0(/1/) N/A N/A
GNMA 1992....... 15,125,532 2.19 238,863,432 187 10.86 7.91 2.95 8.2 6.6 5.9
GNMA 1991....... 21,071,413 3.05 388,095,511 175 12.28 9.31 2.97 17.5 12.9 9.9
GNMA 1990....... 13,817,313 2.00 279,427,260 166 12.87 9.89 2.98 20.1 15.2 9.9
GNMA 1989....... 9,434,626 1.37 188,876,035 148 12.76 9.78 2.98 18.4 14.1 8.6
GNMA 1988....... 4,436,610 0.64 109,121,981 119 12.49 9.55 2.94 15.7 12.5 7.8
GNMA 1987....... 4,206,654 0.61 121,004,885 101 11.43 8.51 2.92 12.7 11.2 6.7
GNMA 1986....... 3,248,963 0.47 106,004,912 89 12.12 9.21 2.91 15.4 12.8 7.2
GNMA Pre-1986... 2,106,976 0.30 126,311,766 61 14.71 11.85 2.86 14.3 12.4 4.9
------------ ------ --------------
TOTAL........... $690,954,931 100.00% $6,254,443,998
============ ====== ==============
<CAPTION>
PROJECTED PREPAYMENT EXPERIENCE (CPR%)
---------------------------------------
DEAL 6 MTHS 12 MTHS 36 MTHS 60 MTHS 120 MTHS
---- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
GTFC 1993-4..... 2.3% 3.2% 4.0% 4.1% 4.3%
GTFC 1993-3..... 3.4 3.8 4.4 4.5 4.6
GTFC 1993-2..... 4.8 4.9 5.3 5.3 5.2
GTFC 1993-1..... 6.7 6.3 6.4 6.2 5.9
GTFC 1992-2..... 6.7 6.5 6.4 6.2 5.9
GTFC 1992-1..... 8.7 8.6 8.3 7.8 7.0
MLMI 1992D...... 9.5 9.6 9.0 8.5 7.6
MLMI 1992B...... 10.5 10.7 10.0 9.4 8.4
MLMI 1991I...... 14.1 13.7 12.3 11.4 9.8
MLMI 1991G...... 15.2 14.6 13.1 12.0 10.3
MLMI 1991D...... 14.7 14.3 12.9 12.0 10.5
MLMI 1991B...... 14.8 14.3 12.9 12.0 10.6
MLMI 1990I...... 15.1 14.9 13.4 12.4 10.8
MLMI 1990G...... 15.8 15.4 13.9 12.9 11.3
MLMI 1990D...... 17.4 16.5 14.8 13.6 11.6
MLMI 1990B...... 17.5 16.6 14.9 13.6 11.5
MLMI 1989H...... 15.8 15.2 13.8 12.8 11.1
MLMI 1989F...... 15.9 15.4 14.0 13.0 11.5
MLMI 1989D...... 16.8 16.0 14.4 13.3 11.6
MLMI 1989B...... 17.0 16.3 14.6 13.3 11.5
MLMI 1988X...... 13.3 13.1 12.1 11.4 10.5
MLMI 1988Q...... 13.0 12.9 11.9 11.1 10.3
MLMI 1988H...... 11.3 11.4 10.7 10.1 9.6
MLMI 1988E...... 10.7 10.9 10.2 9.7 9.5
MLMI 1987C...... 12.0 12.1 11.2 10.5 9.9
MLMI 1987B...... 9.5 9.8 9.2 8.8 8.6
MaHCs 1987-B.... 10.3 10.5 9.9 9.4 9.5
MaHCs 1987-A.... 9.2 9.5 9.1 8.7 8.9
GNMA 1993....... 3.0 3.7 4.4 4.7 5.4
GNMA 1992....... 6.1 6.3 6.3 6.4 6.7
GNMA 1991....... 9.9 9.7 9.3 9.2 8.9
GNMA 1990....... 11.4 11.3 11.0 10.8 10.3
GNMA 1989....... 10.9 10.9 10.5 10.3 9.7
GNMA 1988....... 9.6 9.9 9.6 9.4 9.3
GNMA 1987....... 7.4 7.9 7.9 8.0 8.5
GNMA 1986....... 8.2 8.7 8.6 8.5 10.3
GNMA Pre-1986... 11.1 11.7 11.0 10.7 8.8
TOTAL...........
</TABLE>
- -----
(1)The 1 month historical CPR was used because of new GNMA originations.
27
<PAGE>
MANUFACTURED HOUSING PROJECTED DEFAULT ASSUMPTION
The following graph presents Green Tree's best estimate of the weighted
average conditional default rate (CDR) of all the Contracts for each month
beginning in December 1993. 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 FHA-
insured, VA-guaranteed or 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 future
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 CURVE
28
<PAGE>
MANUFACTURED HOUSING PROJECTED RECOVERY ASSUMPTION
The following graph presents Green Tree'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 December
1993. 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 FHA-insured, VA-guaranteed or 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 future
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 CURVE
29
<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 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 or GNMA Certificate, as applicable, in the manner described in
Appendix I and the documents relating to such Securitized Pool or GNMA
Certificate, including "triggers," "Accelerated Principal Distributions"
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 December 1, 1993 or December 15, 1993, as
appropriate;
(v) Green Tree continues to service the Contracts and to perform all its
obligations under the documents relating to each Securitized Pool and GNMA
Certificate;
(vi) Green Tree's servicing fee with respect to each Contract is .50% per
annum;
(vii) any cash held by the Securitized Pools or GNMA custodial accounts
is reinvested at 3% per annum;
(viii) the Certificates bear an Interest Rate of %;
(ix) the Original Principal Amount of the Certificates is $539,000,000;
(x) Green Tree does not exercise its right to repurchase any of the
Contracts held in the Securitized Pools, as described under "Inside
Refinancing Payments";
(xi) the Subordinated Certificateholders do not exercise their right to
cause the Trust to redeem the Certificates;
(xii) the Certificates are issued on , 1994, and distributions are
made on the Certificates on the 15th of each month, commencing ,
1994;
(xiii) there is no delay between a default on a Contract and final
liquidation of the Contract; and
(xiv) 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 all prepayments due to refinancings are refinanced by
a third party (and thus no inside refinancing payments are made by Green Tree).
30
<PAGE>
CERTIFICATE PRINCIPAL AMORTIZATION TABLE (ASSUMING 50% INSIDE REFINANCINGS)
<TABLE>
<CAPTION>
100% OF DEFAULT ASSUMPTION 125% OF DEFAULT ASSUMPTION
------------------------------------------ ----------------------------------------
INTEREST RATE SHIFTS (1) INTEREST RATE SHIFTS (1)
------------------------------------------ ----------------------------------------
-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>
FOR THE YEARS ENDED
DECEMBER 31,
1993............ 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
1994............ 75 76 77 78 79 80 80 77 78 79 80 81 81 82
1995............ 55 57 58 59 60 61 62 59 60 61 63 64 65 65
1996............ 40 40 41 42 43 44 44 44 45 46 47 48 49 50
1997............ 26 26 26 26 26 27 27 32 33 32 32 33 34 34
1998............ 14 14 12 10 10 11 11 21 21 20 19 19 19 20
1999............ 3 1 0 0 0 0 0 10 9 7 6 6 6 6
2000............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2001............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Projected
CPR (2)......... 11.9% 10.4% 8.1% 6.5% 5.8% 5.5% 5.4% 12.2% 10.7% 8.4% 6.8% 6.1% 5.7% 5.6%
Weighted Average
Life (in
years) (3)...... 2.61 2.63 2.62 2.63 2.66 2.69 2.71 2.91 2.93 2.93 2.94 2.98 3.02 3.04
Expected Matu-
rity Date: 2/00 1/00 11/99 9/99 9/99 9/99 9/99 8/00 7/00 5/00 5/00 5/00 6/00 6/00
<CAPTION>
150% OF DEFAULT ASSUMPTION
--------------------------------------------
INTEREST RATE SHIFTS (1)
--------------------------------------------
-300 -200 -100 0 +100 +200 +300
----- ----- ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED
DECEMBER 31,
1993............ 100% 100% 100% 100% 100% 100% 100%
1994............ 78 79 81 82 83 83 83
1995............ 62 63 65 66 68 68 69
1996............ 49 50 51 52 54 54 55
1997............ 38 39 39 39 40 41 41
1998............ 28 28 27 27 27 28 28
1999............ 18 17 16 15 16 17 17
2000............ 3 2 0 0 0 1 2
2001............ 0 0 0 0 0 0 0
Projected
CPR (2)......... 12.4% 10.9% 8.6% 7.0% 6.3% 5.9% 5.8%
Weighted Average
Life (in
years) (3)...... 3.24 3.27 3.27 3.30 3.36 3.42 3.44
Expected Matu-
rity Date: 3/01 2/01 12/00 11/00 12/00 1/01 2/01
</TABLE>
- ----
(1) The Interest Rate Shifts represent shifts in Green Tree's average Contract
Rate. Green Tree's current average Contract Rate is equal to 10.25%. As an
approximation for movements in Green Tree's average Contract Rate,
investors can look to the 7-year Treasury Note rate.
(2) 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. 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.
(3) 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.
31
<PAGE>
CERTIFICATE PRINCIPAL AMORTIZATION TABLE (ASSUMING 0% INSIDE REFINANCINGS)
<TABLE>
<CAPTION>
100% OF DEFAULT ASSUMPTION 125% OF DEFAULT ASSUMPTION
-------------------------------------------- ----------------------------------------
INTEREST RATE SHIFTS (1) INTEREST RATE SHIFTS (1)
-------------------------------------------- ----------------------------------------
-300 -200 -300 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>
FOR THE YEARS ENDED
DECEMBER 31,
1993............ 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
1994............ 82 82 81 81 80 80 80 84 83 83 82 82 82 82
1995............ 69 68 65 63 63 62 62 73 71 69 67 66 66 66
1996............ 59 56 57 48 46 45 45 64 61 56 53 51 50 50
1997............ 51 46 38 32 29 28 28 57 52 45 39 37 35 35
1998............ 44 37 27 18 14 12 11 51 45 34 27 23 21 20
1999............ 37 29 16 5 * 0 0 44 37 24 15 10 8 7
2000............ 24 14 0 0 0 0 0 33 24 9 0 0 0 0
2001............ 13 1 0 0 0 0 0 23 12 0 0 0 0 0
2002............ 3 0 0 0 0 0 0 14 1 0 0 0 0 0
2003............ 0 0 0 0 0 0 0 5 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
Projected
CPR (2)......... 11.9% 10.4% 8.1% 6.5% 5.8% 5.5% 5.3% 12.2% 10.7% 8.4% 6.8% 6.1% 5.7% 5.6%
Weighted Average
Life (in
years) (3)...... 4.29 3.81 3.26 2.95 2.82 2.76 2.74 4.95 4.34 3.67 3.31 3.17 3.10 3.07
Expected Matu-
rity Date: 4/03 2/02 11/00 4/00 1/00 11/99 10/99 8/04 2/03 7/01 9/00 8/00 8/00 7/00
<CAPTION>
150% OF DEFAULT ASSUMPTION
-----------------------------------------
INTEREST RATE SHIFTS (1)
-----------------------------------------
-300 -200 -100 0 +100 +200 +300
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED
DECEMBER 31,
1993............ 100% 100% 100% 100% 100% 100% 100%
1994............ 85 85 84 84 84 84 84
1995............ 76 74 72 70 70 69 69
1996............ 69 66 61 58 56 56 55
1997............ 63 58 51 46 43 42 42
1998............ 58 52 42 35 31 30 29
1999............ 52 45 33 24 20 19 18
2000............ 42 33 18 8 4 3 2
2001............ 32 22 4 0 0 0 0
2002............ 24 12 0 0 0 0 0
2003............ 17 3 0 0 0 0 0
2004............ 10 0 0 0 0 0 0
2005............ 5 0 0 0 0 0 0
2006............ * 0 0 0 0 0 0
2007............ 0 0 0 0 0 0 0
Projected
CPR (2)......... 12.4% 10.9% 8.6% 7.0% 6.3% 6.0% 5.8%
Weighted Average
Life (in
years) (3)...... 5.82 4.98 4.14 3.72 3.57 3.51 3.48
Expected Matu-
rity Date: 1/07 6/04 5/02 6/01 3/01 2/01 2/01
</TABLE>
- ----
* Indicates an amount greater than zero but less than 0.5% of the initial
principal amount of the Certificates.
(1) The Interest Rate Shifts represent shifts in Green Tree's average Contract
Rate. Green Tree's current average Contract Rate is equal to 10.25%. As an
approximation for movements in Green Tree's average Contract Rate,
investors can look to the 7-year Treasury Note rate.
(2) 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. 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.
(3) 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.
32
<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. The following summary describes certain terms of
the Certificates and the Trust Agreement, does not purport to be complete and
is qualified in its entirety by the Trust Agreement, which is incorporated
herein by reference. 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 at 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.
The Issuer will cause to be furnished 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 initial Certificate Balance.
DISTRIBUTIONS OF INTEREST INCOME
On each Distribution Date, commencing February 15, 1994, the
Certificateholders will be entitled to distributions in an amount equal to the
amount of interest accrued on the Certificate Balance at the Interest Rate (the
"Certificateholders' Interest Distributable Amount"). Interest distributable on
a Distribution Date will accrue from and including the Closing Date (in the
case of the first Distribution Date) or 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.
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
33
<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").
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 Certificate Balance, after giving effect to all payments reported
under (b) above on such date; and
(d) the projected remaining aggregate cashflow value of the Trust
Property, present valued using a % discount rate.
Each amount set forth pursuant to subclauses (a) and (b) will be expressed as a
dollar amount per $1,000 of the initial Certificate Balance.
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, 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 have been issued, the
Trustee will, upon written request by three or more Certificateholders or one
or more holders of Certificates evidencing not less than 25% of the Certificate
Balance, within five Business Days after provision to the Trustee of a
statement of the
34
<PAGE>
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."
35
<PAGE>
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) or by a pass-through entity (as defined below) which has a
disqualified organization as a record holder of an interest in such entity. By
acceptance of a Certificate, each purchaser will be deemed to represent that it
is not a disqualified organization or such a pass-through entity. Accordingly,
a purchase by a disqualified organization or such a pass-through entity 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. 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.
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
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.
36
<PAGE>
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 or the Trustee is unable
to locate a qualified successor, (ii) Finance I or the Administrator at its
sole option advises the Trustee in writing that it elects to terminate the
book-entry system through DTC or (iii) after the occurrence of an Event of
Default, the holders representing a majority of the Certificate Balance (a
"Certificate Majority") advises 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.
DESCRIPTION OF THE TRUST DOCUMENTS
The following summary describes certain terms of the Finance I Note, the
Trust Agreement and the Transfer Agreements (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. The summary does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
the provisions of the Trust Documents.
CERTIFICATE ACCOUNT
Pursuant to the Trust Agreement, the Administrator 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").
37
<PAGE>
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 January 15, 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
January 15, 2004.
If an Event of Default with respect to the Certificates occurs and is
continuing, the Trustee or the holders of 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.
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 Certificateholders will have similar rights to sell the
Fee Assets 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 Green Tree) reasonably satisfactory to the Trustee, materially and adversely
affect the interests of the Certificateholders. The Trust Agreement may also be
amended by the Subordinated Certificateholders and the Trustee and a majority
of the Certificateholders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Trust
Agreement or of modifying, in any matter, 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, collections of payments or distributions
that are required to be made on any related Certificate or the related 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.
Each of the two Transfer Agreements between Green Tree and Finance I or
Finance II (as appropriate) may be amended by Green Tree, Finance I or Finance
II (as appropriate), with the consent of the Trustee, or, with respect to the
Transfer Agreement by and among Finance I, Finance II and the Trustee, such
agreement may be amended by all of the parties thereto; provided that no
amendment may materially and adversely affect the interests of the
Certificateholders.
38
<PAGE>
TERMINATION
The Trust and the respective obligations of the Subordinated
Certificateholders and the Trustee pursuant to the related Trust Documents will
terminate upon the later of (i) the Distribution Date immediately following the
maturity of the Finance I Note or the last Residual Asset or other liquidation
of the last item of Trust Property or (ii) payment to Certificateholders of all
amounts required to be paid to them pursuant to the related Trust Document.
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 the sole remaining Subordinated Certificateholder becomes
insolvent, withdraws or is expelled as a General Partner or is terminated or
dissolved, the Trust will terminate in 90 days and effect prepayment of the
Certificates following the winding-up of the affairs of the Trust, unless
within such 90 days holders of 100% of the Certificates agree in writing to the
continuation of the business of the Trust and to the appointment of a successor
to the Subordinated Certificateholder, and the Trustee is able to obtain an
opinion of counsel to the effect that the Trust will not thereafter be an
association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes.
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. Any funds remaining in
the Trust, after the Trustee has taken certain measures to locate a
Certificateholder 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, with the consent of the Subordinated Certificateholders, 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.
The Trustee of any Trust 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.
39
<PAGE>
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 of the Certificateholders, unless such Certificateholders have
offered the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby. No
Certificateholder will have any right under the Trust Documents to institute
any proceeding with respect to such Trust Documents, unless such holder has
given the Trustee written notice of default and unless the holders of
Certificates evidencing not less than 25% of the Certificate Balance 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.
40
<PAGE>
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.
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
41
<PAGE>
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 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.
42
<PAGE>
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 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, and
most likely in the view of Dorsey & Whitney, the Trust would 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) income to foreign holders generally would be subject to federal tax and
federal tax return filing and withholding requirements and (iii) 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 SPV1 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
43
<PAGE>
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 (expected to be
approximately $111,800 in 1994, in the case of a joint return) 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
44
<PAGE>
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 and
which has no substantial equity features. As described under "Certain Federal
Income Tax Consequences" and subject to the limitations and qualifications
expressed therein, Dorsey & Whitney is of the opinion that the Certificates
will be treated as debt of the Trust for federal income tax purposes. If under
ERISA the Certificates are deemed to be debt and are not deemed to have
substantial equity features, the Trust's assets would not be treated as Plan
assets solely as a result of the purchase of the Certificates by a Plan.
Assuming that either the Certificates are equity interests under applicable
local law or are deemed to have substantial equity features, the Regulation
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
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.
45
<PAGE>
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.
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>
-----
Total................................................. $
=====
</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 % of the Certificate Principal Balance. The
Underwriters may allow, and such dealers may reallow, concessions not to exceed
% of the Certificate Principal Balance 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 and the Subordinated
Certificateholders 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.
46
<PAGE>
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.
47
<PAGE>
APPENDIX I
I. THE CONTRACTS
Set forth below is a description of certain additional characteristics of the
Contracts as of December 1, 1993 (the "Cut-off Date").
GEOGRAPHICAL DISTRIBUTION OF MANUFACTURED HOMES
<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................. 14,928 5.07% $ 253,093,361.39 4.58%
Alaska.................. 47 0.02 700,166.94 0.01
Arizona................. 5,722 1.95 117,100,290.50 2.12
Arkansas................ 8,870 3.02 148,395,763.20 2.68
California.............. 9,782 3.33 236,972,936.90 4.29
Colorado................ 4,421 1.50 89,503,550.23 1.62
Connecticut............. 83 0.03 1,390,564.44 0.03
Delaware................ 925 0.31 17,243,750.59 0.31
District of Columbia.... 36 0.01 641,023.25 0.01
Florida................. 18,050 6.14 325,197,742.67 5.87
Georgia................. 17,215 5.85 302,463,384.97 5.46
Hawaii.................. 33 0.01 537,541.22 0.01
Idaho................... 1,340 0.46 29,424,390.75 0.53
Illinois................ 5,014 1.70 87,454,721.86 1.58
Indiana................. 5,736 1.95 90,489,118.91 1.64
Iowa.................... 4,363 1.48 82,249,333.57 1.49
Kansas.................. 4,212 1.43 82,245,710.88 1.49
Kentucky................ 7,026 2.39 118,769,122.65 2.15
Louisiana............... 7,006 2.38 117,544,720.78 2.13
Maine................... 2,098 0.71 41,963,976.64 0.76
Maryland................ 2,377 0.81 45,451,935.47 0.82
Massachusetts........... 128 0.04 2,395,822.60 0.04
Michigan................ 13,210 4.49 261,272,246.03 4.72
Minnesota............... 5,533 1.88 98,922,521.68 1.79
Mississippi............. 8,334 2.83 128,317,939.61 2.32
Missouri................ 9,083 3.09 155,167,271.84 2.81
Montana................. 2,255 0.77 47,764,951.78 0.86
Nebraska................ 1,423 0.48 26,437,614.11 0.48
Nevada.................. 4,320 1.67 104,284,605.60 1.89
New Hampshire........... 399 0.14 7,259,253.47 0.13
New Jersey.............. 239 0.08 4,892,327.75 0.09
New Mexico.............. 8,815 3.00 186,760,490.58 3.38
New York................ 5,852 1.99 113,293,140.25 2.05
North Carolina.......... 22,579 7.67 450,614,653.15 8.14
North Dakota............ 586 0.20 12,240,652.36 0.22
Ohio.................... 6,073 2.06 99,870,704.30 1.81
Oklahoma................ 6,301 2.14 118,696,557.77 2.15
Oregon.................. 3,010 1.02 72,546,186.70 1.31
Pennsylvania............ 4,717 1.60 85,431,218.54 1.54
Rhode Island............ 19 0.01 293,971.00 0.01
South Carolina.......... 14,064 4.78 274,021,103.26 4.96
South Dakota............ 1,823 0.62 37,250,743.70 0.67
Tennessee............... 8,389 2.85 145,352,859.98 2.63
Texas................... 26,297 8.93 499,564,387.56 9.03
Utah.................... 946 0.32 17,517,570.17 0.32
Vermont................. 300 0.10 5,642,948.99 0.10
Virginia................ 7,257 2.47 124,195,238.03 2.25
Washington.............. 3,500 1.19 86,251,432.44 1.56
West Virginia........... 4,443 1.91 77,828,305.45 1.41
Wisconsin............... 3,737 1.27 69,398,989.43 1.25
Wyoming................. 1,110 0.38 24,610,107.35 0.45
Other................... 165 0.06 2,980,238.06 0.05
------- ------ ----------------- ------
Total.................. 294,191 100.00% $5,529,909,161.35 100.00%
======= ====== ================= ======
</TABLE>
48
<PAGE>
CONTRACT TYPE
<TABLE>
<CAPTION>
AGGREGATE % OF ALL CONTRACTS BY WEIGHTED
PRINCIPAL BALANCE OUTSTANDING PRINCIPAL ORIGINAL CURRENT 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>
FHA/VA.................. $1,779,213,396.70 28.44% $2,102,041,931.76 199 153 12.04%
Conventional............ 4,475,964,711.12 71.56 4,982,709,826.98 196 168 11.83
----------------- ------ ----------------- --- --- -----
Total Weighted Aver- $6,255,178,107.82 100.00% $7,084,751,758.74
age.................... 197 163 11.89%
================= ====== ================= === === =====
</TABLE>
YEARS 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>
1978.................... 12 0.00% $ 102,513.28 0.00%
1979.................... 399 0.14 957,086.12 0.02
1980.................... 905 0.31 4,915,744.07 0.08
1981.................... 1,000 0.34 7,012,348.25 0.11
1982.................... 2,672 0.91 22,782,942.96 0.36
1983.................... 5,430 1.84 55,532,352.52 0.89
1984.................... 7,422 2.50 84,730,411.17 1.35
1985.................... 13,174 4.42 168,511,704.67 2.69
1986.................... 21,353 7.21 298,150,874.70 4.77
1987.................... 21,103 7.12 306,407,591.27 4.90
1988.................... 21,041 7.08 342,014,707.88 5.47
1989.................... 27,487 9.19 500,337,831.21 8.00
1990.................... 32,085 10.73 609,186,290.41 9.74
1991.................... 36,659 12.28 733,554,224.05 11.73
1992.................... 49,597 16.80 1,085,681,991.92 17.36
1993.................... 81,630 19.02 2,032,481,848.72 32.49
Other................... 403 0.14 2,817,644.62 0.05
------- ------ ----------------- ------
Total................ 322,372 100.00% $6,255,178,107.82 100.00%
======= ====== ================= ======
</TABLE>
49
<PAGE>
DISTRIBUTION OF ORIGINAL CONTRACT AMOUNTS
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS AGGREGATE % OF ALL CONTRACTS BY
AS OF PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
ORIGINAL CONTRACT CUT-OFF OUTSTANDING AS OF BALANCE AS OF
AMOUNT (IN DOLLARS)(1) DATE CUT-OFF DATE CUT-OFF DATE
- ---------------------- --------- ----------------- ---------------------
<S> <C> <C> <C>
Less than 10,001............. 18,814 $ 113,405,456.29 1.81%
10,001- 20,000............... 142,861 1,805,426,984.38 28.86
20,001- 30,000............... 99,964 2,164,012,034.98 34.60
30,001- 40,000............... 43,994 1,408,168,979.02 22.51
40,001- 50,000............... 12,985 545,849,694.72 0.73
50,001- 60,000............... 2,801 149,472,241.67 2.39
60,001- 70,000............... 705 44,810,044.38 0.72
70,001- 80,000............... 218 16,115,679.02 0.26
80,001- 90,000............... 61 5,111,120.98 0.08
90,001-100,000............... 22 2,058,009.55 0.03
100,001-110,000............... 6 629,551.83 0.01
120,001-130,000............... 1 118,311.00 0.00
------- ----------------- ------
Total..................... 322,372 $6,255,178,107.82 100.00%
======= ================= ======
</TABLE>
- --------
(1) The largest original Contract amount is $120,056.27 as of the Cut-off Date.
DISTRIBUTION OF CURRENT CONTRACT AMOUNTS
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS AGGREGATE % OF ALL CONTRACTS BY
AS OF PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
CUT-OFF OUTSTANDING AS OF BALANCE AS OF
CURRENT CONTRACT AMOUNT DATE CUT-OFF DATE CUT- OFF DATE
- ----------------------- --------- ----------------- ---------------------
<S> <C> <C> <C>
Less than 5,000............ 10,943 $ 35,809,461.82 0.57%
5,000.01- 10,000............ 42,664 336,989,172.24 5.39
10,000.01- 15,000............ 73,528 923,682,319.34 14.77
15,000.01- 20,000............ 66,599 1,157,306,158.67 18.50
20,000.01- 25,000............ 47,597 1,063,397,552.14 17.08
25,000.01- 30,000............ 31,648 864,886,295.07 13.83
30,000.01- 35,000............ 21,454 694,173,598.65 11.10
35,000.01- 40,000............ 14,640 547,126,103.76 8.75
40,000.01- 45,000............ 6,547 276,860,163.44 4.43
45,000.01- 50,000............ 3,156 149,175,024.26 2.38
50,000.01- 55,000............ 1,749 91,536,028.27 1.46
55,000.01- 60,000............ 835 47,897,126.26 0.77
60,000.01- 65,000............ 464 28,935,517.44 0.46
65,000.01- 70,000............ 210 14,138,415.31 0.23
70,000.01- 75,000............ 128 9,254,649.18 0.15
75,000.01- 80,000............ 82 6,331,157.15 0.10
80,000.01- 85,000............ 40 3,297,970.31 0.05
85,000.01- 90,000............ 19 1,653,522.13 0.03
90,000.01- 95,000............ 16 1,474,064.26 0.02
95,000.01-100,000............ 6 583,945.29 0.01
100,000.01-105,000............ 3 307,169.00 0.00
105,000.01-110,000............ 3 322,302.83 0.01
115,000.01-120,000............ 1 118,311.00 0.00
------- ----------------- -----
Total..................... 322,372 $6,255,178,107.82 100%
======= ================= =====
</TABLE>
50
<PAGE>
DISTRIBUTION OF ORIGINAL LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS AGGREGATE % OF ALL CONTRACTS BY
AS OF PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
CUT-OFF OUTSTANDING AS OF BALANCE AS OF
LOAN-TO-VALUE RATIO(1) DATE CUT-OFF DATE CUT-OFF DATE
- ---------------------- --------- ----------------- ---------------------
<S> <C> <C> <C>
Less than 61%................. 11,757 $ 159,984,664.91 2.56%
61%-65%....................... 4,419 73,108,862.36 1.17
66%-70%....................... 7,066 125,834,142.37 2.01
71%-75%....................... 12,098 222,857,940.74 3.56
76%-80%....................... 29,445 556,218,101.02 8.92
81%-85%....................... 42,231 835,275,209.32 13.35
86%-90%....................... 185,782 3,676,423,248.15 58.31
91%-95%....................... 24,531 545,244,573.83 8.72
Over 95%...................... 5,043 56,221,365.12 0.90
------- ----------------- ------
Total..................... 322,372 $6,255,178,107.82 100.00%
======= ================= ======
</TABLE>
- --------
(1) Rounded to the nearest 1%. The term "Value" as used in this table is
defined above. The loan-to-value ratios on the Contracts may be subject to
a variance of up to 5% from the tabular presentation. Such variances were
caused by information input by Green Tree personnel in regional offices
with respect to incidental items financed in the loans, such as dealer-
installed equipment, the costs of which were estimated at the time the loan
applications were approved.
51
<PAGE>
REMAINING MONTHS TO MATURITY
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS % OF ALL CONTRACTS BY
AS OF AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
MONTHS REMAINING CUT-OFF BALANCE OUTSTANDING BALANCE AS OF
AS OF CUT-OFF DATE DATE AS OF CUT-OFF DATE CUT-OFF DATE
- ------------------ --------- ------------------- ---------------------
<S> <C> <C> <C>
1- 12..................... 2,362 $ 3,786,477.33 0.06%
13- 24..................... 4,172 15,629,422.45 0.25
25- 36..................... 6,469 37,082,427.73 0.59
37- 48..................... 9,948 74,754,255.23 1.20
49- 60..................... 13,434 123,712,687.68 1.98
61- 72..................... 14,137 154,263,718.75 2.47
73- 84..................... 25,204 345,672,272.40 5.53
85- 96..................... 23,829 340,926,613.25 5.45
97-108..................... 22,006 340,418,877.09 5.44
109-120..................... 22,169 367,623,114.30 5.88
121-132..................... 17,186 307,780,558.61 4.92
133-144..................... 18,161 332,691,686.48 5.32
145-156..................... 16,192 318,152,987.70 5.09
157-168..................... 20,982 433,261,042.83 6.93
169-180..................... 29,649 663,859.020.59 10.61
181-192..................... 6,562 183,003,265.41 2.93
193-204..................... 9,582 266,927,787.60 4.27
205-216..................... 10,714 304,906,338.70 4.87
217-228..................... 15,465 463,398,935.85 7.47
229-240..................... 29,207 950,435,409.07 15.19
241-252..................... 8 285,418.17 0.08
253-264..................... 2 78,433.58 0.00
265-276..................... 13 553,010.73 0.81
277-288..................... 1,047 42,198,992.30 0.67
289-300..................... 3,872 183,795,443.99 2.94
------- ----------------- ------
Total................... 322,372 $6,255,178,107.82 100.00%
======= ================= ======
</TABLE>
SEASONING
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS % OF ALL CONTRACTS BY
AS OF AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
MONTHS SINCE CUT-OFF BALANCE OUTSTANDING BALANCE AS OF
ORIGINATION DATE AS OF CUT-OFF DATE CUT-OFF DATE
- ------------ --------- ------------------- ---------------------
<S> <C> <C> <C>
1- 12..................... 90,990 $2,248,126,374.24 35.94%
13- 24..................... 47,993 1,033,695,360.83 16.53
25- 36..................... 35,389 699,103,804.78 11.18
37- 48..................... 30,818 579,835,729.63 9.24
49- 60..................... 25,847 464,864,886.14 7.43
61- 72..................... 20,162 321,189,298.61 5.13
73- 84..................... 21,696 313,211.797.65 5.01
85- 96..................... 20,234 278,256,166.37 4.45
97-108..................... 12,201 153,852,337.29 2.46
109-120..................... 6,938 78,094,426.46 1.25
121-132..................... 5,610 55,741,884.28 0.89
133-144..................... 2,826 16,485,095.28 0.26
145-192..................... 2,448 13,721,786.31 0.22
------- ----------------- ------
Total................... 322,372 $6,255,178,107.82 100.00%
======= ================= ======
</TABLE>
52
<PAGE>
ORIGINAL TERM
<TABLE>
<CAPTION>
% OF CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
ORIGINAL TERM AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
- ------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
13- 24.................... 26 $ 68,147.70 0.00%
25- 36.................... 159 744,913.93 0.01
37- 48.................... 547 3,828,227.11 0.05
49- 68.................... 3,448 22,443,614.83 0.36
61- 72.................... 1,952 14,175,010.32 0.23
73- 84.................... 15,894 189,296,884.35 3.65
85- 96.................... 6,419 53,911,829.42 0.86
97-108.................... 1,645 14,728,094.20 0.27
109-120.................... 29,192 344,361,307.68 5.55
121-132.................... 1,008 14,026,649.13 0.22
133-144.................... 24,201 317,764,656.13 5.08
145-156.................... 1,008 17,579,230.05 0.26
157-168.................... 577 10,873,364.54 0.17
169-180.................... 153,193 2,481,649,697.84 42.87
181-192.................... 283 6,981,505.92 0.11
193-204.................... 306 3,898,180.34 0.14
205-216.................... 415 18,029,385.40 0.29
217-228.................... 200 6,052,474.33 0.10
229-240.................... 76,747 2,298,883,278.55 36.75
241-252.................... 2 55,622.46 0.00
253-264.................... 2 48,827.47 0.00
277-288.................... 5 100,388.33 0.00
289-300.................... 4,945 227,138,676.68 3.63
------- ------------------ ------
Total.................. 522,372 $6,255,178,676.82 100.00%
======= ================== ======
<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................ 193,420 $2,805,3336,728.90 44.85%
Multi Wide................. 128,519 3,441,641,787.36 55.02
Unknown.................... 433 8,199,591.56 0.13
------- ------------------ ------
Total.................. 322,372 $ 6,255,178,107.82 100.00%
======= ================== ======
<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....................... 129,587 $ 2,249,299,993.88 35.96%
Private.................... 192,569 4,001,448,108.37 63.97
Unknown.................... 216 4,430,005.57 0.07
------- ------------------ ------
Total.................. 322,372 $ 6,255,178,107.82 100.00%
======= ================== ======
<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........................ 244,237 $ 5,172,885,455.25 82.70%
Used....................... 77,045 1,082,152,935.33 17.30
Unknown.................... 8 139,817.54 0.00
------- ------------------ ------
Total.................. 322,372 $ 6,255,178,107.82 100.00%
======= ================== ======
</TABLE>
53
<PAGE>
RANGE OF CONTRACTS BY CONTRACT RATE
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS % OF CONTRACT POOL
AS OF AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
RANGE OF CONTRACTS BY CUT-OFF BALANCE OUTSTANDING BALANCE AS OF
CONTRACT RATE DATE AS OF CUT-OFF DATE CUT-OFF DATE
- --------------------- --------- ------------------- ---------------------
<S> <C> <C> <C>
Less than 8.000% 1,513 $ 39,714,152.16 0.63%
8.001%-8.250% 4,779 104,289,967.94 1.67
8.251%-8.500% 1,379 38,337,702.77 0.61
8.501%-8.750% 173 6,383,158.03 0.10
8.751%-9.000% 2,615 110,008,793.43 1.76
9.001%-9.250% 1,141 44,898,029.37 0.72
9.251%-9.500% 8,636 258,165,798.42 4.13
9.501%-9.750% 6,485 193,022,048.47 3.09
9.751%-10.000% 6,068 162,849,087.52 2.60
10.001%-10.250% 13,542 398,758,470.41 6.37
10.251%-10.500% 8,128 217,891,123.69 3.48
10.501%-10.750% 20,515 449,141,149.52 7.18
10.751%-11.000% 11,590 263,477,580.49 4.21
11.001%-11.250% 9,558 196,025,653.75 3.13
11.251%-11.500% 18,832 356,123,966.68 3.69
11.501%-11.750% 10,451 212,438,254.22 3.40
11.751%-12.000% 16,203 297,677,417.88 4.76
12.001%-12.250% 20,861 423,771,581.34 6.77
12.251%-12.500% 17,752 319,282,433.83 5.10
12.501%-12.750% 17,893 330,488,846.85 5.28
12.751%-13,000% 15,134 274,579,618.09 4.39
13.001%-13.250% 8,549 140,493,051.90 2.25
13.251%-13.500% 20,540 344,348,913.93 5.51
13.501%-13.750% 10,537 178,840,777.91 2.86
13.751%-14.000% 18,826 293,878,245.87 4.70
14.001%-14.250% 9,306 138,050,841.45 2.21
14,251%-14.500% 13,750 166,909,753.68 2.67
14,501%-14.750% 5,572 67,616,690.63 1.08
14.751%-15,000% 9,131 108,020,626.52 1.69
15,001%-15,250% 1,959 21,021,367.11 0.34
15,251%-15,500% 4,445 49,406,088.57 0.79
15,501%-15.750% 262 2,709,935.61 0.04
15.751%-16.000% 2,504 25,441,588.18 0.41
16.001%-16.250% 248 3,246,755.99 0.05
16.251%-16,500% 917 8,434,064.26 0.13
16.501%-16.750% 94 818,686.27 0.01
16.751%-17.000% 572 4,162,880.63 0.07
17.001%-17.250% 6 35,737.137 0.08
17.251%-17.500% 412 3,252,256.13 0.05
17.501%-17.750% 7 68,140.49 0.08
17.751%-18.000% 780 5,813,097.11 0.09
18.001% 445 3,271,913.61 0.05
------- ----------------- ------
Total................... 322,372 $6,255,178,107.82 100.00%
======= ================= ======
</TABLE>
54
<PAGE>
II. THE SECURITIZED POOLS
SECURITIZED POOLS
TRANSACTION CHARACTERISTICS
<TABLE>
<CAPTION>
LIMITED/
GUARANTEE UNLIMITED CREDIT ACCELERATED GUARANTEE SERVICING
TRANSACTION TYPE(1) RECOURSE SUPPORT (2) PRINCIPAL FEE FEE RANK(3)
- ----------- --------- --------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
GTFC 1993-4.. N -- R N N 2
GTFC 1993-3.. S U N N Y 2
GTFC 1993-2.. S U N N Y 2
GTFC 1993-1.. S U N N Y 2
GTFC 1992-2.. S U N N Y 2
GTFC 1992-1.. S U N Y Y 2
MLMI 1992D... N -- R Y N 2
MLMI 1992B... N -- R Y N 2
MLMI 1991I... N -- R Y N 2
MLMI 1991G... N -- R Y N 2
MLMI 1991D... S L FSA N N 2
MLMI 1991B... N -- R Y N 2
MLMI 1990I... N -- R Y N 2
MLMI 1990G... S U R N Y 2
MLMI 1990D... S L O N Y 2
MLMI 1990B... S L O N Y 1
MLMI 1989H... S U FSA N Y 3
MLMI 1989F... S U FSA N Y 1
MLMI 1989D... S U N N N 1
MLMI 1989B... S U N N N 1
MLMI 1988X... S U N N N 1
MLMI 1988Q... S U N N N 1
MLMI 1988H... N -- -- N N 1
MLMI 1988E... D L FSA N Y 3
MLMI 1987C... D L FSA N Y 3
MLMI 1987B... D L FSA N Y 3
MaHCS 1987-B. D L FSA N Y 3
MaHCS 1987-A. D L FSA N Y 3
</TABLE>
- --------
(1) D = Contracts repurchased at default; S = obligation to cover investor
shortfalls; N = no guarantee
(2) O = outside reserve fund (not part of the Residual Asset); R = inside
reserve fund (part of the Residual Asset); N = no support; FSA = financial
guaranty insurance policy issued by FSA
(3) 1 = servicing fee always paid first; 2 = servicing fee paid last if Green
Tree is servicer; 3 = servicing fee always paid last
55
<PAGE>
CONVENTIONAL AND GNMA DEAL BY DEAL INFORMATION(1)
<TABLE>
<CAPTION>
ORIGINAL WEIGHTED AVERAGE WEIGHTED AVERAGE
POOL PRINCIPAL TOTAL CERTIFICATE WAM WAM WAC INVESTOR RATE INTEREST MARGIN
DEAL BALANCE BALANCE (MONTHS) (MONTHS) (%) (%) (%)(2) RESERVE FUND BALANCES
- ---------------- -------------- ----------------- -------- -------- ----- ---------------- ---------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GTFC 1993-4..... $ 725,268,946 $ 725,268,946 203 202 9.73% 6.06 3.67 --
GTFC 1993-3..... 652,007,005 652,007,005 203 199 10.23 5.61 4.63 --
GTFC 1993-2..... 435,797,896 435,797,896 204 197 10.65 5.85 4.80 --
GTFC 1993-1..... 236,104,561 236,104,561 207 197 11.35 6.32 5.03 --
GTFC 1992-2..... 265,470,962 265,470,962 202 189 11.26 7.35 3.92 --
GTFC 1992-1..... 226,641,593 226,641,593 199 183 11.88 6.56 5.31 --
MLMI 1992D...... 189,990,855 182,154,778 192 172 12.20 7.49 4.71 $10,349,808
MLMI 1992B...... 483,294,276 452,619,341 183 108 13.44 7.67 5.78 17,654,090
MLMI 1991I...... 123,555,345 116,210,708 187 155 13.06 7.80 5.26 5,212,092
MLMI 1991G...... 121,379,160 114,052,625 189 156 13.50 8.35 5.14 8,187,976
MLMI 1991D...... 93,829,333 93,829,333 183 137 14.20 9.21 4.99 --
MLMI 1991B...... 66,264,904 60,759,598 187 140 14.12 9.44 4.68 6,180,994
MLMI 1990I...... 74,101,263 65,719,702 186 149 14.05 9.37 4.68 7,034,817
MLMI 1990G...... 83,531,009 83,531,009 188 147 14.19 10.07 4.12 13,632,256
MLMI 1990D...... 69,668,275 69,668,275 182 139 14.22 10.01 4.21 --
MLMI 1990B...... 48,269,548 48,269,548 188 142 13.96 10.14 3.83 --
MLMI 1989H...... 71,112,650 71,112,650 189 140 13.71 9.49 4.23 --
MLMI 1989F...... 82,230,042 82,230,042 187 131 13.96 9.75 4.16 --
MLMI 1989D...... 59,700,188 59,700,188 185 131 14.37 10.45 3.92 --
MLMI 1989B...... 29,132,241 29,132,241 182 124 14.13 10.80 3.33 --
MLMI 1988X...... 50,008,613 50,008,613 184 122 13.73 10.25 3.48 --
MLMI 1988Q...... 63,284,419 63,284,419 186 122 13.61 9.80 3.81 --
MLMI 1988H...... 40,480,263 40,480,263 184 118 12.97 9.70 3.27 --
MLMI 1988E...... 44,405,568 44,405,568 180 103 13.51 9.55 3.96 --
MLMI 1987C...... 42,596,425 42,596,425 186 112 13.67 10.10 3.57 --
MLMI 1987B...... 26,386,246 26,386,246 193 96 14.51 10.20 4.31 --
MaHCs 1987-B.... 52,621,317 52,621,317 181 90 13.92 9.55 4.37 --
MaHCs 1987-A.... 18,590,024 18,590,024 181 99 12.65 8.55 4.10 --
GNMA 1993....... 221,015,289 221,015,289 208 202 9.76 6.82 2.94 --
GNMA 1992....... 238,863,432 238,863,432 205 187 10.86 7.91 2.95 --
GNMA 1991....... 388,095,511 388,095,511 204 175 12.28 9.31 2.97 --
GNMA 1990....... 279,427,260 279,427,260 207 166 12.87 9.89 2.98 --
GNMA 1989....... 188,876,035 188,876,035 200 148 12.76 9.78 2.98 --
GNMA 1988....... 109,121,981 109,121,981 184 119 12.49 9.55 2.94 --
GNMA 1987....... 121,004,885 121,004,885 180 101 11.43 8.51 2.92 --
GNMA 1986....... 106,004,912 106,004,912 178 89 12.12 9.21 2.91 --
GNMA Pre-1986... 126,311,766 126,311,766 180 61 14.71 11.85 2.86 --
-------------- -------------- -----------
$6,254,443,998 $6,187,374,947 $68,252,033
============== ============== ===========
</TABLE>
(1) As of the Cut-off Date.
(2) Before servicing fees, losses and expenses.
56
<PAGE>
PREPAYMENT PROJECTIONS COMPARISON
<TABLE>
<CAPTION>
LOAN-BY-LOAN SINGLE LINE COLLATERAL POOL
PREPAY PROJECTIONS (CPR%) PREPAY PROJECTIONS (CPR%)
--------------------------- ----------------------------------
DEAL 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 1993-4........ 2.3% 2.8% 3.2% 4.1% 3.0% 3.7% 4.1% 5.4%
GTFC 1993-3........ 3.4 3.4 3.8 4.5 4.2 4.2 4.6 5.8
GTFC 1993-2........ 4.8 4.6 4.9 5.3 5.4 5.3 5.6 6.4
GTFC 1993-1........ 6.7 6.1 6.3 6.2 7.2 6.7 6.9 7.2
GTFC 1992-2........ 6.7 6.2 6.5 6.2 7.4 7.0 7.2 7.3
GTFC 1992-1........ 8.7 8.4 8.6 7.8 9.3 9.0 9.3 8.9
MLMI 1992D......... 9.5 9.4 9.6 8.5 10.1 10.0 10.3 9.6
MLMI 1992B......... 10.5 10.6 10.7 9.4 13.2 13.4 13.6 13.3
MLMI 1991I......... 14.1 13.8 13.7 11.4 15.0 14.7 14.6 12.9
MLMI 1991G......... 15.2 14.9 14.6 12.0 16.1 15.8 15.6 13.5
MLMI 1991D......... 14.7 14.5 14.3 12.0 16.2 16.1 16.0 14.5
MLMI 1991B......... 14.8 14.6 14.3 12.0 16.3 16.2 16.1 14.4
MLMI 1990I......... 15.1 15.2 14.9 12.4 16.3 16.4 16.2 14.2
MLMI 1990G......... 15.8 15.7 15.4 12.9 16.9 16.8 16.7 14.6
MLMI 1990D......... 17.4 16.9 16.5 13.6 18.8 18.3 18.1 15.5
MLMI 1990B......... 17.5 16.9 16.6 13.6 18.8 18.3 18.2 15.5
MLMI 1989H......... 15.8 15.4 15.2 12.8 17.2 16.9 16.8 14.5
MLMI 1989F......... 15.9 15.5 15.4 13.0 17.4 17.2 17.1 15.0
MLMI 1989D......... 16.8 16.3 16.0 13.3 18.4 18.0 17.8 15.2
MLMI 1989B......... 17.0 16.6 16.3 13.3 18.9 18.5 18.3 15.6
MLMI 1988X......... 13.3 13.2 13.1 11.4 15.3 15.3 15.4 13.7
MLMI 1988Q......... 13.0 12.9 12.9 11.1 14.7 14.7 14.8 13.1
MLMI 1988H......... 11.3 11.3 11.4 10.1 13.2 13.3 13.5 12.0
MLMI 1988E......... 10.7 10.8 10.9 9.7 12.8 13.0 13.2 11.9
MLMI 1987C......... 12.0 12.1 12.1 10.5 14.6 14.7 14.5 12.2
MLMI 1987B......... 9.5 9.7 9.8 8.8 10.8 11.2 11.4 11.2
MaHCS 1987-B....... 10.3 10.5 10.5 9.4 12.0 12.2 12.5 11.3
MaHCS 1987-A....... 9.2 9.4 9.5 8.7 10.5 10.8 11.0 10.4
GNMA 1993.......... 3.0 3.3 3.7 4.7 3.3 3.6 4.0 5.1
GNMA 1992.......... 6.1 6.0 6.3 6.4 6.5 9.5 6.7 7.0
GNMA 1991.......... 9.9 9.7 9.7 9.2 10.3 10.2 10.2 9.9
GNMA 1990.......... 11.4 11.3 11.3 10.8 11.9 11.8 11.9 11.6
GNMA 1989.......... 10.9 10.8 10.9 10.3 11.5 11.4 11.5 11.4
GNMA 1988.......... 9.6 9.7 9.9 9.4 10.3 10.5 10.7 10.8
GNMA 1987.......... 7.4 7.7 7.9 8.0 7.8 8.1 8.4 8.6
GNMA 1986.......... 8.2 8.5 8.7 8.5 8.9 9.2 9.5 9.7
GNMA Pre-1986...... 11.1 11.5 11.7 10.7 13.9 14.6 15.0 15.0
</TABLE>
57
<PAGE>
GTFC 1993-4
Issue Date:December 1993.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ------------ -------
<S> <C> <C>
Class A-1; Senior $240,000,000 4.85%
Class A-2; Senior $110,000,000 5.85%
Class A-3; Senior $75,000,000 6.25%
Class A-4; Senior $111,699,000 6.60%
Class A-5; Senior $108,790,362 7.05%
Class B-1; Subordinate $50,768,000 7.20%
Class B-2; Subordinate $29,011,584 8.55%
</TABLE>
10-year Projected CPR: 4.3%
10-year Projected MHP: 92.7%
REMIC/Grantor Trust:REMIC.
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 Liquidity Reserve (up to $3,626,345). To the extent
that funds in the Certificate Account are insufficient to
distribute the Class B-2 Formula Distribution Amount, a
Reserve Draw Amount will be withdrawn from the Liquidity
Reserve.
Nature of Net Excess Cashflow:
Class C Certificate (Residual).
Triggers:None.
58
<PAGE>
GRAPH--$
59
<PAGE>
GTFC 1993-3
Issue Date:September 1993.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities Balance Rate
- ------------------------- ------------ -------
<S> <C> <C>
Class A-1; Senior $132,655,679 4.60%
Class A-2; Senior $ 68,578,000 4.90%
Class A-3; Senior $ 71,525,000 5.20%
Class A-4; Senior $ 63,956,000 5.45%
Class A-5; Senior $ 88,420,000 5.75%
Class A-6; Senior $ 27,866,000 6.10%
Class A-7; Senior $119,404,000 6.40%
Class B; Subordinate $ 79,602,326 6.85%
</TABLE>
10-year Projected CPR: 4.6%
10-year Projected MHP: 96.9%
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to a Green Tree Guarantee. The Guarantee
Payment is equal to any shortfall in the Class B
Distribution Amount.
Nature of Net Excess Cashflow:
1. A Guarantee Fee equal to the lesser of Monthly Excess
Cashflow and 300 basis points.
2. Class Certificate (Residual).
Triggers:None.
60
<PAGE>
GRAPH--$
61
<PAGE>
GTFC 1993-2
Issue Date:June 1993.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities Balance Rate
- ------------------------- ------------ -------
<S> <C> <C>
Class A-1; Senior $131,335,357 3.66%
Class A-2; Senior $108,780,000 6.10%
Class A-3; Senior $ 50,860,000 6.55%
Class A-4; Senior $ 79,485,000 6.90%
Class B; Subordinate $ 65,337,539 8.0%
10-year Projected CPR: 5.2%
10-year Projected MHP: 105.5%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to a Green Tree Guarantee. The Guarantee
Payment is equal to any shortfall in the Class B
Distribution Amount.
Nature of Net Excess Cashflow:
1. A Guarantee Fee equal to the lesser of the Monthly Excess
Cashflow and 300 basis points.
2. Class C Certificate (Residual).
Triggers:None.
62
<PAGE>
GRAPH--$
63
<PAGE>
GTFC 1993-1
Issue Date:March 1993.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A-1; Senior $66,703,923 4.90%
Class A-2; Senior $64,000,000 6.10%
Class A-3; Senior $75,352,561 6.90%
Class B; Subordinate $30,048,077 8.45%
10-year Projected CPR: 5.9%
10-year Projected MHP: 117.4%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B certificateholders
are entitled to a Green Tree Guarantee. The Guarantee
Payment will equal any Class B Principal Liquidation Loss
Amount and any shortfall in the Class B Distribution Amount.
Nature of Net Excess Cashflow:
1. A Guarantee Fee equal to the lesser of the Monthly Excess
Cashflow and 300 basis points.
2. Class C Certificate (Residual).
Triggers:None.
64
<PAGE>
GRAPH--$
65
<PAGE>
GTFC 1992-2
Issue Date:December 1992.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A-1; Senior $73,147,487 5.85%
Class A-2; Senior $69,000,000 7.05%
Class A-3; Senior $28,176,728 7.50%
Class A-4; Mezzanine $46,131,756 8.15%
Class B; Subordinate $49,014,991 9.15%
10-year Projected CPR: 115.6%
10-year Projected MHP: 5.9%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to a Green Tree Guarantee. The Guarantee
Payment will equal any Class B Principal Liquidation Loss
Amount and any shortfall in the Class B Distribution Amount.
Nature of Net Excess Cashflow:
1. A Guarantee Fee equal to the lesser of the Monthly Excess
Cashflow and 300 basis points.
2. Class C Certificate (Residual).
Triggers:None.
66
<PAGE>
GRAPH--$
67
<PAGE>
GTFC 1992-1
Issue Date:September 1992.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Certificates: Balance Rate
- ---------------------------- ----------- -------
<S> <C> <C>
Class A-1; Senior $44,765,501 4.75%
Class A-2; Senior $50,000,000 6.15%
Class A-3; Senior $20,000,000 6.70%
Class A-4; Senior $29,366,359 7.20%
Class A-5; Mezzanine $44,348,266 6.50%
Class B; Subordinate $38,161,607 8.75%
10-year Projected CPR: 7.0%
10-year Projected MHP: 134.4%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to Class B Accelerated Principal Distributions
(on and after October 15, 1998) and a Green Tree Guarantee.
The Class B Accelerated Principal Distribution is equal to
all Monthly Excess Cashflow. The Guarantee Payment will
equal any Class B Principal Liquidation Loss Amount and any
shortfall in the Class B Distribution Amount.
Nature of Net Excess Cashflow:
1. A Guarantee Fee equal to the lesser of the Monthly Excess
Cashflow and 400 basis points. The Guarantee Fee is reduced
to zero on and after October 15, 1998, because all Monthly
Excess Cashflow will be paid as Class B Accelerated
Principal Distributions. In addition, the Guarantee Fee
would be reduced to zero prior to October 15, 1998 if a
trigger is hit.
2. Class C Certificate (Residual).
Triggers:Yes.
68
<PAGE>
GRAPH--$
69
<PAGE>
MLMI 1992-D
Issue Date:June 1992.
REMIC/Grantor Trust:REMIC.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A-1; Senior $38,175,959 5.90%
Class A-2; Senior $37,500,000 7.40%
Class A-3; Senior $20,686,341 7.75%
Class A-4; Senior $21,500,000 8.15%
Class A-5; Mezzanine $36,831,970 7.95%
Class B; Subordinate $27,460,508 8.50%
10-year Projected CPR: 7.6%
10-year Projected MHP: 140.2%
</TABLE>
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificates are
entitled to Class B Accelerated Principal Distributions and
a Reserve Fund. The Class B Accelerated Principal
Distribution is paid out of Monthly Excess Cashflow, up to a
maximum of 250 basis points (subject to certain triggers).
The Reserve Fund was funded from an initial deposit of
$9,900,000 by Green Tree, and is available to pay the
Reserve Draw Amount each month to the Class B holders.
Investment Income is deposited in the Reserve Fund. If a
Reserve Draw Amount is ever taken from the Reserve Fund,
thereafter the Monthly Excess Cashflow (after payment of the
Class B Accelerated Principal Distribution) will be
deposited in the Reserve Fund until it equals the Requisite
Reserve Amount (equal to the lesser of the Class B Principal
Balance or the amount necessary for the highest rating on
the Class B Certificates). Any amount in the Reserve Fund in
excess of the Class B Principal Balance is released to the
Class C holders. The Class C holders can replace the cash in
the Reserve Fund with a letter of credit. If the amount in
the Reserve Fund equals the Class B Principal Balance (and
the pool balance is less than 10% of the Cut-off Date Pool
Principal Balance), the Trustee is required to use all funds
in the Reserve Fund to repurchase the remaining Contracts
and retire the Class B Certificates. In such event, the
repurchased Contracts would be Class C property.
Nature of Net Excess Cashflow:
1. Class C Certificate (Residual).
Triggers:Yes.
70
<PAGE>
GRAPH--$
71
<PAGE>
MLMI 1992-B
Issue Date:March 1992.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ------------ -------
<S> <C> <C>
Class A-1; Senior $172,422,640 6.85%
Class A-2; Senior $76,834,811 8.05%
Class A-3; Senior $72,000,000 8.30%
Class A-4; Senior $68,046,640 7.85%
Class B; Subordinate $63,315,250 8.50%
10-year Projected CPR: 8.4%
10-year Projected MHP: 221.7%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to Class B Accelerated Principal Distributions
and a Reserve Fund. The Class B Accelerated Principal
Distribution is paid out of Monthly Excess Cashflow, up to a
maximum of 300 basis points (subject to certain triggers).
The maximum will be reduced to 250 basis points on April 15,
1994 (subject to certain triggers).
The Reserve Fund was funded from an initial deposit of
$16,800,000 by Green Tree, and is available to pay the
Reserve Draw Amount each month to the Class B holders. If a
Reserve Draw Amount is ever taken from the Reserve Fund,
thereafter the Monthly Excess Cashflow (after payment of the
Class B Accelerated Principal Distribution) will be
deposited in the Reserve Fund until it equals the Requisite
Reserve Amount (equal to the lesser of the Class B Principal
Balance or the amount necessary for the highest rating on
the Class B Certificates). Any amount in the Reserve Fund in
excess of the Class B Principal Balance is released to the
Class C holders. The Class C holders can replace the cash in
the Reserve Fund with a letter of credit. If the amount in
the Reserve Fund equals the Class B Principal Balance (and
the pool balance is less than 10% of the Cut-off Date Pool
Principal Balance), the Trustee is required to use all funds
in the Reserve Fund to repurchase the remaining Contracts
and retire the Class B Certificates. In such event, the
repurchased Contracts would be Class C property.
Nature of Net Excess Cashflow:
1. Class C Distribution Amount.
Triggers:Yes.
72
<PAGE>
GRAPH--$
73
<PAGE>
MLMI 1991-I
Issue Date:December 1991.
<TABLE>
<CAPTION>
PASS-
DESCRIPTION OF CURRENT THROUGH
SECURITIES BALANCE RATE
-------------- ----------- -------
<S> <C> <C>
Class A; Senior $97,415,269 7.65%
Class B; Subordinate $18,795,439 8.55%
10-year Projected CPR:
9.8%
10-year Projected MHP:
173.8%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to Class B Accelerated Principal Distributions
and a Reserve Fund. The Class B Accelerated Principal
Distribution is paid out of Monthly Excess Cashflow, up to a
maximum of 250 basis points (subject to certain triggers).
The Reserve Fund was funded from an initial deposit of
$4,900,000 by Green Tree, and is available to pay the
Reserve Draw Amount each month to the Class B holders.
Investment Income on funds in the Reserve Fund will be added
to the Reserve Fund. Any amount in the Reserve Fund in
excess of the Requisite Reserve Amount is released to the
Class C holders. The Class C holders can replace the cash in
the Reserve Fund with a letter of credit. If the amount in
the Reserve Fund equals the Class B Principal Balance (and
the pool balance is less than 10% of the Cut-off Date Pool
Principal Balance), the Trustee is required to use all funds
in the Reserve Fund to repurchase the remaining Contracts
and retire the Class B Certificates. In such event, the
repurchased Contracts would be Class C property.
Nature of Net Excess Cashflow:
1. Class C Certificate (Residual).
Triggers:Yes.
74
<PAGE>
GRAPH--$
75
<PAGE>
MLMI 1991-G
Issue Date:September 1991.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $90,918,370 8.15%
Class B; Subordinate $23,134,255 9.15%
10-year Projected CPR: 10.3%
10-year Projected MHP: 181.5%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to Class B Accelerated Principal Distributions
and a Reserve Fund. The Class B Accelerated Principal
Distribution is paid out of Monthly Excess Cashflow, up to a
maximum of 200 basis points (subject to certain triggers).
The Reserve Fund was funded from an initial deposit of
$7,600,000 by Green Tree, and is available to pay the
Reserve Draw Amount each month to the Class B holders.
Investment Income on funds in the Reserve Fund will be added
to the Reserve Fund. If a Reserve Draw Amount is ever taken
from the Reserve Fund, thereafter the Monthly Excess
Cashflow (after payment of the Class B Accelerated Principal
Distribution) will be deposited in the Reserve Fund until it
equals the Requisite Reserve Amount (equal to the lesser of
the Class B Principal Balance or the amount necessary for
the highest rating on the Class B Certificates). Any amount
in the Reserve Fund in excess of the Requisite Reserve
Amount is released to the Class C holders. The Class C
holders can replace the cash in the Reserve Fund with a
letter of credit. If the amount in the Reserve Fund equals
the Class B Principal Balance (and the pool balance is less
than 10% of the Cut-off Date Pool Principal Balance), the
Trustee is required to use all funds in the Reserve Fund to
repurchase the remaining Contracts and retire the Class B
Certificates. In such event, the repurchased Contracts would
be Class C property.
Nature of Net Excess Cashflow:
1. Class C Certificate (Residual).
Triggers:Yes.
76
<PAGE>
GRAPH--$
77
<PAGE>
MLMI 1991-D
Issue Date:June 1991.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $70,377,030 9.00%
Class B; Subordinate $23,452,303 9.85%
10-year Projected CPR: 10.5%
10-year Projected MHP: 142.1%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to a Limited Guarantee, amounts in the
Guarantee Account, and the Policy issued by FSA.
Under the Limited Guarantee, MaHCS Guaranty Corp., a wholly
owned subsidiary of Green Tree ("MaHCS"), is obligated to
pay the Guarantee Payment (equal to any shortfall on the
Class B Distribution) each month, unless the Policy Amount
has been reduced to zero. Green Tree is not obligated under
the Limited Guarantee.
If MaHCS fails to make a required Guarantee Payment, the
deficiency will be paid by FSA. FSA can order the Trustee to
make a claim under the Policy in excess of the Guaranteed
Shortfall, in which case the proceeds are deposited in the
Reserve Fund, which is not an asset of the Trust. If that
happens, the Trustee will thereafter withdraw funds from the
Reserve Fund before making a claim on the Policy.
The Policy Amount on any Remittance Date is the greater of
(i) the Class B Principal Balance minus all Net Liquidation
Losses reported since February 1, 1992, and (ii) the
Hypothetical Reserve Fund Balance for that Remittance Date.
Nature of Net Excess Cashflow:
1. Class C Certificate (Residual).
Triggers:Yes.
78
<PAGE>
GRAPH--$
79
<PAGE>
MLMI 1991-B
Issue Date:March 1991.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $46,666,849 9.20%
Class B; Subordinate $14,092,749 10.25%
10-year Projected CPR: 10.6%
10-year Projected MHP: 152.1%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to Class B Accelerated Principal Distributions
and a Reserve Fund. There is no Green Tree Guarantee. The
Class B Accelerated Principal Distribution is paid out of
Monthly Excess Cashflow and Investment Income off the
Reserve Fund, up to a maximum of 200 basis points (subject
to certain triggers).
The Reserve Fund was funded from an initial deposit of
$6,200,000 by Green Tree, and is available to pay the
Reserve Draw Amount each month to the Class B holders. If a
Reserve Draw Amount is ever taken from the Reserve Fund,
thereafter the Monthly Excess Cashflow and Investment Income
(after payment of the Class B Accelerated Principal
Distribution) will be deposited in the Reserve Fund until it
equals the Requisite Reserve Amount (equal to the lesser of
the Initial Deposit or the Class B Principal Balance). Any
amount in the Reserve Fund in excess of the Class B
Principal Balance is released to the Class C holders. The
Class C holders can replace the cash in the Reserve Fund
with a letter of credit. If the amount in the Reserve Fund
equals the Class B Principal Balance (and the pool balance
is less than 10% of the Cut-off Date Pool Principal
Balance), the Trustee is required to use all funds in the
Reserve Fund to repurchase the remaining Contracts and
retire the Class B Certificates. In such event, the
repurchased Contracts would be Class C property.
Nature of Net Excess Cashflow:
1.Class C Certificate (Residual).
Triggers:Yes.
80
<PAGE>
GRAPH--$
81
<PAGE>
MLMI 1990-I
Issue Date:December 1990.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $51,824,343 9.20%
Class B; Subordinate $13,895,359 10.00%
10-year Projected CPR: 10.8%
10-year Projected MHP: 179.4%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to Class B Accelerated Principal Distributions
and a Reserve Fund. The Class B Accelerated Principal
Distribution is paid out of Monthly Excess Cashflow and
Investment Income off the Reserve Fund, up to a maximum of
200 basis points (subject to certain triggers).
The Reserve Fund was funded from an initial deposit of
$7,000,000 by Green Tree, and is available to pay the
Reserve Draw Amount (equal to any shortfall in the Class B
distribution) each month to the Class B holders. There is no
Green Tree Guarantee. If a Reserve Draw Amount is ever taken
from the Reserve Fund, thereafter the Monthly Excess
Cashflow and Investment Income (after payment of the Class B
Accelerated Principal Distribution) will be deposited in the
Reserve Fund until it equals the Requisite Reserve Amount
(equal to the lesser of the Initial Deposit or the Class B
Principal Balance). Any amount in the Reserve Fund in excess
of the Class B Principal Balance is released to the Class C
holders. The Class C holders can replace the cash in the
Reserve Fund with a letter of credit.
Nature of Net Excess Cashflow:
1. Class C Certificate (Residual).
Triggers:Yes.
82
<PAGE>
GRAPH--$
83
<PAGE>
MLMI 1990-G
Issue Date:September 1990.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A: Senior $56,868,638 9.75%
Class B: Subordinate $26,662,371 10.75%
10-year Projected CPR: 11.3%
10-year Projected MHP: 185%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to a Green Tree Guarantee. Green Tree is
obligated to pay the Guarantee Amount, equal to the
difference between the Class B Formula Distribution Amount
and the Remaining Amount Available. Green Tree's Guarantee
is backed by a cash Reserve Fund equal to $10,600,000 on the
Closing Date. Green Tree is entitled to replace the cash in
the Reserve Fund with a Letter of Credit issued by a
Qualified Bank.
Nature of Net Excess Cashflow:
1. Guarantee Fee equal to the lesser of (a) the Amount
Available less the Class A Distribution Amount and the Class
B Distribution Amount, and (b) 400 basis points.
2. Class C Certificate (Residual).
Triggers:Yes.
84
<PAGE>
GRAPH--$
85
<PAGE>
MLMI 1990-D
Issue Date:June 1990.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $46,016,910 9.70%
Class B; Subordinate $23,651,365 10.60%
10-year Projected CPR: 11.6%
10-year Projected MHP: 173.1%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to a "Collateral Draw Amount," equal to any
shortfall suffered by the Class B certificateholders,
subject to the limit of the "Available Collateral Amount."
If Green Tree fails to pay a Collateral Draw Amount, the
Collateral Agent must withdraw cash from the Reserve Fund.
The Collateral consists of cash. Green Tree may replace the
cash with a Letter of Credit. The Available Collateral
Amount equals (i) the Available Cash (initially $3,500,000)
plus (ii) the lesser of (a) 5.36% of the Pool Scheduled
Principal Balance or (b) $6,300,000 minus all Collateral
Draw Amounts heretofore paid, whether by Green Tree or upon
liquidation of the Collateral, but in no event greater than
the Class B Principal Balance. The Monthly Servicing Fee and
the Collateral Guarantee Fee payable to Green Tree are also
subordinated to Class B cashflow.
Nature of Net Excess Cashflow:
1. Collateral Guarantee Fee, equal to 335 basis points.
2. Class C Certificate (Residual).
Triggers: Yes.
86
<PAGE>
GRAPH--$
87
<PAGE>
MLMI 1990-B
Issue Date:March 1990.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $31,111,523 9.80%
Class B; Subordinate $17,158,025 10.75%
10-year Projected CPR: 11.5%
10-year Projected MHP: 180.6%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to a "Collateral Draw Amount,' equal to any
shortfall suffered by the Class B Certificateholders,
subject to the limit of the "Available Collateral Amount."
If Green Tree fails to pay a Collateral Draw Amount, the
Collateral Agent must liquidate the Collateral in order to
make the payment.
The Collateral consists of FHA-insured mobile home contracts
with a Market Value (marked to market weekly) equal to at
least 112% of the Available Collateral Amount. The Available
Collateral Amount is defined as $8,500,000 minus all
Collateral Draw Amounts theretofore paid, whether by Green
Tree or upon liquidation of Collateral, but in no event
greater than the Class B Principal Balance. The Monthly
Servicing Fee and the Collateral Guarantee Fee payable to
Green Tree are also subordinated to Class B cashflow.
Nature of Net Excess Cashflow:
1. Collateral Guarantee Fee, equal to 299 basis points.
2. Class C Certificate (Residual).
Triggers:Yes.
88
<PAGE>
GRAPH--$
89
<PAGE>
MLMI 1989-H
Issue Date:December 1989.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $45,552,825 9.20%
Class B; Subordinate $25,559,825 10.00%
10-year Projected CPR: 11.1%
10-year Projected MHP: 171.8%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to a Limited Guarantee and amounts in the
Guarantee Account, the Policy and the Supplemental Reserve
Fund.
Under the Limited Guarantee, MaHCS is obligated to pay the
Guarantee Payment (equal to any shortfall on the Class B
distribution) each month, unless the Policy Amount has been
reduced to zero. If the Policy Amount has been reduced to
zero, Green Tree becomes obligated to make any Guarantee
Payments.
If MaHCS fails to make a required Guarantee Payment, the
deficiency will be paid by FSA. FSA can order the Trustee to
make a claim under the Policy in excess of the Guaranteed
Shortfall, in which case the proceeds are deposited in the
Reserve Fund, which is not an asset of the Trust. If that
happens, the Trustee will thereafter withdraw funds from the
Reserve Fund before making a claim on the Policy.
If all the above entities have failed to pay the Guarantee
Payment, the Trustee is to withdraw funds from the
Supplemental Reserve Fund (if there are any).
Nature of Net Excess Cashflow:
1. Limited Guarantee Fee of up to 300 basis points.
2. Class C Certificate (Residual).
Triggers:Yes.
90
<PAGE>
GRAPH--$
91
<PAGE>
MLMI 1989-F
Issue Date:October 1989.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $49,922,466 9.75%
Class B; Subordinate $32,307,576 9.75%
10-year Projected CPR: 11.5%
10-year Projected MHP: 139.1%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to a Limited Guarantee and amounts in the
Guarantee Account and the Policy issued by FSA.
Under the Limited Guarantee, MaHCS is obligated to pay the
Guarantee Payment (equal to any shortfall on the Class B
distribution) each month, unless the Policy Amount has been
reduced to zero. If the Policy Amount has been reduced to
zero, Green Tree becomes obligated to make any Guarantee
Payments.
If MaHCS fails to make a required Guarantee Payment, the
deficiency will be paid by FSA. FSA can order the Trustee to
make a claim under the Policy in excess of the Guaranteed
Shortfall, in which case the proceeds are deposited in the
Reserve Fund, which is not an asset of the Trust. If that
happens, the Trustee will thereafter withdraw funds from the
Reserve Fund before making a claim on the Policy.
Nature of Net Excess Cashflow:
1. Limited Guarantee Fee of up to 300 basis points.
2. Class C Certificate (Residual).
Triggers:Yes.
92
<PAGE>
GRAPH--$
93
<PAGE>
MLMI 1989-D
Issue Date:June 1989.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities Balance Rate
- ------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $34,247,084 9.45%
Class B; Subordinate $25,453,104 11.80%
10-year Projected CPR: 11.6%
10-year Projected MHP: 151.2%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to a Green Tree Guarantee.
Nature of Net Excess Cashflow:
1. Class C Certificate (Residual).
Triggers:None.
94
<PAGE>
GRAPH--$
95
<PAGE>
MLMI 1989-B
Issue Date:March 1989.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $15,582,153 10.80%
Class B; Senior $ 4,311,392 10.80%
Class C; Subordinate $ 9,238,696 10.80%
10-year Projected CPR: 11.5%
10-year Projected MHP: 57.9%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A and Class B Certificates are supported by the
subordination of the Class C Certificates. The Class C
Certificateholders are entitled to a Green Tree Guarantee.
The Guarantee Payment equals any shortfall in the Class C
Distribution Amount.
Nature of Net Excess Cashflow:
1. Class D Certificate (Residual). There is no Guarantee
Fee.
Triggers:None.
96
<PAGE>
GRAPH--$
97
<PAGE>
MLMI 1988-X
Issue Date:December 1988.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities Balance Rate
- ------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $27,839,551 10.25%
Class B; Subordinate $22,169,062 10.25%
10-year Projected CPR: 10.5%
10-year Projected MHP: 228.2%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to a Green Tree Guarantee. The Guarantee
Payment will cover all shortfalls in Class B distributions.
Nature of Net Excess Cashflow:
1. Class C Certificate (Residual). There is no Guarantee
Fee.
Triggers:None.
98
<PAGE>
GRAPH--$
99
<PAGE>
MLMI 1988-Q
Issue Date:September 1988.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities Balance Rate
- ------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $35,503,970 9.80%
Class B; Subordinate $27,780,449 9.80%
10-year Projected CPR: 10.3%
10-year Projected MHP: 218.2%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The Class B Certificateholders
are entitled to a Green Tree Guarantee. The Guarantee
Payment will cover all shortfalls in Class B distributions.
Nature of Net Excess Cashflow:
1. Class C Certificate (Residual). There is no Guarantee
Fee.
Triggers:None.
100
<PAGE>
GRAPH-$
101
<PAGE>
MLMI 1988-H
Issue Date:June 1988.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A; Senior $22,181,846 9.70%
Class B; Subordinate $18,298,417 9.70%
10-year Projected CPR: 9.6%
10-year Projected MHP: 201.3%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates. The subordination of the Class
C distributions.
Nature of Net Excess Cashflow:
1. Class C Certificate (Residual).
Triggers:None.
102
<PAGE>
GRAPH--$
103
<PAGE>
MLMI 1988-E
Issue Date:March 1988.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A $44,405,568 9.55%
10-year Projected CPR: 9.5%
10-year Projected MHP: 199.2%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificateholders are entitled to a Limited
Guarantee and amounts in the Guarantee Account and the
Policy issued by FSA.
Under the Limited Guarantee, MaHCS is obligated to pay the
Guarantee Payment (equal to all Delinquent Payments and the
Repurchase Price of all Defaulted Contracts) each month,
unless the Policy Amount has been reduced to zero. If the
Policy Amount has been reduced to zero, or if MaHCS fails to
make a required Guarantee Payment, the Trustee will offset
from the Limited Guarantee Fee otherwise payable to MaHCS
the amount of such Guarantee Payment.
If MaHCS fails to make a required Guarantee Payment and the
Limited Guarantee Fee is insufficient to provide such
amount, any such deficiency will be paid by FSA. FSA can
order the Trustee to make a claim under the Policy in excess
of the Guaranteed Shortfall, in which case the proceeds are
deposited in the Reserve Fund, which is not an asset of the
Trust. If that happens, the Trustee will thereafter withdraw
funds from the Reserve Fund before making a claim on the
Policy.
MaHCS is also obligated to repurchase defective Contracts
not repurchased by Green Tree, subject to the limit of the
Repurchase Obligation Amount. That obligation is also
covered by the Policy.
The "Guarantee Amount" equals $ minus unrecovered
delinquencies and losses on Defaulted Contracts since
, and minus all Defective Contracts repurchased by
MaHCS or FSA.
Nature of Net Excess Cashflow:
1. Limited Guarantee Fee.
Triggers:Yes.
104
<PAGE>
GRAPH--$
105
<PAGE>
MLMI 1987-C
Issue Date:December 1987.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A $42,596,425 10.10%
10-year Projected CPR: 9.9%
10-year Projected MHP: 203.3%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificateholders are entitled to a Limited
Guarantee and amounts in the Guarantee Account and the
Policy issued by FSA.
Under the Limited Guarantee, MaHCS is obligated to pay the
Guarantee Payment (equal to all Delinquent Payments and the
Repurchase Price of all Defaulted Contracts) each month,
unless the Policy Amount has been reduced to zero. If the
Policy Amount has been reduced to zero, or if MaHCS fails to
make a required Guarantee Payment, the Trustee will offset
from the Limited Guarantee Fee otherwise payable to MaHCS
the amount of such Guarantee Payment.
If MaHCS fails to make a required Guarantee Payment and the
Limited Guarantee Fee is insufficient to provide such
amount, any such deficiency will be paid by FSA. FSA can
order the Trustee to make a claim under the Policy in excess
of the Guaranteed Shortfall, in which case the proceeds are
deposited in the Reserve Fund, which is not an asset of the
Trust. If that happens, the Trustee will thereafter withdraw
funds from the Reserve Fund before making a claim on the
Policy.
MaHCS is also obligated to repurchase defective Contracts
not repurchased by Green Tree, subject to the limit of the
Repurchase Obligation Amount. That obligation is also
covered by the Policy.
The "Guarantee Amount" equals $ minus unrecovered
delinquencies and losses on Defaulted Contracts since ,
and minus all Defective Contracts repurchased by MaHCS or
FSA.
Nature of Net Excess Cashflow:
1. Limited Guarantee Fee.
Triggers:Yes.
106
<PAGE>
GRAPH--$
107
<PAGE>
MLMI 1987-B
Issue Date:October 1987.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A $26,386,246 10.20%
10-year Projected CPR: 8.6%
10-year Projected MHP: 186.9%
</TABLE>
REMIC/Grantor Trust:REMIC.
Credit Enhancement:
The Class A Certificateholders are entitled to a Limited
Guarantee and amounts in the Guarantee Account and the
Policy issued by FSA.
Under the Limited Guarantee, MaHCS is obligated to pay the
Guarantee Payment (equal to all Delinquent Payments and the
Repurchase Price of all Defaulted Contracts) each month,
unless the Policy Amount has been reduced to zero. If the
Policy Amount has been reduced to zero, of if MaCHS fails to
make a required Guarantee Payment, the Trustee will offset
from the Limited Guarantee Fee otherwise payable to MaCHS at
the amount of such Guarantee Payment.
If MaHCS fails to make a required Guarantee Payment and the
Limited Guarantee Fee is insufficient to provide such
amount, any such deficiency will be paid by FSA. FSA can
order the Trustee to make a claim under the Policy in excess
of the Guaranteed Shortfall, in which case the proceeds are
deposited in the Reserve Fund, which is not an asset of the
Trust. If that happens, the Trustee will thereafter withdraw
funds from the Reserve Fund before making a claim on the
Policy.
The "Guarantee Amount" equals $ minus unrecovered
delinquencies and losses on Defaulted Contracts since ,
.
Nature of Net Excess Cashflow:
1. Limited Guarantee Fee.
Triggers:Yes.
108
<PAGE>
GRAPH--$
109
<PAGE>
MaHCS 1987-B
Issue Date:June 1987.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A $52,621,317 9.55%
10-year Projected CPR: 9.5%
10-year Projected MHP: 187.3%
</TABLE>
REMIC/Grantor Trust:Grantor trust.
Credit Enhancement:
The Class A Certificateholders are entitled to a Limited
Guarantee and amounts in the Guarantee Account and the
Policy issued by FSA.
Under the Limited Guarantee, MaHCS is obligated to pay the
Guarantee Payment (equal to all Delinquent Payments and the
Repurchase Price of all Defaulted Contracts) each month,
unless the Policy Amount has been reduced to zero. If the
Policy Amount has been reduced to zero, or if MaHCS fails to
make a required Guarantee Payment, the Trustee will offset
from the Limited Guarantee Fee otherwise payable to MaHCS
the amount of such Guarantee Payment.
If MaHCS fails to make a required Guarantee Payment and the
Limited Guarantee Fee is insufficient to provide such
amount, any such deficiency will be paid by FSA. FSA can
order the Trustee to make a claim under the Policy in excess
of the Guaranteed Shortfall, in which case the proceeds are
deposited in the Reserve Fund, which is not an asset of the
Trust. If that happens, the Trustee will thereafter withdraw
funds from the Reserve Fund before making a claim on the
Policy.
The "Guarantee Amount" equals $25,000,000 minus unrecovered
delinquencies and losses on Defaulted Contracts since
February 17, 1992.
Nature of Net Excess Cashflow:
1. Limited Guarantee Fee.
Triggers:Yes.
110
<PAGE>
GRAPH--$
111
<PAGE>
MaHCS 1987-A
Issue Date:March 1987.
<TABLE>
<CAPTION>
Pass-
Current Through
Description of Securities: Balance Rate
- -------------------------- ----------- -------
<S> <C> <C>
Class A $18,590,024 8.55%
10-year Projected CPR: 8.9%
10-year Projected MHP: 173.5%
</TABLE>
REMIC/Grantor Trust:Grantor trust.
Credit Enhancement:
The Class A Certificateholders are entitled to a Limited
Guarantee and amounts in the Guarantee Account and the
Policy issued by FSA.
Under the Limited Guarantee, MaHCS is obligated to pay the
Guarantee Payment (equal to all Delinquent Payments and the
Repurchase Price of all Defaulted Contracts) each month,
unless the Policy Amount has been reduced to zero. If the
Policy Amount has been reduced to zero, or if MaHCS fails to
make a required Guarantee Payment, the Trustee will offset
from the Limited Guarantee Fee otherwise payable to MaHCS
the amount of such Guarantee Payment. If the Limited
Guarantee Fee is insufficient to enable MaHCS to make the
Guarantee Payment, MaHCS will draw the remainder under the
demand note issued to it by Green Tree.
If MaHCS fails to make a required Guarantee Payment and the
Limited Guarantee is insufficient to provide such amount,
any such deficiency will be paid by FSA. FSA can order the
Trustee to make a claim under the Policy in excess of the
Guaranteed Shortfall, in which case the proceeds are
deposited in the Reserve Fund, which is not an asset of the
Trust. If that happens, the Trustee will thereafter withdraw
funds from the Reserve Fund before making a claim on the
Policy.
The "Guarantee Amount" equals $9,500,000 minus unrecovered
delinquencies and losses on Defaulted Contracts since
February 17, 1992.
Nature of Net Excess Cashflow:
1. Limited Guarantee Fee.
Triggers:Yes.
112
<PAGE>
GRAPH--$
113
<PAGE>
III. THE GNMA POOLS
114
<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..................................................... 7
Summary of Transaction..................................................... 8
Green Tree Financial Corporation........................................... 10
The Trust.................................................................. 12
Historical and Projected Net Excess Cashflow...............................
The Trust Property......................................................... 22
Yield, Average Life and Prepayment Considerations..........................
Description of the Certificates............................................ 38
Description of the Trust Documents......................................... 42
Certain Federal Income Tax Consequences.................................... 45
ERISA Considerations....................................................... 48
Legal Investment Considerations............................................ 50
Underwriting............................................................... 50
Legal Matters.............................................................. 51
Appendix I................................................................. 52
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$539,000,000 (APPROXIMATE)
LOGO
GREEN TREE SECURITIZED NET INTEREST MARGIN TRUST 1994-A
% SECURITIZED NET INTEREST MARGIN CERTIFICATES
---------------
PROSPECTUS
January , 1994
---------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC registration fee........................................... $185,862.06
Blue Sky fees and expenses..................................... *
Accountant's fees and expenses................................. *
Attorney's fees and expenses................................... 75,000**
Trustee's fees and expenses....................................
Printing and engraving expenses................................ 50,000**
Rating Agency fees............................................. *
Miscellaneous.................................................. *
-----------
Total........................................................ $ *
===========
</TABLE>
--------
* To be filed by amendment
** Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 302A.521 of the Minnesota Statutes requires Green Tree ("the
Company") to indemnify a person made or threatened to be made a party to a
proceeding by reason of the former or present official capacity of the person
with respect to the Company, against judgments, penalties, fines, including
reasonable expenses, if such person (1) has not been indemnified by another
organization or employee benefit plan for the same judgments, penalties, fines,
including without limitations, excise taxes assessed against the person with
respect to an employee benefit plan, settlements, and reasonable expenses,
including attorneys' fees and disbursements, incurred by the person in
connection with the proceeding with respect to the same acts or omissions; (2)
acted in good faith; (3) received no improper personal benefit, and statutory
procedure has been followed in the case of any conflict of interest by a
director; (4) in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and (5) in the case of acts or omissions
occurring in the person's performance in the official capacity of director or,
for a person not a director, in the official capacity of officer, committee
member, employee or agent, reasonably believed that the conduct was in the best
interests of the Company, or, in the case of performance by a director,
officer, employee or agent of the Company as a director, officer, partner,
trustee, employee or agent of another organization or employee benefit plan,
reasonably believed that the conduct was not opposed to be best interests of
the Company, unless otherwise limited by the Articles of Incorporation or
Bylaws of the Company. In addition, Section 302A.521, subd. 3, requires payment
by the Company, upon written request, of reasonable expenses in advance of
final disposition in certain instances, upon receipt of a written undertaking
by the person to repay all amounts so paid if it is ultimately determined that
the person is not entitled to indemnification, unless otherwise limited by the
Articles of Incorporation or Bylaws of the Company. A decision as to required
indemnification is made by a disinterested majority of the Board of Directors
present at a meeting at which a disinterested quorum is present, or by a
designated committee of the Board, by special legal counsel, by the
shareholders, or by a court.
The Company's Articles of Incorporation provide that a director is not liable
to the Company or its shareholders for monetary damages for a breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its shareholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law; (iii) under Sections 302A.559 or 80A.23 of the
Minnesota Statutes; (iv) for any transaction from which the director derived an
improper personal benefit; or (v) for any act or omission occurring prior to
the date such indemnification provision became effective.
The Company maintains a directors' and officers' insurance policy.
II-1
<PAGE>
Pursuant to the form of Underwriting Agreement, a copy of which is included
as Exhibit 1.1 hereto, the Underwriters will agree, subject to certain
conditions, to indemnify the Company, its directors, certain of its officers
and persons who control the Company within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), against certain liabilities.
ITEM 16. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Not Applicable
(b) Exhibits:
<TABLE>
<C> <S>
*1.1 Proposed form of Underwriting Agreement
**3.1 Articles of Incorporation of Green Tree Financial Corporation
**3.2 Bylaws of Green Tree Financial Corporation
*4.1 Form of Trust Agreement
*4.2 Form of Transfer Agreement between Green Tree Financial Corporation
and Finance I
*4.3 Form of Transfer Agreement between Green Tree Financial Corporation
and Finance II
*4.4 Form of Transfer Agreement among Finance I, Finance II and the Trust
*4.5 Form of Finance I Note
*4.6 Form of Servicing Agreement between Green Tree Financial Corporation
and the Trust
*5.1 Opinion and consent of Dorsey & Whitney as to legality
*8.1 Opinion of Dorsey & Whitney as to tax matters
***21.1 Subsidiaries of the Registrant
23.1 Consent of Dorsey & Whitney (included as part of Exhibit 5.1)
24.1 Power of attorney from officers and directors of the Registrant
signed by an attorney-in-fact (included on page II-4)
</TABLE>
--------
* To be filed by amendment.
** Incorporated by reference to the similarly numbered exhibit to the
Registrant's Registration Statement on Form S-11 (File No. 33-50236),
as amended, which became effective on September 11, 1992.
*** Incorporated by reference to Exhibit 22.1 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1992.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as a part
of this registration statement in reliance upon Rule
II-2
<PAGE>
430A and contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF SAINT PAUL, STATE OF MINNESOTA, ON JANUARY 18, 1994.
Green Tree Financial Corporation
/s/ Lawrence M. Coss
By: _________________________________
LAWRENCE M. COSS
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATE INDICATED. EACH PERSON WHOSE SIGNATURE TO THIS REGISTRATION STATEMENT
APPEARS BELOW HEREBY CONSTITUTES AND APPOINTS JOHN W. BRINK AND RICHARD G.
EVANS, AND EACH OF THEM, AS HIS TRUE AND LAWFUL ATTORNEY-IN-FACT AND AGENT,
WITH FULL POWER OF SUBSTITUTION, TO SIGN ON HIS BEHALF INDIVIDUALLY AND IN THE
CAPACITY STATED BELOW AND TO PERFORM ANY ACTS NECESSARY TO BE DONE IN ORDER TO
FILE ALL AMENDMENTS AND POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION
STATEMENT, AND ANY AND ALL INSTRUMENTS OR DOCUMENTS FILED AS PART OF OR IN
CONNECTION WITH THIS REGISTRATION STATEMENT OR THE AMENDMENTS THERETO AND EACH
OF THE UNDERSIGNED DOES HEREBY RATIFY AND CONFIRM ALL THAT SAID ATTORNEY-IN-
FACT AND AGENT, OR HIS SUBSTITUTES, SHALL DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.
SIGNATURE TITLE DATE
/s/ Lawrence M. Coss Chairman of the January 18,
- ------------------------------------- Board and Chief 1994
LAWRENCE M. COSS Executive Officer
(Principal
Executive Officer)
and Director
/s/ John W. Brink Executive Vice January 18,
- ------------------------------------- President, 1994
JOHN W. BRINK Treasurer and Chief
Financial Officer
(Principal
Financial Officer)
/s/ Robley D. Evans Vice President and January 18,
- ------------------------------------- Controller 1994
ROBLEY D. EVANS (Principal
Accounting Officer)
/s/ Richard G. Evans Director January 18,
- ------------------------------------- 1994
RICHARD G. EVANS
II-4
<PAGE>
SIGNATURE TITLE DATE
/s/ C. Thomas May, Jr. Director January 14,
- ------------------------------------- 1994
C. THOMAS MAY, JR.
/s/ W. Max McGee Director January 18,
- ------------------------------------- 1994
W. MAX MCGEE
/s/ Robert S. Nickoloff Director January 18,
- ------------------------------------- 1994
ROBERT S. NICKOLOFF
/s/ Kenneth S. Roberts Director January 18,
- ------------------------------------- 1994
KENNETH S. ROBERTS
II-5
<PAGE>
A diagram entitled "Structural Diagram" shows the legal structure of the
transfer of the Fee Assets and the Residual Assets and the creation of the
Trust. Using a combination of boxes and arrows, the diagram illustrates the
transfer by Green Tree to its subsidiaries of the Fee Assets and the Residual
Assets, the transfer of the Residual Assets to the Trust and the issuance of the
Finance 1 Note to the Trust, and the issuance by the Trust of the Certificates
and the Subordinated Certificates.
A graph entitled "Weighted Average Projected Prepayment Rates (CPR), Decreasing
Interest Rate Scenarios" shows 4 different prepayment rates for all of the
Contracts, assuing 4 "Interest Rate Shifts":
(1) the Base Case (average CPR=7%)
(2) -100 basis points (average CPR=8%)
(3) -200 basis points (average CPR=10%)
(4) -300 basis points (average CPR=12%)
These 4 projected prepayment rates are plotted on the graph as annualized
constant prepayment rates (CPRs) for each year beginning in December 1993.
A graph entitled "Weighted Average Projected Prepayment Rated (CPR), Increasing
Interest Rate Scenarios" shows 4 different projected prepayment rates for all of
the Contracts, assuming 4 "Interest Rate Shifts":
(1) the Base Case (average CPR=7%)
(2) -100 basis points (average CPR=6%)
(3) -200 basis points (average CPR=5%)
(4) -300 basis points (average CPR=5%)
These 4 projected prepayment rates are plotted on the graph as annualized
constant prepayment rates (CPRs) for each year beginning in December 1993.
A graph entitled "Weighted Average Projected Default Curve (CDR)" shows the
weighted average projected conditional default rate (CDR) is plotted on the
graph for each year beginning in December 1993.
A graph entitled "Weighted Average Projected Recovery Curve" shows the weighted
average projected rate of recovery for all the Contracts. The projected
recovery percentage is plotted on the graph for each year beginning in December
1993.
<PAGE>
A graph entitled "GNMA Master Projected Cashflows" shows 5 factors with respect
to GNMA Master Projected Cashflows:
(1) Net Excess Spread
(2) Make-up Deposit
(3) FHA Insurance Payment
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning October 1993 through October 2012.
A graph entitled "Total GNMA and Securitized Conventional Cashflows" shows 3
factors with respect to Total GNMA and Securitized Conventional Cashflows:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Expenses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning February 1987 through February 2018.
A graph entitled "Total Securitized Conventional Cashflows" shows 5 factors with
respect to Total Securitized Conventional Cashflows:
(1) Net Excess Spread
(2) Reserve Fund
(3) Class B Principal Acceleration
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning March 1987 through March 2018.
A graph entitled "Total GNMA Cashflows" shows 5 factors with respect to Total
GNMA Cashflows:
(1) Net Excess Spread
(2) Make-up Deposit
(3) FHA Insurance Payment
(4) GT Servicing Fee
(5) Liquidation Losses
-2-
<PAGE>
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning January 1987 through January 2013.
A graph entitled "GTFC 1993-4 Cashflows" shows 3 factors with respect to
Securitized Pool GTFC 1993-4:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning December 1993 through December 2018.
A graph entitled "GTFC 1993-3 Cashflows" shows 3 factors with respect to
Securitized Pool GTFC 1993-3:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning September 1993 through September 2017.
A graph entitled "GTFC 1993-2 Cashflows" shows 3 factors with respect to
Securitized Pool GTFC 1993-2:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning June 1993 through June 2017.
A graph entitled "GTFC 1993-1 Cashflows" shows 3 factors with respect to
Securitized Pool GTFC 1993-1:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
-3-
<PAGE>
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning March 1993 through March 2017.
A graph entitled "GTFC 1992-2 Cashflows" shows 3 factors with respect to
Securitized Pool GTFC 1992-2:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graphs aggregate dollar amounts for each
month beginning December 1992 through December 2016.
A graph entitled "GTFC 1992-1 Cashflows" shows 4 factors with respect to
Securitized Pool GTFC 1992-1:
(1) Net Excess Spread
(2) Class B Principal Acceleration
(3) GT Servicing Fee
(4) Liquidation Losses
These 4 factors are plotted on the graph as aggregate dollar amounts for each
month beginning September 1992 through September 2016.
A graph entitled "MLMI 1992-D Cashflows" shows 5 factors with respect to
Securitized Pool MLMI 1992-D:
(1) Net Excess Spread
(2) Reserve Fund
(3) Class B Principal Acceleration
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning June 1992 through June 2016.
-4-
<PAGE>
A graph entitled "MLMI 1992-B Cashflows" shows 5 factors with respect to
Securitized Pool MLMI 1992-B:
(1) Net Excess Spread
(2) Reserve Fund
(3) Class B Principal Acceleration
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning March 1992 through March 2011.
A graph entitled "MLMI 1991-I Cashflows" shows 5 factors with respect to
Securitized Pool MLMI 1991-I:
(1) Net Excess Spread
(2) Reserve Fund
(3) Class B Principal Acceleration
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning December 1991 through December 2010.
A graph entitled "MLMI 1991-G Cashflows" shows 5 factors with respect to
Securitized Pool MLMI 1991-G:
(1) Net Excess Spread
(2) Reserve Fund
(3) Class B Principal Acceleration
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning September 1991 through September 2010.
-5-
<PAGE>
A graph entitled "MLMI 1991-D Cashflows" shows 4 factors with respect to
Securitized Pool MLMI 1991-D:
(1) Net Excess Spread
(2) Reserve Fund Deposit
(3) GT Servicing Fee
(4) Liquidation Losses
These 4 factors are plotted on the graph as aggregate dollar amounts for each
month beginning June 1991 through June 2010.
A graph entitled "MLMI 1991-B Cashflows" shows 5 factors with respect to
Securitized Pool MLMI 1991-B:
(1) Net Excess Spread
(2) Reserve Fund
(3) Class B Principal Acceleration
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning March 1991 through March 2010.
A graph entitled "MLMI 1990-I Cashflows" shows 5 factors with respect to
Securitized Pool MLMI 1990-I:
(1) Net Excess Spread
(2) Reserve Fund
(3) Class B Principal Acceleration
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning December 1990 through December 2009.
-6-
<PAGE>
A graph entitled "MLMI 1990-G Cashflows" shows 4 factors with respect to
Securitized Pool MLMI 1990-G:
(1) Net Excess Spread
(2) Reserve Fund Deposit
(3) GT Servicing Fee
(4) Liquidation Losses
These 4 factors are plotted on the graph as aggregate dollar amounts for each
month beginning September 1990 through September 2009.
A graph entitled "MLMI 1990-D Cashflows" shows 3 factors with respect to
Securitized Pool MLMI 1990-D:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graphs aggregate dollar amounts for each
month beginning June 1990 through June 2009.
A graph entitled "MLMI 1990-B Cashflows" shows 3 factors with respect to
Securitized Pool MLMI 1990-B:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning March 1990 through March 2009.
A graph entitled "MLMI 1989-H Cashflows" shows 3 factors with respect to
Securitized Pool MLMI 1989-H:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning December 1989 through December 2008.
-7-
<PAGE>
A graph entitled "MLMI 1989-F Cashflows" shows 4 factors with respect to
Securitized Pool MLMI 1989-F:
(1) Net Excess Spread
(2) Spread Account Deposit
(3) GT Servicing Fee
(4) Liquidation Losses
These 4 factors are plotted on the graph as aggregate dollar amounts for each
month beginning September 1989 through September 2008.
A graph entitled "MLMI 1989-D Cashflows" shows 3 factors with respect to
Securitized Pool MLMI 1989-D:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning June 1989 through June 2009.
A graph entitled "MLMI 1989-B Cashflows" shows 3 factors with respect to
Securitized Pool MLMI 1989-B:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning March 1989 through March 2008.
A graph entitled "MLMI 1988-X Cashflows" shows 3 factors with respect to
Securitized Pool MLMI 1988-X:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning December 1988 through December 2007.
-8-
<PAGE>
A graph entitled "MLMI 1988-Q Cashflows" shows 3 factors with respect to
Securitized Pool MLMI 1988-Q:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning September 1988 through September 2007.
A graph entitled "MLMI 1988-H Cashflows" shows 3 factors with respect to
Securitized Pool MLMI 1988-H:
(1) Net Excess Spread
(2) GT Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning June 1988 through June 2007.
A graph entitled "MLMI 1988-E Cashflows" shows 2 factors with respect to
Securitized Pool MLMI 1988-E:
(1) Net Excess Spread
(2) GT Servicing Fee
These 2 factors are plotted on the graph as aggregate dollar amounts for each
month beginning March 1988 through March 2007.
A graph entitled "MLMI 1987-C Cashflows" shows 2 factors with respect to
Securitized Pool MLMI 1987-C:
(1) Net Excess Spread
(2) GT Servicing Fee
These 2 factors are plotted on the graph as aggregate dollar amounts for each
month beginning December 1987 through December 2006.
-9-
<PAGE>
A graph entitled "MLMI 1987-B Cashflows" shows 2 factors with respect to
Securitized Pool MLMI 1987-B:
(1) Net Excess Spread
(2) GT Servicing Fee
These 2 factors are plotted on the graph as aggregate dollar amounts for each
month beginning September 1987 through September 2005.
A graph entitled "MaHCS 1987-B Cashflows" shows 2 factors with respect to
Securitized Pool MaHCS 1987-B:
(1) Net Excess Spread
(2) GT Monthly Servicing
These 2 factors are plotted on the graph as aggregate dollar amounts for each
month beginning June 1987 through June 2006.
A graph entitled "Mahcs 1987-A Cashflows" shows 2 factors with respect to
Securitized Pool MaHCS 1987-A:
(1) Net Excess Spread
(2) GT Servicing Fee
These 2 factors are plotted on the graph as aggregate dollar amounts for each
month beginning March 1987 through March 2006.
A graph entitled "GNMA 1993 Cashflows" shows 5 factors with respect to GNMA 1993
Cashflows:
(1) Net Excess Spread
(2) Make-up Deposit
(3) FHA Insurance Payment
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning January 1993 through January 2013.
-10-
<PAGE>
A graph entitled "GNMA 1992 Cashflows" shows 5 factors with respect to GNMA 1992
Cashflows:
(1) Net Excess Spread
(2) Make-up Deposit
(3) FHA Insurance Payment
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning January 1992 through January 2012.
A graph entitled "GNMA 1991 Cashflows" shows 5 factors with respect to GNMA 1991
Cashflows:
(1) Net Excess Spread
(2) Make-up Deposit
(3) FHA Insurance Payment
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning January 1991 through January 2011.
A graph entitled "GNMA 1990 Cashflows" shows 5 factors with respect to GNMA 1990
Cashflows:
(1) Net Excess Spread
(2) Make-up Deposit
(3) FHA Insurance Payment
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning January 1990 through January 2010.
-11-
<PAGE>
A graph entitled "GNMA 1989 Cashflows" shows 5 factors with respect to GNMA 1989
Cashflows:
(1) Net Excess Spread
(2) Make-up Deposit
(3) FHA Insurance Payment
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning January 1989 through January 2009.
A graph entitled "GNMA 1988 Cashflows" shows 5 factors with respect to GNMA 1988
Cashflows:
(1) Net Excess Spread
(2) Make-up Deposit
(3) FHA Insurance Payment
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning January 1988 through January 2008.
A graph entitled "GNMA 1987 Cashflows" shows 5 factors with respect to GNMA 1987
Cashflows:
(1) Net Excess Spread
(2) Make-up Deposit
(3) FHA Insurance Payment
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning January 1987 through January 2007.
-12-
<PAGE>
A graph entitled "GNMA 1986 Cashflows" shows 5 factors with respect to GNMA 1986
Cashflows:
(1) Net Excess Spread
(2) Make-up Deposit
(3) FHA Insurance Payment
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning January 1986 through January 2006.
A graph entitled "GNMA 1985 Cashflows" shows 5 factors with respect to GNMA 1985
Cashflows:
(1) Net Excess Spread
(2) Make-up Deposit
(3) FHA Insurance Payment
(4) GT Servicing Fee
(5) Liquidation Losses
These 5 factors are plotted on the graph as aggregate dollar amounts for each
month beginning January 1985 through January 2008.
-13-
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S> <C>
*1.1 Proposed form of Underwriting Agreement
**3.1 Articles of Incorporation of Green Tree Financial Corporation
**3.2 Bylaws of Green Tree Financial Corporation
*4.1 Form of Trust Agreement
*4.2 Form of Transfer Agreement between Green Tree Financial
Corporation and Finance I
*4.3 Form of Transfer Agreement between Green Tree Financial
Corporation and Finance II
*4.4 Form of Transfer Agreement among Finance I, Finance II and the
Trust
*4.5 Form of Finance I Note
*4.6 Form of Servicing Agreement between Green Tree Financial
Corporation and the Trust
*5.1 Opinion and consent of Dorsey & Whitney as to legality
*8.1 Opinion of Dorsey & Whitney as to tax matters
***21.1 Subsidiaries of the Registrant
23.1 Consent of Dorsey & Whitney (included as part of Exhibit 5.1)
24.1 Power of attorney from officers and directors of the Registrant
signed by an attorney-in-fact (included on page II-4)
</TABLE>
- --------
* To be filed by amendment.
** Incorporated by reference to the similarly numbered exhibit to the
Registrant's Registration Statement on Form S-11 (File No. 33-50236), as
amended, which became effective on September 11, 1992.
*** Incorporated by reference to Exhibit 22.1 of the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1992.
