<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 27, 1998
GREEN TREE FINANCIAL CORPORATION
--------------------------------
(Exact name of registrant as specified in its charter)
01-08916
Delaware [333-49933/333-63265] 41-1807858
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification No.)
1100 Landmark Towers, 345 St. Peter Street, Saint Paul, Minnesota 55102-1639
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(Address of principal executive offices)
Registrant's telephone number, including area code: (612) 293-3400
--------------
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 1. Changes in Control of Registrant.
---------------------------------
Not applicable.
Item 2. Acquisition or Disposition of Assets.
-------------------------------------
Not applicable.
Item 3. Bankruptcy or Receivership.
---------------------------
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
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Not applicable.
Item 5. Other Events.
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Not applicable.
Item 6. Resignations of Registrant's Directors.
---------------------------------------
Not applicable.
Item 7. Financial Statements and Exhibits.
----------------------------------
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
The following is filed herewith. The exhibit numbers
correspond with Item 601(b) of Regulation S-K.
2
<PAGE>
Exhibit No. Description
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99 External Computational and Descriptive
Information distributed in connection with
Certificates for Manufactured Housing
Contract Senior/Subordinate Pass-Through
Certificates, Series 1998-8, issued by
Green Tree Financial Corporation, as Seller
and Servicer.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
GREEN TREE FINANCIAL CORPORATION
By: /s/ Joel H. Gottesman
-------------------------------
Joel H. Gottesman
Senior Vice President, General Counsel
and Secretary
3
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Filed Electroncially
- -------------- --------------------
99 External Computational and Descriptive
Information distributed in connection
with Certificates for Manufactured Housing
Contract Senior/Subordinate Pass-Through
Certificates, Series 1998-8, issued by
Green Tree Financial Corporation, as Seller
and Servicer.
4
<PAGE>
TERM SHEET DATED October 27, 1998
Green Tree Financial Corporation
Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificates, Series 1998-8
$1,350,000,000 (Approximate)
Subject to Revision
SELLER/SERVICER: Green Tree Financial Corporation ("Green Tree").
TRUSTEE: U.S. Bank National Association, St. Paul, Minnesota.
UNDERWRITERS: Merrill Lynch & Co. (Lead), Lehman Brothers (Co),
Salomon Smith Barney (Co).
Ratings WAL @ Exp. Final
To Call Amount Moody's/S&P 175% MHP Maturity
A-1 $1,130,625,000 Aaa/AAA 6.45 7/15
M-1 $70,875,000 Aa2/AA- 9.96 7/15
M-2 $40,500,000 A2/A 9.96 7/15
B-1 $47,250,000 Baa2/BBB 5.99 4/07
B-2 $60,750,000 Baa3/BBB- 13.32 7/15
To Maturity
A-1 $1,130,625,000 Aaa/AAA 6.72 7/23
M-1 $70,875,000 Aa2/AA- 10.43 7/23
M-2 $40,500,000 A2/A 10.43 7/23
B-2 $60,750,000 Baa3/BBB- 17.91 2/29
FOR INFORMATION CONCERNING CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" IN THE PROSPECTUS SUPPLEMENT AND
PROSPECTUS. CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED HAVE THE
MEANINGS SET FORTH IN THE PROSPECTUS AND PROSPECTUS SUPPLEMENT.
CUT-OFF DATE: October 15, 1998 (or the date of origination, if later)
for each contract other than the Subsequent Contracts,
and for each Subsequent Contract, the date on which such
Contract is purchased by the Trust.
LEGAL FINAL: September 1, 2030
EXP. PRICING: Week of October 26, 1998.
EXP. SETTLEMENT: Week of November 30, 1998.
INTEREST/PRINCIPAL: The 1st day of each month (or if such 1st day is not a
business day, the next succeeding business day),
commencing on January 4, 1999.
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Recipients must read the information contained in the attached statement. Do not
use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
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<PAGE>
ERISA: Subject to the conditions set forth in the Prospectus
Supplement, the Class A-1 Certificates are ERISA
eligible. No transfer of a Class M or a Class B
Certificate will be permitted to be made to any employee
benefit plan subject to ERISA or to the Internal Revenue
Code of 1986, as amended, unless an opinion of counsel
is delivered to the Trustee.
SMMEA: The Class A-1 and the Class M-1 Certificates will not be
SMMEA eligible until such time as the balance of the
Pre-Funding Account is reduced to zero. At such time,
the Class A-1 and the Class M-1 Certificates will be
SMMEA eligible so long as they are rated in one of the
two highest categories by Moody's and S&P.
Because the Class M-2 and Class B Certificates will not
be rated in one of its two highest rating categories by
Moody's or S&P, the Class M-2 and Class B Certificates
will not constitute "mortgage related securities" for
purposes of SMMEA. Accordingly, many institutions with
legal authority to invest in more highly rated
securities based on first mortgage loans may not be
legally authorized to invest in the Class M-2 and Class
B Certificates. See "Legal Investment Considerations" in
the Prospectus Supplement and in the Prospectus. No
representations are made as to any regulatory
requirements or considerations (including without
limitation regulatory capital requirements) applicable
to the purchase of the Class M-2 and Class B
Certificates by banks, savings and loan associations or
other financial institutions, which institutions should
consult their own counsel as to such matters.
TAX STATUS: For federal income tax purposes, the Trust will be
treated as two separate asset pools (the "Master REMIC"
and the "Subsidiary REMIC"), each of which will be
treated as a real estate mortgage investment conduit
("REMIC"). The Class A-1 Certificates, the Class M-1
Certificates, the Class M-2 Certificates, the Class B
Certificates and the Class B-3I Certificates will
constitute "regular interests" in the Master REMIC and
generally will be treated as debt instruments of the
Trust for federal income tax purposes with payment terms
equivalent to the terms of such Certificates. The Class
C Master Certificates and Class C Subsidiary
Certificates will constitute "residual interests" in the
Master REMIC and the Subsidiary REMIC, respectively. The
holders of the Offered Certificates will be required to
include an income interest on such Certificates
(including any original issue discount) in accordance
with the accrual method of accounting. See "Certain
Federal Income Tax Consequences" in the Prospectus.
OPTIONAL REPURCHASE: At its option either the Servicer or the Company may
repurchase from the Trust all remaining Contracts, and
thereby effect early retirement of the Offered
Certificates, on any Remittance Date when the Pool
Scheduled Principal Balance is less than 10% of the
Cut-off Date Pool Principal Balance.
CREDIT ENHANCEMENT: Class A-1: 16.25% subordination (Class M-1, M-2, B-1,
and B-2) plus Excess Spread (Class B-3I). Class M-1:
11.00% (Class M-2, B-1 and B-2) plus Excess Spread
(Class B-3I). Class M-2: 8.00% (Class B-1 and B-2) plus
Excess Spread (Class B-3I). Class B-1: 4.50% (Class B-2)
plus Excess Spread (Class B-3I). Class B-2: Limited
Guarantee plus Excess Spread.
THE CONTRACT POOL: On the Closing Date, the Trust expects to purchase (i)
manufactured housing contracts having an aggregate
principal balance of approximately $642,852,932 as of
the Cut-off Date (the "Initial Contracts") and (ii)
additional manufactured housing contracts (the
"Additional Contracts"). An amount will be deposited
into an account (the "Pre-Funding Account") on the
Closing Date to purchase additional
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use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
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<PAGE>
Contracts prior to 90 days from the Closing Date (the
"Subsequent Contracts") for inclusion in the Contract
Pool. The Subsequent Contracts will represent no more
than 25% of the aggregate Contract Pool.
DISTRIBUTIONS: Certificateholders will be entitled to receive on each
Remittance Date commencing in January 1999, to the
extent that the Amount Available in the Certificate
Account (together with, in the case of the Class B-2
Certificates, the Guarantee Payment, as described below)
is sufficient therefor, distributions allocable to
interest and principal, as described in the Prospectus
Supplement. The Amount Available on each Remittance Date
generally includes the sum of (i) payments on the
Contracts due and received during the related Due
Period, (ii) prepayments and other unscheduled
collections received during the related Due Period, and
(iii) all collections of principal on the Contracts
received during the Due Period in which such Remittance
Date occurs up to and including the third business day
prior to such Remittance Date (but in no event later
than the 25th day of the month prior to such Remittance
Date), minus (iv) with respect to all Remittance Dates
other than the Remittance Date in January 1999, all
collections in respect of principal on the Contracts
received during the related Due Period up to and
including the third business day prior to such
Remittance Date (but in no event later than the 25th day
of the prior month).
The Amount Available in the Certificate Account with
respect to any Distribution Date will be applied first
to the distribution of interest on the Certificates, and
then to the distribution of principal on the
Certificates, in the manner and order of priority
described below.
With respect to the Remittance Date in January 1999, the
Due Period should be the period from and including
October 15, 1998 to and including December 14, 1998.
The "Due Period" with respect to all Remittance Dates
other than the Remittance Date in January 1999, is the
period from and including the 15th day of the second
month preceding such Remittance Date, to and including
the 14th day of the month immediately preceding such
Remittance Date.
INTEREST ON THE
CLASS A-1, CLASS M-1,
CLASS M-2 AND CLASS B-1
CERTIFICATES: Interest will be distributable first to the Class A-1
Certificates, then to the Class M-1 Certificates, then
to the Class M-2 Certificates and then to the Class B-1
Certificates. Interest on the outstanding Class A-1
Principal Balance, Class M-1 Adjusted Principal Balance,
Class M-2 Adjusted Principal Balance, and Class B-1
Adjusted Principal Balance, as applicable, will accrue
from the Settlement Date or from the most recent
Remittance Date on which interest has been paid, to but
excluding the following Remittance Date.
The Certificates will bear interest at a fixed
Pass-Through Rate calculated on a 30/360 basis.
The "Class M-1 Adjusted Principal Balance" as of any
Remittance Date is the Class M-1 Principal Balance less
any Class M-1 Liquidation Loss Amount. The Class M-1
Principal Balance is the Original Class M-1 Principal
Balance less all amounts previously distributed on
account of principal of the Class M-1 Certificates.
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Recipients must read the information contained in the attached statement. Do not
use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
account executive for another copy.
<PAGE>
The "Class M-2 Adjusted Principal Balance" as of any
Remittance Date is the Class M-2 Principal Balance less
any Class M-2 Liquidation Loss Amount. The Class M-2
Principal Balance is the Original Class M-2 Principal
Balance less all amounts previously distributed on
account of principal of the Class M-2 Certificates.
The "Class B-1 Adjusted Principal Balance" as of any
Remittance Date is the Class B-1 Principal Balance less
any Class B-1 Liquidation Loss Amount. The Class B-1
Principal Balance is the Original Class B-1 Principal
Balance less all amounts previously distributed on
account of principal of the Class B-1 Certificates.
In the event that, on a particular Remittance Date, the
Amount Available in the Certificate Account, after
payment of interest on each Class of Certificates that
is senior to such Class of Certificates, is not
sufficient to make a full distribution of interest to
the holders of such Class of Certificates, the amount of
interest to be distributed in respect of such Class will
be allocated among the outstanding Certificates of such
Class pro rata in accordance with their respective
entitlements to interest, and the amount of the
shortfall will be carried forward and added to the
amount such holders will be entitled to receive on the
next Remittance Date. Any such amount so carried forward
will bear interest at the applicable Remittance Rate, to
the extent legally permissible.
PRINCIPAL ON THE
CLASS A-1, CLASS M-1,
CLASS M-2 AND CLASS B-1
CERTIFICATES : The Class A-1 Percentage for any Remittance Date will
equal a fraction, expressed as a percentage, the
numerator of which is the Class A-1 Principal Balance as
of such Remittance Date, and the denominator of which is
the sum of: (i) the Class A-1 Principal Balance (ii) if
the Class M-1 Distribution Test is satisfied on such
Remittance Date, the Class M-1 Principal Balance,
otherwise zero, (iii) if the Class M-2 Distribution Test
is satisfied on such Remittance Date, the Class M-2
Principal Balance, otherwise zero, and (iv) if the Class
B Distribution Test is satisfied on such Remittance
Date, the Class B Principal Balance, otherwise zero, all
as of such Remittance Date.
The Class M-1 Certificateholders will be entitled to
receive principal on each Remittance Date on which (i)
the Class A-1 Principal Balance has been reduced to zero
or (ii) the Class M-1 Distribution Test is satisfied.
The Class M-1 Percentage for any Remittance Date will
equal (a) zero, if the Class A-1 Principal Balance has
not yet been reduced to zero and the Class M-1
Distribution Test is not satisfied or (b) a fraction,
expressed as a percentage, the numerator of which is the
Class M-1 Principal Balance as of such Remittance Date,
and the denominator of which is the sum of: (i) the
Class A-1 Principal Balance, if any, (ii) the Class M-1
Principal Balance, (iii) if the Class M-2 Distribution
Test is satisfied on such Remittance Date, the Class M-2
Principal Balance, otherwise zero and (iii) if the Class
B Distribution Test is satisfied on such Remittance
Date, the Class B Principal Balance, otherwise zero, all
as of such Remittance Date.
The Class M-1 Distribution Test will be satisfied if
each of the following tests is satisfied: (i) the
Remittance Date occurs in or after January 2003; (ii)
the Average Sixty-Day Delinquency Ratio Test (as defined
in the Agreement) as of such Remittance Date must not
exceed 4.0%; (iii) the Average Thirty-Day Delinquency
Ratio Test (as defined in the Agreement) as of such
Remittance Date must not exceed 6.0%; (iv) Cumulative
Realized Losses (as defined in the Agreement) as of
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Recipients must read the information contained in the attached statement. Do not
use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
account executive for another copy.
<PAGE>
such Remittance Date must not exceed a certain specified
percentage of the Cut-off Date Pool Principal Balance,
depending on the year in which such Remittance Date
occurs; (v) the Current Realized Loss Ratio (as defined
in the Agreement) as of such Remittance Date must not
exceed 2.50%; and (vi) the sum of the Class M-1
Principal Balance, the Class M-2 Principal Balance and
the Class B Principal Balance divided by the Pool
Scheduled Principal Balance as of the immediately
preceding Remittance Date must be equal to or greater
than 24.375%.
The Class M-2 Certificateholders will be entitled to
receive principal on each Remittance Date on which (i)
the Class A-1 Principal Balance and Class M-1 Principal
Balance have been reduced to zero or (ii) the Class M-2
Distribution Test is satisfied.
The Class M-2 Percentage for any Remittance Date will
equal (a) zero, if the Class A-1 Principal Balance and
Class M-1 Principal Balance have not yet been reduced to
zero and the Class M-2 Distribution Test is not
satisfied or (b) a fraction, expressed as a percentage,
the numerator of which is the Class M-2 Principal
Balance as of such Remittance Date, and the denominator
of which is the sum of: (i) the Class A-1 Principal
Balance, if any, (ii) the Class M-1 Principal Balance,
if any, (iii) the Class M-2 Principal Balance, and (iv)
if the Class B Distribution Test is satisfied on such
Remittance Date, the Class B Principal Balance,
otherwise zero, all as of such Remittance Date.
The Class M-2 Distribution Test will be satisfied if
each of the following tests is satisfied: (i) the
Remittance Date occurs in or after January 2003; (ii)
the Average Sixty-Day Delinquency Ratio Test (as defined
in the Agreement) as of such Remittance Date must not
exceed 4.00%; (iii) the Average Thirty-Day Delinquency
Ratio Test (as defined in the Agreement) as of such
Remittance Date must not exceed 6.00%; (iv) Cumulative
Realized Losses (as defined in the Agreement) as of such
Remittance Date must not exceed a certain specified
percentage of the Cut-off Date Pool Principal Balance,
depending on the year in which such Remittance Date
occurs; (v) the Current Realized Loss Ratio (as defined
in the Agreement) as of such Remittance Date must not
exceed 2.50%; and (vi) the sum of the Class M-2
Principal Balance and the Class B Principal Balance
divided by the Pool Scheduled Principal Balance as of
the immediately preceding Remittance Date must be equal
to or greater than 16.50%.
The Class B-1 Certificateholders will be entitled to
receive principal on each Remittance Date on which (i)
the Class A-1 Principal Balance, the Class M-1 Principal
Balance and the Class M-2 Principal Balance have been
reduced to zero or (ii) the Class B Distribution Test is
satisfied.
The Class B Percentage for any Remittance Date will
equal (a) zero, if the Class A-1 Principal Balance, the
Class M-1 Principal Balance and the Class M-2 Principal
Balance have not yet been reduced to zero and the Class
B Distribution Test is not satisfied or (b) a fraction,
expressed as a percentage, the numerator of which is the
Class B Principal Balance as of such Remittance Date,
and the denominator of which is the sum of: (i) the
Class A-1 Principal Balance, if any, (ii) the Class M-1
Principal Balance, if any, (iii) the Class M-2 Principal
Balance, if any, and (iv) the Class B Principal Balance,
all as of such Remittance Date.
The Class B Distribution Test will be satisfied if each
of the following tests is satisfied: (i) the Remittance
Date occurs in or after January 2003; (ii) the Average
Sixty-Day Delinquency Ratio Test (as defined in the
Agreement) as of such Remittance Date must not exceed
4.0%; (iii) the Average Thirty-Day Delinquency Ratio
Test (as defined in the Agreement) as of such Remittance
Date must not exceed 6.0%; (iv) the Cumulative Realized
Losses (as defined in the Agreement) as of such
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Recipients must read the information contained in the attached statement. Do not
use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
account executive for another copy.
<PAGE>
Remittance Date must not exceed a certain specified
percentage of the Cut-off Date Pool Principal Balance,
depending on the year in which such Remittance Date
occurs; (v) the Current Realized Loss Ratio (as defined
in the Agreement) as of such Remittance Date must not
exceed 2.50%; (vi) the Class B Principal Balance divided
by the Pool Scheduled Principal Balance as of the
immediately preceding Remittance Date must be equal to
or greater than 12.00%; and (vii) the Class B Principal
Balance must not be less than $27,000,000.
CLASS B-2 INTEREST: Interest on the outstanding Class B-2 Principal Balance
will accrue from the Settlement Date, or from the most
recent Remittance Date on which interest has been paid
to but excluding the following Remittance Date.
To the extent of (i) the remaining Amount Available, if
any, for a Remittance Date after payment of all interest
and principal then payable on the Class A-1, Class M-1,
Class M-2 and Class B-1 Certificates, and (ii) the
Guarantee Payment, if any, for such date, interest will
be paid to the Class B-2 Certificateholders on such
Remittance Date at the Class B-2 Remittance Rate on the
then outstanding Class B-2 Principal Balance. The Class
B-2 Principal Balance is the Original Class B-2
Principal Balance less all amounts previously
distributed to the Class B-2 Certificateholders
(including any Guarantee Payments) on account of
principal.
In the event that, on a particular Remittance Date, the
remaining Amount Available in the Certificate Account
plus any amounts actually paid under the Limited
Guarantee are not sufficient to make a full distribution
of interest to the Class B-2 Certificateholders, the
amount of the deficiency will be carried forward as an
amount that the Class B-2 Certificateholders are
entitled to receive on the next Remittance Date. Any
amount so carried forward will, to the extent legally
permissible, bear interest at the Class B-2 Remittance
Rate.
CLASS B-2 PRINCIPAL: Except for payments of the Class B-2 Liquidation Loss
Amount under the Limited Guarantee, the Class B-2
Certificateholders will be entitled to receive principal
on each Remittance Date on which (i) the Class B-1
Principal Balance has been reduced to zero (the "Class
B-1 Cross-over Date") and (ii) the Class B Distribution
Test is satisfied; provided, however, that if the Class
A-1 Principal Balance, the Class M-1 Principal Balance,
the Class M-2 Principal Balance and the Class B-1
Principal Balance have been reduced to zero, the Class
B-2 Certificateholders will nevertheless be entitled to
receive principal. See "Description of the
Certificates--Class B-2 Principal" in the Prospectus
Supplement.
The Class B Percentage for any Remittance Date will
equal (a) zero, if the Class A-1 Principal Balance, the
Class M-1 Principal Balance and the Class M-2 Principal
Balance have not yet been reduced to zero and the Class
B Distribution Test is not satisfied or (b) a fraction,
expressed as a percentage, the numerator of which is the
Class B Principal Balance as of such Remittance Date,
and the denominator of which is the sum of: (i) the
Class A-1 Principal Balance, if any, (ii) the Class M-1
Principal Balance, if any, (iii) the Class M-2 Principal
Balance, if any and (iv) the Class B Principal Balance,
all as of such Remittance Date.
On each Remittance Date on which the Class B-2
Certificateholders are entitled to receive principal,
the Class B Percentage of the Formula Principal
Distribution Amount will be distributed, to the extent
of the remaining Amount Available after
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Recipients must read the information contained in the attached statement. Do not
use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
account executive for another copy.
<PAGE>
payment of interest on the Class B-2 Certificates, to
the extent of the remaining Amount Available after
payment of interest on the Class B-2 Certificates, to
the Class B-2 Certificateholders until the Class B-2
Principal Balance has been reduced to zero. The Company
will be obligated under the Limited Guarantee to pay the
amount, if any, by which the Class B Percentage of the
Formula Principal Distribution Amount for such
Remittance Date exceeds the remaining Amount Available
after payment of interest on the Class B-2 Certificates.
LOSSES ON LIQUIDATED
CONTRACTS: The distribution of principal to the Class A-1, the
Class M-1, the Class M-2 and the Class B-1
Certificateholders is intended to include the Class A-1
Percentage, the Class M-1 Percentage, the Class M-2
Percentage and the Class B Percentage, respectively, of
the Scheduled Principal Balance of each Contract that
became a Liquidated Contract during the related Due
Period. If the Net Liquidation Proceeds from such
Liquidated Contract are less than the Scheduled
Principal Balance of such Liquidated Contract, the
deficiency will, in effect, be absorbed by the Class
B-3I Certificateholders, then the Monthly Servicing Fee
(so long as Green Tree is the Servicer), then the Class
B-2 Certificateholders, then the Class B-1
Certificateholders, then the Class M-2
Certificateholders and then the Class M-1
Certificateholders, since a portion of the Amount
Available equal to such deficiency and otherwise
distributable to them will be paid to the Class A-1
Certificateholders.
CONTRACT CHARACTERISTICS
------------------------
The information presented below relates to the Initial Contracts, which will
represent approximately 48% of the Contract Pool. Although the characteristics
of the final pool of Contracts will differ from the characteristics of the
Initial Contracts shown below, Green Tree does not expect that the
characteristics of the Additional Contracts sold to the Trust will vary
materially from the information concerning the Initial Contracts herein.
THE INITIAL CONTRACT POOL
Number of MHCs in pool: 14,889
Wgt. Avg. Contract Rate: 8.945%
Range of Rates: 4.250% - 17.000%
Wgt. Avg. Orig. Maturity: 318.8 months
Wgt. Avg. Rem. Maturity: 317.6 months
Avg. Rem Princ. Balance: $43,176
Wgt. Avg. LTV: 86.93%
New/Used: 81.04% / 18.96%
Park/Private: 25.38% / 74.62%
Single/Double: 25.64% / 74.35%
Land/Home: 38.89%
Land in Lieu: 0.57%
Step Rate: 2.83%
Conventional: 97.17%
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Recipients must read the information contained in the attached statement. Do not
use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
account executive for another copy.
<PAGE>
GEOGRAPHIC DISTRIBUTION OF INITIAL CONTRACT OBLIGORS
Aggregate Principal Balance % of Initial
Number of Contracts Outstanding as Cutoff Date Pool
State as of Cutoff Date of Cutoff Date Principal Balance
- ----- ----------------- -------------- -----------------
AK 2 188,590 0.03
AL 910 32,570,638 5.07
AR 254 8,293,662 1.29
AZ 310 14,024,194 2.18
CA 346 15,107,353 2.35
CO 335 18,681,284 2.91
CT 5 238,641 0.04
DE 72 3,084,653 0.48
FL 902 42,681,592 6.64
GA 824 32,419,065 5.04
HI 1 18,362 0.00
IA 191 6,362,163 0.99
ID 76 4,296,199 0.67
IL 250 9,959,560 1.55
IN 452 21,290,515 3.31
KS 183 7,794,929 1.21
KY 374 15,078,656 2.35
LA 328 10,788,768 1.68
MA 16 513,614 0.08
MD 52 2,102,395 0.33
ME 146 7,961,122 1.24
MI 900 47,522,950 7.39
MN 287 9,862,505 1.53
MO 398 12,851,243 2.00
MS 332 11,143,407 1.73
MT 125 5,831,073 0.91
NC 1,395 61,284,932 9.53
ND 68 2,222,244 0.35
NE 77 3,116,683 0.48
NH 83 3,954,619 0.62
NJ 4 236,384 0.04
NM 310 14,597,457 2.27
NV 147 7,137,995 1.11
NY 228 9,874,883 1.54
OH 383 19,045,376 2.96
OK 350 12,709,645 1.98
OR 219 16,457,375 2.56
PA 213 9,528,167 1.48
RI 1 13,644 0.00
SC 618 27,652,945 4.30
SD 107 4,189,610 0.65
TN 431 15,711,472 2.44
TX 1,157 45,902,736 7.14
UT 60 3,587,145 0.56
VA 248 10,472,278 1.63
VT 46 2,496,567 0.39
WA 209 14,655,434 2.28
WI 173 6,716,929 1.04
WV 202 6,620,279 1.03
WY 89 4,001,003 0.62
-- --------- ----
Total 14,889 642,852,932 100.00
====== =========== ======
[MERRILL LYNCH LOGO] 8
================================================================================
Recipients must read the information contained in the attached statement. Do not
use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
account executive for another copy.
<PAGE>
YEAR OF ORIGINATION OF INITIAL CONTRACTS
<TABLE>
<CAPTION>
Number of Aggregate Principal Balance % of Initial Cutoff Date
Year of Contracts as of Outstanding as of Pool
Origination (1) Cutoff Date Cutoff Date Principal Balance
- --------------- ----------- ----------- -----------------
<S> <C> <C> <C>
1984 2 19,546 *
1985 1 6,517 *
1986 159 1,369,407 0.21
1987 341 3,059,123 0.48
1988 1 26,581 *
1989 1 15,023 *
1990 3 59,833 0.01
1991 2 49,089 0.01
1992 3 84,614 0.01
1993 8 217,741 0.03
1994 21 831,420 0.13
1995 31 1,364,560 0.21
1996 39 2,214,188 0.34
1997 50 3,345,782 0.52
1998 14,227 630,189,506 98.03
------ ----------- -----
Total 14,889 642,852,932 100.00
====== =========== ======
</TABLE>
* Indicates an amount greater than zero but less than 0.005% of the
aggregate principal balance of the Initial Contracts as of the Cut-off
Date.
(1) The Initial Contracts shown in the above table with earlier years of
origination primarily represent Contracts originated by the Company and
subsequently refinanced through the Company. The Company retains the
first origination dates on its records with respect to such refinanced
Contracts.
[MERRILL LYNCH LOGO] 9
================================================================================
Recipients must read the information contained in the attached statement. Do not
use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
account executive for another copy.
<PAGE>
DISTRIBUTION OF ORIGINAL INITIAL CONTRACTS AMOUNTS
<TABLE>
<CAPTION>
Aggregate Principal % of Initial Cutoff Date
Number of Contracts as Balance Outstanding Pool
Original Contract Amount ($) of Cutoff Date as of Cutoff Date Principal Balance
- ---------------------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
Less than 10,000 503 3,763,554 0.59
10,000 - 19,999 2,121 29,948,339 4.66
20,000 - 29,999 2,776 67,745,935 10.54
30,000 - 39,999 2,738 93,940,316 14.61
40,000 - 49,999 1,876 83,610,984 13.01
50,000 - 59,999 1,481 81,321,244 12.65
60,000 - 69,999 1,059 68,545,618 10.66
70,000 - 79,999 809 60,558,555 9.42
80,000 - 89,999 556 47,119,402 7.33
90,000 - 99,999 407 38,640,882 6.01
100,000 - 109,999 223 23,361,281 3.63
110,000 - 119,999 138 15,852,750 2.47
120,000 - 129,999 84 10,428,532 1.62
130,000 - 139,999 41 5,498,297 0.86
140,000 - 149,999 27 3,897,581 0.61
150,000 - 159,999 20 3,085,065 0.48
160,000 - 169,999 9 1,490,858 0.23
170,000 - 179,999 9 1,564,888 0.24
180,000+ 12 2,478,850 0.39
-- --------- ----
Total 14,889 642,852,932 100.00
====== =========== ======
</TABLE>
DISTRIBUTION OF ORIGINAL LOAN-TO-VALUE RATIOS OF INITIAL CONTRACTS
<TABLE>
<CAPTION>
Aggregate Principal
Number of Contracts as Balance Outstanding % of Initial Cutoff Date
Loan-to-Value Ratio of Cutoff Date as of Cutoff Date Pool Principal Balance
- ------------------- -------------- ----------------- ----------------------
<S> <C> <C> <C>
Less than 61.00 610 21,915,534 3.41
61.00 - 65.99 183 7,117,188 1.11
66.00 - 70.99 336 15,493,238 2.41
71.00 - 75.99 488 22,043,821 3.43
76.00 - 80.99 1,258 53,909,453 8.39
81.00 - 85.99 1,637 78,689,589 12.24
86.00 - 90.99 4,982 215,700,899 33.55
91.00 - 95.99 4,220 183,522,460 28.55
Greater than 95.99 1,175 44,460,751 6.92
----- ---------- ----
Total 14,889 642,852,932 100.00
====== =========== ======
</TABLE>
[MERRILL LYNCH LOGO] 10
================================================================================
Recipients must read the information contained in the attached statement. Do not
use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
account executive for another copy.
<PAGE>
INITIAL CONTRACT RATES
Aggregate Principal
Number of Contracts Balance Outstanding % of Initial Cutoff Date
Contract Rate as of Cutoff Date as of Cutoff Date Pool Principal Balance
- ------------- ----------------- ----------------- ----------------------
Less than 5.01 10 712,455 0.11
5.01 - 6.00 54 4,021,271 0.63
6.01 - 7.00 1,805 142,782,372 22.21
7.01 - 8.00 2,069 125,858,199 19.58
8.01 - 9.00 2,439 121,367,248 18.88
9.01 - 10.00 2,232 91,601,661 14.25
10.01 - 11.00 2,045 69,319,965 10.78
11.01 - 12.00 2,012 49,128,489 7.64
12.01 - 13.00 1,509 27,493,468 4.28
13.01 - 14.00 510 8,423,193 1.31
14.01 - 15.00 26 382,922 0.06
15.01 - 16.00 142 1,407,519 0.22
16.01 - 17.00 36 354,170 0.06
-- ------- ----
Total 14,889 642,852,932 100.00
====== =========== ======
REMAINING MONTHS TO MATURITY OF INITIAL CONTRACTS
<TABLE>
<CAPTION>
Aggregate Principal
Remaining Mos. Number of Contracts Balance Outstanding % of Initial Cutoff Date
To Maturity as of Cutoff Date as of Cutoff Date Pool Principal Balance
- ----------- ----------------- ----------------- ----------------------
<S> <C> <C> <C>
Less than 31 15 54,699 0.01
31 - 60 709 5,835,027 0.91
61 - 90 332 4,765,474 0.74
91 - 120 908 14,868,016 2.31
121 - 150 299 6,365,342 0.99
151 - 180 1,779 42,617,431 6.63
181 - 210 95 3,212,970 0.50
211 - 240 2,002 65,058,050 10.12
241 - 270 27 1,321,531 0.21
271 - 300 1,121 41,246,515 6.42
301 - 330 24 1,277,404 0.20
331 - 360 7,578 456,230,471 70.97
----- ----------- -----
Total 14,889 642,852,932 100.00
</TABLE>
* Indicates an amount greater than zero but less than 0.005% of the
aggregate principal balance of the Initial Contracts as of the Cut-off
Date.
[MERRILL LYNCH LOGO] 11
================================================================================
Recipients must read the information contained in the attached statement. Do not
use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
account executive for another copy.
<PAGE>
MHP PREPAYMENT SENSITIVITIES(1)(2)
75% MHP 100% MHP 125% MHP 150% MHP
------- -------- -------- --------
WAL/Maturity WAL/Maturity WAL/Maturity WAL/Maturity
To Call
A-1 10.72 4/23 9.34 4/21 8.20 2/19 7.28 4/17
M-1 15.68 4/23 13.75 4/21 12.10 2/19 10.79 4/17
M-2 15.68 4/23 13.75 4/21 12.10 2/19 10.79 4/17
B-1 10.06 9/12 8.44 9/10 7.24 2/09 6.34 11/07
B-2 20.36 4/23 18.24 4/21 16.24 2/19 14.60 4/17
To Maturity
A-1 10.90 10/27 9.56 2/27 8.46 3/26 7.54 12/24
M-1 15.98 10/27 14.12 2/27 12.54 3/26 11.23 12/24
M-2 15.98 10/27 14.12 2/27 12.54 3/26 11.23 12/24
B-1 10.06 9/12 8.44 9/10 7.24 2/09 6.34 11/07
B-2 22.62 2/29 21.23 2/29 19.99 2/29 18.84 2/29
175% MHP 200% MHP 250% MHP 300% MHP
-------- -------- -------- --------
WAL/Maturity WAL/Maturity WAL/Maturity WAL/Maturity
To Call
A-1 6.45 7/15 5.77 1/14 4.71 8/11 3.94 10/09
M-1 9.96 7/15 9.32 1/14 8.31 8/11 7.54 10/09
M-2 9.96 7/15 9.32 1/14 8.31 8/11 7.54 10/09
B-1 5.99 4/07 5.78 10/06 5.45 2/06 5.22 8/05
B-2 13.32 7/15 12.26 1/14 10.60 8/11 9.37 10/09
To Maturity
A-1 6.72 7/23 6.02 1/22 4.93 12/18 4.12 5/16
M-1 10.43 7/23 9.81 1/22 8.81 12/18 8.06 5/16
M-2 10.43 7/23 9.81 1/22 8.81 12/18 8.06 5/16
B-1 5.99 4/07 5.78 10/06 5.45 2/06 5.22 8/05
B-2 17.91 2/29 17.01 2/29 15.29 2/29 13.76 2/29
[MERRILL LYNCH LOGO] 12
================================================================================
Recipients must read the information contained in the attached statement. Do not
use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
account executive for another copy.
<PAGE>
(1) The following are the assumed characteristics of Additional Contracts as
of the Cut-off Date:
Remaining Wgt. Avg. Wgt. Avg.
Months to Aggregate Principal Original Remaining Wgt. Avg.
Maturity Balance Outstanding Term (months) Term (months) Contract Rate
- -------- ------------------- ------------- ------------- -------------
0-120 $13,399,776.78 119 119 11.735%
121-180 $25,716,124.51 174 174 10.853%
181-240 $35,842,520.34 237 237 10.247%
241-300 $22,348,370.56 298 298 10.108%
301-360 $240,193,207.80 360 360 8.543%
---------------
TOTAL $337,499,999.99
===============
(2) The following are the assumed characteristics of Subsequent Contracts as
of the Cut-off Date:
Remaining Wgt. Avg. Wgt. Avg.
Months to Aggregate Principal Original Remaining Wgt. Avg.
Maturity Balance Outstanding Term (months) Term (months) Contract Rate
- -------- ------------------- ------------- ------------- -------------
0-120 $14,676,113.19 119 119 11.735%
121-180 $28,165,600.10 174 174 10.853%
181-240 $39,256,540.95 237 237 10.247%
241-300 $24,477,065.67 298 298 10.108%
301-360 $263,071,748.50 360 360 8.543%
---------------
TOTAL $369,647,068.41
===============
[MERRILL LYNCH LOGO] 13
================================================================================
Recipients must read the information contained in the attached statement. Do not
use or rely on this information if you have not received and reviewed the
statement. If you have not received the statement, call your Merrill Lynch
account executive for another copy.
<PAGE>
The attached tables and other statistical analyses (the "Term Sheet")
are privileged and confidential and are intended for use by the addressee only.
This Term Sheet is furnished to you solely by Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and not by the issuer of the securities or
any of its affiliates. The issuer of these securities has not prepared or taken
part in the preparation of these materials. Neither Merrill Lynch, the issuer of
the securities nor any of its affiliates makes any representation as to the
accuracy or completeness of the information herein. The information herein is
preliminary, and will be subsequently filed with the Securities and Exchange
Commission. They may not be provided to any third party other than the
addressee's legal, tax, financial and/or accounting advisors for the purposes of
evaluating said material.
Numerous assumptions were used in preparing the Term Sheet which may or
may not be stated therein. As such, no assurance can be given as to the
accuracy, appropriateness or completeness of the Term Sheet in any particular
context; or as to whether the Term Sheet and/or the assumptions upon which it is
based reflect present market conditions or future market performance. This Term
Sheet should not be construed as either projections or predictions or as legal,
tax, financial or accounting advice.
Any yields or weighted average lives shown in the Term Sheet are based
on prepayment assumptions and actual prepayment experience may dramatically
affect such yields or weighted average lives. In addition, it is possible that
prepayments on the underlying assets will occur at rates slower or faster than
the rates assumed in the attached Term Sheet. Furthermore, unless otherwise
provided, the Term Sheet assumes no losses on the underlying assets and no
interest shortfall. The specific characteristics of the securities may differ
from those shown in the Term Sheet due to differences between the actual
underlying assets and the hypothetical assets used in preparing the Term Sheet.
The principal amount and designation of any security described in the Term Sheet
are subject to change prior to issuance.
Although a registration statement (including the prospectus) relating
to the securities discussed in this communication has been filed with the
Securities and Exchange Commission and is effective, the final prospectus
supplement relating to the securities discussed in this communication has not
been filed with the Securities and Exchange Commission. This communication shall
not constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of the securities discussed in this communication in any state
in which such offer, solicitations or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
Prospective purchasers are referred to the final prospectus and prospectus
supplement relating to the securities discussed in this communication for final
information on any matter discussed in this communication. All information in
this Term Sheet will be superseded by the information in the final prospectus
and prospectus supplement. A final prospectus and prospectus supplement may be
obtained by contacting the Merrill Lynch Trading Desk at (212) 449-3659.
Please be advised that asset-backed securities may not be appropriate
for all investors. Potential investors must be willing to assume, among other
things, market price volatility, prepayments, yield curve and interest rate
risk. Investors should fully consider the risk of an investment in these
securities.
If you have received this communication in error, please notify the
sending party immediately by telephone and return the original to such party by
mail.
[MERRILL LYNCH LOGO] 14
================================================================================
Recipients must read the information contained in the attached statement. Do not
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statement. If you have not received the statement, call your Merrill Lynch
account executive for another copy.
