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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR L5(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
Commission file number 333-32775
THE MONEY STORE INVESTMENT CORPORATION AND THE MONEY STORE OF
NEW YORK, INC. ( AS ORIGINATORS UNDER A POOLING AND SERVICING
AGREEMENT, DATED AS OF FEBRUARY 28, 1998 PROVIDING FOR THE
ISSUANCE OF THE MONEY STORE SBA LOAN-BACKED ADJUSTABLE RATE
CERTIFICATES SERIES 1998-1, CLASS A AND CLASS B).
THE MONEY STORE INVESTMENT CORPORATION
AND THE MONEY STORE OF NEW YORK, INC.
(Exact name of registrant as specified in its charter)
NEW YORK/NEW JERSEY 22-2293019
(State or other jurisdiction 22-3143559
of incorporation or organization) (Trust I.R.S. Employer
Identification No.)
707 THIRD STREET, WEST SACRAMENTO, CALIFORNIA 95605
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (916) 617-1000
Securities registered pursuant to section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
NONE NONE
Securities registered pursuant to section 12(g) of the Act:
NONE
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
/x/ Yes / / No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Not Applicable.
State the aggregate market value of the Voting Stock held by non-affiliates of
the registrant.
Not Applicable
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of December 31, 1996.
Not Applicable
This Annual Report on Form 10-K is filed pursuant to a request for no-action
letter forwarded to the Office of Chief Counsel Division of Corporate Financing,
dated September 2, 1993, and the response of the SEC, dated January 7, 1994, to
the no-action request.
PART I
ITEM 1. BUSINESS
Omitted pursuant to the "Request for no-action letter forwarded to the
Office of Chief Counsel Division of Corporate Financing," dated
September 2, 1993, and the response of the SEC, dated January 7, 1994,
to the no-action request.
ITEM 2. PROPERTIES
Reference is made to the Annual Compliance Certificate attached hereto
as Exhibit 20.
Reference is made to the Annual Statement attached hereto as Exhibit
13.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established trading market for Registrant's securities
subject to this filing.
Number of holders of record of the Certificates as of March 10, 1999: 5
ITEM 6. SELECTED FINANCIAL DATA
Omitted pursuant to the "Request for no-action letter forwarded to the
Office of Chief Counsel Division of Corporate Financing," dated
September 2, 1993, and the response of the SEC, dated January 7, 1994,
to the no-action request.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Omitted pursuant to the "Request for no-action letter forwarded to the
Office of Chief Counsel Division of Corporate Financing," dated
September 2, 1993, and the response of the SEC, dated January 7, 1994,
to the no-action request.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Annual Compliance Certificate attached as
Exhibit 20.
Reference is made to the annual Independent Accountant's Report on the
Servicer's compliance with loan servicing standards as prepared by KPMG
Peat Marwick, the Servicer's and Registrant's Independent Certified
Public Accountants, accompanied by the Registrant's Management
Assertion, and attached as Exhibit 99 hereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Omitted pursuant to the "Request for no-action letter forwarded to the
Office of Chief Counsel Division of Corporate Financing," dated
September 2, 1993, and the response of the SEC, dated January 7, 1994,
to the no-action request.
ITEM 11. EXECUTIVE COMPENSATION
Omitted pursuant to the "Request for no-action letter forwarded to the
Office of Chief Counsel Division of Corporate Financing," dated
September 2, 1993, and the response of the SEC, dated January 7, 1994,
to the no-action request.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following information is furnished as of March 10, 1999 as to each
Certificateholder of record of more than 5% of the Certificates:
Amount of
Name and Address of Security of
Title of Class Beneficial Owner Beneficial % of
Owner Class
The Money Store The Bank of New York 10,000,000 11.9
SBA Loan-Backed 925 Patterson Plank Rd.
Adjustable Rate Secaucus, NJ 07094
Certificates,
Class A
Norwest Bank Minnesota, 14,600,000 17.4
National Association
733 Marquette Avenue
Minneapolis, MN 55479-0056
Prudential Securities 35,400,000 42.3
Incorporated
Issuer Services
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
WESTLB Securities Americas 23,700,000 28.3
Inc.
*Participant Contact Not Found*
Amount of
Name and Address of Security of
Title of Class Beneficial Owner Beneficial % of
Owner Class
The Money Store The Bank of New York 6,300,000 100%
SBA Loan-Backed 925 Patterson Plank Rd.
Adjustable Rate Secaucus, NJ 07094
Certificates,
Class B
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) None
(b)-(d) Omitted pursuant to the "Request for no-action letter forwarded
to the Office of Chief Counsel Division of Corporate Financing,"
dated September 2, 1993, and the response of the SEC, dated
January 7, 1994, to the no-action request.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K
(a)
1. Not applicable.
2. Not applicable
3. Exhibits
13. Annual Statement
20. Annual Compliance Certificate
99. Annual Independent Accountant's Report on the Servicer's
compliance with loan servicing standards as prepared by
KPMG Peat Marwick, the Servicer's and Registrant's
Independent Certified Public Accountants, accompanied by
the Registrant's Management Assertion.
(b)-(d) Omitted pursuant to the "Request for no-action letter forwarded to
the Office of Chief Counsel Division of Corporate Financing,"
dated September 2, 1993, and the response of the SEC, dated
January 7, 1994, to the no-action request.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized as representative on behalf
of the trust on the 31st day of March, 1999.
THE MONEY STORE INVESTMENT CORPORATION
THE MONEY STORE OF NEW YORK, INC.
By: /s/ JAMES RANSOM
------------------------------
James Ransom
Chief Accounting Officer
<PAGE>
EXHIBIT INDEX
DESCRIPTION PAGE NUMBER
Annual Statement 7
Annual Compliance Certificate 10
Annual Independent Accountant's Report 11
EXHIBIT 13
ANNUAL SERVICER'S STATEMENT
IN ACCORDANCE WITH SECTION 6.09 OF THE POOLING AND SERVICING
AGREEMENT DATED AS OF FEBRUARY 28, 1998, THE MONEY STORE INVESTMENT
CORPORATION REPORTS THE FOLLOWING INFORMATION PERTAINING TO SERIES
1998-1 FOR THE YEAR ENDED DECEMBER 31, 1998.
6. AGGREGATE AMOUNT OF INTEREST RECEIVED NET OF THE FTA's FEE,
PREMIUM PROTECTION FEE, ADDITIONAL FEE AND PORTION
PAYABLE TO REGISTERED HOLDERS 10,339,163.60
10. (A) CLASS A INTEREST DISTRIBUTION AMOUNT:
(i) ACCRUED INTEREST 4,178,504.10
(ii) SHORTFALL, IF ANY, ON A PRECEDING REMITTANCE
DATE PLUS INTEREST 0.00
(iii) CLASS A INTEREST DISTRIBUTION AMOUNT
ADJUSTMENT 29,309.81
TOTAL CLASS A INTEREST DISTRIBUTION AMOUNT 4,207,813.91
(B) CLASS B INTEREST DISTRIBUTION AMOUNT:
(i) ACCRUED INTEREST 336,143.10
(ii) SHORTFALL, IF ANY, ON A PRECEDING REMITTANCE
DATE PLUS INTEREST 0.00
(iii) CLASS B INTEREST DISTRIBUTION AMOUNT
ADJUSTMENT 2,360.82
TOTAL CLASS B INTEREST DISTRIBUTION AMOUNT 338,503.92
(C) CLASS A PRINCIPAL DISTRIBUTION AMOUNT:
(i) UNGUARANTEED PERCENTAGE OF PAYMENTS
AND OTHER RECOVERIES OF PRINCIPAL 3,971,676.19
(ii) PRINCIPAL PORTION OF THE UNGUARANTEED
INTEREST PURCHASED FOR BREACH OF
WARRANTY AND RECEIVED BY THE TRUSTEE 0.00
(iii) SUBSTITUTION ADJUSTMENTS 0.00
(iv) UNGUARANTEED PERCENTAGE OF
LOSSES THAT WERE LIQUIDATED 0.00
(v) UNGUARANTEED PERCENTAGE OF SBA LOAN
DELINQUENT 24 MONTHS OR UNCOLLECTIBLE 34,280.86
(vi) AMOUNT RELEASED FROM PRE-FUNDING ACCOUNT 147.93
(vii) RECALCULATED PRINCIPAL ADJUSTMENT (10.75)
TOTAL CLASS A PRINCIPAL DISTRIBUTION AMOUNT 4,006,094.23
(D) CLASS B PRINCIPAL DISTRIBUTION AMOUNT:
(i) UNGUARANTEED PERCENTAGE OF PAYMENTS
AND OTHER RECOVERIES OF PRINCIPAL 298,943.39
(ii) PRINCIPAL PORTION OF THE UNGUARANTEED
INTEREST PURCHASED FOR BREACH OF
WARRANTY AND RECEIVED BY THE TRUSTEE 0.00
(iii) SUBSTITUTION ADJUSTMENTS 0.00
(iv) UNGUARANTEED PERCENTAGE OF
LOSSES THAT WERE LIQUIDATED 0.00
(v) UNGUARANTEED PERCENTAGE OF SBA LOAN
DELINQUENT 24 MONTHS OR UNCOLLECTIBLE 2,580.28
(vi) AMOUNT RELEASED FROM PRE-FUNDING ACCOUNT 11.14
(vii) RECALCULATED PRINCIPAL ADJUSTMENT (0.81)
TOTAL CLASS B PRINCIPAL DISTRIBUTION AMOUNT 301,534.00
14. (A) WEIGHTED AVERAGE MATURITY 216.323
(B) WEIGHTED AVERAGE SBA LOAN INTEREST RATE 10.313%
<TABLE>
<CAPTION>
SERIES 1998-1 MARCH APRIL MAY JUNE JULY
6. AGGREGATE AMOUNT OF INTEREST RECEIVED NET OF THE FTA's
FEE, PREMIUM PROTECTION FEE, ADDITIONAL FEE AND PORTION
<S> <C> <C> <C> <C> <C>
PAYABLE TO REGISTERED HOLDER 1,158,179.14 888,887.04 759,019.94 1,289,408.50 1,485,511.25
10. (A) CLASS A INTEREST DISTRIBUTION AMOUNT:
(i) ACCRUED INTEREST 431,055.00 430,319.10 427,733.10 426,972.30 425,622.30
(ii) SHORTFALL, IF ANY, ON A PRECEDING REMITTANCE
DATE PLUS INTEREST 0.00 0.00 0.00 0.00 0.00
(iii) CLASS A INTEREST DISTRIBUTION AMOUNT
ADJUSTMENT 512.06 675.69 779.67 777.91 1,864.35
TOTAL CLASS A INTEREST DISTRIBUTION AMOUNT 431,567.06 430,994.79 428,512.77 427,750.21 427,486.65
(B) CLASS B INTEREST DISTRIBUTION AMOUNT:
(i) ACCRUED INTEREST 34,650.00 34,590.90 34,383.00 34,321.80 34,213.20
(ii) SHORTFALL, IF ANY, ON A PRECEDING REMITTANCE
DATE PLUS INTEREST 0.00 0.00 0.00 0.00 0.00
(iii) CLASS B INTEREST DISTRIBUTION AMOUNT
ADJUSTMENT 41.16 54.26 62.64 62.55 149.96
TOTAL CLASS B INTEREST DISTRIBUTION AMOUNT 34,691.16 34,645.16 34,445.64 34,384.35 34,363.16
(C) CLASS A PRINCIPAL DISTRIBUTION AMOUNT:
(i) UNGUARANTEED PERCENTAGE OF PAYMENTS
AND OTHER RECOVERIES OF PRINCIPAL 142,872.52 502,150.20 147,726.37 262,007.88 399,102.97
(ii) PRINCIPAL PORTION OF THE UNGUARANTEED
INTEREST PURCHASED FOR BREACH OF
WARRANTY AND RECEIVED BY THE TRUSTEE 0.00 0.00 0.00 0.00 0.00
(iii) SUBSTITUTION ADJUSTMENTS 0.00 0.00 0.00 0.00 0.00
(iv) UNGUARANTEED PERCENTAGE OF
LOSSES THAT WERE LIQUIDATED 0.00 0.00 0.00 0.00 0.00
(v) UNGUARANTEED PERCENTAGE OF SBA LOAN
DELINQUENT 24 MONTHS OR UNCOLLECTIBLE 0.00 0.00 0.00 0.00 0.00
(vi) AMOUNT RELEASED FROM PRE-FUNDING ACCOUNT 0.00 0.00 0.00 147.93 0.00
(vii) RECALCULATED PRINCIPAL ADJUSTMENT 0.00 0.00 0.00 (10.75) 0.00
TOTAL CLASS A PRINCIPAL DISTRIBUTION AMOUNT 142,872.52 502,150.20 147,726.37 262,145.06 399,102.97
(D) CLASS B PRINCIPAL DISTRIBUTION AMOUNT:
(i) UNGUARANTEED PERCENTAGE OF PAYMENTS
AND OTHER RECOVERIES OF PRINCIPAL 10,753.85 37,796.26 11,119.19 19,721.02 30,040.01
(ii) PRINCIPAL PORTION OF THE UNGUARANTEED
INTEREST PURCHASED FOR BREACH OF
WARRANTY AND RECEIVED BY THE TRUSTEE 0.00 0.00 0.00 0.00 0.00
(iii) SUBSTITUTION ADJUSTMENTS 0.00 0.00 0.00 0.00 0.00
(iv) UNGUARANTEED PERCENTAGE OF
LOSSES THAT WERE LIQUIDATED 0.00 0.00 0.00 0.00 0.00
(v) UNGUARANTEED PERCENTAGE OF SBA LOAN
DELINQUENT 24 MONTHS OR UNCOLLECTIBLE 0.00 0.00 0.00 0.00 0.00
(vi) AMOUNT RELEASED FROM PRE-FUNDING ACCOUNT 0.00 0.00 0.00 11.14 0.00
(vii) RECALCULATED PRINCIPAL ADJUSTMENT 0.00 0.00 0.00 (0.81) 0.00
TOTAL CLASS B PRINCIPAL DISTRIBUTION AMOUNT 10,753.85 37,796.26 11,119.19 19,731.35 30,040.01
14. (A) WEIGHTED AVERAGE MATURITY 229.838 228.634 227.752 222.017 221.270
(B) WEIGHTED AVERAGE SBA LOAN INTEREST RATE 10.553% 10.555% 10.555% 10.566% 10.566%
</TABLE>
<TABLE>
<CAPTION>
SERIES 1998-1 AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER
6. AGGREGATE AMOUNT OF INTEREST RECEIVED NET OF THE FTA's
FEE, PREMIUM PROTECTION FEE, ADDITIONAL FEE AND PORTION
<S> <C> <C> <C> <C> <C>
PAYABLE TO REGISTERED HOLDER 789,988.53 913,129.76 1,038,489.84 1,025,724.16 990,825.44
10. (A) CLASS A INTEREST DISTRIBUTION AMOUNT:
(i) ACCRUED INTEREST 423,567.00 418,382.40 400,469.10 398,663.40 395,720.40
(ii) SHORTFALL, IF ANY, ON A PRECEDING REMITTANCE
DATE PLUS INTEREST 0.00 0.00 0.00 0.00 0.00
(iii) CLASS A INTEREST DISTRIBUTION AMOUNT
ADJUSTMENT 1,725.86 1,570.44 18,298.33 1,558.59 1,546.91
TOTAL CLASS A INTEREST DISTRIBUTION AMOUNT 425,292.86 419,952.84 418,767.43 400,221.99 397,267.31
(B) CLASS B INTEREST DISTRIBUTION AMOUNT:
(i) ACCRUED INTEREST 34,048.20 33,631.20 32,277.60 32,132.10 31,895.10
(ii) SHORTFALL, IF ANY, ON A PRECEDING REMITTANCE
DATE PLUS INTEREST 0.00 0.00 0.00 0.00 0.00
(iii) CLASS B INTEREST DISTRIBUTION AMOUNT
ADJUSTMENT 138.61 126.36 1,474.98 125.72 124.58
TOTAL CLASS B INTEREST DISTRIBUTION AMOUNT 34,186.81 33,757.56 33,752.58 32,257.82 32,019.68
(C) CLASS A PRINCIPAL DISTRIBUTION AMOUNT:
(i) UNGUARANTEED PERCENTAGE OF PAYMENTS
AND OTHER RECOVERIES OF PRINCIPAL 1,006,695.77 200,008.73 331,130.22 595,541.96 384,439.57
(ii) PRINCIPAL PORTION OF THE UNGUARANTEED
INTEREST PURCHASED FOR BREACH OF
WARRANTY AND RECEIVED BY THE TRUSTEE 0.00 0.00 0.00 0.00 0.00
(iii) SUBSTITUTION ADJUSTMENTS 0.00 0.00 0.00 0.00 0.00
(iv) UNGUARANTEED PERCENTAGE OF
LOSSES THAT WERE LIQUIDATED 0.00 0.00 0.00 0.00 0.00
(v) UNGUARANTEED PERCENTAGE OF SBA LOAN
DELINQUENT 24 MONTHS OR UNCOLLECTIBLE 0.00 0.00 34,280.86 0.00 0.00
(vi) AMOUNT RELEASED FROM PRE-FUNDING ACCOUNT 0.00 0.00 0.00 0.00 0.00
(vii) RECALCULATED PRINCIPAL ADJUSTMENT 0.00 0.00 0.00 0.00 0.00
TOTAL CLASS A PRINCIPAL DISTRIBUTION AMOUNT 1,006,695.77 200,008.73 365,411.08 595,541.96 384,439.57
(D) CLASS B PRINCIPAL DISTRIBUTION AMOUNT:
(i) UNGUARANTEED PERCENTAGE OF PAYMENTS
AND OTHER RECOVERIES OF PRINCIPAL 75,772.80 15,054.42 24,923.78 44,825.74 28,936.32
(ii) PRINCIPAL PORTION OF THE UNGUARANTEED
INTEREST PURCHASED FOR BREACH OF
WARRANTY AND RECEIVED BY THE TRUSTEE 0.00 0.00 0.00 0.00 0.00
(iii) SUBSTITUTION ADJUSTMENTS 0.00 0.00 0.00 0.00 0.00
(iv) UNGUARANTEED PERCENTAGE OF
LOSSES THAT WERE LIQUIDATED 0.00 0.00 2,580.28 0.00 0.00
(v) UNGUARANTEED PERCENTAGE OF SBA LOAN
DELINQUENT 24 MONTHS OR UNCOLLECTIBLE 0.00 0.00 0.00 0.00 0.00
(vi) AMOUNT RELEASED FROM PRE-FUNDING ACCOUNT 0.00 0.00 0.00 0.00 0.00
(vii) RECALCULATED PRINCIPAL ADJUSTMENT 0.00 0.00 0.00 0.00 0.00
TOTAL CLASS B PRINCIPAL DISTRIBUTION AMOUNT 75,772.80 15,054.42 27,504.06 44,825.74 28,936.32
14. (A) WEIGHTED AVERAGE MATURITY 219.879 219.021 218.197 217.081 216.323
(B) WEIGHTED AVERAGE SBA LOAN INTEREST RATE 10,564% 10.563% 10.314% 10.314% 10.313%
</TABLE>
BY: /s/ JAMES RANSOM
-------------------------
James Ransom
Chief Accounting Officer
EXHIBIT 20
OFFICER'S STATEMENT
James Ransom, Chief Accounting Officer of The Money Store Investment
Corporation (the Servicer), in accordance with Section 7.04 of the Pooling and
Servicing Agreement (Agreement) dated as of February 28, 1998 wherein The Money
Store Investment Corporation is the Servicer states the following pertaining to
Series 1998-1:
(i) the Servicer has fully complied with articles V and VII;
(ii) a review of the activities of the Servicer during 1998 and of
its performance under the Agreement has been made under my
supervision;
(iii) to the best of my knowledge, based on my review, the Servicer has
fulfilled all its obligations under the Agreement throughout 1998
and there has been no default in the fulfillment of any such
obligation.
THE MONEY STORE COMMERCIAL MORTGAGE, INC.
BY: /s/ JAMES RANSOM
--------------------------
James Ransom
Chief Accounting Officer
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Directors
The Money Store Inc.:
We have examined management's assertion about The Money Store Inc.'s (a
wholly-owned subsidiary of First Union National Bank) compliance with the
minimum servicing standards relating to its servicing of commercial loans set
forth in the Mortgage Bankers Association of America's (MBA's) UNIFORM SINGLE
ATTESTATION PROGRAM FOR MORTGAGE BANKERS (USAP), except minimum servicing
standards V.4. and VI.1., which the MBA has interpreted as being inapplicable to
the servicing of commercial and multifamily loans, as of and for the year ended
December 31, 1998 included in the accompanying management assertion. Management
is responsible for The Money Store Inc.'s compliance with those minimum
servicing standards. Our responsibility is to express an opinion on management's
assertion about The Money Store Inc.'s compliance based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about The Money Store Inc.'s compliance
with the minimum servicing standards and performing such other procedures as we
considered necessary in the circumstances. We believe that our examination
provides a reasonable basis for our opinion. Our examination does not provide a
legal determination on The Money Store Inc.'s compliance with the minimum
servicing standards.
In our opinion, management's assertion that, except for noncompliance by The
Money Store Inc. relating to custodial bank account reconciliations and the
titling of custodial bank accounts, The Money Store Inc. complied in all
material respects with the aforementioned minimum servicing standards relating
to its servicing of commercial loans as of and for the year ended December 31,
1998 is fairly stated, in all material respects.
March 12, 1999
<PAGE>
MANAGEMENT'S ASSERTION
As of and for the year ended December 31, 1998, The Money Store Inc. ("the
Company") has complied in all material respects with the minimum servicing
standards relating to its servicing of commercial loans set forth in the
Mortgage Bankers Association of America's (MBA's) UNIFORM SINGLE ATTESTATION
PROGRAM FOR MORTGAGE BANKERS (USAP), except for minimum servicing standards V.4.
and VI.1., which the MBA has interpreted as being inapplicable to the servicing
of commercial and multifamily loans.
In 1998, the Company was not in compliance with USAP standard I.1. During 1998,
management of the Company implemented processes and staffing changes to ensure
that custodial accounts met the requirements of USAP standard I.1.. Based on the
method that the Company uses to calculate investor remittances, it is
management's belief that this instance of custodial bank account noncompliance
did not materially affect the accuracy of any amounts remitted to trustees or
investors.
In 1998, the Company was not in compliance with USAP standard I.3., which
requires each custodial account be maintained at a federally insured depository
institution in trust for the applicable investor. While all custodial accounts
are maintained in a federally insured depository institution, some accounts are
lacking the appropriate "in trust for" designations. Management is in the
process of correcting the titling of these accounts.
As of and for the year ended December 31, 1998, the Company had in effect a
fidelity bond policy in the amount of $16 million. The Company had in effect an
errors and omissions policy in the amount of $3 million for the period from
January 1, 1998 to June 30, 1998 and an errors and omissions policy in the
amount of $20 million for the period from July 1, 1998 to December 31, 1998.
/s/ ARTHUR Q. LYON, MARCH 12, 1999
- --------------------------------- --------------------
Arthur Q. Lyon, CFO Date
The Money Store Inc.
/s/ DONALD COOMBE MARCH 12, 1999
- --------------------------------- --------------------
Donald Coombe, VP-Loan Servicing Date
The Money Store Inc.
