<PAGE>
Filed Pursuant to Rule 424(b)(2)
Registration File No.: 333-24489
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 WITHOUT THE DELIVERY OF A FINAL FORM OF THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS TO WHICH IT RELATES. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS TO WHICH IT RELATES 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.
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 22, 1998
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED NOVEMBER 20, 1997
$1,154,294,000 (APPROXIMATE)
MORTGAGE CAPITAL FUNDING, INC.
MULTIFAMILY/COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-MC1
The Mortgage Capital Funding, Inc., Multifamily/Commercial Mortgage
Pass-Through Certificates, Series 1998-MC1 (the "Certificates") will consist
of 18 classes (each, a "Class") of Certificates, designated as: (i) the Class
A-1 and Class A-2 Certificates (collectively, the "Class A Certificates");
(ii) the Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class
J, Class K, Class L, Class M and Class N Certificates (collectively with the
Class A Certificates, the "Sequential Pay Certificates"); (iii) the Class X
Certificates (collectively with the Sequential Pay Certificates, the "REMIC
Regular Certificates"); and (iv) the Class R-I, Class R-II and Class R-III
Certificates (collectively, the "REMIC Residual Certificates"). Only the
Class X, Class A, Class B, Class C, Class D, Class E, Class F and Class G
Certificates (collectively, the "Offered Certificates") are offered hereby.
The respective Classes of Offered Certificates will be issued in the
aggregate principal amounts (each, a "Certificate Balance") or, in the case
of the Class X Certificates, in the aggregate notional amount (a "Notional
Amount"), and will accrue interest at the per annum rates (each, a
"Pass-Through Rate"), set forth or otherwise described in the table below or
in the footnotes thereto.
(cover page continued on page S-3)
THE OFFERED CERTIFICATES DO NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
CITICORP REAL ESTATE, INC., CITIBANK, N.A., CITICORP BANKING CORPORATION,
MORTGAGE CAPITAL FUNDING, INC. OR THEIR ULTIMATE PARENT, CITICORP, EXCEPT AS
SET FORTH HEREIN. NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
SEE "RISK FACTORS" BEGINNING ON PAGE S-34 IN THIS PROSPECTUS SUPPLEMENT AND
PAGE 14 IN THE PROSPECTUS FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE OFFERED CERTIFICATES.
<TABLE>
<CAPTION>
INITIAL
CERTIFICATE
BALANCE OR ASSUMED FINAL RATINGS RATED FINAL
NOTIONAL AMOUNT PASS-THROUGH DISTRIBUTION DATE (S&P AND DISTRIBUTION
CLASS (1) RATE (2) FITCH)(3) DATE (3)
- ------------ ----------------- -------------- ------------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Class A-1 .. $ 228,221,000 % June 18, 2007 AAA/AAA March 18, 2030
Class A-2 .. $ 668,830,000 % January 18, 2008 AAA/AAA March 18, 2030
Class X ..... $1,319,193,757(4) %(5) January 18, 2009 AAAr/AAA March 18, 2030
Class B ..... $ 52,768,000 % January 18, 2008 AA/AA March 18, 2030
Class C ..... $ 72,556,000 %(6) January 18, 2008 A/A+ March 18, 2030
Class D ..... $ 13,192,000 %(6) January 18, 2008 A-/A March 18, 2030
Class E ..... $ 65,959,000 %(6) January 18, 2008 BBB+/BBB+ March 18, 2030
Class F ..... $ 13,192,000 %(6) January 18, 2008 BBB/BBB March 18, 2030
Class G ..... $ 39,576,000 %(6) February 18, 2008 NR/BBB- March 18, 2030
</TABLE>
(footnotes on page S-3)
The Offered Certificates are offered severally by Goldman, Sachs & Co. and
Citibank, N.A. (the "Underwriters"), as specified herein, from time to time
to the public in negotiated transactions or otherwise at varying prices to be
determined at the time of sale (which prices will include interest from April
6, 1998). Proceeds to the Sponsor from the sale of the Offered Certificates
will be an amount equal to approximately % of the initial aggregate
Certificate Balance of the Offered Certificates, plus accrued interest,
before deducting expenses payable by the Sponsor.
The Offered Certificates are offered by the Underwriters, subject to
receipt and acceptance by them and subject to their right to reject any order
in whole or in part. It is expected that delivery of the Offered Certificates
will be made in book-entry form only through the facilities of The Depository
Trust Company, in New York, New York on or about May 5, 1998 against payment
therefor in immediately available funds.
JOINT LEAD MANAGERS AND BOOKRUNNERS
GOLDMAN, SACHS & CO. CITIBANK [LOGO]
The date of this Prospectus Supplement is April , 1998.
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[MAP]
MORTGAGE CAPITAL FUNDING, INC.
Multifamily/Commercial Mortgage Pass-Through Certificates, Series 1998-MCI
Geographic Overview of Mortgage Pool
UTAH
5 properties
$13,066,234
1.0% of total
IDAHO
1 property
$3,985,325
0.3% of total
Montana
1 property
$1,793,855
0.1% of total
KANSAS
1 property
$1,411,473
0.1% of total
MISSOURI
2 properties
$7,327,802
0.6% of total
NEBRASKA
4 properties
$9,564,911
0.7% of total
IOWA
2 properties
$13,466,615
1.0% of total
ILLINOIS
11 properties
$64,063,008
4.9% of total
WISCONSIN
3 properties
$11,013,502
0.8% of total
MICHIGAN
8 properties
$45,845,822
3.5% of total
INDIANA
3 properties
$16,628,201
1.3% of total
OHIO
7 properties
$36,603,532
2.8% of total
PENNSYLVANIA
1 property
$2,827,644
0.2% of total
<PAGE>
NEW YORK
8 properties
$80,396,172
6.1% of total
NEW HAMPSHIRE
3 properties
$2,690,408
0.2% of total
VERMONT
1 property
$5,482,019
0.4% of total
MAINE
2 properties
$9,217,110
0.7% of total
MASSACHUSETTS
4 properties
$27,982,646
2.1% of total
RHODE ISLAND
1 property
$3,548,080
0.3% of total
CONNECTICUT
3 properties
$7,172,850
0.5% of total
NEW JERSEY
13 properties
$55,733,943
4.2% of total
D.C.
1 property
$13,759,302
1.0% of total
MARYLAND
2 properties
$11,732,737
0.9% of total
NORTH CAROLINA
4 properties
$16,966,137
1.3% of total
VIRGINIA
8 properties
$44,724,749
3.4% of total
SOUTH CAROLINA
3 properties
$10,425,398
0.8% of total
GEORGIA
2 properties
$7,012,571
0.5% of total
<PAGE>
TENNESSEE
12 properties
$48,098,973
3.7% of total
FLORIDA
17 properties
$107,056,112
8.1% of total
KENTUCKY
4 properties
$30,841,029
2.3% of total
ALABAMA
2 properties
$13,733,312
1.0% of total
MISSISSIPPI
6 properties
$17,762,488
1.4% of total
LOUISIANA
1 property
$1,606,283
0.1% of total
TEXAS
42 properties
$158,205,519
12.0% of total
OKLAHOMA
13 properties
$47,823,577
3.6% of total
COLORADO
4 properties
$26,753,286
2.0% of total
ARIZONA
11 properties
$33,581,837
2.6% of total
CALIFORNIA
28 properties
$162,632,161
12.3% of total
NEVADA
9 properties
$24,193,536
1.8% of total
OREGON
5 properties
$106,252,310
8.1% of total
WASHINGTON
3 properties
$16,211,290
1.2% of total
<PAGE>
WEIGHTED AVERAGES BY PROPERTY TYPE
Anchored Retail 23%
Office 24%
Multifamily 31%
Self-
Storage .2%
Health
Care .5%
Other 1%
Mobile
Home
Park 1%
Industrial/
Warehouse 3%
Lodging 7%
Retail 9%
[ ] (less than or equal to) 1.0%
of Initial Pool Balance
[ ] 1.1% -5.0%
of Initial Pool Balance
[ ] 5.1% -10.0%
of Initial Pool Balance
[ ] (greater than) 10.0%
of Initial Pool Balance
<PAGE>
(footnotes from cover)
- ------------
(1) Subject to a variance of plus or minus 5%.
(2) The "Assumed Final Distribution Date" with respect to any Class of
Offered Certificates is the Distribution Date on which the final
distribution would occur for such Class of Certificates based upon the
assumption that no Mortgage Loan (other than a Hyper-Amortization Loan
(as defined herein)) is prepaid, in whole or in part, prior to its
stated maturity and that the Hyper-Amortization Loans are not prepaid
prior to, but are paid in their entirety on, their respective
Anticipated Repayment Dates (as defined herein) and otherwise based on
the Maturity Assumptions (as described herein). The actual performance
and experience of the Mortgage Loans will likely differ from such
assumptions. See "Yield and Maturity Considerations" herein.
(3) It is a condition to their issuance that the respective Classes of
Offered Certificates be assigned ratings by Standard & Poor's Rating
Services, a Division of the McGraw-Hill Companies, Inc. ("S&P") and/or
Fitch IBCA, Inc. ("Fitch"; and together with S&P, the "Rating
Agencies") no lower than those set forth above. The ratings on the
Offered Certificates do not represent any assessments of (i) the
likelihood or frequency of voluntary or involuntary principal
prepayments on the Mortgage Loans, (ii) the degree to which such
prepayments might differ from those originally anticipated, (iii)
whether and to what extent Prepayment Premiums will be received on the
Mortgage Loans or (iv) whether and to what extent Excess Interest will
be received on the Hyper-Amortization Loans. Also, a security rating
does not represent any assessment of the yield to maturity that
investors may experience or the possibility that the Class X
Certificateholders might not fully recover their initial investment in
the event of rapid prepayments of the Mortgage Loans (including both
voluntary and involuntary prepayments). The "Rated Final Distribution
Date" for each Class of Offered Certificates has been set at the first
Distribution Date that follows the second anniversary of the end of the
amortization term for the Mortgage Loan that, as of the Cut-off Date,
has the longest remaining amortization term, irrespective of its
scheduled maturity. See "Ratings" herein.
(4) The Class X Certificates will not have a Certificate Balance. The Class
X Certificates will accrue interest on a Notional Amount that is equal
to the aggregate of the Certificate Balances of all the Classes of
Sequential Pay Certificates outstanding from time to time.
(5) Initial Pass-Through Rate. The Pass-Through Rate for the Class X
Certificates is variable and will, in general, equal the excess, if
any, of the Weighted Average Net Mortgage Rate (as defined herein) from
time to time, over the weighted average of the Pass-Through Rates for
all the Classes of Sequential Pay Certificates from time to time.
(6) If the Weighted Average Net Mortgage Rate for any Distribution Date is
ever less than the rate specified above for the Class C, Class D, Class
E, Class F or Class G Certificates, then the Pass-Through Rate for such
Class of Certificates for such Distribution Date will equal the
Weighted Average Net Mortgage Rate for such Distribution Date.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE OFFERED
CERTIFICATES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH OFFERED CERTIFICATES, AND THE IMPOSITION OF A PENALTY
BID, IN CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING" HEREIN.
(continued from cover)
The Certificates will represent in the aggregate the entire beneficial
ownership interest in a trust (the "Trust") to be established by Mortgage
Capital Funding, Inc. (the "Sponsor"), the assets of which (such assets
collectively, the "Trust Fund") will consist primarily of a segregated pool
(the "Mortgage Pool") of 253 multifamily and commercial mortgage loans (the
"Mortgage Loans") having the characteristics described herein. As of the
Cut-off Date (as defined herein), the Mortgage Loans had an aggregate
principal balance, after taking into account all payments of principal due on
or before such date, whether or not received, of $1,319,193,758 (the "Initial
Pool Balance"), subject to a variance of plus or minus 5%.
One hundred sixteen of the Mortgage Loans (the "Citi Mortgage Loans"),
which represent 39.84% of the Initial Pool Balance, were originated by or on
behalf of one or more affiliates of Citicorp Real Estate, Inc. (the "Mortgage
Loan Seller"), a commonly controlled affiliate of the Sponsor, pursuant to
its conduit program, and are currently held by the Mortgage Loan Seller or by
one or more of its affiliates. One hundred eight of the Mortgage Loans (the
"AMRESCO Mortgage Loans"), which represent 41.03% of the Initial Pool
Balance, were originated by or on behalf of AMRESCO Capital, L.P. ("AMRESCO
Capital"). The AMRESCO Mortgage Loans are currently held beneficially by one
or more affiliates of AMRESCO Capital, and will be transferred to AMRESCO
Capital on or prior to the Delivery Date.
S-3
<PAGE>
Twenty-nine of the Mortgage Loans (the "Goldman Mortgage Loans"), which
represent 19.13% of the Initial Pool Balance, are currently held by Goldman
Sachs Mortgage Company ("Goldman Sachs Mortgage"). One Goldman Mortgage Loan
(representing 4.31% of the Initial Pool Balance) was originated by Goldman
Sachs Mortgage, 21 of the Goldman Mortgage Loans (representing 10.21% of the
Initial Pool Balance) were acquired from Central Park Capital, L.P., an
affiliate of Goldman Sachs Mortgage, one Goldman Mortgage Loan (representing
3.80% of the Initial Pool Balance) was acquired from Archon Financial L.P.,
an affiliate of Goldman Sachs Mortgage, and six of the Goldman Mortgage Loans
(representing 0.81% of the Initial Pool Balance) were acquired from Imperial
Commercial Capital Corp. On or before the Delivery Date, Goldman Sachs
Mortgage will acquire the AMRESCO Mortgage Loans from AMRESCO Capital, and
the Mortgage Loan Seller will acquire the AMRESCO Mortgage Loans and the
Goldman Mortgage Loans from Goldman Sachs Mortgage. In addition, on or before
the Delivery Date, the Mortgage Loan Seller will, at the direction of the
Sponsor, transfer all of the Mortgage Loans, without recourse, to the Trustee
for the benefit of holders of the Certificates (the "Certificateholders").
See "Description of the Mortgage Pool" and "Risk Factors -- The Mortgage
Loans" herein.
Distributions on the Certificates will be made, to the extent of available
funds, on the 18th day of each month or, if any such 18th day is not a
business day, then on the next succeeding business day, beginning in May 1998
(each, a "Distribution Date"). As more fully described herein, distributions
allocable to interest accrued on each Class of the REMIC Regular Certificates
(the REMIC Residual Certificates will not accrue interest) will be made on
each Distribution Date based on the Pass-Through Rate then applicable to such
Class and the Certificate Balance or, in the case of the Class X
Certificates, the Notional Amount of such Class outstanding immediately prior
to such Distribution Date. Distributions allocable to principal of the
respective Classes of Sequential Pay Certificates will be made in the amounts
and in accordance with the priorities described herein until the Certificate
Balance of each such Class is reduced to zero. Neither the Class X
Certificates nor the REMIC Residual Certificates will have a Certificate
Balance or entitle the holders thereof to receive distributions of principal.
Any prepayment premiums, charges or fees, including those in the form of
yield maintenance payments (collectively, "Prepayment Premiums"), actually
collected on the Mortgage Loans will be distributed among the respective
Classes of Offered Certificates in the amounts and in accordance with the
priorities described herein. See "Description of the Certificates --
Distributions" herein.
As and to the extent described herein, the respective rights of the
holders of the Class B, Class C, Class D, Class E, Class F, Class G, Class H,
Class J, Class K, Class L, Class M, Class N and REMIC Residual Certificates
(collectively, the "Subordinate Certificates") to receive distributions of
amounts collected or advanced on or in respect of the Mortgage Loans will be
subordinated to those of the holders of the Class X and Class A Certificates
(collectively, the "Senior Certificates") and, further, to those of the
holders of each other Class of Subordinate Certificates, if any, with an
earlier alphabetical Class designation. See "Description of the Certificates
- -- Distributions" and "--Subordination; Allocation of Losses and Certain
Expenses" herein.
The yield to maturity of each Class of Offered Certificates will depend
on, among other things, the rate and timing of principal payments (including
by reason of or as affected by prepayments, hyper-amortization, loan
extensions, defaults and liquidations) and losses on the Mortgage Loans that
result in a reduction of the Certificate Balance or Notional Amount of such
Class. The yield to maturity of the Class X Certificates will be highly
sensitive to the rate and timing of principal payments (including by reason
of or as affected by prepayments, hyper-amortization, loan extensions,
defaults and liquidations) and losses on the Mortgage Loans, and investors in
the Class X Certificates should fully consider the associated risks,
including the risk that an extremely rapid rate of amortization, prepayment
and other liquidation of the Mortgage Loans could result in the failure of
such investors to recoup fully their initial investments. Any delay in
collection of a Balloon Payment on any Mortgage Loan that would otherwise be
distributable in reduction of the Certificate Balance of a Class of
Sequential Pay Certificates, whether such delay is due to borrower default or
to modification of the related Mortgage Loan as described herein, will likely
extend the weighted average life of such Class of Certificates. See "Risk
Factors", "Description of the Certificates -- Distributions" and "Yield and
Maturity Considerations" herein. See also "Yield and Maturity Considerations"
and "Risk Factors -- Prepayments; Average Life of Certificates; Yields" in
the Prospectus.
S-4
<PAGE>
As described herein, three separate "real estate mortgage investment
conduit" ("REMIC") elections will be made with respect to the Trust Fund for
federal income tax purposes (the REMICs formed thereby being herein referred
to as "REMIC I", "REMIC II" and "REMIC III", respectively). The Offered
Certificates will evidence "regular interests" in REMIC III. See "Certain
Federal Income Tax Consequences" herein and "Material Federal Income Tax
Consequences" in the Prospectus.
There is currently no secondary market for the Offered Certificates. The
Underwriters intend to make a secondary market in the Offered Certificates,
but are not obligated to do so. There can be no assurance that such a market
will develop or, if it does develop, that it will continue. The Offered
Certificates will not be listed on any securities exchange. See "Risk Factors
- -- The Certificates -- Limited Liquidity" herein.
THE PROSPECTUS THAT ACCOMPANIES THIS PROSPECTUS SUPPLEMENT CONTAINS
IMPORTANT INFORMATION REGARDING THIS OFFERING THAT IS NOT CONTAINED HEREIN,
AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THE PROSPECTUS AND THIS
PROSPECTUS SUPPLEMENT IN FULL TO OBTAIN MATERIAL INFORMATION CONCERNING THE
OFFERED CERTIFICATES. SALES OF THE OFFERED CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THE PROSPECTUS AND THIS
PROSPECTUS SUPPLEMENT.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS MAY BE USED BY CITIBANK,
N.A., CITICORP SECURITIES, INC. OR CITIBANK INTERNATIONAL PLC, AFFILIATES OF
THE SPONSOR AND WHOLLY-OWNED SUBSIDIARIES OF CITICORP, IN CONNECTION WITH
OFFERS AND SALES RELATED TO MARKET-MAKING TRANSACTIONS IN THE CERTIFICATES.
CITIBANK, N.A., CITICORP SECURITIES, INC. OR CITIBANK INTERNATIONAL PLC MAY
ACT AS PRINCIPAL OR AGENT IN SUCH TRANSACTIONS. SUCH SALES WILL BE MADE AT
PRICES RELATED TO PREVAILING MARKET PRICES AT THE TIME OF SALE.
FORWARD-LOOKING STATEMENTS
IF AND WHEN INCLUDED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS OR IN DOCUMENTS INCORPORATED HEREIN OR THEREIN BY REFERENCE, THE
WORDS "EXPECTS", "INTENDS", "ANTICIPATES", "ESTIMATES" AND ANALOGOUS
EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. ANY SUCH
STATEMENTS, WHICH MAY INCLUDE STATEMENTS CONTAINED IN "RISK FACTORS", ARE
INHERENTLY SUBJECT TO A VARIETY OF RISKS AND UNCERTAINTIES THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED. SUCH RISKS AND
UNCERTAINTIES INCLUDE, AMONG OTHERS, GENERAL ECONOMIC AND BUSINESS
CONDITIONS, COMPETITION, CHANGES IN POLITICAL, SOCIAL AND ECONOMIC
CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL
REGULATIONS, CUSTOMER PREFERENCES AND VARIOUS OTHER MATTERS, MANY OF WHICH
ARE BEYOND THE SPONSOR'S CONTROL. THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY
AS OF THE DATE OF THIS PROSPECTUS SUPPLEMENT. THE SPONSOR EXPRESSLY DISCLAIMS
ANY OBLIGATIONS OR UNDERTAKING TO RELEASE PUBLICLY ANY UPDATES OR REVISIONS
TO ANY FORWARD-LOOKING STATEMENT CONTAINED HEREIN TO REFLECT ANY CHANGE IN
THE SPONSOR'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS,
CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED.
S-5
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
EXECUTIVE SUMMARY ................................................... S-8
SUMMARY OF PROSPECTUS SUPPLEMENT .................................... S-10
RISK FACTORS ........................................................ S-34
The Certificates .................................................. S-34
The Mortgage Loans ................................................ S-35
DESCRIPTION OF THE MORTGAGE POOL .................................... S-43
General ........................................................... S-43
Certain Terms and Conditions of the Mortgage Loans ................ S-45
Additional Mortgage Loan Information .............................. S-48
Certain Underwriting Matters ...................................... S-49
The Mortgage Loan Seller and the Additional Warranting Parties .... S-52
Assignment of the Mortgage Loans; Repurchases ..................... S-52
Representations and Warranties; Repurchases ....................... S-53
Changes in Mortgage Pool Characteristics .......................... S-56
SERVICING OF THE MORTGAGE LOANS ..................................... S-57
General ........................................................... S-57
The Master Servicer ............................................... S-58
The Special Servicer .............................................. S-59
Sub-Servicers ..................................................... S-59
Servicing and Other Compensation and Payment of Expenses .......... S-60
Evidence as to Compliance ......................................... S-63
Modifications, Waivers, Amendments and Consents ................... S-63
Sale of Defaulted Mortgage Loans .................................. S-65
REO Properties .................................................... S-65
Inspections; Collection of Operating Information .................. S-66
Termination of the Special Servicer ............................... S-66
DESCRIPTION OF THE CERTIFICATES ..................................... S-68
General ........................................................... S-68
Registration and Denominations .................................... S-68
Certificate Balances and Notional Amount .......................... S-69
Pass-Through Rates ................................................ S-69
Distributions ..................................................... S-71
Subordination; Allocation of Losses and Certain Expenses .......... S-78
P&I Advances ...................................................... S-79
Appraisal Reductions .............................................. S-80
Reports to Certificateholders; Certain Available Information ...... S-81
Voting Rights ..................................................... S-85
Termination ....................................................... S-85
The Trustee ....................................................... S-85
The Fiscal Agent .................................................. S-86
YIELD AND MATURITY CONSIDERATIONS ................................... S-86
Yield Considerations .............................................. S-86
Weighted Average Lives ............................................ S-89
Price/Yield Tables ................................................ S-95
Yield Sensitivity of the Class X Certificates ..................... S-103
S-6
<PAGE>
PAGE
---------
USE OF PROCEEDS ...................................................... S-105
CERTAIN FEDERAL INCOME TAX CONSEQUENCES .............................. S-105
General ............................................................ S-105
Discount and Premium; Prepayment Premiums .......................... S-105
Characterization of Investments in Offered Certificates ............ S-106
Possible Taxes on Income From Foreclosure Property and Other Taxes . S-107
Reporting and Other Administrative Matters ......................... S-107
CERTAIN ERISA CONSIDERATIONS ......................................... S-108
LEGAL INVESTMENT ..................................................... S-111
UNDERWRITING ......................................................... S-111
LEGAL MATTERS ........................................................ S-112
RATINGS .............................................................. S-112
INDEX OF PRINCIPAL DEFINITIONS ....................................... S-114
ANNEX A--Certain Characteristics of the Mortgage Loans ............... A-1
ANNEX B--Trustee Reports ............................................. B-1
ANNEX C--Preliminary Term Sheet ...................................... C-1
</TABLE>
S-7
<PAGE>
EXECUTIVE SUMMARY
The following Executive Summary does not include all relevant information
relating to the securities and collateral described herein, particularly with
respect to the risks and special considerations involved with an investment
in such securities and is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Certain capitalized terms used in this Executive
Summary may be defined elsewhere in this Prospectus Supplement, including in
Annex A hereto, or in the Prospectus. An "Index of Principal Definitions" is
included at the end of both this Prospectus Supplement and the Prospectus.
Terms that are used but not defined in this Prospectus Supplement have the
meanings specified in the Prospectus.
<TABLE>
<CAPTION>
INITIAL PASS-
CERTIFICATE APPROXIMATE APPROXIMATE THROUGH WEIGHTED
BALANCE OR PERCENT OF INITIAL RATE AS AVERAGE
NOTIONAL INITIAL POOL CREDIT COUPON OF DELIVERY LIFE PRINCIPAL
CLASS(ES) RATINGS (1) AMOUNT (2) BALANCE SUPPORT DESCRIPTION DATE (YEARS)(3) WINDOW (3)
- ------------- ----------- ----------------- -------------- --------- ------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Offered Certificates
- ---------------------------------------------------------------------------------------------------- ---------- -----------
A-1 AAA/AAA $ 228,221,000 17.30% 32.00% Fixed Rate ___% 5.535 5/98-6/07
- ------------- ----------- ----------------- -------------- --------- ------------- ------------- ---------- -----------
A-2 AAA/AAA $ 668,830,000 50.70% 32.00% Fixed Rate ___% 9.555 6/07-1/08
- ------------- ----------- ----------------- -------------- --------- ------------- ------------- ---------- -----------
X AAA/AAA $1,319,193,757(4) N/A N/A Variable ___% N/A N/A
Rate
(Interest
Only)
- ------------- ----------- ----------------- -------------- --------- ------------- ------------- ---------- -----------
B AA/AA $ 52,768,000 4.00% 28.00% Fixed Rate ___% 9.703 1/08-1/08
- ------------- ----------- ----------------- -------------- --------- ------------- ------------- ---------- -----------
C A/A+ $ 72,556,000 5.50% 22.50% Lesser of ___% 9.703 1/08-1/08
Specified
Rate and
Net WAC
- ------------- ----------- ----------------- -------------- --------- ------------- ------------- ---------- -----------
D A-/A $ 13,192,000 1.00% 21.50% Lesser of ___% 9.703 1/08-1/08
Specified
Rate and
Net WAC
- ------------- ----------- ----------------- -------------- --------- ------------- ------------- ---------- -----------
E BBB+/BBB+ $ 65,959,000 5.00% 16.50% Lesser of ___% 9.703 1/08-1/08
Specified
Rate and
Net WAC
- ------------- ----------- ----------------- -------------- --------- ------------- ------------- ---------- -----------
F BBB/BBB $ 13,192,000 1.00% 15.50% Lesser of ___% 9.703 1/08-1/08
Specified
Rate and
Net WAC
- ------------- ----------- ----------------- -------------- --------- ------------- ------------- ---------- -----------
G NR/BBB- $ 39,576,000 3.00% 12.50% Lesser of ___% 9.774 1/08-2/08
Specified
Rate and
Net WAC
- ------------- ----------- ----------------- -------------- --------- ------------- ------------- ---------- -----------
Private Certificates -- Not Offered Hereby
- ---------------------------------------------------------------------------------------------------- ---------- -----------
H --(5) $ 52,768,000 --(5) --(5) Lesser of ___% --(5) --(5)
Specified
Rate and
Net WAC
- ------------- ----------- ----------------- -------------- --------- ------------- ------------- ---------- -----------
J through N --(5) $ 112,131,757 --(5) --(5) Fixed Rate ___% --(5) --(5)
- ------------- ----------- ----------------- -------------- --------- ------------- ------------- ---------- -----------
</TABLE>
See footnotes on following page
S-8
<PAGE>
------------
(1) Ratings shown are those of S&P and Fitch, respectively. Classes marked
"NR" will not be rated by the applicable Rating Agency.
(2) Subject to a variance of plus or minus 5%.
(3) Based on the Maturity Assumptions (as defined in "Yield and Maturity
Considerations" herein).
(4) Notional Amount.
(5) These Classes are not offered hereby and this information has been
intentionally omitted.
Set forth below is certain information regarding the Mortgage Loans and
the Mortgaged Properties as of the Cut-off Date (all weighted averages set
forth below are based on the respective Cut-off Date Balances (as defined
herein) of the Mortgage Loans). Such information is described, and additional
information regarding the Mortgage Loans and the Mortgaged Properties is set
forth, under "Description of the Mortgage Pool" herein and in Annex A hereto.
MORTGAGE POOL CHARACTERISTICS
<TABLE>
<CAPTION>
CHARACTERISTICS ENTIRE MORTGAGE POOL
- ----------------------------------------------------------------------------- ------------------------
<S> <C>
Initial Pool Balance ......................................................... $1,319,193,758
Number of Mortgage Loans ..................................................... 253
Number of Mortgaged Properties ............................................... 261
Average Cut-off Date Balance ................................................. $5,214,205
Weighted Average Mortgage Rate ............................................... 7.490%
Weighted Average Remaining Term to Maturity or Anticipated Repayment Date ... 114.9 months
Weighted Average Underwriting Debt Service Coverage Ratio .................... 1.37x
Weighted Average Cut-off Date Loan-to-Value Ratio ............................ 73.2%
Weighted Average Seasoning.................................................... 4 months
</TABLE>
"Cut-off Date Loan-to-Value Ratio" and "Underwriting Debt Service Coverage
Ratio" are calculated as described in Annex A hereto.
S-9
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Certain capitalized terms used in this Summary
may be defined elsewhere in this Prospectus Supplement, including in Annex A
hereto, or in the Prospectus. An "Index of Principal Definitions" is included
at the end of both this Prospectus Supplement and the Prospectus. Terms that
are used but not defined in this Prospectus Supplement will have the meanings
specified in the Prospectus.
Title of Certificates
and Designation of Classes ... Mortgage Capital Funding, Inc.,
Multifamily/Commercial Mortgage Pass-Through
Certificates, Series 1998-MC1 (the
"Certificates"), will consist of 18 classes
(each, a "Class"), designated as: (i) the
Class A-1 and Class A-2 Certificates
(collectively, the "Class A Certificates");
(ii) the Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class J, Class K,
Class L, Class M and Class N Certificates
(collectively with the Class A Certificates,
the "Sequential Pay Certificates"); (iii)
the Class X Certificates (collectively with
the Sequential Pay Certificates, the "REMIC
Regular Certificates"); and (iv) the Class
R-I, Class R-II and Class R-III Certificates
(collectively, the "REMIC Residual
Certificates"). Only the Class X, Class A,
Class B, Class C, Class D, Class E, Class F
and Class G Certificates (collectively, the
"Offered Certificates") are offered hereby.
The Class H, Class J, Class K, Class L,
Class M and Class N Certificates and the
REMIC Residual Certificates (collectively,
the "Private Certificates") have not been
registered under the Securities Act of 1933,
as amended, and are not offered hereby.
Accordingly, to the extent this Prospectus
Supplement contains information regarding
the terms of the Private Certificates, such
information is provided because of its
potential relevance to a prospective
purchaser of an Offered Certificate.
Sponsor ....................... Mortgage Capital Funding, Inc., a Delaware
corporation. The Sponsor is a direct,
wholly-owned subsidiary of Citicorp Banking
Corporation, which is a direct, wholly-owned
subsidiary of Citicorp. The Sponsor is a
commonly controlled affiliate of the
Mortgage Loan Seller and of Citibank, N.A.,
which is the co-lead Underwriter. See
"Mortgage Capital Funding, Inc." in the
Prospectus and "Underwriting" herein.
Neither the Sponsor nor any of its
affiliates has insured or guaranteed the
Offered Certificates.
Trustee ....................... LaSalle National Bank, a nationally
chartered bank. See "Description of the
Certificates -- The Trustee" herein. The
Trustee will also have certain duties with
respect to REMIC administration (in such
capacity, the "REMIC Administrator").
Fiscal Agent .................. ABN AMRO Bank N.V., a Netherlands banking
corporation and the parent of the Trustee.
See "Description of the Certificates -- The
Fiscal Agent" herein.
S-10
<PAGE>
Master Servicer ............... AMRESCO Services, L.P., a Delaware limited
partnership. The Master Servicer is an
affiliate of AMRESCO Capital. See "Servicing
of the Mortgage Loans -- The Master
Servicer" herein.
Special Servicer .............. CRIIMI MAE Services Limited Partnership, a
Maryland limited partnership. See "Servicing
of the Mortgage Loans -- The Special
Servicer" herein.
Mortgage Loan Seller .......... Citicorp Real Estate, Inc., a direct,
wholly-owned subsidiary of Citibank. See
"Description of the Mortgage Pool -- The
Mortgage Loan Seller and the Additional
Warranting Parties" herein.
Additional Warranting Parties . Goldman Sachs Mortgage Company ("Goldman
Sachs Mortgage") and AMRESCO Capital, L.P.
("AMRESCO Capital").
Cut-off Date .................. April 1, 1998 or, with respect to the one
Mortgage Loan with a scheduled due date of
the 11th of each month, April 11, 1998.
References herein and in the Prospectus to
the "Cut-off Date" with respect to the
Mortgage Loans refer to the applicable
Cut-off Date for each Mortgage Loan.
Delivery Date ................. On or about May 5, 1998.
Record Date ................... With respect to each Class of Offered
Certificates and each Distribution Date
(other than the initial Distribution Date),
the last business day of the calendar month
immediately preceding the month in which
such Distribution Date occurs; and with
respect to the initial Distribution Date,
the Delivery Date.
Distribution Date ............. The 18th day of each month or, if any such
18th day is not a business day, the next
succeeding business day, commencing in May
1998.
Determination Date ............ The 11th day of each month or, if any such
11th day is not a business day, the
immediately preceding business day,
commencing in May 1998.
Collection Period ............. With respect to any Distribution Date, the
period that begins immediately following the
Determination Date in the calendar month
preceding the month in which such
Distribution Date occurs (or, in the case of
the initial Distribution Date, that begins
immediately following the Cut-off Date) and
ends on and includes the Determination Date
in the calendar month in which such
Distribution Date occurs.
Registration and Denominations The Offered Certificates will be issued in
book-entry form in original denominations
of: (i) in the case of the Class X
Certificates, $1,000,000 initial notional
amount and in any whole dollar denomination
in excess thereof; and (ii) in the case of
the other Offered Certificates, $10,000
initial principal amount and in any whole
dollar denomination in excess thereof. Each
S-11
<PAGE>
Class of Offered Certificates will be
represented by one or more Certificates
registered in the name of Cede & Co., as
nominee of The Depository Trust Company
("DTC"). No person acquiring an interest in
an Offered Certificate (any such person, a
"Certificate Owner") will be entitled to
receive a fully registered physical
certificate (a "Definitive Certificate")
representing such interest, except under the
limited circumstances described herein and
in the Prospectus. See "Description of the
Certificates -- Registration and
Denominations" herein and "Description of
the Certificates -- Book-Entry Registration
and Definitive Certificates" in the
Prospectus.
The Mortgage Pool ............. The Mortgage Pool will consist of 253
multifamily and commercial mortgage loans
(the "Mortgage Loans"), with an aggregate
Cut-off Date Balance of $1,319,193,758 (the
"Initial Pool Balance"), subject to a
variance of plus or minus 5%. All numerical
information provided herein with respect to
the Mortgage Loans is provided on an
approximate basis. All weighted average
information provided herein with respect to
the Mortgage Loans reflects weighting by
related Cut-off Date Balance. All
percentages of the Mortgage Pool, or of any
specified sub-group thereof, referred to
herein without further description are
approximate percentages by aggregate Cut-off
Date Balance. See "Description of the
Mortgage Pool --Changes in Mortgage Pool
Characteristics" herein.
The "Cut-off Date Balance" of each Mortgage
Loan is the unpaid principal balance thereof
as of the Cut-off Date, after application of
all payments of principal due on or before
such date, whether or not received. The
Cut-off Date Balances of the Mortgage Loans
range from $418,508 to $56,871,141 and the
average Cut-off Date Balance is $5,214,205.
Each Mortgage Loan is evidenced by a
promissory note (a "Mortgage Note") and is
secured by a mortgage, deed of trust or
similar security instrument (a "Mortgage")
that creates a first mortgage lien on a fee
simple and/or leasehold interest in real
property (a "Mortgaged Property") used for
commercial or multifamily residential
purposes, together with all buildings and
improvements and certain personal property
located thereon.
Nine separate sets of Mortgage Loans (the
"Cross-Collateralized Mortgage Loans") are,
solely as among the Mortgage Loans in each
such particular set, cross-defaulted and
cross-collateralized with each other.
Certain sets of such Cross-Collateralized
Mortgage Loans provide for one or more of
the related Mortgaged Properties to be
released upon the fulfilment of certain
conditions, including the satisfaction of a
debt service coverage test and/or the
payment by the related borrower of a release
price equal to a specified percentage
(generally between 100% and 125%) of the
loan amount allocated to the Mortgaged
Property to be released. In addition, three
other sets of such Cross-Collateralized
Mortgage Loans,
S-12
<PAGE>
representing 1.15%, 0.33% and 0.23%,
respectively, of the Initial Pool Balance,
provide that the related
cross-collateralization and cross-default
provisions may be terminated upon the
fulfillment of certain conditions, including
the meeting of a debt service coverage ratio
test, which the Sponsor expects to be
satisfied shortly following the Delivery
Date. The largest set of related
Cross-Collateralized Mortgage Loans
represents 1.82% of the Initial Pool
Balance. See "Description of the Mortgage
Pool -- General" herein and Annex A hereto.
In addition to the Cross-Collateralized
Mortgage Loans, there are five other
Mortgage Loans, which represent 4.33% of the
Initial Pool Balance, that are, in each such
case, secured by a Mortgage or Mortgages
encumbering two or more properties.
Accordingly, the total number of Mortgage
Loans reflected herein is 253, and the total
number of Mortgaged Properties reflected
herein is 261. Certain of such Mortgage
Loans permit one or more of the related
Mortgaged Properties to be released from the
lien of the related Mortgage upon the
satisfaction of certain conditions (except
with respect to the release of certain
undeveloped sub-parcels or parcels which, in
all but one case (as described herein), are
not material to the appraised value of the
Mortgaged Property), including the
satisfaction of a debt service coverage
ratio test and/or the payment of a release
price equal to a specified percentage
(generally between 100% and 125%) of the
allocated loan amount for the Mortgaged
Property to be released.
Certain Mortgage Loans permit the release of
certain non-real property collateral (for
example, the release of mobile homes in the
case of certain Mortgage Loans secured by
mobile home parks).
In general, the Mortgage Loans constitute
nonrecourse obligations of the related
borrower and, upon any such borrower's
default in the payment of any amount due
under the related Mortgage Loan, the holder
thereof may look only to the related
Mortgaged Property for satisfaction of the
borrower's obligation. In those cases where
recourse to a borrower or guarantor is
permitted by the loan documents, the Sponsor
has not undertaken an evaluation of the
financial condition of any such person, and
prospective investors should thus consider
all of the Mortgage Loans to be nonrecourse.
None of the Mortgage Loans is insured or
guaranteed by the United States, any
governmental agency or instrumentality or
any private mortgage insurer. See
"Description of the Mortgage Pool --
General".
Set forth below are the number of Mortgaged
Properties, and the approximate percentage
of the Initial Pool Balance secured by such
Mortgaged Properties, located in the five
states with the highest concentrations:
S-13
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
MORTGAGED INITIAL POOL
STATE PROPERTIES BALANCE
- ------------- ------------ ---------------
<S> <C> <C>
California .. 28 12.33%
Texas ........ 42 11.99%
Florida....... 17 8.12%
Oregon........ 5 8.05%
New York...... 8 6.09%
</TABLE>
The remaining Mortgaged Properties are
located throughout 35 other states and the
District of Columbia, with no more than
4.86% of the Initial Pool Balance secured by
Mortgaged Properties located in any such
other jurisdiction.
Set forth below are the number of Mortgaged
Properties, and the approximate percentage
of the Initial Pool Balance secured by such
Mortgaged Properties, operated for each
indicated purpose:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
MORTGAGED INITIAL POOL
PROPERTY TYPE PROPERTIES BALANCE(1)
- --------------- ------------ ---------------
<S> <C> <C>
Multifamily ... 93 31.15%
Office ......... 45 23.82%
Anchored
Retail......... 42 22.75%
Retail.......... 38 9.09%
Lodging ........ 19 7.17%
Other........... 24(2) 6.02%
</TABLE>
(1) The sum of the percentages in this
column may not equal 100% due to
rounding.
(2) Includes five Mortgaged Properties,
constituting security for 1.19% of the
Initial Pool Balance, that are operated
as mobile home parks.
Each of the Mortgage Loans provides for
scheduled payments of principal and interest
("Monthly Payments") to be due on the first
(or, in one case, the 11th) day of each
month (as to each such Mortgage Loan, the
"Due Date"), except that, as described
below, the Hyper-Amortization Loans (as
defined herein) may require that certain
additional amounts be paid each month
following their respective Anticipated
Repayment Dates (as defined herein).
All of the Mortgage Loans bear interest at a
rate per annum (a "Mortgage Rate") that is
fixed for the remaining term of the Mortgage
Loan, except that, as described below, each
Hyper-Amortization Loan will accrue interest
after its respective Anticipated Repayment
Date at a rate that is no more than two
percentage points in excess of the related
Mortgage Rate prior to such Anticipated
Repayment Date. As used herein, the term
"Mortgage Rate" does not include the
incremental increase in the rate at which
interest may accrue on any Mortgage Loan due
to a default or on any Hyper-Amortization
Loan after its Anticipated Repayment Date.
No Mortgage Loan permits nega-
S-14
<PAGE>
tive amortization and no Mortgage Loan
permits deferral of accrued interest (except
for the Hyper-Amortization Loans). See
"Description of the Mortgage Pool -- Certain
Terms and Conditions of the Mortgage Loans
-- Amortization of Principal" herein.
One hundred forty-two Mortgage Loans (the
"Actual/360 Mortgage Loans"), which
represent 57.55% of the Initial Pool
Balance, accrue interest on the basis of the
actual number of days elapsed in the
relevant month of accrual and a 360-day year
(an "Actual/360 Basis"). One hundred eight
Mortgage Loans, which represent 42.01% of
the Initial Pool Balance, accrue interest on
the basis of a 360-day year consisting of
twelve 30-day months (a "30/360 Basis"). One
Mortgage Loan (the "Actual/365 Mortgage
Loan"), which represents 0.30% of the
Initial Pool Balance, accrues interest on
the basis of the actual number of days
elapsed in the relevant month of accrual and
a 365-day year (an "Actual/365 Basis"). Two
Mortgage Loans, which represent 0.14% of the
Initial Pool Balance, do not specify the
basis on which interest accrues, but are
treated as accruing interest on a 30/360
Basis for the purposes hereof. See
"Description of the Mortgage Pool -- Certain
Terms and Conditions of the Mortgage Loans
-- Mortgage Rates; Calculations of Interest"
herein.
Two hundred forty-three of the Mortgage
Loans (the "Balloon Loans"), which represent
85.99% of the Initial Pool Balance, provide
for monthly payments of principal based on
amortization schedules significantly longer
than the respective remaining terms thereof,
thereby leaving substantial principal
amounts due and payable (each such payment,
together with the corresponding interest
payment, a "Balloon Payment") on their
respective maturity dates, unless prepaid
prior thereto. Nine Mortgage Loans, which
represent 13.94% of the Initial Pool
Balance, are Hyper-Amortization Loans. The
remaining one Mortgage Loan, which
represents 0.07% of the Initial Pool
Balance, is fully amortizing. See
"Description of the Mortgage Pool -- Certain
Terms and Conditions of the Mortgage Loans
-- Amortization of Principal" herein.
A "Hyper-Amortization Loan" is a Mortgage
Loan that provides that if it is not paid in
full as of a date specified in the related
Mortgage Note (the "Anticipated Repayment
Date"), then (i) interest will accrue
thereon at a per annum rate (the "Revised
Rate") that is no more than two percentage
points in excess of the related Mortgage
Rate (the difference between the Revised
Rate and the Mortgage Rate being herein
referred to as the "Excess Interest Rate")
and (ii) the related borrower will be
required to make payments thereon each month
in an amount that is equal to the greater of
the Monthly Payment and certain net cash
flow generated by the related Mortgaged
Property. If the net cash flow referred to
in clause (ii) of the preceding sentence
exceeds the Monthly Payment, the excess
would be
S-15
<PAGE>
applied to repay principal of the particular
Hyper-Amortization Loan (such principal
payments, "Hyper-Amortization Payments").
Interest accrued on the principal balance of
any Hyper-Amortization Loan at the Excess
Interest Rate will be deferred and, to the
extent permitted by applicable law, will
itself accrue interest, compounded monthly,
at the Revised Rate (all such interest
accrued on the principal balance of any
Hyper-Amortization Loan at the Excess
Interest Rate, together with compound
interest on such interest at the Revised
Rate, being herein referred to as "Excess
Interest"). All of the Hyper-Amortization
Loans for which a Lockbox Account (as
defined herein) has not been established on
or before the Delivery Date provide that a
Lockbox Account must be established on or
prior to the applicable Anticipated
Repayment Date. Excess Interest and
Hyper-Amortization Payments will be
considered separate from the scheduled
Monthly Payments and will not be included in
the calculation of Assumed Monthly Payments
(as defined herein). If and to the extent
collected, Excess Interest will be included
as part of the applicable Available
Distribution Amount (as defined herein). See
"Description of the Mortgage Pool -- Certain
Terms and Conditions of the Mortgage Loans
-- Hyperamortization" herein.
In general, a Hyper-Amortization Loan will
permit the related borrower to prepay the
related Mortgage Loan without payment of a
Prepayment Premium (as defined herein)
beginning on a date coinciding with, or up
to six months prior to, the related
Anticipated Repayment Date and on any Due
Date thereafter. The Anticipated Repayment
Date for any such Hyper-Amortization Loan is
set forth in Annex A.
In addition, certain Mortgage Loans provide
for reamortization of the unpaid principal
balance and adjustment of the Monthly
Payments thereon upon application of
specified amounts of insurance proceeds to
the unpaid principal balance of such
Mortgage Loans following a casualty loss.
Except with respect to two Mortgage Loans,
which represent 0.43% of the Initial Pool
Balance, as to which there is no Lock-out
Period (as defined below), and except with
respect to 14 Mortgage Loans, which
represent 8.47% of the Initial Pool Balance,
as to which there is no Open Period (as
defined below), the Mortgage Loans provided
as of origination for, sequentially, (a) a
period (a "Lock-out Period") during which
voluntary principal prepayments are
prohibited, followed by (b) a period (a
"Prepayment Premium Period") during which
any voluntary principal prepayment must be
accompanied by a prepayment premium, charge
or fee (a "Prepayment Premium"), followed by
(c) a period (an "Open Period") during which
voluntary principal prepayments may be made
without an accompanying Prepayment Premium.
Voluntary principal prepayments may be made
after any applicable Lock-out Period in full
or, with respect to three Mortgage Loans
(repre-
S-16
<PAGE>
senting 0.19% of the Initial Pool Balance),
in part, subject to certain limitations and,
during a Prepayment Premium Period, subject
to payment of the applicable Prepayment
Premium. As of the Cut-off Date, with
respect to the 251 Mortgage Loans that
provide for Lock-out Periods, the remaining
Lock-out Periods ranged from six months to
57 months, with a weighted average remaining
Lock-out Period of 38 months. The Open
Period for most Mortgage Loans that provide
for one begins one to six months prior to
stated maturity or, in the case of a
Hyper-Amortization Loan, prior to the
related Anticipated Repayment Date, except
that there are eight Mortgage Loans,
representing 1.62% of the Initial Pool
Balance as to which the Open Period begins
more than six months (and, in four such
cases, begins five years) prior to stated
maturity. Prepayment Premiums on the
Mortgage Loans are generally calculated
either on the basis of a yield maintenance
formula (subject, in certain instances, to a
minimum equal to a specified percentage of
the principal amount prepaid) or as a
percentage (which may decline over time) of
the principal amount prepaid. The prepayment
terms of each of the Mortgage Loans are more
fully described in Annex A. See "Risk
Factors -- The Mortgage Loans -- Prepayment
Premiums" and "Description of the Mortgage
Pool -- Certain Terms and Conditions of the
Mortgage Loans -- Prepayment Provisions"
herein.
Forty-nine of the Mortgage Loans (the
"Defeasance Loans"), representing 33.42% of
the Initial Pool Balance, provide that,
subject to the satisfaction of certain
conditions, the related borrower may pledge
to the holder of the subject Mortgage Loan
"Defeasance Collateral" and thereupon obtain
a release of the Mortgaged Property from the
lien of the related mortgage. In general,
"Defeasance Collateral" is required to
consist of direct, non-callable United
States Treasury obligations that provide for
payments prior, but as close as possible, to
all successive Due Dates (including the
scheduled maturity date), with each such
payment being equal to or greater than (with
any excess to be returned to the borrower)
the Monthly Payment (including, in the case
of the scheduled maturity date, any Balloon
Payment), due on such date.
As of the Cut-off Date, the Mortgage Loans
had the following additional
characteristics: (i) Mortgage Rates ranging
from 6.710% per annum to 9.840% per annum
and a weighted average Mortgage Rate of
7.490% per annum; (ii) remaining terms to
stated maturity or, in the case of the
Hyper-Amortization Loans, to the Anticipated
Repayment Date ranging from 75 months to 129
months and a weighted average remaining term
to stated maturity or the Anticipated
Repayment Date, as the case may be, of 114.9
months; (iii) remaining amortization terms
ranging from 117 months to 359 months and a
weighted average remaining amortization term
of 337.7 months; (iv) Cut-off Date
Loan-to-Value Ratios ranging from 32.8% to
101.0% and a weighted average Cut-off Date
Loan-
S-17
<PAGE>
to-Value Ratio of 73.2%; (v) in the case of
the Balloon Loans and the Hyper-Amortization
Loans, Maturity Date Loan-to-Value Ratios
ranging from 28.3% to 88.9% and a weighted
average Maturity Date Loan-to-Value Ratio of
62.8%; and (vi) Underwriting Debt Service
Coverage Ratios ranging from 0.72x to 2.54x
and a weighted average Underwriting Debt
Service Coverage Ratio of 1.37x. "Cut-off
Date Loan-to-Value Ratio," "Maturity Date
Loan-to-Value Ratio" and "Underwriting Debt
Service Coverage Ratio" are each defined in
Annex A hereto.
For more detailed statistical information
regarding the Mortgage Pool, see Annex A
hereto.
All of the Mortgage Loans were originated
during the twelve-month period preceding the
Cut-off Date.
One hundred sixteen of the Mortgage Loans
(the "Citi Mortgage Loans"), which represent
39.8% of the Initial Pool Balance, were
originated by or on behalf of one or more
affiliates of Citicorp Real Estate, Inc.
(the "Mortgage Loan Seller"), a commonly
controlled affiliate of the Sponsor,
pursuant to its conduit program, and are
currently held by the Mortgage Loan Seller
or by one or more of its affiliates. One
hundred eight of the Mortgage Loans (the
"AMRESCO Mortgage Loans"), which represent
41.03% of the Initial Pool Balance, were
originated by or on behalf of AMRESCO
Capital, L.P. ("AMRESCO Capital"). The
AMRESCO Mortgage Loans are currently held
beneficially by one or more affiliates of
AMRESCO Capital, and will be transferred to
AMRESCO Capital on or prior to the Delivery
Date. Twenty-nine of the Mortgage Loans (the
"Goldman Mortgage Loans"), which represent
19.13% of the Initial Pool Balance, are
currently held by Goldman Sachs Mortgage
Company ("Goldman Sachs Mortgage"). One
Goldman Mortgage Loan (representing 4.31% of
the Initial Pool Balance) was originated by
Goldman Sachs Mortgage, 21 of the Goldman
Mortgage Loans (representing 10.21% of the
Initial Pool Balance) were acquired from
Central Park Capital, L.P., an affiliate of
Goldman Sachs Mortgage, one Goldman Mortgage
Loan (representing 3.80% of the Initial Pool
Balance) was acquired from Archon Financial
L.P., an affiliate of Goldman Sachs
Mortgage, and six of the Goldman Mortgage
Loans (representing 0.81% of the Initial
Pool Balance) were acquired from Imperial
Commercial Capital Corp. On or before the
Delivery Date, Goldman Sachs Mortgage will
acquire the AMRESCO Mortgage Loans from
AMRESCO Capital, and the Mortgage Loan
Seller will acquire the AMRESCO Mortgage
Loans and the Goldman Mortgage Loans from
Goldman Sachs Mortgage. In addition, on or
before the Delivery Date, the Mortgage Loan
Seller will, at the direction of the
Sponsor, transfer all of the Mortgage Loans,
without recourse, to the Trustee for the
benefit of holders of the Certificates (the
"Certificateholders"). The Mortgage Loan
Seller will make certain representations and
warranties regarding the characteristics of
the Citi Mort-
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<PAGE>
gage Loans, AMRESCO Capital will make
certain representations and warranties
regarding the characteristics of the AMRESCO
Mortgage Loans, and Goldman Sachs Mortgage
will make certain representations and
warranties regarding the characteristics of
the Goldman Mortgage Loans. As more
particularly described herein, the Mortgage
Loan Seller will be obligated to cure any
material breach of any such representation
or warranty made by the Mortgage Loan Seller
with respect to the Citi Mortgage Loans or
repurchase the affected Citi Mortgage Loan,
AMRESCO Capital will be obligated to cure
any material breach of any such
representation or warranty made by AMRESCO
Capital with respect to the AMRESCO Mortgage
Loans or repurchase the affected AMRESCO
Mortgage Loan, and Goldman Sachs Mortgage
will be obligated to cure any material
breach of any such representation or
warranty made by Goldman Sachs Mortgage with
respect to the Goldman Mortgage Loans or
repurchase the affected Goldman Mortgage
Loan.
The Mortgage Loans are being sold without
recourse, and none of the Mortgage Loan
Seller, AMRESCO Capital or Goldman Sachs
Mortgage will have any obligations with
respect to the Offered Certificates other
than pursuant to such representations,
warranties and repurchase obligations. The
Sponsor will make no representations or
warranties with respect to the Mortgage
Loans and will have no obligation to
repurchase or replace Mortgage Loans with
deficient documentation or which are
otherwise defective. See "Description of the
Mortgage Pool" and "Risk Factors -- The
Mortgage Loans" herein and "Description of
the Trust Funds" and "Certain Legal Aspects
of Mortgage Loans" in the Prospectus.
The Mortgage Loans will be serviced and
administered by the Master Servicer and, if
circumstances require, the Special Servicer,
pursuant to the Pooling Agreement (as
defined below) and generally in accordance
with the discussion set forth under
"Servicing of the Mortgage Loans" herein and
"Description of the Pooling Agreements" in
the Prospectus. The compensation to be
received by the Master Servicer (including
Master Servicing Fees) and the Special
Servicer (including Standby Fees, Special
Servicing Fees, Liquidation Fees and Workout
Fees) for their services is described herein
under "Servicing of the Mortgage Loans --
Servicing and Other Compensation and Payment
of Expenses".
Description of the Certificates The Certificates will be issued pursuant to
a Pooling and Servicing Agreement, to be
dated as of April 1, 1998 (the "Pooling
Agreement"), among the Sponsor, the Master
Servicer, the Special Servicer, the Trustee,
the Fiscal Agent, the REMIC Administrator,
the Mortgage Loan Seller and the Additional
Warranting Parties, and will represent in
the aggregate the entire beneficial
ownership interest in a trust (the "Trust")
the assets of which (such assets
collectively, the "Trust Fund") will consist
primarily of the Mortgage Pool.
S-19
<PAGE>
A. Certificate Balances and
a Notional Amount ....... Upon initial issuance, each Class of Offered
Certificates will have the Certificate
Balance or Notional Amount set forth for
such Class on the cover page hereof (in each
case, subject to a variance of plus or minus
5%). Upon initial issuance, the Class H,
Class J, Class K, Class L, Class M and Class
N Certificates will have an aggregate
Certificate Balance equal to the excess of
the Initial Pool Balance over the aggregate
Certificate Balance of the Class A, Class B,
Class C, Class D, Class E, Class F and Class
G Certificates.
The "Certificate Balance" of any Class of
Sequential Pay Certificates outstanding at
any time will be the then-aggregate stated
principal amount of such Class. On each
Distribution Date, the Certificate Balance
of each Class of Sequential Pay Certificates
will be reduced by any distributions of
principal actually made on such Class of
Certificates on such Distribution Date, and
will be further reduced by any losses on or
in respect of the Mortgage Loans (referred
to herein as "Realized Losses") and by
certain Trust Fund expenses (referred to
herein as "Additional Trust Fund Expenses")
allocated to such Class of Certificates on
such Distribution Date. See "Description of
the Certificates -- Distributions" and
"--Subordination; Allocation of Losses and
Certain Expenses" herein.
The Class X Certificates will not have a
Certificate Balance; such Class of
Certificates will instead represent the
right to receive distributions of interest
accrued as described herein on a notional
principal amount (a "Notional Amount") equal
to the aggregate of the Certificate Balances
of all the Classes of Sequential Pay
Certificates outstanding from time to time.
The Notional Amount of the Class X
Certificates is used solely for the purpose
of determining the amount of interest to be
distributed on such Class of Certificates
and does not represent the right to receive
any distributions of principal.
No Class of REMIC Residual Certificates will
have a Certificate Balance or a Notional
Amount.
A Class of Offered Certificates will be
considered outstanding until its Certificate
Balance or Notional Amount is reduced to
zero; provided, however, that, under very
limited circumstances, reimbursements of any
previously allocated Realized Losses and
Additional Trust Fund Expenses may
thereafter be made with respect thereto. See
"Description of the Certificates --
Certificate Balances and a Notional Amount"
and "--Distributions" herein.
B. Pass-Through Rates ........ The Pass-Through Rate applicable to each
Class of Offered Certificates for the
initial Distribution Date is set forth on
the cover page hereof. The Pass-Through
Rates for the Class A-1, Class A-2 and Class
B Certificates for each subsequent
Distribution Date will, in the case of each
such Class, remain fixed at the per annum
rate set forth with respect thereto on the
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<PAGE>
cover page hereof; the Pass-Through Rates
for the Class C, Class D, Class E, Class F
and Class G Certificates for each subsequent
Distribution Date will, in the case of such
Class, equal the lesser of (i) the per annum
rate set forth with respect thereto on the
cover page hereof and (ii) the Weighted
Average Net Mortgage Rate for such
Distribution Date; and the Pass-Through Rate
applicable to the Class X Certificates for
each subsequent Distribution Date will, in
general, equal the excess, if any, of (i)
the Weighted Average Net Mortgage Rate for
such Distribution Date, over (ii) the
weighted average of the Pass-Through Rates
applicable to all the Classes of Sequential
Pay Certificates for such Distribution Date
(weighted on the basis of their respective
Certificate Balances immediately prior to
such Distribution Date).
The Pass-Through Rate applicable to the
Class H Certificates for the initial
Distribution Date is % per annum; and the
Pass-Through Rate applicable to such Class
of Certificates for each subsequent
Distribution Date will equal the lesser of
(i) % per annum and (ii) the Weighted
Average Net Mortgage Rate for such
Distribution Date. The Pass-Through Rates
applicable to the Class J, Class K, Class L,
Class M and Class N Certificates for the
initial Distribution Date and each
subsequent Distribution Date will be fixed
at ____%, ____%, ____%, ____% and ____% per
annum, respectively.
The "Weighted Average Net Mortgage Rate" for
any Distribution Date will, in general,
equal the weighted average of the Net
Mortgage Rates for all the Mortgage Loans
(weighted on the basis of their respective
"Stated Principal Balances" (as defined
herein) immediately following the preceding
Distribution Date or, in the case of the
initial Distribution Date, as of the Cut-off
Date).
The "Net Mortgage Rate" with respect to any
Mortgage Loan is, in general, a per annum
rate equal to the related Mortgage Rate in
effect from time to time, minus the
aggregate of the per annum rates applicable
to the calculation of the Master Servicing
Fee, the Standby Fee and the Trustee Fee
(each as defined herein) with respect to
such Mortgage Loan (such monthly fees,
collectively, the "Administrative Fees"; and
such aggregate rate, the "Administrative Fee
Rate"); provided that, solely for purposes
of calculating the Weighted Average Net
Mortgage Rate for any Distribution Date, the
following adjustments will be made in
calculating the Net Mortgage Rate for
certain Mortgage Loans: (i) if the Mortgage
Rate for the subject Mortgage Loan has been
modified or changed by the Special Servicer
as described under "Servicing of the
Mortgage Loans -- Modifications, Waivers,
Amendments and Consents" herein or otherwise
in connection with a bankruptcy, insolvency
or similar proceeding involving the related
borrower, or if the subject Mortgage Loan is
in default, such modification, change and/or
default will be disregarded and the Net
Mortgage Rate
S-21
<PAGE>
for such Mortgage Loan will be calculated
based upon the Mortgage Rate in effect for
such Mortgage Loan as of the Delivery Date;
and (ii) if the subject Mortgage Loan does
not accrue interest on the basis of a
360-day year consisting of twelve 30-day
months (which is the basis on which interest
accrues in respect of the REMIC Regular
Certificates), then the Net Mortgage Rate of
such Mortgage Loan for any one-month period
preceding a related Due Date will be the
annualized rate at which interest would have
to accrue in respect of such Mortgage Loan
on the basis of a 360-day year consisting of
twelve 30-day months in order to produce the
aggregate amount of interest actually
accrued in respect of such Mortgage Loan
during such one-month period at the related
Mortgage Rate (net of the related
Administrative Fee Rate). The calculation of
the Net Mortgage Rate for any
Hyper-Amortization Loan (and, accordingly,
the calculation of the Weighted Average Net
Mortgage Rate for any Distribution Date)
will not be affected by the step-up from the
Mortgage Rate to the Revised Rate on the
Anticipated Repayment Date for such
Hyper-Amortization Loan. As of the Cut-off
Date (without regard to the adjustment to
the basis of accrual described in clause
(ii) of the proviso to the second preceding
sentence), the Net Mortgage Rates for the
Mortgage Loans will range from 6.5268% per
annum to 9.7318% per annum, with a weighted
average Net Mortgage Rate of 7.3633% per
annum. See "Servicing of the Mortgage Loans
--Servicing and Other Compensation and
Payment of Expenses" and "Description of the
Certificates -- Pass-Through Rates" herein.
C. Distributions of Interest
and Principal ........... The total of all payments or other
collections (or advances in lieu thereof) on
or in respect of the Mortgage Loans
(exclusive of Prepayment Premiums) that are
available for distributions of interest on
and principal of the Certificates on any
Distribution Date is herein referred to as
the "Available Distribution Amount" for such
date. See "Description of the Certificates
-- Distributions -- The Available
Distribution Amount" herein.
On each Distribution Date, the Trustee will
apply the Available Distribution Amount for
such date for the following purposes and in
the following order of priority:
(1) to pay interest to the holders of the
Class A-1, Class A-2 and Class X
Certificates (collectively, the "Senior
Certificates"), up to an amount equal
to, and pro rata as among such Classes
in accordance with, all Distributable
Certificate Interest in respect of each
such Class of Certificates for such
Distribution Date and, to the extent not
previously paid, for all prior
Distribution Dates, if any;
(2) to pay principal first to the holders of
the Class A-1 Certificates and second to
the holders of the Class A-2
Certificates, in each case up to an
amount equal to the
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<PAGE>
lesser of (a) the then-outstanding
Certificate Balance of such Class of
Certificates and (b) the remaining
portion of the Principal Distribution
Amount (as defined below) for such
Distribution Date;
(3) to reimburse the holders of the Class
A-1 and Class A-2 Certificates, up to an
amount equal to, and pro rata as between
such Classes in accordance with, the
respective amounts of Realized Losses
and Additional Trust Fund Expenses, if
any, previously allocated to such
Classes of Certificates and for which no
reimbursement has previously been paid;
and
(4) to make payments on the other Classes of
Certificates (collectively, the
"Subordinate Certificates") as
contemplated below;
provided that, on each Distribution Date as
of which the aggregate Certificate Balance
of the Subordinate Certificates is to be or
has been reduced to zero, and in any event
on the final Distribution Date in connection
with a termination of the Trust (see
"Description of the Certificates --
Termination" herein), the payments of
principal to be made as contemplated by
clause (2) above with respect to the Class A
Certificates will be so made (subject to
available funds) to the holders of the
respective Classes of such Certificates, up
to an amount equal to, and pro rata as among
such Classes in accordance with, the
respective then-outstanding Certificate
Balances of such Classes of Certificates.
On each Distribution Date, following the
above-described distributions on the Senior
Certificates, the Trustee will apply the
remaining portion, if any, of the Available
Distribution Amount for such date to make
payments to the holders of each of the
remaining Classes of Sequential Pay
Certificates, in alphabetical order of Class
designation, in each case for the following
purposes and in the following order of
priority (i.e., payments under clauses (1),
(2) and (3) below, in that order, to the
holders of the Class B Certificates, then
payments under clauses (1), (2) and (3)
below, in that order, to the holders of the
Class C Certificates, and so forth in such
manner with respect to, sequentially, the
Class D, Class E, Class F, Class G, Class H,
Class J, Class K, Class L, Class M and Class
N Certificates, in that order):
(1) to pay interest to the holders of such
Class of Certificates, up to an amount
equal to all Distributable Certificate
Interest in respect of such Class of
Certificates for such Distribution Date
and, to the extent not previously paid,
for all prior Distribution Dates, if
any;
(2) if the Certificate Balances of the Class
A Certificates and of each other Class
of Sequential Pay Certificates, if any,
with an earlier alphabetical Class
designation have been reduced to zero,
to pay principal to the holders of such
S-23
<PAGE>
Class of Certificates, up to an amount
equal to the lesser of (a) the then
outstanding Certificate Balance of such
Class of Certificates and (b) the
remaining portion of the Principal
Distribution Amount for such
Distribution Date; and
(3) to reimburse the holders of such Class
of Certificates, up to an amount equal
to all Realized Losses and Additional
Trust Fund Expenses, if any, previously
allocated to such Class of Certificates
and for which no reimbursement has
previously been paid;
provided that, on the final Distribution
Date in connection with a termination of the
Trust, the payments of principal to be made
as contemplated by clause (2) above with
respect to any Class of Sequential Pay
Certificates will be so made (subject to
available funds) to the holders of such
Class of Certificates up to an amount equal
to the entire then-outstanding Certificate
Balance of such Class of Certificates.
Any portion of the Available Distribution
Amount for any Distribution Date that is not
otherwise payable to the holders of REMIC
Regular Certificates as contemplated above
will be paid to the holders of the REMIC
Residual Certificates.
Reimbursement of previously allocated
Realized Losses and Additional Trust Fund
Expenses will not constitute distributions
of principal for any purpose and will not
result in an additional reduction in the
Certificate Balance of the Class of
Certificates in respect of which any such
reimbursement is made.
The "Distributable Certificate Interest" in
respect of any Class of REMIC Regular
Certificates for any Distribution Date will
generally equal one month's interest at the
Pass-Through Rate in respect of such Class
of Certificates for such Distribution Date
accrued on the Certificate Balance or
Notional Amount, as the case may be, of such
Class of Certificates outstanding
immediately prior to such Distribution Date,
reduced (to not less than zero) by such
Class of Certificates' allocable share
(calculated as described herein) of any Net
Aggregate Prepayment Interest Shortfall (as
defined herein) for such Distribution Date.
Distributable Certificate Interest will be
calculated on the basis of a 360-day year
consisting of twelve 30-day months. The
"Interest Accrual Period" for the
Certificates for any Distribution Date will
be the month preceding the month in which
such Distribution Date occurs, except that
the Interest Accrual Period for the
Certificates for the Distribution Date in
May 1998 will be the one-month period from
April 6, 1998 to May 5, 1998, inclusive. See
"Description of the Certificates
--Distributions -- Distributable Certificate
Interest" and "Servicing of the Mortgage
Loans -- Servicing and Other Compensation
and Payment of Expenses" herein.
The "Principal Distribution Amount" for any
Distribution Date, will, in general, equal
the aggregate of the following:
S-24
<PAGE>
(a) the principal portions of all Monthly
Payments (other than Balloon Payments)
and any Assumed Monthly Payments (as
defined below) due or deemed due, as the
case may be, in respect of the Mortgage
Loans for their respective Due Dates
occurring during the calendar month in
which such Distribution Date occurs;
(b) all voluntary principal prepayments
received on the Mortgage Loans during
the related Collection Period;
(c) with respect to any Mortgage Loan as to
which the related stated maturity date
occurred during or prior to the related
Collection Period, any payment of
principal (exclusive of any voluntary
principal prepayment) made by or on
behalf of the related borrower during
the related Collection Period, net of
any portion of such payment that
represents a recovery of the principal
portion of any Monthly Payment (other
than a Balloon Payment) due, or the
principal portion of any Assumed Monthly
Payment deemed due, in respect of such
Mortgage Loan on a Due Date during or
prior to the calendar month in which
such Distribution Date occurs, that was
not previously recovered;
(d) all Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds (each as
defined in the Prospectus) and, to the
extent not included in clause (a), (b)
or (c) above, payments and other amounts
received on the Mortgage Loans during
the related Collection Period that were
identified and applied by the Master
Servicer as recoveries of principal
thereof, in each case net of any portion
of such amounts that represents (i) a
recovery of the principal portion of any
Monthly Payment (other than a Balloon
Payment) due, or the principal portion
of any Assumed Monthly Payment deemed
due, in respect of the related Mortgage
Loan on a Due Date during or prior to
the calendar month in which such
Distribution Date occurs, that was not
previously recovered or (ii) the
principal portion of a Monthly Payment
made by the related borrower during the
related Collection Period that is due
subsequent to the end of the calendar
month in which such Distribution Date
occurs; and
(e) if such Distribution Date is subsequent
to the initial Distribution Date, the
excess, if any, of (i) the Principal
Distribution Amount for the immediately
preceding Distribution Date, over (ii)
the aggregate distributions of principal
made on the Sequential Pay Certificates
on such immediately preceding
Distribution Date.
For purposes of the foregoing, the "Monthly
Payment" due on any Mortgage Loan on any
related Due Date will reflect any waiver,
modification or amendment of the terms of
such Mortgage Loan, whether agreed to by the
Master Servicer or Special Servicer or
resulting from a bankruptcy, insolvency or
S-25
<PAGE>
similar proceeding involving the related
borrower. "Monthly Payments" for
Hyper-Amortization Loans will not include
Excess Interest or Hyper-Amortization
Payments.
An "Assumed Monthly Payment" is an amount
deemed due in respect of: (i) any Mortgage
Loan that is delinquent in respect of its
Balloon Payment beyond the first
Determination Date that follows its stated
maturity date and as to which no
arrangements have been agreed to for
collection of the delinquent amounts,
including an extension of maturity; or (ii)
any Mortgage Loan as to which the related
Mortgaged Property has been acquired on
behalf of the Certificateholders through
foreclosure, deed in lieu of foreclosure or
otherwise (each such property, upon
acquisition, an "REO Property"). The Assumed
Monthly Payment deemed due on any such
Mortgage Loan delinquent as to its Balloon
Payment, for its stated maturity date and
for each successive Due Date that it remains
outstanding, will equal the Monthly Payment
that would have been due thereon on such
date if the related Balloon Payment had not
come due, but rather such Mortgage Loan had
continued to amortize in accordance with its
amortization schedule, if any, in effect
immediately prior to maturity and had
continued to accrue interest in accordance
with its terms in effect immediately prior
to maturity. The Assumed Monthly Payment
deemed due on any such Mortgage Loan as to
which the related Mortgaged Property has
become an REO Property, for each Due Date
that such REO Property remains part of the
Trust Fund, will equal the Monthly Payment
(or, in the case of a Mortgage Loan
delinquent in respect of its Balloon Payment
as described in the prior sentence, the
Assumed Monthly Payment) due on the last Due
Date prior to the acquisition of such REO
Property. "Assumed Monthly Payments" for
Hyper-Amortization Loans do not include
Excess Interest or Hyper-Amortization
Payments.
The Principal Distribution Amount will in no
event include Excess Interest or Prepayment
Premiums.
D. Distribution of Prepayment
Premiums ................. Any Prepayment Premium (whether described in
the related Mortgage Loan documents as a
fixed prepayment premium or a yield
maintenance amount) actually collected with
respect to a Mortgage Loan during any
particular Collection Period will be
distributed on the related Distribution Date
to the holders of each Class of Offered
Certificates (other than the Class X
Certificates) in an amount up to the product
of (a) such Prepayment Premium, (b) the
applicable Discount Rate Fraction for such
Class and such Mortgage Loan and (c) the
applicable Principal Allocation Fraction for
such Class and such Distribution Date. The
"Discount Rate Fraction" for any Class of
Offered Certificates (other than the Class X
Certificates) and any prepaid Mortgage Loan
is equal to a fraction (not greater than 1.0
or less than 0.0), (a) the numerator of
which is equal
S-26
<PAGE>
to the excess, if any, of the Pass-Through
Rate for such Class of Certificates over the
relevant Discount Rate (as defined herein),
and (b) the denominator of which is equal to
the excess, if any, of the Mortgage Rate of
such Mortgage Loan over the relevant
Discount Rate. With respect to each Class of
Offered Certificates (other than the Class X
Certificates) for any Distribution Date, the
"Principal Allocation Fraction" is a
fraction, the numerator of which is the
portion of Principal Distribution Amount
allocated to such Class of Certificates for
such Distribution Date, and the denominator
of which is the entire Principal
Distribution Amount for such Distribution
Date.
The portion of any Prepayment Premium
remaining after distribution of the amounts
calculated as described above to the holders
of the Offered Certificates (other than the
Class X Certificates) will be distributed to
the holders of the Class X Certificates. See
"Description of the Certificates --
Distributions -- Distributions of Prepayment
Premiums" herein.
P&I Advances .................. Subject to a recoverability determination as
described herein, and further subject to
certain limitations involving Mortgage Loans
that have been modified or extended as to
which the related Mortgaged Property has
declined in value as described herein, the
Master Servicer is required to make advances
(each, a "P&I Advance") with respect to each
Distribution Date for the benefit of the
Certificateholders in an amount generally
equal to the aggregate of all Monthly
Payments (other than Balloon Payments) and
any Assumed Monthly Payments, in each case
net of related Workout Fees, that (a) were
due or deemed due, as the case may be, in
respect of the Mortgage Loans during the
calendar month in which such Distribution
Date occurs and (b) were not paid by or on
behalf of the related borrowers or otherwise
collected as of the close of business on the
last day of the related Collection Period.
Subject to a recoverability determination as
described herein, if the Master Servicer
fails to make a required P&I Advance, the
Trustee will be required to make such P&I
Advance, and if the Master Servicer and the
Trustee both fail to make a required P&I
Advance, the Fiscal Agent will be required
to make such P&I Advance.
As more fully described herein, the Master
Servicer, the Trustee and the Fiscal Agent
will each be entitled to interest on any P&I
Advances made, and the Master Servicer, the
Special Servicer, the Trustee and the Fiscal
Agent will each be entitled to interest on
certain servicing expenses incurred, by or
on behalf of it. Such interest will accrue
from the date any such P&I Advance is made
or such servicing expense is incurred at a
rate per annum equal to the "prime rate" as
published in the "Money Rates" section of
The Wall Street Journal, as such "prime
rate" may change from time to time (the
"Reimbursement Rate"). Such interest on any
P&I Advance or servicing expense will be
paid: first, out of Default Interest (as
defined
S-27
<PAGE>
herein) and late payment charges collected
on the related Mortgage Loan; and, second,
at any time coinciding with or following the
reimbursement of such P&I Advance or such
servicing expense, out of general
collections on the Mortgage Pool then held
by the Master Servicer. See "Description of
the Certificates -- P&I Advances" and
"Servicing of the Mortgage Loans --
Servicing and Other Compensation and Payment
of Expenses" herein and "Description of the
Certificates -- Advances in Respect of
Delinquencies" and "Description of the
Pooling Agreements -- Certificate Account"
in the Prospectus.
Subordination; Allocation of
Losses and Certain Expenses . As and to the extent described herein, the
Subordinate Certificates will, in the case
of each Class thereof, be subordinated with
respect to distributions of interest and
principal to the Senior Certificates and,
further, to each other Class of Subordinate
Certificates, if any, with an earlier
alphabetical Class designation.
If, following the distributions to be made
in respect of the Certificates on any
Distribution Date, the aggregate Stated
Principal Balance of the Mortgage Pool that
will be outstanding immediately following
such Distribution Date is less than the
then-aggregate Certificate Balance of the
Sequential Pay Certificates, the Certificate
Balances of the Class N, Class M, Class L,
Class K, Class J, Class H, Class G, Class F,
Class E, Class D, Class C and Class B
Certificates will be reduced, sequentially
in that order, in the case of each such
Class until such deficit (or the related
Certificate Balance) is reduced to zero
(whichever occurs first). If any portion of
such deficit remains at such time as the
Certificate Balances of such Classes of
Certificates are reduced to zero, then the
respective Certificate Balances of the Class
A-1 and Class A-2 Certificates will be
reduced, pro rata in accordance with the
relative sizes of the remaining Certificate
Balances of such Classes of Certificates,
until such deficit (or each such Certificate
Balance) is reduced to zero. Any such
deficit will, in general, be the result of
Realized Losses incurred in respect of the
Mortgage Pool and/or Additional Trust Fund
Expenses. Accordingly, the foregoing
reductions in the Certificate Balances of
the respective Classes of the Sequential Pay
Certificates will constitute an allocation
of any such Realized Losses and Additional
Trust Fund Expenses.
Treatment of REO Properties ... Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Fund
through foreclosure, deed in lieu of
foreclosure or otherwise, the related
Mortgage Loan will, for purposes of, among
other things, determining distributions on,
and allocations of Realized Losses and
Additional Trust Fund Expenses to, the
Certificates, as well as determining Master
Servicing Fees, Standby Fees, Special
Servicing Fees and Trustee Fees generally be
treated as having remained out-
S-28
<PAGE>
standing until each such REO Property is
liquidated. Among other things, such
Mortgage Loan will be taken into account
when determining the Weighted Average Net
Mortgage Rate and the Principal Distribution
Amount for each Distribution Date. Operating
revenues and other proceeds derived from
each REO Property (after application thereof
to pay certain costs and taxes, including
certain reimbursements payable to the Master
Servicer, the Special Servicer, the Trustee
and/or the Fiscal Agent, incurred in
connection with the operation and
disposition of such REO Property) will be
"applied" or treated by the Master Servicer
as principal, interest and other amounts
"due" on the related Mortgage Loan; and,
subject to a recoverability determination as
more fully described herein (see
"Description of the Certificates -- P&I
Advances"), the Master Servicer, the Trustee
and the Fiscal Agent will be obligated to
make P&I Advances in respect of such
Mortgage Loan, in all cases as if such
Mortgage Loan had remained outstanding.
Controlling Class ............. The holder (or holders) of Certificates
representing a majority interest in the
Controlling Class will have the right,
subject to certain conditions described
herein, to replace the Special Servicer. The
"Controlling Class" will, in general, be the
most subordinate Class of Sequential Pay
Certificates then outstanding whose then
Certificate Balance is at least equal to 25%
of the initial Certificate Balance thereof.
The Controlling Class will initially be the
Class N Certificates. In addition, as more
particularly described herein, any holder or
holders of Certificates representing a
majority interest in the Controlling Class
will have the option of purchasing defaulted
Mortgage Loans from time to time at the
Purchase Price specified herein. It is
anticipated that an affiliate of the Special
Servicer will acquire certain of the
Certificates, including Private Certificates
that will constitute all or a part of the
initial "Controlling Class". See "Servicing
of the Mortgage Loans -- The Special
Servicer" and "--Sale of Defaulted Mortgage
Loans" herein.
Optional Termination .......... At its option, the holder or holders (other
than the Sponsor or the Mortgage Loan
Seller) of Certificates representing a
majority interest in the Controlling Class
or the Master Servicer (in that order of
priority) may purchase all of the Mortgage
Loans and REO Properties, and thereby effect
a termination of the Trust and early
retirement of the then-outstanding
Certificates, on any Distribution Date on
which the remaining aggregate Stated
Principal Balance of the Mortgage Pool is
less than 1.0% of the Initial Pool Balance.
See "Description of the Certificates --
Termination" herein and in the Prospectus.
Certain Federal Income Tax
Consequences ................. For federal income tax purposes, three
separate "real estate mortgage investment
conduit" ("REMIC") elections will be made
with respect to designated portions of the
Trust Fund, the resulting REMICs being
herein referred to as "REMIC I",
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<PAGE>
"REMIC II" and "REMIC III", respectively.
The assets of REMIC I will include the
Mortgage Loans, any REO Properties acquired
on behalf of the Certificateholders and the
Certificate Account (as defined in the
Prospectus); the assets of REMIC II will
consist of the separate uncertificated
"regular interests" in REMIC I; and the
assets of REMIC III will consist of the
separate uncertificated "regular interests"
in REMIC II. For federal income tax
purposes, (i) the Class R-I Certificates
will be the sole class of "residual
interests" in REMIC I, (ii) the Class R-II
Certificates will be the sole class of
"residual interests" in REMIC II, (iii) the
REMIC Regular Certificates will evidence the
"regular interests" in, and generally will
be treated as debt obligations of, REMIC
III, and (iv) the Class R-III Certificates
will be the sole class of "residual
interests" in REMIC III. See "Certain
Federal Income Tax Consequences --General"
herein.
For federal income tax reporting purposes,
it is anticipated that the Class __, Class
__, Class __, Class __ and Class __
Certificates will not, and the Class __,
Class __ and Class X Certificates will, be
treated as having been issued with original
issue discount. The prepayment assumption
that will be used for purposes of computing
the accrual of market discount and premium,
if any, for federal income tax purposes will
be that the Mortgage Loans will not prepay
prior to maturity (that is, a CPR of 0%),
except that the Hyper-Amortization Loans
will be repaid in full on their respective
Anticipated Repayment Dates. However, no
representation is made that the Mortgage
Loans will not prepay or that, if they do,
they will prepay at any particular rate.
If the method for computing original issue
discount described in the Prospectus results
in a negative amount for any period, a
possibility of particular relevance to the
holders of the Class X Certificates, a
Certificateholder will be permitted to
offset such amount only against the future
original issue discount (if any) from such
Certificate. See "Certain Federal Income Tax
Consequences" herein and "Material Federal
Income Tax Consequences -- REMICs --
Taxation of Owners of REMIC Regular
Certificates -- Original Issue Discount" in
the Prospectus.
Generally, except to the extent noted below,
the Offered Certificates will be treated as
"real estate assets" within the meaning of
Section 856(c)(4)(A) of the Internal Revenue
Code of 1986 (the "Code"). In addition,
interest (including original issue discount)
on the Offered Certificates will be interest
described in Section 856(c)(3)(B) of the
Code. However, the Offered Certificates will
generally only be considered assets
described in Section 7701(a)(19)(C) of the
Code to the extent that the Mortgage Loans
are secured by residential property and,
accordingly, an investment in the Offered
Certificates may not be suitable for some
thrift institutions. To the extent an
Offered Certificate represents ownership of
an interest in any Mortgage Loan that is
secured in part by the related borrower's
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<PAGE>
interest in an account containing any
holdback of loan proceeds, a portion of such
Certificate may not represent ownership of
assets described in Section 7701(a)(19)(C)
of the Code and "real estate assets" under
Section 856(c)(4)(A) of the Code and the
interest thereon may not constitute
"interest on obligations secured by
mortgages on real property" within the
meaning of Section 856(c)(3)(B) of the Code.
However, if 95% or more of the Mortgage
Loans are treated as assets described in the
foregoing sections of the Code, the Offered
Certificates will be treated as such assets
in their entirety. The Offered Certificates
will be treated as "qualified mortgages" for
another REMIC under Section 860G(a)(3)(C) of
the Code.
For further information regarding the
federal income tax consequences of investing
in the Offered Certificates, see "Certain
Federal Income Tax Consequences" herein and
"Material Federal Income Tax Consequences"
in the Prospectus.
Certain ERISA Considerations .. A fiduciary of any employee benefit plan or
other retirement arrangement subject to
Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"),
or Section 4975 of the Code (each such plan
or other retirement arrangement, a "Plan")
should review carefully with its legal
advisors whether the purchase or holding of
Offered Certificates could give rise to a
transaction that is prohibited or that is
not otherwise permitted either under ERISA
or Section 4975 of the Code or whether there
exists any statutory or administrative
exemption applicable to an investment
therein.
The U.S. Department of Labor has issued to
Citicorp an individual prohibited
transaction exemption, Prohibited
Transaction Exemption 90-88, and to Goldman,
Sachs & Co. an individual prohibited
transaction exemption, Prohibited
Transaction Exemption 89-88 (together, the
"Exemptions"), which generally exempt from
the application of certain of the prohibited
transaction provisions of Section 406 of
ERISA and the excise taxes imposed on such
prohibited transactions by Section 4975(a)
and (b) of the Code, transactions relating
to the purchase, sale and holding of certain
pass-through certificates underwritten by an
underwriting syndicate or selling group of
which Citibank, N.A., as an affiliate of
Citicorp, or Goldman, Sachs & Co.,
respectively, is a manager and the servicing
and operation of related asset pools,
provided that certain conditions are
satisfied. The Sponsor expects that the
Exemptions will generally apply to the
Senior Certificates, but that they will not
apply to the Class B, Class C, Class D,
Class E, Class F and Class G Certificates.
AS A RESULT, NO TRANSFER OF A CLASS B, CLASS
C, CLASS D, CLASS E, CLASS F OR CLASS G
CERTIFICATE OR ANY INTEREST THEREIN MAY BE
MADE TO A PLAN OR TO ANY PERSON WHO IS
DIRECTLY OR INDIRECTLY PURCHASING SUCH
CERTIFICATE OR INTEREST THEREIN ON BEHALF
OF, AS TRUSTEE OR OTHER FIDUCIARY OF, OR
WITH ASSETS OF A PLAN, UNLESS THE PURCHASE
AND HOLDING OF ANY SUCH CERTIFICATE OR
INTEREST
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<PAGE>
THEREIN IS EXEMPT FROM THE PROHIBITED
TRANSACTION PROVISIONS OF SECTION 406 OF
ERISA AND SECTION 4975 OF THE CODE UNDER
PROHIBITED TRANSACTION CLASS EXEMPTION
95-60, WHICH EXEMPTION PROVIDES AN EXEMPTION
FROM THE PROHIBITED TRANSACTION RULES FOR
CERTAIN TRANSACTIONS INVOLVING AN INSURANCE
COMPANY GENERAL ACCOUNT. See "Certain ERISA
Considerations" herein and "ERISA
Considerations" in the Prospectus.
Ratings ....................... It is a condition to their issuance that the
respective Classes of Offered Certificates
receive the credit ratings indicated below
from Standard & Poor's Ratings Services, a
Division of the McGraw-Hill Companies, Inc.
("S&P") and/or Fitch IBCA, Inc. ("Fitch";
and, together with S&P, the "Rating
Agencies"):
<TABLE>
<CAPTION>
CLASS S&P FITCH
- -------------- -------- ---------
<S> <C> <C>
Class A-1 ..... AAA AAA
Class A-2 ..... AAA AAA
Class X ....... AAAr AAA
Class B ....... AA AA
Class C........ A A+
Class D........ A- A
Class E........ BBB+ BBB+
Class F........ BBB BBB
Class G........ NR BBB-
</TABLE>
The ratings of the Offered Certificates
address the timely payment thereon of
interest on each Distribution Date and,
except in the case of the Class X
Certificates, the ultimate payment thereon
of principal on or before the Rated Final
Distribution Date. The ratings of the
Offered Certificates do not, however,
address the tax attributes thereof or of the
Trust. In addition, the ratings on the
Offered Certificates do not represent any
assessment of (i) the likelihood or
frequency of voluntary or involuntary
principal prepayments on the Mortgage Loans,
(ii) the degree to which such prepayments
might differ from those originally
anticipated, (iii) whether and to what
extent Prepayment Premiums will be received
on the Mortgage Loans, or (iv) whether and
to what extent Excess Interest will be
collected on the Hyper-Amortization Loans.
Also a security rating does not represent
any assessment of the yield to maturity that
investors may experience or the possibility
that the Class X Certificateholders might
not fully recover their investment in the
event of rapid prepayments of the Mortgage
Loans (including both voluntary and
involuntary prepayments). The ratings of the
Offered Certificates also do not address
certain other matters as described under
"Ratings" herein. There is no assurance that
any such rating will not be downgraded,
qualified or withdrawn by a Rating Agency,
if, in its judgment, circumstances so
warrant. There can be no assurance whether
any other rating agency will rate any of the
Offered Certificates, or if one does, what
rating such agency will assign. A security
rating is not a recommendation to buy,
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<PAGE>
sell or hold securities and may be subject
to revision or withdrawal at any time by the
assigning rating agency. See "Ratings"
herein and "Risk Factors -- Limited Nature
of Credit Ratings" in the Prospectus.
Legal Investment .............. The Offered Certificates will not constitute
"mortgage related securities" within the
meaning of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). As a
result, the appropriate characterization of
the Offered Certificates under various legal
investment restrictions, and thus the
ability of investors subject to these
restrictions to purchase the Offered
Certificates, may be subject to significant
interpretative uncertainties. Investors
should consult their own legal advisors to
determine whether and to what extent the
Offered Certificates constitute legal
investments for them. See "Legal Investment"
herein and in the Prospectus.
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<PAGE>
RISK FACTORS
Prospective purchasers of Offered Certificates should consider, among
other things, the following factors (as well as the factors set forth under
"Risk Factors" in the Prospectus) in connection with an investment therein.
THE CERTIFICATES
Limited Liquidity. There is currently no secondary market for the Offered
Certificates. The Sponsor has been advised by the Underwriters that they
presently intend to make a secondary market in the Offered Certificates;
however, neither Underwriter has any obligation to do so and any
market-making activity may be discontinued at any time. There can be no
assurance that a secondary market for the Offered Certificates will develop
or, if it does develop, that it will provide holders of Offered Certificates
with liquidity of investment or that it will continue for the life of the
Offered Certificates. The Offered Certificates will not be listed on any
securities exchange. See "Risk Factors -- Certain Factors Adversely Affecting
Resale of the Offered Certificates" in the Prospectus.
Certain Yield Considerations. The yield on any Offered Certificate will
depend on (a) the price at which such Certificate is purchased by an investor
and (b) the rate, timing and amount of distributions on such Certificate. The
rate, timing and amount of distributions on any Offered Certificate will, in
turn, depend on, among other things, (v) the Pass-Through Rate for such
Certificate, (w) the rate and timing of principal payments (including
principal prepayments) and other principal collections on or in respect of
the Mortgage Loans and the extent to which such amounts are to be applied or
otherwise result in a reduction of the Certificate Balance or Notional Amount
of the Class of Certificates to which such Certificate belongs, (x) the rate,
timing and severity of Realized Losses and Additional Trust Fund Expenses and
the extent to which such losses and expenses result in the failure to pay
interest on, or a reduction of the Certificate Balance or Notional Amount of,
the Class of Certificates to which such Certificate belongs, (y) the timing
and severity of any Net Aggregate Prepayment Interest Shortfalls and the
extent to which such shortfalls are allocated in reduction of the
Distributable Certificate Interest payable on the Class of Certificates to
which such Certificate belongs and (z) the extent to which Prepayment
Premiums are collected and, in turn, distributed on the Class of Certificates
to which such Certificate belongs. Except for the Pass-Through Rates on the
Class A and Class B Certificates (which are, in each case, fixed), it is
impossible to predict with certainty any of the factors described in the
preceding sentence. Accordingly, investors may find it difficult to analyze
the effect that such factors might have on the yield to maturity of any Class
of Offered Certificates. See "Description of the Mortgage Pool", "Description
of the Certificates -- Distributions" and "--Subordination; Allocation of
Losses and Certain Expenses" and "Yield and Maturity Considerations" herein.
See also "Yield and Maturity Considerations" in the Prospectus.
The yield to maturity of the Class X Certificates will be highly sensitive
to the rate and timing of principal payments (including by reason of or as
affected by prepayments, hyper-amortization, loan extensions, defaults and
liquidations) and losses on the Mortgage Loans, and investors in the Class X
Certificates should fully consider the associated risks, including the risk
that an extremely rapid rate of amortization, prepayment or other liquidation
of the Mortgage Loans could result in the failure of such investors to recoup
fully their initial investments. Because the Notional Amount of the Class X
Certificates will equal the aggregate of the Certificate Balances of all the
Classes of Sequential Pay Certificates outstanding from time to time, any
payment of principal or loss on any Mortgage Loan that is applied in
reduction of the Certificate Balance of a Class of Sequential Pay
Certificates will reduce such Notional Amount.
In general, in the case of the Class X Certificates and any other Class of
Offered Certificates purchased at a premium, if principal payments on the
Mortgage Loans occur at a rate faster than anticipated at the time of
purchase, then the investors' actual yield to maturity may be lower than that
assumed at the time of purchase. Conversely, in the case of any Class of
Offered Certificates purchased at a discount, if principal payments on the
Mortgage Loans occur at a rate slower than anticipated at the time of
purchase, then the investors' actual yield to maturity may be lower than that
assumed at the time of purchase. Prepayment Premiums, even if available and
distributable on the Offered Certificates, may
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<PAGE>
not be sufficient to offset fully any loss in yield on a particular Class of
Offered Certificates attributable to the related prepayments of the Mortgage
Loans.
Potential Conflicts of Interest. As described herein, the Special Servicer
will have considerable latitude in determining whether to liquidate or modify
defaulted Mortgage Loans, subject to certain limitations. See "Servicing of
the Mortgage Loans -- Modifications, Waivers, Amendments and Consents"
herein. Subject to the conditions described herein, including approval from
the Rating Agencies, the holder or holders of Certificates representing a
majority interest in the Controlling Class can replace the existing Special
Servicer and substitute any such holder or an affiliate thereof as the
successor. The "Controlling Class" will, in general, be the most subordinate
Class of Sequential Pay Certificates then outstanding whose then Certificate
Balance is at least equal to 25% of its initial Certificate Balance, and may
have interests in conflict with those of the holders of the Offered
Certificates. It is anticipated that an affiliate of the Special Servicer
will acquire certain of the Private Certificates, including those
constituting the initial "Controlling Class". Accordingly, investors in the
Offered Certificates should consider that, although the Special Servicer will
be obligated to act in accordance with the terms of the Pooling Agreement and
will be governed by the servicing standard described herein, it may have
interests when dealing with defaulted Mortgage Loans that are in conflict
with those of holders of the Offered Certificates.
THE MORTGAGE LOANS
Nature of the Mortgaged Properties. The Mortgaged Properties consist
solely of multifamily rental and commercial properties. Lending on the
security of income-producing properties is generally viewed as exposing a
lender to a greater risk of loss than lending on the security of one-to
four-family residences. Multifamily and commercial real estate lending
typically involves larger loans, and repayment is typically dependent upon
the successful operation of the related real estate project. Income from and
the market value of the Mortgaged Properties would be adversely affected if
space in the Mortgaged Properties could not be leased, if tenants were unable
to meet their obligations or if for any other reason rental payments could
not be collected (or, in the case of an owner occupied property, if the
owner's business declined). Successful operation of an income-producing real
estate project is dependent upon, among other things, economic conditions
generally and in the area of such project, the degree to which such project
competes with other projects in the area, operating costs and the performance
of the management agent, if any. In some cases, that operation may also be
affected by circumstances outside the control of the borrower or lender, such
as the quality or stability of the surrounding neighborhood, the development
of competing projects or businesses, maintenance expenses (including energy
costs), and changes in laws (including the imposition of rent control or
stabilization laws in the case of multifamily rental properties, statutory
and regulatory changes, retroactive rate adjustments and government funding
restrictions, in the case of health care-related facilities, and changes in
the tax laws, in all cases). If the cash flow from a particular property is
reduced (for example, if leases are not obtained or renewed, if tenant
defaults increase or rental rates decline or, in the case of a property
occupied by its owner, if the owner's business declines), the borrower's
ability to repay the loan may be impaired and the resale value of the
particular property may decline.
In the case of most Mortgage Loans, there will be existing leases on the
related Mortgaged Property that expire during the term of the Mortgage Loan
and there can be no assurance that such leases will be renewed or that the
subject space will be relet at no less than comparable rental rates. In
addition, there can be no guaranty that a commercial tenant will continue
operations throughout the term of its lease. The borrowers' income would be
adversely affected if tenants were unable to pay rent, if space were unable
to be rented on favorable terms or at all, or if a significant tenant were to
become a debtor in a bankruptcy case under the United States Bankruptcy Code.
For example, if any borrower were to relet or renew the existing leases at
rental rates significantly lower than expected rates, then such borrower's
funds from operations may be adversely affected. Changes in payment patterns
by tenants may result from a variety of social, legal and economic factors,
including, without limitation, the rate of inflation and unemployment levels
and may be reflected in the rental rates offered for comparable space. In
addition, upon reletting or renewing existing leases at commercial
properties, borrowers will likely be required to pay leasing commissions and
tenant improvement costs which may adversely affect cash
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<PAGE>
flow from the Mortgaged Property. There can be no assurances whether, or to
what extent, economic, legal or social factors will affect future rental or
repayment patterns. See "Description of the Mortgage Pool -- Additional
Mortgage Loan Information -- Tenant Matters" herein.
Two Mortgage Loans, which in the aggregate represent 0.51% of the Initial
Pool Balance, have Underwriting Debt Service Coverage Ratios of below 1.0x,
and two Mortgage Loans, which in the aggregate represent 0.28% of the Initial
Pool Balance, have Underwriting Debt Service Coverage Ratios of between 1.0x
and 1.1x, inclusive. When the debt service coverage ratio of a Mortgage Loan
is below 1.0x, the revenue derived from the use and operation of the related
Mortgaged Property is insufficient to cover the operating expenses of such
Mortgaged Property and to pay debt service on such Mortgage Loan. In such
cases, the related Mortgagor will be required to pay a portion of such items
from sources other than cash flow for the related Mortgaged Property. If the
related Mortgagor ceases to use such alternative cash sources at a time when
operating revenue from the related Mortgaged Property is still insufficient
to cover such items, deferred maintenance at the related Mortgaged Property
and/or a default under the subject Mortgage Loan may occur.
Lending on commercial properties, which represent security for 68.85% of
the Initial Pool Balance, is generally perceived as involving greater risk
than lending on the security of multifamily residential properties, and
certain types of commercial properties are exposed to particular risks. In
such cases, additional risk may be presented by the type and use of a
particular Mortgaged Property. For instance, Mortgaged Properties that
operate as nursing homes may present special risks to lenders due to the
significant governmental regulation of the ownership, operation, maintenance
and financing of health care institutions. Moreover, Mortgaged Properties
used for healthcare or industrial purposes are not readily convertible to
other uses if the operation of such property for its current purpose proves
not to be profitable. See also "--Risks Particular to Retail Properties",
"--Risks Particular to Office Properties" and "--Risks Particular to
Hospitality Properties" below.
Management. The successful operation of a real estate project is dependent
on the performance and viability of the property manager of such project. The
property manager is responsible for responding to changes in the local
market, planning and implementing the rental structure (including
establishing levels of rent payments) or the business plan, as the case may
be, and ensuring that maintenance and capital improvements can be carried out
in a timely fashion. Accordingly, by controlling costs, providing appropriate
service to tenants and seeing to the maintenance of improvements, sound
property management can improve occupancy rates/business and cash flow,
reduce operating and repair costs and preserve building value. On the other
hand, management errors can, in some cases, impair the long term viability of
a real estate project. There are 21 groups of Mortgaged Properties that have
the same or related management. No group of such Mortgaged Properties with
the same or related management represents security for more than 2.40% of the
Initial Pool Balance.
Balloon Payments and Hyper-Amortization Loans. Two hundred forty-three of
the Mortgage Loans, which represent 85.99% of the Initial Pool Balance, will
have substantial payments (that is, Balloon Payments) due at their respective
stated maturities, in each case unless the Mortgage Loan is previously
prepaid. In addition, nine of the Mortgage Loans, which represent 13.94% of
the Initial Pool Balance, are Hyper-Amortization Loans which will have
substantial scheduled principal balances as of their respective Anticipated
Repayment Dates, in each case unless the Mortgage Loan is previously prepaid.
Two hundred thirty-four of the Balloon Loans and all of the
Hyper-Amortization Loans, representing in the aggregate 96.06% of the Initial
Pool Balance, will have Balloon Payments due or Anticipated Repayment Dates
scheduled, as the case may be, during the period from and including January
2007 through and including December 2008. Mortgage Loans with Balloon
Payments involve a greater risk to the lender than fully amortizing loans,
because the ability of a borrower to make a Balloon Payment typically will
depend upon its ability either to refinance the loan or to sell the related
Mortgaged Property at a price sufficient to permit the borrower to make the
Balloon Payment. Similarly, the ability of a borrower to repay a
Hyper-Amortization Loan on the related Anticipated Repayment Date will depend
on its ability to either refinance the Mortgage Loan or to sell the related
Mortgaged Property. The ability of a borrower to accomplish either of these
goals will be affected by a number of factors occurring at the time of
attempted sale or refinancing, including the level of available mortgage
rates, the fair
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market value of the property, the borrower's equity in the related property,
the financial condition of the borrower and operating history of the
property, tax laws, prevailing economic conditions and the availability of
credit for multifamily or commercial properties, as the case may be. See
"Description of the Mortgage Pool -- Certain Terms and Conditions of the
Mortgage Loans" and "--Additional Mortgage Loan Information" herein and "Risk
Factors -- Balloon Payments; Borrower Default" in the Prospectus.
In order to maximize recoveries on defaulted Mortgage Loans, the Pooling
Agreement enables the Special Servicer to extend, modify or otherwise deal
with Mortgage Loans that are in material default or as to which a payment
default (including the failure to make a Balloon Payment) is reasonably
foreseeable (subject, however, to the limitation that the maturity date of
the Mortgage Loan may not be extended beyond a date that is two years prior
to the Rated Final Distribution Date and to the other limitations described
under "Servicing of the Mortgage Loans -- Modifications, Waivers, Amendments
and Consents" herein). There can be no assurance, however, that any such
extension or modification will increase the present value of recoveries in a
given case. Any delay in collection of a Balloon Payment that would otherwise
be distributable in respect of a Class of Offered Certificates, whether such
delay is due to borrower default or to modification of the related Mortgage
Loan by the Special Servicer, will likely extend the weighted average life of
such Class of Offered Certificates. See "Yield and Maturity Considerations"
herein and in the Prospectus.
Risks Particular to Retail Properties. In addition to risks generally
associated with income-producing real estate, retail properties are also
affected significantly by adverse changes in consumer spending patterns,
local competitive conditions (such as the supply of retail space or the
existence or construction of new competitive shopping centers or shopping
malls), alternative forms of retailing (such as direct mail and video
shopping networks which reduce the need for retail space by retail
companies), the quality and philosophy of management, the attractiveness of
the properties to tenants and their customers or clients, the public
perception of the safety of customers at shopping malls and shopping centers,
and the need to make major repairs or improvements to satisfy the needs of
major tenants.
Retail properties also are directly affected by the strength of retail
sales generally. The retailing industry is currently undergoing consolidation
due to many factors, including growth in discount retailing and mail order
merchandisers. If the sales by tenants in the Mortgaged Properties that
contain retail space were to decline, the rents that are based on a
percentage of revenues may decline and tenants may be unable to pay the fixed
portion of their rents or other occupancy costs. Retail properties may be
adversely affected if a significant tenant ceases operations at such
locations (which may occur on account of a voluntary decision not to renew a
lease, bankruptcy or insolvency of such tenant, such tenant's general
cessation of business activities or for other reasons). Significant tenants
at a retail property play an important part in generating customer traffic
and making a retail property a desirable location for other tenants at such
property. In addition, certain tenants at retail properties may be entitled
to terminate their leases if an anchor tenant fails to renew or terminates
its lease, becomes the subject of a bankruptcy proceeding or ceases
operations at such property. In such cases, there can be no assurance that
any such anchor tenants will continue to occupy space in the related shopping
centers. Whether a retail property is "anchored" or "unanchored" by a large
retail tenant is also an important distinction. Retail properties that are
anchored have traditionally been perceived to be less risky. While there is
no strict definition of an anchor, it is generally understood that a retail
anchor is proportionately large in size and is vital in attracting customers
to the retail property.
Risks Particular to Multifamily Properties. In the case of multifamily
lending in particular, adverse economic conditions, either local or national,
may limit the amount of rent that can be charged and may result in a
reduction in timely rent payments or a reduction in occupancy levels.
Occupancy and rent levels may also be affected by construction of additional
housing units, local military base closings, a downturn in the financial
condition of a significant company or type of industry in the locale, and
national and local politics, including current or future rent stabilization
and rent control laws and agreements. In addition, the level of mortgage
interest rates may encourage tenants to purchase single-family housing.
Further, the cost of operating a multifamily property may increase, including
the costs of utilities and the costs of required capital expenditures. All of
these conditions and events may increase the possibility that a borrower may
be unable to meet its obligations under its Mortgage Loan.
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Two Multifamily Mortgaged Properties (as defined herein), representing
security for 1.08% of the Initial Pool Balance, are subject to master use
land restriction agreements requiring the related borrowers to set aside
dwelling units for lower income families and very low income families,
thereby limiting operating revenues.
Risks Particular to Office Properties. Office properties may be adversely
affected if a significant tenant ceases operations at such properties (which
may occur on account of a voluntary decision not to renew a lease, bankruptcy
or insolvency of such tenant, such tenant's general cessation of business
activities or for other reasons). Ability to relet vacant office space may be
adversely affected by a general economic decline in the relevant geographic
area. In addition, there may be significant costs associated with tenant
improvements and concessions in connection with reletting office space.
Risks Particular to Hospitality Properties. Various factors, including
location, quality and franchise affiliation, affect the economic viability of
a hotel or motel. Adverse economic conditions, either local, regional or
national, may limit the amount that may be charged for a room and may result
in a reduction in occupancy levels. The construction of competing hotels or
motels can have similar effects. Because hotel and motel rooms are generally
rented for short periods of time, hotel and motel properties tend to respond
more quickly to adverse economic conditions and competition than do other
commercial properties. In addition, the franchise license may be owned by an
entity operating the hotel or motel and not the borrower or, if the franchise
license is owned by the borrower, the transferability of the related
franchise license agreement may be restricted and, in the event of a
foreclosure on a hotel or motel property, the borrower may not have the right
to use the franchise license without the franchisor's consent. Furthermore,
the ability of a hotel or motel to attract customers, and some of such
hotel's revenues, may depend in large part on its having a liquor license.
Such a license may not be transferable.
Risks of Subordinate Financing. Two Mortgaged Properties, representing
security for 0.72% of the Initial Pool Balance, are encumbered by secured
subordinated debt; however, either (i) the holders of the subordinate debt
have agreed not to foreclose for so long as the related Mortgage Loan is
outstanding and the Trust is not pursuing a foreclosure action or (ii) the
subordinate debt is payable only out of excess cash flow after payment of all
sums due on the related Mortgage Loan. Also, notwithstanding that the
Mortgage Loans either prohibit the related borrower from encumbering the
Mortgaged Property with additional secured debt or require the consent of the
holder of the first lien prior to so encumbering such property, a violation
of such prohibition may not become evident until the related Mortgage Loan
otherwise defaults. The existence of any such subordinated indebtedness may
increase the difficulty of refinancing the related Mortgage Loan at maturity
and the possibility that reduced cash flow could result in deferred
maintenance. Also, in the event that the holder of the subordinated debt
files for bankruptcy or is placed in involuntary receivership, foreclosure on
the Mortgaged Property could be delayed. See "Certain Legal Aspects of
Mortgage Loans -- Subordinate Financing" in the Prospectus. In addition,
owners of the borrowers under the Mortgage Loans may incur mezzanine debt
secured by their ownership interests in the related borrowers. Furthermore,
certain of the Mortgage Loans permit, and certain borrowers under the
Mortgage Loans have incurred, additional indebtedness for operating or
similar purposes. Additional debt, in any form, may cause a diversion of
funds from property maintenance. The Sponsor has not been able to confirm the
existence of any other debt.
Limited Recourse. The Mortgage Loans generally are nonrecourse obligations
of the borrowers. In those cases where recourse to a borrower or guarantor is
permitted by the loan documents, the Sponsor has not undertaken any
evaluation of the financial condition of any such person (in many cases, the
borrower is a special purpose entity having no assets other than those
pledged to secure the related Mortgage Loan). Accordingly, prospective
investors should consider all of the Mortgage Loans to be nonrecourse loans
as to which recourse in the case of default will be limited to the related
Mortgaged Property or Properties securing the defaulted Mortgage Loan.
Consequently, payment on each Mortgage Loan prior to maturity is dependent
primarily on the sufficiency of the net operating income of the related
Mortgaged Property or Properties and, at maturity (whether at scheduled
maturity or, in the event of a default under the related Mortgage Loan, upon
the acceleration of such maturity), upon the then-market
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value of the related Mortgaged Property or the ability of the related
borrower to refinance the Mortgaged Property. Neither the Certificates nor
the Mortgage Loans are insured or guaranteed by any governmental entity, by
any private mortgage insurer, or by the Sponsor, the Mortgage Loan Seller,
AMRESCO Capital, Goldman Sachs Mortgage, any originator, the Underwriters,
the Master Servicer, the Special Servicer, the Trustee, the Fiscal Agent, the
REMIC Administrator, any of their respective affiliates or, in general, by
any other person. However, as more fully described under "Description of the
Mortgage Pool -- Representations and Warranties; Repurchases" herein, the
Mortgage Loan Seller will be obligated to repurchase any Citi Mortgage Loans
as to which its representations and warranties concerning such Mortgage Loans
are materially breached and cannot be cured, AMRESCO Capital will be
obligated to repurchase any AMRESCO Mortgage Loans as to which its
representations and warranties concerning such Mortgage Loans are materially
breached and cannot be cured, and Goldman Sachs Mortgage will be obligated to
repurchase any Goldman Mortgage Loans as to which its representations and
warranties concerning such Mortgage Loans are materially breached and cannot
be cured.
Environmental Considerations. Except with respect to four Mortgage Loans,
which represent 0.27% of the Initial Pool Balance and are secured by
Multifamily Mortgaged Properties, an environmental site assessment (or an
update of a previously conducted assessment) was performed (generally in a
manner consistent with industry-wide standards) at the Mortgaged Properties
on or after January 17, 1997. With respect to certain Mortgage Loans the
related Mortgaged Properties were also subject to a "Phase II" environmental
assessment. No such assessment or update otherwise revealed any material
adverse environmental condition or circumstance at any Mortgaged Property,
except as described under "Description of the Mortgage Pool -- Certain
Underwriting Matters -- Environmental Assessments" herein, and further except
in those cases in which an operations and maintenance plan (including, in
several cases, in respect of asbestos-containing materials and lead-based
paint), periodic monitoring of nearby properties or the establishment of an
escrow reserve to cover the estimated cost of remediation was recommended,
and which recommended actions have been or are expected to be implemented in
the manner and within the time frames specified in the related Mortgage Loan
documents. With respect to the four Mortgage Loans as to which no
environmental site assessment was performed, a regulatory database search was
conducted which did not reveal any onsite environmental concerns for the
related Mortgaged Properties. There can be no assurance, however, that all
environmental conditions and risks have been identified in such environmental
assessments or regulatory database searches or that all recommended
operations and maintenance plans have been or will continue to be
implemented.
Certain federal, state and local laws, regulations and ordinances govern
the management, removal, encapsulation or disturbance of asbestos-containing
materials ("ACMs"). Such laws, as well as common law standards, may impose
liability for releases of or exposure to ACMs and may provide for third
parties to seek recovery from owners or operators of real properties for
personal injuries associated with such releases.
Recent federal legislation will in the future require owners of
residential housing constructed prior to 1978 to disclose to potential
residents or purchasers any known lead-based paint hazards and will impose
treble damages for any failure to so notify. In addition, the ingestion of
lead-based paint chips or dust particles by children can result in lead
poisoning, and the owner of a property where such circumstances exist may be
held liable for such injuries and for the costs of removal or encapsulation
of the lead-based paint. Testing for lead-based paint, asbestos-containing
materials or lead in the water was conducted with respect to certain of the
Mortgaged Properties, generally based on the age and/or condition thereof.
The information contained herein concerning environmental conditions at
the Mortgaged Properties is based on the environmental assessments and has
not been independently verified by the Sponsor, the Mortgage Loan Seller,
AMRESCO Capital, Goldman Sachs Mortgage, the Underwriters, the Master
Servicer, the Special Servicer, the Trustee, the Fiscal Agent, the REMIC
Administrator, or any of their respective affiliates.
The Pooling Agreement requires that the Special Servicer obtain an
environmental site assessment of a Mortgaged Property prior to acquiring
title thereto or assuming its operation. Such requirement
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precludes enforcement of the security for the related Mortgage Loan until a
satisfactory environmental site assessment is obtained (or until any required
remedial action is taken), but will decrease the likelihood that the Trust
will become liable for a material adverse environmental condition at the
Mortgaged Property. However, there can be no assurance that the requirements
of the Pooling Agreement will effectively insulate the Trust from potential
liability for a materially adverse environmental condition at any Mortgaged
Property. See "Servicing of the Mortgage Loans" herein and "Description of
the Pooling Agreements -- Realization Upon Defaulted Mortgage Loans", "Risk
Factors -- Environmental Risks" and "Certain Legal Aspects of Mortgage Loans
- -- Environmental Risks" in the Prospectus.
Limitations on Enforceability of Cross-Collateralization. As described
under "Description of the Mortgage Pool -- General" herein, the Mortgage Pool
includes nine sets of Cross-Collateralized Mortgage Loans, each of which sets
represents between 0.20% and 1.82% of the Initial Pool Balance. In addition
to the Cross-Collateralized Mortgage Loans, there are five Mortgage Loans,
representing 4.33% of the Initial Pool Balance, that are secured by a
Mortgage or Mortgages on multiple Mortgaged Properties. These arrangements
seek to reduce the risk that the inability of one or more of the Mortgaged
Properties securing any such set of Cross-Collateralized Mortgage Loans or
any such Mortgage Loan with multiple Mortgaged Properties to generate net
operating income sufficient to pay debt service will result in defaults and
ultimate losses. However, with respect to one such set of
Cross-Collateralized Mortgage Loans, the related Mortgaged Properties are
located in two separate states. Because, in general, foreclosure actions are
brought in state court and the courts of one state cannot exercise
jurisdiction over property in another state, it may be necessary upon a
default under any such Mortgage Loan to foreclose on the related Mortgaged
Properties in a particular order rather than simultaneously in order to
ensure that the lien of the related Mortgages is not impaired or released. In
addition, one or more of the related Mortgaged Properties for certain sets of
related Cross-Collateralized Mortgage Loans and certain individual Mortgage
Loans with multiple Mortgaged Properties may be released from the lien of the
applicable Mortgage under the circumstances and upon the satisfaction of the
conditions described herein under "Description of the Mortgage Pool --
Certain Terms and Conditions of the Mortgage Loans." Moreover, the
cross-collateralization and cross-default provisions for certain sets of
Cross-Collateralizated Mortgage Loans are expected to terminate in accordance
with their terms shortly following the Delivery Date as described herein
under "Description of the Mortgage Pool -- Certain Terms and Conditions of
the Mortgage Loans."
Certain related Cross-Collateralized Mortgage Loans have different
borrowers. Cross-collateralization arrangements involving more than one
borrower could be challenged as a fraudulent conveyance by creditors of a
borrower or by the representative of the bankruptcy estate of a borrower, if
a borrower were to become a debtor in a bankruptcy case. Accordingly, a lien
granted by a borrower to secure repayment of another borrower's Mortgage Loan
could be avoided if a court were to determine that (i) such borrower was
insolvent at the time of granting the lien, was rendered insolvent by the
granting of the lien, was left with inadequate capital, or was not able to
pay its debts as they matured and (ii) the borrower did not, when it allowed
its Mortgaged Property to be encumbered by a lien securing the entire
indebtedness represented by the other Mortgage Loan, receive fair
consideration or reasonably equivalent value for pledging such Mortgaged
Property for the equal benefit of the other borrower.
Related Parties. Certain groups of borrowers under the Mortgage Loans are
affiliated or under common control with one another. However, no such group
of affiliated borrowers are obligors on Mortgage Loans representing more than
2.40% of the Initial Pool Balance. In addition, tenants in certain Mortgaged
Properties also may be tenants in other Mortgaged Properties, and certain
tenants may be owned by affiliates of the borrowers or otherwise related to
or affiliated with a borrower. In addition, there are several cases in which
a particular entity is a tenant at multiple Mortgaged Properties, and
although it may not be a Major Tenant at any such property, it may be
significant to the success of such properties. In such circumstances, any
adverse circumstances relating to a borrower or tenant or a respective
affiliate and affecting one of the related Mortgage Loans or Mortgaged
Properties could arise in connection with the other related Mortgage Loans or
Mortgaged Properties. In particular, the bankruptcy or insolvency of any such
borrower or tenant or respective affiliate could have an adverse effect on
the
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operation of all of the related Mortgaged Properties and on the ability of
such related Mortgaged Properties to produce sufficient cash flow to make
required payments on the related Mortgage Loans. For example, if a person
that owns or directly or indirectly controls several Mortgaged Properties
experiences financial difficulty at one Mortgaged Property, it could defer
maintenance at one or more other Mortgaged Properties in order to satisfy
current expenses with respect to the Mortgaged Property experiencing
financial difficulty, or it could attempt to avert foreclosure by filing a
bankruptcy petition that might have the effect of interrupting Monthly
Payments for an indefinite period on all the related Mortgage Loans. See
"Certain Legal Aspects of Mortgage Loans -- Bankruptcy Laws" in the
Prospectus. In addition, a number of the borrowers under the Mortgage Loans
are limited or general partnerships. Under certain circumstances, the
bankruptcy of the general partner in a partnership may result in the
dissolution of such partnership. The dissolution of a borrower partnership,
the winding-up of its affairs and the distribution of its assets could result
in an acceleration of its payment obligations under the related Mortgage
Loan.
Ownership of Other Properties. Not all the borrowers have been set up
solely to own and operate Mortgaged Properties, and their financial success
may be affected by the performance of other real estate owned thereby. Any
such borrower could defer maintenance on one or more Mortgaged Properties in
order to satisfy current expenses with respect to other of its properties, or
circumstances involving other of its properties could cause the borrower to
declare bankruptcy.
Owner-Occupied and Single-Tenant Properties. Fifteen Mortgage Loans,
representing 5.21% of the Initial Pool Balance, are secured by Mortgaged
Properties that are entirely owner-occupied or occupied by a single tenant.
The full and timely repayment of any such Mortgage Loan is heavily dependent
on the viability of such single occupant and its business.
Geographic Concentration. Twenty-eight of the Mortgaged Properties, which
constitute security for 12.33% of the Initial Pool Balance, are located in
California; 42 of the Mortgaged Properties, which constitute security for
11.99% of the Initial Pool Balance, are located in Texas; 17 of the Mortgaged
Properties, which constitute security for 8.12% of the Initial Pool Balance,
are located in Florida; 5 of the Mortgaged Properties, which constitute
security for 8.05% of the Initial Pool Balance, are located in Oregon; and 8
of the Mortgaged Properties, which constitute security for 6.09% of the
Initial Pool Balance, are located in New York. In general, a concentration of
Mortgaged Properties in a particular state or region increases the exposure
of the Mortgage Pool to any adverse economic developments that may occur in
such state or region, conditions in the real estate market where the
Mortgaged Properties securing the related Mortgage Loans are located, changes
in governmental rules and fiscal policies, acts of nature, including floods,
tornadoes and earthquakes (which may result in uninsured losses), and other
factors which are beyond the control of the borrowers.
Other Concentrations. Each of seventy-six individual Mortgage Loans and
four groups of Cross-Collateralized Mortgage Loans has a Cut-off Date Balance
that is higher than the average Cut-off Date Balance. The largest single
Mortgage Loan has a Cut-off Date Balance that represents approximately 4.31%
of the Initial Pool Balance, and the largest group of Cross-Collateralized
Mortgage Loans have Cut-off Date Balances that represent in the aggregate
approximately 1.82% of the Initial Pool Balance. The five largest individual
Mortgage Loans, or groups of Cross-Collateralized Mortgage Loans, have
Cut-off Date Balances that represent in the aggregate approximately 15.59% of
the Initial Pool Balance. In general, concentrations in a pool of mortgage
loans with larger than average balances can result in losses that are more
severe, relative to the size of the pool, than would be the case if the
aggregate balance of such pool were more evenly distributed.
Risk of Changes in Concentrations. As payments in respect of principal
(including in the form of voluntary principal prepayments, Liquidations
Proceeds and the repurchase prices for any Mortgage Loans repurchased due to
breaches of representations or warranties) are received with respect to the
Mortgage Loans, the remaining Mortgage Loans as a group may exhibit increased
concentration with respect to the type of properties, property
characteristics, number of borrowers and affiliated borrowers and geographic
location. Because principal on the Sequential Pay Certificates is payable in
sequential order, the Classes thereof that have a lower or later priority
with respect to the payment of principal are relatively more likely to be
exposed to any risks associated with changes in concentrations of borrower,
loan or property characteristics.
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Prepayment Premiums. With limited exception, all of the Mortgage Loans
require, for a specified period following the end of the related Lock-out
Period (or, in two cases, the related date of origination), that any
voluntary principal prepayment be accompanied by a Prepayment Premium.
Prepayment Premiums are generally calculated either as a percentage (which
may decline over time) of the principal amount prepaid or on the basis of a
yield maintenance formula (subject, in certain instances, to a minimum equal
to a specified percentage of the amount prepaid). See "Description of the
Mortgage Pool -- Certain Terms and Conditions of the Mortgage Loans --
Prepayment Provisions" herein. Any Prepayment Premiums actually collected on
the Mortgage Loans will be distributed among the respective Classes of the
Offered Certificates in the amounts and in accordance with the priorities
described herein under "Description of the Certificates -- Distributions --
Distributions of Prepayment Premiums". The Sponsor, however, makes no
representation as to the collectability of any Prepayment Premium.
The enforceability, under the laws of a number of states, of provisions
similar to the provisions of the Mortgage Loans providing for the payment of
a Prepayment Premium upon an involuntary prepayment is unclear. No assurance
can be given that, at any time that any Prepayment Premium is required to be
made in connection with an involuntary prepayment, the obligation to pay such
Prepayment Premium will be enforceable under applicable law or, if
enforceable, that the Liquidation Proceeds will be sufficient to make such
payment. Liquidation Proceeds recovered in respect of any defaulted Mortgage
Loan will, in general, be applied to cover outstanding servicing expenses and
unpaid principal and interest prior to being applied to cover any Prepayment
Premium due in connection with the liquidation of such Mortgage Loan. In
addition, the Special Servicer may waive a Prepayment Premium in connection
with obtaining a pay-off of a defaulted Mortgage Loan. See "Servicing of the
Mortgage Loans -- Modifications, Waivers, Amendments and Consents" herein and
"Certain Legal Aspects of Mortgage Loans -- Default Interest and Limitations
on Prepayments" in the Prospectus.
No Prepayment Premium will be payable in connection with any repurchase of
a Mortgage Loan by the Mortgage Loan Seller, AMRESCO Capital or Goldman Sachs
Mortgage for a material breach of representation or warranty on the part of
the Mortgage Loan Seller, AMRESCO Capital or Goldman Sachs Mortgage, as the
case may be, or any failure to deliver documentation relating thereto, nor
will any Prepayment Premium be payable in connection with the purchase of all
of the Mortgage Loans and any REO Properties by the Master Servicer or any
holder or holders of Certificates evidencing a majority interest in the
Controlling Class in connection with the termination of the Trust or in
connection with the purchase of defaulted Mortgage Loans by the Master
Servicer, Special Servicer or any holder or holders of Certificates
evidencing a majority interest in the Controlling Class. See "Description of
the Mortgage Pool -- Assignment of the Mortgage Loans; Repurchases" and
"--Representations and Warranties; Repurchases", "Servicing of the Mortgage
Loans -- Sale of Defaulted Mortgage Loans" and "Description of the
Certificates -- Termination" herein.
Limited Information. The information set forth in this Prospectus
Supplement with respect to the Mortgage Loans is derived principally from (i)
a review of the available credit and legal files relating to the Mortgage
Loans, (ii) inspections of the Mortgaged Properties undertaken by or on
behalf of the Mortgage Loan Seller with respect to the Citi Mortgage Loans,
by or on behalf of AMRESCO Capital with respect to the AMRESCO Mortgage
Loans, and by or on behalf of Goldman Sachs Mortgage with respect to the
Goldman Mortgage Loans, (iii) unaudited operating statements for the
Mortgaged Properties supplied by the borrowers, (iv) appraisals for the
Mortgaged Properties that generally were performed at origination (which
appraisals were used in presenting information regarding the values of the
Mortgaged Properties as of the Cut-off Date under "Description of the
Mortgage Pool" and under Annex A for illustrative purposes only) and/or (v)
information supplied by entities from which the Mortgage Loan Seller, AMRESCO
Capital or Goldman Sachs Mortgage, as the case may be, acquired, or which
currently service, certain of the Mortgage Loans. Also, several Mortgage
Loans constitute acquisition financing; and, accordingly, limited or no
operating information is available with respect to the related Mortgaged
Property. Moreover, all of the Mortgage Loans were originated during the
twelve-month period preceding the Cut-off Date and, consequently, there are
limited payment histories with respect to the Mortgage Loans.
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Litigation. The borrower under an AMRESCO Mortgage Loan, representing
0.22% of the Initial Pool Balance, has been named as a defendant in a civil
action seeking unspecified monetary damages. The plaintiff alleges that a
tenant-in-residence with a prior criminal record committed a sexual assault
on two other tenants at the related Mortgaged Property. The borrower's
insurance carrier has assumed the defense of the action. AMRESCO Capital is
not in a position to predict the outcome of such litigation.
In addition, a Mortgaged Property representing security for 0.54% of the
Initial Pool Balance, was transferred to the borrower under such Mortgage
Loan pursuant to the confirmed plan of reorganization of a related party. The
borrower's key principal had an ownership interest in such related
transferor. The related transferor's bankruptcy was filed in response to the
noteholder's efforts to foreclose on the subject property following a
maturity default. The borrower's key principal had previously declared
personal bankruptcy in 1991. All claims against the borrower's key principal
have been resolved through his plan of reorganization, which was confirmed in
1994.
The borrower under a Mortgage Loan representing 0.26% of the Initial Pool
Balance, filed for bankruptcy when the lender under a previous mortgage loan
secured by the related Mortgaged Property would not extend such loan. The
successor of such lender granted the borrower the sought after extension and
the borrower's bankruptcy was eventually discharged.
There may also be other legal proceedings pending and, from time to time,
threatened against the borrowers and their affiliates relating to the
business of or arising out of the ordinary course of business of the
borrowers and their affiliates. There can be no assurance that such
litigation will not have a material adverse effect on the distributions to
Certificateholders.
Risk of Year 2000. The transition from the year 1999 to the year 2000 may
disrupt the ability of computerized systems to process information. If the
Master Servicer, the Special Servicer or the Trustee do not have by the year
2000 computerized systems which are year 2000 compliant, the ability of the
Master Servicer, the Special Servicer or the Trustee to service the Mortgage
Loans (in the case of the Master Servicer and the Special Servicer) and make
distributions to the Certificateholders (in the case of the Trustee) may be
materially and adversely affected.
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Mortgage Pool will consist of 253 multifamily and commercial mortgage
loans (the "Mortgage Loans") with an aggregate Cut-off Date Balance of
$1,319,193,758 (the "Initial Pool Balance"), subject to a variance of plus or
minus 5%. See "Description of the Trust Funds" and "Certain Legal Aspects of
Mortgage Loans" in the Prospectus. The "Cut-off Date Balance" of each
Mortgage Loan is the unpaid principal balance thereof as of the Cut-off Date
after application of all payments of principal due on or before such date,
whether or not received. The "Cut-off Date" will be April 1, 1998 or, in the
case of one Mortgage Loan with a Due Date of the 11th of each month, April
11, 1998. References herein and in the Prospectus to the "Cut-off Date" with
respect to the Mortgage Loans refer to the applicable Cut-off Date for each
Mortgage Loan. All numerical information provided herein with respect to the
Mortgage Loans is provided on an approximate basis. All weighted average
information provided herein with respect to the Mortgage Loans reflects
weighting by related Cut-off Date Balance. All percentages of the Mortgage
Pool, or of any specified sub-group thereof, referred to herein without
further description are approximate percentages by aggregate Cut-off Date
Balance.
Each Mortgage Loan is evidenced by a promissory note (a "Mortgage Note")
and secured by a mortgage, deed of trust or other similar security instrument
(a "Mortgage") that creates a first mortgage lien on a fee simple and/or
leasehold interest in real property (a "Mortgaged Property"). Each Mortgaged
Property is improved by (i) an apartment building or complex consisting of
five or more rental living units or a mobile home park (a "Multifamily
Mortgaged Property"; and any Mortgage Loan secured thereby, a "Multifamily
Loan") (89 Mortgage Loans, representing 31.15% of the Initial Pool Balance),
or (ii) a retail
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shopping mall or center, an office building or complex, a hotel or motel, a
health care facility, an industrial building, a self storage facility or a
mixed use facility (a "Commercial Mortgaged Property"; and any Mortgage Loan
secured thereby, a "Commercial Loan") (164 Mortgage Loans which represent
68.85% of the Initial Pool Balance).
Nine separate sets of Mortgage Loans (the "Cross-Collateralized Mortgage
Loans") are, solely as among the Mortgage Loans in each such particular set,
cross-defaulted and cross-collateralized with each other. The largest set of
related Cross-Collateralized Mortgage Loans represents 1.82% of the Initial
Pool Balance. Each of the Cross-Collateralized Mortgage Loans is evidenced by
a separate Mortgage Note and secured by a separate Mortgage, which Mortgage
contains provisions creating the relevant cross-collateralization and
cross-default arrangements. Except with respect to one such set of
Cross-Collateralized Mortgage Loans for which the related Mortgaged
Properties are located in two separate states, the Mortgaged Properties for
each set of Cross-Collateralized Mortgage Loans are located in the same
state. See Annex A hereto for information regarding the Cross-Collateralized
Mortgage Loans and see "Risk Factors -- The Mortgage Loans -- Limitations on
Enforceability of Cross-Collateralization" herein.
Certain sets of the Cross-Collateralized Mortgage Loans provide for one or
more of the related Mortgaged Properties to be released upon the fulfilment
of certain conditions, including the satisfaction of a debt service coverage
ratio and/or the payment by the related borrower of a release price equal to
a specified percentage (generally between 100% and 125%) of the allocated
loan amount for the Mortgaged Property to be released. In addition, three
other sets of the Cross-Collateralized Mortgage Loans, representing 1.15%,
0.33% and 0.23%, respectively, of the Initial Pool Balance, provide that the
related cross-collateralization and cross-default provisions may be
terminated upon the fulfilment of certain conditions, including the meeting
of a debt service coverage ratio test, which the Sponsor expects to be
satisfied shortly following the Delivery Date.
In addition to the Cross-Collateralized Mortgage Loans, there are five
other Mortgage Loans, which represent 4.33% of the Initial Pool Balance, that
are, in each such case, secured by a Mortgage or Mortgages encumbering two or
more properties. In each such case, the related Mortgaged Properties are
located in the same state. Accordingly, the total number of Mortgage Loans
reflected herein is 253, and the total number of Mortgaged Properties
reflected herein is 261. In the case of certain of such Mortgage Loans, one
or more of the related Mortgaged Properties may be released from the lien of
the related Mortgage upon the satisfaction of certain conditions (except with
respect to the release of certain undeveloped sub-parcels or parcels which,
in all but one case, are not material to the appraised value of the Mortgaged
Property), including the satisfaction of a debt service coverage ratio test
and/or the payment of a release price equal to a specified percentage
(generally between 100% and 125%) of the allocated loan amount for the
Mortgaged Property to be released. One Mortgage Loan, representing 0.18% of
the Initial Pool Balance, permits the release of an undeveloped parcel worth
approximately $350,000 that was taken into account when calculating the
related Cut-off Date LTV Ratio of 55.6%.
Certain Mortgage Loans permit the release of certain non-real property
collateral (for example, the release of mobile homes in the case of certain
Mortgage Loans secured by mobile home parks).
In general, the Mortgage Loans constitute nonrecourse obligations of the
related borrower and, upon any such borrower's default in the payment of any
amount due under the related Mortgage Loan, the holder thereof may look only
to the related Mortgaged Property or Properties for satisfaction of the
borrower's obligation. In addition, in those cases where recourse to a
borrower or guarantor is permitted by the loan documents, the Sponsor has not
undertaken an evaluation of the financial condition of any such person, and
prospective investors should thus consider all of the Mortgage Loans to be
nonrecourse. None of the Mortgage Loans is insured or guaranteed by the
United States, any governmental entity or instrumentality, or any private
mortgage insurer. See "Risk Factors -- The Mortgage Loans -- Limited
Recourse" herein.
Twenty-eight of the Mortgaged Properties, which constitute security for
12.33% of the Initial Pool Balance, are located in California; 42 of the
Mortgaged Properties, which constitute security for 11.99% of the Initial
Pool Balance, are located in Texas; 17 of the Mortgaged Properties, which
constitute security
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for 8.12% of the Initial Pool Balance, are located in Florida; five of the
Mortgaged Properties, which constitute security for 8.05% of the Initial Pool
Balance, are located in Oregon; and eight of the Mortgaged Properties, which
constitute security for 6.09% of the Initial Pool Balance, are located in New
York. The remaining Mortgaged Properties are located throughout 35 other
states and District of Columbia, with no more than 4.86% of the Initial Pool
Balance secured by Mortgaged Properties located in any such other
jurisdiction.
One hundred sixteen of the Mortgage Loans (the "Citi Mortgage Loans"),
which represent 39.84% of the Initial Pool Balance, were originated by or on
behalf of one or more affiliates of Citicorp Real Estate, Inc. (the "Mortgage
Loan Seller"), a commonly controlled affiliate of the Sponsor, pursuant to
its conduit program, and are currently held by the Mortgage Loan Seller or by
one or more of its affiliates. One hundred eight of the Mortgage Loans (the
"AMRESCO Mortgage Loans"), which represent 41.03% of the Initial Pool
Balance, were originated by or on behalf of AMRESCO Capital, L.P. ("AMRESCO
Capital"). The AMRESCO Mortgage Loans are currently held beneficially by one
or more affiliates of AMRESCO Capital, and will be transferred to AMRESCO
Capital on or prior to the Delivery Date. Twenty-nine of the Mortgage Loans
(the "Goldman Mortgage Loans"), which represent 19.13% of the Initial Pool
Balance, are currently held by Goldman Sachs Mortgage Company ("Goldman Sachs
Mortgage"). One Goldman Mortgage Loan (representing 4.31% of the Initial Pool
Balance) was originated by Goldman Sachs Mortgage, 21 of the Goldman Mortgage
Loans (representing 10.21% of the Initial Pool Balance) were acquired from
Central Park Capital, L.P., an affiliate of Goldman Sachs Mortgage, one
Goldman Mortgage Loan (representing 3.80% of the Initial Pool Balance) was
acquired from Archon Financial L.P., an affiliate of Goldman Sachs Mortgage,
and six of the Goldman Mortgage Loans (representing 0.81% of the Initial Pool
Balance) were acquired from Imperial Commercial Capital Corp. On or before
the Delivery Date, Goldman Sachs Mortgage will acquire the AMRESCO Mortgage
Loans from AMRESCO Capital, and the Mortgage Loan Seller will acquire the
AMRESCO Mortgage Loans and the Goldman Mortgage Loans from Goldman Sachs
Mortgage. In addition, on or before the Delivery Date (but after it has
acquired those Mortgage Loans not currently held by it), the Mortgage Loan
Seller will, at the direction of the Sponsor, transfer all of the Mortgage
Loans, without recourse, to the Trustee for the benefit of the
Certificateholders. Goldman Sachs Mortgage has agreed to indemnify the
Mortgage Loan Seller with respect to certain liabilities, including certain
liabilities under the Securities Act, relating to the Goldman Mortgage Loans.
AMRESCO Capital has agreed to indemnify the Mortgage Loan Seller with respect
to certain liabilities, including certain liabilities under the Securities
Act, with respect to the AMRESCO Mortgage Loans. See "--The Mortgage Loan
Seller and the Additional Warranting Parties" and "--Assignment of the
Mortgage Loans; Repurchase" below.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Due Dates. Each of the Mortgage Loans provides for scheduled payments of
principal and interest ("Monthly Payments") to be due on the first (or, in
the case of one Mortgage Loan, representing 3.80% of the Initial Pool
Balance, the eleventh) day of each month (as to each such Mortgage Loan, the
"Due Date"), except that, as described below, the Hyper-Amortization Loans
(as defined herein) may require that certain additional amounts be paid each
month following their respective Anticipated Repayment Dates (as defined
herein).
Mortgage Rates; Calculations of Interest. All of the Mortgage Loans bear
interest at a rate per annum (a "Mortgage Rate") that is fixed for the
remaining term of the Mortgage Loan, except that, as described below, the
Hyper-Amortization Loans will accrue interest after their respective
Anticipated Repayment Dates at rates that are no more than two percentage
points in excess of their related Mortgage Rates prior to such Anticipated
Repayment Dates. As used in this Prospectus Supplement, the term "Mortgage
Rate" does not include the incremental increase in the rate at which interest
may accrue on any Mortgage Loan due to a default or on any such
Hyper-Amortization Loan after its Anticipated Repayment Date. As of the
Cut-off Date, the Mortgage Rates of the Mortgage Loans ranged from 6.710% per
annum to 9.840% per annum, and the weighted average Mortgage Rate of the
Mortgage Loans was 7.490%. No Mortgage Loan permits negative amortization,
and no Mortgage Loan permits deferral of accrued interest (except for the
Hyper-Amortization Loans).
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One hundred forty-two Mortgage Loans (the "Actual/360 Mortgage Loans"),
which represent 57.55% of the Initial Pool Balance, accrue interest on the
basis of the actual number of days elapsed in the relevant month of accrual
and a 360-day year (an "Actual/360 Basis"). One hundred eight Mortgage Loans,
which represent 42.01% of the Initial Pool Balance, accrue interest on the
basis of a 360-day year consisting of twelve 30-day months (a "30/360
Basis"). One Mortgage Loan (the "Actual/365 Mortgage Loan"), which represents
0.30% of the Initial Pool Balance, accrues interest on the basis of the
actual number of days elapsed in the relevant month of accrual and a 365-day
year (an "Actual/365 Basis"). Two Mortgage Loans, which represent 0.14% of
the Initial Pool Balance, do not specify the basis on which interest accrues,
but are treated as accruing interest on a 30/360 Basis for the purposes
hereof.
Hyperamortization. Nine of the Mortgage Loans (the "Hyper-Amortization
Loans"), which represent 13.94% of the Initial Pool Balance, provide for
changes in their payments and their accrual of interest if, in each such
case, the particular Mortgage Loan is not paid in full by a specified date
(the "Anticipated Repayment Date"). Each Hyper-Amortization Loan will bear
interest at its related Mortgage Rate until its Anticipated Repayment Date.
Commencing on the related Anticipated Repayment Date, if not paid in full by
then, each Hyper-Amortization Loan generally will bear interest at a fixed
per annum rate (the "Revised Rate") equal to the related Mortgage Rate plus
no more than two percentage points. The interest accrued at the excess of the
Revised Rate over the Mortgage Rate (such difference in rate, the "Excess
Interest Rate") will be deferred until the principal of such Mortgage Loan is
paid in full and, except where limited by applicable law, will itself accrue
interest, compounded monthly, at the Revised Rate (all such interest accrued
on the principal balance of any Hyper-Amortization Loan at the Excess
Interest Rate, together with compound interest on such interest at the
Revised Rate, being herein referred to as "Excess Interest"). Non-payment of
such Excess Interest will not constitute a default under such Mortgage Loan
prior to the related maturity date. No later than the related Anticipated
Repayment Date, if it has not previously done so, the borrower under each
Hyper-Amortization Loan will be required to enter into a lockbox agreement
whereby all revenue from the related Mortgaged Property will be deposited
directly into a designated account (the "Lockbox Account") controlled by the
Master Servicer. Also commencing on the related Anticipated Repayment Date,
if not paid in full by then, each Hyper-Amortization Loan provides that all
remaining monthly cash flow from the related Mortgaged Property, if any,
after paying the scheduled Monthly Payment and all permitted operating
expenses and capital expenditures, be applied to pay principal on the
Mortgage Loan (such payments of principal, "Hyper-Amortization Payments")
until the Mortgage Loan is paid in full. Excess Interest and
Hyper-Amortization Payments will be considered separate from the scheduled
Monthly Payments and will not be included in the calculation of Assumed
Monthly Payments. As described below, Hyper-Amortization Loans generally
provide that the related borrower is prohibited from prepaying the Mortgage
Loan until a date coinciding with, or up to six months prior to, the
Anticipated Repayment Date; but, upon the occurrence of such date and on each
Due Date thereafter, such borrower may prepay the loan, in whole or in part,
without payment of a Prepayment Premium. The Anticipated Repayment Date for
each Hyper-Amortization Loan is listed in Annex A.
Amortization of Principal. Two hundred forty-three of the Mortgage Loans,
which represent 85.99% of the Initial Pool Balance, provide for monthly
payments of principal based on amortization schedules significantly longer
than the respective remaining terms thereof, thereby leaving substantial
principal amounts due and payable (each such payment, together with the
corresponding interest payment, a "Balloon Payment") on their respective
maturity dates, unless prepaid prior thereto. Nine Mortgage Loans, which
represent 13.94% of the Initial Pool Balance, are Hyper-Amortization Loans.
The remaining Mortgage Loan, which represents 0.07% of the Initial Pool
Balance, is a fully amortizing loan.
The original term to stated maturity or, in the case of the
Hyper-Amortization Loans, to the Anticipated Repayment Date of each Mortgage
Loan was between 84 and 132 months. The original amortization schedules of
the Mortgage Loans ranged from 120 to 360 months. As of the Cut-off Date, the
remaining terms to stated maturity or, in the case of the Hyper-Amortization
Loans, to the respective Anticipated Repayment Dates of the Mortgage Loans
will range from 75 to 129 months, and the weighted average remaining term to
stated maturity or the Anticipated Repayment Date, as the case may be, of
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the Mortgage Loans will be 114.9 months. As of the Cut-off Date, the
remaining amortization terms of the Mortgage Loans will range from 117 to 359
months, and the weighted average remaining amortization term of the Mortgage
Loans will be 337.7 months. See "Risk Factors --The Mortgage Loans -- Balloon
Payments" herein.
In addition, certain Mortgage Loans provide for reamortization of the
unpaid principal balance and adjustment of the Monthly Payments thereon upon
application of specified amounts of insurance proceeds to the unpaid
principal balance of such Mortgage Loans following a casualty loss.
Prepayment Provisions. Except with respect to two Mortgage Loans, which
represent 0.43% of the Initial Pool Balance, as to which there is no Lock-out
Period (as defined below), and except with respect to 14 Mortgage Loans,
which represent 8.47% of the Initial Pool Balance, as to which there is no
Open Period (as defined below), the Mortgage Loans provided as of origination
for, sequentially, (a) a period (a "Lock-out Period") during which voluntary
principal prepayments are prohibited, followed by (b) a period (a "Prepayment
Premium Period") during which any voluntary principal prepayment be
accompanied by a premium, charge or fee (a "Prepayment Premium"), followed by
(c) a period (an "Open Period") during which voluntary principal prepayments
may be made without an accompanying Prepayment Premium. Voluntary principal
prepayments may be made after any applicable Lock-out Period in full or, with
respect to three Mortgage Loans (representing 0.19% of the Initial Pool
Balance), in part, subject to certain limitations and, during a Prepayment
Premium Period, subject to payment of the applicable Prepayment Premium. As
of the Cut-off Date, with respect to the 251 Mortgage Loans that provide for
Lock-out Periods, the remaining Lock-out Periods ranged from six months to 57
months, with a weighted average remaining Lock-out Period of 38 months. The
Open Period for most Mortgage Loans that provide for one begins one to six
months prior to stated maturity or, in the case of a Hyper-Amortization Loan,
prior to the related Anticipated Repayment Date, except that there are eight
Mortgage Loans, representing 1.62% of the Initial Pool Balance, as to which
the Open Period begins more than six months (and, in five such cases, begins
five years) prior to stated maturity. Prepayment Premiums on the Mortgage
Loans are generally calculated either on the basis of a yield maintenance
formula (subject, in certain instances, to a minimum equal to a specified
percentage of the principal amount prepaid) or as a percentage (which may
decline over time) of the principal amount prepaid. The prepayment terms of
each of the Mortgage Loans are more particularly described in Annex A hereto.
As more fully described herein, Prepayment Premiums actually collected on
the Mortgage Loans will be distributed to the respective Classes of Offered
Certificateholders in the amounts and priorities described under "Description
of the Certificates -- Distributions -- Distributions of Prepayment Premiums"
herein. The Sponsor makes no representation as to the enforceability of the
provision of any Mortgage Loan requiring the payment of a Prepayment Premium
or as to the collectability of any Prepayment Premium. See "Risk Factors --
The Mortgage Loans -- Prepayment Premiums" herein and "Certain Legal Aspects
of Mortgage Loans -- Default Interest and Limitations on Prepayments" in the
Prospectus.
Forty-nine of the Mortgage Loans (the "Defeasance Loans"), representing
33.42% of the Initial Pool Balance, provide that, subject to the satisfaction
of certain conditions, the related borrower may pledge to the holder of the
subject Mortgage Loan "Defeasance Collateral" and thereupon obtain a release
of the Mortgaged Property from the lien of the related Mortgage, provided
that, the borrower (a) pays on any Due Date (the "Release Date") (i) all
interest accrued and unpaid on the Mortgage Note to and including the Release
Date; (ii) all other sums, excluding scheduled interest or principal
payments, due under the Mortgage Loan; and (iii) any costs and expenses
incurred in connection with such releases, and (b) delivers a security
agreement granting the Trust a first priority security interest in the
Defeasance Collateral and an opinion of counsel to such effect. In general,
"Defeasance Collateral" is required to consist of direct, non-callable United
States Treasury obligations that provide payments prior, but as close as
possible, to all successive Due Dates (including the scheduled maturity
date), with each such payment being equal to or greater than (with any excess
to be returned to the borrower) the Monthly Payment (including, in the case
of the scheduled maturity date, any Balloon Payment) due on such date.
"Due-on-Sale" and "Due-on-Encumbrance" Provisions. All of the Mortgage
Loans contain both "due-on-sale" and "due-on-encumbrance" clauses that in
each case, subject to certain limited
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exceptions, permit the holder of the Mortgage to accelerate the maturity of
the related Mortgage Loan if the borrower sells or otherwise transfers or
encumbers the related Mortgaged Property or prohibit the borrower from doing
so without consent of the holder of the Mortgage. See "--Additional Mortgage
Loan Information -- Subordinate Financing" herein. Certain of the Mortgage
Loans permit either (i) a one-time or two-time transfer of the related
Mortgaged Property if certain specified conditions are satisfied or if the
transfer is to a borrower reasonably acceptable to the lender, (ii) a
transfer of the related Mortgaged Property to a person that is related to the
borrower or (iii) in limited circumstances, a transfer of beneficial
interests in the borrower. The Master Servicer or the Special Servicer, as
applicable, will be required to determine, in a manner consistent with the
servicing standard described herein under "Servicing of the Mortgage Loans --
General" and with the REMIC Provisions, whether to exercise any right the
holder of any Mortgage may have under any such clause to accelerate payment
of the related Mortgage Loan upon, or to withhold its consent to, any
transfer or further encumbrance of the related Mortgaged Property; provided,
however, that neither the Master Servicer nor the Special Servicer may waive
any right it has, or grant any consent that it may otherwise withhold, under
any related "due-on-sale" or "due-on-encumbrance" clause unless: (i) the
Master Servicer or the Special Servicer, as the case may be, shall have
received written confirmation from each Rating Agency that such action would
not result in the qualification, downgrade or withdrawal of the rating then
assigned by such Rating Agency to any Class of Certificates, such
confirmation to be required in the case of any waiver of rights under a
related "due-on-sale" clause only if the then-outstanding principal balance
of the subject Mortgage Loan (together with the then-outstanding aggregate
principal balance of all other Mortgage Loans that are cross-collateralized
therewith or have been made to the same borrower or borrowers that are, to
the actual knowledge of the Master Servicer or the Special Servicer, as the
case may be, affiliated with the related borrower) exceeds a specified
amount; and (ii) in the case of the Master Servicer, it shall have provided,
a specified number of business days prior to the granting of such waiver or
consent, to the Special Servicer, written notice of the matter and a written
explanation of the surrounding circumstances and, upon request made within a
specified period, shall have discussed the matter with the Special Servicer
(provided that the Master Servicer will not be obligated to follow any
instructions in such regard from the Special Servicer). See "Description of
the Pooling Agreements -- Due-on-Sale and Due-on-Encumbrance Provisions" and
"Certain Legal Aspects of Mortgage Loans -- Due-on-Sale and
Due-on-Encumbrance" in the Prospectus.
ADDITIONAL MORTGAGE LOAN INFORMATION
General. For a detailed presentation of certain characteristics of the
Mortgage Loans and Mortgaged Properties, on an individual basis and in
tabular format, see Annex A hereto. Certain capitalized terms that appear
herein are defined in Annex A.
Delinquencies. No Mortgage Loan will be as of the Cut-off Date, or has
been since origination, 30 days or more delinquent in respect of any Monthly
Payment, except for one Mortgage Loan that was more than 30 days delinquent
once in connection with a servicing error. All of the Mortgage Loans were
originated during the twelve-month period prior to the Cut-off Date.
Tenant Matters. Three Mortgage Loans secured by Commercial Mortgaged
Properties, which represent 1.21% of the Initial Pool Balance, are wholly
owner-occupied, and 85 Mortgage Loans secured by Commercial Mortgaged
Properties, which represent 34.81% of the Initial Pool Balance, are leased in
large part to one or more Major Tenants. Four companies are Major Tenants
with respect to more than one Mortgaged Property, with the related groups of
Mortgage Loans representing 2.07%, 1.55%, 1.34% and 0.26%, respectively, of
the Initial Pool Balance. In addition, there are several cases in which a
particular entity is a tenant at multiple Mortgaged Properties, and although
it may not be a Major Tenant at any such property, it may be significant to
the success of such properties. "Major Tenants" means any tenant at a
Commercial Mortgaged Property that rents at least 20% of the Leasable Square
Footage (as defined in Annex A) at such property.
Certain of the Multifamily Mortgaged Properties have material
concentrations of student tenants.
Ground Leases. Three of the Mortgage Loans, which represent 0.99% of the
Initial Pool Balance, are, in each such case, secured solely by a Mortgage on
the applicable borrower's leasehold interest in
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the related Mortgaged Property. In the case of each such Mortgage Loan, the
related ground lease expires more than 10 years after the stated maturity of
the loan. In each case, either (i) the ground lessor has subordinated its
interest in the related Mortgaged Property to the interest of the holder of
the related Mortgage Loan or (ii) the ground lessor has agreed to give the
holder of the Mortgage Loan notice of, and has granted such holder the right
to cure, any default or breach by the lessee. Two Mortgage Loans, each made
to co-borrowers, which represent 0.44% of the Initial Pool Balance, are each
secured by a Mortgage on the leasehold interest or estate for years of one
borrower and the fee interest of the other borrower, respectively, in the
related Mortgaged Property. See "Certain Legal Aspects of Mortgage Loans --
Foreclosure -- Leasehold Risks" in the Prospectus.
Subordinate Financing. Two Mortgaged Properties, representing security for
two Mortgage Loans representing 0.72% of the Initial Pool Balance, are
encumbered by secured subordinated debt; however, either (i) the holders of
the subordinated debt have agreed not to foreclose for so long as the related
Mortgage Loan is outstanding and the Trust is not pursuing a foreclosure
action or (ii) the subordinated debt is payable only out of excess cash flow
after payment of all sums due on the related Mortgage Loan. Also,
notwithstanding that the Mortgage Loans either prohibit the related borrower
from encumbering the Mortgaged Property with additional secured debt or
require the consent of the holder of the first lien prior to so encumbering
such property, a violation of such prohibition may not become evident until
the related Mortgage Loan otherwise defaults. The existence of any such
subordinated indebtedness may increase the difficulty of refinancing the
related Mortgage Loan at maturity and the possibility that reduced cash flow
could result in deferred maintenance. Also, in the event that the holder of
the subordinated debt files for bankruptcy or is placed in involuntary
receivership, foreclosing on the Mortgaged Property could be delayed. See
"Certain Legal Aspects of Mortgage Loans -- Subordinate Financing" in the
Prospectus. In addition, owners of the borrowers under the Mortgage Loans may
incur mezzanine debt secured by their ownership interests in the related
borrowers. Furthermore, certain of the Mortgage Loans permit, and certain
borrowers under the Mortgage Loans have incurred, additional indebtedness for
operating or similar purposes. Additional debt, in any form, may cause a
diversion of funds from property maintenance. The Sponsor has not been able
to confirm the existence of any other debt.
Lender Borrower Relationships. The Sponsor, the Mortgage Loan Seller, the
Additional Warranting Parties and their respective banking or finance
affiliates may maintain certain banking or other relationships with borrowers
under the Mortgage Loans or their affiliates, and proceeds of the Mortgage
Loans may, in certain limited cases, be used by such borrowers or their
affiliates in whole or in part to pay indebtedness owed to any such parties.
CERTAIN UNDERWRITING MATTERS
Environmental Assessments. Except with respect to four Mortgage Loans,
which represent 0.27% of the Initial Pool Balance, each of the related
Mortgaged Properties was subject to a "Phase I" environmental assessment or
an update of a previously conducted assessment, which assessment or update
was conducted generally in accordance with industry-wide standards not more
than 27 months prior to the Delivery Date. With respect to certain Mortgage
Loans, the related Mortgaged Properties were also subject to a "Phase II"
environmental assessment. No such assessment or update otherwise revealed any
material adverse environmental condition or circumstance at any Mortgaged
Property, except as set forth below, and further, except in those cases in
which an operations and maintenance plan (including, in several cases, in
respect of asbestos-containing materials and lead based paint), periodic
monitoring of nearby properties or the establishment of an escrow reserve to
cover the estimated cost of remediation was recommended, and which
recommended actions have been or are expected to be implemented in the manner
and within the time frames specified in the related Mortgage Loan documents.
With respect to the four Mortgage Loans as to which no environmental site
assessment was performed, a regulatory database search was conducted which
did not reveal any onsite environmental concerns for the related Mortgaged
Properties. There can be no assurance that the environmental assessments or
regulatory database searches identified all possible environmental conditions
and risks at the Mortgaged Properties or that recommended operations and
maintenance plans have been or will continue to be implemented. In many
cases, certain potentially adverse environmental conditions were not tested
for. For example, lead based paint and radon were tested for
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only at Multifamily Mortgaged Properties and only if, in the case of lead
based paint, the age of the Mortgaged Property warranted such testing and, in
the case of radon, radon is prevalent in the geographic area where the
Mortgaged Property is located. In addition, asbestos-containing materials,
lead-based paint and lead in water were generally tested for only at
Mortgaged Properties where the age and condition of such Mortgaged Properties
warranted such testing.
The information contained herein regarding environmental conditions at the
Mortgaged Properties is based on the environmental assessments and has not
been independently verified by the Sponsor, the Mortgage Loan Seller, AMRESCO
Capital, Goldman Sachs Mortgage, the Underwriters, the Master Servicer, the
Special Servicer, the Trustee, the Fiscal Agent, the REMIC Administrator, or
any of their respective affiliates.
Property Condition Assessments. Except with respect to four Mortgage
Loans, which represent 0.27% of the Initial Pool Balance, inspections of the
related Mortgaged Properties were conducted by independent licensed engineers
in connection with or subsequent to the origination of the related Mortgage
Loan. Such inspections were generally commissioned to inspect the exterior
walls, roofing, interior construction, mechanical and electrical systems and
general condition of the site, buildings and other improvements located at a
Mortgaged Property. With respect to certain of the Mortgage Loans, the
resulting reports indicated a variety of deferred maintenance items and
recommended capital improvements. The estimated cost of the necessary repairs
or replacements at a Mortgaged Property was included in the related property
condition assessment; and, in the case of certain Mortgaged Properties, such
cost exceeded $100,000. With limited exception, cash reserves were
established to fund such deferred maintenance or replacement items, generally
in an amount equal to 125% of the estimated cost of such items. In addition,
various Mortgage Loans require monthly deposits into cash reserve accounts to
fund property maintenance expenses. The four Mortgaged Properties that were
not subject to an engineering inspection were inspected by representatives of
Goldman Sachs Mortgage.
Appraisals and Market Studies. An appraisal of each of the related
Mortgaged Properties was performed (or an existing appraisal updated) in
connection with or subsequent to the origination of each Mortgage Loan, by an
independent appraiser that is either a member of the Appraisal Institute
("MAI") or state-certified, in order to establish that the appraised value of
the related Mortgaged Property or Properties exceeded the original principal
balance of the Mortgage Loan (or, in the case of certain sets of related
Cross-Collateralized Mortgage Loans, the aggregate original principal balance
of such sets). Each such appraisal or property valuation was prepared on or
about the "Appraisal Date" indicated on Annex A hereto and conforms to the
appraisal guidelines set forth in Title XI of the Federal Financial
Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"). In
general, such appraisals represent the analysis and opinions of the
respective appraisers at or before the time made, and are not guarantees of,
and may not be indicative of, present or future value. There can be no
assurance that another appraiser would not have arrived at a different
valuation, even if such appraiser used the same general approach to and same
method of appraising the property. In addition, appraisals seek to establish
the amount a typically motivated buyer would pay a typically motivated
seller. Such amount could be significantly higher than the amount obtained
from the sale of a Mortgaged Property under a distress or liquidation sale.
None of the Sponsor, the Mortgage Loan Seller, AMRESCO Capital, Goldman
Sachs Mortgage, the Underwriters, the Master Servicer, the Special Servicer,
the Trustee, the Fiscal Agent, the REMIC Administrator, or any of their
respective affiliates has prepared or conducted its own separate appraisal or
reappraisal of any Mortgaged Property.
Zoning and Building Code Compliance. The Mortgage Loan Seller, with
respect to the Citi Mortgage Loans, AMRESCO Capital, with respect to the
AMRESCO Mortgage Loans, and Goldman Sachs Mortgage, with respect to the
Goldman Mortgage Loans, have examined whether the use and operation of the
related Mortgaged Properties were in compliance in all material respects with
all applicable zoning, land-use, environmental, building, fire and health
ordinances, rules, regulations and orders applicable to such Mortgaged
Properties at the time such Mortgage Loans were originated. Establishment of
such compliance may have been supported by legal opinions, certifications
from
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government officials, representations by the related borrower contained in
the related Mortgage Loan documents, property condition assessments
undertaken by independent licensed engineers or, in the case of the Goldman
Mortgage Loans not originated by Goldman Sachs Mortgage representations by
the applicable seller of such Mortgage Loans to Goldman Sachs Mortgage
identified in "--General" above. Certain violations may exist, but neither
the Mortgage Loan Seller, with respect to the Citi Mortgage Loans, AMRESCO
Capital, with respect to the AMRESCO Mortgage Loans nor Goldman Sachs
Mortgage, with respect to the Goldman Mortgage Loans, considers them to be
material. In some cases, the use, operation and/or structure of the related
Mortgaged Property constitutes a permitted nonconforming use and/or structure
that may not be rebuilt to its current state in the event of a material
casualty event. With respect to such Mortgaged Properties, the Mortgage Loan
Seller with respect to the Citi Mortgage Loans, AMRESCO Capital with respect
to the AMRESCO Mortgage Loans, and Goldman Sachs Mortgage with respect to the
Goldman Mortgage Loans, have made one or more of the following determinations
to the effect that in the event of a material casualty affecting the
Mortgaged Property: (i) insurance proceeds would be available and sufficient
to pay off the related Mortgage Loan in full, (ii) the Mortgaged Property, if
permitted to be repaired or restored in conformity with current law, would
constitute adequate security for the related Mortgage Loan and/or (iii) the
risk that the entire Mortgaged Property would suffer a material casualty to
such a magnitude that it could not be rebuilt to its current state is remote.
If insurance proceeds are available for application to the related Mortgage
Loan in the event of a material casualty, no assurance can be given that such
proceeds would be sufficient to pay off such Mortgage Loan in full. In
addition, if the Mortgaged Property were to be repaired or restored in
conformity with current law, no assurance can be given as to what its value
would be relative to the remaining balance of the related Mortgage Loan or
what would be the revenue-producing potential of the property.
Hazard, Liability and Other Insurance. The Mortgages generally require
that each Mortgaged Property be insured by a hazard insurance policy in an
amount (subject to a customary deductible) at least equal to the lesser of
the outstanding principal balance of the related Mortgage Loan and 100% of
the full insurable replacement cost of the improvements located on the
related Mortgaged Property, and if applicable, that the related hazard
insurance policy contain appropriate endorsements to avoid the application of
co-insurance and not permit reduction in insurance proceeds for depreciation;
provided that, in the case of certain of the Mortgage Loans, the hazard
insurance may be in such other amounts as was required by the related
originators. In addition, if any portion of a Mortgaged Property securing any
Mortgage Loan was, at the time of the origination of such Mortgage Loan, in
an area identified in the Federal Register by the Flood Emergency Management
Agency as having special flood hazards, and flood insurance was available, a
flood insurance policy meeting any requirements of the then-current
guidelines of the Federal Insurance Administration is required to be in
effect with a generally acceptable insurance carrier, in an amount
representing coverage not less than the least of (1) the outstanding
principal balance of such Mortgage Loan, (2) the full insurable value of such
Mortgaged Property, (3) the maximum amount of insurance available under the
National Flood Insurance Act of 1968, as amended and (4) 100% of the
replacement cost of the improvements located on the related Mortgaged
Property. In general, the standard form of hazard insurance policy covers
physical damage to, or destruction of, the improvements on the Mortgaged
Property by fire, lightning, explosion, smoke, windstorm and hail, riot or
strike and civil commotion, subject to the conditions and exclusions set
forth in each policy.
Each Mortgage generally also requires the related borrower to maintain
comprehensive general liability insurance against claims for personal and
bodily injury, death or property damage occurring on, in or about the related
Mortgaged Property in an amount customarily required by institutional
lenders.
Each Mortgage (other than a Mortgage encumbering a mobile home park
property) generally further requires the related borrower to maintain
business interruption or rent loss insurance in an amount not less than 100%
of the projected rental income or revenue from the related Mortgaged Property
for not less than six months.
In general, the Mortgaged Properties (including those located in
California) are not insured against earthquake risks. With respect to some
Mortgaged Properties located in California, the related originator conducted
seismic studies to assess the "probable maximum loss" for such Mortgaged
Properties.
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THE MORTGAGE LOAN SELLER AND THE ADDITIONAL WARRANTING PARTIES
The Mortgage Loan Seller. The Mortgage Loan Seller is a Delaware
corporation and is in the business of originating loans on income-producing
properties. The principal office of the Mortgage Loan Seller is in New York,
New York. The Mortgage Loan Seller is a direct, wholly-owned subsidiary of
Citibank, N.A.
AMRESCO Capital. AMRESCO Capital, which originated and underwrote
approximately $1.7 billion of commercial real estate mortgages during 1997,
is a commercial mortgage banker that originates, underwrites, accumulates and
securitizes commercial real estate loans. AMRESCO Capital is approved by FNMA
to participate in the DUS program for multifamily mortgage lending. AMRESCO
Capital is also a member of the FHLMC Program Plus(Registered Trademark)
multifamily seller/servicer program in Florida, New York, North Carolina and
South Carolina.
Goldman Sachs Mortgage. Goldman Sachs Mortgage is a limited partnership
organized under the laws of the State of New York. Its general partner is
Goldman Sachs Real Estate Funding Corp., which is a wholly owned subsidiary
of The Goldman Sachs Group, L.P. Goldman Sachs Mortgage is an affiliate of
Goldman, Sachs & Co., one of the Underwriters. The principal offices of
Goldman Sachs Mortgage are located at 85 Broad Street, New York, NY 10004.
Its telephone number is (212) 902-1000.
The information set forth herein concerning (i) the Mortgage Loan Seller
has been provided by the Mortgage Loan Seller, (ii) AMRESCO Capital has been
provided by AMRESCO Capital, and (iii) Goldman Sachs Mortgage has been
provided by Goldman Sachs Mortgage, and neither the Sponsor nor either
Underwriter makes any representation or warranty as to the accuracy or
completeness of such information.
ASSIGNMENT OF THE MORTGAGE LOANS; REPURCHASES
On or prior to the Delivery Date, at the direction of the Sponsor, the
Mortgage Loan Seller will assign, sell and transfer the Mortgage Loans,
without recourse, to the Trustee for the benefit of the Certificateholders.
In connection with such assignment, the Mortgage Loan Seller will be required
to deliver the following documents, among others, to the Trustee with respect
to each Citi Mortgage Loan, AMRESCO Capital will be required to deliver the
following documents, among others, to the Trustee with respect to each
AMRESCO Mortgage Loan, and Goldman Sachs Mortgage will be required to deliver
the following documents, among others, to the Trustee with respect to each
Goldman Mortgage Loan: (a) the original Mortgage Note, endorsed (without
recourse) to the order of the Trustee; (b) the original or a copy of the
related Mortgage(s), together with originals or copies of any intervening
assignments of such document(s), in each case (unless the particular document
has not been returned from the applicable recording office) with evidence of
recording thereon; (c) the original or a copy of any related assignment(s) of
leases and rents (if any such item is a document separate from the Mortgage),
together with originals or copies of any intervening assignments of such
document(s), in each case (unless the particular document has not been
returned from the applicable recording office) with evidence of recording
thereon; (d) an assignment of each related Mortgage in favor of the Trustee,
in recordable form (or a certified copy of such assignment as sent for
recording); (e) an assignment of any related assignment(s) of leases and
rents (if any such item is a document separate from the Mortgage) in favor of
the Trustee, in recordable form (or a certified copy of such assignment as
sent for recording); (f) an original or copy of the related lender's title
insurance policy (or, if a title insurance policy has not yet been issued, a
commitment for title insurance "marked-up" at the closing of such Mortgage
Loan); (g) an assignment in favor of the Trustee of each effective UCC
financing statement in the possession of the transferor (or a certified copy
of such assignment as sent for filing); and (h) in those cases where
applicable, the original or a copy of the related ground lease.
The Trustee will be required to review the documents delivered thereto by
the Mortgage Loan Seller with respect to each Citi Mortgage Loan, by AMRESCO
Capital with respect to each AMRESCO Mortgage Loan, and by Goldman Sachs
Mortgage with respect to each Goldman Mortgage Loan, within a specified
period following such delivery, and the Trustee will hold the related
documents in trust. If it is found during the course of such review or at any
time thereafter that any of the above-described
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documents was not delivered with respect to any Mortgage Loan or that any
such document is defective, and in either case such omission or defect
materially and adversely affects the value of the related Mortgage Loan or
the interests of Certificateholders therein, then the Mortgage Loan Seller
(if, but only if, the affected Mortgage Loan is a Citi Mortgage Loan),
AMRESCO Capital (if, but only if, the affected Mortgage Loan is an AMRESCO
Mortgage Loan) or Goldman Sachs Mortgage (if, but only if, the affected
Mortgage Loan is a Goldman Mortgage Loan) will be obligated, except as
otherwise described below, within a period of 90 days following the earlier
of its discovery or receipt of notice of such omission or defect, to deliver
the missing documents or cure the defect in all material respects, as the
case may be, or to repurchase (or cause the repurchase of) the affected
Mortgage Loan at a price (the "Purchase Price") generally equal to the sum of
the unpaid principal balance of such Mortgage Loan, plus any accrued but
unpaid interest thereon at the related Mortgage Rate to but not including the
Due Date in the Collection Period of repurchase, plus any related
unreimbursed Servicing Advances (as defined herein); provided that, if the
Mortgage Loan Seller, AMRESCO Capital or Goldman Sachs Mortgage, as the case
may be, certifies to the Trustee that (i) such defect is not reasonably
susceptible of correction or cure, or such missing document cannot reasonably
be obtained, within such 90-day period and is susceptible of correction or
cure, or can be obtained, within an additional 90-day period, (ii) such
defect or the absence of such document does not cause the related Mortgage
Loan to fail to be a "qualified mortgage" or a "qualified replacement
mortgage" within the meaning of Section 860G of the Code, and (iii) the
Mortgage Loan Seller, AMRESCO Capital or Goldman Sachs Mortgage, as the case
may be, is diligently prosecuting the correction or cure of such defect, or
the obtaining of such missing document, then such party shall have an
additional period of 90 days in which to correct or cure such defect or
obtain such missing document, or, if ultimately unable to do so, to effect
such repurchase. The respective cure/repurchase obligations of the Mortgage
Loan Seller (in the case of Citi Mortgage Loans), AMRESCO Capital (in the
case of AMRESCO Mortgage Loans) and Goldman Sachs Mortgage (in the case of
Goldman Mortgage Loans) will constitute the sole remedies available to the
Certificateholders for any failure on the part of the Mortgage Loan Seller,
AMRESCO Capital or Goldman Sachs Mortgage, as the case may be, to deliver any
of the above-described documents with respect to any Mortgage Loan or for any
defect in any such document, and neither the Sponsor nor any other person
will be obligated to repurchase the affected Mortgage Loan if either the
Mortgage Loan Seller, AMRESCO Capital or Goldman Sachs Mortgage, as the case
may be, defaults on its obligation to do so. Notwithstanding the foregoing,
if any of the above-described documents is not delivered with respect to any
Mortgage Loan because such document has been submitted for recording, and
neither such document nor a copy thereof, in either case with evidence of
recording thereon, can be obtained because of delays on the part of the
applicable recording office, then none of the Mortgage Loan Seller, AMRESCO
Capital nor Goldman Sachs Mortgage will be required to repurchase (or cause
the repurchase of) the affected Mortgage Loan on the basis of such missing
document so long as it continues in good faith to attempt to obtain such
document or such copy.
The Pooling Agreement will require that the assignments in favor of the
Trustee with respect to each Mortgage Loan described in clauses (d) and (e)
of the second preceding paragraph be submitted for recording in the real
property records of the appropriate jurisdictions within a specified number
of days following the Delivery Date. See "Description of the Pooling
Agreements -- Assignment of Mortgage Loans; Repurchases" in the Prospectus.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
In the Pooling Agreement, except as otherwise specified in the Pooling
Agreement and under this "--Representations and Warranties; Repurchases"
caption, the Mortgage Loan Seller will be required to represent and warrant
solely with respect to the Citi Mortgage Loans, AMRESCO Capital will be
required to represent and warrant solely with respect to the AMRESCO Mortgage
Loans, and Goldman Sachs Mortgage will be required to represent and warrant
solely with respect to the Goldman Mortgage Loans, in each case as of the
Delivery Date or as of such other date specifically provided in the related
representation or warranty, among other things, substantially as follows: (i)
the information set forth in the schedule of Mortgage Loans (the "Mortgage
Loan Schedule") attached to the Pooling Agreement (which will contain a
limited portion of the information set forth in Annex A) was true and correct
in all material
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respects as of the Cut-off Date; (ii) each Mortgage securing a Mortgage Loan
is a valid first lien on the related Mortgaged Property subject only to (A)
the lien of current real estate taxes and assessments not yet due and
payable, (B) covenants, conditions and restrictions, rights of way, easements
and other matters of public record, and other matters to which like
properties are commonly subject, which do not materially adversely affect the
current use of the Mortgaged Property, the security interest of the lender or
the value of the property, (C) rights of tenants (whether under ground leases
or space leases) at the Mortgaged Property to remain following a foreclosure
or similar proceeding (provided that such tenants are performing under such
leases), (D) exceptions and exclusions specifically referred to in the
related lender's title insurance policy issued or, as evidenced by a
"marked-up" commitment, to be issued in respect of such Mortgage Loan, and
(E) if such Mortgage Loan is cross-collateralized with any other Mortgage
Loan, the lien of the Mortgage for such other Mortgage Loan (the exceptions
set forth in the foregoing clauses (A), (B), (C), (D) and (E) collectively,
"Permitted Encumbrances"); (iii) the Mortgage(s) and Mortgage Note for each
Mortgage Loan and all other documents to which the related borrower is a
party and which evidence or secure such Mortgage Loan, are the legal, valid
and binding obligations of the related borrower (subject to any non-recourse
provisions contained in any of the foregoing agreements and any applicable
state anti-deficiency legislation), enforceable in accordance with their
respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, redemption, fraudulent conveyance, receivership,
moratorium or other laws relating to or affecting the rights of creditors
generally and by general principles of equity regardless of whether such
enforcement is considered in a proceeding in equity or at law; (iv) except as
described under "--Additional Mortgage Loan Information -- Delinquencies"
herein, no Mortgage Loan was as of the Cut-off Date, or during the
twelve-month period prior thereto, more than 30 days delinquent in respect of
any Monthly Payment, without giving effect to any applicable grace period;
(v) there is no valid offset, defense or counterclaim to any Mortgage Loan;
(vi) it has not waived any material default, breach, violation or event of
acceleration existing under any Mortgage or Mortgage Note; (vii) it has not
received actual notice that (A) there is any proceeding pending or threatened
for the total or partial condemnation of any Mortgaged Property, or (B) there
is any material damage at any Mortgaged Property that materially and
adversely affects the value of such Mortgaged Property (except in those cases
where there is an escrow of funds sufficient to effect the necessary repairs
and maintenance); (viii) all insurance coverage required under each Mortgage
securing a Mortgage Loan is in full force and effect with respect to the
related Mortgaged Property; (ix) at origination, each Mortgage Loan complied
in all material respects with all requirements of federal and state law,
including those requirements pertaining to usury, relating to the origination
of such Mortgage Loan; (x) except with respect to four Mortgage Loans as
discussed under "Certain Underwriting Matters -- Environmental Assessments",
one or more environmental site assessments (or an update of a previously
conducted assessment) has been performed with respect to each Mortgaged
Property not more than 27 months prior to the Delivery Date, and, having made
no independent inquiry other than reviewing the resulting report(s) and/or
employing an environmental consultant to perform the assessments or updates
referenced herein, it has no knowledge of any material and adverse
environmental condition or circumstance affecting such Mortgaged Property
that was not disclosed in the related report(s); (xi) the lien of each
Mortgage is insured by a title insurance policy issued by a title insurance
company qualified to do business in the jurisdiction in which the Mortgaged
Property is located, that insures the originator, its successors and assigns,
as to the first priority lien of such Mortgage in the original principal
amount of the related Mortgage Loan (or, in the case of the Mortgage securing
one Mortgage Loan with an original principal balance of $1,196,250, in the
amount of $1,170,000) after all advances of principal, subject only to
Permitted Encumbrances (or, if a title insurance policy has not yet been
issued in respect of any Mortgage Loan, a policy meeting the foregoing
description is evidenced by a commitment for title insurance "marked-up" at
the closing of such loan); (xii) the proceeds of each Mortgage Loan have been
fully disbursed, and there is no requirement for future advances thereunder;
(xiii) the terms of the Mortgage Note and Mortgage(s) for each Mortgage Loan
have not been impaired, waived, altered or modified in any material respect,
except as specifically set forth in the related Mortgage File; (xiv) there
are no delinquent taxes, ground rents, water charges, sewer rents, or other
similar outstanding charges affecting the related Mortgaged Property that are
not otherwise covered by an escrow of funds sufficient to pay such charges;
(xv) the related borrower's interest in each Mortgaged Property securing a
Mortgage Loan consists of a fee simple and/or leasehold
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estate or interest in real property; (xvi) no Mortgage Loan contains any
equity participation by the lender, provides for any contingent or additional
interest in the form of participation in the cash flow of the related
Mortgaged Property or provides for the negative amortization of interest,
except for the Hyper-Amortization Loans to the extent described above under
"--Certain Terms and Conditions of the Mortgage Loans -- Hyperamortization";
and (xvii) all escrow deposits (including capital improvements and
environmental remediation reserves) relating to each Mortgage Loan that were
required to be delivered to the mortgagee under the terms of the related loan
documents have been received and, to the extent of any remaining balances of
such escrow deposits, are in the possession or under the control of the
representing party or its agents (which shall include the Master Servicer).
In the Pooling Agreement, AMRESCO Capital will also be required to represent
and warrant, as of the Delivery Date, that, immediately prior to the transfer
of the AMRESCO Mortgage Loans by AMRESCO Capital to Goldman Sachs Mortgage,
AMRESCO Capital was the sole owner of each AMRESCO Mortgage Loan and had
authority to sell, assign and transfer such Mortgage Loan. In the Pooling
Agreement, Goldman Sachs Mortgage will also be required to represent and
warrant, as of the Delivery Date, that, immediately prior to the transfer of
the AMRESCO Mortgage Loans and the Goldman Mortgage Loans by Goldman Sachs
Mortgage to the Mortgage Loan Seller, Goldman Sachs Mortgage was the sole
owner of each AMRESCO Mortgage Loan and Goldman Mortgage Loan and had full
right and authority to sell, assign and transfer such Mortgage Loan (provided
that in the case of the AMRESCO Mortgage Loans, such representation and
warranty will be made on the assumption that the representation and warranty
of AMRESCO Capital described in the prior sentence is true and correct). In
the Pooling Agreement, the Mortgage Loan Seller will also be required to
represent and warrant, as of the Delivery Date, that, immediately prior to
the transfer of the Mortgage Loans to the Trustee, the Mortgage Loan Seller
was the sole owner of each Mortgage Loan (including each AMRESCO Mortgage
Loan and Goldman Mortgage Loan) and had full right and authority to sell,
assign and transfer such Mortgage Loan (provided that, in the case of the
AMRESCO Mortgage Loans and the Goldman Mortgage Loans, such representation
and warranty will be made on the assumption that the representations and
warranties of AMRESCO Capital and Goldman Sachs Mortgage described in the
prior two sentences are true and correct).
If the Mortgage Loan Seller discovers or is notified of a breach of any of
the foregoing representations and warranties made by it with respect to any
Citi Mortgage Loan (or, in the case of a breach of the representation and
warranty described in the last sentence of the prior paragraph, with respect
to any Mortgage Loan), if Goldman Sachs Mortgage discovers or is notified of
a breach of any of the foregoing representations and warranties made by it
with respect to any Goldman Mortgage Loan (or, in the case of a breach of the
representation and warranty described in the second to last sentence of the
prior paragraph with respect to any Goldman Mortgage Loan or AMRESCO Mortgage
Loan) or, if AMRESCO Capital discovers or is notified of a breach of any of
the foregoing representations and warranties made by it with respect to any
AMRESCO Mortgage Loan, and in any case such breach materially and adversely
affects the value of such Mortgage Loan or the interests of
Certificateholders therein, then the party that made the representation and
warranty that was breached will be obligated, within a period of 90 days
following the earlier of its discovery or receipt of notice of such breach,
to cure such breach in all material respects or to repurchase (or cause the
repurchase of) the affected Mortgage Loan at the applicable Purchase Price;
provided that, if the Mortgage Loan Seller, AMRESCO Capital or Goldman Sachs
Mortgage, as the case may be, certifies to the Trustee that (a) such breach
is not reasonably susceptible of correction or cure within such 90-day period
and is susceptible of correction or cure within an additional 90-day period,
(b) such breach does not cause the related Mortgage Loan to fail to be a
"qualified mortgage" or a "qualified replacement mortgage" within the meaning
of Section 860G of the Code and (c) the Mortgage Loan Seller, AMRESCO Capital
or Goldman Sachs Mortgage, as the case may be, is diligently prosecuting the
correction or cure of such breach, then such party shall have an additional
period of 90 days in which to correct or cure such breach or, if ultimately
unable to do so, to effect such repurchase.
The foregoing cure/repurchase obligation of the Mortgage Loan Seller,
AMRESCO Capital or Goldman Sachs Mortgage, as applicable, will constitute the
sole remedy available to the Certificateholders for any breach of any of the
foregoing representations and warranties, and neither the Sponsor nor any
other person will be obligated to repurchase any affected Mortgage Loan in
connection with a
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breach of such representations and warranties if either the Mortgage Loan
Seller, AMRESCO Capital or Goldman Sachs Mortgage, as applicable, defaults on
its obligation to do so. The Mortgage Loan Seller, AMRESCO Capital and
Goldman Sachs Mortgage will be the sole Warranting Parties (as defined in the
Prospectus) in respect of the Mortgage Loans, with the Mortgage Loan Seller
being the sole Warranting Party with respect to the Citi Mortgage Loans,
AMRESCO Capital being the sole Warranting Party with respect to the AMRESCO
Mortgage Loans (except as described in the last two sentences of the second
preceding paragraph) and Goldman Sachs Mortgage being the sole Warranting
Party with respect to the Goldman Mortgage Loans (except as described in the
last sentence of the second preceding paragraph). See "Description of the
Pooling Agreements -- Representations and Warranties; Repurchases" in the
Prospectus.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the time the Offered Certificates are issued, as adjusted for
the scheduled principal payments due on the Mortgage Loans on or before the
Cut-off Date. Prior to the issuance of the Offered Certificates, a Mortgage
Loan may be removed from the Mortgage Pool if the Sponsor deems such removal
necessary or appropriate or if it is prepaid. A limited number of other
mortgage loans may be included in the Mortgage Pool prior to the issuance of
the Offered Certificates, unless including such mortgage loans would
materially alter the characteristics of the Mortgage Pool as described
herein. The Sponsor believes that the information set forth herein will be
representative of the characteristics of the Mortgage Pool as it will be
constituted at the time the Offered Certificates are issued, although the
range of Mortgage Rates and maturities, as well as the other characteristics
of the Mortgage Loans described herein, may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Delivery Date
and will be filed, together with the Pooling Agreement, with the Securities
and Exchange Commission within fifteen days after the initial issuance of the
Offered Certificates. In the event Mortgage Loans are removed from or added
to the Mortgage Pool as set forth in the preceding paragraph, such removal or
addition will be noted in the Form 8-K.
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SERVICING OF THE MORTGAGE LOANS
GENERAL
The Master Servicer and the Special Servicer, either directly or through
sub-servicers, will each be required to service and administer the respective
Mortgage Loans for which it is responsible, in the best interests and for the
benefit of the Certificateholders, in accordance with any and all applicable
laws, the terms of the Pooling Agreement and the respective Mortgage Loans
and, to the extent consistent with the foregoing, the following standard (the
"Servicing Standard"): (a) in the same manner in which, and with the same
care, skill, prudence and diligence with which, the Master Servicer or
Special Servicer, as the case may be, generally services and administers
similar mortgage loans or assets, as applicable, for third parties or
generally services and administers similar mortgage loans or assets, as
applicable, held in its own portfolio, whichever servicing procedure is of a
higher standard; (b) with a view to the timely collection of all scheduled
payments of principal and interest under the Mortgage Loans or, if a Mortgage
Loan comes into and continues in default and if, in the good faith and
reasonable judgment of the Special Servicer, no satisfactory arrangements can
be made for the collection of the delinquent payments, the maximization of
the recovery on such Mortgage Loan to the Certificateholders (collectively)
on a present value basis; and (c) without regard to (i) any relationship that
the Master Servicer or the Special Servicer, as the case may be, or any
affiliate thereof may have with any related borrower or any other party to
the Pooling Agreement; (ii) the ownership of any Certificate by the Master
Servicer or the Special Servicer, as the case may be, or any affiliate
thereof; (iii) the Master Servicer's obligation to make Advances (as defined
herein); (iv) the Special Servicer's obligation to make (or to direct the
Master Servicer to make) Servicing Advances (as defined herein); (v) the
right of the Master Servicer or the Special Servicer, as the case may be, or
any affiliate thereof to receive compensation for its services or
reimbursement of costs under the Pooling Agreement or with respect to any
particular transaction; (vi) the management and/or servicing of mortgage loan
portfolios for other third parties; and (vii) any indemnity or repurchase
obligation on the part of the Master Servicer or the Special Servicer, as the
case may be, or any of their respective affiliates with respect to the
Mortgage Loans.
In general, the Master Servicer will be responsible for the servicing and
administration of all the Mortgage Loans as to which no Servicing Transfer
Event (as defined herein) has occurred and all Corrected Mortgage Loans (as
defined herein), and the Special Servicer will be obligated to service and
administer each Mortgage Loan (other than a Corrected Mortgage Loan) as to
which a Servicing Transfer Event has occurred (each, a "Specially Serviced
Mortgage Loan") and each Mortgaged Property acquired on behalf of the
Certificateholders in respect of a defaulted Mortgage Loan through
foreclosure, deed-in-lieu of foreclosure or otherwise (upon acquisition, an
"REO Property"). A "Servicing Transfer Event" with respect to any Mortgage
Loan consists of any of the following events: (i) the related borrower has
failed to make when due any Balloon Payment, which failure has continued, or
the Master Servicer determines in its good faith judgment will continue,
unremedied for 30 days; (ii) the related borrower has failed to make when due
any Monthly Payment (other than a Balloon Payment) or any other payment
required under the related Mortgage Note or the related Mortgage(s), which
failure has continued, or the Master Servicer determines in its good faith
judgment will continue, unremedied for 60 days; (iii) the Master Servicer has
determined in its good faith and reasonable judgment that a default in the
making of a Monthly Payment (including a Balloon Payment) or any other
payment required under the related Mortgage Note or the related Mortgage(s)
is likely to occur within 30 days and is likely to remain unremedied for at
least 60 days or, in the case of a Balloon Payment, for at least 30 days;
(iv) there shall have occurred a default under the related loan documents,
other than as described in clause (i), (ii) or (iii) above, that may, in the
Master Servicer's good faith judgment, materially impair the value of the
related Mortgaged Property as security for the Mortgage Loan or otherwise
materially and adversely affect the interests of Certificateholders, which
default has continued unremedied for the applicable cure period under the
terms of the Mortgage Loan (or, if no cure period is specified, 60 days); (v)
a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or
future federal or state bankruptcy, insolvency or similar law or the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been
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entered against the related borrower and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days; (vi) the
related borrower shall have consented to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to such
borrower or of or relating to all or substantially all of its property; (vii)
the related borrower shall have admitted in writing its inability to pay its
debts generally as they become due, filed a petition to take advantage of any
applicable insolvency or reorganization statute, made an assignment for the
benefit of its creditors, or voluntarily suspended payment of its
obligations; or (viii) the Master Servicer shall have received notice of the
commencement of foreclosure or similar proceedings with respect to the
related Mortgaged Property or Properties. The Master Servicer shall continue
to collect information and prepare all reports to the Trustee required under
the Pooling Agreement with respect to any Specially Serviced Mortgage Loans
and REO Properties, and further to render incidental services with respect to
any Specially Serviced Mortgage Loans and REO Properties as are specifically
provided for in the Pooling Agreement. The Master Servicer and the Special
Servicer will not have any responsibility for the performance by each other
of their respective duties under the Pooling Agreement.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "Corrected Mortgage Loan" as to which the Master Servicer will
re-assume servicing responsibilities) at such time as such of the following
as are applicable occur with respect to the circumstances identified above
that caused the Mortgage Loan to be characterized as a Specially Serviced
Mortgage Loan (and provided that no other Servicing Transfer Event then
exists):
(w) with respect to the circumstances described in clauses (i), (ii) and
(iii) of the preceding paragraph, the related borrower has made three
consecutive full and timely Monthly Payments under the terms of such
Mortgage Loan (as such terms may be changed or modified in connection with
a bankruptcy or similar proceeding involving the related borrower or by
reason of a modification, waiver or amendment granted or agreed to by the
Special Servicer);
(x) with respect to the circumstances described in clause (iv) of the
preceding paragraph, such default is cured;
(y) with respect to the circumstances described in clauses (v), (vi) and
(vii) of the preceding paragraph, such circumstances cease to exist in the
good faith and reasonable judgment of the Special Servicer; and
(z) with respect to the circumstances described in clause (viii) of the
preceding paragraph, such proceedings are terminated.
The Master Servicer and Special Servicer will each be required to service
and administer any group of related Cross-Collateralized Mortgage Loans as a
single Mortgage Loan as and when it deems necessary and appropriate,
consistent with the Servicing Standard. If any Cross-Collateralized Mortgage
Loan becomes a Specially Serviced Mortgage Loan, then each other Mortgage
Loan that is cross-collateralized with it shall also become a Specially
Serviced Mortgage Loan. Similarly, no Cross-Collateralized Mortgage Loan
shall subsequently become a Corrected Mortgage Loan, unless and until all
Servicing Transfer Events in respect of each other Mortgage Loan with which
it is cross-collateralized, are remediated or otherwise addressed as
contemplated above.
Set forth below is a description of certain pertinent provisions of the
Pooling Agreement relating to the servicing of the Mortgage Loans. Reference
is also made to the Prospectus, in particular to the section captioned
"Description of the Pooling Agreements," for additional important information
regarding the terms and conditions of the Pooling Agreement as such terms and
conditions relate to the rights and obligations of the Master Servicer and
the Special Servicer thereunder.
THE MASTER SERVICER
AMRESCO Services, L.P., a Delaware limited partnership, will serve as
master servicer (the "Master Servicer") and in such capacity will be
responsible for servicing the Mortgage Loans (other than Specially Serviced
Mortgage Loans and REO Properties). The Master Servicer is a wholly owned
subsidiary of
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AMRESCO, INC. ("AMRESCO"), a diversified financial services company which is
publicly traded on NASDAQ. The Master Servicer's principal offices are
located at 235 Peachtree Street, NE, Suite 900, Atlanta, Georgia 30303.
As of February 28, 1998, AMRESCO serviced approximately 9,929 commercial
and multi-family loans, totaling approximately $30.4 billion in aggregate
outstanding principal amount, including approximately 5,900 loans
representing approximately $17 billion that are currently included in 55
securitized transactions. The portfolio is significantly diversified both
geographically and by product type.
As of September 30, 1997, the Mortgage Bankers Association of America
ranked AMRESCO as the second largest commercial mortgage servicing firm.
Fitch and S&P have approved AMRESCO as a master and special servicer for
investment grade commercial and multifamily mortgage-backed securities.
AMRESCO is ranked "Strong" as a commercial loan servicer and asset manager
and "Above Average" as a commercial master servicer by S&P. AMRESCO is ranked
"Acceptable" as master servicer and "Superior" as a special servicer by
Fitch. S&P ranks commercial loan servicers, commercial master servicers and
asset managers in one of five rating categories: Strong, Above Average,
Average, Below Average and Weak. Fitch ranks master servicers as Acceptable
or Unacceptable. Fitch ranks special servicers in one of five categories:
Superior, Above Average, Average, Below Average and Unacceptable.
The information set forth herein concerning the Master Servicer and
AMRESCO has been provided by the Master Servicer. Neither the Sponsor nor the
Underwriters makes any representation or warranty as to the accuracy or
completeness of such information.
THE SPECIAL SERVICER
The duties of Special Servicer will be performed by CRIIMI MAE Services
Limited Partnership, a Maryland limited partnership ("CRIIMI MAE"), the
general partner of which is CRIIMI MAE Services, Inc. As of December 31,
1997, CRIIMI MAE was responsible for performing certain servicing functions
with respect to commercial and multifamily loans with an aggregate principal
balance of approximately $16.5 billion, the real property securing which is
located in 49 states, Puerto Rico, Guam and the District of Columbia. As of
December 31, 1997, CRIIMI MAE was authorized to act, if necessary, as the
Special Servicer with respect to approximately 3,600 commercial mortgage
loans. CRIIMI MAE has been approved as a special servicer for investment
grade-rated commercial and multifamily mortgage-backed securities by S&P and
Fitch.
The information set forth herein concerning CRIIMI MAE has been provided
by it, and neither the Sponsor nor the Underwriters make any representation
or warranty as to the accuracy or completeness of such information.
SUB-SERVICERS
The Master Servicer and Special Servicer may each delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that the Master
Servicer or Special Servicer, as the case may be, will remain obligated under
the Pooling Agreement for such delegated duties. A majority of the Mortgage
Loans are currently being primary serviced by third-party servicers that are
entitled to and will become Sub-Servicers of such loans on behalf of the
Master Servicer. Each sub-servicing agreement between the Master Servicer or
Special Servicer, as the case may be, and a Sub-Servicer (each, a
"Sub-Servicing Agreement") must provide that, if for any reason the Master
Servicer or Special Servicer, as the case may be, is no longer acting in such
capacity, the Trustee or any successor to such Master Servicer or Special
Servicer may (i) assume such party's rights and obligations under such
Sub-Servicing Agreement, (ii) enter into a new Sub-Servicing Agreement with
such Sub-Servicer on such terms as the Trustee or such other successor Master
Servicer or Special Servicer and such Sub-Servicer shall mutually agree or
(iii) terminate such Sub-Servicer without cause (but only upon payment to the
Sub-Servicer of specified compensation). The Master Servicer and Special
Servicer will each be required to monitor the performance of Sub-Servicers
retained by it.
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The Master Servicer and Special Servicer will each be solely liable for
all fees owed by it to any Sub-Servicer retained thereby. Each Sub-Servicer
retained thereby will be reimbursed by the Master Servicer or Special
Servicer, as the case may be, for certain expenditures which it makes,
generally to the same extent the Master Servicer or Special Servicer would be
reimbursed under the Pooling Agreement. See "--Servicing and Other
Compensation and Payment of Expenses" herein.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the Master Servicer in respect of
its master servicing activities will be the Master Servicing Fee. The "Master
Servicing Fee" will be payable monthly on a loan-by-loan basis from amounts
received in respect of interest on each Mortgage Loan (including Specially
Serviced Mortgage Loans and Mortgage Loans as to which the related Mortgaged
Property has become an REO Property), will accrue at the applicable Master
Servicing Fee Rate and will be computed on the basis of the same principal
amount and for the same number of days respecting which any related interest
payment on the related Mortgage Loan is computed under the terms of the
related Mortgage Note and applicable law, and without giving effect to any
Excess Interest that may accrue on any Hyper-Amortization Loan on or after
its Anticipated Repayment Date. The "Master Servicing Fee Rate" will range
from 0.0900% to 0.1650% per annum, on a loan-by-loan basis, with a weighted
average Master Servicing Fee Rate of 0.1085% per annum as of the Cut-off
Date. As additional servicing compensation, the Master Servicer will be
entitled to retain Prepayment Interest Excesses (as described below)
collected on the Mortgage Loans. In addition, the Master Servicer will be
authorized to invest or direct the investment of funds held in any and all
accounts maintained by it that constitute part of the Certificate Account, in
certain government securities and other investment grade obligations
specified in the Pooling Agreement ("Permitted Investments"), and the Master
Servicer will be entitled to retain any interest or other income earned on
such funds, but will be required to cover any losses from its own funds
without any right to reimbursement.
If a borrower prepays a Mortgage Loan, in whole or in part, after the Due
Date but on or before the Determination Date in any calendar month, the
amount of interest (net of related Master Servicing Fees and any Excess
Interest) accrued on such prepayment from such Due Date to, but not
including, the date of prepayment (or any later date through which interest
accrues) will, to the extent actually collected, constitute a "Prepayment
Interest Excess." Conversely, if a borrower prepays a Mortgage Loan, in whole
or in part, after the Determination Date in any calendar month and does not
pay interest on such prepayment through the end of such calendar month, then
the shortfall in a full month's interest (net of related Master Servicing
Fees and any Excess Interest) on such prepayment will constitute a
"Prepayment Interest Shortfall." Prepayment Interest Excesses collected on
the Mortgage Loans during any Collection Period will be retained by the
Master Servicer as additional servicing compensation, but only to the extent
that such Prepayment Interest Excesses exceed the aggregate amount of
Prepayment Interest Shortfalls incurred with respect to the Mortgage Loans
during such Collection Period. The Master Servicer will cover, out of its own
funds, any Prepayment Interest Shortfalls incurred with respect to the
Mortgage Loans during any Collection Period that are not offset by Prepayment
Interest Excesses collected on the Mortgage Loans during such Collection
Period, but only to the extent of that portion of its aggregate Master
Servicing Fee for the related Collection Period that is, in the case of each
and every Mortgage Loan, calculated at 0.04% per annum.
The principal compensation to be paid to the Special Servicer in respect
of its special servicing activities will be the Standby Fee, the Special
Servicing Fee, the Workout Fee and the Liquidation Fee. The Standby Fee will
accrue with respect to each Mortgage Loan (including a Specially Serviced
Mortgage Loan and a Mortgage Loan as to which the related Mortgaged Property
has become an REO Property) in the same manner as the Master Servicing Fee
for such Mortgage Loan (but at a rate of 0.015% per annum (the "Standby Fee
Rate")), and will be payable out of amounts received in respect of interest
on such Mortgage Loan. The "Special Servicing Fee" will accrue with respect
to each Specially Serviced Mortgage Loan and each Mortgage Loan as to which
the related Mortgaged Property has become an REO Property, at a rate equal to
0.25% per annum (the "Special Servicing Fee Rate"), on the basis of the same
principal amount and for the same number of days respecting which any related
interest payment due or deemed due on such Mortgage Loan is computed under
the related Mortgage
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Loan and applicable law, and without giving effect to any Excess Interest
that may accrue on any Hyper-Amortization Loan on or after its Anticipated
Repayment Date. All such Special Servicing Fees will be payable monthly from
general collections on the Mortgage Loans and any REO Properties on deposit
in the Certificate Account from time to time. A "Workout Fee" will in general
be payable with respect to each Corrected Mortgage Loan. As to each Corrected
Mortgage Loan, the Workout Fee will be payable out of, and will be calculated
by application of a "Workout Fee Rate" of 1.0% to, each collection of
interest (other than Default Interest (as defined below) and Excess Interest)
and principal (including scheduled payments, prepayments, Balloon Payments
and payments at maturity) received on such Mortgage Loan for so long as it
remains a Corrected Mortgage Loan. The Workout Fee with respect to any
Corrected Mortgage Loan will cease to be payable if such loan again becomes a
Specially Serviced Mortgage Loan or if the related Mortgaged Property becomes
an REO Property; provided that a new Workout Fee will become payable if and
when such Mortgage Loan again becomes a Corrected Mortgage Loan. If the
Special Servicer is terminated (other than for cause) or resigns, it shall
retain the right to receive any and all Workout Fees payable with respect to
Mortgage Loans that became Corrected Mortgage Loans during the period that it
acted as Special Servicer and were still such at the time of such termination
or resignation (and the successor Special Servicer shall not be entitled to
any portion of such Workout Fees), in each case until the Workout Fee for any
such loan ceases to be payable in accordance with the preceding sentence. A
"Liquidation Fee" will be payable with respect to each Specially Serviced
Mortgage Loan as to which the Special Servicer obtains a full or discounted
payoff with respect thereto from the related borrower and, except as
otherwise described below, with respect to any Specially Serviced Mortgage
Loan or REO Property as to which the Special Servicer receives any
Liquidation Proceeds. As to each such Specially Serviced Mortgage Loan and
REO Property, the Liquidation Fee will be payable from, and will be
calculated by application of a "Liquidation Fee Rate" of 1.0% to, the related
payment or proceeds (other than any portion thereof that represents accrued
but unpaid Excess Interest or Default Interest). Notwithstanding anything to
the contrary described above, no Liquidation Fee will be payable based on, or
out of, Liquidation Proceeds received in connection with (i) the repurchase
of any Mortgage Loan by the Mortgage Loan Seller, AMRESCO Capital or Goldman
Sachs Mortgage for a breach of representation or warranty or for defective or
deficient Mortgage Loan documentation so long as such repurchase occurs
within 120 days of the Mortgage Loan Seller's, AMRESCO Capital's or Goldman
Sachs Mortgage's, as applicable, notice or discovery of such breach, defect
or deficiency, (ii) the purchase of any Specially Serviced Mortgage Loan or
REO Property by the Master Servicer, the Special Servicer or any holder or
holders of Certificates evidencing a majority interest in the Controlling
Class or (iii) the purchase of all of the Mortgage Loans and REO Properties
by the Master Servicer or any holder or holders of Certificates evidencing a
majority interest in the Controlling Class in connection with the termination
of the Trust. If, however, Liquidation Proceeds are received with respect to
any Corrected Mortgage Loan and the Special Servicer is properly entitled to
a Workout Fee, such Workout Fee will be payable based on and out of the
portion of such Liquidation Proceeds that constitute principal and/or
interest. The Special Servicer will be authorized to invest or direct the
investment of funds held in any accounts maintained by it that constitute
part of the Certificate Account, in Permitted Investments, and the Special
Servicer will be entitled to retain any interest or other income earned on
such funds, but will be required to cover any losses from its own funds
without any right to reimbursement.
The Master Servicer and the Special Servicer will each be responsible for
the fees of any Sub-Servicers retained by it (without right of reimbursement
therefor). As additional servicing compensation, the Sub-Servicers (or, to
the extent such Sub-Servicers are not entitled thereto, the Master Servicer)
with respect to Mortgage Loans that are not Specially Serviced Mortgage
Loans, and the Special Servicer with respect to Specially Serviced Mortgage
Loans, generally will be entitled to retain all assumption and modification
fees, "Default Interest" (that is, interest (other than Excess Interest) in
excess of interest at the related Mortgage Rate accrued as a result of a
default) and late payment charges (to the extent such Default Interest and/or
late payment charges are not otherwise applied to cover interest on Advances
if received on a Specially Serviced Mortgage Loan), charges for beneficiary
statements or demands and any similar fees, in each case to the extent
actually paid by the borrowers with respect to such Mortgage Loans (and,
accordingly, such amounts will not be available for distribution to
Certificateholders). The respective Sub-Servicers (or, to the extent such
Sub-Servicers are not entitled
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thereto, the Master Servicer) shall be entitled to receive all amounts
collected for checks returned for insufficient funds with respect to all
Mortgage Loans (including Specially Serviced Mortgage Loans) as additional
servicing compensation. Default Interest and late payment charges accrued in
respect of any Mortgage Loan after it has become a Specially Serviced
Mortgage Loan are to be applied to cover interest on Advances in respect of
such Mortgage Loan. In addition, collections on a Mortgage Loan are to be
applied to interest (at the related Mortgage Rate) and principal then due and
owing prior to being applied to Default Interest and late payment charges.
The Master Servicer and the Special Servicer will, in general, each be
required to pay its overhead and any general and administrative expenses
incurred by it in connection with its servicing activities under the Pooling
Agreement, and neither will be entitled to reimbursement therefor except as
expressly provided in the Pooling Agreement. In general, customary,
reasonable and necessary "out of pocket" costs and expenses incurred by the
Master Servicer or Special Servicer in connection with the servicing of a
Mortgage Loan after a default, delinquency or other unanticipated event, or
in connection with the administration of any REO Property, will constitute
"Servicing Advances" (Servicing Advances and P&I Advances, collectively,
"Advances") and, in all cases, will be reimbursable from future payments and
other collections, including in the form of Insurance Proceeds, Condemnation
Proceeds and Liquidation Proceeds, on or in respect of the related Mortgage
Loan or REO Property ("Related Proceeds"). Notwithstanding the foregoing, the
Master Servicer and the Special Servicer will each be permitted to pay, or to
direct the payment of, certain servicing expenses directly out of the
Certificate Account and at times without regard to the relationship between
the expense and the funds from which it is being paid (including in
connection with the remediation of any adverse environmental circumstance or
condition at a Mortgaged Property or an REO Property, although in such
specific circumstances the Master Servicer may advance the costs thereof). In
addition, the Special Servicer may from time to time require the Master
Servicer to reimburse it for any Servicing Advance made thereby (in which
case, such Servicing Advance will be deemed to have been made by the Master
Servicer). Furthermore, if the Special Servicer (i) is required under the
Pooling Agreement to direct the Master Servicer to make a Servicing Advance
or (ii) is otherwise aware a reasonable period in advance that it is
reasonably likely that the Special Servicer will incur a cost or expense that
will, when incurred, constitute a Servicing Advance, the Special Servicer is
required to (in the case of clause (i) preceding), or is required to use
reasonable efforts to (in the case of clause (ii) preceding), request that
the Master Servicer make such Advance, such request to be made in writing and
in a timely manner that does not adversely affect the interests of any
Certificateholder; provided, however, that the Special Servicer is obligated
to make any Servicing Advance in an emergency or in circumstances where the
failure to make the Advance in lieu of requesting that the Master Servicer
make such Advance would be inconsistent with the Servicing Standard; and
provided, further, that the Special Servicer is obligated to make any
Servicing Advance with respect to Specially Serviced Mortgage Loans and REO
Properties that it fails to timely request the Master Servicer to make. The
Master Servicer will be required to make any such Servicing Advance (other
than a Nonrecoverable Servicing Advance (as defined below)) that it is
requested by the Special Servicer to so make within five business days of the
Master Servicer's receipt of such request. The Special Servicer will, with
limited exception as described in the preceding sentence, be relieved of any
obligations with respect to an Advance that it timely requests the Master
Servicer to make (regardless of whether or not the Master Servicer makes that
Advance).
If the Master Servicer or Special Servicer is required under the Pooling
Agreement to make a Servicing Advance, but neither does so within 10 days
after such Servicing Advance is required to be made, then the Trustee will,
if it has actual knowledge of such failure, be required to give the
defaulting party notice of such failure and, if such failure continues for
one more business day, the Trustee will be required to make such Servicing
Advance. If the Trustee is required, but fails, to make such Servicing
Advance, then the Fiscal Agent will be required to make such Servicing
Advance.
Notwithstanding anything to the contrary herein, the Master Servicer, the
Special Servicer, the Trustee and the Fiscal Agent will be obligated to make
Servicing Advances (including, in the case of the Master Servicer, at the
request or direction of the Special Servicer) only to the extent that such
Servicing
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Advances are, in the reasonable and good faith judgment of the Master
Servicer, the Special Servicer, the Trustee or the Fiscal Agent, as the case
may be, ultimately recoverable from Related Proceeds (any Servicing Advance
not so recoverable, a "Nonrecoverable Servicing Advance").
The foregoing paragraph notwithstanding, the Master Servicer is required
(at the direction of the Special Servicer if a Specially Serviced Mortgage
Loan or an REO Property is involved) to pay directly out of the Certificate
Account any servicing expense that, if paid by the Master Servicer or the
Special Servicer, would constitute a Nonrecoverable Servicing Advance;
provided that the Master Servicer (or the Special Servicer, if a Specially
Serviced Mortgage Loan or an REO Property is involved) has determined in
accordance with the Servicing Standard that making such payment is in the
best interests of the Certificateholders (as a collective whole), as
evidenced by an officer's certificate delivered promptly to the Trustee, the
Sponsor and the Rating Agencies, setting forth the basis for such
determination and accompanied by any supporting information the Master
Servicer or the Special Servicer may have obtained.
As and to the extent described herein, the Master Servicer, the Special
Servicer, the Trustee and the Fiscal Agent are each entitled to receive
interest at the Reimbursement Rate on Servicing Advances made thereby. See
"Description of the Pooling Agreements -- Certificate Account" and
"--Servicing Compensation and Payment of Expenses" in the Prospectus and
"Description of the Certificates -- P&I Advances" herein.
EVIDENCE AS TO COMPLIANCE
On or before March 15 of each year, beginning March 15, 1999, each of the
Master Servicer and the Special Servicer, at its expense, will be required to
furnish the Sponsor and the Trustee with a statement obtained from a firm of
independent public accountants that is a member of the American Institute of
Certified Public Accountants to the effect that such firm has examined such
documents and records as it has deemed necessary and appropriate relating to
the Master Servicer's or Special Servicer's, as the case may be, servicing of
the Mortgage Loans under the Pooling Agreement or servicing of mortgage loans
similar to the Mortgage Loans under substantially similar agreements for the
preceding calendar year (or during the period from the date of commencement
of the Master Servicer's or Special Servicer's, as the case may be, duties
under the Pooling Agreement until the end of such preceding calendar year in
the case of the first such statement) and that based on their examination,
conducted substantially in compliance with generally accepted auditing
standards and the Uniform Single Attestation Program for Mortgage Bankers or
the audit program for mortgages serviced for FHLMC, the servicing by the
Master Servicer or the Special Servicer, as the case may be, has been
conducted in compliance with such similar agreements, except for such
exceptions or errors in records that, in the opinion of such firm, generally
accepted auditing standards and such programs require it to report.
The Pooling Agreement will also require that, on or before March 15 of
each year, beginning March 15, 1999, each of the Master Servicer and the
Special Servicer deliver to the Trustee a statement signed by one or more
officers thereof to the effect that the Master Servicer or Special Servicer,
as the case may be, has fulfilled its material obligations under the Pooling
Agreement in all material respects throughout the preceding calendar year or
the portion thereof during which the Certificates were outstanding.
MODIFICATIONS, WAIVERS, AMENDMENTS AND CONSENTS
The Master Servicer and the Special Servicer each may, consistent with the
Servicing Standard, agree to any modification, waiver or amendment of any
term of, forgive or defer the payment of interest on and principal of, permit
the release, addition or substitution of collateral securing, and/or permit
the release of the borrower on or any guarantor of any Mortgage Loan it is
required to service and administer, without the consent of the Trustee or any
Certificateholder, subject, however, to each of the following limitations,
conditions and restrictions:
(i) with limited exception (including as described below with respect to
Excess Interest), the Master Servicer may not agree to any modification,
waiver or amendment of any term of, or take any
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of the other above referenced actions with respect to, any Mortgage Loan
it is required to service and administer that would affect the amount or
timing of any related payment of principal, interest or other amount
payable thereunder or, in the Master Servicer's good faith and reasonable
judgment, would materially impair the security for such Mortgage Loan or
reduce the likelihood of timely payment of amounts due thereon; however,
the Special Servicer may agree to any modification, waiver or amendment of
any term of, or take any of the other above referenced actions with
respect to, a Specially Serviced Mortgage Loan that would have any such
effect, but only if a material default on such Mortgage Loan has occurred
or, in the Special Servicer's reasonable and good faith judgment, a
default in respect of payment on such Mortgage Loan is reasonably
foreseeable, and such modification, waiver, amendment or other action is
reasonably likely to produce a greater recovery to Certificateholders
(collectively) on a present value basis than would liquidation as
certified to the Trustee in an officer's certificate;
(ii) the Special Servicer may not, in connection with any particular
extension, extend the maturity date of a Mortgage Loan beyond a date that
is two years prior to the Rated Final Distribution Date or, in the case of
a Mortgage Loan secured solely by a Mortgage on the applicable borrower's
leasehold interest in the related Mortgaged Property, beyond a date that
is ten years prior to the expiration of the ground lease;
(iii) neither the Master Servicer nor the Special Servicer may make or
permit any modification, waiver or amendment of any term of, or take any
of the other above referenced actions with respect to, any Mortgage Loan
that would (A) cause either REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC under the Code or result in the imposition of any tax
on "prohibited transactions" or "contributions" after the startup date of
either such REMIC under the REMIC Provisions or (B) cause any Mortgage
Loan to cease to be a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code (neither the Master Servicer nor the Special
Servicer shall be liable for judgments as regards decisions made under
this subsection which were made in good faith and, unless it would
constitute bad faith or negligence to do so, each of the Master Servicer
and the Special Servicer may rely on opinions of counsel in making such
decisions);
(iv) neither the Master Servicer nor the Special Servicer may permit any
borrower to add or substitute any collateral for an outstanding Mortgage
Loan, which collateral constitutes real property, unless the Special
Servicer shall have first determined in accordance with the Servicing
Standard, based upon a Phase I environmental assessment (and such
additional environmental testing as the Special Servicer deems necessary
and appropriate), that such additional or substitute collateral is in
compliance with applicable environmental laws and regulations and that
there are no circumstances or conditions present with respect to such new
collateral relating to the use, management or disposal of any hazardous
materials for which investigation, testing, monitoring, containment,
clean-up or remediation would be required under any then applicable
environmental laws and/or regulations (and shall have notified the Rating
Agencies of such determination in the case of any Mortgage Loan with a
then-outstanding principal balance that (together with the
then-outstanding aggregate principal balance of all other Mortgage Loans
cross-collateralized therewith or made to the same borrower or borrowers
that are, to the actual knowledge of the Special Servicer, affiliated with
the related borrower) exceeds a specified amount); and
(v) with limited exceptions, neither the Master Servicer nor the Special
Servicer may release any collateral securing an outstanding Mortgage Loan;
provided that (x) the limitations, conditions and restrictions set forth in
clauses (i) through (v) above will not apply to any modification of any term
of any Mortgage Loan that either occurs automatically, or results from the
exercise of a unilateral option by the borrower within the meaning of
Treasury Regulations Section 1.1001-3(c)(2)(ii), in any event under the terms
of such Mortgage Loan in effect on the Delivery Date, and (y) notwithstanding
clauses (i) through (v) above, neither the Master Servicer nor the Special
Servicer will be required to oppose the confirmation of a plan in any
bankruptcy or similar proceeding involving a borrower if in their reasonable
and good faith judgment such opposition would not ultimately prevent the
confirmation of such plan or one substantially similar.
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With respect to the Hyper-Amortization Loans, the Master Servicer shall
be permitted, in its discretion, to waive all or any accrued Excess Interest
if, prior to the related maturity date, the related borrower has requested
the right to prepay the Mortgage Loan in full together with all other
payments required by the Mortgage Loan in connection with such prepayment
except for all or a portion of accrued Excess Interest, provided that the
Master Servicer's determination to waive the right to such accrued Excess
Interest is reasonably likely to produce a greater payment to
Certificateholders on a present value basis than a refusal to waive the right
to such Excess Interest. Any such waiver will not be effective until such
prepayment is tendered. The Master Servicer will have no liability to the
Trust, the Certificateholders or any other person so long as such
determination is based on such criteria. Except as permitted by clauses (i)
through (v) of the preceding paragraph, the Special Servicer will have no
right to waive the payment of Excess Interest.
SALE OF DEFAULTED MORTGAGE LOANS
The Pooling Agreement grants to the Master Servicer, the Special Servicer
and any holder or holders of Certificates evidencing a majority interest in
the Controlling Class a right to purchase from the Trust certain defaulted
Mortgage Loans in the priority described below. If the Special Servicer has
determined, in its good faith and reasonable judgment, that any defaulted
Mortgage Loan will become the subject of a foreclosure sale or similar
proceeding and that the sale of such Mortgage Loan under the circumstances
described in this paragraph is in accordance with the Servicing Standard, the
Special Servicer will be required to promptly so notify in writing the
Trustee and the Master Servicer, and the Trustee will be required, within 10
days after receipt of such notice, to notify the holder (or holders) of the
Controlling Class. A single holder or particular group of holders of
Certificates evidencing a majority interest in the Controlling Class may, at
its or their option, purchase any such defaulted Mortgage Loan from the
Trust, at a price equal to the applicable Purchase Price. If such
Certificateholder(s) has (have) not purchased such defaulted Mortgage Loan
within 15 days of its having received notice in respect thereof, either the
Special Servicer or the Master Servicer, in that order, may, at its option,
purchase such defaulted Mortgage Loan from the Trust, at a price equal to the
applicable Purchase Price.
The Special Servicer may offer to sell any defaulted Mortgage Loan that
has not otherwise been purchased as described in the prior paragraph, if and
when the Special Servicer determines, consistent with the Servicing Standard,
that such a sale would be in the best economic interests of the Trust. Such
offer is to be made in a commercially reasonable manner for a period of not
less than 30 days. Unless the Special Servicer determines that acceptance of
any offer would not be in the best economic interests of the Trust, the
Special Servicer will be required to accept the highest cash offer received
from any person that constitutes a fair price (which may be less than the
Purchase Price) for such Mortgage Loan; provided that none of the Special
Servicer, the Master Servicer, the Sponsor, the Mortgage Loan Seller, AMRESCO
Capital, Goldman Sachs Mortgage, the holder of any Certificate or any
affiliate of any such party (each, an "Interested Person") may purchase such
Mortgage Loan (or any REO Property acquired in respect thereof) for less than
the Purchase Price unless at least two other offers are received from
independent third parties at a price that is less than the Purchase Price and
the price proposed by any Interested Persons; and provided, further, that
none of the Trustee, the Fiscal Agent or any affiliate of either of them may
make an offer for any such Mortgage Loan. See also "Description of the
Pooling Agreements -- Realization Upon Defaulted Mortgage Loans" in the
Prospectus.
REO PROPERTIES
If title to any Mortgaged Property is acquired by the Special Servicer on
behalf of the Certificateholders, the Special Servicer, on behalf of such
holders, will be required to sell the Mortgaged Property not later than the
end of the third calendar year following the year of acquisition, unless (i)
the Internal Revenue Service grants an extension of time to sell such
property (an "REO Extension") or (ii) the Special Servicer obtains an opinion
of independent counsel generally to the effect that the holding of the
property subsequent to the end of the third calendar year following the year
in which such acquisition occurred will not result in the imposition of a tax
on the Trust or cause REMIC I, REMIC II or REMIC III to fail to qualify as a
REMIC under the Code. Subject to the foregoing, the Special Servicer will
generally
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be required to solicit cash offers for any Mortgaged Property so acquired in
such a manner as will be reasonably likely to realize a fair price for such
property. The Special Servicer may retain an independent contractor to
operate and manage any REO Property; however, the retention of an independent
contractor will not relieve the Special Servicer of its obligations with
respect to such REO Property.
In general, the Special Servicer will be obligated to operate and manage
any Mortgaged Property acquired as REO Property in a manner that would, to
the extent commercially reasonable, maximize the Trust's net after-tax
proceeds from such property. After the Special Servicer reviews the operation
of such property and consults with the REMIC Administrator to determine the
Trust's federal income tax reporting position with respect to income it is
anticipated that the Trust would derive from such property, the Special
Servicer could determine that it would not be commercially reasonable to
manage and operate such property in a manner that would avoid the imposition
of a tax on "net income from foreclosure property" (generally, income not
derived from renting or selling real property) within the meaning of the
REMIC Provisions or a tax on "prohibited transactions" under Section 860F of
the Code (either such tax referred to herein as an "REO Tax"). To the extent
that income the Trust receives from an REO Property is subject to (i) a tax
on "net income from foreclosure property," such income would be subject to
federal tax at the highest marginal corporate tax rate (currently 35%) and
(ii) a tax on "prohibited transactions," such income would be subject to
federal tax at a 100% rate. The determination as to whether income from an
REO Property would be subject to an REO Tax will depend on the specific facts
and circumstances relating to the management and operation of each REO
Property. Generally, income from an REO Property that is directly operated by
the Special Servicer would be apportioned and classified as "service" or
"non-service" income. The "service" portion of such income could be subject
to federal tax either at the highest marginal corporate tax rate or at the
100% rate on "prohibited transactions," and the "non-service" portion of such
income could be subject to federal tax at the highest marginal corporate tax
rate or, although it appears unlikely, at the 100% rate applicable to
"prohibited transactions." The considerations will be of particular relevance
with respect to any health care facilities or hotels that become REO
Property. Any REO Tax imposed on the Trust's income from an REO Property
would reduce the amount available for distribution to Certificateholders.
Certificateholders are advised to consult their own tax advisors regarding
the possible imposition of REO Taxes in connection with the operation of
commercial REO Properties by REMICs.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
Commencing in 1999, the Master Servicer is required to perform (or cause
to be performed) physical inspections of each Mortgaged Property (other than
REO Properties and Mortgaged Properties securing Specially Serviced Mortgage
Loans) at least once every two years (or, if the related Mortgage Loan has a
then-current balance greater than $2 million, at least once every year). In
addition, the Special Servicer, subject to statutory limitations or
limitations set forth in the related loan documents, is required to perform a
physical inspection of each Mortgaged Property as soon as practicable after
servicing of the related Mortgage Loan is transferred thereto. The Special
Servicer and the Master Servicer will each be required to prepare (or cause
to be prepared) as soon as reasonably possible a written report of each such
inspection performed thereby describing the condition of the Mortgaged
Property.
With respect to each Mortgage Loan that requires the borrower to deliver
quarterly or annual operating statements with respect to the related
Mortgaged Property, the Master Servicer or the Special Servicer, depending on
which is obligated to service such Mortgage Loan, is also required to make
reasonable efforts to collect and review such statements. However, there can
be no assurance that any operating statements required to be delivered will
in fact be so delivered, nor is the Master Servicer or the Special Servicer
likely to have any practical means of compelling such delivery in the case of
an otherwise performing Mortgage Loan.
TERMINATION OF THE SPECIAL SERVICER
The holder or holders of Certificates evidencing a majority interest in
the Controlling Class may at any time replace any Special Servicer. Such
holder(s) shall designate a replacement to so serve by the delivery to the
Trustee of a written notice stating such designation. The Trustee will be
required, promptly
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after receiving any such notice, to so notify the Rating Agencies. If the
designated replacement is acceptable to the Trustee, which approval may not
be unreasonably withheld, the designated replacement shall become the Special
Servicer as of the date the Trustee shall have received: (i) written
confirmation from each Rating Agency stating that if the designated
replacement were to serve as Special Servicer under the Pooling Agreement,
the then-current rating or ratings of one or more Classes of the Certificates
would not be qualified, downgraded or withdrawn as a result thereof; (ii) a
written acceptance of all obligations of the Special Servicer, executed by
the designated replacement; and (iii) an opinion of counsel to the effect
that the designation of such replacement to serve as Special Servicer is in
compliance with the Pooling Agreement, that the designated replacement will
be bound by the terms of the Pooling Agreement and that the Pooling Agreement
will be enforceable against such designated replacement in accordance with
its terms. The existing Special Servicer will be deemed to have resigned
simultaneously with such designated replacement's becoming the Special
Servicer under the Pooling Agreement.
The "Controlling Class" will be the most subordinate Class of Sequential
Pay Certificates outstanding (the Class A-1 and Class A-2 Certificates being
treated as a single Class for this purpose) that has a Certificate Balance at
least equal to 25% of its initial Certificate Balance (or, if no Class of
Sequential Pay Certificates has a Certificate Balance at least equal to 25%
of its initial Certificate Balance, then the "Controlling Class" will be the
Class of Sequential Pay Certificates with the largest Certificate Balance
then outstanding). The Class N Certificates will be the initial Controlling
Class. It is anticipated that an affiliate of the Special Servicer will
acquire certain of the Private Certificates, including Private Certificates
constituting the initial "Controlling Class."
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Mortgage Capital Funding, Inc., Multifamily/Commercial Mortgage
Pass-Through Certificates, Series 1998-MC1 (the "Certificates") will be
issued on or about May 5, 1998 (the "Delivery Date"), pursuant to a Pooling
and Servicing Agreement, to be dated as of the Cut-off Date (the "Pooling
Agreement"), among the Sponsor, the Master Servicer, the Special Servicer,
the Trustee, the Fiscal Agent, the REMIC Administrator, the Mortgage Loan
Seller and the Additional Warranting Parties, and will represent in the
aggregate the entire beneficial ownership interest in a trust (the "Trust"),
the assets of which (such assets collectively, the "Trust Fund") include: (i)
the Mortgage Loans and all payments thereunder and proceeds thereof received
after the Cut-off Date (exclusive of payments of principal, interest and
other amounts due thereon on or before the Cut-off Date); (ii) any REO
Properties; and (iii) such funds or assets as from time to time are deposited
in the Certificate Account (see "Description of the Pooling Agreements --
Certificate Account" in the Prospectus).
The Certificates will consist of 18 classes (each, a "Class") to be
designated as: (i) the Class A-1 Certificates and the Class A-2 Certificates
(collectively, the "Class A Certificates"); (ii) the Class B Certificates,
the Class C Certificates, the Class D Certificates, the Class E Certificates,
the Class F Certificates, the Class G Certificates, the Class H Certificates,
the Class J Certificates, the Class K Certificates, the Class L Certificates,
the Class M Certificates and the Class N Certificates (collectively with the
Class A Certificates, the "Sequential Pay Certificates"); (iii) the Class X
Certificates (collectively with the Sequential Pay Certificates, the "REMIC
Regular Certificates"); and (iv) the Class R-I Certificates, the Class R-II
Certificates and the Class R-III Certificates (collectively, the "REMIC
Residual Certificates"). Only the Class X, Class A, Class B, Class C, Class
D, Class E, Class F and Class G Certificates (collectively, the "Offered
Certificates") are offered hereby.
The Class H, Class J, Class K, Class L, Class M and Class N Certificates
and the REMIC Residual Certificates (collectively, the "Private
Certificates") have not been registered under the Securities Act and are not
offered hereby. Accordingly, to the extent this Prospectus Supplement
contains information regarding the terms of the Private Certificates, such
information is provided because of its potential relevance to a prospective
purchaser of an Offered Certificate.
REGISTRATION AND DENOMINATIONS
The Offered Certificates will be issued in book-entry format in
denominations of: (i) in the case of the Class X Certificates, $1,000,000
initial notional amount and in any whole dollar denomination in excess
thereof; and (ii) in the case of the other Offered Certificates, $10,000
initial principal amount and in any whole dollar denomination in excess
thereof.
Each Class of Offered Certificates will initially be represented by one or
more Certificates registered in the name of the nominee of The Depository
Trust Company ("DTC"). The Sponsor has been informed by DTC that DTC's
nominee will be Cede & Co. No beneficial owner of an Offered Certificate
(each, a "Certificate Owner") will be entitled to receive a fully registered
physical certificate (a "Definitive Certificate") representing its interest
in such Class, except under the limited circumstances described under
"Description of the Certificates -- Book-Entry Registration and Definitive
Certificates" in the Prospectus. Unless and until Definitive Certificates are
issued in respect of the Offered Certificates, beneficial ownership interests
in each such Class of Certificates will be maintained and transferred on the
book-entry records of DTC and its participating organizations (its
"Participants"), and all references to actions by holders of each such Class
of Certificates will refer to actions taken by DTC upon instructions received
from the related Certificate Owners through its Participants in accordance
with DTC procedures, and all references herein to payments, notices, reports
and statements to holders of each such Class of Certificates will refer to
payments, notices, reports and statements to DTC or Cede & Co., as the
registered holder thereof, for distribution to the related Certificate Owners
through its Participants in accordance with DTC procedures. The form of such
payments and transfers may result in certain delays in receipt of payments by
an investor and may restrict an investor's ability to pledge its securities.
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See "Description of the Certificates -- Book-Entry Registration and
Definitive Certificates" and "Risk Factors -- Book-Entry Registration" in the
Prospectus. The Trustee will initially serve as registrar (in such capacity,
the "Certificate Registrar") for purposes of recording and otherwise
providing for the registration of the Offered Certificates and, if and to the
extent Definitive Certificates are issued in respect thereof, of transfers
and exchanges of the Offered Certificates.
CERTIFICATE BALANCES AND NOTIONAL AMOUNT
Upon initial issuance, the respective classes of Sequential Pay
Certificates will have the following Certificate Balances (in each case,
subject to a variance of plus or minus 5%):
<TABLE>
<CAPTION>
INITIAL APPROXIMATE APPROXIMATE
CERTIFICATE PERCENT OF INITIAL CREDIT
CLASS BALANCE INITIAL POOL BALANCE SUPORT
- -------------------- -------------- -------------------- --------------
<S> <C> <C> <C>
Class A-1 ........... $228,221,000 17.30% 32.00%
Class A-2 ........... $668,830,000 50.70% 32.00%
Class B ............. $ 52,768,000 4.00% 28.00%
Class C ............. $ 72,556,000 5.50% 22.50%
Class D ............. $ 13,192,000 1.00% 21.50%
Class E ............. $ 65,959,000 5.00% 16.50%
Class F ............. $ 13,192,000 1.00% 15.50%
Class G ............. $ 39,576,000 3.00% 12.50%
Class H ............. $ 52,768,000 -- --
Classes J through N $112,131,757 -- --
</TABLE>
The "Certificate Balance" of any Class of Sequential Pay Certificates
outstanding at any time will be the then aggregate stated principal amount
thereof. On each Distribution Date, the Certificate Balance of each Class of
Sequential Pay Certificates will be reduced by any distributions of principal
actually made on such Class of Certificates on such Distribution Date, and
will be further reduced by any Realized Losses and Additional Trust Fund
Expenses allocated to such Class of Certificates on such Distribution Date.
See "--Distributions" and "--Subordination; Allocation of Losses and Certain
Expenses" below.
The Class X Certificates will not have a Certificate Balance. The Class X
Certificates will represent the right to receive distributions of interest
accrued as described herein on a notional amount (a "Notional Amount") equal
to the aggregate of the Certificate Balances of all of the Classes of
Sequential Pay Certificates outstanding from time to time. The initial
Notional Amount for the Class X Certificates is $1,319,193,757.
No class of REMIC Residual Certificates will have a Certificate Balance or
a Notional Amount.
A Class of Offered Certificates will be considered to be outstanding until
its Certificate Balance or Notional Amount, as the case may be, is reduced to
zero; provided, however, that, under very limited circumstances,
reimbursement of any previously allocated Realized Losses and Additional
Trust Fund Expenses may thereafter be made with respect thereto.
PASS-THROUGH RATES
The Pass-Through Rates applicable to the Class A-1, Class A-2, Class B,
Class C, Class D, Class E, Class F and Class G Certificates for the initial
Distribution Date are set forth on the cover page hereof. The Pass-Through
Rates for the Class A-1, Class A-2 and Class B Certificates for each
subsequent Distribution Date will, in the case of each such Class, remain
fixed at the per annum rate set forth with respect thereto on the cover page
hereof; and the Pass-Through Rates for the Class C, Class D, Class E, Class F
and Class G Certificates for each subsequent Distribution Date will, in the
case of such Class,
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equal the lesser of (i) the per annum rate set forth with respect thereto on
the cover page hereof and (ii) the Weighted Average Net Mortgage Rate for
such Distribution Date.
The Pass-Through Rate applicable to the Class X Certificates for the
initial Distribution Date is also set forth on the cover page hereof. The
Pass-Through Rate applicable to the Class X Certificates for each subsequent
Distribution Date will, in general, equal the excess, if any, of (i) the
Weighted Average Net Mortgage Rate for each Distribution Date, over (ii) the
weighted average of the Pass-Through Rates applicable to all the Classes of
Sequential Pay Certificates for such Distribution Date (weighted on the basis
of their respective Certificate Balances immediately prior to such
Distribution Date).
The Pass-Through Rate Applicable to the Class H Certificates for the
initial Distribution Date will equal ___% per annum, and the Pass-Through
Rate applicable to such Class of Certificates for each subsequent
Distribution Date will equal the lesser of ___% per annum and the Weighted
Average Net Mortgage Rate for such Distribution Date. The Pass-Through Rates
applicable to the Class J, Class K, Class L, Class M and Class N Certificates
for the initial Distribution Date and each subsequent Distribution Date will
be fixed at ___%, ___%, ___%, ___% and ___% per annum, respectively.
The "Weighted Average Net Mortgage Rate" for any Distribution Date will,
in general, equal the weighted average of the Net Mortgage Rates for all the
Mortgage Loans (weighted on the basis of their respective "Stated Principal
Balances" (as defined herein) immediately following the preceding
Distribution Date or, in the case of the initial Distribution Date, as of the
Cut-off Date).
The "Net Mortgage Rate" with respect to any Mortgage Loan is, in general,
a per annum rate equal to the related Mortgage Rate in effect from time to
time, minus the aggregate of the per annum rates applicable to the
calculation of the Master Servicing Fee, the Standby Fee and the Trustee Fee
(each as defined herein) with respect to such Mortgage Loan (such monthly
fees, collectively, the "Administrative Fees"; and such aggregate rate, the
"Administrative Fee Rate"); provided that, solely for purposes of calculating
the Weighted Average Net Mortgage Rate for any Distribution Date, the
following adjustments will be made in calculating the Net Mortgage Rate for
certain Mortgage Loans: (i) if the Mortgage Loan has been modified or changed
by the Special Servicer as described under "Servicing of the Mortgage Loans
- -- Modifications, Waivers, Amendments and Consents" herein or otherwise in
connection with a bankruptcy, insolvency or similar proceeding involving the
related borrower, or if the subject Mortgage Loan is in default, such
modification, change and/or default will be disregarded and the Net Mortgage
Rate for such Mortgage Loan will be calculated based upon the Mortgage Rate
in effect for such Mortgage Loan as of the Delivery Date; and (ii) if the
subject Mortgage Loan does not accrue interest on the basis of a 360-day year
consisting of twelve 30-day months (which is the basis on which interest
accrues in respect of the REMIC Regular Certificates), then the Net Mortgage
Rate of such Mortgage Loan for any one-month period preceding a related Due
Date will be the annualized rate at which interest would have to accrue in
respect of such loan on the basis of a 360-day year consisting of twelve
30-day months in order to produce the aggregate amount of interest actually
accrued in respect of such loan during such one-month period at the related
Mortgage Rate (net of the related Administrative Fee Rate). The calculation
of the Net Mortgage Rate for any Hyper-Amortization Loan (and, accordingly,
the calculation of Weighted Average Net Mortgage Rate for any Distribution
Date) will not be affected by the step-up from the Mortgage Rate to the
Revised Rate on the Anticipated Repayment Date for such Hyper-Amortization
Loan. As of the Cut-off Date (without regard to the adjustment to the basis
of accrual described in clause (ii) of the proviso to the second preceding
sentence), the Net Mortgage Rates for the Mortgage Loans will range from
6.5268% per annum to 9.7318% per annum, with a weighted average Net Mortgage
Rate of 7.3633% per annum. See "Servicing of the Mortgage Loans -- Servicing
and Other Compensation and Payment of Expenses" and "Description of the
Certificates -- Pass-Through Rates" herein.
The "Stated Principal Balance" of each Mortgage Loan will initially equal
the Cut-off Date Balance thereof and will be permanently reduced (to not less
than zero) on each Distribution Date by (i) any payments or other collections
(or advances in lieu thereof) of principal on such Mortgage Loan that have
been (or, if they had not been applied to cover Additional Trust Fund
Expenses, would have been) distributed on the Certificates on such date, and
(ii) the principal portion of any Realized Loss incurred in respect of such
Mortgage Loan during the related Collection Period.
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The "Collection Period" for each Distribution Date is the period that
begins immediately following the Determination Date in the calendar month
preceding the month in which such Distribution Date occurs (or, in the case
of the initial Distribution Date, immediately following the Cut-off Date) and
ends on the Determination Date in the calendar month in which such
Distribution Date occurs. The "Determination Date" will be the 11th day of
each month or, if any such 11th day is not a business day, the immediately
preceding business day.
DISTRIBUTIONS
General. Distributions on or with respect to the Certificates will be made
by the Trustee, to the extent of available funds, on the 18th day of each
month or, if any such 18th day is not a business day, then on the next
succeeding business day, commencing in May 1998 (each, a "Distribution
Date"). Except as otherwise described below, all such distributions will be
made to the persons in whose names the Certificates are registered at the
close of business on the related Record Date and, as to each such person,
will be made by wire transfer in immediately available funds to the account
specified by the Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder will have provided
the Trustee with written wiring instructions no less than five business days
prior to the related Record Date, or otherwise by check mailed to such
Certificateholder. Until Definitive Certificates are issued in respect
thereof, Cede & Co. will be the registered holder of the Offered
Certificates. See "--Registration and Denominations" above. The final
distribution on any Certificate (determined without regard to any possible
future reimbursement of any Realized Losses or Additional Trust Fund Expense
previously allocated to such Certificate) will be made in like manner, but
only upon presentation and surrender of such Certificate at the location that
will be specified in a notice of the pendency of such final distribution. Any
distribution that is to be made with respect to a Certificate in
reimbursement of a Realized Loss or Additional Trust Fund Expense previously
allocated thereto, which reimbursement is to occur after the date on which
such Certificate is surrendered as contemplated by the preceding sentence
(the likelihood of any such distribution being remote), will be made by check
mailed to the Certificateholder that surrendered such Certificate. All
distributions made on or with respect to a Class of Certificates will be
allocated pro rata among such Certificates based on their respective
percentage interests in such Class.
With respect to any Distribution Date and any Class of Certificates, the
"Record Date" will be the last business day of the calendar month immediately
preceding the month in which such Distribution Date occurs (or, in the case
of the initial Distribution Date, it will be the Delivery Date).
The Available Distribution Amount. With respect to any Distribution Date,
distributions of interest on and principal of the Certificates will be made
from the Available Distribution Amount for such Distribution Date. The
"Available Distribution Amount" for any Distribution Date will, in general,
equal (a) all amounts on deposit in the Certificate Account as of the close
of business on the related Determination Date, exclusive of any portion
thereof that represents one or more of the following:
(i) Monthly Payments collected but due on a Due Date subsequent to the
end of the calendar month in which such Distribution Date occurs;
(ii) Prepayment Premiums (which are separately distributable on the
Certificates as hereinafter described);
(iii) amounts that are payable or reimbursable to any person other than
the Certificateholders (including amounts payable to the Master Servicer,
the Special Servicer, any Sub-Servicers, the Trustee or the Fiscal Agent
as compensation (including Trustee Fees, Master Servicing Fees, Standby
Fees, Special Servicing Fees, Workout Fees, Liquidation Fees, assumption
fees, modification fees and, to the extent not otherwise applied to cover
interest on Advances, Default Interest and late payment charges), amounts
payable in reimbursement of outstanding Advances, together with interest
thereon, and amounts payable in respect of other Additional Trust Fund
Expenses); and
(iv) amounts deposited in the Certificate Account in error; plus
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(b) to the extent not already included in clause (a), any P&I Advances
made with respect to such Distribution Date and any payments made by the
Master Servicer to cover Prepayment Interest Shortfalls incurred during the
related Collection Period.
See "Description of the Pooling Agreements -- Certificate Account" in the
Prospectus.
Application of the Available Distribution Amount. On each Distribution
Date, the Trustee will apply the Available Distribution Amount for such date
for the following purposes and in the following order of priority:
(1) to pay interest to the holders of the Class A-1, Class A-2 and Class
X Certificates (collectively, the "Senior Certificates"), up to an amount
equal to, and pro rata as among such Classes in accordance with, all
Distributable Certificate Interest in respect of each such Class of
Certificates for such Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates, if any;
(2) to pay principal first to the holders of the Class A-1 Certificates
and second to the holders of the Class A-2 Certificates, in each such
case, up to an amount equal to the lesser of (a) the then outstanding
Certificate Balance of such Class of Certificates and (b) the remaining
portion of the Principal Distribution Amount for such Distribution Date;
(3) to reimburse the holders of the Class A-1 and Class A-2 Certificates,
up to an amount equal to, and pro rata as between such Classes in
accordance with, the respective amounts of Realized Losses and Additional
Trust Fund Expenses, if any, previously allocated to such Classes of
Certificates and for which no reimbursement has previously been paid; and
(4) to make payments on the other Classes of Certificates (collectively,
the "Subordinate Certificates") as contemplated below;
provided that, on each Distribution Date as of which the aggregate
Certificate Balance of the Subordinate Certificates is to be or has been
reduced to zero, and in any event on the final Distribution Date in
connection with a termination of the Trust (see "--Termination" below), the
payments of principal to be made as contemplated by clause (2) above with
respect to the Class A Certificates, will be so made (subject to available
funds) to the holders of the respective Classes of such Certificates, up to
an amount equal to, and pro rata as among such Classes in accordance with,
the respective then outstanding Certificate Balances of such Classes of
Certificates.
On each Distribution Date, following the above-described distributions on
the Senior Certificates, the Trustee will apply the remaining portion, if
any, of the Available Distribution Amount for such date for the following
purposes and in the following order of priority:
(1) to pay interest to the holders of the Class B Certificates, up to an
amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, if any;
(2) if the Certificate Balances of the Class A Certificates have been
reduced to zero, to pay principal to the holders of the Class B
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates and (b) the
remaining portion of the Principal Distribution Amount for such
Distribution Date;
(3) to reimburse the holders of the Class B Certificates, up to an amount
equal to all Realized Losses and Additional Trust Fund Expenses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid;
(4) to pay interest to the holders of the Class C Certificates, up to an
amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, if any;
(5) if the Certificate Balances of the Class A and Class B Certificates
have been reduced to zero, to pay principal to the holders of the Class C
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates and (b) the
remaining portion of the Principal Distribution Amount for such
Distribution Date;
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(6) to reimburse the holders of the Class C Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(7) to pay interest to the holders of the Class D Certificates, up to an
amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, if any;
(8) if the Certificate Balances of the Class A, Class B and Class C
Certificates have been reduced to zero, to pay principal to the holders of
the Class D Certificates, up to an amount equal to the lesser of (a) the
then outstanding Certificate Balance of such Class of Certificates and (b)
the remaining portion of the Principal Distribution Amount for such
Distribution Date;
(9) to reimburse the holders of the Class D Certificates, up to an amount
equal to all Realized Losses and Additional Trust Fund Expenses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(10) to pay interest to the holders of the Class E Certificates, up to an
amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, if any;
(11) if the Certificate Balances of the Class A, Class B, Class C and
Class D Certificates have been reduced to zero, to pay principal to the
holders of the Class E Certificates, up to an amount equal to the lesser
of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(12) to reimburse the holders of the Class E Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(13) to pay interest to the holders of the Class F Certificates, up to an
amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, if any;
(14) if the Certificate Balances of the Class A, Class B, Class C, Class
D and Class E Certificates have been reduced to zero, to pay principal to
the holders of the Class F Certificates, up to an amount equal to the
lesser of (a) the then outstanding Certificate Balance of such Class of
Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(15) to reimburse the holders of the Class F Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(16) to pay interest to the holders of the Class G Certificates, up to an
amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, if any;
(17) if the Certificate Balances of the Class A, Class B, Class C, Class
D, Class E and Class F Certificates have been reduced to zero, to pay
principal to the holders of the Class G Certificates, up to an amount
equal to the lesser of (a) the then outstanding Certificate Balance of
such Class of Certificates and (b) the remaining portion of the Principal
Distribution Amount for such Distribution Date;
(18) to reimburse the holders of the Class G Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(19) to pay interest to the holders of the Class H Certificates, up to an
amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, if any;
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(20) if the Certificate Balances of the Class A, Class B, Class C, Class
D, Class E, Class F and Class G Certificates have been reduced to zero, to
pay principal to the holders of the Class H Certificates, up to an amount
equal to the lesser of (a) the then outstanding Certificate Balance of
such Class of Certificates and (b) the remaining portion of the Principal
Distribution Amount for such Distribution Date;
(21) to reimburse the holders of the Class H Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(22) to pay interest to the holders of the Class J Certificates, up to an
amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, if any;
(23) if the Certificate Balances of the Class A, Class B, Class C, Class
D, Class E, Class F, Class G and Class H Certificates have been reduced to
zero, to pay principal to the holders of the Class J Certificates, up to
an amount equal to the lesser of (a) the then outstanding Certificate
Balance of such Class of Certificates and (b) the remaining portion of the
Principal Distribution Amount for such Distribution Date;
(24) to reimburse the holders of the Class J Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(25) to pay interest to the holders of the Class K Certificates, up to an
amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, if any;
(26) if the Certificate Balances of the Class A, Class B, Class C, Class
D, Class E, Class F, Class G, Class H and Class J Certificates have been
reduced to zero, to pay principal to the holders of the Class K
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates and (b) the
remaining portion of the Principal Distribution Amount for such
Distribution Date;
(27) to reimburse the holders of the Class K Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(28) to pay interest to the holders of the Class L Certificates, up to an
amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, if any;
(29) if the Certificate Balances of the Class A, Class B, Class C, Class
D, Class E, Class F, Class G, Class H, Class J and Class K Certificates
have been reduced to zero, to pay principal to the holders of the Class L
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates and (b) the
remaining portion of the Principal Distribution Amount for such
Distribution Date;
(30) to reimburse the holders of the Class L Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(31) to pay interest to the holders of the Class M Certificates, up to an
amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, if any;
(32) if the Certificate Balances of the Class A, Class B, Class C, Class
D, Class E, Class F, Class G, Class H, Class J, Class K and Class L
Certificates have been reduced to zero, to pay principal to the holders of
the Class M Certificates, up to an amount equal to the lesser of (a) the
then outstanding Certificate Balance of such Class of Certificates and (b)
the remaining portion of the Principal Distribution Amount for such
Distribution Date;
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(33) to reimburse the holders of the Class M Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(34) to pay interest to the holders of the Class N Certificates, up to an
amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, if any;
(35) if the Certificate Balances of the Class A, Class B, Class C, Class
D, Class E, Class F, Class G, Class H, Class J, Class K, Class L and Class
M Certificates have been reduced to zero, to pay principal to the holders
of the Class N Certificates, up to an amount equal to the lesser of (a)
the then outstanding Certificate Balance of such Class of Certificates and
(b) the remaining portion of the Principal Distribution Amount for such
Distribution Date;
(36) to reimburse the holders of the Class N Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received; and
(37) to pay to the holders of the REMIC Residual Certificates, the
balance, if any, of the Available Distribution Amount for such
Distribution Date;
provided that, on the final Distribution Date in connection with a
termination of the Trust, the payments of principal to be made as
contemplated by any of clauses (2), (5), (8), (11), (14), (17), (20), (23),
(26), (29), (32) and (35) above with respect to any Class of Sequential Pay
Certificates, will be so made (subject to available funds) up to an amount
equal to the entire then outstanding Certificate Balance of such Class of
Certificates.
Distributable Certificate Interest. The "Distributable Certificate
Interest" in respect of each Class of REMIC Regular Certificates for each
Distribution Date is equal to the Accrued Certificate Interest in respect of
such Class of Certificates for such Distribution Date, reduced by such Class
of Certificates' allocable share (calculated as described below) of any Net
Aggregate Prepayment Interest Shortfall for such Distribution Date.
The "Accrued Certificate Interest" in respect of each Class of REMIC
Regular Certificates for each Distribution Date is equal to one month's
interest at the Pass-Through Rate applicable to such Class of Certificates
for such Distribution Date accrued on the related Certificate Balance or
Notional Amount, as the case may be, outstanding immediately prior to such
Distribution Date. Accrued Certificate Interest will be calculated on the
basis of a 360-day year consisting of twelve 30-day months. The "Interest
Accrual Period" for the Certificates for any Distribution Date will be the
month preceding the month in which such Distribution Date occurs (except that
the Interest Accrual Period for the Certificates for the Distribution Date in
May 1998 will be the one-month period from April 6, 1998 to May 5, 1998,
inclusive).
To the extent of that portion of its aggregate Master Servicing Fee for
the related Collection Period that is, in the case of each and every Mortgage
Loan, calculated at 0.04% per annum, the Master Servicer is required to make
a non-reimbursable payment with respect to each Distribution Date to cover
the aggregate of any Prepayment Interest Shortfalls incurred with respect to
the Mortgage Pool during such Collection Period that are not offset by
Prepayment Interest Excesses collected on the Mortgage Loans during such
Collection Period. The "Net Aggregate Prepayment Interest Shortfall" for any
Distribution Date will be the amount, if any, by which (a) the aggregate of
all Prepayment Interest Shortfalls incurred with respect to the Mortgage Pool
during the related Collection Period, exceeds (b) any such payment made by
the Master Servicer with respect to such Distribution Date to cover such
Prepayment Interest Shortfalls. See "Servicing of the Mortgage Loans
- --Servicing and Other Compensation and Payment of Expenses" herein. The Net
Aggregate Prepayment Interest Shortfall, if any, for each Distribution Date
will be allocated on such Distribution Date: first, to the respective Classes
of REMIC Regular Certificates (other than the Senior Certificates)
sequentially in reverse alphabetical order of Class designation, in each case
up to an amount equal to the lesser of any remaining unallocated portion of
such Net Aggregate Prepayment Interest Shortfall and any Accrued Certificate
Interest in respect of the particular Class of Certificates for such
Distribution Date; and thereafter, if and
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to the extent that any portion of such Net Aggregate Prepayment Interest
Shortfall remains unallocated, among the respective Classes of Senior
Certificates, up to, and pro rata in accordance with, the respective amounts
of Accrued Certificate Interest for each such Class of Senior Certificates
for such Distribution Date.
Principal Distribution Amount. The "Principal Distribution Amount" for any
Distribution Date will, in general, equal the aggregate of the following:
(a) the principal portions of all Monthly Payments (other than Balloon
Payments) and any Assumed Monthly Payments due or deemed due, as the case
may be, in respect of the Mortgage Loans for their respective Due Dates
occurring during the calendar month in which such Distribution Date
occurs;
(b) all voluntary principal prepayments received on the Mortgage Loans
during the related Collection Period;
(c) with respect to any Balloon Loan as to which the related stated
maturity date occurred during or prior to the related Collection Period,
any payment of principal (exclusive of any voluntary principal prepayment)
made by or on behalf of the related borrower during the related Collection
Period, net of any portion of such payment that represents a recovery of
the principal portion of any Monthly Payment (other than a Balloon
Payment) due, or the principal portion of any Assumed Monthly Payment
deemed due, in respect of such Mortgage Loan on a Due Date during or prior
to the calendar month in which such Distribution Date occurs, that was not
previously recovered;
(d) all Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds
and, to the extent not included in clause (a), (b) or (c) above, payments
and other amounts received on the Mortgage Loans during the related
Collection Period that were identified and applied by the Master Servicer
as recoveries of principal thereof, in each case net of any portion of
such amounts that represents (i) a recovery of the principal portion of
any Monthly Payment (other than a Balloon Payment) due, or the principal
portion of any Assumed Monthly Payment deemed due, in respect of the
related Mortgage Loan on a Due Date during or prior to the calendar month
in which such Distribution Date occurs, that was not previously recovered
or (ii) the principal portion of a Monthly Payment made by the related
borrower during the related Collection Period that is due subsequent to
the end of the calendar month in which such Distribution Date occurs; and
(e) if such Distribution Date is subsequent to the initial Distribution
Date, the excess, if any, of (i) the Principal Distribution Amount for the
immediately preceding Distribution Date, over (ii) the aggregate
distributions of principal made on the Sequential Pay Certificates in
respect of such Principal Distribution Amount on such immediately
preceding Distribution Date.
For purposes of the foregoing, the Monthly Payment due on any Mortgage
Loan on any related Due Date will reflect any waiver, modification or
amendment of the terms of such Mortgage Loan, whether agreed to by the Master
Servicer or Special Servicer or resulting from a bankruptcy, insolvency or
similar proceeding involving the related borrower. "Monthly Payments" for
Hyper-Amortization Loans will not include Excess Interest or
Hyper-Amortization Payments.
An "Assumed Monthly Payment" is an amount deemed due in respect of: (i)
any Mortgage Loan that is delinquent in respect of its Balloon Payment beyond
the first Determination Date that follows its stated maturity date and as to
which no arrangements have been agreed to for collection of the delinquent
amounts, including an extension of maturity; or (ii) any Mortgage Loan as to
which the related Mortgaged Property has become an REO Property. The Assumed
Monthly Payment deemed due on any such Mortgage Loan delinquent as to its
Balloon Payment, for its stated maturity date and for each successive Due
Date that it remains outstanding, will equal the Monthly Payment that would
have been due thereon on such date if the related Balloon Payment had not
come due, but rather such Mortgage Loan had continued to amortize in
accordance with its amortization schedule, if any, in effect immediately
prior to maturity and had continued to accrue interest in accordance with
such loan's terms in effect immediately prior to maturity. The Assumed
Monthly Payment deemed due on any such Mortgage Loan as to which the related
Mortgaged Property has become an REO Property, for each Due Date that such
REO
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Property remains part of the Trust Fund, will equal the Monthly Payment (or,
in the case of a Mortgage Loan delinquent in respect of its Balloon Payment
as described in the prior sentence, the Assumed Monthly Payment) due on the
last Due Date prior to the acquisition of such REO Property. "Assumed Monthly
Payments" for Hyper-Amortization Loans do not include Excess Interest or
Hyper-Amortization Payments.
The Principal Distribution Amount will in no event include Excess Interest
or Prepayment Premiums.
Distributions of Prepayment Premiums. Any Prepayment Premium (whether
described in the related Mortgage Loan documents as a fixed prepayment
premium or a yield maintenance amount) actually collected with respect to a
Mortgage Loan during any particular Collection Period will be distributed on
the related Distribution Date to the holders of each Class of Offered
Certificates (other than the Class X Certificates) in an amount up to the
product of (a) such Prepayment Premium, (b) the applicable Discount Rate
Fraction for such Class and such Mortgage Loan and (c) the applicable
Principal Allocation Fraction for such Class and such Distribution Date.
The "Discount Rate Fraction" for any Class of Offered Certificates (other
than the Class X Certificates) and any prepaid Mortgage Loan is equal to a
fraction (not greater than 1.0 or less than 0.0), (a) the numerator of which
is equal to the excess, if any, of the Pass-Through Rate for such Class of
Certificates over the relevant Discount Rate (as defined herein), and (b) the
denominator of which is equal to the excess, if any, of the Mortgage Rate of
such Mortgage Loan over the relevant Discount Rate. With respect to each
Class of Offered Certificates (other than the Class X Certificates) for any
Distribution Date, the "Principal Allocation Fraction" is a fraction, the
numerator of which is the portion of Principal Distribution Amount allocated
to such Class of Certificates for such Distribution Date, and the denominator
of which is the entire Principal Distribution Amount for such Distribution
Date.
The "Discount Rate" means the yield for "This Week" as reported by the
Federal Reserve Board in Federal Reserve Statistical Release H.15(519) for
the constant maturity treasury having a maturity coterminous with the
maturity date or, in the case of a Hyper-Amortization Loan, the Anticipated
Repayment Date of the prepaid Mortgage Loan as of the related Determination
Date. If there is no Discount Rate for instruments having a maturity
coterminous with the remaining term (to maturity or Anticipated Repayment
Date, as applicable) of the applicable Mortgage Loan, then the Discount Rate
will be equal to the interpolation of the yields of the constant maturity
treasuries with maturities next longer and shorter than such remaining term
to maturity or Anticipated Repayment Date.
The portion of any Prepayment Premium remaining after distribution of the
amounts calculated as described above to the holders of the Offered
Certificates (other than the Class X Certificates) will be distributed to the
holders of the Class X Certificates.
The Sponsor makes no representation as to the enforceability of the
provision of any Mortgage Note requiring the payment of a Prepayment Premium
or of the collectability of any Prepayment Premium. See "Description of the
Mortgage Pool -- Certain Terms and Conditions of the Mortgage Loans --
Prepayment Provisions" and "Risk Factors -- The Mortgage Loans -- Prepayment
Premiums" herein.
Treatment of REO Properties. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Fund through foreclosure, deed in lieu
of foreclosure or otherwise, the related Mortgage Loan will be treated, for
purposes of, among other things, determining distributions on the
Certificates, allocations of Realized Losses and Additional Trust Fund
Expenses to the Certificates, and the amount of Master Servicing Fees,
Standby Fees, Special Servicing Fees and Trustee Fees payable under the
Pooling Agreement, as having remained outstanding until such REO Property is
liquidated. Among other things, such Mortgage Loan will be taken into account
when determining the Weighted Average Net Mortgage Rate and the Principal
Distribution Amount for each Distribution Date. In connection therewith,
operating revenues and other proceeds derived from such REO Property (after
application thereof to pay certain costs and taxes, including certain
reimbursements payable to the Master Servicer, the Special Servicer, the
Trustee and/or the Fiscal Agent, incurred in connection with the operation
and disposition of such REO Property) will be "applied" by the Master
Servicer as principal, interest and other amounts
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"due" on such Mortgage Loan; and, subject to the recoverability determination
described below (see "--P&I Advances"), the Master Servicer, the Trustee and
the Fiscal Agent will be required to make P&I Advances in respect of such
Mortgage Loan, in all cases as if such Mortgage Loan had remained
outstanding.
SUBORDINATION; ALLOCATION OF LOSSES AND CERTAIN EXPENSES
As and to the extent described herein, the rights of holders of the
Subordinate Certificates to receive distributions of amounts collected or
advanced on the Mortgage Loans will, in the case of each Class thereof, be
subordinated to the rights of holders of the Senior Certificates and,
further, to the rights of holders of each other Class of Subordinate
Certificates, if any, with an earlier alphabetical Class designation. This
subordination is intended to enhance the likelihood of timely receipt by
holders of the respective Classes of Senior Certificates of the full amount
of Distributable Certificate Interest payable in respect of their
Certificates on each Distribution Date, and the ultimate receipt by holders
of the respective Classes of Class A Certificates of principal equal to, in
each such case, the entire related Certificate Balance. Similarly, but to
decreasing degrees, this subordination is also intended to enhance the
likelihood of timely receipt by holders of the other Classes of Offered
Certificates of the full amount of Distributable Certificate Interest payable
in respect of their Certificates on each Distribution Date, and the ultimate
receipt by holders of the other Classes of Offered Certificates of principal
equal to, in each such case, the entire related Certificate Balance. The
subordination of any Class of Subordinate Certificates will be accomplished
by, among other things, the application of the Available Distribution Amount
on each Distribution Date in the order of priority described under
"--Distributions -- Application of the Available Distribution Amount" above.
No other form of Credit Support will be available for the benefit of holders
of the Offered Certificates.
If, following the distributions to be made in respect of the Certificates
on any Distribution Date, the aggregate Stated Principal Balance of the
Mortgage Pool that will be outstanding immediately following such
Distribution Date is less than the then aggregate Certificate Balance of the
Sequential Pay Certificates, the Certificate Balances of the Class N, Class
M, Class L, Class K, Class J, Class H, Class G, Class F, Class E, Class D,
Class C and Class B Certificates will be reduced, sequentially in that order,
in the case of each such Class until such deficit (or the related Certificate
Balance) is reduced to zero (whichever occurs first). If any portion of such
deficit remains at such time as the Certificate Balances of such Classes of
Certificates are reduced to zero, then the respective Certificate Balances of
the Class A-1 and Class A-2 Certificates will be reduced, pro rata in
accordance with the relative sizes of the remaining Certificate Balances of
such Classes of Certificates, until such deficit (or each such Certificate
Balance) is reduced to zero. Any such deficit will, in general, be the result
of Realized Losses incurred in respect of the Mortgage Loans and/or
Additional Trust Fund Expenses. Accordingly, the foregoing reductions in the
Certificate Balances of the respective Classes of the Sequential Pay
Certificates will constitute an allocation of any such Realized Losses and
Additional Trust Fund Expenses. Any such reduction in the Certificate Balance
of a Class of Sequential Pay Certificates will result in a corresponding
reduction in the Notional Amount of the Class X Certificates.
"Realized Losses" are losses on or in respect of the Mortgage Loans
arising from the inability of the Master Servicer and/or the Special Servicer
to collect all amounts due and owing under any such Mortgage Loan, including
by reason of the fraud or bankruptcy of a borrower or a casualty of any
nature at a Mortgaged Property, to the extent not covered by insurance. The
Realized Loss in respect of a liquidated Mortgage Loan (or related REO
Property) is an amount generally equal to the excess, if any, of (a) the
outstanding principal balance of such Mortgage Loan as of the date of
liquidation, together with (i) all accrued and unpaid interest thereon at the
related Mortgage Rate to but not including the Due Date in the Collection
Period in which the liquidation occurred and (ii) all related unreimbursed
Servicing Advances and outstanding liquidation expenses, over (b) the
aggregate amount of Liquidation Proceeds, if any, recovered in connection
with such liquidation. If any portion of the debt due under a Mortgage Loan
is forgiven, whether in connection with a modification, waiver or amendment
granted or agreed to by the Master Servicer or the Special Servicer or in
connection with the bankruptcy or similar proceeding involving the related
borrower, the amount so forgiven also will be treated as a Realized Loss.
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"Additional Trust Fund Expenses" include, among other things, (i) all
Special Servicing Fees, Workout Fees and Liquidation Fees paid to the Special
Servicer, (ii) any interest paid to the Master Servicer, the Special
Servicer, the Trustee and/or the Fiscal Agent in respect of unreimbursed
Advances, (iii) the cost of various opinions of counsel required or permitted
to be obtained in connection with the servicing of the Mortgage Loans and the
administration of the Trust Fund, (iv) certain unanticipated, non-Mortgage
Loan specific expenses of the Trust, including certain reimbursements and
indemnifications to the Trustee as described under "Description of the
Pooling Agreements -- Certain Matters Regarding the Trustee" in the
Prospectus (and certain comparable reimbursements and indemnifications to the
Fiscal Agent), certain reimbursements to the Master Servicer, the Special
Servicer, the REMIC Administrator and the Sponsor as described under
"Description of the Pooling Agreements -- Certain Matters Regarding the
Master Servicer, the Special Servicer, the REMIC Administrator and the
Sponsor" in the Prospectus and certain federal, state and local taxes, and
certain tax-related expenses, payable out of the Trust Fund as described
under "Certain Federal Income Tax Consequences -- Possible Taxes on Income
From Foreclosure Property and Other Taxes" herein and "Material Federal
Income Tax Consequences -- Taxation of Owners of REMIC Regular Certificates
- -- Prohibited Transactions Tax and Other Taxes" in the Prospectus, (v) any
amounts expended on behalf of the Trust to remediate an adverse environmental
condition at any Mortgaged Property securing a defaulted Mortgage Loan (see
"Description of the Pooling Agreements -- Realization Upon Defaulted Mortgage
Loans" in the Prospectus), and (vi) any other expense of the Trust Fund not
specifically included in the calculation of "Realized Loss" for which there
is no corresponding collection from a borrower. Additional Trust Fund
Expenses will reduce amounts payable to Certificateholders and, consequently,
may result in a loss on the Offered Certificates.
P&I ADVANCES
With respect to each Distribution Date, the Master Servicer will be
obligated, subject to the recoverability determination described below, to
make advances (each, a "P&I Advance") out of its own funds or, subject to the
replacement thereof as and to the extent provided in the Pooling Agreement,
funds held in the Certificate Account that are not required to be part of the
Available Distribution Amount for such Distribution Date, in an amount
generally equal to the aggregate of all Monthly Payments (other than Balloon
Payments) and any Assumed Monthly Payments, in each case net of related
Workout Fees, that (a) were due or deemed due, as the case may be, in respect
of the Mortgage Loans during the calendar month in which such Distribution
Date occurs and (b) were not paid by or on behalf of the related borrowers or
otherwise collected as of the close of business on the last day of the
related Collection Period. The Master Servicer's obligations to make P&I
Advances in respect of any Mortgage Loan will continue through liquidation of
such Mortgage Loan or disposition of any REO Property acquired in respect
thereof. Notwithstanding the foregoing, if it is determined that an Appraisal
Reduction Amount (as defined below) exists with respect to any Required
Appraisal Mortgage Loan (as defined below), then, with respect to the
Distribution Date immediately following the date of such determination and
with respect to each subsequent Distribution Date for so long as such
Appraisal Reduction Amount exists, in the event of subsequent delinquencies
on such Mortgage Loan, the interest portion of the P&I Advance required to be
made in respect of such Mortgage Loan will be reduced (no reduction to be
made in the principal portion, however) to an amount equal to the product of
(i) the amount of the interest portion of such P&I Advance that would
otherwise be required to be made for such Distribution Date without regard to
this sentence, multiplied by (ii) a fraction (expressed as a percentage), the
numerator of which is equal to the Stated Principal Balance of such Mortgage
Loan, net of such Appraisal Reduction Amount, and the denominator of which is
equal to the Stated Principal Balance of such Mortgage Loan. See "--Appraisal
Reductions" below. Subject to the recoverability determination described
below, if the Master Servicer fails to make a required P&I Advance, the
Trustee will be required to make such P&I Advance, and if the Trustee fails
to make such P&I Advance, the Fiscal Agent will be required to do so. See
"--The Trustee" and "--The Fiscal Agent" below.
The Master Servicer, the Trustee and the Fiscal Agent will each be
entitled to recover any P&I Advance made out of its own funds from any
Related Proceeds. Notwithstanding the foregoing, none of the Master Servicer,
the Trustee or the Fiscal Agent will be obligated to make any P&I Advance
that it
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determines in its reasonable good faith judgment would, if made, not be
recoverable out of Related Proceeds (a "Nonrecoverable P&I Advance"; and,
together with a Nonrecoverable Servicing Advance, "Nonrecoverable Advances"),
and the Master Servicer, the Trustee and the Fiscal Agent, as applicable,
will be entitled to recover any P&I Advance that at any time is determined to
be a Nonrecoverable P&I Advance out of funds received on or in respect of
other Mortgage Loans. See "Description of the Certificates -- Advances in
Respect of Delinquencies" and "Description of the Pooling Agreements --
Certificate Account" in the Prospectus.
The Master Servicer, the Trustee and the Fiscal Agent will each be
entitled with respect to any Advance made thereby, and the Special Servicer
will be entitled with respect to any Servicing Advance made thereby, to
interest accrued on the amount of such Advance for so long as it is
outstanding at a rate per annum (the "Reimbursement Rate") equal to the
"prime rate" as published in the "Money Rates" section of The Wall Street
Journal, as such "prime rate" may change from time to time. Such interest on
any Advance will be payable to the Master Servicer, the Special Servicer, the
Trustee or the Fiscal Agent, as the case may be, first, out of Default
Interest and late payment charges collected on the related Mortgage Loan and,
second, at any time coinciding with or following the reimbursement of such
Advance, out of any amounts then on deposit in the Certificate Account. Any
delay between a Sub-Servicer's receipt of a late collection of a Monthly
Payment as to which a P&I Advance was made and the forwarding of such late
collection to the Master Servicer will increase the amount of interest
accrued and payable to the Master Servicer, the Trustee or the Fiscal Agent,
as the case may be, on such P&I Advance. To the extent not offset by Default
Interest and/or late payment charges accrued and actually collected on the
related Mortgage Loan while it is a Specially Serviced Mortgage Loan,
interest accrued on outstanding Advances will result in a reduction in
amounts payable on the Certificates.
APPRAISAL REDUCTIONS
Within 30 days (or within such longer period as the Master Servicer or the
Special Servicer, as applicable, is diligently and in good faith proceeding
to obtain such) after the earliest of (i) the date on which any Mortgage Loan
becomes a Modified Mortgage Loan (as defined below), (ii) the 90th day
following the occurrence of any uncured delinquency in Monthly Payments with
respect to any Mortgage Loan, (iii) the date on which a receiver is appointed
and continues in such capacity in respect of the Mortgaged Property securing
any Mortgage Loan, (iv) the date on which the borrower under any Mortgage
Loan becomes the subject of bankruptcy or insolvency proceedings, and (v) the
date on which a Mortgaged Property securing any Mortgage Loan becomes an REO
Property (each such Mortgage Loan, a "Required Appraisal Loan"; and each such
date, a "Required Appraisal Date"), the Master Servicer or the Special
Servicer, as applicable, will be required to obtain an appraisal of the
related Mortgaged Property from an independent MAI-designated appraiser,
unless such an appraisal had previously been obtained within the prior twelve
months. The cost of such appraisal will be advanced by the Master Servicer,
subject to its right to be reimbursed therefor as a Servicing Advance. As a
result of any such appraisal, it may be determined that an Appraisal
Reduction Amount exists with respect to the related Required Appraisal Loan.
The "Appraisal Reduction Amount" for any Required Appraisal Loan will, in
general, be an amount (determined as of the Determination Date immediately
succeeding the later of the date on which the relevant appraisal is obtained
and the earliest relevant Required Appraisal Date) equal to the excess, if
any, of (a) the sum of (i) the Stated Principal Balance of such Required
Appraisal Loan, (ii) to the extent not previously advanced by or on behalf of
the Master Servicer, the Trustee or the Fiscal Agent, all unpaid interest on
the Required Appraisal Loan through the most recent Due Date prior to such
Determination Date at a per annum rate equal to the sum of the related Net
Mortgage Rate and the per annum rate at which the Trustee Fee is calculated,
(iii) all accrued but unpaid Master Servicing Fees and Special Servicing Fees
in respect of such Required Appraisal Loan, (iv) all related unreimbursed
Advances made by or on behalf of the Master Servicer, the Special Servicer,
the Trustee or the Fiscal Agent with respect to such Required Appraisal Loan
plus interest accrued thereon at the Reimbursement Rate and (v) all currently
due and unpaid real estate taxes and assessments, insurance premiums and, if
applicable, ground rents in respect of the related Mortgaged Property (net of
any escrow reserves held by the Master Servicer or Special Servicer to cover
any such item), over (b) 90% of an amount equal to (i) the appraised value of
the related Mortgaged Property or REO Property as
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determined by such appraisal, net of (ii) the amount of any liens on such
property (not otherwise arising out of the items described in clause (a)(v)
above) that are prior to the lien of the Required Appraisal Loan; provided
that, if an appraisal is required to be obtained as contemplated by the first
sentence of this paragraph but has not been obtained within the 30-day period
contemplated by such sentence, then until (but just until) such appraisal is
obtained the "Appraisal Reduction Amount" for the subject Required Appraisal
Loan will be deemed to equal 30% of the Stated Principal Balance of such
Required Appraisal Loan (after receipt of such appraisal, the Appraisal
Reduction Amount, if any, will be calculated without regard to this proviso).
With respect to each Required Appraisal Loan (unless such Mortgage Loan
has become a Corrected Mortgage Loan and has remained current for twelve
consecutive Monthly Payments, and no other Servicing Transfer Event has
occurred with respect thereto during the preceding twelve months, in which
case it will cease to be a Required Appraisal Loan), the Special Servicer is
required, within 30 days of each anniversary of such loan's becoming a
Required Appraisal Loan, to order an update of the prior appraisal (the cost
of which will be advanced by the Master Servicer at the direction of the
Special Servicer and will be reimbursable as a Servicing Advance). Based upon
such appraisal, the Special Servicer is to redetermine and report to the
Trustee and the Master Servicer the Appraisal Reduction Amount, if any, with
respect to such Mortgage Loan.
A "Modified Mortgage Loan" is any Mortgage Loan as to which any Servicing
Transfer Event has occurred and which has been modified by the Special
Servicer in a manner that: (A) affects the amount or timing of any payment of
principal or interest due thereon (other than, or in addition to, bringing
current Monthly Payments with respect to such Mortgage Loan); (B) except as
expressly contemplated by the related Mortgage, results in a release of the
lien of the Mortgage on any material portion of the related Mortgaged
Property without a corresponding principal prepayment in an amount not less
than the fair market value (as is) of the property to be released; or (C) in
the good faith and reasonable judgment of the Special Servicer, otherwise
materially impairs the security for such Mortgage Loan or reduces the
likelihood of timely payment of amounts due thereon.
REPORTS TO CERTIFICATEHOLDERS; CERTAIN AVAILABLE INFORMATION
Trustee Reports. Based on information provided in monthly reports prepared
by the Master Servicer and the Special Servicer and delivered to the Trustee,
the Trustee will be required to prepare and/or forward on each Distribution
Date to the holders of each Class of REMIC Regular Certificates and the
Rating Agencies, the following statements and reports (collectively, the
"Trustee Reports") substantially in the forms set forth in Annex B (although
such forms may be subject to change over time) and substantially containing
the information set forth below:
(1) A statement (a "Distribution Date Statement") setting forth, among
other things: (i) the amount of distributions, if any, made on such
Distribution Date to the holders of each Class of REMIC Regular
Certificates and applied to reduce the respective Certificate Balances
thereof; (ii) the amount of distributions, if any, made on such
Distribution Date to the holders of each Class of REMIC Regular
Certificates allocable to Distributable Certificate Interest and
Prepayment Premiums; (iii) the Available Distribution Amount for such
Distribution Date; (iv) the aggregate amount of P&I Advances made in
respect of the immediately preceding Distribution Date; (v) the aggregate
Stated Principal Balance of the Mortgage Pool outstanding immediately
before and immediately after such Distribution Date; (vi) the number,
aggregate principal balance, weighted average remaining term to maturity
and weighted average Mortgage Rate of the Mortgage Pool as of the end of
the Collection Period for the prior Distribution Date; (vii) as of the
close of business on the last day of the most recently ended calendar
month, the number and aggregate unpaid principal balance of Mortgage Loans
(A) delinquent one month, (B) delinquent two months, (C) delinquent three
or more months, and (D) as to which foreclosure proceedings have been
commenced; (viii) the most recent appraised value of any REO Property
included in the Trust Fund as of the end of the Collection Period for such
Distribution Date; (ix) the Accrued Certificate Interest and Distributable
Certificate Interest in respect of each Class of REMIC Regular
Certificates for such Distribution Date; (x) the aggregate amount of
Distributable Certificate Interest payable in respect of each Class
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of REMIC Regular Certificates on such Distribution Date, including,
without limitation, any Distributable Certificate Interest remaining
unpaid from prior Distribution Dates; (xi) any unpaid Distributable
Certificate Interest in respect of such Class of REMIC Regular
Certificates after giving effect to the distributions made on such
Distribution Date; (xii) the Pass-Through Rate for each Class of REMIC
Regular Certificates for such Distribution Date; (xiii) the Principal
Distribution Amount for such Distribution Date, separately identifying the
respective components of such amount; (xiv) the aggregate of all Realized
Losses incurred during the related Collection Period and, aggregated by
type, all Additional Trust Fund Expenses incurred during the related
Collection Period; (xv) the Certificate Balance or Notional Amount, as the
case may be, of each Class of REMIC Regular Certificates outstanding
immediately before and immediately after such Distribution Date,
separately identifying any reduction therein due to the allocation of
Realized Losses and Additional Trust Fund Expenses on such Distribution
Date; (xvi) the aggregate amount of servicing fees paid to the Master
Servicer and the Special Servicer, collectively and separately, during the
Collection Period for the prior Distribution Date; (xvii) a brief
description of any material waiver, modification or amendment of any
Mortgage Loan entered into by the Master Servicer or Special Servicer
pursuant to the Pooling Agreement during the related Collection Period;
and (xviii) any item of information disclosed to the Trustee by the Master
Servicer as described under "--Reports to Certificateholders; Certain
Available Information -- Other Information" below since the preceding
Distribution Date or, in the case of the first Distribution Date
Statement, since the Closing Date. In the case of information furnished
pursuant to clauses (i) and (ii) above, the amounts shall be expressed as
a dollar amount in the aggregate for all Certificates of each applicable
Class and per a specified denomination.
(2) A report containing information regarding the Mortgage Loans as of
the close of business on the immediately preceding Determination Date,
which report shall contain certain of the categories of information
regarding the Mortgage Loans set forth in this Prospectus Supplement in
the tables under the caption "Annex A: Certain Characteristics of the
Mortgage Loans" (calculated, where applicable, on the basis of the most
recent relevant information provided by the borrowers to the Master
Servicer or the Special Servicer and by the Master Servicer or the Special
Servicer, as the case may be, to the Trustee) and such information shall
be presented in a loan-by-loan and tabular format substantially similar to
the formats utilized in this Prospectus Supplement on Annex A (provided
that no information will be provided as to any repair and replacement or
other cash reserve and the only financial information to be reported on an
ongoing basis will be actual expenses, actual revenues and actual net
operating income for the respective Mortgaged Properties and a debt
service coverage ratio calculated on the basis thereof).
(3) A "Delinquent Loan Status Report" setting forth, among other things,
those Mortgage Loans which, as of the close of business on the last day of
the most recently ended calendar month, were delinquent 30-59 days,
delinquent 60-89 days, delinquent 90 days or more, current but specially
serviced, or in foreclosure but not REO Property.
(4) An "Historical Loan Modification Report" setting forth, among other
things, those Mortgage Loans which, as of the close of business on the
immediately preceding Determination Date, have been modified pursuant to
the Pooling Agreement (i) during the Collection Period ending on such
Determination Date and (ii) since the Cut-off Date, showing the original
and the revised terms thereof.
(5) An "Historical Loss Report" setting forth, among other things, as of
the close of business on the immediately preceding Determination Date, (i)
the aggregate amount of Liquidation Proceeds received, and liquidation
expenses incurred, both during the Collection Period ending on such
Determination Date and historically, and (ii) the amount of Realized
Losses occurring during such Collection Period and historically, set forth
on a Mortgage Loan-by-Mortgage Loan basis.
(6) An "REO Status Report" setting forth, among other things, with
respect to each REO Property that was included in the Trust Fund as of the
close of business on the immediately preceding Determination Date, (i) the
acquisition date of such REO Property, (ii) the amount of
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income collected with respect to any REO Property (net of related
expenses) and other amounts, if any, received on such REO Property during
the Collection Period ending on such Determination Date and (iii) the
value of the REO Property based on the most recent appraisal or other
valuation thereof available to the Master Servicer as of such
Determination Date (including any prepared internally by the Special
Servicer).
(7) A "Special Servicer Loan Status Report" setting forth, among other
things, as of the close of business on the immediately preceding
Determination Date, (i) the aggregate principal balance of all Specially
Serviced Mortgage Loans and (ii) a loan-by-loan listing of all Specially
Serviced Mortgage Loans indicating their status, date and reason for
transfer to the Special Servicer.
None of the above reports will include any information that the Master
Servicer deems to be confidential. The information that pertains to Specially
Serviced Mortgage Loans and REO Properties reflected in such reports shall be
based solely upon the reports delivered by the Special Servicer to the Master
Servicer prior to the related Distribution Date. None of the Master Servicer,
the Special Servicer or the Trustee will be responsible for the accuracy or
completeness of any information supplied to it by a borrower or other third
party that is included in any reports, statements, materials or information
prepared or provided by the Master Servicer, the Special Servicer or the
Trustee, as applicable.
The Master Servicer is also required to deliver to the Trustee within 130
days following the end of each calendar quarter, commencing with the calendar
quarter ending March 31, 1998, with respect to each Mortgaged Property and
REO Property, an "Operating Statement Analysis" containing revenue, expense
and net operating income information normalized using the methodology
described therein as of the end of such calendar quarter (but only to the
extent, in the case of a Mortgaged Property, that the related borrower is
required by the Mortgage to deliver, or otherwise agrees to provide, such
information) for such Mortgaged Property or REO Property as of the end of
such calendar quarter. The Trustee is to forward copies of each Operating
Statement Analysis to holders of the REMIC Regular Certificates on or about
the first Distribution Date following the Trustee's receipt thereof.
Certificate Owners who have certified to the Trustee as to their
beneficial ownership of any Offered Certificate may also obtain copies of any
of the Trustee Reports and Operating Statement Analyses described above.
Otherwise, until such time as Definitive Certificates are issued in respect
of the Offered Certificates, the foregoing information will be available to
the related Certificate Owners only to the extent that it is forwarded by or
otherwise available through DTC and its Participants. Conveyance of notices
and other communications by DTC to Participants, and by Participants to
Certificate Owners, will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from time to
time. The Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Sponsor, the REMIC Administrator, the Mortgage Loan Seller and the
Certificate Registrar are required to recognize as Certificateholders only
those persons in whose names the Certificates are registered on the books and
records of the Certificate Registrar.
For a discussion of certain annual information reports to be furnished by
the Trustee to persons who at any time during the prior calendar year were
holders of the Offered Certificates, see "Description of the Certificates --
Reports to Certificateholders" in the Prospectus.
The Trustee will also be required to make available monthly to, among
others, Certificateholders and Certificate Owners identified to the Trustee
in writing, an electronic file containing Mortgage Loan information, based on
reports provided to it by the Master Servicer and/or the Special Servicer, in
the "CSSA Loan periodic update file" and the "CSSA Property File" with the
Delinquent Loan Status Report, Historical Loan Modification Report,
Historical Loss Report, REO Status Report and Special Servicer Loan Status
Report attached (provided that these reports are delivered to the Trustee in
an electronic format acceptable to the Trustee) via the Trustee's bulletin
board. Access to the bulletin board can be obtained by dialing (714)
282-3990. Those who have an account on the bulletin board may retrieve the
data file for each transaction in the directory. An account number may be
obtained by typing "NEW" upon logging into the bulletin board. In order to
access information from the bulletin board, the user must have available
their assigned log-on ID. The Trustee may (at its discretion and with the
consent of the Sponsor and the Underwriters) make the information that is
available via its bulletin board, also available via the
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Internet at www.LNBABS.com. A Certificateholder or Certificate Owner may also
obtain the information by calling the Trustee's ASAP System at (312) 904-2200
and requesting statement number 328, or such other mechanism as the Trustee
may have in place from time to time. Account numbers on the Trustee's ASAP
System and passwords from the Trustee's website may be obtained by calling
(312) 904-2200 and following the voice prompts for obtaining account numbers.
In addition, with consent of the Sponsor and the Underwriters, certain
property level information and reports will also be available on the Master
Servicer's website at www.AMRESCO.com. This site will not be password
protected with respect to this transaction.
Other Information. The Pooling Agreement requires that the Trustee make
available at its Corporate Trust Office, during normal business hours, upon
reasonable advance written notice and at the expense of the requesting party,
for review by any holder or Certificate Owner of an Offered Certificate or
any person identified to the Trustee by any such holder or Certificate Owner
as a prospective transferee of an Offered Certificate or any interest
therein, originals or copies of, among other things, the following items: (a)
the Pooling Agreement and any amendments thereto, (b) all Trustee Reports
delivered to holders of the relevant Class of Offered Certificates since the
Delivery Date, (c) all officer's certificates delivered to the Trustee since
the Delivery Date as described under "Servicing of the Mortgage Loans --
Evidence as to Compliance" herein, (d) all accountant's reports delivered to
the Trustee since the Delivery Date as described under "Servicing of the
Mortgage Loans -- Evidence as to Compliance" herein, and (e) the Mortgage
Note, Mortgage and other legal documents relating to each Mortgage Loan,
including any and all modifications, waivers and amendments of the terms of a
Mortgage Loan entered into by the Master Servicer or the Special Servicer and
delivered to the Trustee. In addition, the Master Servicer is required to
make available, during normal business hours, upon reasonable advance written
notice and at the expense of the requesting party, for review by any holder
or Certificate Owner of an Offered Certificate or any person identified to
the Master Servicer as a prospective transferee of an Offered Certificate or
any interest therein, originals or copies of any and all documents (in the
case of documents generated by the Special Servicer, to the extent received
therefrom) that constitute the servicing file for each Mortgage Loan, in each
case except to the extent the Master Servicer in its good faith determination
believes that any item of information contained in such servicing file is of
a nature that it should be conveyed to all Certificateholders at the same
time, in which case the Master Servicer is required, as soon as reasonably
possible following its receipt of any such item of information, to disclose
such item of information to the Trustee for inclusion by the Trustee as part
of the Trustee Reports referred to under "--Reports to Certificateholders;
Certain Available Information -- Trustee Reports" above; provided that, until
the Trustee has either disclosed such information to all Certificateholders
as part of the Trustee Reports or has properly filed such information with
the Securities and Exchange Commission on behalf of the Trust under the
Securities Exchange Act of 1934, the Master Servicer is entitled to withhold
such item of information from any Certificateholder or Certificate Owner or
prospective transferee of a Certificate or an interest therein; and,
provided, further, that the Master Servicer is not required to make
information contained in any servicing file available to any person to the
extent that doing so is prohibited by applicable law or by any documents
related to a Mortgage Loan.
The Trustee and, subject to the last sentence of the prior paragraph, the
Master Servicer will each make available, upon reasonable advance written
notice and at the expense of the requesting party, originals or copies of the
items referred to in the prior paragraph that are maintained thereby, to
Certificateholders, Certificate Owners and prospective purchasers of
Certificates and interests therein; provided that the Trustee and Master
Servicer may each require (a) in the case of a Certificate Owner, a written
confirmation executed by the requesting person or entity, in a form
reasonably acceptable to the Trustee or Master Servicer, as applicable,
generally to the effect that such person or entity is a beneficial owner of
Offered Certificates and will keep such information confidential, and (b) in
the case of a prospective purchaser, confirmation executed by the requesting
person or entity, in a form reasonably acceptable to the Trustee or Master
Servicer, as applicable, generally to the effect that such person or entity
is a prospective purchaser of Offered Certificates or an interest therein, is
requesting the information solely for use in evaluating a possible investment
in such Certificates and will otherwise keep such information confidential.
Certificateholders, by the acceptance of their Certificates, will be deemed
to have agreed to keep such information confidential.
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VOTING RIGHTS
At all times during the term of the Pooling Agreement, 94.0% of the voting
rights for the Certificates (the "Voting Rights") shall be allocated among
the holders of the respective Classes of Sequential Pay Certificates in
proportion to the Certificate Balances of their Certificates and 6.0% of the
Voting Rights shall be allocated to the holders of the Class X Certificates.
Voting Rights allocated to a Class of Certificateholders shall be allocated
among such Certificateholders in proportion to the percentage interests in
such Class evidenced by their respective Certificates. See "Description of
the Certificates -- Voting Rights" in the Prospectus.
TERMINATION
The obligations created by the Pooling Agreement will terminate following
the earliest of (i) the final payment (or advance in respect thereof) or
other liquidation of the last Mortgage Loan or related REO Property remaining
in the Trust Fund, and (ii) the purchase of all of the Mortgage Loans and REO
Properties remaining in the Trust Fund by any holder or holders (other than
the Sponsor or Mortgage Loan Seller) of Certificates representing a majority
interest in the Controlling Class or by the Master Servicer (in that order of
priority). Written notice of termination of the Pooling Agreement will be
given to each Certificateholder, and the final distribution with respect to
each Certificate will be made only upon surrender and cancellation of such
Certificate at the office of the Certificate Registrar or other location
specified in such notice of termination.
Any such purchase by the majority holder(s) of the Controlling Class or
the Master Servicer of all the Mortgage Loans and REO Properties remaining in
the Trust Fund is required to be made at a price equal to (a) the sum of (i)
the aggregate Purchase Price of all the Mortgage Loans then included in the
Trust Fund (other than any Mortgage Loans as to which the related Mortgaged
Properties have become REO Properties) and (ii) the fair market value of all
REO Properties then included in the Trust Fund, as determined by an appraiser
mutually agreed upon by the Master Servicer and the Trustee, minus (b)
(solely in the case of a purchase by the Master Servicer) the aggregate of
all amounts payable or reimbursable to the Master Servicer under the Pooling
Agreement. Such purchase will effect early retirement of the then outstanding
Certificates, but the right of the majority holder(s) of the Controlling
Class or the Master Servicer to effect such termination is subject to the
requirement that the then aggregate Stated Principal Balance of the Mortgage
Pool be less than 1.0% of the Initial Pool Balance. The purchase price paid
by the majority holder(s) of the Controlling Class or the Master Servicer,
exclusive of any portion thereof payable or reimbursable to any person other
than the Certificateholders, will constitute part of the Available
Distribution Amount for the final Distribution Date.
THE TRUSTEE
LaSalle National Bank ("LaSalle") will act as Trustee of the Trust.
LaSalle is a subsidiary of LaSalle National Corporation, which is a
subsidiary of the Fiscal Agent. The Trustee is at all times to be, and will
be required to resign if it fails to be, (i) a corporation, bank or banking
association, organized and doing business under the laws of the United States
of America or any state thereof, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of not less
than $50,000,000 and subject to supervision or examination by federal or
state authority and (ii) an institution whose long-term senior unsecured debt
(or that of its fiscal agent) is rated not less than "AA" by each of S&P and
Fitch (or such lower rating as would not result, as confirmed in writing by
each Rating Agency, result in a qualification, downgrade or withdrawal of any
of the then current ratings assigned by such Rating Agency to the
Certificates). The corporate trust office of the Trustee responsible for
administration of the Trust Fund (the "Corporate Trust Office") is located at
135 South LaSalle Street, Chicago, Illinois 60603. Attention: Asset Backed
Trust Services -- Mortgage Capital Funding, Inc., Multifamily/ Commercial
Mortgage Pass-Through Certificates, Series 1998-MC1. As of December 31, 1997,
the Trustee had assets of approximately $19 billion. See "Description of the
Pooling Agreements -- The Trustee", "--Duties of the Trustee", "--Certain
Matters Regarding the Trustee" and "--Resignation and Removal of the Trustee"
in the Prospectus.
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Pursuant to the Pooling Agreement, the Trustee will be entitled to a
monthly fee (the "Trustee Fee"; and, together with the Master Servicing Fee
and the Standby Fee, the "Administrative Fees") payable out of general
collections on the Mortgage Loans and any REO Properties and calculated at
0.0032% per annum on the aggregate Stated Principal Balance of each Mortgage
Loan outstanding from time to time.
The Trustee will also have certain duties with respect to REMIC
administration (in such capacity the "REMIC Administrator"). See "Material
Federal Income Tax Consequences -- REMICs -- Reporting and Other
Administrative Matters" and "Description of the Pooling Agreements -- Certain
Matters Regarding the Master Servicer, the Special Servicer, the REMIC
Administrator and the Sponsor", "--Events of Default" and "--Rights Upon
Event of Default" in the Prospectus.
THE FISCAL AGENT
ABN AMRO Bank N.V., a Netherlands banking corporation ("ABN AMRO"), will
act as Fiscal Agent for the Trust and will be obligated to make any Advance
required to be made, but not made, by the Master Servicer and the Trustee
under the Pooling Agreement, provided that the Fiscal Agent will not be
obligated to make any Advance that it deems to be a Nonrecoverable Advance.
The Fiscal Agent will be entitled (but not obligated) to rely conclusively on
any determination by the Master Servicer or the Trustee that an Advance, if
made, would be a Nonrecoverable Advance. The Fiscal Agent will be entitled to
reimbursement for each Advance made by it in the same manner and to the same
extent as, but prior to, the Master Servicer and the Trustee. See "--P&I
Advances" above. The Fiscal Agent will be entitled to various rights,
protections and indemnities similar to those afforded the Trustee. The
Trustee will be responsible for payment of the compensation of the Fiscal
Agent. As of December 31, 1997, the Fiscal Agent had assets of approximately
$414 billion. In the event that LaSalle shall, for any reason, cease to act
as Trustee under the Pooling Agreement, ABN AMRO likewise shall no longer
serve in the capacity of Fiscal Agent thereunder.
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Offered Certificate will depend on (a) the price
at which such Certificate is purchased by an investor and (b) the rate,
timing and amount of distributions on such Certificate. The rate, timing and
amount of distributions on any Offered Certificate will in turn depend on,
among other things, (v) the Pass-Through Rate for such Certificate (which is
fixed in the case of the Class A and Class B Certificates), (w) the rate and
timing of principal payments (including principal prepayments) and other
principal collections on or in respect of the Mortgage Loans and the extent
to which such amounts are to be applied or otherwise result in reduction of
the Certificate Balance or Notional Amount of the Class of Certificates to
which such Certificate belongs, (x) the rate, timing and severity of Realized
Losses, Additional Trust Fund Expenses and Appraisal Reductions and the
extent to which such losses, expenses and reductions result in the nonpayment
or deferred payment of interest on, or reduction of the Certificate Balance
or Notional Amount of, the Class of Certificates to which such Certificate
belongs, (y) the timing and severity of any Net Aggregate Prepayment Interest
Shortfalls and the extent to which such shortfalls are allocable in reduction
of the Distributable Certificate Interest payable on the Class of
Certificates to which such Certificate belongs and (z) the extent to which
Prepayment Premiums are collected and, in turn, distributed on the Class of
Certificates to which such Prepayment Premiums belong.
Pass-Through Rates. The Pass-Through Rate applicable to the Class X
Certificates will be variable and will be calculated based in part on the
Weighted Average Net Mortgage Rate from time to time. In addition, the
Pass-Through Rates on the Class C, Class D, Class E, Class F and Class G
Certificates may not exceed the Weighted Average Net Mortgage Rate from time
to time. Accordingly, the yield on such Certificates will be sensitive to
changes in the relative composition of the Mortgage Pool as a result of
scheduled amortization, voluntary prepayments and liquidations of Mortgage
Loans following default. The Pass-Through Rate and yield to maturity of the
Class X Certificates will, and the
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Pass-Through Rates and yields to maturity of the Class C, Class D, Class E,
Class F and Class G Certificates may, be adversely affected if Mortgage Loans
with relatively higher Mortgage Rates amortize and/or prepay faster than
Mortgage Loans with relatively lower Mortgage Rates. In addition, the
Pass-Through Rate for the Class X Certificates will vary with the rate and
timing of the Certificate Balances of the respective Classes of Sequential
Pay Certificates. See "Description of the Certificates -- Pass-Through Rates"
and "Description of the Mortgage Pool" herein and "--Rate and Timing of
Principal Payments" below.
Rate and Timing of Principal Payments. The yield to holders of the Class X
Certificates will be extremely sensitive to, and the yield to holders of any
other Class of Offered Certificates purchased at a discount or premium will
be affected by, the rate and timing of reductions of the Certificate Balance
or Notional Amount, as the case may be, of such Class of Certificates. As
described herein, the Principal Distribution Amount for each Distribution
Date will be distributable entirely in respect of the Class A Certificates
until the related Certificate Balances thereof are reduced to zero. Following
retirement of the Class A Certificates, the Principal Distribution Amount for
each Distribution Date will be distributable entirely in respect of the other
Classes of Sequential Pay Certificates, sequentially in alphabetical order of
Class designation, in each such case until the related Certificate Balance is
reduced to zero. The Notional Amount of the Class X Certificates will equal
the aggregate of the Certificate Balances of all the Classes of Sequential
Pay Certificates outstanding from time to time. Consequently, the rate and
timing of reductions of the Certificate Balance or Notional Amount, as the
case may be, of each Class of Offered Certificates will depend on the rate
and timing of principal payments on or in respect of the Mortgage Loans,
which will in turn be affected by the amortization schedules thereof, the
dates on which any Balloon Payments are due and the rate and timing of
principal prepayments and other unscheduled collections thereon (including
for this purpose, collections made in connection with liquidations of
Mortgage Loans due to defaults, casualties or condemnations affecting the
Mortgaged Properties, or purchases of Mortgage Loans out of the Trust Fund).
Prepayments and, assuming the respective stated maturity dates therefor have
not occurred, liquidations of the Mortgage Loans will result in distributions
on the Sequential Pay Certificates of amounts that would otherwise be
distributed over the remaining terms of the Mortgage Loans and will tend to
shorten the weighted average lives of those Certificates. Defaults on the
Mortgage Loans, particularly in the case of Balloon Loans at or near their
stated maturity dates, may result in significant delays in payments of
principal on the Mortgage Loans (and, accordingly, on the Sequential Pay
Certificates) while workouts are negotiated or foreclosures are completed,
and such delays will tend to lengthen the weighted average lives of those
Certificates. Failure of the borrower under any Hyper-Amortization Loan to
repay its Mortgage Loan by or shortly after the related Anticipated Repayment
Date, for whatever reason, will also tend to lengthen the weighted average
lives of the Sequential Pay Certificates. Although each Hyper-Amortization
Loan includes incentives for the related borrower to repay the Mortgage Loan
by its Anticipated Repayment Date (e.g., an increase in the rate at which
interest accrues and the application of all excess cash (net of the minimum
required debt service, approved property expenses and any required reserves)
from the related Mortgaged Property to pay down the Mortgage Loan, in each
case following the passage of such date), there can be no assurance that the
related borrower will want or be able to repay the Mortgage Loan in full. See
"Servicing of the Mortgage Loans -- Modifications, Waivers, Amendments and
Consents" herein and "Description of the Pooling Agreements -- Realization
Upon Defaulted Mortgage Loans" and "Certain Legal Aspects of Mortgage Loans
- -- Foreclosure" in the Prospectus.
The extent to which the yield to maturity of any Class of Offered
Certificates may vary from the anticipated yield will depend upon the degree
to which such Certificates are purchased at a discount or premium and when,
and to what degree, payments of principal on or in respect of the Mortgage
Loans are distributed or otherwise result in a reduction of the Certificate
Balance or Notional Amount of such Certificates. An investor should consider,
in the case of any Offered Certificate purchased at a discount, the risk that
a slower than anticipated rate of principal payments on the Mortgage Loans
could result in an actual yield to such investor that is lower than the
anticipated yield and, in the case of a Class X Certificate or any other
Offered Certificate purchased at a premium, the risk that a faster than
anticipated rate of principal payments on the Mortgage Loans could result in
an actual yield to such investor that is lower than the anticipated yield. In
general, the earlier a payment of principal on or in respect of the
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Mortgage Loans is distributed or otherwise results in reduction of the
notional amount of a Class X Certificate or the principal balance of any
other Offered Certificate purchased at a discount or premium, the greater
will be the effect on an investor's yield to maturity. As a result, the
effect on an investor's yield of principal payments occurring at a rate
higher (or lower) than the rate anticipated by the investor during any
particular period may not be fully offset by a subsequent like reduction (or
increase) in the rate of principal payments. Investors in the Class X
Certificates should fully consider the risk that an extremely rapid rate of
principal payments on the Mortgage Loans could result in the failure of such
investors to fully recoup their initial investments. Because the rate of
principal payments on or in respect of the Mortgage Loans will depend on
future events and a variety of factors (as described more fully below), no
assurance can be given as to such rate or the rate of principal prepayments
in particular. The Sponsor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience
of a large group of mortgage loans comparable to the Mortgage Loans.
Prepayment Premiums, even if available and distributable on the Offered
Certificates, may not be sufficient to offset fully any loss in yield on a
particular Class of Offered Certificates attributable to the related
prepayments of the Mortgage Loans.
Losses and Shortfalls. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. As and to the
extent described herein, Realized Losses and Additional Trust Fund Expenses
will be allocated to the respective Classes of Sequential Pay Certificates
(in each case, to reduce the Certificate Balance thereof) in the following
order: first, to each Class of Sequential Pay Certificates (other than the
Class A Certificates), in reverse alphabetical order of Class designation,
until the Certificate Balance thereof has been reduced to zero; then, to the
Class A-1 and Class A-2 Certificates pro rata in accordance with their
respective remaining Certificate Balances, until the remaining Certificate
Balance of each such Class of Certificates has been reduced to zero. Any such
reduction in the Certificate Balance of a Class of Sequential Pay
Certificates will cause a corresponding reduction of the Notional Amount of
the Class X Certificates.
The Net Aggregate Prepayment Interest Shortfall, if any, for each
Distribution Date will be allocated to the respective Classes of REMIC
Regular Certificates (in each case, to reduce the amount of interest
otherwise payable thereon on such Distribution Date) as follows: first, to
the respective Classes of REMIC Regular Certificates (other than the Senior
Certificates) sequentially in reverse alphabetical order of Class
designation, in each case up to an amount equal to the lesser of any
remaining unallocated portion of such Net Aggregate Prepayment Interest
Shortfall and any Accrued Certificate Interest in respect of such Class of
Certificates for such Distribution Date; and, thereafter, if and to the
extent that any portion of such Net Aggregate Prepayment Interest Shortfall
remains unallocated, among the respective Classes of Senior Certificates, up
to, and pro rata in accordance with, the respective amounts of Accrued
Certificate Interest for each such Class of Senior Certificates for such
Distribution Date.
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on or in respect of the Mortgage Loans
may be affected by a number of factors, including, without limitation,
prevailing interest rates, the terms of the Mortgage Loans (for example,
Prepayment Premiums, Lock-out Periods and amortization terms that require
Balloon Payments), the demographics and relative economic vitality of the
areas in which the Mortgaged Properties are located and the general supply
and demand for retail shopping space, rental apartments, office space, hotel
and motel rooms, industrial space, health care facility beds, senior living
units or mobile home park pads, as the case may be, in such areas, the
quality of management of the Mortgaged Properties, the servicing of the
Mortgage Loans, possible changes in tax laws and other opportunities for
investment. See "Risk Factors -- The Mortgage Loans", "Description of the
Mortgage Pool" and "Servicing of the Mortgage Loans" herein and "Description
of the Pooling Agreements" and "Yield and Maturity Considerations -- Yield
and Prepayment Considerations" in the Prospectus.
The rate of prepayment on the Mortgage Loans is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. When the prevailing market interest rate is below the
Mortgage Rate (or, in the case of a Hyper-Amortization Loan after its
Anticipated
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Repayment Date, the Revised Rate) at which a Mortgage Loan accrues interest,
a borrower may have an increased incentive to refinance such Mortgage Loan.
Conversely, to the extent prevailing market interest rates exceed the
applicable Mortgage Rate (or, for Hyper-Amortization Loans after the
Anticipated Repayment Date, the Revised Rate) for any Mortgage Loan, such
Mortgage Loan may be less likely to prepay (other than, in the case of the
Hyper-Amortization Loans, out of certain net cash flow from the related
Mortgaged Property). In particular, the Revised Rate for each
Hyper-Amortization Loan generally is the Mortgage Rate therefor plus no more
than two percentage points, and the primary incentive to prepay a
Hyper-Amortization Loan on or before its Anticipated Repayment Date, assuming
prevailing market interest rates exceed such Revised Rate, is to give the
borrower access to excess cash flow, all of which (net of the minimum
required debt service, approved property expenses and any required reserves)
must be applied to pay down principal of the Mortgage Loan. Accordingly,
there can be no assurance that any Hyper-Amortization Loan will be prepaid on
or before its Anticipated Repayment Date or on any other date prior to
maturity.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash
flow needs or to make other investments. In addition, some borrowers may be
motivated by federal and state tax laws (which are subject to change) to sell
Mortgaged Properties prior to the exhaustion of tax depreciation benefits.
If a Mortgage Loan is not in a Lock-out Period, any Prepayment Premium in
respect of such Mortgage Loan may not be sufficient economic disincentive to
prevent the related borrower from voluntarily prepaying the loan as part of a
refinancing thereof or a sale of the related Mortgaged Property. See
"Description of the Mortgage Pool -- Certain Terms and Conditions of the
Mortgage Loans" herein.
The Sponsor makes no representation or warranty as to the particular
factors that will affect the rate and timing of prepayments and defaults on
the Mortgage Loans, as to the relative importance of such factors, as to the
percentage of the principal balance of the Mortgage Loans that will be
prepaid or as to which a default will have occurred as of any date or as to
the overall rate of prepayment or default on the Mortgage Loans.
Unpaid Distributable Certificate Interest. As described under "Description
of the Certificates -- Distributions -- Application of the Available
Distribution Amount" herein, if the portion of the Available Distribution
Amount distributable in respect of interest on any Class of Offered
Certificates on any Distribution Date is less than the Distributable
Certificate Interest then payable for such Class, the shortfall will be
distributable to holders of such Class of Certificates on subsequent
Distribution Dates, to the extent of available funds. Any such shortfall will
not bear interest, however, and will therefore negatively affect the yield to
maturity of such Class of Certificates for so long as it is outstanding.
WEIGHTED AVERAGE LIVES
The weighted average life of any Offered Certificate (other than a Class X
Certificate) refers to the average amount of time that will elapse from the
date of its issuance until each dollar to be applied in reduction of the
principal balance of such Certificate is distributed to the investor. For
purposes of this Prospectus Supplement, the weighted average life of any such
Offered Certificate is determined by (i) multiplying the amount of each
principal distribution thereon by the number of years from the assumed
Settlement Date (as defined below) to the related Distribution Date, (ii)
summing the results and (iii) dividing the sum by the aggregate amount of the
reductions in the principal balance of such Certificate. Accordingly, the
weighted average life of any such Offered Certificate will be influenced by,
among other things, the rate at which principal of the Mortgage Loans is paid
or otherwise collected or advanced and the extent to which such payments,
collections and/or advances of principal are in turn applied in reduction of
the Certificate Balance of the Class of Certificates to which such Offered
Certificate belongs. As described herein, the Principal Distribution Amount
for each Distribution Date will be distributable entirely in respect of the
Class A Certificates until the Certificate Balances thereof are reduced to
zero, and will thereafter be distributable entirely in respect of the other
Classes of Sequential Pay Certificates, sequentially in alphabetical order of
Class designation, in each such case until the related Certificate Balance is
reduced to zero. As a consequence of the foregoing, the weighted average
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lives of the Class A Certificates may be shorter, and the weighted average
lives of the other Classes of Sequential Pay Certificates may be longer, than
would otherwise be the case if the Principal Distribution Amount for each
Distribution Date was being distributed on a pro rata basis among the
respective Classes of Sequential Pay Certificates.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the CPR model (as
described in the Prospectus). As used in each of the following tables, the
column headed "0%" assumes that none of the Mortgage Loans is prepaid before
maturity (except that each Hyper-Amortization Loan is paid in full on its
related Anticipated Repayment Date). The columns headed "4%", "8%", "12%",
"16%" and 20% assume that no prepayments are made on any Mortgage Loan during
such Mortgage Loan's Lock-out Period, defeasance period or yield maintenance
period, in each case if any, and are otherwise made on each of the Mortgage
Loans at the indicated CPRs (except that each Hyper-Amortization Loan is paid
in full on its related Anticipated Repayment Date). There is no assurance,
however, that prepayments of the Mortgage Loans (whether or not in a Lock-out
Period, a defeasance period or a yield maintenance period) will conform to
any particular CPR, and no representation is made that the Mortgage Loans
will prepay in accordance with the assumptions set forth herein at any of the
CPRs shown or at any other particular prepayment rate, that all the Mortgage
Loans will prepay in accordance with the assumptions set forth herein at the
same rate or that Mortgage Loans that are in a Lock-out Period, a defeasance
period or a yield maintenance period will not prepay as a result of
involuntary liquidations upon default or otherwise. A "yield maintenance
period" is any period during which a Mortgage Loan provides that voluntary
prepayments be accompanied by a Prepayment Premium calculated on the basis of
a yield maintenance formula.
The following tables indicate the percentages of the initial Certificate
Balances of the Class A-1, Class A-2, Class B, Class C, Class D, Class E,
Class F and Class G Certificates that would be outstanding after each of the
dates shown at various CPRs, and the corresponding weighted average lives of
such Classes of Certificates, under the following assumptions (the "Maturity
Assumptions"): (i) the Mortgage Loans have the characteristics set forth on
Annex A and the Initial Pool Balance is $1,319,193,758, (ii) the initial
Certificate Balance or Notional Amount, as the case may be, of each Class of
REMIC Regular Certificates is as described herein, (iii) there are no
delinquencies or losses in respect of the Mortgage Loans, there are no
modifications, extensions, waivers or amendments affecting the payment by
borrowers of principal or interest on the Mortgage Loans, there are no
Appraisal Reduction Amounts with respect to the Mortgage Loans and there are
no casualties or condemnations affecting the Mortgaged Properties, (iv)
scheduled Monthly Payments on the Mortgage Loans are timely received on the
first day of each month, (v) no voluntary or involuntary prepayments are
received as to any Mortgage Loan during such Mortgage Loan's Lock-out Period
("LOP"), defeasance period or yield maintenance period ("YMP"), in each case
if any, each Hyper-Amortization Loan is paid in full on its related
Anticipated Repayment Date and, otherwise, prepayments are made on each of
the Mortgage Loans at the indicated CPRs set forth in the tables (without
regard to any limitations in such Mortgage Loans on partial voluntary
principal prepayments), (vi) no person or entity entitled thereto exercises
its right of optional termination described herein under "Description of the
Certificates -- Termination", (vii) no Mortgage Loan is required to be
repurchased by the Mortgage Loan Seller, Goldman Sachs Mortgage or AMRESCO
Capital, (viii) no Prepayment Interest Shortfalls are incurred and no
Prepayment Premiums are collected, (ix) there are no Additional Trust Fund
Expenses, (x) distributions on the Offered Certificates are made on the 18th
day of each month, commencing in May 1998, (xi) the Prepayment Premium for
the Mortgage Loan secured by the Mortgaged Property identified on Annex A as
Embassy Suites, Portland, Maine, which Prepayment Premium is described as the
lesser of yield maintenance and a declining percentage of the amount prepaid,
will be treated as if it was solely a declining percentage of the amount
prepaid, and (xii) the Offered Certificates are settled on May 5, 1998 (the
"Settlement Date"). To the extent that the Mortgage Loans have
characteristics that differ from those assumed in preparing the tables set
forth below, the Class A-1, Class A-2, Class B, Class C, Class D, Class E,
Class F and/or Class G Certificates may mature earlier or later than
indicated by the tables. It is highly unlikely that the Mortgage Loans will
prepay in accordance with the above assumptions at any of the specified CPRs
until maturity or that all the Mortgage Loans will so prepay at the same
rate. In addition, variations in the actual
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prepayment experience and the balance of the Mortgage Loans that prepay may
increase or decrease the percentages of initial Certificate Balances (and
weighted average lives) shown in the following tables. Such variations may
occur even if the average prepayment experience of the Mortgage Loans were to
conform to the assumptions and be equal to any of the specified CPRs.
Investors are urged to conduct their own analyses of the rates at which the
Mortgage Loans may be expected to prepay.
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-1 CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
DATE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- ------------------------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Delivery Date ............ 100% 100% 100% 100% 100% 100%
April 18, 1999............ 94% 94% 94% 94% 94% 94%
April 18, 2000............ 87% 87% 87% 87% 87% 87%
April 18, 2001............ 80% 80% 79% 79% 79% 78%
April 18, 2002............ 72% 72% 71% 70% 69% 69%
April 18, 2003............ 64% 63% 62% 60% 59% 58%
April 18, 2004............ 55% 53% 52% 50% 49% 48%
April 18, 2005............ 27% 26% 25% 24% 23% 22%
April 18, 2006............ 17% 15% 14% 13% 12% 12%
April 18, 2007............ 6% 3% 1% 0% 0% 0%
April 18, 2008............ 0% 0% 0% 0% 0% 0%
---------- ---------- ---------- ----------- ----------- -----------
Weighted Average Life
(in years) ............. 5.54 5.45 5.38 5.31 5.26 5.21
========== ========== ========== =========== =========== ===========
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-2 CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
DATE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- ------------------------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Delivery Date............. 100% 100% 100% 100% 100% 100%
April 18, 1999............ 100% 100% 100% 100% 100% 100%
April 18, 2000............ 100% 100% 100% 100% 100% 100%
April 18, 2001............ 100% 100% 100% 100% 100% 100%
April 18, 2002............ 100% 100% 100% 100% 100% 100%
April 18, 2003............ 100% 100% 100% 100% 100% 100%
April 18, 2004............ 100% 100% 100% 100% 100% 100%
April 18, 2005............ 100% 100% 100% 100% 100% 100%
April 18, 2006............ 100% 100% 100% 100% 100% 100%
April 18, 2007............ 100% 100% 100% 100% 99% 99%
April 18, 2008............ 0% 0% 0% 0% 0% 0%
---------- ---------- ---------- ----------- ----------- -----------
Weighted Average Life
(in years).............. 9.55 9.55 9.54 9.53 9.52 9.51
========== ========== ========== =========== =========== ===========
</TABLE>
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<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS B CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
DATE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- ------------------------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Delivery Date............. 100% 100% 100% 100% 100% 100%
April 18, 1999............ 100% 100% 100% 100% 100% 100%
April 18, 2000............ 100% 100% 100% 100% 100% 100%
April 18, 2001............ 100% 100% 100% 100% 100% 100%
April 18, 2002............ 100% 100% 100% 100% 100% 100%
April 18, 2003............ 100% 100% 100% 100% 100% 100%
April 18, 2004............ 100% 100% 100% 100% 100% 100%
April 18, 2005............ 100% 100% 100% 100% 100% 100%
April 18, 2006............ 100% 100% 100% 100% 100% 100%
April 18, 2007............ 100% 100% 100% 100% 100% 100%
April 18, 2008............ 0% 0% 0% 0% 0% 0%
---------- ---------- ---------- ----------- ----------- -----------
Weighted Average Life
(in years) ............. 9.70 9.70 9.70 9.70 9.70 9.70
========== ========== ========== =========== =========== ===========
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS C CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
DATE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- ------------------------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Delivery Date............. 100% 100% 100% 100% 100% 100%
April 18, 1999............ 100% 100% 100% 100% 100% 100%
April 18, 2000............ 100% 100% 100% 100% 100% 100%
April 18, 2001............ 100% 100% 100% 100% 100% 100%
April 18, 2002............ 100% 100% 100% 100% 100% 100%
April 18, 2003............ 100% 100% 100% 100% 100% 100%
April 18, 2004............ 100% 100% 100% 100% 100% 100%
April 18, 2005............ 100% 100% 100% 100% 100% 100%
April 18, 2006............ 100% 100% 100% 100% 100% 100%
April 18, 2007............ 100% 100% 100% 100% 100% 100%
April 18, 2008............ 0% 0% 0% 0% 0% 0%
---------- ---------- ---------- ----------- ----------- -----------
Weighted Average Life
(in years) ............. 9.70 9.70 9.70 9.70 9.70 9.70
========== ========== ========== =========== =========== ===========
</TABLE>
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<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS D CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
DATE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- ------------------------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Delivery Date............. 100% 100% 100% 100% 100% 100%
April 18, 1999............ 100% 100% 100% 100% 100% 100%
April 18, 2000............ 100% 100% 100% 100% 100% 100%
April 18, 2001............ 100% 100% 100% 100% 100% 100%
April 18, 2002............ 100% 100% 100% 100% 100% 100%
April 18, 2003............ 100% 100% 100% 100% 100% 100%
April 18, 2004............ 100% 100% 100% 100% 100% 100%
April 18, 2005............ 100% 100% 100% 100% 100% 100%
April 18, 2006............ 100% 100% 100% 100% 100% 100%
April 18, 2007............ 100% 100% 100% 100% 100% 100%
April 18, 2008............ 0% 0% 0% 0% 0% 0%
---------- ---------- ---------- ----------- ----------- -----------
Weighted Average Life
(in years) ............. 9.70 9.70 9.70 9.70 9.70 9.70
========== ========== ========== =========== =========== ===========
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS E CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
DATE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- ------------------------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Delivery Date............. 100% 100% 100% 100% 100% 100%
April 18, 1999............ 100% 100% 100% 100% 100% 100%
April 18, 2000............ 100% 100% 100% 100% 100% 100%
April 18, 2001............ 100% 100% 100% 100% 100% 100%
April 18, 2002............ 100% 100% 100% 100% 100% 100%
April 18, 2003............ 100% 100% 100% 100% 100% 100%
April 18, 2004............ 100% 100% 100% 100% 100% 100%
April 18, 2005............ 100% 100% 100% 100% 100% 100%
April 18, 2006............ 100% 100% 100% 100% 100% 100%
April 18, 2007............ 100% 100% 100% 100% 100% 100%
April 18, 2008............ 0% 0% 0% 0% 0% 0%
---------- ---------- ---------- ----------- ----------- -----------
Weighted Average Life
(in years) ............. 9.70 9.70 9.70 9.70 9.70 9.70
========== ========== ========== =========== =========== ===========
</TABLE>
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<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS F CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
DATE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- ------------------------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Delivery Date............. 100% 100% 100% 100% 100% 100%
April 18, 1999............ 100% 100% 100% 100% 100% 100%
April 18, 2000............ 100% 100% 100% 100% 100% 100%
April 18, 2001............ 100% 100% 100% 100% 100% 100%
April 18, 2002............ 100% 100% 100% 100% 100% 100%
April 18, 2003............ 100% 100% 100% 100% 100% 100%
April 18, 2004............ 100% 100% 100% 100% 100% 100%
April 18, 2005............ 100% 100% 100% 100% 100% 100%
April 18, 2006............ 100% 100% 100% 100% 100% 100%
April 18, 2007............ 100% 100% 100% 100% 100% 100%
April 18, 2008............ 0% 0% 0% 0% 0% 0%
---------- ---------- ---------- ----------- ----------- -----------
Weighted Average Life
(in years) ............. 9.70 9.70 9.70 9.70 9.70 9.70
========== ========== ========== =========== =========== ===========
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS G CERTIFICATES AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
DATE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- ------------------------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Delivery Date............. 100% 100% 100% 100% 100% 100%
April 18, 1999............ 100% 100% 100% 100% 100% 100%
April 18, 2000............ 100% 100% 100% 100% 100% 100%
April 18, 2001............ 100% 100% 100% 100% 100% 100%
April 18, 2002............ 100% 100% 100% 100% 100% 100%
April 18, 2003............ 100% 100% 100% 100% 100% 100%
April 18, 2004............ 100% 100% 100% 100% 100% 100%
April 18, 2005............ 100% 100% 100% 100% 100% 100%
April 18, 2006............ 100% 100% 100% 100% 100% 100%
April 18, 2007............ 100% 100% 100% 100% 100% 100%
April 18, 2008............ 0% 0% 0% 0% 0% 0%
---------- ---------- ---------- ----------- ----------- -----------
Weighted Average Life
(in years) ............. 9.77 9.76 9.75 9.74 9.73 9.72
========== ========== ========== =========== =========== ===========
</TABLE>
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PRICE/YIELD TABLES
The tables set forth below show the corporate bond equivalent ("CBE")
yield, weighted average life (as described under "--Weighted Average Lives"
above) and the period during which principal payments would be received
("Window") with respect to each Class of Offered Certificates (other than the
Class X Certificates) under the Maturity Assumptions. Purchase prices set
forth below for each such Class of Offered Certificates are expressed in
32nds (i.e., means %) as a percentage of the initial Certificate
Balance of such Class of Certificates, without accrued interest.
The yields set forth in the following tables were calculated by
determining the monthly discount rates which, when applied to the assumed
stream of cash flows to be paid on each Class of Offered Certificates (other
than the Class X Certificates), would cause the discounted present value of
such assumed stream of cash flows as of the Settlement Date to equal the
assumed purchase prices, plus accrued interest at the applicable Pass-Through
Rate as stated on the cover hereof from and including April 6, 1998 to but
excluding the Settlement Date, and converting such monthly rates to
semi-annual corporate bond equivalent rates. Such calculation does not take
into account variations that may occur in the interest rates at which
investors may be able to reinvest funds received by them as reductions of the
Certificate Balances of such Classes of Offered Certificates and consequently
does not purport to reflect the return on any investment in such Classes of
Offered Certificates when such reinvestment rates are considered.
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<PAGE>
CLASS A-1 CERTIFICATES
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
PRICE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- --------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
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<PAGE>
CLASS A-2 CERTIFICATES
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
PRICE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- --------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
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<PAGE>
CLASS B CERTIFICATES
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
PRICE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- --------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
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<PAGE>
CLASS C CERTIFICATES
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
PRICE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- --------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
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<PAGE>
CLASS D CERTIFICATES
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
PRICE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- --------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
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<PAGE>
CLASS E CERTIFICATES
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
PRICE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- --------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
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<PAGE>
CLASS F CERTIFICATES
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
PRICE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- --------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
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<PAGE>
CLASS G CERTIFICATES
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
PRICE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- --------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
YIELD SENSITIVITY OF THE CLASS X CERTIFICATES
The yield to maturity of the Class X Certificates will be highly sensitive
to the rate and timing of principal payments (including by reason of
prepayments, hyper-amortization, loan extensions, defaults and liquidations)
and losses on or in respect of the Mortgage Loans. Investors in the Class X
Certificates should fully consider the associated risks, including the risk
that an extremely rapid rate of amortization, prepayment or other liquidation
of the Mortgage Loans could result in the failure of such investors to recoup
fully their initial investments.
The following tables indicate the approximate pre-tax yield to maturity on
a corporate bond equivalent ("CBE") basis on the Class X Certificates for the
specified CPRs based on the Maturity Assumptions. In addition, it was assumed
that the Trust will be terminated when the aggregate Stated Principal Balance
of the Mortgage Pool was equal to 1.0% of the Initial Pool Balance.
Futhermore, it was assumed, when specifically indicated in a particular
table, that 100% of any Prepayment Premium calculated as a declining
percentage of the amount prepaid (a "Decl. % Premium") is collected in
connection with each prepayment as to which such a Prepayment Premium is
applicable. It was also assumed that the purchase price of the Class X
Certificates is as specified below, expressed in 32nds (i.e., means %)
as a percentage of the initial Notional Amount of such Certificates, plus
accrued interest.
The yields set forth in the following tables were calculated by
determining the monthly discount rates that, when applied to the assumed
streams of cash flows to be paid on the Class X Certificates, would cause the
discounted present value of such assumed stream of cash flows to equal the
assumed purchase price thereof, and by converting such monthly rates to
semi-annual corporate bond equivalent rates. Such calculation does not take
into account shortfalls in collection of interest due to prepayments (or
other liquidations) of the Mortgage Loans or the interest rates at which
investors may be able to reinvest funds received by them as distributions on
the Class X Certificates (and, accordingly, does not purport to reflect the
return on any investment in the Class X Certificates when such reinvestment
rates are considered).
The characteristics of the Mortgage Loans may differ from those assumed in
preparing the tables below. In addition, there can be no assurance that the
Mortgage Loans will prepay in accordance with the above assumptions at any of
the rates shown in the tables or at any other particular rate, that the cash
flows on the Class X Certificates will correspond to the cash flows shown
herein or that the aggregate purchase price of the Class X Certificates will
be as assumed. In
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addition, it is unlikely that the Mortgage Loans will prepay in accordance
with the above assumptions at any of the specified CPRs until maturity or
that all the Mortgage Loans will so prepay at the same rate. Timing of
changes in the rate of prepayments may significantly affect the actual yield
to maturity to investors, even if the average rate of principal prepayments
is consistent with the expectations of investors. Investors must make their
own decisions as to the appropriate prepayment assumption to be used in
deciding whether to purchase Class X Certificates.
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
PRICE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- --------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES ASSUMING 100% OF RECOVERY OF DECL. % PREMIUMS
(PREPAYMENTS LOCKED OUT THROUGH LOP, DEFEASANCE AND YMP, THEN AT THE
FOLLOWING CPR)
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-----------------------------------------------------------------------
PRICE 0% CPR 4% CPR 8% CPR 12% CPR 16% CPR 20% CPR
- --------- ---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
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USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Offered
Certificates will be used by the Sponsor to purchase the Mortgage Loans and
to pay certain expenses in connection with the issuance of the Certificates.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
For federal income tax purposes, three separate "real estate mortgage
investment conduit" ("REMIC") elections will be made with respect to
designated portions of the Trust Fund, the resulting REMICs being herein
referred to as "REMIC I", "REMIC II" and "REMIC III", respectively. The assets
of REMIC I will include the Mortgage Loans, any REO Properties acquired on
behalf of the Certificateholders and the Certificate Account (as defined in
the Prospectus); the assets of REMIC II will consist of the separate,
noncertificated "regular interests" in REMIC I; and the assets of REMIC III
will consist of the separate, noncertificated "regular interests" in REMIC II.
For federal income tax purposes, (i) the Class R-I Certificates will be the
sole class of "residual interests" in REMIC I, (ii) the Class R-II
Certificates will be the sole class of "residual interests" in REMIC II, (iii)
the REMIC Regular Certificates will evidence the "regular interests" in, and
generally will be treated as debt obligations of, REMIC III, and (iv) the
Class R-III Certificates will be the sole class of "residual interests" in
REMIC III. Upon issuance of the Offered Certificates, Sidley & Austin, special
tax counsel to the Sponsor, will deliver its opinion generally to the effect
that, assuming compliance with all provisions of the Pooling Agreement, for
federal income tax purposes, REMIC I, REMIC II and REMIC III will each qualify
as a REMIC under the Code. See "Material Federal Income Tax Consequences --
REMICs" in the Prospectus.
DISCOUNT AND PREMIUM; PREPAYMENT PREMIUMS
For federal income tax reporting purposes, it is anticipated that the
Class __, Class __, Class __, Class __ and Class __ Certificates will not, and
the Class __ and Class X Certificates will, be treated as having been issued
with original issue discount. The prepayment assumption that will be used in
determining the rate of accrual of market discount and premium, if any, for
federal income tax purposes will be based on the assumption that subsequent to
the date of any determination the Mortgage Loans will not prepay (that is, a
CPR of 0%), except that the Hyper-Amortization Loans will be repaid in full on
their respective Anticipated Repayment Dates. However, no representation is
made that the Mortgage Loans will not prepay or that, if they do, they will
prepay at any particular rate. See "Material Federal Income Tax Consequences
- -- REMICs -- Taxation of Owners of REMIC Regular Certificates" in the
Prospectus.
The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Internal Revenue Code of 1986
(the "Code") generally addressing the treatment of debt instruments issued
with original issue discount. Purchasers of the Offered Certificates should be
aware that the OID Regulations and Section 1272(a)(6) of the Code do not
adequately address certain issues relevant to, or are not applicable to,
prepayable securities such as the Offered Certificates. Prospective purchasers
of the Offered Certificates are advised to consult their tax advisors
concerning the tax treatment of such Certificates.
If the method for computing original issue discount described in the
Prospectus results in a negative amount for any period, a possibility of
particular relevance to the Class X Certificates, the amount of original issue
discount allocable to such period would be zero and such Certificateholders
will be permitted to offset such negative amount only against future original
issue discount (if any) attributable to such Certificate. Although the matter
is not free from doubt, a holder of a Class X Certificate may be permitted to
deduct a loss to the extent that his or her respective remaining basis in such
Certificate exceeds the maximum amount of future payments to which such
Certificateholder is entitled, assuming no further prepayments of the Mortgage
Loans. Any such loss might be treated as a capital loss.
The OID Regulations provide in general that original issue discount with
respect to debt instruments issued in connection with the same or related
transactions are treated as a single debt instrument for
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purposes of computing the accrual of original issue discount with respect to
such debt instruments. This aggregation rule ordinarily is only to be applied
when single debt instruments are issued by a single issuer to a single
holder. Although it is not clear that this aggregation rule technically
applies to REMIC regular interests or other instruments subject to Section
1272(a)(6) of the Code, information reports or returns sent to
Certificateholders and the IRS with respect to the Class X Certificates,
which evidence the ownership of multiple regular interests, will be based on
such an aggregate method of computing the yield on the related regular
interests. Prospective purchasers of the Class X Certificates are advised to
consult their tax advisers about the use of this methodology and the
potential consequences of being required to report original issue discount
separately with respect to each of the regular interests, ownership of which
is evidenced by the Class X Certificates.
Certain Classes of the Offered Certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
such a Class of Certificates will be treated as holding a Certificate with
amortizable bond premium will depend on such Certificateholder's purchase
price and the distributions remaining to be made on such Certificate at the
time of its acquisition by such Certificateholder. Holders of such Classes of
Certificates should consult their own tax advisors regarding the possibility
of making an election to amortize such premium. See "Material Federal Income
Tax Consequences -- REMICs -- Taxation of Owners of REMIC Regular Certificates
- -- Premium" in the Prospectus.
Prepayment Premiums actually collected on the Mortgage Loans will be
distributed to the holders of each Class of Certificates entitled thereto as
described herein. It is not entirely clear under the Code when the amount of a
Prepayment Premium should be taxed to the holder of a Class of Certificates
entitled to a Prepayment Premium. For federal income tax reporting purposes,
Prepayment Premiums will be treated as income to the holders of a Class of
Certificates entitled to Prepayment Premiums only after the Master Servicer's
actual receipt of a Prepayment Premium to which such Class of Certificates is
entitled under the terms of the Pooling Agreement. The Internal Revenue
Service may nevertheless seek to require that an assumed amount of Prepayment
Premiums be included in distributions projected to be made on the Certificates
and that taxable income be reported based on the projected constant yield to
maturity of the Certificates, including such projected Prepayment Premiums
prior to their actual receipt. In the event that such projected Prepayment
Premiums were not actually received, presumably the holder of a Certificate
would be allowed to claim a deduction or reduction in gross income at the time
such unpaid Prepayment Premiums had been projected to be received. Moreover,
it appears that Prepayment Premiums are to be treated as ordinary income
rather than capital gain. However, the correct characterization of such income
is not entirely clear and Certificateholders should consult their own tax
advisors concerning the treatment of Prepayment Premiums.
CHARACTERIZATION OF INVESTMENTS IN OFFERED CERTIFICATES
Generally, except to the extent noted below, the Offered Certificates will
be "real estate assets" within the meaning of Section 856(c)(4)(A) of the Code
in the same proportion that the assets of the Trust would be so treated. In
addition, interest (including original issue discount, if any) on the Offered
Certificates will be interest described in Section 856(c)(3)(B) of the Code to
the extent that such Certificates are treated as "real estate assets" within
the meaning of Section 856(c)(4)(A) of the Code.
To the extent an Offered Certificate represents ownership of an interest
in any Mortgage Loan that is secured in part by the related borrower's
interest in an account containing any holdback of loan proceeds, a portion of
such Certificate may not represent ownership of assets described in Section
7701(a)(19)(C) of the Code and "real estate assets" under Section 856(c)(4)(A)
of the Code and the interest thereon may not constitute "interest on
obligations secured by mortgages on real property" within the meaning of
Section 856(c)(3)(B) of the Code. However, if 95% or more of the Mortgage
Loans are treated as assets described in the foregoing sections of the Code,
the Offered Certificates will be treated as such assets in their entirety. The
Offered Certificates will be treated as "qualified mortgages" for another
REMIC under Section 860G(a)(3)(C) of the Code and "permitted assets" for a
"financial asset
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securitization investment trust" under Section 860L(c) of the Code. See
"Description of the Mortgage Pool" herein and "Material Federal Income Tax
Consequences -- REMICs -- Characterization of Investments in REMIC
Certificates" in the Prospectus.
POSSIBLE TAXES ON INCOME FROM FORECLOSURE PROPERTY AND OTHER TAXES
In general, the Special Servicer will be obligated to operate and manage
any Mortgaged Property acquired as REO Property in a manner that would, to the
extent commercially reasonable, maximize the Trust's net after-tax proceeds
from such property. After the Special Servicer reviews the operation of such
property and consults with the REMIC Administrator to determine the Trust's
federal income tax reporting position with respect to income it is anticipated
that the Trust would derive from such property, the Special Servicer could
determine that it would not be commercially reasonable to manage and operate
such property in a manner that would avoid the imposition of a tax on "net
income from foreclosure property" (generally, income not derived from renting
or selling real property) within the meaning of the REMIC Provisions or a tax
on "prohibited transactions" under Section 860F of the Code (either such tax
referred to herein as an "REO Tax"). To the extent that income the Trust
receives from an REO Property is subject to (i) a tax on "net income from
foreclosure property," such income would be subject to federal tax at the
highest marginal corporate tax rate (currently 35%) and (ii) a tax on
"prohibited transactions", such income would be subject to federal tax at a
100% rate. The determination as to whether income from an REO Property would
be subject to an REO Tax will depend on the specific facts and circumstances
relating to the management and operation of each REO Property. Generally,
income from an REO Property that is directly operated by the Special Servicer
would be apportioned and classified as "service" or "non-service" income. The
"service" portion of such income could be subject to federal tax either at the
highest marginal corporate tax rate or at the 100% rate on "prohibited
transactions," and the "non-service" portion of such income could be subject
to federal tax at the highest marginal corporate tax rate or, although it
appears unlikely, at the 100% rate applicable to "prohibited transactions".
These considerations will be of particular relevance with respect to any
health care facilities or hotels that become REO Property. However, unless
otherwise required by expressly applicable authority, it is anticipated that
the Trust will take the position that no income from foreclosure property will
be subject to the 100% "prohibited transactions" tax. Any REO Tax imposed on
the Trust's income from an REO Property would reduce the amount available for
distribution to Certificateholders. Certificateholders are advised to consult
their own tax advisors regarding the possible imposition of REO Taxes in
connection with the operation of commercial REO Properties by REMICs.
To the extent permitted by then applicable laws, any Prohibited
Transactions Tax (as defined in the Prospectus), Contributions Tax (also as
defined in the Prospectus) or tax on "net income from foreclosure property"
that may be imposed on any of REMIC I, REMIC II or REMIC III will be borne by
the REMIC Administrator, the Trustee, the Fiscal Agent, the Master Servicer or
the Special Servicer, in any case out of its own funds, provided that such
person has sufficient assets to do so, and provided further that such tax
arises out of a breach of such person's obligations under certain specified
sections of the Pooling Agreement. Any such tax not borne by the REMIC
Administrator, the Trustee, the Fiscal Agent, the Master Servicer or the
Special Servicer will be charged against the Trust resulting in a reduction in
amounts available for distribution to the Certificateholders. See "Material
Federal Income Tax Consequences -- REMICs -- Prohibited Transactions Tax and
Other Taxes" in the Prospectus.
REPORTING AND OTHER ADMINISTRATIVE MATTERS
Reporting of interest income, including any original issue discount, if
any, with respect to REMIC Regular Certificates is required annually, and may
be required more frequently under Treasury regulations. These information
reports generally are required to be sent to individual holders of REMIC
Regular Certificates and the IRS; holders of REMIC Regular Certificates that
are corporations, trusts, securities dealers and certain other non-individuals
will be provided interest and original issue discount income information and
the information set forth in the following paragraph upon request in
accordance with the requirements of the applicable regulations. The
information must be provided by the later of 30 days after the end of the
quarter for which the information was requested, or two weeks after the
receipt
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of the request. The related REMIC must also comply with rules requiring a
REMIC Regular Certificate issued with original issue discount to disclose on
its face the amount of original issue discount and the issue date, and
requiring such information to be reported to the IRS. Reporting with respect
to the REMIC Residual Certificates, including income, excess inclusions,
investment expenses and relevant information regarding qualification of the
related REMIC's assets will be made as required under the Treasury
regulations, generally on a quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular
Certificate at the beginning of each accrual period. In addition, the reports
will include information required by regulations with respect to computing the
accrual of any market discount. Because exact computation of the accrual of
market discount on a constant yield method would require information relating
to the holder's purchase price that the REMIC Administrator may not have, such
regulations only require that information pertaining to the appropriate
proportionate method of accruing market discount be provided.
The "tax matters person" for each REMIC created under the Pooling
Agreement will be the holder of REMIC Residual Certificates evidencing the
largest percentage interest in such REMIC's Class of REMIC Residual
Certificates. All holders of REMIC Residual Certificates will irrevocably
designate the REMIC Administrator as agent for such "tax matters persons" in
all respects.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "Material Federal Income Tax
Consequences -- REMICs" in the Prospectus.
CERTAIN ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
arrangement, including individual retirement accounts and annuities, Keogh
plans and collective investment funds and separate accounts in which such
plans, accounts or arrangements are invested, including insurance company
general accounts, that is subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code (each,
a "Plan") should carefully review with its legal advisors whether the purchase
or holding of Offered Certificates could constitute or give rise to a
transaction that is prohibited or is not otherwise permitted either under
ERISA or Section 4975 of the Code or whether there exists any statutory or
administrative exemption applicable thereto. Certain fiduciary and prohibited
transaction issues arise only if the assets of the Trust constitute "plan
assets" for purposes of Part 4 of Title I of ERISA and Section 4975 of the
Code ("Plan Assets"). Whether the assets of the Trust will constitute Plan
Assets at any time will depend on a number of factors, including the portion
of any Class of Certificates that is held by "benefit plan investors" (as
defined in U.S. Department of Labor Regulation Section 2510.3-101).
The U.S. Department of Labor issued to Citicorp an individual prohibited
transaction exemption, Prohibited Transaction Exemption ("PTE") 90-88, and to
Goldman, Sachs & Co. ("Goldman, Sachs") an individual prohibited transaction
exemption, PTE 89-88 (the "Exemptions"), which generally exempt from the
application of the prohibited transaction provisions of Sections 406(a) and
(b) and 407(a) of ERISA, and the excise taxes imposed on such prohibited
transactions pursuant to Sections 4975(a) and (b) of the Code, certain
transactions, among others, relating to the servicing and operation of
mortgage pools, such as the Mortgage Pool, and the purchase, sale and holding
of mortgage pass-through certificates, such as the Senior Certificates,
underwritten by an Exemption-Favored Party (as hereinafter defined), provided
that certain conditions set forth in the Exemptions are satisfied.
"Exemption-Favored Parties" include (a) Citicorp, (b) Goldman, Sachs, (c) any
person directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with either Citicorp (such
as Citibank, N.A.) or Goldman, Sachs, and (d) any member of the underwriting
syndicate or selling group of which a person described in (a), (b) or (c) is a
manager or co-manager with respect to the Senior Certificates.
The Exemptions set forth six general conditions which must be satisfied
for a transaction involving the purchase, sale and holding of a Senior
Certificate to be eligible for exemptive relief thereunder. First, the
acquisition of such Senior Certificate by a Plan must be on terms that are at
least as favorable to the Plan as they would be in an arm's-length transaction
with an unrelated party. Second, the rights and
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interests evidenced by such Senior Certificate must not be subordinated to
the rights and interests evidenced by the other Certificates. Third, such
Senior Certificate at the time of acquisition by the Plan must be rated in
one of the three highest generic rating categories by S&P, Fitch, Duff &
Phelps Credit Rating Co. ("DCR") or Moody's Investors Service, Inc.
("Moody's"). Fourth, the Trustee cannot be an affiliate of any other member
of the "Restricted Group", which (in addition to the Trustee) consists of any
Exemption-Favored Party, the Sponsor, the Master Servicer, the Special
Servicer, any sub-servicer, the Mortgage Loan Seller, Goldman Sachs Mortgage,
AMRESCO Capital, any borrower with respect to Mortgage Loans constituting
more than 5% of the aggregate unamortized principal balance of the Mortgage
Pool as of the date of initial issuance of the Certificates and any affiliate
of any of the aforementioned persons. Fifth, the sum of all payments made to
and retained by the Exemption-Favored Parties must represent not more than
reasonable compensation for underwriting the Senior Certificates; the sum of
all payments made to and retained by the Sponsor pursuant to the assignment
of the Mortgage Loans to the Trust must represent not more than the fair
market value of such obligations; and the sum of all payments made to and
retained by the Master Servicer, the Special Servicer and any sub-servicer
must represent not more than reasonable compensation for such person's
services under the Pooling Agreement and reimbursement of such person's
reasonable expenses in connection therewith. Sixth, the investing Plan must
be an accredited investor as defined in Rule 501(a)(1) of Regulation D of the
Commission under the Securities Act.
Because the Senior Certificates are not subordinated to any other Class of
Certificates, the second general condition set forth above is satisfied with
respect to such Certificates. It is a condition of their issuance that each
Class of Senior Certificates be rated not lower than "AAA" by each of S&P and
Fitch. As of the Delivery Date, the fourth general condition set forth above
will be satisfied with respect to the Senior Certificates. A fiduciary of a
Plan contemplating purchasing a Senior Certificate in the secondary market
must make its own determination that, at the time of such purchase, such
Certificate continues to satisfy the third and fourth general conditions set
forth above. A fiduciary of a Plan contemplating purchasing a Senior
Certificate, whether in the initial issuance of such Certificate or in the
secondary market, must make its own determination that the first and fifth
general conditions set forth above will be satisfied with respect to such
Certificate as of the date of such purchase. A Plan's authorizing fiduciary
will be deemed to make a representation regarding satisfaction of the sixth
general condition set forth above in connection with the purchase of a Senior
Certificate.
The Exemptions also require that the Trust meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type
that have been included in other investment pools; (ii) certificates
evidencing interests in such other investment pools must have been rated in
one of the three highest categories of S&P, Fitch, Moody's or DCR for at least
one year prior to the Plan's acquisition of a Senior Certificate; and (iii)
certificates evidencing interests in such other investment pools must have
been purchased by investors other than Plans for at least one year prior to
any Plan's acquisition of a Senior Certificate. The Sponsor has confirmed to
its satisfaction that such requirements have been satisfied as of the date
hereof.
If the general conditions of the Exemptions are satisfied, the Exemptions
may provide an exemption from the restrictions imposed by Sections 406(a) and
407(a) of ERISA, as well as the excise taxes imposed by Sections 4975(a) and
(b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of the Code,
in connection with (i) the direct or indirect sale, exchange or transfer of
Senior Certificates in the initial issuance of Certificates between the
Sponsor or an Exemption-Favored Party and a Plan when the Sponsor, an
Exemption-Favored Party, the Trustee, the Master Servicer, the Special
Servicer, a sub-servicer, the Mortgage Loan Seller, Goldman Sachs Mortgage,
AMRESCO Capital or a borrower is a party in interest (within the meaning of
Section 3(14) of ERISA) or a disqualified person (within the meaning of
Section 4975(e)(2) of the Code) (a "Party in Interest") with respect to the
investing Plan, (ii) the direct or indirect acquisition or disposition in the
secondary market of Senior Certificates by a Plan and (iii) the continued
holding of Senior Certificates by a Plan. However, no exemption is provided
from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for
the acquisition or holding of a Senior Certificate on behalf of an Excluded
Plan (as defined in the next sentence) by any person who has discretionary
authority or renders investment advice with respect to the assets of such
Excluded Plan. For purposes hereof, an "Excluded Plan" is a Plan sponsored by
any member of the Restricted Group.
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Moreover, if the general conditions of the Exemptions, as well as certain
other specific conditions set forth in the Exemptions, are satisfied, the
Exemptions may also provide an exemption from the restrictions imposed by
Sections 406(b)(1) and (b)(2) of ERISA, and the excise taxes imposed by
Sections 4975(a) and (b) of the Code by reason of Section 4975(c)(1)(E) of the
Code, in connection with (1) the direct or indirect sale, exchange or transfer
of Senior Certificates in the initial issuance of Certificates between the
Sponsor or an Exemption-Favored Party and a Plan when the person who has
discretionary authority or renders investment advice with respect to the
investment of Plan assets in such Certificates is (a) a borrower with respect
to 5% or less of the fair market value of the Mortgage Pool or (b) an
affiliate of such a person, (2) the direct or indirect acquisition or
disposition in the secondary market of Senior Certificates by a Plan and (3)
the continued holding of Senior Certificates by a Plan.
Further, if the general conditions of the Exemptions, as well as certain
other conditions set forth in the Exemptions, are satisfied, the Exemptions
may provide an exemption from the restrictions imposed by Sections 406(a),
406(b) and 407(a) of ERISA, and the excise taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Section 4975(c) of the Code, for transactions
in connection with the servicing, management and operation of the Mortgage
Pool.
Lastly, if the general conditions of the Exemptions are satisfied, the
Exemptions also may provide an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Sections 4975(c)(1) (A) through (D)
of the Code, if such restrictions are deemed to otherwise apply merely because
a person is deemed to be a Party in Interest with respect to an investing Plan
by virtue of providing services to the Plan (or by virtue of having certain
specified relationships to such a person) solely as a result of the Plan's
ownership of Senior Certificates.
Before purchasing a Senior Certificate, a fiduciary of a Plan should
itself confirm that (i) the Senior Certificates constitute "certificates" for
purposes of the Exemptions and (ii) the specific and general conditions and
the other requirements set forth in the Exemptions would be satisfied. In
addition to making its own determination as to the availability of the
exemptive relief provided in the Exemptions, the Plan fiduciary should
consider the availability of any other prohibited transaction class
exemptions. See "ERISA Considerations" in the Prospectus. There can be no
assurance that any such class exemptions will apply with respect to any
particular Plan investment in the Offered Certificates or, even if it were
deemed to apply, that any exemption would apply to all transactions that may
occur in connection with such transaction. A purchaser of a Senior Certificate
should be aware, however, that even if the conditions specified in one or more
exemptions are satisfied, the scope of relief provided by an exemption may not
cover all acts which might be construed as prohibited transactions.
THE CHARACTERISTICS OF THE CLASS B, CLASS C, CLASS D, CLASS E, CLASS F AND
CLASS G CERTIFICATES DO NOT MEET THE REQUIREMENTS OF THE EXEMPTIONS.
ACCORDINGLY, THE CERTIFICATES OF THOSE CLASSES MAY NOT BE ACQUIRED BY A PLAN,
OTHER THAN AN INSURANCE COMPANY GENERAL ACCOUNT, WHICH MAY BE ABLE TO RELY ON
SECTION III OF PTCE 95-60 (DISCUSSED BELOW).
Section III of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")
exempts from the application of the prohibited transaction provisions of
Sections 406(a), 406(b) and 407(a) of ERISA and Section 4975 of the Code
transactions in connection with the servicing, management and operation of a
trust (such as the Trust) in which an insurance company general account has an
interest as a result of its acquisition of certificates issued by the trust,
provided that certain conditions are satisfied. If these conditions are met,
insurance company general accounts would be allowed to purchase certain
Classes of Certificates (such as the Class B, Class C, Class D, Class E, Class
F and Class G Certificates) that do not meet the requirements of the
Exemptions solely because they (i) are subordinated to other Classes of
Certificates in the Trust and/or (ii) have not received a rating at the time
of the acquisition in one of the three highest rating categories from S&P,
Moody's, DCR or Fitch. All other conditions of the Exemptions would have to be
satisfied in order for PTCE 95-60 to be available. Before purchasing Class B,
Class C, Class D, Class E, Class F and Class G Certificates, an insurance
company general account seeking to rely on Section III of PTCE 95-60 should
itself confirm that all applicable conditions and other requirements have been
satisfied.
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A governmental plan as defined in Section 3(32) of ERISA is not subject to
Title I of ERISA or Section 4975 of the Code. However, such a governmental
plan may be subject to a federal, state or local law which is, to a material
extent, similar to the foregoing provisions of ERISA or the Code ("Similar
Law"). A fiduciary of a governmental plan should make its own determination as
to the need for and the availability of any exemptive relief under Similar
Law.
Any Plan fiduciary considering whether to purchase an Offered Certificate
on behalf of a Plan should consult with its counsel regarding the
applicability of the fiduciary responsibility and prohibited transaction
provisions of ERISA and the Code to such investment.
The sale of Offered Certificates to a Plan is in no respect a
representation by the Sponsor or the Underwriters that this investment meets
all relevant legal requirements with respect to investments by Plans generally
or by any particular Plan, or that this investment is appropriate for Plans
generally or for any particular Plan.
LEGAL INVESTMENT
The Offered Certificates will not constitute "mortgage related securities"
for purposes of SMMEA. As a result, the appropriate characterization of the
Offered Certificates under various legal investment restrictions, and thus the
ability of investors subject to these restrictions to purchase the Offered
Certificates, is subject to significant interpretive uncertainties. Neither
the Sponsor nor the Underwriters make any representation as to the ability of
particular investors to purchase the Offered Certificates under applicable
legal investment or other restrictions. All institutions whose investment
activities are subject to legal investment laws and regulations, regulatory
capital requirements or review by regulatory authorities should consult with
their own legal advisors in determining whether and to what extent the Offered
Certificates constitute legal investments for them or are subject to
investment, capital or other restrictions. See "Legal Investment" in the
Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement between the Sponsor and the Underwriters, the Sponsor has agreed to
sell to each of the Underwriters named below, and each of such Underwriters
has severally agreed to purchase upon issuance, the percentage of the
Certificate Balance or Notional Amount, as the case may be, of each Class of
Offered Certificates set forth opposite its name below:
<TABLE>
<CAPTION>
UNDERWRITER CLASS A-1 CLASS A-2 CLASS X CLASS B CLASS C CLASS D CLASS E CLASS F CLASS G
- ----------- --------- --------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Goldman, Sachs & Co. ..... __% __% __% __% __% __% __% __% __%
Citibank, N.A. ........... __% __% __% __% __% __% __% __% __%
</TABLE>
In connection with the purchase and sale of the Offered Certificates, the
Underwriters may be deemed to have received compensation from the Sponsor in
the form of underwriting discounts. Distribution of the Offered Certificates
will be made by the Underwriters from time to time in negotiated transactions
or otherwise at varying prices to be determined at the time of sale. The
Underwriters may effect such transactions by selling the Offered Certificates
to or through dealers, and such dealers may receive compensation in the form
of underwriting discounts, concessions or commissions from the Underwriters.
The Offered Certificates are new issues of securities with no established
trading market. The Sponsor has been advised by the Underwriters that the
Underwriters intend to make a market in the Offered Certificates but are not
obligated to do so and may discontinue market making at any time without
notice. No assurance can be given as to the liquidity of the trading market
for the Offered Certificates.
Citibank, N.A. is an affiliate of the Sponsor. Proceeds to the Sponsor
from the sale of the Offered Certificates, before deducting expenses payable
by the Sponsor, will be an amount equal to approximately ________% of the
initial aggregate Certificate Balance of the Class A, Class B, Class C, Class
D, Class E, Class F and Class G Certificates, plus accrued interest on all the
Offered Certificates, before deducting expenses payable by the Sponsor.
S-111
<PAGE>
In connection with the offering, the Underwriters may purchase and sell
the Offered Certificates in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover short
positions created by the Underwriters in connection with the offering.
Stabilizing transactions consist of certain bids or purchases for the purpose
of preventing or arresting a decline in the market price of the Offered
Certificates; and short positions created by the Underwriters involve the sale
by the Underwriters of a greater number of Offered Certificates than they are
required to purchase from the Sponsor in the offering. The Underwriters also
may impose a penalty bid, whereby selling concessions allowed to
broker-dealers in respect of the Offered Certificates sold in the offering may
be reclaimed by the Underwriters if such Offered Certificates are repurchased
by the Underwriters in stabilizing or covering transactions. These activities
may stabilize, maintain or otherwise affect the market price of the Offered
Certificates, which may be higher than the price that might otherwise prevail
in the open market; and these activities, if commenced, may be discontinued at
any time. These transactions may be effected in the over-the-counter market or
otherwise.
The Sponsor has agreed to indemnify each Underwriter and each person, if
any, who controls each Underwriter within the meaning of Section 15 of the
Securities Act against, or make contributions to each Underwriter and each
such controlling person with respect to, certain liabilities, including
certain liabilities under the Securities Act. Each of the Mortgage Loan
Seller, Goldman Sachs Mortgage and AMRESCO Capital has agreed to indemnify the
Sponsor, its officers and directors, the Underwriters, and each person, if
any, who controls the Sponsor or either Underwriter within the meaning of
Section 15 of the Securities Act, with respect to its respective liabilities,
including certain liabilities under the Securities Act, relating solely to its
respective Mortgage Loans.
LEGAL MATTERS
Certain legal matters will be passed upon for the Sponsor by Sidley &
Austin, New York, New York and by Stephen E. Dietz, as an Associate General
Counsel of Citibank, N.A., for the Underwriters by Cadwalader, Wickersham &
Taft, New York, New York and for AMRESCO Capital by Andrews & Kurth LLP,
Washington, D.C. Mr. Dietz owns or has the right to acquire a number of shares
of common stock of Citicorp equal to less than .01% of the outstanding common
stock of Citicorp.
RATINGS
It is a condition to their issuance that the Offered Certificates receive
the credit ratings indicated below from Standard & Poor's Ratings Services, a
Division of the McGraw-Hill Companies, Inc. ("S&P") and/or Fitch IBCA, Inc.
("Fitch"; and, together with S&P, the "Rating Agencies"):
<TABLE>
<CAPTION>
CLASS S&P FITCH
- -------------- -----------------
<S> <C> <C>
Class A-1 ..... AAA AAA
Class A-2 ..... AAA AAA
Class X ....... AAAr AAA
Class B ....... AA AA
Class C ....... A A+
Class D ....... A- A
Class E ....... BBB+ BBB+
Class F........ BBB BBB
Class G........ NR BBB-
</TABLE>
The ratings of the Offered Certificates address the likelihood of the
timely receipt by holders thereof of all payments of interest to which they
are entitled on each Distribution Date and, except in the case of the Class X
Certificates, the ultimate receipt by holders thereof of all payments of
principal to which they are entitled by the Distribution Date in March 2030
(the "Rated Final Distribution Date"). The ratings take into consideration the
credit quality of the Mortgage Pool, structural and legal aspects associated
with the Certificates, and the extent to which the payment stream from the
Mortgage Pool is adequate to make payments of principal and/or interest, as
applicable, required under the Offered Certificates. The
S-112
<PAGE>
ratings of the Offered Certificates do not, however, represent any
assessments of (i) the likelihood or frequency of voluntary or involuntary
principal prepayments on the Mortgage Loans, (ii) the degree to which such
prepayments might differ from those originally anticipated, (iii) whether and
to what extent Prepayment Premiums will be collected on the Mortgage Loans in
connection with such prepayments or the corresponding effect on yield to
investors, or (iv) whether and to what extent Excess Interest will be
collected on the Hyper-Amortization Loans. Also, a security rating does not
represent any assessment of the yield to maturity that investors may
experience or the possibility that the Class X Certificateholders might not
fully recover their investment in the event of rapid prepayments and/or other
liquidations of the Mortgage Loans. In general, the ratings address credit
risk and not prepayment risk. As described herein, the amounts payable with
respect to the Class X Certificates consist only of interest (and, to the
extent described herein, may consist of a portion of the Prepayment Premiums
actually collected on the Mortgage Loans). If the entire pool were to prepay
in the initial month, with the result that the Class X Certificateholders
receive only a single month's interest and thus suffer a nearly complete loss
of their investment, all amounts "due" to such Certificateholders will
nevertheless have been paid, and such result is consistent with the ratings
received on the Class X Certificates. The Notional Amount upon which interest
is calculated with respect to the Class X Certificates is subject to
reduction in connection with each reduction in the Certificate Balance of a
Class of Sequential Pay Certificates, whether as a result of principal
payments or the allocation of Realized Losses and Additional Trust Fund
Expenses. The ratings on the Class X Certificates do not address the timing
or magnitude of reduction of such Notional Amount, but only the obligation to
pay interest timely on such Notional Amount as so reduced from time to time.
Accordingly, the ratings on the Class X Certificates should be evaluated
independently from similar ratings on other types of securities.
There is no assurance that any rating assigned to the Offered Certificates
by a Rating Agency will not be downgraded, qualified or withdrawn by such
Rating Agency, if, in its judgment, circumstances so warrant. There can be no
assurance as to whether any rating agency not requested to rate the Offered
Certificates will nonetheless issue a rating to any Class thereof and, if so,
what such rating would be. A rating assigned to any Class of Offered
Certificates by a rating agency that has not been requested by the Sponsor to
do so may be lower than the ratings assigned thereto by S&P and/or Fitch.
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating agency. See "Risk Factors --
Limited Nature of Credit Ratings" in the Prospectus.
S-113
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<CAPTION>
<S> <C>
Accrued Certificate Interest ........................ S-75
Actual/360 Basis .................................... S-15
Actual/360 Mortgage Loans ........................... S-15
Actual/365 Basis .................................... S-15
Actual/365 Mortgage Loan ............................ S-15
Additional Trust Fund Expenses ...................... S-20, S-79
Additional Warranting Parties ....................... S-11
Administrative Fee Rate ............................. S-70
Administrative Fees ................................. S-70, S-86
Advances ............................................ S-62
AMRESCO Capital ..................................... S-3, S-11, S-18
AMRESCO Mortgage Loans .............................. S-3, S-18
Anticipated Repayment Date .......................... S-15
Appraisal Reduction Amount .......................... S-80, S-81
Assumed Final Distribution Date ..................... S-3
Assumed Monthly Payment ............................. S-26, S-76
Assumed Monthly Payments ............................ S-77
Available Distribution Amount ....................... S-22, S-71
Balloon Loans ....................................... S-15
Balloon Payment ..................................... S-15, S-46
Certificate Balance ................................. S-1
Certificate Owner ................................... S-12
Certificate Registrar ............................... S-69
Certificateholders .................................. S-4, S-18
Certificates ........................................ S-1, S-10
Citi Mortgage Loans ................................. S-3, S-18
Class ............................................... S-1, S-10
Class A Certificates ................................ S-1, S-10
Code ................................................ S-30
Collection Period ................................... S-71
Commercial Loan ..................................... S-44
Commercial Mortgaged Property ....................... S-44
Controlling Class ................................... S-29, S-35, S-67
Corporate Trust Office .............................. S-85
Corrected Mortgage Loan ............................. S-58
CRIIMI MAE .......................................... S-59
Cross-Collateralized Mortgage Loans ................. S-12
Cut-off Date ........................................ S-11, S-43
Cut-off Date Balance ................................ S-12, S-43
Default Interest .................................... S-61
Defeasance Collateral ............................... S-17, S-47
Defeasance Loans .................................... S-17, S-47
Definitive Certificate .............................. S-12
Delivery Date ....................................... S-11
Determination Date .................................. S-11, S-71
Discount Rate ....................................... S-77
Discount Rate Fraction .............................. S-26, S-77
Distributable Certificate Interest .................. S-24, S-75
Distribution Date ................................... S-4, S-11, S-71
Distribution Date Statement ......................... S-81
DTC ................................................. S-12
S-114
<PAGE>
Due Date .............................................. S-14
ERISA ................................................. S-31, S-108
Excess Interest ....................................... S-16
Excess Interest Rate .................................. S-15
Excluded Plan ......................................... S-109
Exemption-Favored Parties ............................. S-108
Exemptions ............................................ S-31, S-108
FIRREA ................................................ S-50
Fitch ................................................. S-3, S-32, S-112
Form 8-K .............................................. S-56
Goldman Mortgage Loans ................................ S-4, S-18
Goldman, Sachs ........................................ S-108
Goldman Sachs Mortgage ................................ S-4, S-11, S-18
Historical Loan Modification Report ................... S-82
Historical Loss Report ................................ S-82
Hyper-Amortization Loan ............................... S-15
Hyper-Amortization Loans .............................. S-46
Hyper-Amortization Payments ........................... S-16, S-46
Initial Pool Balance .................................. S-3, S-12
Interest Accrual Period ............................... S-24, S-75
Interested Person ..................................... S-65
IRS ................................................... S-105
LaSalle ............................................... S-85
Liquidation Fee ....................................... S-61
Liquidation Fee Rate .................................. S-61
Lock-out Period ....................................... S-16
Major Tenants ......................................... S-48
Master Servicer ....................................... S-58
Master Servicing Fee .................................. S-60
Master Servicing Fee Rate ............................. S-60
Maturity Assumptions .................................. S-90
Modified Mortgage Loan ................................ S-81
Monthly Payments ...................................... S-14
Moody's ............................................... S-109
Mortgage .............................................. S-12
Mortgage Loan Schedule ................................ S-53
Mortgage Loan Seller .................................. S-3, S-18
Mortgage Loans ........................................ S-3, S-12, S-43
Mortgage Note ......................................... S-12
Mortgage Pool ......................................... S-3
Mortgage Rate ......................................... S-14
Mortgaged Property .................................... S-12
Multifamily Loan ...................................... S-43
Multifamily Mortgaged Property ........................ S-43
Net Aggregate Prepayment Interest Shortfall ........... S-75
Net Mortgage Rate ..................................... S-21, S-70
Nonrecoverable Advances ............................... S-80
Nonrecoverable P&I Advance ............................ S-80
Nonrecoverable Servicing Advance ...................... S-63
Notional Amount ....................................... S-1, S-20
Offered Certificates .................................. S-1, S-10
OID Regulations ....................................... S-105
Open Period ........................................... S-16
S-115
<PAGE>
Operating Statement Analysis ........................ S-83
Participants ........................................ S-68
Party in Interest ................................... S-109
Pass-Through Rate ................................... S-1
Permitted Encumbrances .............................. S-54
Permitted Investments ............................... S-60
P&I Advance ......................................... S-79
Plan ................................................ S-31
Pooling Agreement ................................... S-19
Prepayment Interest Excess .......................... S-60
Prepayment Interest Shortfall ....................... S-60
Prepayment Premium .................................. S-16
Prepayment Premium Period ........................... S-16
Prepayment Premiums ................................. S-4
Principal Allocation Fraction ....................... S-27
Principal Distribution Amount ....................... S-24, S-76
Private Certificates ................................ S-10
PTCE 95-60 .......................................... S-110
Purchase Price ...................................... S-53
Rated Final Distribution Date ....................... S-3, S-112
Rating Agencies ..................................... S-3, S-32, S-112
Realized Losses ..................................... S-20
Record Date ......................................... S-71
Reimbursement Rate .................................. S-80
Related Proceeds .................................... S-62
Release Date ........................................ S-47
REMIC ............................................... S-5, S-105
REMIC Administrator ................................. S-10, S-86
REMIC I ............................................. S-5, S-105
REMIC II ............................................ S-5, S-105
REMIC III ........................................... S-5, S-105
REMIC Regular Certificates .......................... S-1, S-10
REMIC Residual Certificates ......................... S-1, S-10
REO Extension ....................................... S-65
REO Property ........................................ S-26, S-57
REO Status Report ................................... S-82
REO Tax ............................................. S-107
Required Appraisal Date ............................. S-80
Required Appraisal Loan ............................. S-80
Restricted Group .................................... S-109
Revised Rate ........................................ S-15
Senior Certificates ................................. S-4, S-72
Sequential Pay Certificates ......................... S-1, S-10
Servicing Advances .................................. S-62
Servicing Standard .................................. S-57
Servicing Transfer Event ............................ S-57
Settlement Date ..................................... S-90
SMMEA ............................................... S-33
S&P ................................................. S-3, S-32, S-112
Special Servicer Loan Status Report ................. S-83
Special Servicing Fee ............................... S-60
Special Servicing Fee Rate .......................... S-60
Specially Serviced Mortgage Loan .................... S-57
S-116
<PAGE>
Sponsor .................................................. S-3
Standby Fee Rate ......................................... S-60
Stated Principal Balance ................................. S-70
Subordinate Certificates ................................. S-4, S-72
Sub-Servicer ............................................. S-59
Sub-Servicing Agreement .................................. S-59
Trust .................................................... S-3, S-19
Trust Fund ............................................... S-3, S-19
Trustee Fee .............................................. S-86
Trustee Reports .......................................... S-81
Voting Rights ............................................ S-85
Workout Fee .............................................. S-61
Workout Fee Rate ......................................... S-61
Yield and Maturity Considerations ........................ S-9
</TABLE>
S-117
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
The schedule and tables appearing in this Annex A set forth certain
information with respect to the Mortgage Loans and Mortgaged Properties.
Unless otherwise indicated, such information is presented as of the Cut-off
Date. The statistics in such schedule and tables were derived, in many cases,
from information and operating statements furnished by or on behalf of the
respective borrowers. Such information and operating statements were generally
unaudited and have not been independently verified by the Sponsor or the
Underwriters or any of their respective affiliates or any other person.
For purposes of the Prospectus Supplement, including the schedule and
tables in this Annex A, the indicated terms shall have the following meanings:
1. "Underwriting NOI" or "U/W NOI" as used herein with respect to any
Mortgaged Property means an estimate, made at origination of the related
Mortgage Loan, of the total cash flow anticipated to be available for annual
debt service on such Mortgage Loan, calculated as the excess of U/W Revenues
over U/W Expenses, each of which was generally derived in the following
manner:
(i) "Underwriting Revenues" or "U/W Revenues" were generally
assumed to equal (subject to the assumptions and adjustments
specified in the following three sentences): (a) the amount of gross
rents (in the case of the Multifamily Mortgaged Properties) received
during the latest full calendar year (on a rolling 12-month basis, or
annualized or estimated in certain cases); (b) annual contractual
base rents (in the case of the Commercial Mortgaged Properties other
than the health care and hotel/motel Mortgaged Properties) that
either are annualized based on leases in effect as reflected on a
rent roll provided by the borrower in connection with the origination
of the related Mortgage Loan or are based on a prior 12 month period;
and (c) annual revenues consistent with historical operating trends
and market and competitive conditions, in the case of health care and
hotel/motel Mortgaged Properties. Such Underwriting Revenues were
generally modified by (x) assuming that the occupancy rate for the
Mortgaged Property was consistent with the relevant market if such
was less than the occupancy rate reflected in the most recent rent
roll or operating statements, as the case may be, furnished by the
related borrower, and (y) in the case of retail, office and
industrial Mortgaged Properties, assuming a level of reimbursements
from tenants consistent with the terms of the lease or historical
trends at the property, and in certain cases, assuming that a
specified percentage of rent will become defaulted or otherwise
uncollectible. In addition, in the case of retail, office and
industrial Mortgaged Properties, upward adjustments may have been
made with respect to such revenues to account for all or a portion of
the rents provided for under any new leases scheduled to take effect
later in the year. Also, in the case of certain Mortgaged Properties
that are operated as nursing home or hotel/motel properties and are
subject to an operating lease with a single operator, Underwriting
Revenues were calculated as described above based on revenues
received by the operator rather than rental payments received by the
related borrower under the operating lease; provided that such rental
payments are sufficient to pay debt service on the related Mortgage
Loan.
Underwriting Revenues generally include: (w) for the
Multifamily Mortgaged Properties, rental and other revenues; (x) for
the Commercial Mortgaged Properties (other than the health care
related and hotel/motel Mortgaged Properties), base rent (less
mark-to-market adjustments in some cases), percentage rent, expense
reimbursements and other revenues; (y) for the health care Mortgaged
Properties, resident charges, Medicaid and Medicare payments, and
other revenues; and (z) for the hotel/motel Mortgaged Properties,
guest room rates, food and beverage charges, telephone charges and
other revenues.
(ii) "Underwriting Expenses" or "U/W Expenses" were
generally assumed to be equal to historical annual expenses reflected
in the operating statements and other information furnished by the
borrower, except that such expenses were generally modified by (a) if
there was no management fee or a below market management fee,
assuming that a management fee was payable with respect to the
Mortgaged Property in an amount approximately equal to between 0%
A-1
<PAGE>
and 10% of assumed gross revenues for the year, (b) adjusting certain
historical expense items upwards or downwards to amounts that reflect
industry norms for the particular type of property and/or taking into
consideration material changes in the operating position of the
related Mortgaged Property (such as newly signed leases and market
data) and (c) adjusting for non-recurring items (such as capital
expenditures) and tenant improvement and leasing commissions, if
applicable (in the case of certain retail, office and industrial
Mortgaged Properties, adjustments may have been made to account for
tenant improvements and leasing commissions at costs consistent with
historical trends or prevailing market conditions and, in other
cases, operating expenses did not include such costs).
Underwriting Expenses generally include salaries and wages,
the costs or fees of utilities, repairs and maintenance, marketing,
insurance, management, landscaping, security (if provided at the
Mortgaged Property) and the amount of real estate taxes, general and
administrative expenses, ground lease payments, and other costs but
without any deductions for debt service, depreciation and
amortization or capital expenditures therefor (except as described
above). In the case of certain retail, office and/or industrial
Mortgaged Properties, Underwriting Expenses may have included leasing
commissions and tenant improvements. In the case of hotel/motel
Mortgaged Properties, Underwriting Expenses included such
departmental expenses as guest rooms, food and beverage, telephone
bills, and rental and other expenses, and such undistributed
operating expenses as general and administrative, marketing and
franchise fee. In the case of health care Mortgaged Properties,
Underwriting Expenses included routine and ancillary contractual
expenses, nursing expenses, dietary expenses, laundry/housekeeping
expenses, activities/social service expenses, equipment rental
expenses and other expenses.
The historical expenses with respect to any Mortgaged Property were
generally obtained (x) from operating statements relating to the latest full
calendar year, (y) by analyzing and annualizing the amount of expenses for
previous partial periods for which operating statements were available, with
certain adjustments for items deemed inappropriate for annualization, and/or
(z) by reviewing the amounts of expenses for periods prior to the latest full
calendar year where such information was available.
The management fees used in calculating Underwriting NOI differ in
many cases from the management fees provided for under the loan documents for
the Mortgage Loans. Further, actual conditions at the Mortgaged Properties
will differ, and may differ substantially, from the assumed conditions used in
calculating Underwriting NOI. In particular, the assumptions regarding tenant
vacancies, tenant improvements and leasing commissions, future rental rates,
future expenses and other conditions if and to the extent used in calculating
Underwriting NOI for a Mortgaged Property, may differ substantially from
actual conditions with respect to such Mortgaged Property. There can be no
assurance that the actual costs of reletting and capital improvements will not
exceed those estimated or assumed in connection with the origination or
purchase of the Mortgage Loans.
In some cases, "Underwriting NOI" or "U/W NOI" describes the cash
flow available before deductions for capital expenditures such as tenant
improvements, leasing commissions and structural reserves. In most cases,
"Underwriting NOI" or "U/W NOI" has been calculated without including U/W
Reserves or any other reserves among Underwriting Expenses. Had such reserves
been so included, "Underwriting NOI" or "U/W NOI" would have been lower. Even
in those cases where such "reserves" were so included, no cash may have been
actually escrowed. No representation is made as to the future net cash flow of
the properties, nor is "Underwriting NOI" or "U/W NOI" set forth herein
intended to represent such future net cash flow.
Underwriting NOI and the Underwriting Revenues and Underwriting
Expenses used to determine Underwriting NOI for each Mortgaged Property are
derived from information furnished by the respective borrowers. Net income for
a Mortgaged Property as determined under generally accepted accounting
principles ("GAAP") would not be the same as the stated Underwriting NOI for
such Mortgaged Property as set forth in the following schedule or tables. In
addition, Underwriting NOI is not a substitute for or comparable to operating
income as determined in accordance with GAAP as a measure of the results of a
property's operations or a substitute for cash flows from operating activities
determined in accordance with GAAP as a measure of liquidity.
A-2
<PAGE>
2. "Underwriting NCF", "Underwritten NCF" or "U/W NCF" means, with
respect to any Mortgaged Property, the "Underwriting NOI" for such Mortgaged
Property reduced by capital expenditures, replacement reserves, tenant
improvements and leasing commissions.
3. "Underwriting NOI Debt Service Coverage Ratio", "Underwriting NOI
DSCR" or "U/W NOI DSCR" as used herein with respect to any Mortgage Loan means
(a) the Underwriting NOI for the related Mortgaged Property or Properties,
divided by (b) the Annual Debt Service for such Mortgage Loan.
4. "Underwriting Debt Service Coverage Ratio", "Underwriting DSCR" or
"U/W DSCR" as used herein with respect to any Mortgage Loan means (a) the
Underwriting NCF for the related Mortgaged Property or Properties, divided by
(b) the Annual Debt Service for such Mortgage Loan.
5. "1996 NCF" means, with respect to any Mortgaged Property, the net
operating income derived therefrom for 1996 (equal to 1996 Revenues less 1996
Expenses) that was available for debt service, as established by information
provided by the related borrower, except that in certain cases such net
operating income has been adjusted by removing certain non-recurring expenses
and revenue or by certain other normalizations. 1996 NCF does not necessarily
reflect accrual of certain costs such as capital expenditures and leasing
commissions and does not reflect non-cash items such as depreciation or
amortization. In some cases, capital expenditures and non-recurring items may
have been treated by a borrower as an expense but were deducted from 1996
Expenses to reflect normalized 1996 NCF. The Sponsor has not made any attempt
to verify the accuracy of any information provided by each borrower or to
reflect changes in net operating income that may have occurred since the date
of the information provided by each borrower for the related Mortgaged
Property. 1996 NCF was not necessarily determined in accordance with GAAP.
Moreover, 1996 NCF is not a substitute for net income determined in accordance
with GAAP as a measure of the results of a Mortgaged Property's operations or
a substitute for cash flows from operating activities determined in accordance
with GAAP as a measure of liquidity and in certain cases may reflect
partial-year annualizations.
(i) "1996 Revenues" are the gross revenues received in
respect of a Mortgaged Property for the year ended December 31, 1996
(or annualized or estimated in certain cases) or for a fiscal year
primarily overlapping with calendar year 1996, as reflected in the
operating statements and other information furnished by the related
borrower, and such revenues generally include: (a) for the
Multifamily Mortgaged Properties, gross rental and other revenues;
(b) for the retail, office and industrial Mortgaged Properties, base
rent, percentage rent, expense reimbursements and other revenues; (c)
for the health care Mortgaged Properties, resident charges, Medicaid
and Medicare payments and other revenues; and (d) for the hotel/motel
Mortgaged Properties, guest room, food and beverage, telephone and
other revenues. In addition, in the case of certain Mortgaged
Properties that are operated as nursing homes or hotels and are
subject to an operating lease with a single operator, 1996 Revenues
were calculated as described above based on revenues received by the
operators rather than rental payments received by the related
borrower under the operating lease.
(ii) "1996 Expenses" are the operating expenses incurred for
a Mortgaged Property for the year ended December 31, 1996 (or
annualized or estimated in certain cases) or for a fiscal year
primarily overlapping with calendar year 1996, as reflected in the
operating statements and other information furnished by the related
borrower, and such expenses generally include salaries and wages, the
costs or fees of utilities, repairs and maintenance, marketing,
insurance, management, landscaping, security (if provided at the
Mortgaged Property) and the amount of real estate taxes, general and
administrative expenses, ground lease payments, and other costs (but
without any deductions for debt service, depreciation and
amortization or capital expenditures or reserves therefor). In the
case of certain retail, office and/or industrial Mortgaged
Properties, 1996 Expenses may have included leasing commissions and
tenant improvements. In the case of hotel/motel Mortgaged Properties,
1996 Expenses included such departmental expenses as guest room, food
and beverage, telephone, and rental and other expenses, and such
undistributed operating expenses as marketing and franchise fees. In
the case of health care Mortgaged Properties, 1996 Expenses included
routine and ancillary contractual expenses, nursing expenses, dietary
expenses, laundry/ housekeeping, activities/social service expenses,
equipment rental expenses and other expenses.
A-3
<PAGE>
6. "1996 Debt Service Coverage Ratio" or "1996 DSCR" means, with
respect to any Mortgage Loan, (a) the 1996 NCF for the related Mortgaged
Property or Properties, divided by (b) the Annual Debt Service for such
Mortgage Loan.
7. "1995 NCF" means, with respect to any Mortgaged Property, the net
operating income derived therefrom for 1995, equal to 1995 Revenues less 1995
Expenses and calculated in a manner consistent with 1996 NCF.
(i) "1995 Revenues" are the revenues for a Mortgaged
Property for the year ended December 31, 1995 or for a fiscal year
primarily overlapping with calendar 1995, calculated in a manner
consistent with 1996 Revenues.
(ii) "1995 Expenses" are the actual expenses incurred for a
Mortgaged Property for the year ended December 31, 1995 or for a
fiscal year primarily overlapping with calendar 1995, calculated in a
manner consistent with 1996 Expenses.
8. "1995 Debt Service Coverage Ratio" or "1995 DSCR" means, with
respect to any Mortgage Loan, (a) the 1995 NCF for the related Mortgaged
Property or Properties, divided by (b) the Annual Debt Service for such
Mortgage Loan.
9. "Annual Debt Service" means, for any Mortgage Loan, twelve times
the amount of the Monthly Payment under such Mortgage Loan as of the Cut-off
Date.
10. "Appraisal Value" means, for any Mortgaged Property, the
appraiser's value as stated in the appraisal available to the Sponsor as of
the date specified on the schedule.
11. "Cut-off Date Loan-to-Value Ratio" or "Cut-off Date LTV Ratio"
means, with respect to any Mortgage Loan, the Cut-off Date Balance of such
Mortgage Loan divided by the Appraisal Value of the related Mortgaged
Property.
12. "Maturity Date/ARD Loan-to-Value Ratio" means, with respect to
any Balloon Loan or Hyper-Amortization Loan, the related Anticipated Loan
Balance at Scheduled Maturity Date/ARD, divided by the Appraisal Value of the
related Mortgaged Property.
13. "Leasable Square Footage" or "NSF" means, in the case of a
Mortgaged Property operated as a retail center, office complex or industrial
facility, the square footage of the net leasable area.
14. "Units", "Rooms" and "Beds", respectively, mean: (i) in the case
of a Mortgaged Property operated as multifamily housing, the number of
apartments, regardless of the size of or number of rooms in such apartment
(referred to in the schedule as "Units") and, in the case of a Mortgaged
Property operated as a mobile home park, the number of pads (also referred to
in the schedule as "Units"); (ii) in the case of a Mortgaged Property operated
as a hotel or motel, the number of rooms (referred to in the schedule as
"Rooms"); and (iii) in the case of a Mortgaged Property operated as a health
care facility, the number of beds (referred to in the schedule as "Beds").
15. "SF" means, with respect to any Commercial Mortgaged Property,
square footage.
16. "U/W Reserves" means: (i) in the case of a Mortgaged Property
operated as a retail center, office complex or industrial facility, on-going
reserves required to be maintained on a net leasable area basis; (ii) in the
case of a Mortgaged Property operated as multifamily housing or a mobile home
park, on-going reserves required to be maintained on a per Unit basis; (iii)
in the case of a Mortgaged Property operated as a hotel or motel calculated as
a percentage of U/W Revenues; and (iv) in the case of a Mortgaged Property
operated as a health care facility, on-going reserves required to be
maintained on a per Bed basis; however, in each case, actual reserves may be
less than the amount of required reserves or no reserves may have been
escrowed.
17. "Occupancy %" or "Occupancy Percent" means the percentage of
Leasable Square Footage or Total Units/Rooms/Beds/Pads, as the case may be, of
the Mortgaged Property that was occupied as of a specified date, as specified
by the borrower or as derived from the Mortgaged Property's rent rolls, which
generally are calculated by physical presence or, alternatively, collected
rents as a percentage of potential rental revenues.
A-4
<PAGE>
18. "Administrative Fee Rate" means the sum of the Master Servicing
Fee Rate (including the per annum rates at which the monthly sub-servicing fee
is payable to the related Sub-Servicer (the "Sub-Servicing Fee Rate")), plus
the Standby Fee Rate, plus the per annum rate applicable to the calculation of
the Trustee Fee.
19. "Related Loans" means two or more Mortgage Loans with respect to
which the related Mortgaged Properties are either owned by the same entity or
owned by two or more entities controlled by the same key principals.
20. "Anticipated Loan Balance at Scheduled Maturity Date/ARD" means,
with respect to any Mortgage Loan, the balance due at maturity or, in the case
of a Hyper-Amortization Loan, the related Anticipated Repayment Date pursuant
to the payment schedule for such Mortgage Loan and assuming no prepayments,
defaults or extensions.
21. "UPB" means, with respect to any Mortgage Loan, its unpaid
principal balance.
22. "YM" means, with respect to any Mortgage Loan, a yield maintenance
premium.
23. "FREE" means, with respect to any Mortgage Loan, that such
Mortgage Loan may be voluntarily prepaid without a Prepayment Premium.
24. "Hyperamortizing" means Hyper-Amortization Loan.
25. "Fully Amortizing" means fully amortizing Mortgage Loan.
26. "Balloon" means Balloon Loan.
27. "Scheduled Maturity Date/ARD" means, with respect to any Mortgage
Loan, the date specified in the related Mortgage Note as its stated maturity
date or, with respect to any Hyper-Amortization Loan, its Anticipated
Repayment Date.
28. "Prepayment Provisions" for each Mortgage Loan are: "LO" means
the duration of lockout period; " greater than 1% or YM" means the greater of
the applicable yield maintenance charge and one percent of the outstanding
principal balance at such time; "YM" means the yielded maintenance charge. The
number in parenthesis is the number of months for which the related call
protection provision is in effect, exclusive of the maturity date for
calculation purpose only. The prepayment provision for each of the Mortgage
Loans identified by loan numbers 400028275, 400028297, 655311-7, 655313-3,
655315-9, 655316-2 and 655321-4 does not equal the term of such Mortgage Loan
because the first payment date is less than one month after the origination
date.
A-5
<PAGE>
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
<TABLE><CAPTION>
CONTROL LOAN LOAN
NUMBER NUMBER CONTRIBUTOR PROPERTY NAME PROPERTY ADDRESS
<S> <C> <C> <C> <C>
1 R0364 GSMC Boulevard Mall 730 Alberta Drive
2 Gold1 GSMC (Archon) 200 Market Building 200 S. W. Market Street
3 655666-4 Citicorp Montgomery Park 2701 NW Vaughn Street
4 655595-3 Citicorp Wheatlands 12225 Dearfield Parkway
5 400029136 Amresco Pembroke Landings 10101 SW 14th Street
- -----------------------------------------------------------------------------------------------------------------------------------
6 400029127 Amresco TRW Aggregate
400029127A Amresco TRW Building 2200-2250 Park Place
400029127B Amresco TRW Buildings 1700 Rosecrans Avenue
7 O0194 GSMC (CPC) TASC Building 55 Walkers Brook Drive
8 400028301 Amresco Southern Center 10105-10463 Southern Boulevard
9 400028226 Amresco Tara Hills Apartments 2130 West Crescent Avenue
10 400027581 Amresco The Springs Aggregate
400027581A Amresco Spring Oaks Apartments 3756 Wynn Road
400027581B Amresco Spring Garden Apartments 3800 Wynn Road
400027581C Amresco Spring Meadow Apartments 3880 Wynn Road
400027581D Amresco Spring Palm Apartments 3663 Valley View Drive
- -----------------------------------------------------------------------------------------------------------------------------------
11 R0169 GSMC (CPC) Town Square Shopping Center 1445 Towne Square Boulevard N.W.
12 655653-8 Citicorp Hillsborough Industrial Portfolio NEQ State Road 6 & Route 206
13 400029115 Amresco 1818 "N" Street, N.W. 1818 "N" Street, N.W.
14 655582-7 Citicorp Spring Valley Shopping Center 481-699 Sweetwater & 8688-8888 Jama
15 400028227 Amresco Shops at Sterling Ponds I 33201/33801 Van Dyke Road
- -----------------------------------------------------------------------------------------------------------------------------------
16 M0275 GSMC (CPC) Park Laureate Apartments 2050 Stony Brook Drive
17 R0011 GSMC (CPC) McFarland Mall 900 Skyland Boulevard East
18 400029114 Amresco WaterStone Shopping Center 9891 Waterstone Blvd
19 655607-5 Citicorp Residence Inn - Anaheim 1700 S. Clementine Street
20 L0131 GSMC (CPC) Holiday Inn Conference Center 2480 Jonathan Moore Pike
- -----------------------------------------------------------------------------------------------------------------------------------
21 655543-2 Citicorp Executive Parkway 1200,1221,1400,1600 Executive Place
22 400028275 Amresco Cottonwood / Tri-Valley Aggregate
400028275A Amresco Cottonwood Plaza 1100 "C" Highway 260
400028275B Amresco Tri Valley Plaza 1355 East Florence Street
23 400028240 Amresco Lake Walden Square State Road 39 and Alexander Street
24 655583-0 Citicorp Summer Brook Apartments 1553 Oro Vista Road
25 655641-5 Citicorp Landmark Apartments 16330 NE 11th Street
- -----------------------------------------------------------------------------------------------------------------------------------
26 O0201 GSMC (CPC) Somerset Exec. Square I & II One and Two Executive Drive
27 O0061 GSMC (CPC) SunTrust Building 801 Laurel Oak Drive
28 400028264 Amresco Chestnut Hill Apartments 7500 Bellerive Drive
29 L0076 GSMC (CPC) Monticello Inn 119-139 Ellis Street
30 655612-7 Citicorp Central Plant Land 2052 Century Park East
- -----------------------------------------------------------------------------------------------------------------------------------
31 400028285 Amresco Century Plaza 10630-10632 Little Patuxent Parkway
32 655598-2 Citicorp Web Foods Facility 144-06 94th Avenue
33 400028292 Amresco Fontana Shopping Center NWC of East 51st and South Mem
34 400028302 Amresco Fourth Ward Square Apartments 501 N. Graham Street
35 655643-1 Citicorp Memphis Medical 1068 Cresthaven Road
- -----------------------------------------------------------------------------------------------------------------------------------
36 655313-3 Citicorp Brandon Oaks Apartments 800 Vista Valet Drive
37 400028293 Amresco Duck Creek Apartments 2038 South Vaughn Way
38 400028277 Amresco South Park Centre 12651 South Dixie Highway
39 400029130 Amresco Edgebrook Shopping Center 1639 North Alphine Road
40 400029132 Amresco Manchester Square Shopping Ctr 8108-8316 East 61st Street
- -----------------------------------------------------------------------------------------------------------------------------------
41 400028268 Amresco Schooner Cove II Apartments 5050 Schooner Cove Boulevard
42 400028237 Amresco Timmerman Plaza 10300 West Silver Spring Drive
43 400028230 Amresco 1650 King Street Office Building 1650 King Street
44 655384-5 Citicorp Page Marriott 600 Clubhouse Drive
45 655550-0 Citicorp Eagle River Village 32700 Highway 6
- -----------------------------------------------------------------------------------------------------------------------------------
46 655549-0 Citicorp Microware System Building 1500 N.W. 118th Street
47 400028265 Amresco Parkway Apartments 6601 Harbor Town Drive
48 655557-1 Citicorp Erindale Center 5505-5781 N. Acadamy Boulevard
49 655569-4 Citicorp Mahopac Village Center Route 6 & Miller Road
50 655516-0 Citicorp Residence Inn Marriot 48 McPrice Court
- -----------------------------------------------------------------------------------------------------------------------------------
51 400028252 Amresco Danville Manor Shopping Center 1560 Houstonville Road
52 400028216 Amresco Parkwood Village Shopping Center 104 Harwood Road
53 400028297 Amresco Woodman Village Apartments 6935 Paradise Valley Rd.
54 400028283 Amresco Windridge Townhomes 6700 Hopeful Road
55 655376-4 Citicorp Eastwood Village 3330 East 33rd Street
- -----------------------------------------------------------------------------------------------------------------------------------
56 655579-1 Citicorp Hampton Inn 7141 South Springs Drive
57 400028289 Amresco Embassy Suites-Portland, Maine 1050 Westbrook Street
58 655668-0 Citicorp Montfort Place 13800 Montfort Drive
59 400028232 Amresco Summit Point Apartments 333 Uvalde Road
60 655316-2 Citicorp Sugar Tree Apartments 8050 South Padre Island Drive
- -----------------------------------------------------------------------------------------------------------------------------------
61 400028243 Amresco Dove Tree Apartments 4515 Gardendale Street
62 655311-7 Citicorp Grove Park 2566 Goliad Road
63 400027583 Amresco King James Office Buildings 24500-24600 Center Ridge Road
64 655366-7 Citicorp Edgewood Terrace/Four Season Apt 220 Edgewood Terrace Drive & 330 4 Seasons
65 400028266 Amresco Coral Club Apartments 5909 Fondren Road
- -----------------------------------------------------------------------------------------------------------------------------------
66 400028241 Amresco Courtyard at Pleasant Run 3250 Pleasant Run Road
67 400029125 Amresco Twin River Apartments 611 Abbington Drive
68 R0126 GSMC (CPC) Southland SC-Addition 6026 South Westnedge Avenue
69 655555-5 Citicorp Econolodge 1076 Williston Road
70 655375-1 Citicorp Wyndham Garden Hotel 4700 South Laburnum Avenue
- -----------------------------------------------------------------------------------------------------------------------------------
71 400028282 Amresco Northloop Plaza Center 2503-2547 Judson Road
72 400028267 Amresco Pine Hill Apartments 307 Holly Drive
73 655525-4 Citicorp Rockwell Apartments 8201 N. Rockwell
74 655662-2 Citicorp Comerica Building 5551 Ridgewood Drive
75 1700020014 GSMC (CPC) 642 Harrison Street 642 Harrison Street
- -----------------------------------------------------------------------------------------------------------------------------------
76 400028251 Amresco Eastbrooke Apartments 11900 East 13 Mile Road
77 655655-4 Citicorp Montgomery Commons Route 206 & Applegate Road
78 655391-3 Citicorp Durango Holiday Inn 800 Camino Del Rio
79 400028288 Amresco River Gate / Oak Ridge Plaza Aggregate
400028288A Amresco River Gate Village Shopping Center Corner of Nova Road/Granada Boulevard
400028288B Amresco Oak Ridge Plaza Shopping Center SWC of Texas Avenue/Oak Ridge
80 655401-9 Citicorp Hill Road Plaza 1111-1221 Hill Road
- -----------------------------------------------------------------------------------------------------------------------------------
81 655566-5 Citicorp 100 Newtown Road 100 Newton Road
82 400028273 Amresco Palm Plaza Shopping Center 7913 NW 2nd Street
83 400028278 Amresco 55 Marietta Street 55 Marietta Street
84 655315-9 Citicorp Cimarron Crossing 9500 Jollyville Road
85 655592-4 Citicorp Mountain View Business Center 465 Fairchild Drive
- -----------------------------------------------------------------------------------------------------------------------------------
86 655526-7 Citicorp Twin Lakes Apartments 6103 NW 63rd Street
87 400029142 Amresco Baywater Apartments 6910 West Waters Avenue
88 655658-3 Citicorp Loews River Run Theatre 16621 Torrence Avenue
89 400028263 Amresco Barrington Apartments 5959 Bonhomme
90 R0216 GSMC (CPC) Southgate Shopping Center 602-1020 South Cass Street
- -----------------------------------------------------------------------------------------------------------------------------------
91 400029146 Amresco Mainland Office Building 10680 Main Street
92 655531-9 Citicorp Sequoia Office R&D 1600 Greenhills Road
93 400029135 Amresco Sharpstown Manor Apartments 7500 Clarewood
94 655600-4 Citicorp Hunters Point Apartments 1442 Hunter Point Drive
95 400028236 Amresco Eastwood Village Apartments 1037 East Lexington Avenue
- -----------------------------------------------------------------------------------------------------------------------------------
96 R0219 GSMC (CPC) Lawrenceburg Shopping Center North Locust Street (US Highway 43)
97 655563-6 Citicorp Forest Hills Apartments 6375 Clough Pike
98 400028262 Amresco Normandy Square Apartments 4410 N. W. 36th Street
99 655418-7 Citicorp Cherryfield Village MHP 16707 South Garfield
100 655606-2 Citicorp Quince Station 5121 Quince Avenue
- -----------------------------------------------------------------------------------------------------------------------------------
101 400028244 Amresco Towne Centre Shopping Center 111-219 Towne Drive
102 400028253 Amresco Beltway Office Park 3737, 3739, 3743 and 3841 Red Bluff Rd.
103 655483-1 Citicorp Windsong Apartments 600 Front Street
104 655321-4 Citicorp The Reserve at Alamo Heights 8446 Country Village Drive
105 655517-3 Citicorp Landmark Crossing 1314 Bridford Parkway
- -----------------------------------------------------------------------------------------------------------------------------------
106 400028248 Amresco Fairfax Medical Building 10721 Main Street
107 655679-0 Citicorp Oxford Square Apartments 1802 W. Jackson Avenue
108 400029133 Amresco The Grove Shopping Center 28961-91 Golden Lantern
109 655527-0 Citicorp Woodoaks Apartments 633 Vandanent Ave.
110 655491-2 Citicorp Airborne Express 15-31 Papetti Plaza
- -----------------------------------------------------------------------------------------------------------------------------------
111 400028254 Amresco Foothill Plaza Shopping Center 1000 Pocatello Creek Rd.
112 400029144 Amresco 6200 LBJ Office Building 6200 LBJ Freeway
113 400028208 Amresco Kingsboro Village Apartments 1401 South Cunningham Street
114 655520-9 Citicorp Concord Apartments 9300 Orchard
115 655589-8 Citicorp Days Inn - Williamsburg 331 Bypass Road
- -----------------------------------------------------------------------------------------------------------------------------------
116 400028287 Amresco Vegas Plaza Shopping Center 2305-2421 East Bonanza Road
117 400028223 Amresco Potomac House Apartments 2830 S.W. 59th Street
118 655588-5 Citicorp Boardwalk Shopping Center 119th & Pacific
119 R0249 GSMC (CPC) Lincoln Park Shopping Center U.S. Highway 231/431
120 655420-0 Citicorp Woodcreek Shopping Center 2017 North Frazier
- -----------------------------------------------------------------------------------------------------------------------------------
121 655605-9 Citicorp Power Laser Facility 1 Kexon Drive
122 400028229 Amresco Ramada Inn - Fairview Heights 6900 North Illinois
123 655667-7 Citicorp Mountain View Park 888 Villa Street
124 655510-2 Citicorp Touhy Plaza 5222 West Touhy Avenue
125 400028296 Amresco 59th Av and Bell Road Center 5901-5981 West Bell Road
- -----------------------------------------------------------------------------------------------------------------------------------
126 655432-3 Citicorp Sunset Rill Apartments 235 Carta Road & 4701 Ashville Hwy
127 655542-9 Citicorp Tidelands Industrial Park 1445,1535,1545 & 1645 Tidelands Avenue
128 655521-2 Citicorp Country Club Apartments 2001 S. Country Road
129 655433-6 Citicorp Northfield Crossing Shopping Center 1623-78 Memorial Boulevard.
130 400028259 Amresco Beechnut Grove Apartments 308 Van Buren Street
- -----------------------------------------------------------------------------------------------------------------------------------
131 400028239 Amresco MacArthur Plaza Shopping Ctr. 8600-8608 North MacArthur Boulevard
132 400028217 Amresco West Market Street Center 815, 825, 845 & 875 West Market Street
133 655350-2 Citicorp Kingston Emporium 99 Fortin Road
134 655427-1 Citicorp Braes Court Apartments 8801 South Braeswood Boulevard
135 400027558 Amresco Corporate Park of Farmington 27003-7,101-3,150 Hills Tech
- -----------------------------------------------------------------------------------------------------------------------------------
136 655512-8 Citicorp Willow Pond Office Building 269 Mt. Hermon Road
137 400028271 Amresco Brookfield Apartments 12021 N. 43rd Avenue
138 655570-4 Citicorp Bolsa Magnolia Retail Center 9039 Bolsa Avenue
139 655414-5 Citicorp Gilmore Apartments 6 South McClean
140 400028295 Amresco Laurel Place One 14405 Laurel Place
- -----------------------------------------------------------------------------------------------------------------------------------
141 400028231 Amresco Almeda Chateau Apartments 10802 Kingspoint Road
142 R0113 GSMC (CPC) Willow Grove Shopping Center 6635-6685 Quince Road
143 400028298 Amresco The Greens Apartments 9301 Newton Drive
144 655657-0 Citicorp Fairlawn Village Apartments 505 E. Fairlawn Drive
145 400028238 Amresco Graham Center 3103 - 3109 Graham Road
- -----------------------------------------------------------------------------------------------------------------------------------
146 655572-0 Citicorp Lafayette Auto Center 2555 Lafayette Street
147 O0246 GSMC (CPC) 140 Ethel Road West 140 Ethel Road West
148 400027549 Amresco Sidney Shopping Plaza 1500-1760 Michigan Street
149 655412-9 Citicorp Hillcrest Apartments 1345 East Raines Road
150 400027550 Amresco Villa Royale Apartments 17103 Imperial Valley Drive
- -----------------------------------------------------------------------------------------------------------------------------------
151 400028299 Amresco Legacy I & II Apartments 40 South 200 East, 200 South 300 East,
9 South 200 East
152 655509-2 Citicorp Coronado Plaza Shopping Center 515 & 615 E. Grand Road
153 400028222 Amresco Willow Rock Plaza Shopping Ctr. 6661-6671 Stanford Ranch Road
154 655683-9 Citicorp PGA Marina 2385 PGA Blvd.
155 400028250 Amresco Imperial Towers Apartments 2825 S. Washington Avenue
- -----------------------------------------------------------------------------------------------------------------------------------
156 655599-5 Citicorp Frankford Plaza 9212 Franklin Avenue
157 400028219 Amresco Manning Shopping Center 100 West Boyce
158 400028218 Amresco Aspen Plaza Shopping Center 861 - 905 East 9400 South
159 400027547 Amresco Carillon Square 1300 South State Street
160 655617-2 Citicorp Brookstone Rest Home 2968 Old Salisbury Road
- -----------------------------------------------------------------------------------------------------------------------------------
161 655554-2 Citicorp Grapevine Town Center 1469 State Highway
162 400029128 Amresco Oasis Townhouse Apartments 16007 Merrill Avenue
163 655434-9 Citicorp Colonial Marketplace Route 25
164 400029131 Amresco Sierra Meadows Plaza 4800-4820 Granvite Drive
165 400029122 Amresco Seaside Village Apartments 4925 Fort Crockett Blvd.
- -----------------------------------------------------------------------------------------------------------------------------------
166 400027580 Amresco Northtown Village Apartments 1231 West US 287 Bypass
167 655421-3 Citicorp 50-60 Franklin 50-60 Franklin Street
168 655656-7 Citicorp Campus View Plaza 1250 Route 28
169 400028290 Amresco Redwood Terrace Apartments 2040 North Redwood Street
170 400028260 Amresco 216 South Jefferson Building 216 South Jefferson Street
- -----------------------------------------------------------------------------------------------------------------------------------
171 400028247 Amresco Lexington Office Building 110 Hartwell Avenue
172 655630-5 Citicorp Park Manor Shopping Center 5037-5081 Park Avenue
173 400027508 Amresco Parkaire Plaza Shopping Center 6729-6749 Airline Drive
174 655435-2 Citicorp Cypress Landing Shopping Center 3002 FM 1960 East
175 655548-7 Citicorp Stonewood Apartments 4209 W. Walnut Street
- -----------------------------------------------------------------------------------------------------------------------------------
176 655419-0 Citicorp Gadsden Square Shopping Center 1509 West Jefferson Street
177 655486-0 Citicorp Soundview Apartments 28425 18th Avenue South
178 400028261 Amresco Comfort Inn - Provo 1555 North Canyon Road
179 400028280 Amresco Lawrenceville Shopping Center 3313 Brunswick Pike
180 400028276 Amresco Tower Square Shopping Center 2111 East Rawson Avenue
- -----------------------------------------------------------------------------------------------------------------------------------
181 400028284 Amresco Valentine Place Apartments 113-115 & 120 Valentine Place
182 400028274 Amresco Castle Inn Motel 3214 West State Road
183 400028255 Amresco Hillcrest Residence Apartments 1402 S.W. 59th Street
184 655552-6 Citicorp Kingspark Mobile Home 1821 N. Lancelot Place
185 655534-8 Citicorp Belmont Business Center 1601-1625 El Camino Real
- -----------------------------------------------------------------------------------------------------------------------------------
186 655611-4 Citicorp Eagle Run Square 3655 North 129th Street
187 O0200 GSMC (CPC) Parkside Plaza 1600 St. Georges Avenue
188 655485-7 Citicorp Levi's Only 1159 Dublin Road
189 655428-4 Citicorp Woodstone Apartments 10250 Lands End Drive
190 655492-5 Citicorp Southridge Village Shopping Center 2436 I-35 East
- -----------------------------------------------------------------------------------------------------------------------------------
191 O0153 GSMC (CPC) Palm Court Plaza 11911 US Highway 1
192 400027582 Amresco Omaha Nursing Home 4835 South 49th Street
193 655568-1 Citicorp Caliber Systems, Inc. 22 McGrath Road
194 400028256 Amresco BRT Aggregate
400028256A Amresco BRT Self Storage-Plumtrees Rd 64 Plumtrees Road
400028256B Amresco BRT Self Storage - Old Newtown Road 10 Old Newtown Road
195 655593-7 Citicorp Westside Plaza 4002-4024 N. 67th Avenue
- -----------------------------------------------------------------------------------------------------------------------------------
196 655670-3 Citicorp Confort Inn- Havelock, NC 1013 East Main Street
197 655478-9 Citicorp Days Inn - Corpus Christi 901 Navigation Boulevard
198 400028257 Amresco Shades of Covington 8450 Standish Bend Drive
199 400028234 Amresco Goshen Country Club Apartments 1671 Goshen Road
200 655558-4 Citicorp Franks Nursery and Crafts 1770 Middle Country Road
- -----------------------------------------------------------------------------------------------------------------------------------
201 M0092 GSMC (CPC) Gregory Avenue Apartments 99-105 Gregory Avenue
202 655546-1 Citicorp Dana Center 1035, 1045 & 1055 Dana Drive
203 655580-1 Citicorp Colts Towne Plaza 41 RT 34
204 400028224 Amresco Oakcreek Apartments 5909 South Lee Street
205 655387-4 Citicorp On the Border Restaurant 4400 Beltline Road
- -----------------------------------------------------------------------------------------------------------------------------------
206 655574-6 Citicorp Park Chase Shopping Center 13185 Veteran Memorial Drive
207 655438-1 Citicorp Discovery Inn 380 West 7200 South
208 1700019997 GSMC (CPC) Ronson Court Office 4845 & 4849 Ronson Court
209 655564-9 Citicorp Nordhaus Building 20300 West 12 Mile Road
210 655522-5 Citicorp Dor Jay/Trinity Place Aggregate
655522-5A Citicorp Dor Jay Apartments 4311 SE 9th Street
655522-5B Citicorp Trinity Place Apartments 4312 SE 9th Street
- -----------------------------------------------------------------------------------------------------------------------------------
211 655381-6 Citicorp University Village Apartments 1711 S. 11th
212 655693-6 Citicorp 100 Village Court 100 Village Court & Route 35
213 400029138 Amresco Highland Estates Apartments 93 West Street
214 400028245 Amresco Cypresswood Shopping Center 17500-17696 Kuykendahl
215 400029151 Amresco Leisure Villa Apartments 5413-5444 Downing Street
- -----------------------------------------------------------------------------------------------------------------------------------
216 655586-9 Citicorp Park Meadow 1117-1119 Plymouth Drive
217 400027569 Amresco Pinewood North Apartments 5601 Hamil Road
218 655406-4 Citicorp Steepleway Plaza Shopping Center 9720 Jones Road
219 O0036 GSMC (CPC) Walnut Grove Gardens Office 3100 Walnut Grove Road
220 400028279 Amresco Alpine Apartments 1921 S.W. 69th Avenue
- -----------------------------------------------------------------------------------------------------------------------------------
221 400028207 Amresco Hickory Hills Apartments 5400 Mackey Street
222 655565-2 Citicorp Whitestore of De Pere 801-811 Main Avenue
223 400027568 Amresco Colonial Nursing Home 119 North Indiana Avenue
224 400028212 Amresco One West Hills Office Building 5787 S. Hampton Road
225 655587-2 Citicorp Westwood Village Kirby Ave @ Maynard Drive
- -----------------------------------------------------------------------------------------------------------------------------------
226 M0037 GSMC (CPC) Manor House Apartments 117 DeMontaluzin Avenue
227 655654-1 Citicorp Hillsborough Mini Office 102 Stryker Lane
228 400028211 Amresco Valu Inn Motel 3125 Santiam Highway SE
229 655547-4 Citicorp Men's Wearhouse 8342 Leesburg Pike
230 1700019982 GSMC (CPC) Mark Manor Apartments 6535, 6545, and 6555 North 17th Avenue
- -----------------------------------------------------------------------------------------------------------------------------------
231 M0214 GSMC (CPC) Monaco Lakes East Apartments 5201 Monaco Drive
232 655594-0 Citicorp Westcliff Office Building #8 201-401 N. Buffalo Drive
233 655614-3 Citicorp Westcliff Office Building #11 201-401 N. Buffalo Drive
234 400028300 Amresco Palm Court Apartments 4410 N. Longview
235 655553-9 Citicorp Kingswood Estates 2323 Bellwood Drive
- -----------------------------------------------------------------------------------------------------------------------------------
236 400029123 Amresco Meadowcreek Apartments 14000 Maham Road
237 400028235 Amresco Kristen's Place Apartments 3402 Blalock Drive
238 400027585 Amresco Brentwood Apartments 821 & 831 South Nursery Road
239 655436-5 Citicorp Westview Terrace Apartments 8021 Calmont Avenue
240 655358-6 Citicorp 47 Empire Blvd. 47 Empire Boulevard
241 1700020046 GSMC (CPC) Connie Stevens Forever Spring 1914 East Mendenhall Drive
242 655425-5 Citicorp Joe's Crab Shack 2607 West Pacific Coast Highway
243 655559-7 Citicorp Executive Oaks Office Building 1553-1563 County Line Road
244 L0129 GSMC (CPC) Best Western-Tillman's Corner 5634 Tillman's Corner Parkway
245 400028220 Amresco Marketplace Shopping Center 50-82 University Parkway
- -----------------------------------------------------------------------------------------------------------------------------------
246 655551-3 Citicorp Four Season's Mobile Home Park 112 South Knob Hill Court
247 655613-0 Citicorp Westcliff Office Building #10 201-401 N. Buffalo Drive
248 655573-3 Citicorp Scotchtown Farms Plaza 666 NYS Route 211 East
249 655523-8 Citicorp Park Ridge Apartments 3033 NW Grand Boulevard
250 1700020031 GSMC (CPC) Sunny Palms Apartments 4402 North 36th Street
- -----------------------------------------------------------------------------------------------------------------------------------
251 1700020057 GSMC (CPC) Mahoney Village 845 East Mahoney
252 400029152 Amresco 7 Railroad Avenue Apartments 7 Railroad Avenue
253 400029153 Amresco 11 Railroad Avenue Apartments 11 Railroad Avenue
<PAGE>
<CAPTION>
CONTROL ZIP PROPERTY ORIGINAL CUT-OFF % OF INITIAL
NUMBER CITY STATE CODE TYPE BALANCE DATE BALANCE POOL BALANCE
<S> <C> <C> <C> <C> <C> <C> <C>
1 Amherst NY 14226 Anchored Retail $ 57,000,000 $ 56,871,141.40 4.3%
2 Portland OR 97201 Office $ 50,250,000 $ 50,131,682.88 3.8%
3 Portland OR 97210 Office $ 41,650,000 $ 41,572,076.42 3.2%
4 Buffalo Grove IL 60089 Multifamily $ 32,460,000 $ 32,409,203.17 2.5%
5 Pembroke Pines FL 33025 Multifamily $ 24,760,000 $ 24,699,237.18 1.9%
- -------------------------------------------------------------------------------------------------------------- ----
6 $ 23,000,000 $ 22,946,061.53 1.7%
El Segundo CA 90245 Office
Manhattan Beach CA 90266 Office
7 Reading MA 01867 Office $ 20,500,000 $ 20,452,772.46 1.6%
8 Royal Palm Beach FL 33411 Anchored Retail $ 17,200,000 $ 17,158,036.57 1.3%
9 Anaheim CA 92801 Multifamily $ 16,800,000 $ 16,699,765.38 1.3%
10 $ 16,400,000 $ 16,295,542.01 1.2%
Las Vegas NV 89103 Multifamily
Las Vegas NV 89103 Multifamily
Las Vegas NV 89103 Multifamily
Las Vegas NV 89103 Multifamily
- -------------------------------------------------------------------------------------------------------------- ----
11 Roanoke VA 24012 Anchored Retail $ 15,200,000 $ 15,156,429.32 1.1%
12 Hillsborough Townsh NJ 08502 Industrial/Warehouse $ 14,400,000 $ 14,361,558.85 1.1%
13 Washington DC 20036 Office $ 13,800,000 $ 13,759,301.65 1.0%
14 Spring Valley CA 91977 Anchored Retail $ 13,500,000 $ 13,452,871.58 1.0%
15 Sterling Heights MI 48311 Anchored Retail $ 13,387,000 $ 13,293,646.61 1.0%
- -------------------------------------------------------------------------------------------------------------- ----
16 Louisville KY 40220 Multifamily $ 13,275,000 $ 13,266,395.34 1.0%
17 Tuscaloosa AL 35405 Anchored Retail $ 12,875,000 $ 12,847,998.44 1.0%
18 Deerfield Township OH 45249 Anchored Retail $ 12,000,000 $ 11,972,135.71 0.9%
19 Anaheim CA 92802 Lodging $ 12,000,000 $ 11,957,165.65 0.9%
20 Columbus IN 47201 Lodging $ 10,800,000 $ 10,751,718.76 0.8%
- -------------------------------------------------------------------------------------------------------------- ----
21 Eugene OR 97401 Office $ 10,700,000 $ 10,674,955.33 0.8%
22 $ 10,600,000 $ 10,566,754.58 0.8%
Cottonwood AZ 86326 Anchored Retail
Casa Grande AZ 85222 Anchored Retail
23 Plant City FL 33566 Anchored Retail $ 10,250,000 $ 10,212,469.75 0.8%
24 San Diego CA 92154 Multifamily $ 10,000,000 $ 9,982,168.71 0.8%
25 Bellevue WA 98008 Multifamily $ 9,600,000 $ 9,581,688.96 0.7%
- -------------------------------------------------------------------------------------------------------------- ----
26 Franklin Township NJ 08873 Office $ 8,900,000 $ 8,878,541.56 0.7%
27 Naples FL 34108 Office $ 8,700,000 $ 8,674,642.53 0.7%
28 Houston TX 77036 Multifamily $ 8,650,000 $ 8,616,119.04 0.7%
29 San Francisco CA 94109 Lodging $ 8,500,000 $ 8,472,121.82 0.6%
30 Los Angelos CA 90067 Other $ 8,350,000 $ 8,319,430.06 0.6%
- -------------------------------------------------------------------------------------------------------------- ----
31 Columbia MD 21044 Office $ 8,300,000 $ 8,274,629.78 0.6%
32 Jamaica NY 11435 Office $ 8,000,000 $ 7,985,341.77 0.6%
33 Tulsa OK 74145 Anchored Retail $ 8,000,000 $ 7,981,014.73 0.6%
34 Charlotte NC 28202 Multifamily $ 8,000,000 $ 7,980,095.50 0.6%
35 Memphis TN 38119 Office $ 8,000,000 $ 7,978,931.33 0.6%
- -------------------------------------------------------------------------------------------------------------- ----
36 San Antonio TX 78216 Multifamily $ 8,000,000 $ 7,960,493.32 0.6%
37 Aurora CO 80014 Multifamily $ 7,880,000 $ 7,860,508.44 0.6%
38 Miami FL 33156 Retail $ 7,700,000 $ 7,677,109.73 0.6%
39 Rockford IL 61107 Anchored Retail $ 7,650,000 $ 7,632,130.53 0.6%
40 Tulsa OK 74133 Anchored Retail $ 7,650,000 $ 7,631,115.36 0.6%
- -------------------------------------------------------------------------------------------------------------- ----
41 Ypsilanti MI 48197 Multifamily $ 7,584,000 $ 7,552,490.96 0.6%
42 Milwaukee WI 53225 Anchored Retail $ 7,150,000 $ 7,126,699.78 0.5%
43 Alaxandria VA 22314 Office $ 7,150,000 $ 7,110,777.87 0.5%
44 Page AZ 86040 Lodging $ 7,050,000 $ 7,013,177.73 0.5%
45 Edwards CO 81632 Mobile Home Park $ 7,000,000 $ 6,986,496.63 0.5%
- -------------------------------------------------------------------------------------------------------------- ----
46 Clive IA 50325 Office $ 7,000,000 $ 6,984,191.00 0.5%
47 Houston TX 77036 Multifamily $ 6,900,000 $ 6,872,973.57 0.5%
48 Colorado Springs CO 80918 Retail $ 6,800,000 $ 6,783,179.83 0.5%
49 Carmel NY 10541 Anchored Retail $ 6,800,000 $ 6,781,398.53 0.5%
50 Greenville SC 29615 Lodging $ 6,750,000 $ 6,728,074.20 0.5%
- -------------------------------------------------------------------------------------------------------------- ----
51 Danville KY 40422 Anchored Retail $ 6,740,000 $ 6,711,850.17 0.5%
52 Hurst TX 75054 Anchored Retail $ 6,675,000 $ 6,640,814.46 0.5%
53 San Diego CA 92020 Multifamily $ 6,650,000 $ 6,623,382.11 0.5%
54 Florence KY 41042 Multifamily $ 6,600,000 $ 6,580,262.36 0.5%
55 Des Moines IA 50317 Anchored Retail $ 6,500,000 $ 6,482,424.09 0.5%
- -------------------------------------------------------------------------------------------------------------- ----
56 Franklin TN 37067 Lodging $ 6,500,000 $ 6,476,052.33 0.5%
57 Portland ME 04102 Lodging $ 6,500,000 $ 6,473,394.86 0.5%
58 Dallas TX 75240 Office $ 6,350,000 $ 6,346,290.30 0.5%
59 Houston TX 77015 Multifamily $ 6,320,000 $ 6,283,311.38 0.5%
60 Corpus Christi TX 78412 Multifamily $ 6,300,000 $ 6,268,888.53 0.5%
- -------------------------------------------------------------------------------------------------------------- ----
61 San Antonio TX 78240 Multifamily $ 6,175,000 $ 6,143,646.22 0.5%
62 San Antonio TX 78233 Multifamily $ 6,100,000 $ 6,069,876.20 0.5%
63 Westlake OH 44145 Office $ 6,000,000 $ 5,950,807.19 0.5%
64 Jackson MS 39206 Multifamily $ 5,880,000 $ 5,867,008.61 0.4%
65 Houston TX 77036 Multifamily $ 5,715,000 $ 5,693,269.36 0.4%
- -------------------------------------------------------------------------------------------------------------- ----
66 Lancaster TX 75231 Retail $ 5,680,000 $ 5,640,454.99 0.4%
67 East Windsor NJ 08520 Multifamily $ 5,640,000 $ 5,621,564.29 0.4%
68 Portage MI 49024 Anchored Retail $ 5,500,000 $ 5,486,502.00 0.4%
69 Burlington VT 05043 Lodging $ 5,500,000 $ 5,482,019.10 0.4%
70 Richmond VA 23231 Lodging $ 5,475,000 $ 5,452,942.22 0.4%
- -------------------------------------------------------------------------------------------------------------- ----
71 Longview TX 75601 Anchored Retail $ 5,400,000 $ 5,381,328.62 0.4%
72 Howell MI 48843 Multifamily $ 5,400,000 $ 5,379,098.06 0.4%
73 Oklahoma City OK 73132 Multifamily $ 5,300,000 $ 5,287,570.08 0.4%
74 Naples FL 34108 Office $ 5,300,000 $ 5,286,524.78 0.4%
75 San Francisco CA 94107 Office $ 5,300,000 $ 5,277,109.49 0.4%
- -------------------------------------------------------------------------------------------------------------- ----
76 Warren MI 48093 Multifamily $ 5,280,000 $ 5,258,615.13 0.4%
77 Montgomery NJ 08502 Office $ 5,200,000 $ 5,190,593.43 0.4%
78 Durango CO 81301 Lodging $ 5,150,000 $ 5,123,101.46 0.4%
79 $ 5,100,000 $ 5,078,368.94 0.4%
Ormand Beach FL 32174 Anchored Retail
Orlando FL 32809 Anchored Retail
80 Columbus OH 43212 Anchored Retail $ 5,100,000 $ 5,077,178.66 0.4%
- -------------------------------------------------------------------------------------------------------------- ----
81 Danbury CT 06810 Anchored Retail $ 5,000,000 $ 4,988,797.49 0.4%
82 Miami FL 33126 Retail $ 5,000,000 $ 4,985,718.28 0.4%
83 Atlanta GA 30303 Office $ 5,000,000 $ 4,983,847.42 0.4%
84 Austin TX 78759 Multifamily $ 4,960,000 $ 4,935,505.87 0.4%
85 Mountainview CA 94043 Office $ 4,900,000 $ 4,888,889.56 0.4%
- -------------------------------------------------------------------------------------------------------------- ----
86 Oklahoma City OK 73132 Multifamily $ 4,700,000 $ 4,688,977.25 0.4%
87 Tampa FL 33634 Multifamily $ 4,700,000 $ 4,688,934.04 0.4%
88 Lansing IL 60438 Retail $ 4,700,000 $ 4,681,200.82 0.4%
89 Houston TX 77036 Multifamily $ 4,625,000 $ 4,606,884.45 0.3%
90 Corinth MS 38834 Anchored Retail $ 4,575,000 $ 4,566,509.05 0.3%
- -------------------------------------------------------------------------------------------------------------- ----
91 Fairfax VA 22030 Office $ 4,550,000 $ 4,539,745.15 0.3%
92 Scotts Valley CA 95066 Office $ 4,500,000 $ 4,489,529.62 0.3%
93 Houston TX 77036 Multifamily $ 4,500,000 $ 4,489,257.27 0.3%
94 Zionsville IN 46077 Multifamily $ 4,500,000 $ 4,489,128.81 0.3%
95 El Cajon CA 92020 Multifamily $ 4,500,000 $ 4,473,802.55 0.3%
- -------------------------------------------------------------------------------------------------------------- ----
96 Lawrenceburg TN 38464 Anchored Retail $ 4,420,000 $ 4,411,796.72 0.3%
97 Anderson Twp. OH 45244 Multifamily $ 4,400,000 $ 4,389,983.49 0.3%
98 Lauderdale Lakes FL 33319 Multifamily $ 4,350,000 $ 4,330,607.78 0.3%
99 Paramount CA 90723 Mobile Home Park $ 4,320,000 $ 4,307,310.76 0.3%
100 Memphis TN 38117 Retail $ 4,300,000 $ 4,290,346.61 0.3%
- -------------------------------------------------------------------------------------------------------------- ----
101 Elizabethtown KY 42701 Anchored Retail $ 4,300,000 $ 4,282,521.02 0.3%
102 Pasadena TX 77053 Office $ 4,250,000 $ 4,232,689.50 0.3%
103 Issaquah WA 98027 Multifamily $ 4,150,000 $ 4,137,009.79 0.3%
104 San Antonio TX 78209 Multifamily $ 4,135,000 $ 4,114,580.03 0.3%
105 Greensboro NC 27407 Retail $ 4,100,000 $ 4,090,722.00 0.3%
- -------------------------------------------------------------------------------------------------------------- ----
106 Fairfax VA 22030 Office $ 4,100,000 $ 4,081,051.56 0.3%
107 Oxford MS 38655 Multifamily $ 4,000,000 $ 3,992,980.26 0.3%
108 Laguna Niguel CA 92677 Retail $ 4,000,000 $ 3,991,038.49 0.3%
109 Yukon OK 73099 Multifamily $ 4,000,000 $ 3,990,618.95 0.3%
110 Elizabeth NJ 07026 Industrial/Warehouse $ 4,000,000 $ 3,985,924.51 0.3%
- -------------------------------------------------------------------------------------------------------------- ----
111 Pocatello ID 83201 Anchored Retail $ 4,000,000 $ 3,985,324.87 0.3%
112 Dallas TX 75206 Office $ 3,950,000 $ 3,940,064.65 0.3%
113 Independence MO 64050 Multifamily $ 3,972,000 $ 3,935,728.01 0.3%
114 Midwest City OK 73130 Multifamily $ 3,900,000 $ 3,890,853.46 0.3%
115 Williamsburg VA 23185 Lodging $ 3,865,000 $ 3,854,470.20 0.3%
- -------------------------------------------------------------------------------------------------------------- ----
116 Las Vegas NV 89101 Anchored Retail $ 3,850,000 $ 3,831,621.56 0.3%
117 Oklahoma City OK 73119 Multifamily $ 3,840,000 $ 3,819,360.07 0.3%
118 Omaha NE 68154 Retail $ 3,800,000 $ 3,790,246.60 0.3%
119 Fayettville TN 37334 Anchored Retail $ 3,740,000 $ 3,733,058.77 0.3%
120 Conroe TX 77301 Retail $ 3,750,000 $ 3,730,195.38 0.3%
- -------------------------------------------------------------------------------------------------------------- ----
121 Pioneer OH 43554 Industrial/Warehouse $ 3,750,000 $ 3,729,828.50 0.3%
122 Fairview Heights IL 62208 Lodging $ 3,700,000 $ 3,672,788.40 0.3%
123 Mountain View CA 94041 Office $ 3,600,000 $ 3,593,539.60 0.3%
124 Skokie IL 60077 Retail $ 3,600,000 $ 3,591,853.46 0.3%
125 Glendale AZ 85306 Retail $ 3,600,000 $ 3,591,788.78 0.3%
- -------------------------------------------------------------------------------------------------------------- ----
126 Knoxville TN 37914 Multifamily $ 3,600,000 $ 3,591,788.78 0.3%
127 National City CA 91950 Industrial/Warehouse $ 3,600,000 $ 3,591,656.86 0.3%
128 El Reno OK 73036 Multifamily $ 3,600,000 $ 3,591,557.04 0.3%
129 Murfeesboro TN 37129 Anchored Retail $ 3,600,000 $ 3,589,703.60 0.3%
130 Jackson MI 49201 Multifamily $ 3,600,000 $ 3,587,284.26 0.3%
- -------------------------------------------------------------------------------------------------------------- ----
131 Irving TX 75063 Retail $ 3,600,000 $ 3,584,246.37 0.3%
132 Salinas CA 93901 Industrial/Warehouse $ 3,613,000 $ 3,580,628.28 0.3%
133 Kingston RI 02881 Retail $ 3,550,000 $ 3,548,079.86 0.3%
134 Houston TX 77031 Multifamily $ 3,525,000 $ 3,514,759.95 0.3%
135 Farmington Hills MI 48331 Industrial/Warehouse $ 3,525,000 $ 3,492,129.96 0.3%
- -------------------------------------------------------------------------------------------------------------- ----
136 Scotts Valley CA 95066 Office $ 3,500,000 $ 3,492,016.49 0.3%
137 Phoenix AZ 85029 Multifamily $ 3,500,000 $ 3,489,173.71 0.3%
138 Westminster CA 92683 Retail $ 3,500,000 $ 3,488,885.04 0.3%
139 Memphis TN 38104 Multifamily $ 3,500,000 $ 3,486,612.33 0.3%
140 Laurel MD 20707 Office $ 3,470,000 $ 3,458,106.90 0.3%
- -------------------------------------------------------------------------------------------------------------- ----
141 Houston TX 77075 Multifamily $ 3,450,000 $ 3,418,189.68 0.3%
142 Memphis TN 38119 Retail $ 3,400,000 $ 3,392,753.91 0.3%
143 Kansas City MO 64138 Multifamily $ 3,400,000 $ 3,392,073.75 0.3%
144 Urbana IL 61801 Multifamily $ 3,300,000 $ 3,297,949.17 0.2%
145 Falls Church VA 22042 Anchored Retail $ 3,300,000 $ 3,281,495.53 0.2%
- -------------------------------------------------------------------------------------------------------------- ----
146 Santa Clara CA 95050 Retail $ 3,250,000 $ 3,242,630.85 0.2%
147 Piscataway NJ 08817 Industrial/Warehouse $ 3,200,000 $ 3,192,583.86 0.2%
148 Sidney OH 45365 Anchored Retail $ 3,180,000 $ 3,150,235.97 0.2%
149 Memphis TN 38116 Multifamily $ 3,150,000 $ 3,141,578.43 0.2%
150 Houston TX 77060 Multifamily $ 3,158,000 $ 3,134,289.41 0.2%
- -------------------------------------------------------------------------------------------------------------- ----
151 Ephraim UT 84627 Multifamily $ 3,100,000 $ 3,093,137.47 0.2%
152 Tucson AZ 43500 Retail $ 3,100,000 $ 3,092,671.88 0.2%
153 Rocklin CA 95677 Retail $ 3,066,000 $ 3,052,017.70 0.2%
154 Palm Beach Gardens FL 33410 Other $ 3,000,000 $ 2,992,237.16 0.2%
155 Titusville FL 32780 Multifamily $ 2,950,000 $ 2,937,278.73 0.2%
- -------------------------------------------------------------------------------------------------------------- ----
156 Philadelphia PA 19114 Anchored Retail $ 2,835,000 $ 2,827,644.22 0.2%
157 Manning SC 29102 Anchored Retail $ 2,850,000 $ 2,825,123.33 0.2%
158 Sandy UT 84070 Retail $ 2,850,000 $ 2,824,182.49 0.2%
159 Orem UT 84058 Retail $ 2,830,000 $ 2,813,763.57 0.2%
160 Lexington NC 27295 Health Care $ 2,800,000 $ 2,797,356.07 0.2%
- -------------------------------------------------------------------------------------------------------------- ----
161 Grapevine TX 76051 Retail $ 2,800,000 $ 2,795,600.85 0.2%
162 Fontana CA 92335 Multifamily $ 2,800,000 $ 2,792,811.40 0.2%
163 Standish ME 04084 Anchored Retail $ 2,750,000 $ 2,743,714.76 0.2%
164 Rocklin CA 95677 Retail $ 2,750,000 $ 2,743,538.07 0.2%
165 Galveston TX 77551 Multifamily $ 2,720,000 $ 2,710,932.62 0.2%
- -------------------------------------------------------------------------------------------------------------- ----
166 Waxahachie TX 75165 Multifamily $ 2,723,000 $ 2,702,254.19 0.2%
167 Boston MA 02110 Retail $ 2,700,000 $ 2,695,409.71 0.2%
168 Branchburg NJ 08876 Office $ 2,600,000 $ 2,593,152.68 0.2%
169 Canby OR 97013 Multifamily $ 2,600,000 $ 2,591,731.96 0.2%
170 Chicago IL 60606 Office $ 2,600,000 $ 2,590,907.97 0.2%
- -------------------------------------------------------------------------------------------------------------- ----
171 Lexington MA 02173 Office $ 2,600,000 $ 2,582,221.33 0.2%
172 Memphis TN 38117 Retail $ 2,580,000 $ 2,570,053.16 0.2%
173 Houston TX 77076 Anchored Retail $ 2,600,000 $ 2,545,584.18 0.2%
174 Harris County TX 77380 Anchored Retail $ 2,540,000 $ 2,529,116.67 0.2%
175 Garland TX 75042 Multifamily $ 2,528,750 $ 2,521,622.99 0.2%
- -------------------------------------------------------------------------------------------------------------- ----
176 Quincy FL 32351 Anchored Retail $ 2,525,000 $ 2,514,475.36 0.2%
177 Federal Way WA 98003 Multifamily $ 2,500,000 $ 2,492,591.49 0.2%
178 Provo UT 84604 Lodging $ 2,500,000 $ 2,492,009.59 0.2%
179 Lawrenceville NJ 08648 Retail $ 2,500,000 $ 2,491,009.17 0.2%
180 Oak Creek WI 53154 Anchored Retail $ 2,500,000 $ 2,490,494.01 0.2%
- -------------------------------------------------------------------------------------------------------------- ----
181 Ithaca NY 14850 Multifamily $ 2,500,000 $ 2,487,990.12 0.2%
182 Allegheny NY 14706 Lodging $ 2,480,000 $ 2,467,809.04 0.2%
183 Oklahoma City OK 73119 Multifamily $ 2,475,000 $ 2,459,122.73 0.2%
184 Peoria IL 61604 Mobile Home Park $ 2,450,000 $ 2,448,683.50 0.2%
185 Belmont CA 94002 Office $ 2,450,000 $ 2,444,444.77 0.2%
- -------------------------------------------------------------------------------------------------------------- ----
186 Omaha NE 68164 Retail $ 2,400,000 $ 2,395,794.84 0.2%
187 Rahway NJ 07065 Office $ 2,400,000 $ 2,394,213.47 0.2%
188 Columbus OH 43215 Industrial/Warehouse $ 2,350,000 $ 2,333,362.97 0.2%
189 Houston TX 77380 Multifamily $ 2,325,000 $ 2,318,245.93 0.2%
190 Denton TX 76205 Retail $ 2,300,000 $ 2,295,751.82 0.2%
- -------------------------------------------------------------------------------------------------------------- ----
191 North Palm Beach FL 33408 Office $ 2,300,000 $ 2,294,269.61 0.2%
192 Omaha NE 68117 Nursing Home, Skilled $ 2,300,000 $ 2,279,526.85 0.2%
193 Dracut MA 01826 Industrial/Warehouse $ 2,256,000 $ 2,252,242.48 0.2%
194 $ 2,200,000 $ 2,184,052.53 0.2%
Danbury CT 06810 Self-Storage
Danbury CT 06810 Self-Storage
195 Phoenix AZ 85033 Retail $ 2,175,000 $ 2,167,211.62 0.2%
- -------------------------------------------------------------------------------------------------------------- ----
196 Havelock NC 28532 Lodging $ 2,100,000 $ 2,097,963.22 0.2%
197 Corpus Christi TX 78408 Lodging $ 2,100,000 $ 2,091,865.09 0.2%
198 Tampa FL 33615 Multifamily $ 2,100,000 $ 2,090,871.70 0.2%
199 Augusta GA 30906 Multifamily $ 2,040,000 $ 2,028,723.18 0.2%
200 Center Reach NY 11720 Retail $ 2,025,000 $ 2,017,874.29 0.2%
- -------------------------------------------------------------------------------------------------------------- ----
201 Passaic NJ 07055 Multifamily $ 2,000,000 $ 1,997,986.39 0.2%
202 Redding CA 96003 Retail $ 2,000,000 $ 1,995,337.26 0.2%
203 Colts Neck NJ 07722 Office $ 2,000,000 $ 1,993,269.79 0.2%
204 Oklahoma City OK 73139 Multifamily $ 2,000,000 $ 1,989,250.03 0.2%
205 Addison TX 75248 Retail $ 1,900,000 $ 1,887,080.14 0.1%
- -------------------------------------------------------------------------------------------------------------- ----
206 Houston TX 77014 Retail $ 1,875,000 $ 1,870,284.11 0.1%
207 Midvale UT 84047 Lodging $ 1,850,000 $ 1,843,141.01 0.1%
208 San Diego CA 92111 Office $ 1,850,000 $ 1,836,280.46 0.1%
209 Southfield MI 48706 Office $ 1,800,000 $ 1,796,054.70 0.1%
210 $ 1,800,000 $ 1,795,778.53 0.1%
Del City OK 73115 Multifamily
Del City OK 73115 Multifamily
- -------------------------------------------------------------------------------------------------------------- ----
211 Bozeman MT 59715 Multifamily $ 1,800,000 $ 1,793,854.96 0.1%
212 Hazlet NJ 07730 Office $ 1,750,000 $ 1,738,661.50 0.1%
213 Milford NH 03055 Multifamily $ 1,730,000 $ 1,723,854.25 0.1%
214 Spring TX 77379 Retail $ 1,700,000 $ 1,689,675.77 0.1%
215 Alexandria LA 30341 Multifamily $ 1,612,000 $ 1,606,282.53 0.1%
- -------------------------------------------------------------------------------------------------------------- ----
216 Champaign IL 61821 Multifamily $ 1,570,000 $ 1,567,034.18 0.1%
217 Houston TX 77039 Multifamily $ 1,480,000 $ 1,469,554.26 0.1%
218 Houston TX 77065 Retail $ 1,445,000 $ 1,436,529.62 0.1%
219 Memphis TN 38111 Office $ 1,440,000 $ 1,436,296.66 0.1%
220 Pembroke Pines FL 33023 Multifamily $ 1,440,000 $ 1,435,330.22 0.1%
- -------------------------------------------------------------------------------------------------------------- ----
221 Overland Park KS 85016 Multifamily $ 1,425,000 $ 1,411,472.74 0.1%
222 West De Pere WI 54115 Anchored Retail $ 1,400,000 $ 1,396,307.98 0.1%
223 Crown Point IN 46307 Nursing Home, Skilled $ 1,400,000 $ 1,387,353.39 0.1%
224 Dallas TX 75232 Office $ 1,370,000 $ 1,363,387.80 0.1%
225 Champaign IL 61821 Multifamily $ 1,350,000 $ 1,346,699.87 0.1%
- -------------------------------------------------------------------------------------------------------------- ----
226 Bay St. Louis MS 39520 Multifamily $ 1,300,000 $ 1,299,221.32 0.1%
227 Hillsborough Townsh NJ 08502 Industrial/Warehouse $ 1,300,000 $ 1,294,883.90 0.1%
228 Albany OR 97321 Lodging $ 1,300,000 $ 1,281,862.96 0.1%
229 Tyson's Corner VA 22103 Retail $ 1,250,000 $ 1,247,837.49 0.1%
230 Phoenix AZ 85017 Multifamily $ 1,196,250 $ 1,186,491.51 0.1%
- -------------------------------------------------------------------------------------------------------------- ----
231 Pascagoula MS 39581 Multifamily $ 1,150,000 $ 1,149,443.71 0.1%
232 Las Vegas NV 89128 Office $ 1,150,000 $ 1,147,324.25 0.1%
233 Las Vegas NV 89128 Office $ 1,130,000 $ 1,127,370.78 0.1%
234 Phoenix AZ 85014 Multifamily $ 1,120,000 $ 1,117,419.88 0.1%
235 Grand Island NE 68801 Mobile Home Park $ 1,100,000 $ 1,099,343.17 0.1%
- -------------------------------------------------------------------------------------------------------------- ----
236 Dallas TX 75240 Multifamily $ 1,100,000 $ 1,097,420.20 0.1%
237 Houston TX 77080 Multifamily $ 1,105,000 $ 1,095,635.86 0.1%
238 Irving TX 75060 Multifamily $ 1,100,000 $ 1,089,206.04 0.1%
239 Fort Worth TX 76116 Multifamily $ 1,080,000 $ 1,077,642.26 0.1%
240 Brooklyn NY 11225 Other $ 1,000,000 $ 985,028.32 0.1%
241 North Las Vegas NV 89030 Industrial/Warehouse $ 990,000 $ 983,562.09 0.1%
242 Newport Beach CA 92663 Retail $ 900,000 $ 897,727.17 0.1%
243 Jackson MS 39211 Office $ 890,000 $ 887,325.43 0.1%
244 Mobile AL 36619 Lodging $ 900,000 $ 885,313.52 0.1%
245 Aiken SC 29801 Anchored Retail $ 885,000 $ 872,200.17 0.1%
- -------------------------------------------------------------------------------------------------------------- ----
246 Peoria IL 61604 Mobile Home Park $ 825,000 $ 824,556.69 0.1%
247 Las Vegas NV 89128 Office $ 810,000 $ 808,115.34 0.1%
248 Wallkill NY 10940 Retail $ 800,000 $ 799,588.34 0.1%
249 Oklahoma City OK 73116 Multifamily $ 700,000 $ 698,358.32 0.1%
250 Phoenix AZ 85018 Multifamily $ 700,000 $ 696,267.88 0.1%
- -------------------------------------------------------------------------------------------------------------- ----
251 Mesa AZ 85203 Multifamily $ 663,600 $ 660,879.54 0.1%
252 Derry NH 03038 Multifamily $ 550,000 $ 548,046.15 0.0%
253 Derry NH 03038 Multifamily $ 420,000 $ 418,507.97 0.0%
$ 1,319,193,757.61
<PAGE>
<CAPTION>
ANTICIPATED LOAN NET
CONTROL BALANCE LOAN MORTGAGE ADMINISTRATIVE SUB-SERVICING MORTGAGE
NUMBER AT MATURITY / ARD TYPE RATE FEE RATE FEE RATE RATE
<S> <C> <C> <C> <C> <C> <C>
1 $ 50,282,286.08 Hyperamortizing 7.45500 0.10820 0.05000 7.34680
2 $ 44,097,066.46 Hyperamortizing 7.25000 0.10820 0.05000 7.14180
3 $ 36,210,990.47 Balloon 6.90000 0.13820 0.08000 6.76180
4 $ 28,016,339.74 Balloon 7.25000 0.13820 0.08000 7.11180
5 $ 21,267,096.88 Balloon 7.04000 0.10820 0.05000 6.93180
- ----------------------------------------------------------------------------------------------------------------------
6 $ 19,860,410.57 Hyperamortizing 7.27000 0.10820 0.05000 7.16180
7 $ 18,040,552.90 Balloon 7.36000 0.10820 0.05000 7.25180
8 $ 15,023,486.20 Balloon 7.07000 0.10820 0.05000 6.96180
9 $ 13,316,828.25 Hyperamortizing 7.29000 0.10820 0.05000 7.18180
10 $ 14,505,523.49 Balloon 8.41000 0.10820 0.05000 8.30180
- ----------------------------------------------------------------------------------------------------------------------
11 $ 13,381,976.30 Balloon 7.37000 0.10820 0.05000 7.26180
12 $ 11,516,572.47 Balloon 7.01000 0.13820 0.08000 6.87180
13 $ 11,998,724.02 Hyperamortizing 7.58000 0.10820 0.05000 7.47180
14 $ 10,931,544.88 Balloon 7.41000 0.13820 0.08000 7.27180
15 $ 10,936,028.79 Balloon 8.46000 0.10820 0.05000 8.35180
- ----------------------------------------------------------------------------------------------------------------------
16 $ 12,194,766.55 Balloon 6.88000 0.10820 0.05000 6.77180
17 $ 11,463,245.36 Balloon 7.83000 0.10820 0.05000 7.72180
18 $ 10,373,687.43 Balloon 7.32000 0.10820 0.05000 7.21180
19 $ 9,675,842.51 Balloon 7.27000 0.13320 0.07500 7.13680
20 $ 8,100,818.33 Balloon 7.57000 0.10820 0.05000 7.46180
- ----------------------------------------------------------------------------------------------------------------------
21 $ 9,397,064.94 Balloon 7.28000 0.13820 0.08000 7.14180
22 $ 9,136,055.66 Hyperamortizing 7.27000 0.10820 0.05000 7.16180
23 $ 8,921,780.44 Balloon 7.63000 0.10820 0.05000 7.52180
24 $ 8,762,856.34 Balloon 7.20000 0.13820 0.08000 7.06180
25 $ 8,319,505.06 Balloon 6.78000 0.13820 0.08000 6.64180
- ----------------------------------------------------------------------------------------------------------------------
26 $ 7,785,987.58 Balloon 7.13000 0.10820 0.05000 7.02180
27 $ 7,644,755.03 Balloon 7.29500 0.10820 0.05000 7.18680
28 $ 7,472,630.39 Balloon 7.29000 0.10820 0.05000 7.18180
29 $ 6,962,828.05 Balloon 7.80000 0.10820 0.05000 7.69180
30 $ 6,699,858.71 Balloon 7.11000 0.13820 0.08000 6.97180
- ----------------------------------------------------------------------------------------------------------------------
31 $ 7,174,885.49 Balloon 7.40000 0.10820 0.05000 7.29180
32 $ 6,979,286.08 Balloon 7.03000 0.13820 0.08000 6.89180
33 $ 6,898,526.49 Balloon 7.21000 0.10820 0.05000 7.10180
34 $ 6,860,138.86 Balloon 6.97000 0.10820 0.05000 6.86180
35 $ 6,417,898.90 Balloon 7.11000 0.13820 0.08000 6.97180
- ----------------------------------------------------------------------------------------------------------------------
36 $ 7,135,060.89 Balloon 7.89000 0.16320 0.10500 7.72680
37 $ 6,870,176.64 Balloon 7.00000 0.10820 0.05000 6.89180
38 $ 6,689,089.67 Balloon 7.54000 0.10820 0.05000 7.43180
39 $ 6,608,741.68 Balloon 7.29000 0.10820 0.05000 7.18180
40 $ 6,566,195.68 Balloon 7.01000 0.10820 0.05000 6.90180
- ----------------------------------------------------------------------------------------------------------------------
41 $ 6,506,479.06 Balloon 6.99000 0.10820 0.05000 6.88180
42 $ 6,630,560.84 Balloon 8.21000 0.10820 0.05000 8.10180
43 $ 6,348,400.71 Balloon 8.61000 0.10820 0.05000 8.50180
44 $ 4,943,836.36 Balloon 7.85000 0.13820 0.08000 7.71180
45 $ 6,408,874.98 Balloon 6.71000 0.18320 0.12500 6.52680
- ----------------------------------------------------------------------------------------------------------------------
46 $ 6,175,794.69 Balloon 7.46000 0.18320 0.12500 7.27680
47 $ 5,960,826.41 Balloon 7.29000 0.10820 0.05000 7.18180
48 $ 5,928,579.20 Balloon 7.00000 0.13820 0.08000 6.86180
49 $ 5,930,887.38 Balloon 6.83000 0.13820 0.08000 6.69180
50 $ 5,538,967.30 Balloon 7.86000 0.18320 0.12500 7.67680
- ----------------------------------------------------------------------------------------------------------------------
51 $ 5,900,395.28 Balloon 7.90000 0.10820 0.05000 7.79180
52 $ 5,896,999.23 Balloon 8.35000 0.10820 0.05000 8.24180
53 $ 5,730,455.19 Balloon 7.18000 0.10820 0.05000 7.07180
54 $ 5,729,735.56 Balloon 7.51000 0.10820 0.05000 7.40180
55 $ 5,760,031.71 Balloon 7.63000 0.18320 0.12500 7.44680
- ----------------------------------------------------------------------------------------------------------------------
56 $ 5,209,022.11 Balloon 7.07000 0.18320 0.12500 6.88680
57 $ 5,280,043.07 Balloon 8.23000 0.10820 0.05000 8.12180
58 $ 5,572,108.89 Balloon 7.22000 0.18320 0.12500 7.03680
59 $ 5,581,180.89 Balloon 8.33000 0.10820 0.05000 8.22180
60 $ 5,618,861.40 Balloon 7.89000 0.16320 0.10500 7.72680
- ----------------------------------------------------------------------------------------------------------------------
61 $ 5,384,097.79 Balloon 7.71000 0.10820 0.05000 7.60180
62 $ 5,440,484.62 Balloon 7.89000 0.16320 0.10500 7.72680
63 $ 4,970,606.57 Balloon 9.05500 0.10820 0.05000 8.94680
64 $ 5,201,965.93 Balloon 7.57000 0.18320 0.12500 7.38680
65 $ 4,953,755.49 Balloon 7.44000 0.10820 0.05000 7.33180
- ----------------------------------------------------------------------------------------------------------------------
66 $ 4,641,197.87 Balloon 8.47000 0.10820 0.05000 8.36180
67 $ 4,846,628.34 Balloon 7.06000 0.10820 0.05000 6.95180
68 $ 4,800,235.72 Balloon 7.04000 0.10820 0.05000 6.93180
69 $ 4,507,985.64 Balloon 7.82000 0.13820 0.08000 7.68180
70 $ 4,510,597.09 Balloon 7.99000 0.18320 0.12500 7.80680
- ----------------------------------------------------------------------------------------------------------------------
71 $ 4,301,291.05 Balloon 7.47000 0.10820 0.05000 7.36180
72 $ 4,671,313.91 Hyperamortizing 7.35000 0.10820 0.05000 7.24180
73 $ 4,653,425.56 Balloon 7.27000 0.13320 0.07500 7.13680
74 $ 4,285,667.10 Balloon 7.37000 0.18320 0.12500 7.18680
75 $ 5,012,837.02 Balloon 8.75000 0.10820 0.05000 8.64180
- ----------------------------------------------------------------------------------------------------------------------
76 $ 4,543,602.64 Balloon 7.12000 0.10820 0.05000 7.01180
77 $ 4,546,052.87 Balloon 7.11000 0.13820 0.08000 6.97180
78 $ 3,611,454.96 Balloon 7.85000 0.13820 0.08000 7.71180
79 $ 4,119,974.90 Hyperamortizing 8.01000 0.10820 0.05000 7.90180
80 $ 4,127,980.75 Balloon 7.39000 0.18320 0.12500 7.20680
- ----------------------------------------------------------------------------------------------------------------------
81 $ 4,415,715.01 Balloon 7.50000 0.13820 0.08000 7.36180
82 $ 4,362,389.04 Balloon 7.74000 0.10820 0.05000 7.63180
83 $ 4,302,654.45 Balloon 7.12000 0.10820 0.05000 7.01180
84 $ 4,423,737.65 Balloon 7.89000 0.16320 0.10500 7.72680
85 $ 4,320,878.60 Balloon 7.44000 0.18320 0.12500 7.25680
- ----------------------------------------------------------------------------------------------------------------------
86 $ 4,126,622.67 Balloon 7.27000 0.13320 0.07500 7.13680
87 $ 4,056,585.52 Balloon 7.25000 0.10820 0.05000 7.14180
88 $ 3,209,826.59 Balloon 7.11000 0.18320 0.12500 6.92680
89 $ 3,995,481.44 Balloon 7.29000 0.10820 0.05000 7.18180
90 $ 3,982,851.71 Balloon 6.95000 0.10820 0.05000 6.84180
- ----------------------------------------------------------------------------------------------------------------------
91 $ 3,946,558.31 Balloon 7.47000 0.10820 0.05000 7.36180
92 $ 3,955,074.22 Balloon 7.31000 0.18320 0.12500 7.12680
93 $ 3,877,751.52 Balloon 7.18000 0.10820 0.05000 7.07180
94 $ 3,935,708.65 Balloon 7.12000 0.18320 0.12500 6.93680
95 $ 3,923,634.39 Balloon 7.71000 0.10820 0.05000 7.60180
- ----------------------------------------------------------------------------------------------------------------------
96 $ 3,847,913.70 Balloon 6.95000 0.10820 0.05000 6.84180
97 $ 4,077,832.17 Balloon 7.42000 0.18320 0.12500 7.23680
98 $ 3,486,108.94 Balloon 7.70000 0.10820 0.05000 7.59180
99 $ 3,792,603.05 Balloon 7.26000 0.10820 0.05000 7.15180
100 $ 3,796,562.56 Balloon 7.49000 0.13820 0.08000 7.35180
- ----------------------------------------------------------------------------------------------------------------------
101 $ 3,774,875.91 Balloon 8.03500 0.10820 0.05000 7.92680
102 $ 3,730,216.42 Balloon 8.02500 0.10820 0.05000 7.91680
103 $ 3,615,829.84 Balloon 6.97000 0.13820 0.08000 6.83180
104 $ 3,687,935.42 Balloon 7.89000 0.16320 0.10500 7.72680
105 $ 3,616,340.85 Balloon 7.45000 0.13820 0.08000 7.31180
- ----------------------------------------------------------------------------------------------------------------------
106 $ 3,609,912.48 Balloon 8.18000 0.10820 0.05000 8.07180
107 $ 3,514,159.90 Balloon 7.30000 0.13820 0.08000 7.16180
108 $ 3,471,799.58 Balloon 7.50000 0.10820 0.05000 7.39180
109 $ 3,512,020.34 Balloon 7.27000 0.13320 0.07500 7.13680
110 $ 3,234,096.71 Balloon 7.36000 0.13820 0.08000 7.22180
- ----------------------------------------------------------------------------------------------------------------------
111 $ 3,480,916.87 Balloon 7.62000 0.10820 0.05000 7.51180
112 $ 3,426,991.27 Balloon 7.46000 0.10820 0.05000 7.35180
113 $ 3,239,256.83 Balloon 8.39000 0.10820 0.05000 8.28180
114 $ 3,424,219.19 Balloon 7.27000 0.13320 0.07500 7.13680
115 $ 3,076,639.29 Balloon 6.86000 0.18320 0.12500 6.67680
- ----------------------------------------------------------------------------------------------------------------------
116 $ 3,050,107.27 Balloon 7.27000 0.10820 0.05000 7.16180
117 $ 3,376,213.39 Balloon 8.11000 0.10820 0.05000 8.00180
118 $ 3,066,247.26 Balloon 7.30000 0.18320 0.12500 7.11680
119 $ 3,255,927.63 Balloon 6.95000 0.10820 0.05000 6.84180
120 $ 3,071,989.77 Balloon 7.80000 0.11320 0.05500 7.68680
- ----------------------------------------------------------------------------------------------------------------------
121 $ 2,607,722.93 Balloon 7.61000 0.16320 0.10500 7.44680
122 $ 2,998,069.15 Balloon 8.13000 0.10820 0.05000 8.02180
123 $ 3,151,363.34 Balloon 7.16000 0.13820 0.08000 7.02180
124 $ 3,175,323.78 Balloon 7.45000 0.18320 0.12500 7.26680
125 $ 3,047,693.96 Balloon 7.41000 0.10820 0.05000 7.30180
- ----------------------------------------------------------------------------------------------------------------------
126 $ 3,118,393.01 Balloon 7.41000 0.18320 0.12500 7.22680
127 $ 3,165,676.59 Balloon 7.33000 0.18320 0.12500 7.14680
128 $ 3,160,817.70 Balloon 7.27000 0.13320 0.07500 7.13680
129 $ 3,170,222.54 Balloon 7.38000 0.18320 0.12500 7.19680
130 $ 3,145,593.74 Balloon 7.81000 0.10820 0.05000 7.70180
- ----------------------------------------------------------------------------------------------------------------------
131 $ 3,186,614.04 Balloon 8.45000 0.10820 0.05000 8.34180
132 $ 3,001,627.75 Balloon 9.18000 0.10820 0.05000 9.07180
133 $ 3,134,359.26 Balloon 7.46000 0.18320 0.12500 7.27680
134 $ 3,098,634.17 Balloon 7.31000 0.18320 0.12500 7.12680
135 $ 2,912,195.54 Balloon 8.93500 0.10820 0.05000 8.82680
- ----------------------------------------------------------------------------------------------------------------------
136 $ 3,084,004.54 Balloon 7.41000 0.18320 0.12500 7.22680
137 $ 3,027,021.79 Balloon 7.34000 0.10820 0.05000 7.23180
138 $ 2,883,689.59 Balloon 8.00000 0.18320 0.12500 7.81680
139 $ 3,031,772.39 Balloon 7.41000 0.18320 0.12500 7.22680
140 $ 3,041,532.56 Balloon 7.96000 0.10820 0.05000 7.85180
- ----------------------------------------------------------------------------------------------------------------------
141 $ 2,809,417.85 Balloon 8.33000 0.10820 0.05000 8.22180
142 $ 3,025,474.84 Balloon 7.75000 0.10820 0.05000 7.64180
143 $ 2,937,883.93 Balloon 7.30000 0.10820 0.05000 7.19180
144 $ 2,880,573.76 Balloon 7.02000 0.12820 0.07000 6.89180
145 $ 2,726,914.37 Balloon 8.83000 0.10820 0.05000 8.72180
- ----------------------------------------------------------------------------------------------------------------------
146 $ 2,865,889.77 Balloon 7.44000 0.18320 0.12500 7.25680
147 $ 2,813,934.15 Balloon 7.33000 0.10820 0.05000 7.22180
148 $ 2,625,774.20 Balloon 8.91200 0.10820 0.05000 8.80380
149 $ 2,794,849.49 Balloon 7.68000 0.18320 0.12500 7.49680
150 $ 2,678,001.45 Balloon 8.43000 0.10820 0.05000 8.32180
- ----------------------------------------------------------------------------------------------------------------------
151 $ 2,694,188.43 Balloon 7.56000 0.10820 0.05000 7.45180
152 $ 2,719,014.24 Balloon 7.23000 0.10820 0.05000 7.12180
153 $ 2,737,966.06 Balloon 8.92000 0.10820 0.05000 8.81180
154 $ 2,416,312.16 Balloon 7.24000 0.13820 0.08000 7.10180
155 $ 2,573,809.82 Balloon 7.74000 0.10820 0.05000 7.63180
- ----------------------------------------------------------------------------------------------------------------------
156 $ 2,282,023.21 Balloon 7.22000 0.18320 0.12500 7.03680
157 $ 2,339,970.38 Balloon 8.67000 0.10820 0.05000 8.56180
158 $ 2,327,074.51 Balloon 8.44000 0.10820 0.05000 8.33180
159 $ 2,324,653.02 Balloon 8.69000 0.10820 0.05000 8.58180
160 $ 2,271,207.53 Balloon 7.44000 0.13820 0.08000 7.30180
- ----------------------------------------------------------------------------------------------------------------------
161 $ 2,415,587.61 Balloon 7.23000 0.18320 0.12500 7.04680
162 $ 2,428,826.65 Balloon 6.81000 0.10820 0.05000 6.70180
163 $ 2,422,533.31 Balloon 7.40000 0.18320 0.12500 7.21680
164 $ 2,374,075.48 Balloon 7.26000 0.10820 0.05000 7.15180
165 $ 2,331,895.42 Balloon 6.96000 0.10820 0.05000 6.85180
- ----------------------------------------------------------------------------------------------------------------------
166 $ 2,335,720.46 Balloon 8.96000 0.10820 0.05000 8.85180
167 $ 2,384,084.86 Balloon 7.50000 0.18320 0.12500 7.31680
168 $ 2,085,816.94 Balloon 7.11000 0.13820 0.08000 6.97180
169 $ 2,241,506.35 Balloon 7.20000 0.10820 0.05000 7.09180
170 $ 2,274,211.45 Balloon 7.86000 0.10820 0.05000 7.75180
- ----------------------------------------------------------------------------------------------------------------------
171 $ 2,277,884.61 Balloon 7.60000 0.10820 0.05000 7.49180
172 $ 1,783,556.25 Balloon 7.45000 0.13820 0.08000 7.31180
173 $ 1,201,560.53 Balloon 8.06000 0.10820 0.05000 7.95180
174 $ 2,071,317.87 Balloon 7.64000 0.18320 0.12500 7.45680
175 $ 2,110,961.72 Balloon 7.40000 0.13820 0.08000 7.26180
- ----------------------------------------------------------------------------------------------------------------------
176 $ 2,210,920.92 Balloon 7.91000 0.18320 0.12500 7.72680
177 $ 2,192,528.02 Balloon 7.22000 0.13820 0.08000 7.08180
178 $ 2,017,026.06 Balloon 7.96000 0.10820 0.05000 7.85180
179 $ 2,180,262.35 Balloon 7.72000 0.10820 0.05000 7.61180
180 $ 2,166,996.33 Balloon 7.44000 0.10820 0.05000 7.33180
- ----------------------------------------------------------------------------------------------------------------------
181 $ 1,978,420.91 Hyperamortizing 7.23000 0.10820 0.05000 7.12180
182 $ 1,727,544.38 Balloon 8.34000 0.10820 0.05000 8.23180
183 $ 1,998,891.94 Balloon 8.00000 0.10820 0.05000 7.89180
184 $ 2,164,243.44 Balloon 7.48000 0.18320 0.12500 7.29680
185 $ 2,160,439.24 Balloon 7.44000 0.18320 0.12500 7.25680
- ----------------------------------------------------------------------------------------------------------------------
186 $ 2,109,034.02 Balloon 7.31000 0.12820 0.07000 7.18180
187 $ 2,099,593.09 Balloon 7.13000 0.10820 0.05000 7.02180
188 $ 1,628,239.05 Balloon 7.50000 0.18320 0.12500 7.31680
189 $ 2,043,780.14 Balloon 7.31000 0.18320 0.12500 7.12680
190 $ 2,003,899.60 Balloon 6.98000 0.18320 0.12500 6.79680
- ----------------------------------------------------------------------------------------------------------------------
191 $ 1,868,196.10 Balloon 7.52000 0.10820 0.05000 7.41180
192 $ 1,912,524.84 Balloon 9.22000 0.10820 0.05000 9.11180
193 $ 1,998,478.50 Balloon 7.63000 0.18320 0.12500 7.44680
194 $ 1,786,647.90 Balloon 8.22000 0.10820 0.05000 8.11180
195 $ 1,752,678.42 Balloon 7.25000 0.18320 0.12500 7.06680
- ----------------------------------------------------------------------------------------------------------------------
196 $ 1,697,213.31 Balloon 7.32000 0.13820 0.08000 7.18180
197 $ 1,740,987.72 Balloon 8.21000 0.18320 0.12500 8.02680
198 $ 1,830,637.21 Balloon 7.70000 0.10820 0.05000 7.59180
199 $ 1,788,475.23 Balloon 7.97000 0.10820 0.05000 7.86180
200 $ 1,637,261.86 Balloon 7.36000 0.13820 0.08000 7.22180
- ----------------------------------------------------------------------------------------------------------------------
201 $ 1,607,986.92 Balloon 7.15000 0.10820 0.05000 7.04180
202 $ 1,757,360.77 Balloon 7.30000 0.13820 0.08000 7.16180
203 $ 1,630,634.44 Balloon 7.64000 0.13820 0.08000 7.50180
204 $ 1,758,444.11 Balloon 8.11000 0.10820 0.05000 8.00180
205 $ 1,330,880.38 Balloon 7.81000 0.18320 0.12500 7.62680
- ----------------------------------------------------------------------------------------------------------------------
206 $ 1,519,805.29 Balloon 7.45000 0.18320 0.12500 7.26680
207 $ 1,480,732.26 Balloon 7.03000 0.18320 0.12500 6.84680
208 $ 1,562,703.97 Balloon 8.87500 0.10820 0.05000 8.76680
209 $ 1,594,019.97 Balloon 7.61000 0.18320 0.12500 7.42680
210 $ 1,580,408.96 Balloon 7.27000 0.13320 0.07500 7.13680
- ----------------------------------------------------------------------------------------------------------------------
211 $ 1,463,658.79 Balloon 7.55000 0.18320 0.12500 7.36680
212 $ 817,178.19 Balloon 7.09000 0.18320 0.12500 6.90680
213 $ 1,371,690.39 Balloon 7.30000 0.10820 0.05000 7.19180
214 $ 1,384,691.52 Balloon 8.34000 0.10820 0.05000 8.23180
215 $ 1,301,369.57 Balloon 7.31000 0.10820 0.05000 7.20180
- ----------------------------------------------------------------------------------------------------------------------
216 $ 1,362,786.54 Balloon 6.84000 0.12820 0.07000 6.71180
217 $ 1,270,422.19 Balloon 8.26000 0.10820 0.05000 8.15180
218 $ 1,193,950.86 Balloon 8.09000 0.18320 0.12500 7.90680
219 $ 1,282,958.45 Balloon 7.85000 0.10820 0.05000 7.74180
220 $ 1,159,129.21 Balloon 7.87000 0.10820 0.05000 7.76180
- ----------------------------------------------------------------------------------------------------------------------
221 $ 1,174,264.50 Balloon 8.82500 0.10820 0.05000 8.71680
222 $ 1,122,786.11 Balloon 7.10000 0.18320 0.12500 6.91680
223 $ 1,161,786.90 Balloon 9.13000 0.10820 0.05000 9.02180
224 $ 1,123,221.84 Balloon 8.61000 0.10820 0.05000 8.50180
225 $ 1,178,859.33 Balloon 7.06000 0.12820 0.07000 6.93180
- ----------------------------------------------------------------------------------------------------------------------
226 $ 1,138,367.33 Balloon 7.14000 0.10820 0.05000 7.03180
227 $ 892,626.61 Balloon 7.26000 0.13820 0.08000 7.12180
228 $ 945,238.43 Balloon 9.84000 0.10820 0.05000 9.73180
229 $ 1,100,692.18 Balloon 7.39000 0.18320 0.12500 7.20680
230 $ 1,006,287.61 Balloon 9.75000 0.10820 0.05000 9.64180
- ----------------------------------------------------------------------------------------------------------------------
231 $ 1,023,735.01 Balloon 7.79000 0.10820 0.05000 7.68180
232 $ 1,010,741.68 Balloon 7.31000 0.14820 0.09000 7.16180
233 $ 993,163.47 Balloon 7.31000 0.14820 0.09000 7.16180
234 $ 969,081.70 Balloon 7.36000 0.10820 0.05000 7.25180
235 $ 963,487.57 Balloon 7.15000 0.18320 0.12500 6.96680
- ----------------------------------------------------------------------------------------------------------------------
236 $ 965,804.81 Balloon 7.27000 0.10820 0.05000 7.16180
237 $ 894,694.47 Balloon 8.10000 0.10820 0.05000 7.99180
238 $ 902,071.83 Balloon 8.62000 0.10820 0.05000 8.51180
239 $ 1,004,314.47 Balloon 7.63000 0.18320 0.12500 7.44680
240 $ 476,976.50 Balloon 7.58000 0.13820 0.08000 7.44180
241 $ 844,380.45 Balloon 9.25000 0.10820 0.05000 9.14180
242 $ 728,850.12 Balloon 7.42000 0.18320 0.12500 7.23680
243 $ 740,377.97 Balloon 8.34000 0.18320 0.12500 8.15680
244 $ 10,271.35 Fully Amortizing 8.21000 0.10820 0.05000 8.10180
245 $ 622,572.60 Balloon 8.67000 0.10820 0.05000 8.56180
- ----------------------------------------------------------------------------------------------------------------------
246 $ 728,775.35 Balloon 7.48000 0.18320 0.12500 7.29680
247 $ 711,913.47 Balloon 7.31000 0.14820 0.09000 7.16180
248 $ 709,002.42 Balloon 7.61000 0.18320 0.12500 7.42680
249 $ 614,604.04 Balloon 7.27000 0.13320 0.07500 7.13680
250 $ 622,194.25 Balloon 8.75000 0.10820 0.05000 8.64180
- ----------------------------------------------------------------------------------------------------------------------
251 $ 602,035.00 Balloon 8.62500 0.10820 0.05000 8.51680
252 $ 436,086.85 Balloon 7.30000 0.10820 0.05000 7.19180
253 $ 333,011.77 Balloon 7.30000 0.10820 0.05000 7.19180
<PAGE>
<CAPTION>
FIRST INTEREST ORIGINAL TERM
CONTROL NOTE PAYMENT ACCRUAL MONTHLY TO MATURITY / ARD
NUMBER DATE DATE METHOD PAYMENT (MONTHS)
<S> <C> <C> <C> <C> <C>
1 12/05/97 02/01/98 Actual Days / 360 Year-Days $ 396,797.36 120
2 12/23/97 02/11/98 Actual Days / 360 Year-Days $ 342,793.58 120
3 01/27/98 03/01/98 Actual Days / 360 Year-Days $ 274,306.96 120
4 01/02/98 03/01/98 30 Month-Days / 360 Year-Days $ 221,434.42 120
5 12/30/97 02/01/98 30 Month-Days / 360 Year-Days $ 165,394.58 120
- ---------------------------------------------------------------------------------------------------------------------
6 12/24/97 02/01/98 30 Month-Days / 360 Year-Days $ 157,212.67 120
7 12/10/97 02/01/98 Actual Days / 360 Year-Days $ 141,378.89 120
8 12/18/97 02/01/98 Actual Days / 360 Year-Days $ 115,241.77 120
9 10/30/97 12/01/97 30 Month-Days / 360 Year-Days $ 121,864.83 120
10 05/01/97 07/01/97 30 Month-Days / 360 Year-Days $ 125,057.25 120
- ---------------------------------------------------------------------------------------------------------------------
11 11/25/97 01/01/98 Actual Days / 360 Year-Days $ 104,930.83 120
12 01/16/98 03/01/98 Actual Days / 360 Year-Days $ 101,868.08 120
13 11/07/97 01/01/98 30 Month-Days / 360 Year-Days $ 97,248.69 120
14 12/12/97 02/01/98 Actual Days / 360 Year-Days $ 98,974.84 120
15 08/29/97 10/01/97 30 Month-Days / 360 Year-Days $ 107,435.13 120
- ---------------------------------------------------------------------------------------------------------------------
16 02/20/98 04/01/98 Actual Days / 360 Year-Days $ 87,251.66 84
17 12/23/97 02/01/98 Actual Days / 360 Year-Days $ 92,950.86 120
18 12/03/97 02/01/98 30 Month-Days / 360 Year-Days $ 82,431.67 120
19 12/30/97 02/01/98 Actual Days / 360 Year-Days $ 86,891.51 120
20 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 84,122.21 120
- ---------------------------------------------------------------------------------------------------------------------
21 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 73,210.71 120
22 12/04/97 01/01/98 30 Month-Days / 360 Year-Days $ 72,454.54 121
23 10/30/97 12/01/97 30 Month-Days / 360 Year-Days $ 72,584.12 120
24 01/07/98 03/01/98 Actual Days / 360 Year-Days $ 67,878.82 120
25 01/16/98 03/01/98 Actual Days / 360 Year-Days $ 62,456.98 120
- ---------------------------------------------------------------------------------------------------------------------
26 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 59,990.99 120
27 11/26/97 01/01/98 Actual Days / 360 Year-Days $ 59,615.11 120
28 10/22/97 12/01/97 30 Month-Days / 360 Year-Days $ 59,243.11 120
29 12/30/97 02/01/98 Actual Days / 360 Year-Days $ 64,482.22 120
30 12/24/97 02/01/98 Actual Days / 360 Year-Days $ 59,603.29 120
- ---------------------------------------------------------------------------------------------------------------------
31 11/25/97 01/01/98 30 Month-Days / 360 Year-Days $ 57,467.52 121
32 01/13/98 03/01/98 Actual Days / 360 Year-Days $ 53,385.48 120
33 12/22/97 02/01/98 30 Month-Days / 360 Year-Days $ 54,357.22 120
34 12/19/97 02/01/98 30 Month-Days / 360 Year-Days $ 53,063.11 120
35 01/15/98 03/01/98 Actual Days / 360 Year-Days $ 57,104.95 120
- ---------------------------------------------------------------------------------------------------------------------
36 08/07/97 09/01/97 Actual Days / 360 Year-Days $ 58,088.87 120
37 12/08/97 02/01/98 Actual Days / 360 Year-Days $ 52,425.84 120
38 11/13/97 01/01/98 30 Month-Days / 360 Year-Days $ 54,050.58 120
39 12/30/97 02/01/98 30 Month-Days / 360 Year-Days $ 52,394.20 120
40 12/31/97 02/01/98 30 Month-Days / 360 Year-Days $ 50,947.00 120
- ---------------------------------------------------------------------------------------------------------------------
41 10/31/97 12/01/97 30 Month-Days / 360 Year-Days $ 50,405.62 120
42 10/14/97 12/01/97 30 Month-Days / 360 Year-Days $ 53,514.63 84
43 06/27/97 08/01/97 30 Month-Days / 360 Year-Days $ 55,535.68 120
44 12/11/97 02/01/98 Actual Days / 360 Year-Days $ 58,312.59 120
45 01/09/98 03/01/98 Actual Days / 360 Year-Days $ 45,215.90 84
- ---------------------------------------------------------------------------------------------------------------------
46 12/30/97 02/01/98 Actual Days / 360 Year-Days $ 48,753.43 120
47 10/22/97 12/01/97 30 Month-Days / 360 Year-Days $ 47,257.51 120
48 12/17/97 02/01/98 Actual Days / 360 Year-Days $ 45,240.57 120
49 01/08/98 03/01/98 Actual Days / 360 Year-Days $ 47,326.07 84
50 12/24/97 02/01/98 Actual Days / 360 Year-Days $ 51,473.14 120
- ---------------------------------------------------------------------------------------------------------------------
51 10/01/97 11/01/97 30 Month-Days / 360 Year-Days $ 48,986.68 120
52 07/24/97 09/01/97 30 Month-Days / 360 Year-Days $ 50,617.08 120
53 11/18/97 12/01/97 30 Month-Days / 360 Year-Days $ 45,049.42 120
54 11/04/97 01/01/98 30 Month-Days / 360 Year-Days $ 46,193.33 120
55 11/24/97 01/01/98 Actual Days / 360 Year-Days $ 46,028.95 120
- ---------------------------------------------------------------------------------------------------------------------
56 12/23/97 02/01/98 Actual Days / 360 Year-Days $ 46,231.31 120
57 11/21/97 01/01/98 30 Month-Days / 360 Year-Days $ 51,162.42 120
58 02/04/98 04/01/98 Actual Days / 360 Year-Days $ 43,189.06 120
59 06/30/97 08/01/97 30 Month-Days / 360 Year-Days $ 47,835.96 120
60 08/07/97 09/01/97 Actual Days / 360 Year-Days $ 45,744.98 120
- ---------------------------------------------------------------------------------------------------------------------
61 08/28/97 10/01/97 30 Month-Days / 360 Year-Days $ 44,067.89 120
62 08/07/97 09/01/97 Actual Days / 360 Year-Days $ 44,292.76 120
63 06/13/97 08/01/97 30 Month-Days / 360 Year-Days $ 50,577.95 120
64 12/15/97 02/01/98 Actual Days / 360 Year-Days $ 41,396.02 120
65 10/22/97 12/01/97 30 Month-Days / 360 Year-Days $ 39,725.57 120
- ---------------------------------------------------------------------------------------------------------------------
66 08/29/97 10/01/97 30 Month-Days / 360 Year-Days $ 45,622.12 120
67 11/26/97 01/01/98 30 Month-Days / 360 Year-Days $ 37,750.60 120
68 12/16/97 02/01/98 Actual Days / 360 Year-Days $ 36,739.51 120
69 12/31/97 02/01/98 Actual Days / 360 Year-Days $ 41,796.17 120
70 11/12/97 01/01/98 Actual Days / 360 Year-Days $ 42,220.68 120
- ---------------------------------------------------------------------------------------------------------------------
71 12/09/97 02/01/98 30 Month-Days / 360 Year-Days $ 39,800.21 120
72 10/30/97 12/01/97 30 Month-Days / 360 Year-Days $ 37,204.49 120
73 12/08/97 02/01/98 Actual Days / 360 Year-Days $ 36,227.27 120
74 01/28/98 03/01/98 Actual Days / 360 Year-Days $ 38,719.47 120
75 06/26/97 08/01/97 Actual Days / 360 Year-Days $ 41,695.12 84
- ---------------------------------------------------------------------------------------------------------------------
76 10/29/97 12/01/97 30 Month-Days / 360 Year-Days $ 35,554.52 120
77 01/16/98 03/01/98 Actual Days / 360 Year-Days $ 34,980.73 120
78 12/26/97 02/01/98 Actual Days / 360 Year-Days $ 42,597.14 120
79 11/21/97 01/01/98 30 Month-Days / 360 Year-Days $ 39,396.42 120
80 11/24/97 01/01/98 Actual Days / 360 Year-Days $ 37,324.40 120
- ---------------------------------------------------------------------------------------------------------------------
81 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 34,960.99 120
82 11/14/97 01/01/98 30 Month-Days / 360 Year-Days $ 35,786.07 120
83 11/18/97 01/01/98 30 Month-Days / 360 Year-Days $ 33,669.05 120
84 08/07/97 09/01/97 Actual Days / 360 Year-Days $ 36,015.10 120
85 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 34,060.42 120
- ---------------------------------------------------------------------------------------------------------------------
86 12/05/97 02/01/98 Actual Days / 360 Year-Days $ 32,126.07 120
87 12/03/97 02/01/98 30 Month-Days / 360 Year-Days $ 32,062.29 120
88 01/20/98 03/01/98 Actual Days / 360 Year-Days $ 36,750.03 120
89 10/22/97 12/01/97 30 Month-Days / 360 Year-Days $ 31,676.23 120
90 01/16/98 03/01/98 Actual Days / 360 Year-Days $ 30,284.12 120
- ---------------------------------------------------------------------------------------------------------------------
91 12/31/97 02/01/98 30 Month-Days / 360 Year-Days $ 31,720.84 120
92 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 30,881.28 120
93 12/29/97 02/01/98 30 Month-Days / 360 Year-Days $ 30,484.57 120
94 12/19/97 02/01/98 Actual Days / 360 Year-Days $ 30,302.15 120
95 07/25/97 09/01/97 30 Month-Days / 360 Year-Days $ 32,114.25 120
- ---------------------------------------------------------------------------------------------------------------------
96 01/16/98 03/01/98 Actual Days / 360 Year-Days $ 29,258.10 120
97 12/18/97 02/01/98 Actual Days / 360 Year-Days $ 30,524.77 84
98 11/12/97 01/01/98 30 Month-Days / 360 Year-Days $ 32,714.14 120
99 11/17/97 01/01/98 Actual Days / 360 Year-Days $ 29,499.32 120
100 12/29/97 02/01/98 Actual Days / 360 Year-Days $ 30,036.79 120
- ---------------------------------------------------------------------------------------------------------------------
101 09/15/97 11/01/97 30 Month-Days / 360 Year-Days $ 31,656.86 120
102 09/04/97 11/01/97 30 Month-Days / 360 Year-Days $ 31,259.10 120
103 11/19/97 01/01/98 Actual Days / 360 Year-Days $ 27,526.49 120
104 08/07/97 09/01/97 Actual Days / 360 Year-Days $ 30,024.68 120
105 12/05/97 02/01/98 Actual Days / 360 Year-Days $ 28,527.55 120
- ---------------------------------------------------------------------------------------------------------------------
106 08/29/97 10/01/97 30 Month-Days / 360 Year-Days $ 30,600.40 120
107 01/29/98 03/01/98 Actual Days / 360 Year-Days $ 27,422.84 120
108 12/19/97 02/01/98 30 Month-Days / 360 Year-Days $ 27,968.58 120
109 12/05/97 02/01/98 Actual Days / 360 Year-Days $ 27,341.33 120
110 12/15/97 02/01/98 Actual Days / 360 Year-Days $ 29,196.35 120
- ---------------------------------------------------------------------------------------------------------------------
111 10/27/97 12/01/97 30 Month-Days / 360 Year-Days $ 28,297.99 120
112 12/30/97 02/01/98 Actual Days / 365 Year-Days $ 27,510.86 120
113 06/16/97 08/01/97 30 Month-Days / 360 Year-Days $ 31,689.72 120
114 12/05/97 02/01/98 Actual Days / 360 Year-Days $ 26,657.80 120
115 01/14/98 03/01/98 Actual Days / 360 Year-Days $ 26,972.81 120
- ---------------------------------------------------------------------------------------------------------------------
116 11/04/97 01/01/98 30 Month-Days / 360 Year-Days $ 27,877.69 120
117 07/01/97 09/01/97 30 Month-Days / 360 Year-Days $ 28,471.58 120
118 01/22/98 03/01/98 Actual Days / 360 Year-Days $ 27,589.19 120
119 01/16/98 03/01/98 Actual Days / 360 Year-Days $ 24,756.85 120
120 10/22/97 12/01/97 Actual Days / 360 Year-Days $ 28,448.04 120
- ---------------------------------------------------------------------------------------------------------------------
121 12/29/97 02/01/98 Actual Days / 360 Year-Days $ 30,462.47 120
122 08/01/97 10/01/97 30 Month-Days / 360 Year-Days $ 28,876.57 120
123 01/22/98 03/01/98 Actual Days / 360 Year-Days $ 24,338.97 120
124 12/03/97 02/01/98 Actual Days / 360 Year-Days $ 25,048.58 120
125 12/23/97 02/01/98 30 Month-Days / 360 Year-Days $ 24,950.24 132
- ---------------------------------------------------------------------------------------------------------------------
126 12/23/97 02/01/98 30 Month-Days / 360 Year-Days $ 24,950.24 120
127 12/24/97 02/01/98 Actual Days / 360 Year-Days $ 24,754.00 120
128 12/05/97 02/01/98 Actual Days / 360 Year-Days $ 24,607.20 120
129 11/12/97 01/01/98 Actual Days / 360 Year-Days $ 24,876.57 120
130 10/31/97 12/01/97 30 Month-Days / 360 Year-Days $ 25,940.26 120
- ---------------------------------------------------------------------------------------------------------------------
131 08/07/97 10/01/97 30 Month-Days / 360 Year-Days $ 27,553.42 120
132 05/23/97 07/01/97 30 Month-Days / 360 Year-Days $ 30,766.74 120
133 02/06/98 04/01/98 Actual Days / 360 Year-Days $ 24,724.95 120
134 11/21/97 01/01/98 Actual Days / 360 Year-Days $ 24,190.34 120
135 05/23/97 07/01/97 30 Month-Days / 360 Year-Days $ 29,424.93 120
- ---------------------------------------------------------------------------------------------------------------------
136 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 24,257.17 120
137 11/19/97 01/01/98 30 Month-Days / 360 Year-Days $ 24,090.20 120
138 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 27,013.57 120
139 10/31/97 12/01/97 30 Month-Days / 360 Year-Days $ 24,257.17 120
140 10/28/97 12/01/97 30 Month-Days / 360 Year-Days $ 25,364.94 120
- ---------------------------------------------------------------------------------------------------------------------
141 06/30/97 08/01/97 30 Month-Days / 360 Year-Days $ 27,386.22 120
142 12/31/97 02/01/98 Actual Days / 360 Year-Days $ 24,358.02 120
143 12/02/97 02/01/98 30 Month-Days / 360 Year-Days $ 23,309.41 120
144 02/27/98 04/01/98 Actual Days / 360 Year-Days $ 21,999.33 120
145 09/10/97 11/01/97 30 Month-Days / 360 Year-Days $ 27,310.33 119
- ---------------------------------------------------------------------------------------------------------------------
146 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 22,591.09 120
147 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 22,003.55 120
148 05/15/97 07/01/97 30 Month-Days / 360 Year-Days $ 26,495.08 120
149 11/10/97 01/01/98 Actual Days / 360 Year-Days $ 22,414.80 120
150 06/27/97 08/01/97 30 Month-Days / 360 Year-Days $ 24,746.30 120
- ---------------------------------------------------------------------------------------------------------------------
151 12/18/97 02/01/98 30 Month-Days / 360 Year-Days $ 21,803.16 120
152 12/31/97 02/01/98 Actual Days / 360 Year-Days $ 21,105.43 120
153 07/09/97 09/01/97 30 Month-Days / 360 Year-Days $ 24,493.42 120
154 01/30/98 03/01/98 Actual Days / 360 Year-Days $ 21,664.88 120
155 09/11/97 11/01/97 30 Month-Days / 360 Year-Days $ 21,113.78 120
- ---------------------------------------------------------------------------------------------------------------------
156 01/06/98 03/01/98 Actual Days / 360 Year-Days $ 20,436.81 120
157 06/09/97 08/01/97 30 Month-Days / 360 Year-Days $ 23,276.39 120
158 06/30/97 08/01/97 30 Month-Days / 360 Year-Days $ 22,833.85 120
159 09/11/97 11/01/97 30 Month-Days / 360 Year-Days $ 23,151.41 120
160 02/02/98 04/01/98 Actual Days / 360 Year-Days $ 20,582.60 120
- ---------------------------------------------------------------------------------------------------------------------
161 01/14/98 03/01/98 30 Month-Days / 360 Year-Days $ 19,062.97 120
162 12/30/97 02/01/98 Actual Days / 360 Year-Days $ 18,272.56 120
163 12/02/97 02/01/98 Actual Days / 360 Year-Days $ 19,040.44 120
164 12/12/97 02/01/98 30 Month-Days / 360 Year-Days $ 18,778.50 120
165 11/21/97 01/01/98 30 Month-Days / 360 Year-Days $ 18,023.22 120
- ---------------------------------------------------------------------------------------------------------------------
166 05/06/97 07/01/97 30 Month-Days / 360 Year-Days $ 22,337.56 120
167 01/29/98 03/01/98 Actual Days / 360 Year-Days $ 18,878.79 120
168 01/16/98 03/01/98 Actual Days / 360 Year-Days $ 18,559.11 120
169 11/14/97 01/01/98 30 Month-Days / 360 Year-Days $ 17,648.50 120
170 10/08/97 12/01/97 30 Month-Days / 360 Year-Days $ 18,824.74 120
- ---------------------------------------------------------------------------------------------------------------------
171 09/08/97 11/01/97 30 Month-Days / 360 Year-Days $ 19,383.21 84
172 01/27/98 03/01/98 Actual Days / 360 Year-Days $ 20,705.50 120
173 08/19/97 10/01/97 30 Month-Days / 360 Year-Days $ 25,081.78 120
174 11/03/97 01/01/98 Actual Days / 360 Year-Days $ 19,002.29 120
175 12/12/97 02/01/98 30 Month-Days / 360 Year-Days $ 17,955.04 120
- ---------------------------------------------------------------------------------------------------------------------
176 10/01/97 11/01/97 30 Month-Days / 360 Year-Days $ 18,369.38 120
177 11/19/97 01/01/98 Actual Days / 360 Year-Days $ 17,003.57 120
178 12/17/97 02/01/98 30 Month-Days / 360 Year-Days $ 19,229.21 120
179 10/30/97 12/01/97 30 Month-Days / 360 Year-Days $ 17,858.51 120
180 10/31/97 12/01/97 30 Month-Days / 360 Year-Days $ 17,377.77 120
- ---------------------------------------------------------------------------------------------------------------------
181 11/10/97 01/01/98 30 Month-Days / 360 Year-Days $ 18,037.97 120
182 12/05/97 02/01/98 30 Month-Days / 360 Year-Days $ 21,271.54 120
183 09/23/97 11/01/97 30 Month-Days / 360 Year-Days $ 19,102.45 120
184 02/26/98 04/01/98 Actual Days / 360 Year-Days $ 17,097.22 120
185 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 17,030.21 120
- ---------------------------------------------------------------------------------------------------------------------
186 01/07/98 03/01/98 Actual Days / 360 Year-Days $ 16,470.02 120
187 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 16,177.34 120
188 11/18/97 01/01/98 Actual Days / 360 Year-Days $ 18,931.44 120
189 11/21/97 01/01/98 Actual Days / 360 Year-Days $ 15,955.33 120
190 01/15/98 03/01/98 Actual Days / 360 Year-Days $ 15,271.08 120
- ---------------------------------------------------------------------------------------------------------------------
191 01/28/98 03/01/98 Actual Days / 360 Year-Days $ 17,026.73 120
192 05/09/97 07/01/97 30 Month-Days / 360 Year-Days $ 19,649.19 120
193 01/20/98 03/01/98 Actual Days / 360 Year-Days $ 15,975.59 120
194 08/28/97 10/01/97 30 Month-Days / 360 Year-Days $ 17,301.82 120
195 12/23/97 02/01/98 Actual Days / 360 Year-Days $ 15,721.05 120
- ---------------------------------------------------------------------------------------------------------------------
196 02/03/98 04/01/98 Actual Days / 360 Year-Days $ 15,273.78 120
197 11/10/97 01/01/98 Actual Days / 360 Year-Days $ 16,501.36 120
198 09/04/97 11/01/97 30 Month-Days / 360 Year-Days $ 14,972.16 120
199 07/10/97 09/01/97 30 Month-Days / 360 Year-Days $ 14,926.16 120
200 12/23/97 02/01/98 Actual Days / 360 Year-Days $ 14,780.65 120
- ---------------------------------------------------------------------------------------------------------------------
201 02/05/98 04/01/98 Actual Days / 360 Year-Days $ 14,327.50 120
202 12/24/97 02/01/98 Actual Days / 360 Year-Days $ 13,711.42 120
203 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 14,962.43 120
204 07/01/97 09/01/97 30 Month-Days / 360 Year-Days $ 14,828.95 120
205 11/06/97 01/01/98 Actual Days / 360 Year-Days $ 15,668.43 120
- ---------------------------------------------------------------------------------------------------------------------
206 01/20/98 03/01/98 Actual Days / 360 Year-Days $ 13,795.16 120
207 12/24/97 02/01/98 Actual Days / 360 Year-Days $ 13,110.84 120
208 06/26/97 08/01/97 Actual Days / 360 Year-Days $ 15,367.08 120
209 12/23/97 02/01/98 Actual Days / 360 Year-Days $ 12,721.72 120
210 12/05/97 02/01/98 Actual Days / 360 Year-Days $ 12,303.60 120
- ---------------------------------------------------------------------------------------------------------------------
211 12/08/97 02/01/98 Actual Days / 360 Year-Days $ 13,360.44 120
212 01/30/98 03/01/98 Actual Days / 360 Year-Days $ 15,817.68 120
213 12/23/97 02/01/98 30 Month-Days / 360 Year-Days $ 12,560.34 120
214 09/15/97 11/01/97 30 Month-Days / 360 Year-Days $ 13,506.05 120
215 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 11,714.03 120
- ---------------------------------------------------------------------------------------------------------------------
216 01/07/98 03/01/98 Actual Days / 360 Year-Days $ 10,277.09 120
217 06/25/97 08/01/97 30 Month-Days / 360 Year-Days $ 11,316.38 120
218 09/30/97 11/01/97 Actual Days / 360 Year-Days $ 11,239.03 120
219 11/24/97 01/01/98 Actual Days / 360 Year-Days $ 10,416.02 120
220 12/23/97 02/01/98 30 Month-Days / 360 Year-Days $ 10,990.43 120
- ---------------------------------------------------------------------------------------------------------------------
221 05/30/97 07/01/97 30 Month-Days / 360 Year-Days $ 11,788.25 120
222 01/27/98 03/01/98 Actual Days / 360 Year-Days $ 9,984.40 120
223 05/15/97 07/01/97 30 Month-Days / 360 Year-Days $ 11,873.63 120
224 10/02/97 12/01/97 30 Month-Days / 360 Year-Days $ 11,133.35 120
225 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 9,036.05 120
- ---------------------------------------------------------------------------------------------------------------------
226 02/05/98 04/01/98 Actual Days / 360 Year-Days $ 8,771.51 120
227 01/16/98 03/01/98 Actual Days / 360 Year-Days $ 10,282.77 120
228 05/28/97 07/01/97 30 Month-Days / 360 Year-Days $ 12,407.78 120
229 01/02/98 03/01/98 Actual Days / 360 Year-Days $ 8,646.22 120
230 05/27/97 07/01/97 Silent $ 10,660.23 120
- ---------------------------------------------------------------------------------------------------------------------
231 02/05/98 04/01/98 Actual Days / 360 Year-Days $ 8,270.55 120
232 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 7,891.88 120
233 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 7,754.63 120
234 12/29/97 02/01/98 30 Month-Days / 360 Year-Days $ 7,724.12 120
235 02/26/98 04/01/98 Actual Days / 360 Year-Days $ 7,429.47 120
- ---------------------------------------------------------------------------------------------------------------------
236 12/02/97 02/01/98 Actual Days / 360 Year-Days $ 7,518.87 120
237 07/17/97 09/01/97 30 Month-Days / 360 Year-Days $ 8,601.90 120
238 05/13/97 07/01/97 30 Month-Days / 360 Year-Days $ 8,946.63 120
239 12/01/97 02/01/98 Actual Days / 360 Year-Days $ 7,647.89 84
240 10/10/97 12/01/97 Actual Days / 360 Year-Days $ 9,315.64 120
241 07/21/97 09/01/97 Actual Days / 360 Year-Days $ 8,478.18 120
242 01/07/98 03/01/98 Actual Days / 360 Year-Days $ 6,604.16 120
243 12/16/97 02/01/98 Actual Days / 360 Year-Days $ 7,070.82 120
244 12/23/97 02/01/98 Actual Days / 360 Year-Days $ 11,019.61 120
245 06/09/97 08/01/97 30 Month-Days / 360 Year-Days $ 7,775.72 120
- ---------------------------------------------------------------------------------------------------------------------
246 02/26/98 04/01/98 Actual Days / 360 Year-Days $ 5,757.23 120
247 12/22/97 02/01/98 Actual Days / 360 Year-Days $ 5,558.63 120
248 02/06/98 04/01/98 Actual Days / 360 Year-Days $ 5,654.10 120
249 12/05/97 02/01/98 Actual Days / 360 Year-Days $ 4,784.73 120
250 06/25/97 08/01/97 Silent $ 5,506.90 121
- ---------------------------------------------------------------------------------------------------------------------
251 07/21/97 09/01/97 Actual Days / 360 Year-Days $ 5,161.41 120
252 12/23/97 02/01/98 30 Month-Days / 360 Year-Days $ 3,993.17 120
253 12/23/97 02/01/98 30 Month-Days / 360 Year-Days $ 3,049.33 120
<PAGE>
<CAPTION>
REMAINING
ORIGINAL TERM TO SCHEDULED
AMORTIZATION MATURITY MATURITY CROSS LOCKOUT
CONTROL TERM SEASONING / ARD DATE/ COLLATERALIZED RELATED EXPIRATION
NUMBER (MONTHS) (MONTHS) (MONTHS) ARD LOANS LOANS DATE PREPAYMENT PENALTY DESCRIPTION (MONTHS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 360 3 117 01/01/08 04/30/00 LO(28)/Defeasance(91)/FREE(1)
2 360 3 117 01/11/08 05/10/00 LO(28)/Defeasance(89)/FREE(3)
3 360 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
4 360 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
5 360 3 117 01/01/08 01/31/01 LO(37)/Defeasance(77)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
6 360 3 117 01/01/08 12/31/00 LO(36)/Defeasance(84)
7 360 3 117 12/31/07 12/31/00 LO(36)/Defeasance(84)
8 360 3 117 01/01/08 01/31/01 LO(37)/Defeasance(77)/FREE(6)
9 300 5 115 11/01/07 11/30/01 LO(49)/> YM or 1%(65)/FREE(6)
10 360 10 110 06/01/07 06/30/01 LO(49)/>YM or 1%(65)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
11 360 4 116 11/30/07 11/30/00 LO(36)/Defeasance(84)
12 300 2 118 02/01/08 Yes(c) Yes (1) 01/31/02 LO(48)/YM(66)/FREE(6)
13 360 4 116 12/01/07 11/30/00 LO(36)/Defeasance(84)
14 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
15 300 7 113 09/01/07 09/30/98 LO(13)/>YM or 1%(101)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
16 360 1 83 03/01/05 04/30/00 LO2(6)/Defeasance(52)/FREE(6)
17 360 3 117 12/31/07 12/31/00 LO(36)/Defeasance(78)/FREE(6)
18 360 3 117 01/01/08 01/31/01 LO(37)/Defeasance(77)/FREE(6)
19 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
20 264 3 117 12/31/07 12/31/00 LO(36)/Defeasance(84)
- -----------------------------------------------------------------------------------------------------------------------------------
21 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
22 360 4 117 01/01/08 12/31/01 LO(48)/>YM or 1%(66)/FREE(6)
23 360 5 115 11/01/07 11/30/01 LO(49)/>YM or 1%(65)/FREE(6)
24 360 2 118 02/01/08 12/31/01 LO(47)/YM(67)/FREE(6)
25 360 2 118 02/01/08 01/29/00 LO(24)/YM(90)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
26 360 3 117 01/01/08 Yes (h) Yes (20) 04/30/00 LO(28)/Defeasance(86)/FREE(6)
27 360 4 116 12/01/07 04/30/00 LO(29)/Defeasance(85)/FREE(6)
28 360 5 115 11/01/07 Yes (14) 11/30/00 LO(37)/Defeasance(77)/FREE(6)
29 300 3 117 01/01/08 04/30/00 LO(28)/Defeasance(86)/FREE(6)
30 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
31 360 4 117 01/01/08 12/31/01 LO(49)/> YM or 1%(66)/FREE(6)
32 360 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
33 360 3 117 01/01/08 Yes (11) 04/30/00 LO(28)/Defeasance(86)/FREE(6)
34 360 3 117 01/01/08 01/31/01 LO(37)/Defeasance(77)/FREE(6)
35 300 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
36 360 8 112 08/01/07 Yes (3) 07/31/01 LO(47)/YM(66)/FREE(6)
37 360 3 117 01/01/08 Yes (11) 05/31/00 LO(29)/Defeasance(85)/FREE(6)
38 360 4 116 12/01/07 12/31/00 LO(37)/ Defeasance(77)/FREE(6)
39 360 3 117 01/01/08 01/31/02 LO(49)/>YM or 1%(65)/FREE(6)
40 360 3 117 01/01/08 01/31/01 LO(37)/Defeasance(77)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
41 360 5 115 11/01/07 Yes (6) 11/30/01 LO(49)/>YM or 1%(65)/FREE(6)
42 360 5 79 11/01/04 11/30/99 LO(25)/>YM or 1%(53)/FREE(6)
43 360 9 111 07/01/07 07/31/01 LO(49)/>YM or 1%(65)/FREE(6)
44 240 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
45 360 2 82 02/01/05 Yes (10) 01/31/00 LO(24)/5%(12)/4%(12)/3%(12)/2%(12)/1%(6)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
46 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
47 360 5 115 11/01/07 Yes (14) 11/30/00 LO(37)/Defeasance(77)/FREE(6)
48 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
49 300 2 82 02/01/05 01/31/01 LO(36)/YM(42)/FREE(6)
50 300 3 117 01/01/08 12/31/98 LO(12)/YM(102)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
51 360 6 114 10/01/07 10/31/01 LO(49)/>YM or 1% /(59)/FREE(12)
52 360 8 112 08/01/07 08/31/01 LO(49)/>YM or 1%(65)/FREE(6)
53 360 5 115 11/01/07 11/30/01 LO(48)/>YM or 1%(65)/FREE(6)
54 360 4 116 12/01/07 12/31/01 LO(49)/>YM or 1%(65)/FREE(6)
55 360 4 116 12/01/07 11/30/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
56 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
57 300 4 116 12/01/07 12/31/02 LO(61)/<5% or YM(12)/<3% or YM(24)/<1%
or YM(17)/FREE(6)
58 360 1 119 03/01/08 02/28/02 LO(48)/YM(66)/FREE(6)
59 360 9 111 07/01/07 Yes (11) 07/31/01 LO(49)/>YM or 1%(65)/FREE(6)
60 360 8 112 08/01/07 Yes (3) 07/31/01 LO(47)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
61 360 7 113 09/01/07 Yes (11) 09/30/01 LO(49)/>YM or 1%(65)/FREE(6)
62 360 8 112 08/01/07 Yes(d) Yes (3) 07/31/01 LO(47)/YM(66)/FREE(6)
63 300 9 111 07/01/07 07/31/01 LO(49)/>YM or 1%(65)/FREE(6)
64 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
65 360 5 115 11/01/07 Yes (14) 11/30/00 LO(37)/Defeasance(77)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
66 300 7 113 09/01/07 Yes (13) 09/30/01 LO(49)/>YM or 1%(65)/FREE(6)
67 360 4 116 12/01/07 11/30/00 LO(36)/Defeasance(84)
68 360 3 117 12/31/07 12/31/00 LO(36)/Defeasance(84)
69 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
70 300 4 116 12/01/07 11/30/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
71 300 3 117 01/01/08 01/31/02 LO(49)/>YM or 1%(65)/FREE(6)
72 360 5 115 11/01/07 11/30/01 LO(49)/>YM or 1%(65)/FREE(6)
73 360 3 117 01/01/08 Yes(e) Yes (4) 12/31/01 LO(48)/YM(66)/FREE(6)
74 300 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
75 360 9 75 06/30/04 06/30/00 LO(36)/4%(12)/3%(12)/2%(12)/1%(6)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
76 360 5 115 11/01/07 Yes (6) 11/30/01 LO(49)/>YM or 1%(65)/FREE(6)
77 360 2 118 02/01/08 Yes(c) Yes (1) 01/31/02 LO(48)/YM(66)/FREE(6)
78 240 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
79 300 4 116 12/01/07 Yes (13) 12/31/00 LO(37)/>YM or 1%(77)/FREE(6)
80 300 4 116 12/01/07 11/30/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
81 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
82 360 4 116 12/01/07 11/30/01 LO(47)/>YM or 1%(66)/FREE(6)
83 360 4 116 12/01/07 12/31/00 LO(37)/Defeasance(77)/FREE(6)
84 360 8 112 08/01/07 Yes(d) Yes (3) 07/31/01 LO(48)/YM(65)/FREE(6)
85 360 3 117 01/01/08 Yes (13) 12/31/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
86 360 3 117 01/01/08 Yes(e) Yes (4) 12/31/01 LO(48)/YM(66)/FREE(6)
87 360 3 117 01/01/08 Yes (14) 01/31/01 LO(37)/Defeasance(77)/FREE(6)
88 240 2 118 02/01/08 01/31/02 LO(48)/YM(67)/FREE(5)
89 360 5 115 11/01/07 Yes (14) 11/30/00 LO(37)/Defeasance(77)/FREE(6)
90 360 2 118 01/31/08 Yes (21) 01/31/01 LO(36)/Defeasance(78)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
91 360 3 117 01/01/08 12/31/00 LO(36)/Defeasance(84)
92 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
93 360 3 117 01/01/08 01/31/01 LO(37)/Defeasance(77)/FREE(6)
94 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
95 360 8 112 08/01/07 08/31/01 LO(49)/>YM or 1%(65)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
96 360 2 118 01/31/08 Yes (21) 01/31/01 LO(36)/Defeasance(78)/FREE(6)
97 360 3 81 01/01/05 12/31/00 LO(36)/1%(42)/FREE(6)
98 300 4 116 12/01/07 11/30/01 LO(48)/>YM or 1%(66)/FREE(6)
99 360 4 116 12/01/07 11/30/01 LO(48)/YM(66)/FREE(6)
100 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
101 360 6 114 10/01/07 10/31/01 LO(49)/>YM or 1%(59)/FREE(12)
102 360 6 114 10/01/07 10/31/01 LO(49)/>YM or 1%(65)/FREE(6)
103 360 4 116 12/01/07 11/30/01 LO(48)/YM(66)/FREE(6)
104 360 8 112 08/01/07 Yes(d) Yes (3) 07/31/01 LO(47)/YM(66)/FREE(6)
105 360 3 117 01/01/08 12/31/01 LO(48)/YM(63)/FREE(9)
- -----------------------------------------------------------------------------------------------------------------------------------
106 360 7 113 09/01/07 09/30/01 LO(49)/>YM or 1%(65)/FREE(6)
107 360 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
108 360 3 117 01/01/08 01/31/02 LO(49)/>YM or 1%(65)/FREE(6)
109 360 3 117 01/01/08 Yes(e) Yes (4) 12/31/01 LO(48)/YM(66)/FREE(6)
110 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
111 360 5 115 11/01/07 Yes (9) 11/30/01 LO(49)/>YM or 1%(65)/FREE(6)
112 360 3 117 01/01/08 01/31/01 LO(37)/Defeasance(77)/FREE(6)
113 300 9 111 07/01/07 Yes (2) 07/31/01 LO(49)/>YM or 1%(65)/FREE(6)
114 360 3 117 01/01/08 Yes(e) Yes (4) 12/31/01 LO(48)/YM(66)/FREE(6)
115 300 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
116 300 4 116 12/01/07 12/31/01 LO(49)/>YM or 1%(65)/FREE(6)
117 360 8 112 08/01/07 Yes (6) 08/31/01 LO(49)/>YM or 1%(65)/FREE(6)
118 300 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
119 360 2 118 01/31/08 Yes (21) 01/31/01 LO(36)/Defeasance(78)/FREE(6)
120 300 5 115 11/01/07 10/31/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
121 240 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
122 300 7 113 09/01/07 09/30/01 LO(49)/>YM or 1%(65)/FREE(6)
123 360 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
124 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
125 360 3 129 01/01/09 01/31/02 LO(49)/>YM or 1%(77)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
126 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
127 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
128 360 3 117 01/01/08 Yes(e) Yes (4) 12/31/01 LO(48)/YM(66)/FREE(6)
129 360 4 116 12/01/07 11/30/01 LO(48)/YM(66)/FREE(6)
130 360 5 115 11/01/07 11/30/01 LO(49)/>YM or 1%(65)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
131 360 7 113 09/01/07 09/30/01 LO(49)/>YM or 1%(65)/FREE(6)
132 300 10 110 06/01/07 06/30/02 LO(61)/>YM or 1%(53)/FREE(6)
133 360 1 119 03/01/08 Yes(i) Yes (16) 02/28/01 LO(36)/YM(78)/FREE(6)
134 360 4 116 12/01/07 Yes (8) 11/30/01 LO(48)/YM(66)/FREE(6)
135 300 10 110 06/01/07 05/31/01 LO(48)/>YM or 1%(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
136 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
137 360 4 116 12/01/07 12/31/01 LO(49)/>YM or 1%(65)/FREE(6)
138 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
139 360 5 115 11/01/07 10/31/01 LO(48)/YM(66)/FREE(6)
140 360 5 115 11/01/07 11/30/01 LO(49)/>YM or 1%(65)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
141 300 9 111 07/01/07 Yes (11) 07/31/01 LO(49)/>YM or 1%(65)/FREE(6)
142 360 3 117 12/31/07 Yes (19) 12/31/00 LO(36)/Defeasance(84)
143 360 3 117 01/01/08 01/31/01 LO(37)/Defeasance77/FREE(6)
144 360 1 119 03/01/08 Yes (15) 02/28/02 LO(48)/YM(66)/FREE(6)
145 300 6 113 09/01/07 10/31/01 LO(49)/>YM or 1%(64)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
146 360 3 117 01/01/08 Yes (13) 12/31/01 LO(48)/YM(66)/FREE(6)
147 360 3 117 01/01/08 Yes (h) Yes (20) 04/30/00 LO(28)/Defeasance(86)/FREE(6)
148 300 10 110 06/01/07 06/30/01 LO(49)/>YM or 1%(65)/FREE(6)
149 360 4 116 12/01/07 11/30/01 LO(48)/YM(66)/FREE(6)
150 324 9 111 07/01/07 07/31/01 LO(49)/>YM or 1%(65)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
151 360 3 117 01/01/08 01/31/01 LO(37)/Defeasance(77)/FREE(6)
152 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
153 360 8 112 08/01/07 >YM or 1%(114)/FREE(6)
154 300 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
155 360 6 114 10/01/07 09/30/01 LO(48)/>YM or 1%(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
156 300 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
157 300 9 111 07/01/07 Yes (a) Yes (5) 07/31/01 LO(49)/>YM or 1%(65)/FREE(6)
158 300 9 111 07/01/07 07/31/01 LO(49)/>YM or 1%(65)/FREE(6)
159 300 6 114 10/01/07 Yes (9) 10/31/01 LO(49)/>YM or 1%(65)/FREE(6)
160 300 1 119 03/01/08 02/28/02 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
161 360 2 118 02/01/08 01/31/02 LO(48)/YM(59)/FREE(13)
162 360 3 117 01/01/08 01/31/02 LO(49)/>YM or 1%(65)/FREE(6)
163 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
164 360 3 117 01/01/08 01/31/02 LO(49)/>YM or 1%(65)/FREE(6)
165 360 4 116 12/01/07 12/31/00 LO(37)/Defeasance(77)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
166 324 10 110 06/01/07 06/30/01 LO(49)/>YM or 1%(65)/FREE(6)
167 360 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
168 300 2 118 02/01/08 Yes(c) Yes (1) 01/31/02 LO(48)/YM(66)/FREE(6)
169 360 4 116 12/01/07 12/31/01 LO(49)/>YM or 1%(65)/FREE(6)
170 360 5 115 11/01/07 >YM or 1%(114)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
171 300 6 78 10/01/04 10/31/00 LO(37)/Defeasance(47)
172 240 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
173 178 7 113 09/01/07 09/30/01 LO(49)/>YM or 1%(65)/FREE(6)
174 300 4 116 12/01/07 11/30/00 LO(36)/5%(24)/4%(24)/3%(12)/2%(12)/1%(6)/FREE(6)
175 330 3 117 01/01/08 12/31/99 LO(24)/YM(90)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
176 360 6 114 10/01/07 09/30/01 LO(48)/YM(66)/FREE(6)
177 360 4 116 12/01/07 11/30/01 LO(48)/YM(66)/FREE(6)
178 300 3 117 01/01/08 01/31/02 LO(49)/>YM or 1%(65)/FREE(6)
179 360 5 115 11/01/07 11/30/00 LO(37)/>YM or 1%(77)/FREE(6)
180 360 5 115 11/01/07 11/30/01 LO(49)/> YM or 1%(65)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
181 300 4 116 12/01/07 11/30/00 LO(36)/Defeasance(84)
182 240 3 117 01/01/08 01/31/02 LO(49)/>YM or 1%(65)/FREE(6)
183 300 6 114 10/01/07 10/31/01 LO(49)/>YM or 1%(65)/FREE(6)
184 360 1 119 03/01/08 Yes (10) 03/31/02 LO(49)/5%(12)/4%(12)/3%(12)/2%(12)/1%(17)/
FREE(6)
185 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
186 360 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
187 360 3 117 01/01/08 Yes (h) Yes (20) 04/30/00 LO(28)/Defeasance(86)/FREE(6)
188 240 4 116 12/01/07 11/30/01 LO(48)/YM(66)/FREE(6)
189 360 4 116 12/01/07 Yes (8) 11/30/01 LO(48)/YM(66)/FREE(6)
190 360 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
191 300 2 118 01/31/08 01/31/01 LO(36)/Defeasance(84)
192 300 10 110 06/01/07 06/30/01 LO(49)/>YM or 1%(65)/FREE(6)
193 360 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
194 300 7 113 09/01/07 09/30/99 LO(25)/>YM or 1%(89)/FREE(6)
195 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
196 300 1 119 03/01/08 02/28/02 LO(48)/YM(66)/FREE(6)
197 300 4 116 12/01/07 11/30/01 LO(48)/YM(66)/FREE(6)
198 360 6 114 10/01/07 10/31/01 LO(49)/>YM or 1%(65)/FREE(6)
199 360 8 112 08/01/07 08/31/01 LO(49)/>YM or 1%(65)/FREE(6)
200 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
201 300 1 119 03/01/08 04/30/00 LO2(6)/Defeasance(88)/FREE(6)
202 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
203 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
204 360 8 112 08/01/07 Yes (6) 08/31/01 LO(49)/>YM or 1%(65)/FREE(6)
205 240 4 116 12/01/07 11/30/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
206 300 2 118 02/01/08 01/31/02 LO(48)/5%(12)/4%(12)/3%(12)/2%(12)/1%(18)/
FREE(6)
207 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
208 300 9 111 06/30/07 06/30/02 LO60_>YM or 1%(54)/FREE(6)
209 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
210 360 3 117 01/01/08 Yes(e) Yes (4) 12/31/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
211 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
212 180 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
213 300 3 117 01/01/08 Yes (b) Yes (17) 01/31/00 LO(25)/>YM or 1%(89)/FREE(6)
214 300 6 114 10/01/07 10/31/01 LO(49)/>YM or 1%(65)/FREE(6)
215 300 3 117 01/01/08 01/31/02 LO(49)/>YM or 1%(65)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
216 360 2 118 02/01/08 Yes (15) 01/31/02 LO(48)/YM(66)/FREE(6)
217 336 9 111 07/01/07 07/31/01 LO(49)/>YM or 1%(65)/FREE(6)
218 300 6 114 10/01/07 09/30/01 LO(48)/5%(12)/4%(12)/3%(12)/2%(12)/1%(18)/
FREE(6)
219 360 4 116 11/30/07 Yes (19) 11/30/00 LO(36)/Defeasance(84)
220 300 3 117 01/01/08 01/31/02 LO(49)/>YM or 1%(65)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
221 300 10 110 06/01/07 Yes (2) 06/30/01 LO(49)/>YM or 1%(65)/FREE(6)
222 300 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
223 300 10 110 06/01/07 06/30/01 LO(49)/>YM or 1%(65)/FREE(6)
224 300 5 115 11/01/07 11/30/99 LO(25)/>YM or 1%(89)/FREE(6)
225 360 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
226 360 1 119 02/28/08 Yes (f) Yes (18) 02/28/01 LO(36)/Defeasance(78)/FREE(6)
227 240 2 118 02/01/08 Yes(c) Yes (1) 01/31/02 LO(48)/YM(66)/FREE(6)
228 240 10 110 06/01/07 06/30/01 LO(49)/>YM or 1%(65)/FREE(6)
229 360 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
230 300 10 110 06/01/07 05/31/99 LO(24)/3%(12)/2%(12)/1%(12)/FREE(60)
- -----------------------------------------------------------------------------------------------------------------------------------
231 360 1 119 02/28/08 Yes (f) Yes (18) 02/28/01 LO(36)/Defeasance(78)/FREE(6)
232 360 3 117 01/01/08 Yes(g) Yes (7) 12/31/01 LO(48)/YM(66)/FREE(6)
233 360 3 117 01/01/08 Yes(g) Yes (7) 12/31/01 LO(48)/YM(66)/FREE(6)
234 360 3 117 01/01/08 01/31/02 LO(49)/>YM or 1%(65)/FREE(6)
235 360 1 119 03/01/08 Yes (10) 03/31/02 LO(49)/5%(12)/4%(12)/3%(12)/2%(12)/1%(17)/
FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
236 360 3 117 01/01/08 01/31/01 LO(37)/Defeasance(77)/FREE(6)
237 300 8 112 08/01/07 08/31/01 LO(49)/>YM or 1%(65)/FREE(6)
238 300 10 110 06/01/07 06/30/01 LO(49)/>YM or 1%(65)/FREE(6)
239 360 3 81 01/01/05 12/31/99 LO(24)/5%(12)/4%(12)/3%(12)/2%(12)/1%(6)/FREE(6)
240 180 5 115 11/01/07 10/31/01 LO(48)/YM(66)/FREE(6)
241 300 8 112 07/31/07 07/31/99 LO(24)/3%(12)/2%(12)/1%(12)/FREE(60)
242 300 2 118 02/01/08 01/31/02 LO(48)/YM(66)/FREE(6)
243 300 3 117 01/01/08 12/31/01 LO(48)/YM(66)/FREE(6)
244 120 3 117 12/31/07 12/31/00 LO(36)/Defeasance(84)
245 240 9 111 07/01/07 Yes (a) Yes (5) 07/31/01 LO(49)/>YM or 1%(65)/FREE(6)
- -----------------------------------------------------------------------------------------------------------------------------------
246 360 1 119 03/01/08 Yes (10) 03/31/02 LO(49)/5%(12)/4%(12)/3%(12)/2%(12)/1%(17)/
FREE(6)
247 360 3 117 01/01/08 Yes(g) Yes (7) 12/31/01 LO(48)/YM(66)/FREE(6)
248 360 1 119 03/01/08 Yes(i) Yes (16) 02/28/01 LO(36)/YM(78)/FREE(6)
249 360 3 117 01/01/08 Yes(e) Yes (4) 12/31/01 LO(48)/YM(66)/FREE(6)
250 360 9 112 07/31/07 07/31/99 LO(25)/3%(12)/2%(12)/1%(11)/FREE(61)
- -----------------------------------------------------------------------------------------------------------------------------------
251 360 8 112 08/01/07 07/31/99 LO(24)/3%(12)/2%(12)/1%(12)/FREE(60)
252 300 3 117 01/01/08 Yes (b) Yes (17) 01/31/00 LO(25)/>YM or 1%(89)/FREE(6)
253 300 3 117 01/01/08 Yes (b) Yes (17) 01/31/00 LO(25)/>YM or 1%(89)/FREE(6)
<PAGE>
<CAPTION>
TOTAL SF/
CUT-OFF MATURITY DATE / UNITS/ UNITS/
CONTROL APPRAISED APPRAISAL DATE LTV ARD LTV YEAR BUILT/ ROOMS ROOMS/
NUMBER VALUE DATE RATIO RATIO RENOVATED BEDS BEDS
<S> <C> <C> <C> <C> <C> <C> <C>
1 76,800,000 09/01/97 74.1 65.5 1962,1968 / 1978,1994,1996-7 524,186 SF
2 68,000,000 01/01/98 73.7 64.8 1974 / 1990 377,178 SF
3 63,000,000 12/19/97 66.0 57.5 1920 / 1988 668,641 SF
4 39,500,000 11/19/97 82.0 70.9 1994 / NAP 352 Units
5 30,950,000 03/20/97 79.8 68.7 1996/1997 / NAP 300 Units
- ------------------------------------------------------------------------------------------------------------------------------
6 31,300,000 09/22/97 73.3 63.5 227,549 SF
14,500,000 09/22/97 73.3 63.5 1965 / 1987 100,836 SF
16,800,000 09/22/97 73.3 63.5 1955-57 / 1987 126,713 SF
7 27,500,000 10/01/97 74.4 65.6 1985 / 1991 185,400 SF
8 23,400,000 09/10/97 73.3 64.2 1990 / 1996 285,550 SF
9 21,735,000 09/18/97 76.8 61.3 1972 / NAP 368 Units
10 24,000,000 03/24/97 67.9 60.4 723 Units
03/24/97 67.9 60.4 1979 / 1996 217 Units
03/24/97 67.9 60.4 1980 / 1996 169 Units
03/24/97 67.9 60.4 1983 / 1996 169 Units
03/24/97 67.9 60.4 1983 / 1996 168 Units
- ------------------------------------------------------------------------------------------------------------------------------
11 19,000,000 09/05/97 79.8 70.4 1988 -1990 / 1994 301,563 SF
12 17,573,000 11/19/97 81.7 65.5 1981 / 1997 358,379 SF
13 19,500,000 10/16/97 70.6 61.5 1983 / NAP 100,235 SF
14 18,800,000 10/07/97 71.6 58.1 1961 / 1997 202,704 SF
15 17,900,000 05/01/97 74.3 61.1 1996 / NAP 284,619 SF
- ------------------------------------------------------------------------------------------------------------------------------
16 17,800,000 01/06/98 74.5 68.5 1991 / 1997 272 Units
17 17,950,000 07/23/97 71.6 63.9 1969 / 1993 498,411 SF
18 16,000,000 10/22/97 74.8 64.8 1997 / NAP 116,860 SF
19 23,700,000 12/23/97 50.5 40.8 1987 / NAP 200 Units
20 16,600,000 11/12/97 64.8 48.8 1963 / 1969, 78, 80, 89 253 Rooms
- ------------------------------------------------------------------------------------------------------------------------------
21 13,700,000 10/20/97 77.9 68.6 1986 / NAP 138,068 SF
22 14,500,000 07/16/97 72.9 63.0 246,405 SF
7,900,000 07/16/97 72.9 63.0 1987 / NAP 140,503 SF
6,600,000 07/15/97 72.9 63.0 1989 / 1997 105,902 SF
23 13,600,000 07/10/97 75.1 65.6 1992 / NAP 263,259 SF
24 12,750,000 12/05/97 78.3 68.7 1987 / NAP 216 Units
25 12,490,000 10/10/97 76.7 66.6 1969 / NAP 191 Units
- ------------------------------------------------------------------------------------------------------------------------------
26 12,600,000 11/19/97 70.5 61.8 1979 / 1997 164,196 SF
27 11,650,000 10/02/97 74.5 65.6 1983 / NAP 67,580 SF
28 11,150,000 09/02/97 77.3 67.0 1982 / NAP 460 Units
29 14,000,000 09/15/97 60.5 49.7 1907 / 1988/97 91 Rooms
30 10,600,000 12/02/97 78.5 63.2 1965 / 1973 71,438 SF
- ------------------------------------------------------------------------------------------------------------------------------
31 12,750,000 10/08/97 64.9 56.3 1971-1973 / NAP 167,707 SF
32 10,700,000 11/13/97 74.6 65.2 1940 / 1997 78,133 SF
33 13,000,000 10/24/97 61.4 53.1 1973 / 1988/1996 314,610 SF
34 10,300,000 11/20/97 77.5 66.6 1991 / NAP 154 Units
35 11,300,000 12/10/97 70.6 56.8 1986 / NAP 57,918 SF
- ------------------------------------------------------------------------------------------------------------------------------
36 10,000,000 04/18/97 79.6 71.4 1986 / NAP 276 Units
37 9,850,000 10/23/97 79.8 69.7 1972 / 1995 268 Units
38 10,450,000 08/20/97 73.5 64.0 1985 / NAP 82,471 SF
39 9,750,000 11/20/97 78.3 67.8 1974 / NAP 157,346 SF
40 10,200,000 12/01/97 74.8 64.4 1986 / NAP 141,621 SF
- ------------------------------------------------------------------------------------------------------------------------------
41 9,480,000 09/12/97 79.7 68.6 1973 / 1996 228 Units
42 9,500,000 07/02/97 75.0 69.8 1968, 1970 and 1983 / 1995-98 205,679 SF
43 9,800,000 05/09/97 72.6 64.8 1990 / 1996 50,863 SF
44 9,400,000 09/23/97 74.6 52.6 1994 / NAP 153 Units
45 15,100,000 11/18/97 46.3 42.4 1974 / NAP 380 Pad
- ------------------------------------------------------------------------------------------------------------------------------
46 9,300,000 11/25/97 75.1 66.4 1997 / NAP 82,876 SF
47 8,650,000 09/02/97 79.5 68.9 1982 / 1995-1997 348 Units
48 9,950,000 11/19/97 68.2 59.6 1985 / NAP 165,868 SF
49 9,100,000 10/23/97 74.5 65.2 1974 / 1994 148,317 SF
50 8,500,000 12/10/97 79.2 65.2 1984 / NAP 96 Units
- ------------------------------------------------------------------------------------------------------------------------------
51 9,000,000 08/26/97 74.6 65.6 1970 / 1996 191,627 SF
52 8,900,000 04/28/97 74.6 66.3 1986 / 1996 163,253 SF
53 8,350,000 09/24/97 79.3 68.6 1987 / NAP 148 Units
54 8,300,000 09/16/97 79.3 69.0 1989 / NAP 144 Units
55 8,190,000 10/27/97 79.2 70.3 1990 / NAP 96,924 SF
- ------------------------------------------------------------------------------------------------------------------------------
56 10,500,000 11/18/97 61.7 49.6 1996 / NAP 127 Units
57 10,200,000 10/08/97 63.5 51.8 1989 / 1993 119 Rooms
58 8,500,000 01/09/98 74.7 65.6 1983 / NAP 81,826 SF
59 7,910,000 01/29/97 79.4 70.6 1969 / 1995 291 Units
60 8,200,000 05/04/97 76.4 68.5 1984 / NAP 250 Units
- ------------------------------------------------------------------------------------------------------------------------------
61 7,830,000 01/30/97 78.5 68.8 1975 / 1996 264 Units
62 7,700,000 04/18/97 78.8 70.7 1977 / NAP 360 Units
63 8,600,000 04/04/97 69.2 57.8 1979 & 1981 / NAP 149,666 SF
64 7,350,000 06/16/97 79.8 70.8 1971 / 1991 186 Units
65 7,150,000 09/02/97 79.6 69.3 1969 / 1991 220 Units
- ------------------------------------------------------------------------------------------------------------------------------
66 9,300,000 07/24/97 60.7 49.9 1986 / 1996 122,010 SF
67 7,300,000 10/01/97 77.0 66.4 1970 / NAP 183 Units
68 7,500,000 11/01/97 73.2 64.0 1997 / NAP 51,802 SF
69 7,900,000 12/04/97 69.4 57.1 1980 / NAP 177 Units
70 8,000,000 08/12/97 68.2 56.4 1985 / 1996 151 Units
- ------------------------------------------------------------------------------------------------------------------------------
71 8,200,000 09/26/97 65.6 52.5 1981 / 1990, 1994, 1995 223,345 SF
72 6,900,000 10/09/97 78.0 67.7 1973 / 1997 207 Units
73 6,300,000 10/20/97 83.9 73.9 1982 / NAP 304 Units
74 7,000,000 08/13/97 75.5 61.2 1990 / NAP 38,521 SF
75 7,800,000 07/01/97 67.7 64.3 1935 / 1996 56,203 SF
- ------------------------------------------------------------------------------------------------------------------------------
76 6,600,000 08/14/97 79.7 68.8 1968 / 1995 176 Units
77 6,400,000 11/17/97 81.1 71.0 1990 / 1992 59,319 SF
78 6,600,000 09/30/97 77.6 54.7 1966 / 1995 142 Units
79 7,300,000 10/16/97 69.6 56.4 151,209 SF
3,300,000 10/15/97 69.6 56.4 1979 / NAP 76,720 SF
4,000,000 10/16/97 69.6 56.4 1977 / NAP 74,489 SF
80 6,650,000 10/06/97 76.3 62.1 1989 / NAP 90,340 SF
- ------------------------------------------------------------------------------------------------------------------------------
81 6,100,000 11/17/97 81.8 72.4 1966 / 1997 49,000 SF
82 6,800,000 09/19/97 73.3 64.2 1988 / NAP 50,040 SF
83 15,200,000 10/01/97 32.8 28.3 1953 / 1995 398,000 SF
84 6,200,000 04/18/97 79.6 71.4 1982 / 1996 160 Units
85 8,100,000 11/24/97 60.4 53.3 1980 / NAP 57,746 SF
- ------------------------------------------------------------------------------------------------------------------------------
86 6,200,000 10/20/97 75.6 66.6 1972 / 1996 296 Units
87 6,400,000 11/03/97 73.3 63.4 1984 / NAP 176 Units
88 6,380,000 11/01/97 73.4 50.3 1988 / NAP 45,671 SF
89 7,000,000 09/02/97 65.8 57.1 1981 / NAP 308 Units
90 6,500,000 09/10/97 70.3 61.3 1972/1984/1985/1987 / NAP 203,330 SF
- ------------------------------------------------------------------------------------------------------------------------------
91 6,200,000 11/26/97 73.2 63.7 1989 / NAP 57,652 SF
92 7,400,000 11/12/97 60.7 53.4 1983 / 1996 68,010 SF
93 5,700,000 10/08/97 78.8 68.0 1966 / 1993 268 Units
94 5,850,000 12/15/97 76.7 67.3 1990 / NAP 112 Units
95 6,000,000 04/01/97 74.6 65.4 1970 / NAP 190 Units
- ------------------------------------------------------------------------------------------------------------------------------
96 5,850,000 11/10/97 75.4 65.8 1965-1988 / 1988 172,985 SF
97 5,640,000 10/07/97 77.8 72.3 1973 / NAP 164 Units
98 5,500,000 09/22/97 78.7 63.4 1970 / 1996 189 Units
99 5,400,000 09/12/97 79.8 70.2 1968 / NAP 119 Pad
100 5,500,000 11/11/97 78.0 69.0 1959 / 1996 101,573 SF
- ------------------------------------------------------------------------------------------------------------------------------
101 6,100,000 07/02/97 70.2 61.9 1988 / NAP 107,720 SF
102 5,700,000 08/07/97 74.3 65.4 1985 / NAP 89,154 SF
103 7,815,000 10/31/97 52.9 46.3 1990 / NAP 90 Units
104 5,900,000 04/18/97 69.7 62.5 1965 / 1996 200 Units
105 5,180,000 09/22/97 79.0 69.8 1996 / NAP 46,098 SF
- ------------------------------------------------------------------------------------------------------------------------------
106 5,800,000 08/06/97 70.4 62.2 1959-1986 / 1996 53,470 SF
107 5,425,000 11/24/97 73.6 64.8 1976 / NAP 200 Units
108 5,400,000 10/30/97 73.9 64.3 1984 / NAP 45,020 SF
109 3,950,000 10/20/97 101.0 88.9 1972 / NAP 181 Units
110 5,000,000 10/31/97 79.7 64.7 1982 / NAP 82,400 SF
- ------------------------------------------------------------------------------------------------------------------------------
111 5,600,000 08/29/97 71.2 62.2 1979 / NAP 113,201 SF
112 5,400,000 12/01/97 73.0 63.5 1985 / NAP 51,523 SF
113 4,965,000 04/18/97 79.3 65.2 1972 / 1996 253 Units
114 4,050,000 10/17/97 96.1 84.5 1986 / NAP 128 Units
115 6,100,000 12/08/97 63.2 50.4 1989 / NAP 120 Units
- ------------------------------------------------------------------------------------------------------------------------------
116 5,150,000 10/06/97 74.4 59.2 1959 & 1977 / NAP 53,056 SF
117 4,800,000 05/14/97 79.6 70.3 1970 / 1996 288 Units
118 5,022,000 11/14/97 75.5 61.1 1975 / 1997 78,715 SF
119 5,000,000 11/10/97 74.7 65.1 1979 and 1980 / 1996 and 1997 127,833 SF
120 5,400,000 09/24/97 69.1 56.9 1968 / 1994 130,340 SF
- ------------------------------------------------------------------------------------------------------------------------------
121 5,100,000 07/21/97 73.1 51.1 1997 / NAP 100,000 SF
122 5,600,000 06/01/97 65.6 53.5 1975 / 1997 160 Rooms
123 4,800,000 11/11/97 74.9 65.7 1987 / NAP 22,570 SF
124 4,500,000 10/23/97 79.8 70.6 1959 / 1997 38,040 SF
125 5,075,000 10/13/97 70.8 60.1 1981 / 1988 64,950 SF
- ------------------------------------------------------------------------------------------------------------------------------
126 4,950,000 09/24/97 72.6 63.0 1974 / NAP 180 Units
127 4,500,000 11/21/97 79.8 70.3 1953 / 1989 99,236 SF
128 4,300,000 10/20/97 83.5 73.5 1984 / NAP 180 Units
129 4,850,000 10/07/97 74.0 65.4 1984 / NAP 77,189 SF
130 4,925,000 09/04/97 72.8 63.9 1969 / 1996 230 Units
- ------------------------------------------------------------------------------------------------------------------------------
131 4,870,000 06/30/97 73.6 65.4 1996 / NAP 34,810 SF
132 5,000,000 03/07/97 71.6 60.0 1953, 1962, 1992 / NAP 118,746 SF
133 5,150,000 05/21/97 68.9 60.9 1987 / NAP 40,500 SF
134 4,400,000 09/29/97 79.9 70.4 1977 / NAP 282 Units
135 4,450,000 01/20/97 78.5 65.4 1989 / 1993 65,869 SF
- ------------------------------------------------------------------------------------------------------------------------------
136 5,100,000 11/20/97 68.5 60.5 1984 / NAP 43,953 SF
137 4,490,000 09/23/97 77.7 67.4 1984 / NAP 124 Units
138 4,700,000 09/02/97 74.2 61.4 1990 / NAP 35,149 SF
139 4,375,000 09/04/97 79.7 69.3 1930 / 1950 148 Units
140 4,630,000 09/23/97 74.7 65.7 1986 / NAP 46,305 SF
- ------------------------------------------------------------------------------------------------------------------------------
141 4,450,000 01/29/97 76.8 63.1 1969 / NAP 207 Units
142 5,350,000 07/02/97 63.4 56.6 1988 / 1997 72,240 SF
143 4,000,000 11/06/97 84.8 73.4 1970 / 1995 150 Units
144 4,330,000 11/04/97 76.2 66.5 1950 / 1990 108 Units
145 5,350,000 07/02/97 61.3 51.0 1960 / 1992 32,738 SF
- ------------------------------------------------------------------------------------------------------------------------------
146 5,150,000 12/03/97 63.0 55.6 1947 / 1989 60,477 SF
147 4,700,000 11/19/97 67.9 59.9 1981 / NAP 109,940 SF
148 4,850,000 01/13/97 65.0 54.1 1960-1985 / NAP 143,651 SF
149 4,400,000 09/26/97 71.4 63.5 1968 / NAP 216 Units
150 4,000,000 03/07/97 78.4 67.0 1979 / 1996-97 304 Units
- ------------------------------------------------------------------------------------------------------------------------------
151 4,205,000 10/11/97 73.6 64.1 Various / 1992 35 Units
152 3,900,000 11/24/97 79.3 69.7 1986 / NAP 43,478 SF
153 4,150,000 04/15/97 73.5 66.0 1995 / NAP 27,975 SF
154 4,875,000 12/19/97 61.4 49.6 1970 / 1978 40,429 SF
155 3,765,000 07/31/97 78.0 68.4 1964 / 1996 188 Units
- ------------------------------------------------------------------------------------------------------------------------------
156 3,542,000 12/12/97 79.8 64.4 1960 / 1985 35,168 SF
157 3,940,000 04/01/97 71.7 59.4 1987 / NAP 94,374 SF
158 4,700,000 07/01/97 60.1 49.5 1985 / 1996 & 1997 58,624 SF
159 3,950,000 01/17/97 71.2 58.9 1978 / NAP 47,355 SF
160 4,400,000 12/08/97 63.6 51.6 1988 / 1996 113 Bed
- ------------------------------------------------------------------------------------------------------------------------------
161 3,860,000 11/21/97 72.4 62.6 1997 / NAP 20,000 SF
162 3,500,000 10/25/97 79.8 69.4 1988 / NAP 118 Units
163 3,700,000 09/20/97 74.2 65.5 1992 / NAP 75,820 SF
164 4,040,000 11/10/97 67.9 58.8 1988-1989 / NAP 33,488 SF
165 3,400,000 11/04/97 79.7 68.6 1986 / NAP 90 Units
- ------------------------------------------------------------------------------------------------------------------------------
166 3,450,000 02/28/97 78.3 67.7 1983 / Ongoing Renovations 122 Units
167 4,000,000 09/29/97 67.4 59.6 1880 / 1981 21,422 SF
168 3,500,000 11/13/97 74.1 59.6 1987 / NAP 32,843 SF
169 3,250,000 10/01/97 79.7 69.0 1994 / NAP 57 Units
170 3,350,000 09/01/97 77.3 67.9 1886 / 1986 56,581 SF
- ------------------------------------------------------------------------------------------------------------------------------
171 4,550,000 08/14/97 56.8 50.1 1984 / NAP 52,721 SF
172 3,283,000 12/22/97 78.3 54.3 1954 / 1997 30,960 SF
173 3,840,000 07/01/96 66.3 31.3 1982 / NAP 50,339 SF
174 3,500,000 10/09/97 72.3 59.2 1980 / NAP 107,557 SF
175 3,000,000 10/22/97 84.1 70.4 1966 / 1993 158 Units
- ------------------------------------------------------------------------------------------------------------------------------
176 3,500,000 08/27/97 71.8 63.2 1981 / NAP 98,337 SF
177 3,520,000 10/29/97 70.8 62.3 1980 / NAP 90 Units
178 3,975,000 09/10/97 62.7 50.7 1985 / NAP 101 Rooms
179 3,375,000 09/25/97 73.8 64.6 1993 / NAP 17,000 SF
180 3,350,000 10/02/97 74.3 64.7 1989 / 1996 45,922 SF
- ------------------------------------------------------------------------------------------------------------------------------
181 3,340,000 10/10/97 74.5 59.2 1920 & 1985 / 1982 59 Units
182 3,515,000 10/16/97 70.2 49.1 1953-1979 / 1995-1997 160 Rooms
183 3,300,000 05/12/97 74.5 60.6 1965 / 1996/97 146 Units
184 4,500,000 11/17/97 54.4 48.1 1973 / NAP 566 Pad
185 4,400,000 11/14/97 55.6 49.1 1978 / NAP 24,239 SF
- ------------------------------------------------------------------------------------------------------------------------------
186 3,200,000 11/14/97 74.9 65.9 1997 / NAP 24,800 SF
187 3,400,000 11/10/97 70.4 61.8 1984 / NAP 32,959 SF
188 3,150,000 06/22/97 74.1 51.7 1950 / 1995 37,436 SF
189 3,300,000 09/29/97 70.2 61.9 1983 / NAP 144 Units
190 2,875,000 12/01/97 79.9 69.7 1987 / NAP 37,203 SF
- ------------------------------------------------------------------------------------------------------------------------------
191 3,800,000 10/16/97 60.4 49.2 1988 / NAP 45,866 SF
192 3,100,000 03/01/97 73.5 61.7 1969 / NAP 83 Beds
193 2,820,000 10/07/97 79.9 70.9 1996 / NAP 21,300 SF
194 3,300,000 07/23/97 66.2 54.1 62,400 SF
07/23/97 66.2 54.1 1996 / NAP 29,900 SF
07/23/97 66.2 54.1 1989 / NAP 32,500 SF
195 3,050,000 11/23/97 71.1 57.5 1983 / NAP 74,617 SF
- ------------------------------------------------------------------------------------------------------------------------------
196 2,895,000 12/19/97 72.5 58.6 1995 / NAP 58 Units
197 3,200,000 08/14/97 65.4 54.4 1984 / NAP 121 Units
198 2,900,000 05/07/97 72.1 63.1 1984 / NAP 96 Units
199 2,700,000 05/08/97 75.1 66.2 1973 and 1983 / NAP 99 Units
200 2,700,000 12/15/97 74.7 60.6 1969 / NAP 21,265 SF
- ------------------------------------------------------------------------------------------------------------------------------
201 2,880,000 09/25/97 69.4 55.8 1926 / 1997 82 Units
202 3,000,000 11/17/97 66.5 58.6 1992 / NAP 105,477 SF
203 2,650,000 10/13/97 75.2 61.5 1977 / NAP 39,309 SF
204 2,550,000 05/14/97 78.0 69.0 1960-1968 / 1996 170 Units
205 2,375,000 09/11/97 79.5 56.0 1985 / NAP 7,634 SF
- ------------------------------------------------------------------------------------------------------------------------------
206 2,600,000 10/15/97 71.9 58.5 1983 / NAP 47,563 SF
207 4,000,000 10/24/97 46.1 37.0 1974 / 1994 89 Units
208 2,500,000 06/23/97 73.5 62.5 1973 & 1979 / NAP 36,668 SF
209 2,400,000 10/23/97 74.8 66.4 1978 / NAP 30,702 SF
210 2,200,000 10/20/97 81.6 71.8 116 Units
1,307,593 10/20/97 81.6 71.8 1970 / NAP 60 Units
892,407 10/17/97 81.6 71.8 1970 / NAP 56 Units
- ------------------------------------------------------------------------------------------------------------------------------
211 3,000,000 08/15/97 59.8 48.8 1984 / NAP 84 Units
212 2,639,200 12/01/97 65.9 31.0 1993 / NAP 28,102 SF
213 2,200,000 11/01/97 78.4 62.3 1967 / NAP 60 Units
214 2,500,000 08/05/97 67.6 55.4 1979 and 1983 / NAP 47,906 SF
215 2,025,000 10/02/97 79.3 64.3 1972 / NAP 100 Units
- ------------------------------------------------------------------------------------------------------------------------------
216 2,030,000 11/17/97 77.2 67.1 1995 / NAP 34 Units
217 1,970,000 02/25/97 74.6 64.5 1979 / 1996 128 Units
218 2,100,000 09/09/97 68.4 56.9 1986 / NAP 34,178 SF
219 2,240,000 07/22/97 64.1 57.3 1975 / 1997 46,460 SF
220 1,800,000 10/01/97 79.7 64.4 1968/1970 / 1995-1997 76 Units
- ------------------------------------------------------------------------------------------------------------------------------
221 1,785,000 04/11/97 79.1 65.8 1969 / 1995 74 Units
222 1,930,000 10/23/97 72.3 58.2 1968 / 1993 43,280 SF
223 1,750,000 03/11/97 79.3 66.4 1914,1960,1995 / 1995 55 Beds
224 2,810,000 04/21/97 48.5 40.0 1984 / 1996 62,943 SF
225 1,700,000 11/06/97 79.2 69.3 1970 / 1988 48 Units
- ------------------------------------------------------------------------------------------------------------------------------
226 1,700,000 12/01/97 76.4 67.0 1955 / 1996 71 Units
227 1,925,000 11/19/97 67.3 46.4 1997 / NAP 14,220 SF
228 1,900,000 04/17/97 67.5 49.7 1967 / 1975 & Ongoing 59 Rooms
229 1,800,000 11/24/97 69.3 61.1 1997 / NAP 6,500 SF
230 1,600,000 05/09/97 74.2 62.9 1968 / 1996 48 Units
- ------------------------------------------------------------------------------------------------------------------------------
231 1,535,000 12/01/97 74.9 66.7 1970 - 1975 / 1997 120 Units
232 1,725,000 11/24/97 66.5 58.6 1995 / NAP 11,721 SF
233 1,730,000 11/24/97 65.2 57.4 1995 / NAP 11,721 SF
234 1,400,000 10/28/97 79.8 69.2 1986 / 1997 52 Units
235 2,225,000 11/17/97 49.4 43.3 1972 / NAP 426 Pad
- ------------------------------------------------------------------------------------------------------------------------------
236 1,350,000 11/11/97 81.3 71.5 1964 / 1996 & 1997 71 Units
237 1,400,000 06/11/97 78.3 63.9 1972 / NAP 103 Units
238 1,600,000 03/28/97 68.1 56.4 1960 - 1962 / 1996 107 Units
239 1,350,000 10/10/97 79.8 74.4 1969 / 1996 96 Units
240 1,500,000 06/05/97 65.7 31.8 1990 / NAP 40,600 SF
241 1,325,000 07/09/97 74.2 63.7 1997 / NAP 22,800 SF
242 2,100,000 10/29/97 42.7 34.7 1968 / NAP 5,100 SF
243 1,240,000 03/12/97 71.6 59.7 1981 / NAP 25,448 SF
244 2,550,000 08/19/97 34.7 NAP 1995 / NAP 52 Rooms
245 1,638,000 03/31/97 53.2 38.0 1979 / 1996 58,259 SF
- ------------------------------------------------------------------------------------------------------------------------------
246 1,400,000 11/17/97 58.9 52.1 1972 / NAP 191 Pad
247 1,250,000 11/24/97 64.6 57.0 1995 / NAP 8,986 SF
248 1,065,000 06/02/97 75.1 66.6 1989 / NAP 10,700 SF
249 820,000 10/17/97 85.2 75.0 1981 / NAP 54 Units
250 1,000,000 06/13/97 69.6 62.2 1962 / NAP 31 Units
- ------------------------------------------------------------------------------------------------------------------------------
251 830,000 07/12/97 79.6 72.5 1986 / 1996 28 Units
252 670,000 11/01/97 81.8 65.1 1987 / 1994 18 Units
253 570,000 11/01/97 73.4 58.4 1986 / NAP 17 Units
<PAGE>
<CAPTION>
U/W
NET LOAN BALANCE OCCUPANCY U/W RESERVES
CONTROL RENTABLE PER SF/ UNIT/ OCCUPANCY AS OF U/W U/W U/W NOI U/W U/W U/W PER
NUMBER AREA (SF) ROOM/BED PERCENT DATE REVENUES EXPENSES NOI DSCR NCF DSCR RESERVES UNIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 524,186 $ 108.49 97 12/01/97 10,795,759 4,084,445 6,711,314 1.41 6,152,249 1.29 234,903 0.45
2 377,178 $ 132.91 94 01/01/98 8,286,181 2,413,055 5,873,126 1.43 5,441,540 1.32 56,443 0.15
3 668,641 $ 62.17 98 01/14/98 8,980,305 3,401,435 5,578,870 1.69 4,926,592 1.50 201,370 0.30
4 356,400 $ 92,071.60 98 12/03/97 4,580,657 1,331,335 3,249,322 1.22 3,178,922 1.20 70,400 200.00
5 400,320 $ 82,330.79 100 12/18/97 3,496,532 987,727 2,508,805 1.26 2,448,805 1.23 60,000 200.00
- ---------------------------------------------------------------------------------------------------------------------------------
6 227,549 $ 100.84 3,511,756 778,449 2,773,307 1.47 2,622,264 1.39 29,091 0.13
100,836 100 12/12/97
126,713 100 12/19/97
7 185,400 $ 110.32 100 12/10/97 3,713,545 1,378,445 2,335,100 1.38 2,163,605 1.28 18,540 0.10
8 285,550 $ 60.09 98 11/24/97 2,676,801 720,001 1,956,800 1.41 1,814,852 1.31 62,821 0.22
9 375,760 $ 45,379.80 99 10/01/97 3,239,780 1,273,723 1,966,057 1.34 1,874,057 1.28 92,000 250.00
10 521,919 $ 22,538.79 4,370,398 2,013,029 2,357,370 1.57 2,194,695 1.46 162,675 225.00
156,637 95 04/15/97
122,221 96 04/15/97
122,157 97 04/15/97
120,904 95 04/15/97
- ---------------------------------------------------------------------------------------------------------------------------------
11 301,563 $ 50.26 99 11/20/97 2,429,659 495,012 1,934,647 1.54 1,766,215 1.40 57,296 0.19
12 358,379 $ 40.07 98 12/17/97 2,643,596 860,469 1,783,127 1.46 1,596,717 1.31 76,757 0.21
13 100,235 $ 137.27 97 10/24/97 2,616,434 856,260 1,760,173 1.51 1,563,348 1.34 20,063 0.20
14 202,704 $ 66.37 92 11/18/97 2,445,633 663,337 1,782,296 1.50 1,675,413 1.41 30,406 0.15
15 284,619 $ 46.71 100 08/22/97 1,735,560 44,811 1,690,749 1.31 1,690,749 1.31
- ---------------------------------------------------------------------------------------------------------------------------------
16 257,840 $ 48,773.51 96 01/19/98 2,230,813 716,725 1,514,088 1.45 1,409,062 1.35 88,713 326.15
17 498,411 $ 25.78 94 01/12/98 2,726,858 929,821 1,797,037 1.61 1,559,050 1.40 89,249 0.18
18 116,860 $ 102.45 97 11/24/97 2,034,622 609,565 1,425,057 1.44 1,384,529 1.40 11,686 0.10
19 $ 59,785.83 12/23/97 6,656,823 4,567,839 2,088,984 2.00 1,822,711 1.75 266,273 1,331.37
20 179,294 $ 42,496.91 70 11/12/97 7,014,556 5,483,300 1,531,256 1.52 1,531,256 1.52 280,582 1,109.02
- ---------------------------------------------------------------------------------------------------------------------------------
21 138,068 $ 77.32 99 11/25/97 2,003,561 672,572 1,330,989 1.52 1,183,613 1.35 27,778 0.20
22 246,405 $ 42.88 1,722,416 477,251 1,245,165 1.43 1,083,121 1.25 71,457 0.29
140,503 91 10/22/97
105,902 96 10/22/97
23 263,259 $ 38.79 88 09/23/97 1,655,141 491,379 1,163,762 1.34 1,061,942 1.22 39,505 0.15
24 $ 46,213.74 99 12/04/97 1,686,915 652,370 1,034,545 1.27 981,705 1.21 52,840 244.63
25 162,530 $ 50,165.91 95 01/01/98 1,638,989 632,433 1,006,556 1.34 955,750 1.28 50,806 266.00
- ---------------------------------------------------------------------------------------------------------------------------------
26 164,196 $ 54.07 89 12/31/97 2,166,387 846,862 1,319,525 1.83 1,095,152 1.52 31,197 0.19
27 67,580 $ 128.36 92 11/19/97 1,644,473 553,510 1,090,963 1.53 931,996 1.30 22,301 0.33
28 328,680 $ 18,730.69 95 09/23/97 2,223,902 1,061,346 1,162,557 1.64 1,070,557 1.51 92,000 200.00
29 63,540 $ 93,100.24 81 09/15/97 3,425,795 2,209,271 1,216,524 1.57 1,216,524 1.57 137,032 1,505.85
30 71,438 $ 116.46 100 12/01/97 1,139,406 29,394 1,110,012 1.55 1,110,012 1.55
- ---------------------------------------------------------------------------------------------------------------------------------
31 167,707 $ 49.34 92 11/15/97 2,206,592 1,045,152 1,161,441 1.68 954,180 1.38 25,156 0.15
32 78,133 $ 102.20 100 11/13/97 1,484,742 640,371 844,371 1.32 836,558 1.31 7,813 0.10
33 314,610 $ 25.37 81 12/16/97 1,817,015 537,425 1,279,590 1.96 1,067,370 1.64 78,653 0.25
34 125,626 $ 51,818.80 82 12/10/97 1,351,882 446,578 905,305 1.42 856,179 1.34 49,126 319.00
35 57,918 $ 137.76 100 01/14/98 1,494,400 445,816 1,048,584 1.53 992,905 1.45 4,633 0.08
- ---------------------------------------------------------------------------------------------------------------------------------
36 241,848 $ 28,842.37 92 04/28/97 1,741,349 796,568 944,781 1.36 875,781 1.26 69,000 250.00
37 220,550 $ 29,330.26 98 11/19/97 1,647,007 742,285 904,722 1.44 837,722 1.33 67,000 250.00
38 82,471 $ 93.09 93 11/11/97 1,685,101 723,155 961,946 1.48 880,209 1.36 14,845 0.18
39 157,346 $ 48.51 94 12/29/97 1,766,083 857,760 908,323 1.44 797,980 1.27 32,763 0.21
40 141,621 $ 53.88 88 12/09/97 1,343,440 318,166 1,025,274 1.68 959,479 1.57 7,081 0.05
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41 206,800 $ 33,124.96 96 10/26/97 1,630,393 712,494 917,898 1.52 866,600 1.43 51,300 225.00
42 205,679 $ 34.65 93 09/30/97 1,404,407 522,817 881,590 1.37 781,472 1.22 63,078 0.31
43 50,863 $ 139.80 100 07/01/97 1,297,763 373,652 924,111 1.39 825,596 1.24 10,173 0.20
44 $ 45,837.76 53 12/31/96 3,992,180 2,852,942 1,139,238 1.63 979,551 1.40 159,687 1,043.71
45 1,064,000 $ 18,385.52 100 12/01/97 1,998,977 603,045 1,395,932 2.57 1,376,932 2.54 19,000 50.00
- ---------------------------------------------------------------------------------------------------------------------------------
46 82,876 $ 84.27 100 12/31/97 873,928 43,696 830,232 1.42 760,263 1.30 8,288 0.10
47 246,432 $ 19,749.92 95 09/23/97 1,705,665 820,221 885,444 1.56 815,496 1.44 69,948 201.00
48 165,868 $ 40.90 98 12/05/97 1,581,000 474,588 1,106,412 2.04 995,612 1.83 24,880 0.15
49 148,317 $ 45.72 70 09/30/97 1,506,013 685,437 820,576 1.44 747,562 1.32 22,345 0.15
50 $ 70,084.11 84 11/01/97 2,343,226 1,374,260 968,966 1.57 875,237 1.42 93,729 976.34
- ---------------------------------------------------------------------------------------------------------------------------------
51 191,627 $ 35.03 96 09/01/97 1,232,754 309,946 922,807 1.57 825,202 1.40 31,000 0.16
52 163,253 $ 40.68 95 07/01/97 1,294,416 394,259 900,158 1.48 798,607 1.31 24,299 0.15
53 124,176 $ 44,752.58 98 11/12/97 1,149,948 416,883 733,065 1.36 699,765 1.29 33,300 225.00
54 158,560 $ 45,696.27 98 09/30/97 1,197,884 483,581 714,304 1.29 681,616 1.23 32,688 227.00
55 96,924 $ 66.88 98 06/18/97 1,077,640 344,754 732,886 1.33 700,085 1.27 14,440 0.15
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56 $ 50,992.54 11/18/97 2,858,991 1,727,752 1,131,239 2.04 1,045,469 1.88 85,770 675.35
57 95,978 $ 54,398.28 86 10/08/97 4,509,673 3,464,224 1,045,449 1.70 865,062 1.41 180,387 1,515.86
58 81,826 $ 77.56 91 12/16/97 1,207,339 468,449 738,890 1.43 664,215 1.28 13,912 0.17
59 295,276 $ 21,592.14 88 06/23/97 1,482,253 727,726 754,527 1.31 688,179 1.20 66,348 228.00
60 179,660 $ 25,075.55 91 12/31/97 1,490,164 740,197 749,967 1.37 687,467 1.25 62,500 250.00
- ---------------------------------------------------------------------------------------------------------------------------------
61 243,208 $ 23,271.39 93 07/21/97 1,435,035 737,062 697,973 1.32 634,613 1.20 63,360 240.00
62 220,048 $ 16,860.77 85 12/31/97 1,530,047 750,755 779,292 1.47 689,292 1.30 90,000 250.00
63 149,666 $ 39.76 95 05/08/97 1,854,269 895,571 958,698 1.58 833,871 1.37 31,605 0.21
64 188,612 $ 31,543.06 96 10/01/97 1,138,591 426,030 712,561 1.43 666,061 1.34 46,500 250.00
65 188,030 $ 25,878.50 92 09/23/97 1,339,549 666,263 673,286 1.41 621,586 1.30 51,700 235.00
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66 122,010 $ 46.23 91 07/30/97 1,273,212 383,288 889,923 1.63 793,812 1.45 40,263 0.33
67 145,570 $ 30,718.93 100 10/31/97 1,534,979 859,254 675,724 1.49 634,549 1.40 41,175 225.00
68 51,802 $ 105.91 100 12/05/97 844,087 168,092 675,995 1.53 661,832 1.50 5,166 0.10
69 $ 30,971.86 12/04/97 5,070,148 4,123,287 946,861 1.89 744,055 1.48 202,806 1,145.80
70 $ 36,112.20 80 04/30/97 5,386,922 4,454,297 932,625 1.84 771,017 1.52 161,608 1,070.25
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71 223,345 $ 24.09 96 12/04/97 993,419 231,966 761,453 1.59 619,906 1.30 33,502 0.15
72 148,527 $ 25,985.98 91 10/02/97 1,416,400 760,824 655,576 1.47 603,826 1.35 51,750 250.00
73 $ 17,393.32 93 10/31/97 956,255 406,713 549,542 1.26 488,742 1.12 60,800 200.00
74 38,521 $ 137.24 93 11/24/97 917,928 217,312 700,616 1.51 653,312 1.41 5,778 0.15
75 56,203 $ 93.89 100 09/03/97 1,073,337 525,896 547,441 1.09 435,857 0.87 8,430 0.15
- ---------------------------------------------------------------------------------------------------------------------------------
76 137,976 $ 29,878.50 99 09/08/97 1,220,270 597,335 622,935 1.46 583,335 1.37 39,600 225.00
77 59,319 $ 87.50 100 01/01/97 957,862 335,929 621,933 1.48 569,733 1.36 7,711 0.13
78 56,235 $ 36,078.18 56 12/31/96 2,385,468 1,623,307 762,161 1.49 666,742 1.30 95,419 671.96
79 151,209 $ 33.59 1,222,710 388,247 834,463 1.77 693,199 1.47 49,764 0.33
76,720 93 07/10/97 511,247 162,337 348,910 1.77 286,567 1.47 24,438 0.32
74,489 100 07/10/97 711,463 225,910 485,553 1.77 406,632 1.47 25,326 0.34
80 90,340 $ 56.20 92 10/23/97 741,237 169,081 572,156 1.28 539,283 1.20 13,551 0.15
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81 49,000 $ 101.81 100 12/03/97 780,685 178,557 602,128 1.44 585,247 1.40 7,333 0.15
82 50,040 $ 99.63 100 10/21/97 799,799 198,790 601,009 1.40 569,964 1.33 7,506 0.15
83 398,000 $ 12.52 51 11/06/97 3,003,618 1,630,407 1,373,210 3.40 824,183 2.04 99,500 0.25
84 118,580 $ 30,846.91 98 12/29/97 1,078,361 518,468 559,893 1.30 519,893 1.20 40,000 250.00
85 57,746 $ 84.66 100 12/23/97 950,226 318,787 631,439 1.54 590,588 1.44 9,072 0.16
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86 174,196 $ 15,841.14 90 10/31/97 1,017,817 522,627 495,190 1.28 435,990 1.13 59,200 200.00
87 136,016 $ 26,641.67 96 11/18/97 1,072,309 510,318 561,991 1.46 518,343 1.35 43,648 248.00
88 45,671 $ 102.50 100 12/01/97 662,230 31,489 630,741 1.43 584,739 1.33 6,851 0.15
89 213,264 $ 14,957.42 92 09/23/97 1,499,980 705,464 794,516 2.09 728,296 1.92 66,220 215.00
90 203,330 $ 22.46 89 12/08/97 826,781 248,100 578,681 1.59 447,311 1.23 49,231 0.24
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91 57,652 $ 78.74 100 12/23/97 844,415 288,973 555,442 1.46 471,512 1.24 11,530 0.20
92 68,010 $ 66.01 100 11/15/97 981,718 207,640 774,078 2.09 723,533 1.95 10,202 0.15
93 205,014 $ 16,750.96 95 12/01/97 1,132,230 624,703 507,526 1.39 443,474 1.21 64,052 239.00
94 $ 40,081.51 98 11/20/97 871,662 359,334 512,328 1.41 489,928 1.35 22,400 200.00
95 148,423 $ 23,546.33 96 06/30/97 1,109,517 574,854 534,664 1.39 483,364 1.25 51,300 270.00
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96 172,985 $ 25.50 85 12/29/97 687,561 131,390 556,171 1.58 466,704 1.33 25,948 0.15
97 153,675 $ 26,768.19 95 09/28/97 1,001,893 532,259 469,634 1.28 428,634 1.17 41,000 250.00
98 170,933 $ 22,913.27 96 10/21/97 1,210,302 657,763 552,539 1.41 505,289 1.29 47,250 250.00
99 $ 36,195.89 98 10/01/97 707,764 254,619 453,145 1.28 450,051 1.27 3,094 26.00
100 101,573 $ 42.24 91 11/13/97 651,953 155,200 496,753 1.38 443,529 1.23 15,236 0.15
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101 107,720 $ 39.76 100 09/04/97 732,685 159,600 573,084 1.51 490,861 1.29 24,237 0.23
102 89,154 $ 47.48 93 06/01/97 1,171,524 571,604 599,951 1.60 518,719 1.38 17,831 0.20
103 76,167 $ 45,966.78 100 09/25/97 909,994 322,700 587,294 1.78 564,794 1.71 22,500 250.00
104 148,960 $ 20,572.90 88 12/31/97 1,025,534 507,540 517,994 1.44 477,994 1.33 40,000 200.00
105 46,098 $ 88.74 97 12/05/97 599,781 113,392 486,389 1.42 464,088 1.36 6,717 0.15
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106 53,470 $ 76.32 96 08/01/97 849,356 295,968 553,388 1.51 477,820 1.30 12,316 0.23
107 193,120 $ 19,964.90 97 01/01/98 950,062 470,058 480,004 1.46 420,004 1.28 60,000 300.00
108 45,020 $ 88.65 100 12/01/97 1,124,385 592,878 531,506 1.58 478,963 1.43 11,705 0.26
109 $ 22,047.62 97 10/31/97 660,091 257,936 402,155 1.23 365,955 1.12 36,200 200.00
110 82,400 $ 48.37 100 10/31/97 669,961 182,758 487,203 1.39 461,839 1.32 12,360 0.15
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111 113,201 $ 35.21 99 10/24/97 764,815 202,121 562,695 1.66 500,832 1.47 22,640 0.20
112 51,523 $ 76.47 100 12/15/97 830,502 356,034 474,468 1.44 417,535 1.26 7,728 0.15
113 181,744 $ 15,556.24 91 05/31/97 1,087,479 535,694 551,784 1.45 488,534 1.28 63,250 250.00
114 $ 30,397.29 98 10/31/97 602,111 213,257 388,854 1.22 360,822 1.13 28,032 219.00
115 $ 32,120.59 74 09/30/97 2,069,426 1,359,509 709,917 2.19 609,917 1.88 100,000 833.33
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116 53,056 $ 72.22 93 10/28/97 629,357 121,172 508,186 1.52 476,201 1.42 10,611 0.20
117 224,712 $ 13,261.67 97 05/26/97 1,055,166 554,219 500,948 1.47 443,348 1.30 57,600 200.00
118 78,715 $ 48.15 98 01/07/98 666,317 171,356 494,961 1.50 428,411 1.29 27,550 0.35
119 127,833 $ 29.20 97 12/29/97 644,883 143,338 501,545 1.69 436,612 1.47 19,535 0.15
120 130,340 $ 28.62 89 09/25/97 825,219 263,765 561,454 1.64 489,115 1.43 19,551 0.15
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121 100,000 $ 37.30 100 11/19/97 490,200 24,510 465,690 1.27 431,015 1.18 10,000 0.10
122 99,628 $ 22,954.93 73 05/31/97 2,019,900 1,442,917 576,983 1.67 495,424 1.43 81,559 509.74
123 22,570 $ 159.22 100 12/16/97 551,339 134,917 416,422 1.43 393,401 1.35 4,514 0.20
124 38,040 $ 94.42 100 10/23/97 419,867 12,596 407,271 1.35 407,271 1.35
125 64,950 $ 55.30 83 12/10/97 712,250 222,068 490,182 1.64 444,779 1.49 14,939 0.23
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126 $ 19,954.38 87 10/31/97 868,207 449,322 418,885 1.40 368,485 1.23 50,400 280.00
127 99,236 $ 36.19 100 11/24/97 540,263 119,333 420,930 1.42 389,043 1.31 9,924 0.10
128 114,482 $ 19,953.09 91 10/31/97 601,562 231,052 370,510 1.25 334,510 1.13 36,000 200.00
129 77,189 $ 46.51 95 01/31/98 605,902 142,426 463,476 1.55 426,136 1.43 11,578 0.15
130 250,240 $ 15,596.89 83 09/30/97 961,672 543,680 417,992 1.34 376,592 1.21 41,400 180.00
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131 34,810 $ 102.97 94 07/22/97 643,313 178,932 464,381 1.40 437,628 1.32 6,962 0.20
132 118,746 $ 30.15 100 04/01/97 581,755 71,813 509,942 1.38 465,969 1.26 17,812 0.15
133 40,500 $ 87.61 90 10/30/97 644,129 204,980 439,149 1.48 409,083 1.38 6,075 0.15
134 224,870 $ 12,463.69 95 09/24/97 1,234,329 798,992 435,337 1.50 367,657 1.27 67,680 240.00
135 65,869 $ 53.02 100 04/25/97 661,531 145,925 515,605 1.46 452,511 1.28 23,713 0.36
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136 43,953 $ 79.45 100 11/15/97 784,455 288,084 496,371 1.71 449,737 1.55 6,593 0.15
137 82,948 $ 28,138.50 90 10/28/97 729,788 319,201 410,586 1.42 376,114 1.30 34,472 278.00
138 35,149 $ 99.26 95 09/29/97 556,930 111,827 445,103 1.37 425,765 1.31 4,115 0.12
139 87,280 $ 23,558.19 97 09/05/97 858,542 437,927 420,615 1.44 375,224 1.29 43,852 296.30
140 46,305 $ 74.68 100 09/23/97 751,417 310,557 440,860 1.45 381,750 1.25 11,576 0.25
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141 172,659 $ 16,512.99 96 06/23/97 1,157,393 704,857 452,536 1.38 400,786 1.22 51,750 250.00
142 72,240 $ 46.97 69 12/15/97 660,857 192,900 467,957 1.60 391,085 1.34 39,096 0.54
143 142,542 $ 22,613.83 96 10/17/97 835,561 440,450 395,111 1.41 364,607 1.30 30,504 203.36
144 79,185 $ 30,536.57 89 12/31/97 628,371 280,670 347,701 1.32 326,301 1.24 21,400 198.15
145 32,738 $ 100.24 100 09/08/97 545,674 97,873 447,801 1.37 432,140 1.32 6,548 0.20
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146 60,477 $ 53.62 100 12/23/97 569,940 104,471 465,469 1.72 437,678 1.61 9,075 0.15
147 109,940 $ 29.04 94 12/22/97 642,634 227,054 415,580 1.57 364,830 1.38 24,187 0.22
148 143,651 $ 21.93 96 05/05/97 688,021 181,850 506,171 1.59 415,090 1.31 34,714 0.24
149 200,000 $ 14,544.34 99 09/22/97 992,445 549,320 443,125 1.65 389,125 1.45 54,000 250.00
150 219,482 $ 10,310.16 93 06/25/97 985,533 562,408 423,125 1.42 355,400 1.20 67,725 222.78
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151 45,127 $ 88,375.36 100 10/23/97 453,012 109,246 343,765 1.31 328,295 1.25 15,470 442.00
152 43,478 $ 71.13 100 10/08/97 520,510 152,426 368,084 1.45 344,788 1.36 6,522 0.15
153 27,975 $ 109.10 91 06/30/97 537,221 151,675 385,557 1.31 368,056 1.25 4,196 0.15
154 40,429 $ 74.01 12/19/97 816,325 400,140 416,185 1.60 408,785 1.57 7,400 0.18
155 138,653 $ 15,623.82 92 09/30/97 854,959 469,210 385,750 1.52 343,450 1.36 42,300 225.00
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156 35,168 $ 80.40 100 12/31/97 499,388 159,905 339,483 1.38 317,503 1.29 5,275 0.15
157 94,374 $ 29.94 95 06/01/97 515,837 132,362 383,475 1.37 350,390 1.25 20,017 0.21
158 58,624 $ 48.17 100 05/22/97 668,615 177,841 490,774 1.79 434,230 1.58 19,134 0.33
159 47,355 $ 59.42 100 09/08/97 569,171 185,237 383,933 1.38 352,540 1.27 9,473 0.20
160 $ 24,755.36 94 01/01/98 1,563,836 958,961 604,875 2.45 570,975 2.31 33,900 300.00
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161 20,000 $ 139.78 100 01/08/98 402,179 88,309 313,870 1.37 287,620 1.26 3,000 0.15
162 105,020 $ 23,667.89 92 12/15/97 762,383 414,460 347,923 1.59 318,423 1.45 29,500 250.00
163 75,820 $ 36.19 100 11/28/97 470,381 145,945 324,436 1.42 292,883 1.28 11,373 0.15
164 33,488 $ 81.93 100 12/01/97 552,242 189,133 363,109 1.61 341,397 1.52 6,698 0.20
165 91,182 $ 30,121.47 90 11/06/97 674,766 384,539 290,227 1.34 269,347 1.25 20,880 232.00
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166 108,440 $ 22,149.62 96 12/01/97 658,234 303,993 354,241 1.32 323,741 1.21 30,500 250.00
167 21,422 $ 125.82 100 12/01/97 560,653 224,737 335,916 1.48 299,713 1.32 4,284 0.20
168 32,843 $ 78.96 100 12/11/97 491,027 164,412 326,615 1.47 289,831 1.30 3,941 0.12
169 52,024 $ 45,468.98 96 11/03/97 424,291 148,910 275,381 1.30 263,981 1.25 11,400 200.00
170 56,581 $ 45.79 100 09/09/97 792,191 445,719 346,473 1.53 297,976 1.32 8,487 0.15
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171 52,721 $ 48.98 100 07/22/97 859,377 414,765 444,612 1.91 351,066 1.51 10,544 0.20
172 30,960 $ 83.01 100 01/19/98 464,424 117,168 347,256 1.40 324,102 1.30 4,644 0.15
173 50,339 $ 50.57 100 06/30/97 516,018 112,551 403,467 1.34 379,511 1.26 9,061 0.18
174 107,557 $ 23.51 78 10/07/97 555,787 167,464 388,323 1.70 310,613 1.36 26,889 0.25
175 $ 15,959.64 98 12/01/97 900,566 570,718 329,848 1.53 290,098 1.35 39,750 251.58
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176 98,337 $ 25.57 100 09/22/97 490,066 143,838 346,228 1.57 296,080 1.34 23,445 0.24
177 71,460 $ 27,695.46 100 09/25/97 542,664 266,415 276,249 1.35 253,749 1.24 22,500 250.00
178 49,060 $ 24,673.36 73 09/01/97 1,544,141 1,062,315 481,826 2.09 404,619 1.75 77,207 764.43
179 17,000 $ 146.53 100 10/20/97 391,800 84,789 307,011 1.43 300,303 1.40 2,550 0.15
180 45,922 $ 54.23 97 10/01/97 434,637 140,262 294,375 1.41 277,531 1.33 8,306 0.18
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181 29,748 $ 42,169.32 98 11/03/97 508,719 204,638 304,081 1.40 286,381 1.32 17,700 300.00
182 77,183 $ 15,423.81 60 10/16/97 1,770,162 1,306,270 463,892 1.82 375,383 1.47 88,508 553.17
183 140,450 $ 16,843.31 94 09/15/97 706,827 356,541 350,285 1.53 318,165 1.39 32,120 220.00
184 $ 4,326.30 67 10/30/97 984,985 652,463 332,522 1.62 261,772 1.28 70,750 125.00
185 24,239 $ 100.85 90 11/10/97 384,318 107,916 276,402 1.35 259,537 1.27 5,817 0.24
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186 24,800 $ 96.60 100 12/04/97 364,443 58,722 305,721 1.55 288,771 1.46 3,785 0.15
187 32,959 $ 72.64 95 12/12/97 583,212 270,843 312,369 1.61 258,123 1.33 11,865 0.36
188 37,436 $ 62.33 100 11/01/97 334,000 10,020 323,980 1.43 300,120 1.32 3,744 0.10
189 96,528 $ 16,098.93 99 08/31/97 718,124 407,561 310,563 1.62 274,563 1.43 36,000 250.00
190 37,203 $ 61.71 100 05/01/97 392,993 108,153 284,840 1.55 259,960 1.42 7,441 0.20
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191 45,866 $ 50.02 87 11/04/97 518,663 169,833 348,830 1.71 289,400 1.42 12,228 0.27
192 23,296 $ 27,464.18 92 05/09/97 2,297,752 1,877,306 420,446 1.78 395,546 1.68 24,900 300.00
193 21,300 $ 105.74 100 12/01/97 318,616 51,387 267,229 1.39 258,907 1.35 4,120 0.19
194 62,400 $ 35.00 480,543 165,154 315,389 1.52 306,029 1.47 9,360 0.15
29,900 $ 73.05 92 08/12/97
32,500 $ 67.20 88 08/12/97
195 74,617 $ 29.04 98 12/15/97 639,679 271,441 368,238 1.95 287,652 1.52 17,162 0.23
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196 26,312 $ 36,171.78 12/19/97 736,909 404,774 332,135 1.81 294,818 1.61 37,317 643.40
197 44,430 $ 17,288.14 67 08/31/97 1,215,545 890,933 324,612 1.64 282,488 1.43 42,124 348.13
198 76,800 $ 21,779.91 100 06/30/97 548,504 286,174 262,330 1.46 238,330 1.33 24,000 250.00
199 110,610 $ 20,492.15 96 06/25/97 537,488 255,921 281,567 1.57 255,431 1.43 26,136 264.00
200 21,265 $ 94.89 100 12/31/97 288,562 8,657 279,905 1.58 279,905 1.58
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201 56,530 $ 24,365.69 99 01/23/98 605,805 318,048 287,757 1.67 263,157 1.53 24,600 300.00
202 105,477 $ 18.92 100 10/01/97 285,172 44,069 241,103 1.47 240,112 1.46 992 0.01
203 39,309 $ 50.71 95 12/04/97 430,216 165,709 264,507 1.47 240,507 1.34 11,793 0.30
204 121,886 $ 11,701.47 98 05/26/97 622,138 346,871 275,266 1.55 237,016 1.33 38,250 225.00
205 7,634 $ 247.19 100 08/01/97 219,745 6,592 213,153 1.13 206,893 1.10 6,260 0.82
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206 47,563 $ 39.32 97 09/01/97 404,158 137,566 266,592 1.61 234,250 1.42 7,135 0.15
207 33,509 $ 20,709.45 79 08/30/97 1,240,448 880,699 359,749 2.29 326,264 2.07 33,485 376.24
208 36,668 $ 50.08 92 06/12/97 424,483 185,038 239,445 1.30 200,901 1.09 6,600 0.18
209 30,702 $ 58.50 100 11/01/97 500,371 243,084 257,287 1.69 221,980 1.45 4,605 0.15
210 $ 15,480.85 392,285 198,754 193,531 1.31 170,331 1.15 23,200 200.00
97 10/31/97 201,115 87,877 113,238 1.29 101,238 1.15 12,000 200.00
92 10/31/97 191,170 110,877 80,293 1.34 69,093 1.15 11,200 200.00
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211 66,304 $ 21,355.42 95 09/22/97 446,654 196,580 250,074 1.56 227,310 1.42 22,764 271.00
212 28,102 $ 61.87 100 01/31/98 425,489 171,527 253,962 1.34 227,049 1.20 4,215 0.15
213 43,000 $ 28,730.90 98 11/14/97 625,862 268,739 357,123 1.52 321,898 1.37 35,225 587.08
214 47,906 $ 35.27 80 08/31/97 406,885 133,270 273,615 1.69 240,247 1.48 7,186 0.15
215 102,576 $ 16,062.83 91 11/26/97 393,055 185,768 207,287 1.47 182,037 1.30 25,250 252.50
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216 33,712 $ 46,089.24 100 11/04/97 277,744 117,100 160,644 1.30 153,844 1.25 6,800 200.00
217 106,640 $ 11,480.89 95 06/13/97 566,004 435,966 130,037 0.96 97,525 0.72 32,512 254.00
218 34,178 $ 42.03 100 06/18/97 316,989 116,247 200,742 1.49 183,210 1.36 10,595 0.31
219 46,460 $ 30.91 86 11/18/97 506,450 278,297 228,153 1.83 172,649 1.38 19,048 0.41
220 48,770 $ 18,885.92 99 11/13/97 406,295 193,759 212,536 1.61 185,936 1.41 26,600 350.00
- ---------------------------------------------------------------------------------------------------------------------------------
221 60,968 $ 19,073.96 95 04/30/97 378,037 179,171 198,866 1.41 176,518 1.25 22,348 302.00
222 43,280 $ 32.26 95 01/27/98 249,339 55,067 194,272 1.62 187,780 1.57 6,492 0.15
223 20,765 $ 25,224.61 95 05/07/97 1,529,424 1,247,795 281,629 1.98 265,129 1.86 16,500 300.00
224 62,943 $ 21.66 94 09/09/97 720,919 447,375 273,544 2.05 194,974 1.46 16,468 0.26
225 25,200 $ 28,056.25 98 10/31/97 268,945 122,100 146,845 1.35 137,245 1.27 9,600 200.00
- ---------------------------------------------------------------------------------------------------------------------------------
226 66,034 $ 18,298.89 96 01/27/98 372,594 189,282 183,312 1.74 161,657 1.54 21,655 305.00
227 14,220 $ 91.06 94 12/22/97 220,576 48,075 172,501 1.40 168,721 1.37 945 0.07
228 18,500 $ 21,726.49 84 03/31/97 489,000 245,515 243,485 1.64 223,585 1.50 19,900 337.29
229 6,500 $ 191.97 100 11/24/97 185,466 24,950 160,516 1.55 153,067 1.48 975 0.15
230 48,120 $ 24,718.57 100 06/01/97 331,212 126,284 204,928 1.60 192,928 1.51 12,000 250.00
- ---------------------------------------------------------------------------------------------------------------------------------
231 118,944 $ 9,578.70 100 01/15/98 518,301 339,688 178,613 1.80 136,613 1.38 42,000 350.00
232 11,721 $ 97.89 100 11/01/97 183,677 26,175 157,502 1.66 148,492 1.57 1,172 0.10
233 11,721 $ 96.18 100 11/01/97 183,867 29,114 154,753 1.66 145,743 1.57 1,172 0.10
234 39,932 $ 21,488.84 92 12/22/97 265,214 127,979 137,235 1.48 116,175 1.25 21,060 405.00
235 $ 2,580.62 100 02/23/98 438,768 218,269 220,499 2.47 196,543 2.20 23,956 56.23
- ---------------------------------------------------------------------------------------------------------------------------------
236 61,220 $ 15,456.62 97 10/25/97 399,778 248,140 151,638 1.68 134,882 1.49 16,756 236.00
237 74,496 $ 10,637.24 90 06/30/97 394,875 224,345 170,530 1.65 144,780 1.40 25,750 250.00
238 74,307 $ 10,179.50 97 04/30/97 450,132 292,406 157,726 1.47 129,464 1.21 28,262 264.13
239 81,960 $ 11,225.44 95 11/13/97 485,544 347,708 137,836 1.50 115,276 1.26 22,560 235.00
240 40,600 $ 24.26 02/01/97 138,000 6,900 131,100 1.17 131,100 1.17
241 22,800 $ 43.14 100 07/11/97 142,956 4,289 138,667 1.36 125,600 1.23 2,280 0.10
242 5,100 $ 176.02 100 10/29/97 210,977 10,549 200,428 2.53 195,958 2.47 765 0.15
243 25,448 $ 34.87 89 02/01/98 201,404 65,559 135,845 1.60 110,497 1.30 11,378 0.45
244 22,800 $ 17,025.26 75 08/19/97 649,828 362,172 287,656 2.18 287,656 2.18 32,491 624.83
245 58,259 $ 14.97 88 05/27/97 237,069 57,615 179,454 1.92 117,306 1.26 22,367 0.38
- ---------------------------------------------------------------------------------------------------------------------------------
246 $ 4,317.05 66 10/30/97 326,250 216,819 109,431 1.58 90,431 1.31 19,000 99.48
247 8,986 $ 89.93 100 11/01/97 139,590 24,195 115,395 1.73 108,486 1.63 899 0.10
248 10,700 $ 74.73 100 10/20/97 143,446 56,267 87,179 1.28 79,603 1.17 1,712 0.16
249 $ 12,932.56 93 10/31/97 155,301 76,769 78,532 1.37 66,706 1.16 11,826 219.00
250 28,384 $ 22,460.25 100 06/23/97 163,685 69,540 94,145 1.42 86,395 1.31 7,750 250.00
- ---------------------------------------------------------------------------------------------------------------------------------
251 21,504 $ 23,602.84 96 04/21/97 140,762 53,039 87,723 1.42 80,723 1.30 7,000 250.00
252 15,300 $ 30,447.01 100 11/14/97 625,862 268,739 357,123 1.52 321,898 1.37 35,225 1,956.94
253 14,025 $ 24,618.12 95 12/01/97 625,862 268,739 357,123 1.52 321,898 1.37 35,225 2,072.06
<PAGE>
<CAPTION>
CONTROL 1996 1996 1996 1996 1995 1995 1995 1995
NUMBER REVENUES EXPENSES NCF DSCR REVENUES EXPENSES NCF DSCR LARGEST TENANT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,427,823 4,019,426 6,408,397 1.35 10,409,739 3,709,961 6,699,778 1.41 Kaufmann's
2 7,486,989 2,630,286 4,547,934 1.11 7,836,071 2,444,413 5,066,254 1.23 Aetna-EBD Claims
3 6,521,504 2,514,186 4,007,318 1.22 6,701,871 2,416,915 4,284,956 1.30 NACCO Materials Handeling
4
5 864,162 620,364 243,798 0.12
- --------------------------------------------------------------------------------------------------------------------------------
6 2,580,991 89,435 2,491,556 1.32
Sport Connection
TRW Inc.
7 TASC, Inc.
8 2,542,515 718,927 1,799,944 1.30 2,357,926 516,377 1,705,565 1.23 Kmart
9 2,966,124 1,207,759 1,758,365 1.20 2,867,793 1,193,758 1,674,035 1.14
10 4,205,953 1,941,286 2,251,859 1.50 3,847,733 2,067,210 1,763,874 1.18
- --------------------------------------------------------------------------------------------------------------------------------
11 2,162,585 513,306 1,649,279 1.31 2,399,033 460,897 1,938,136 1.54 Phar Mor #61
12 2,521,224 766,395 1,655,653 1.35 2,315,201 682,960 1,472,671 1.20 Computer Associates
13 2,166,793 857,567 1,016,285 0.87 2,373,607 856,424 1,354,016 1.16 American Society of Engineers
14 1,704,152 474,014 1,230,138 1.04 1,869,296 808,584 1,060,712 0.89 PNS Store
15 2,130,829 416,417 1,714,412 1.33 Super Kmart
- --------------------------------------------------------------------------------------------------------------------------------
16 2,106,063 697,381 1,408,682 1.35 1,934,719 696,903 1,237,816 1.18
17 2,510,234 779,420 1,602,056 1.44 2,569,263 759,364 1,611,765 1.44 Gayfer's Department Store
18 Homeplace
19 6,841,405 4,446,643 2,120,435 2.03 6,087,678 4,082,114 2,005,564 1.92
20 7,073,265 5,111,311 1,961,954 1.94 7,255,785 5,094,014 2,161,771 2.14
- --------------------------------------------------------------------------------------------------------------------------------
21 1,860,285 640,803 1,219,482 1.39 1,804,163 631,789 1,172,374 1.33 HBO
22 1,404,080 406,517 878,111 1.01 1,450,928 513,241 937,687 1.08
Wal-Mart
JC Penney
23 1,767,975 452,401 1,280,857 1.47 2,021,256 494,700 1,526,556 1.75 Kmart
24
25 1,538,373 566,369 924,187 1.23 1,456,413 583,169 828,409 1.11
- --------------------------------------------------------------------------------------------------------------------------------
26 Ulrich Voordhees Warner Assoc.
27 1,674,692 538,559 1,136,133 1.59 1,687,371 503,240 1,184,131 1.66 SunTrust
28 2,059,262 975,802 968,460 1.36 2,179,581 1,133,349 931,232 1.31
29 3,283,529 1,817,938 1,465,591 1.89 2,711,663 1,855,600 856,063 1.11
30 1,080,963 1,941 1,079,022 1.51
- --------------------------------------------------------------------------------------------------------------------------------
31 2,168,949 944,197 1,224,752 1.78 1,897,000 985,956 911,044 1.32 Dentalco Mgmt Serv
32 NYC Dept of Finance
33 1,228,725 509,601 651,510 1.00 Staples
34 1,339,243 421,147 879,596 1.38 1,254,132 425,192 790,440 1.24
35 1,572,646 456,357 1,116,289 1.63 1,573,053 431,878 1,141,175 1.67 Memphis Cancer Center
- --------------------------------------------------------------------------------------------------------------------------------
36 1,701,552 740,218 899,613 1.29 1,804,404 787,412 917,532 1.32
37 1,527,038 651,672 799,738 1.27 1,461,234 711,688 695,909 1.11
38 1,774,878 673,528 1,101,350 1.70 1,720,144 636,079 1,084,065 1.67 The Prudential Florida Realty
39 1,742,076 811,271 930,805 1.48 1,694,796 810,530 884,267 1.41 Zanocco Ace Hardware
40 1,381,308 295,907 983,870 1.61 1,335,360 285,672 918,283 1.50 Bally's
- --------------------------------------------------------------------------------------------------------------------------------
41 1,478,992 664,760 814,232 1.35 1,488,180 642,326 845,854 1.40
42 1,318,939 503,953 814,986 1.27 1,388,902 505,224 883,678 1.38 JC Penney
43 1,397,273 342,299 1,054,974 1.58 1,264,676 364,739 887,570 1.33 Orthotics & Prosthetics
44 4,139,561 2,577,430 1,562,131 2.23 3,982,350 2,688,691 1,293,659 1.85
45 1,974,441 649,757 1,324,684 2.44 1,818,028 673,052 1,144,976 2.11
- --------------------------------------------------------------------------------------------------------------------------------
46 Microware Systems Corp
47 1,591,288 748,416 755,872 1.33 1,650,270 840,429 722,841 1.27
48 1,567,619 470,524 1,097,095 2.02 1,374,280 436,063 938,217 1.73 Jack Barton & Co, Inc.
49 1,426,536 735,154 691,382 1.22 1,838,157 712,681 1,125,476 1.98 The Great A&P
50 2,558,785 1,660,522 898,263 1.45 2,518,238 2,101,901 416,337 0.67
- --------------------------------------------------------------------------------------------------------------------------------
51 1,209,202 281,930 565,459 0.96 1,236,021 260,521 897,154 1.53 Winn Dixie
52 1,303,817 433,793 870,024 1.43 1,055,252 405,092 650,160 1.07 Winn-Dixie, Inc.
53 1,076,833 415,252 618,885 1.14 1,026,995 414,354 571,821 1.06
54 1,190,408 494,697 629,111 1.13 1,162,456 436,819 656,716 1.18
55 1,053,161 266,032 787,129 1.43 980,268 240,927 739,341 1.34 Fleming Foods
- --------------------------------------------------------------------------------------------------------------------------------
56 2,858,991 1,776,726 1,082,265 1.95
57 4,466,634 3,370,526 917,443 1.49 4,229,570 3,247,561 812,826 1.32
58 811,896 416,348 395,548 0.76 Renter's Choice
59 1,474,450 696,105 771,366 1.34 1,278,273 747,625 484,765 0.84
60 1,417,298 684,721 653,694 1.19 1,360,301 718,977 578,874 1.05
- --------------------------------------------------------------------------------------------------------------------------------
61 1,417,194 696,259 716,111 1.35 1,261,361 754,098 490,198 0.93
62 1,494,276 699,670 727,742 1.37 1,382,268 605,950 757,948 1.43
63 1,743,909 907,981 730,009 1.20 1,593,611 814,110 753,960 1.24 Warner & Associates
64 1,146,896 443,354 662,718 1.33 1,154,330 474,916 635,423 1.28
65 1,178,225 671,147 507,078 1.06 1,247,879 724,731 523,148 1.10
- --------------------------------------------------------------------------------------------------------------------------------
66 762,649 270,820 491,829 0.90 623,953 264,089 359,234 0.66 Cinemark Movies 14
67 1,536,016 733,938 785,980 1.74 1,478,539 705,905 740,634 1.63
68 Circuit City
69 5,013,766 4,022,277 871,423 1.74 4,869,812 4,018,456 759,585 1.51
70 5,092,939 4,149,388 790,763 1.56 5,154,523 4,266,239 733,648 1.45
- --------------------------------------------------------------------------------------------------------------------------------
71 1,111,178 243,691 855,528 1.79 821,605 178,754 535,590 1.12 Brookshires
72 1,329,283 724,120 576,183 1.29 1,223,803 704,671 490,152 1.10
73 885,852 345,324 540,528 1.24 853,992 387,470 466,522 1.07
74 857,824 192,878 664,946 1.43 922,744 185,668 737,076 1.59 Comerica
75 810,418 397,580 (1,145,120)(2.29) 1,461,581 379,335 1,082,246 2.16 Autodesk,Inc.
- --------------------------------------------------------------------------------------------------------------------------------
76 1,067,784 582,337 485,447 1.14
77 898,931 338,718 515,507 1.23 852,513 328,094 385,483 0.92 Princeton Allergy
78 2,429,421 1,518,992 910,429 1.78 2,343,643 1,365,483 978,160 1.91
79 1,295,912 384,577 911,335 1.93 1,329,723 372,046 957,676 2.03
540,495 149,484 391,011 1.93 595,721 146,340 449,381 2.03 Odd Lots
755,417 235,093 520,324 1.93 734,002 225,706 508,295 2.03 Family Thrift
80 729,447 185,383 544,064 1.21 721,100 181,572 539,528 1.20 Big Bear
- --------------------------------------------------------------------------------------------------------------------------------
81 Xpect Drugs
82 814,153 161,951 652,202 1.52 789,919 140,844 641,125 1.49 Factory Furniture R Us
83 3,066,860 1,452,181 1,526,817 3.78 3,284,290 1,741,573 1,333,828 3.30 NationsBank Lease Buyout
84 1,061,474 475,743 563,442 1.30 857,635 424,934 425,002 0.98
85 857,922 268,727 589,195 1.44 818,125 281,470 536,655 1.31 Occupational Health S
- --------------------------------------------------------------------------------------------------------------------------------
86 998,639 506,303 492,336 1.28 967,647 541,505 426,142 1.11
87 982,283 508,170 474,113 1.23 986,843 535,189 451,654 1.17
88 662,230 662,230 1.50 662,230 662,230 1.50 Sony Theater-Loews
89 1,412,879 687,522 648,357 1.71 1,371,616 770,181 524,435 1.38
90 930,472 198,315 732,157 2.01 846,164 256,772 568,202 1.56 Wal-Mart
- --------------------------------------------------------------------------------------------------------------------------------
91 841,946 227,033 614,913 1.62 837,524 234,073 586,143 1.54 WR Systems
92 915,792 173,072 742,720 2.00 692,892 119,906 572,492 1.54 E-Mu
93 1,091,942 608,283 389,736 1.07 1,060,854 605,067 383,059 1.05
94 881,666 336,519 545,147 1.50 853,205 331,915 521,290 1.43
95 993,145 575,431 297,481 0.77
- --------------------------------------------------------------------------------------------------------------------------------
96 646,555 111,767 534,788 1.52 634,875 114,734 520,141 1.48 Big Lots (Wal-mart)
97 928,901 448,774 480,127 1.31 898,147 492,003 406,144 1.11
98
99 708,629 226,113 478,150 1.35 655,028 222,535 432,493 1.22
100 489,544 139,961 349,583 0.97 404,777 120,934 283,843 0.79 Billy Hardwick Bowling Center
- --------------------------------------------------------------------------------------------------------------------------------
101 669,475 144,855 469,157 1.24 601,038 135,394 465,644 1.23 Goody's
102 1,118,732 531,980 586,752 1.56 1,067,184 500,042 567,142 1.51 Inchcape Testing
103
104 358,842 320,966 27,047 0.08 48,262 202,262 (154,000) (0.43)
105 Pet Depot
- --------------------------------------------------------------------------------------------------------------------------------
106 608,464 253,810 354,654 0.97 962,233 294,181 668,052 1.82 1st Priority Healthcare
107 952,651 446,213 475,630 1.45 953,776 437,372 485,917 1.48
108 1,037,768 629,279 161,232 0.48 1,013,419 594,642 398,042 1.19 Blockbuster
109 613,272 303,877 309,395 0.94 615,855 206,171 409,684 1.25
110 684,145 163,270 520,875 1.49 625,968 169,181 456,787 1.30 Airborne Express
- --------------------------------------------------------------------------------------------------------------------------------
111 752,924 149,150 603,774 1.78 697,854 159,225 538,629 1.59 Waremart
112 327,803 277,506 33,388 0.10 325,198 264,355 60,843 0.18 Silicon Graphics
113 1,056,950 542,886 470,839 1.24 260,145 119,407 140,738 0.37
114 542,291 210,994 331,297 1.04 516,460 218,940 297,520 0.93
115 2,069,426 1,190,975 878,451 2.71 1,890,393 1,098,471 791,922 2.45
- --------------------------------------------------------------------------------------------------------------------------------
116 567,679 106,016 461,663 1.38 401,704 120,198 281,506 0.84 Smart and Final
117 989,642 527,167 339,573 0.99 933,140 582,212 250,240 0.73
118 641,819 240,388 325,911 0.98 Brother Sebastian's
119 696,379 178,736 517,643 1.74 654,514 60,938 593,576 2.00 Red Foods/BI-LO
120 779,166 239,515 539,651 1.58 743,844 228,895 514,949 1.51 Carmike Cinemas
- --------------------------------------------------------------------------------------------------------------------------------
121 Powerlasers Corporation
122 2,171,301 1,718,715 452,586 1.31 2,261,974 1,682,524 579,450 1.67
123 462,684 120,434 328,553 1.12 366,988 116,791 233,244 0.80 Elan Computer Group
124 Pep Boys
125 648,993 176,018 472,975 1.58 482,266 111,605 370,661 1.24 Terri's Consign
- --------------------------------------------------------------------------------------------------------------------------------
126 888,466 435,952 425,835 1.42 888,248 429,398 424,166 1.42
127 487,561 109,277 372,490 1.25 507,883 129,976 335,548 1.13 Quality Craft
128 561,165 232,329 328,836 1.11 620,616 230,208 390,408 1.32
129 604,562 108,864 495,698 1.66 569,862 123,599 446,263 1.49 Piggly-Wiggly
130 781,256 476,801 277,635 0.89 765,984 518,203 247,781 0.80
- --------------------------------------------------------------------------------------------------------------------------------
131 229,579 56,118 173,461 0.52 ReMax Realtors
132 573,246 43,658 529,588 1.43 557,138 79,515 481,417 1.30 Business Development Labs
133 603,308 174,778 428,530 1.44 569,063 231,441 334,693 1.13 CVS Pharmacy
134 951,742 712,096 173,574 0.60
135 565,192 123,147 418,885 1.19 653,915 134,495 438,419 1.24 Daifuku USA
- --------------------------------------------------------------------------------------------------------------------------------
136 840,765 303,967 521,488 1.79 846,422 299,138 523,675 1.80 SEI
137 704,339 332,333 372,006 1.29 677,527 279,892 397,635 1.38
138 527,240 51,417 475,823 1.47 432,355 94,002 338,353 1.04 Bolsa Furniture
139 856,879 430,519 322,062 1.11 818,160 397,577 386,426 1.33
140 778,229 299,795 478,434 1.57 525,956 312,921 (82,849) (0.27) American Communication
- --------------------------------------------------------------------------------------------------------------------------------
141 1,149,355 678,945 454,569 1.38 1,121,371 695,222 365,407 1.11
142 580,959 184,546 333,856 1.14 450,790 160,328 267,086 0.91 Physiotherapy Association, Inc
143 728,499 426,862 267,844 0.96 595,284 413,389 140,447 0.50
144 638,728 239,225 399,503 1.51 632,727 246,759 385,968 1.46
145 599,757 94,069 501,368 1.53 571,520 73,972 445,661 1.36 Lucky World Asian Market
- --------------------------------------------------------------------------------------------------------------------------------
146 491,577 84,693 406,884 1.50 501,271 77,145 424,126 1.56 Accessories Plus 4x4
147 712,106 216,502 484,961 1.84 465,179 133,074 327,723 1.24 Van Leer Chocolate Corporation
148 673,681 141,960 486,402 1.53 592,154 157,754 371,298 1.17 Save A Lot Grocery
149 961,236 509,512 365,539 1.36 934,545 439,349 193,758 0.72
150 998,505 514,726 483,779 1.63
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151 440,206 91,601 332,799 1.27
152 428,463 140,844 280,499 1.11 416,351 137,057 277,016 1.09 Factory 2-U
153 177,033 45,228 131,805 0.45 Family Video
154 854,121 397,655 456,466 1.76 867,974 389,411 478,563 1.84
155 814,562 468,634 300,388 1.19 826,136 521,571 256,485 1.01
- --------------------------------------------------------------------------------------------------------------------------------
156 514,458 142,918 371,540 1.51 514,971 140,261 374,710 1.53 Drug Emporium, Inc.
157 572,759 98,646 473,233 1.69 Wal-Mart
158 486,321 115,474 91,080 0.33 495,738 110,328 332,302 1.21 House of Fabrics
159 584,432 140,567 443,865 1.60 555,212 147,497 407,715 1.47 Sizzler Resturant
160 1,298,609 823,588 475,021 1.92 1,159,861 740,427 419,434 1.70
- --------------------------------------------------------------------------------------------------------------------------------
161 Chuck's Burgers
162 736,845 382,562 334,760 1.53 703,125 377,668 297,836 1.36
163 471,532 135,360 318,199 1.39 461,943 132,627 311,343 1.36 Hannaford Bros.
164 265,743 79,828 185,915 0.83 Hacienda Mexican Restaurant
165 652,765 375,405 277,360 1.28 667,536 375,502 292,034 1.35
- --------------------------------------------------------------------------------------------------------------------------------
166 677,308 298,096 379,212 1.41 650,597 302,911 347,686 1.30
167 262,615 111,578 151,037 0.67 226,527 75,477 151,050 0.67 London Harness Co. LTD.
168 Ivy Mortgage Corporation
169 438,609 121,921 316,688 1.50 429,085 107,283 321,802 1.52
170 745,456 412,983 311,987 1.38 729,059 424,904 201,349 0.89 Chicago Consulting Actuari
- --------------------------------------------------------------------------------------------------------------------------------
171 677,433 334,747 342,686 1.47 677,433 335,437 341,996 1.47 Eastern Research
172 381,160 119,057 243,688 0.98 441,752 91,866 316,793 1.27 Honey Baked Hams
173 543,355 115,485 427,870 1.42 526,033 107,082 413,875 1.38 Kroger
174 429,937 159,605 270,332 1.19 295,509 89,345 205,887 0.90 Planet Tire & Auto
175 851,547 491,158 360,389 1.67 820,642 431,876 388,766 1.80
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176 508,608 81,069 427,539 1.94 564,051 83,435 480,616 2.18 Wal Mart
177 474,208 260,051 192,017 0.94 490,179 267,753 208,365 1.02
178 1,543,397 1,051,810 491,587 2.13 1,544,884 1,155,883 389,001 1.69
179 372,265 78,147 292,418 1.36 419,200 63,300 355,900 1.66 Pier One Imports, Inc.
180 440,271 143,947 296,324 1.42 426,267 149,594 276,673 1.33 Piggly Wiggly
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181 514,711 208,249 306,462 1.42 488,335 198,930 289,405 1.34
182 1,805,344 1,123,857 591,220 2.32 2,008,393 1,167,158 740,816 2.90
183 585,044 273,977 311,067 1.36
184 940,237 678,828 261,409 1.27 839,616 618,068 221,548 1.08
185 339,009 264,696 74,313 0.36 320,664 141,531 179,133 0.88 Arents/McGovern
- --------------------------------------------------------------------------------------------------------------------------------
186 Pastimes
187 533,915 259,436 215,966 1.11 556,571 259,578 254,635 1.31 Infolog USA, Inc.
188 Levi's Only
189 647,966 405,302 220,015 1.15 627,662 341,868 266,093 1.39
190 378,366 93,568 271,208 1.48 376,881 42,070 319,863 1.75 Edward F. Wolski, MDPA
- --------------------------------------------------------------------------------------------------------------------------------
191 398,382 98,058 273,442 1.34 398,382 90,272 295,749 1.45 Palm Court (Executive Suites)
192 2,316,506 1,783,421 533,085 2.26 2,100,319 1,625,279 475,040 2.01
193 148,372 148,372 0.77 Coles Express (Caliber Systems,
194 297,797 135,618 162,179 0.78 260,743 120,227 140,516 0.68
195 554,581 225,318 329,263 1.75 558,064 251,877 306,187 1.62 Salvation Army
- --------------------------------------------------------------------------------------------------------------------------------
196 746,348 386,188 360,160 1.97 312,872 171,108 141,764 0.77
197 1,243,812 850,723 393,089 1.99 1,196,403 840,931 355,472 1.80
198 539,950 244,605 293,929 1.64 521,863 234,774 280,246 1.56
199 503,964 252,407 203,853 1.14 555,567 239,933 259,974 1.45
200 Franks Nursery and Crafts
- --------------------------------------------------------------------------------------------------------------------------------
201 576,803 332,702 244,101 1.42 583,902 314,041 269,861 1.57
202 246,814 39,685 188,249 1.14 178,138 47,094 131,044 0.80 Red Robin
203 428,621 163,103 265,518 1.48 393,447 174,044 219,403 1.22 Monmouth Country VO Tech
204 589,957 330,593 259,364 1.46 562,291 325,324 236,967 1.33
205
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206 421,845 104,434 315,061 1.90 371,994 102,741 196,821 1.19 Bo Lee Restaurant
207 1,334,038 734,618 599,420 3.81 1,324,153 741,089 583,064 3.71
208 412,953 192,453 149,506 0.81 434,687 177,895 190,069 1.03 SD Assoc. of Realtors
209 498,066 229,923 266,088 1.74 509,507 234,805 260,122 1.70 Nordhaus Research
210 348,175 176,998 171,177 1.16 353,816 192,897 160,919 1.09
172,298 71,734 100,564 1.15 182,062 85,178 96,884 1.10
175,877 105,264 70,613 1.18 171,754 107,719 64,035 1.07
- --------------------------------------------------------------------------------------------------------------------------------
211 464,838 195,101 269,737 1.68 431,346 189,273 242,073 1.51
212 432,078 147,832 284,246 1.50 415,836 142,060 273,776 1.44 Natzel & Mumford Organiztion
213 389,537 232,493 157,044 0.67 256,913 134,603 122,310 0.52
214 413,403 149,734 241,082 1.49 427,724 135,962 250,950 1.55 Texas Lady Spa
215 424,509 166,495 213,432 1.52 435,176 172,820 253,424 1.80
- --------------------------------------------------------------------------------------------------------------------------------
216 270,508 120,446 150,062 1.22
217 567,119 463,236 84,060 0.62
218 304,046 125,365 155,281 1.15 265,395 96,882 168,513 1.25 Kids R People 2
219 503,757 278,491 200,605 1.60 465,611 238,384 211,715 1.69 Visiting Nurses Association
220 411,840 133,191 269,607 2.04 377,125 98,933 243,519 1.85
- --------------------------------------------------------------------------------------------------------------------------------
221 314,098 192,978 121,120 0.86 114,774 73,206 41,568 0.29
222 243,389 46,342 197,047 1.64 231,503 39,169 192,334 1.61 Fleming-Jubilee
223 1,542,856 1,033,520 509,336 3.57 1,301,836 1,119,131 182,705 1.28
224 733,021 439,069 243,314 1.82 606,517 391,479 170,738 1.28 A-1 Nursing Care, Inc.
225 258,226 132,260 125,966 1.16 260,630 118,398 142,232 1.31
- --------------------------------------------------------------------------------------------------------------------------------
226 361,492 186,786 174,706 1.66 337,600 150,518 187,082 1.78
227
228 474,167 185,472 288,695 1.94 464,335 239,116 203,630 1.37
229 Men's Wearhouse
230 298,231 114,065 184,166 1.44 255,769 81,126 174,643 1.37
- --------------------------------------------------------------------------------------------------------------------------------
231 437,474 349,792 87,682 0.88 501,671 323,824 177,847 1.79
232 182,550 20,184 162,366 1.71 182,400 10,014 172,386 1.82 NLVH, Inc.
233 182,600 19,990 162,610 1.75 182,400 9,894 172,506 1.85 NLVH, Inc.
234 228,053 130,190 89,096 0.96
235 442,644 224,831 217,813 2.44 388,629 226,708 161,921 1.82
- --------------------------------------------------------------------------------------------------------------------------------
236 309,361 230,975 60,636 0.67 364,800 347,050 3.85
237 332,396 207,296 102,716 1.00 305,858 163,123 130,880 1.27
238 55,278 42,185 13,093 0.12
239
240 McDonalds Corporation
241 Connie Stevens Forever Spring
242 217,620 3,780 213,840 2.70 202,229 19,187 183,042 2.31 Joe's Crab Shack
243 183,581 52,270 124,688 1.47 204,358 49,225 149,269 1.76 McLain Restaurants
244 712,222 259,018 453,204 3.43
245 264,123 57,549 169,171 1.81 Kroger
- --------------------------------------------------------------------------------------------------------------------------------
246 310,655 201,952 108,703 1.57 298,180 216,397 81,783 1.18
247 110,594 15,916 94,678 1.42 104,178 7,892 96,286 1.44 Mantei, Manthei,& Lorenz, Ltd.
248 164,273 57,187 107,086 1.58 122,097 49,277 69,670 1.03 Health Spa
249 144,883 73,096 71,787 1.25 138,722 69,686 69,036 1.20
250 156,660 63,315 93,345 1.41 155,610 62,785 92,825 1.40
- --------------------------------------------------------------------------------------------------------------------------------
251 95,852 46,042 13,304 0.21
252 389,537 232,493 157,044 0.67 256,913 134,603 122,310 0.52
253 389,537 232,493 157,044 0.67 256,913 134,603 122,310 0.52
<PAGE>
<CAPTION>
SECOND
LARGEST
LARGEST LARGEST LARGEST SECOND LARGEST SECOND LARGEST TENANT
CONTROL TENANT TENANT % OF TENANT TENANT TENANT % OF LEASE
NUMBER LEASED SF TOTAL NSF LEASE EXPIRATION SECOND LARGEST TENANT LEASED SF TOTAL NSF EXPIRATION
<S> <C> <C> <C> <C> <C> <C> <C>
1 180,282 34 01/31/14 Jenss Department Store 79,028 15 12/31/02
2 19,498 5 12/31/98 Blue Cross BlueShield 19,385 5 12/31/09
3 78,127 12 12/31/04 Wells Fargo Bank 74,935 12 05/31/98
4
5
- -----------------------------------------------------------------------------------------------------------------------------
6
66,011 65 02/29/12 TRW, Inc. 34,825 35 07/31/07
126,713 100 06/30/07
7 185,400 100 05/31/06
8 86,479 30 06/30/15 Beall's 38,448 13 06/30/05
9
10
- -----------------------------------------------------------------------------------------------------------------------------
11 78,823 26 07/31/12 Heironimus 40,700 14 01/31/03
12 33,000 9 05/31/98 Medica 30,000 8 10/31/98
13 9,702 10 01/31/04 Paulson and Nance 7,669 8 05/31/05
14 24,609 12 01/31/04 Union 76 22,500 11 05/31/00
15 173,919 61 05/31/21 Builder's Square 110,700 39 04/30/21
- -----------------------------------------------------------------------------------------------------------------------------
16
17 172,302 35 01/31/08 Fox Theaters 37,532 8 12/31/99
18 53,000 45 07/31/17 Barnes & Noble 25,000 21 02/28/12
19
20
- -----------------------------------------------------------------------------------------------------------------------------
21 19,343 14 02/28/01 Western Pioneer 14,442 10 12/31/99
22
65,930 47 01/31/09 JC Penney 22,331 16 03/31/05
33,630 32 02/28/04 Factory 2U 15,965 15 11/17/01
23 91,266 35 03/31/17 Kash N Karry 46,300 18 03/31/12
24
25
- -----------------------------------------------------------------------------------------------------------------------------
26 20,572 13 08/11/01 D.B. Kelley 14,467 9 05/01/03
27 30,482 45 12/31/02 Global Knowledge Network 5,606 8 06/30/99
28
29
30
- -----------------------------------------------------------------------------------------------------------------------------
31 12,857 8 09/30/06 Howard County MD 9,252 6 06/30/98
32 78,133 100 10/30/11
33 57,204 18 04/30/06 UA Fontana 18,822 6 12/31/04
34
35 23,690 41 12/31/03 The Orthopedic Clinic, P.C. 12,410 21 09/30/03
- -----------------------------------------------------------------------------------------------------------------------------
36
37
38 7,997 10 07/31/02 First Reserve 7,468 9 02/28/01
39 17,000 11 09/30/04 Walgreen's 13,050 8 02/28/41
40 42,000 30 01/31/07 TJ Maxx 24,050 17 10/31/98
- -----------------------------------------------------------------------------------------------------------------------------
41
42 88,699 43 12/31/05 Warehouse Shoes 21,420 10 07/31/02
43 12,467 25 03/31/01 State Justice Institute 10,435 21 01/31/01
44
45
- -----------------------------------------------------------------------------------------------------------------------------
46 82,876 100 12/31/12
47
48 19,833 12 08/31/00 Westwood Home Furnishings, Inc. 13,070 8 10/31/99
49 47,030 32 12/31/99 Rite Aid 9,875 7 06/01/01
50
- -----------------------------------------------------------------------------------------------------------------------------
51 35,000 18 12/31/05 Watsons 29,925 16 04/28/00
52 44,000 27 04/30/06 Results Bedford Inc. 31,000 19 02/28/02
53
54
55 63,440 65 06/06/10 Hollywood Video 8,000 8 02/07/12
- -----------------------------------------------------------------------------------------------------------------------------
56
57
58 19,471 24 07/01/99 Espey Huston & Associates 14,727 18 09/30/02
59
60
- -----------------------------------------------------------------------------------------------------------------------------
61
62
63 18,350 12 06/30/04 Ohio Casualty 17,911 12 05/31/99
64
65
- -----------------------------------------------------------------------------------------------------------------------------
66 47,408 39 12/31/12 Vartec 22,884 19 04/30/00
67
68 32,370 62 01/31/18 Old Navy 15,188 29 09/30/07
69
70
- -----------------------------------------------------------------------------------------------------------------------------
71 49,600 22 08/31/01 Office Depot (C&A Sublease) 32,019 14 10/31/98
72
73
74 7,196 19 08/31/00 Grant Fridkin 6,309 16 09/30/00
75 31,788 57 09/30/01 Associated Third Party Adminis 24,415 43 03/31/04
- -----------------------------------------------------------------------------------------------------------------------------
76
77 6,591 11 05/31/03 Uberoi Computer 4,931 8 12/31/98
78
79
25,600 33 01/31/02 Ben Franklin 12,000 16 01/31/99
12,670 17 01/31/00 Flordia Dept HRS 12,539 17 02/28/05
80 55,990 62 10/25/09 Oak Creations 6,750 7 12/31/01
- -----------------------------------------------------------------------------------------------------------------------------
81 37,700 77 10/31/12 The Big Party Corporation 9,300 19 09/30/07
82 9,700 19 05/31/07 Casa Larios Restaurant 5,440 11 05/31/98
83 53,071 13 04/30/00 Avdata Systems 16,650 4 05/31/01
84
85 4,800 8 11/30/99 Cal Tran 3,468 6 04/30/98
- -----------------------------------------------------------------------------------------------------------------------------
86
87
88 45,671 100 06/28/08
89
90 70,250 35 05/31/05 Belk-Hudson 25,900 13 07/31/01
- -----------------------------------------------------------------------------------------------------------------------------
91 15,083 26 09/14/00 Protix 5,764 10 03/31/98
92 52,100 77 10/31/98 Mediware 11,481 17 04/30/01
93
94
95
- -----------------------------------------------------------------------------------------------------------------------------
96 27,007 16 09/30/06 Peebles 25,550 15 11/30/02
97
98
99
100 34,802 34 06/01/04 Hancock Fabrics 16,417 16 09/01/07
- -----------------------------------------------------------------------------------------------------------------------------
101 25,023 23 12/31/01 Allied Sporting Goods 12,468 12 10/31/05
102 27,813 31 04/30/03 Harris County 21,189 24 03/31/01
103
104
105 14,440 31 12/31/06 Hallmark 7,461 16 07/31/01
- -----------------------------------------------------------------------------------------------------------------------------
106 7,451 14 05/31/04 Imaging Surgery Center 3,791 7 05/31/98
107
108 7,115 16 06/30/01 Coldwell Banker 5,617 12 06/30/00
109
110 60,243 73 12/31/02 Airborne Express 22,157 27 12/31/02
- -----------------------------------------------------------------------------------------------------------------------------
111 40,304 36 11/30/04 Payless Drug Stores 37,682 33 10/31/07
112 33,815 66 05/31/01 Marcoa Publishing 7,353 14 01/31/01
113
114
115
- -----------------------------------------------------------------------------------------------------------------------------
116 15,000 28 12/31/12 Hollywood Video 11,200 21 10/31/05
117
118 7,728 10 11/30/01 Thunderbird Grill 4,212 5 04/30/01
119 36,605 29 10/01/02 Tractor Supply Company 30,028 23 06/01/07
120 18,530 14 12/31/99 Texas Dept of Prot. & Reg. Serv 14,996 12 04/14/05
- -----------------------------------------------------------------------------------------------------------------------------
121 100,000 100 10/31/12
122
123 6,179 27 03/01/98 MicroGuild, Inc. 3,332 15 08/22/99
124 23,040 61 07/31/02 Petcare Plus 15,000 39 11/30/01
125 14,400 22 06/03/02 T&C Car Wash 8,000 12 02/28/09
- -----------------------------------------------------------------------------------------------------------------------------
126
127 55,146 56 06/30/00 Dal-Tile, Inc 9,168 9 04/30/00
128
129 30,625 40 09/05/04 Pattys Hallmark 8,800 11 01/31/03
130
- -----------------------------------------------------------------------------------------------------------------------------
131 4,200 12 06/30/04 Casa Dominguez 3,750 11 10/31/03
132 36,736 31 03/31/00 Food Bank 15,400 13 09/30/98
133 7,200 18 01/01/03 Rhode Island Book co. 3,600 9 03/31/07
134
135 13,582 21 05/31/99 Calsonic International 12,893 20 04/30/98
- -----------------------------------------------------------------------------------------------------------------------------
136 13,031 30 02/28/02 Thuridion 7,642 17 02/28/00
137
138 4,315 12 04/01/00 Bridgecreek Realty 3,800 11 03/01/01
139
140 12,580 27 01/31/07 OPCMIA 8,764 19 11/30/06
- -----------------------------------------------------------------------------------------------------------------------------
141
142 10,800 15 08/31/03 Tuesday Morning, Inc. 5,844 8 12/31/01
143
144
145 18,738 57 12/31/08 Super Video 5,600 17 12/31/02
- -----------------------------------------------------------------------------------------------------------------------------
146 14,010 23 01/31/01 Auto Dynamics 6,000 10 08/31/98
147 11,950 11 01/31/99 Sabinsa Corporation 9,800 9 12/31/98
148 26,070 18 01/31/98 Odd Lots 21,930 15 01/31/01
149
150
- -----------------------------------------------------------------------------------------------------------------------------
151
152 12,675 29 01/31/02 Deseret (LDS Church) 12,675 29 07/31/04
153 3,840 14 03/20/01 Willowrock Pet Clinic 2,975 11 09/17/07
154
155
- -----------------------------------------------------------------------------------------------------------------------------
156 24,000 68 10/02/00 Payless Shoes Source 2,970 8 12/30/00
157 41,304 44 02/01/07 Food Lion 25,000 26 06/30/07
158 13,500 23 09/30/01 Peter Piper Pizza 10,054 17 07/31/07
159 7,050 15 02/28/08 Banc One Corporation 5,850 12 12/31/97
160
- -----------------------------------------------------------------------------------------------------------------------------
161 3,960 20 01/31/08 Print Place 3,894 19 04/30/07
162
163 45,245 60 04/30/17 U.S. Postal Svc. 4,175 6 09/30/09
164 6,313 19 03/31/12 Tuesday Morning 4,800 14 12/31/98
165
- -----------------------------------------------------------------------------------------------------------------------------
166
167 7,950 37 02/27/00 Copy Cop, Inc. 7,500 35 12/08/06
168 10,947 33 07/31/00 The Asi Group, Inc. 6,195 19 11/30/02
169
170 9,836 17 06/30/99 Clark Dietz, Inc. 7,479 13 03/31/99
- -----------------------------------------------------------------------------------------------------------------------------
171 18,030 34 06/30/02 Macro Chem 9,961 19 02/29/00
172 4,290 14 03/31/04 Art Center 3,600 12 04/30/00
173 34,019 68 06/30/01 Blockbuster 6,400 13 01/31/98
174 37,082 34 04/30/02 Walgreen Company 10,069 9 09/30/00
175
- -----------------------------------------------------------------------------------------------------------------------------
176 46,969 48 01/31/02 IGA 35,000 36 01/01/07
177
178
179 9,000 53 05/31/03 New England Audio 8,000 47 05/31/12
180 32,040 70 12/31/09 Budzisz-Wruck and Associates 4,355 9 12/31/98
- -----------------------------------------------------------------------------------------------------------------------------
181
182
183
184
185 4,665 19 02/01/02 JRP 2,263 9 01/01/00
- -----------------------------------------------------------------------------------------------------------------------------
186 7,405 30 10/31/04 Expressions 5,000 20 08/31/04
187 7,555 23 06/16/00 Jayden Management Corp. 4,417 13 12/31/99
188 37,436 100 06/30/07
189
190 22,417 60 10/01/97 Cellular City 3,200 9 12/01/98
- -----------------------------------------------------------------------------------------------------------------------------
191 10,824 24 10/01/02 Carney-Neuhaus Enginee 3,433 7 04/01/02
192
193 20,600 100 05/31/06
194
195 21,295 29 06/30/02 Arizona D.E.S. 18,097 24 01/31/02
- -----------------------------------------------------------------------------------------------------------------------------
196
197
198
199
200 21,265 100 10/29/17
- -----------------------------------------------------------------------------------------------------------------------------
201
202 50,289 48 08/31/12 Jack in the Box 32,773 31 12/31/11
203 6,750 17 06/30/98 CGI Development 3,200 8 10/31/07
204
205
- -----------------------------------------------------------------------------------------------------------------------------
206 4,552 10 06/30/00 Amex Pawn 4,200 9 01/31/99
207
208 11,740 32 03/31/06 CSCI 3,042 8 06/30/99
209 12,868 42 02/28/04 Americorp Financial 4,844 16 01/31/98
210
- -----------------------------------------------------------------------------------------------------------------------------
211
212 13,461 48 04/30/04 Transaction Billing Resource 4,117 15 11/30/02
213
214 4,340 9 11/30/00 Beverage Depot 3,880 8 12/31/98
215
- -----------------------------------------------------------------------------------------------------------------------------
216
217
218 6,180 18 08/31/02 Dynamic Glass 5,400 16 02/28/98
219 10,178 22 12/01/98 Memphis Symphony Orchestra 4,529 10 06/30/98
220
- -----------------------------------------------------------------------------------------------------------------------------
221
222 25,180 58 06/30/08 Rowley Schlimgen 10,800 25 09/30/00
223
224 3,696 6 12/08/00 John F. Whitehorn M.D. 3,630 6 01/31/99
225
- -----------------------------------------------------------------------------------------------------------------------------
226
227
228
229 6,500 100 04/27/07
230
- -----------------------------------------------------------------------------------------------------------------------------
231
232 11,721 100 09/30/09
233 11,721 100 09/30/09
234
235
- -----------------------------------------------------------------------------------------------------------------------------
236
237
238
239
240 02/01/11
241 22,800 100
242 5,100 100 09/30/09 Marina Properties 06/30/01
243 2,235 9 01/31/98 Woodward & Clyde 1,890 7 05/31/98
244
245 30,979 53 02/28/99 Treasury Drug 7,000 12 10/31/99
- -----------------------------------------------------------------------------------------------------------------------------
246
247 6,543 73 09/30/00 A M Nevada, Inc. 2,443 27 03/01/00
248 1,800 17 11/30/99 Inches-A-Weigh 1,800 17 12/31/02
249
250
- -----------------------------------------------------------------------------------------------------------------------------
251
252
253
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CERTAIN CHARACTERISTICS OF THE MULTIFAMILY MORTGAGED PROPERTIES
LOAN LOAN CUT-OFF DATE UTILITIES
COUNTER NUMBER PROPERTY NAME BALANCE PROPERTY COUNTY TENANT PAYS
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4 655595-3 Wheatlands $32,409,203 Electricity/Gas
5 400029136 Pembroke Landings $24,699,237 Broward All utilities
9 400028226 Tara Hills Apartments $16,699,765 Orange Electricity only
10 400027581 Spring Oaks Aggregate $16,295,542
400027581A Spring Oaks Apartments Clark Electricity only
400027581B Spring Garden Apartments Clark Electricity only
400027581C Spring Meadow Apartments Clark Electricity only
400027581D Spring Palm Apartments Clark Electricity only
16 M0275 Park Laureate Apartments $13,266,395 Louisville Electricity only
24 655583-0 Summer Brook Apartments $9,982,169 San Diego Electricity only
25 655641-5 Landmark Apartments $9,581,689 King County Electricity only
28 400028264 Chestnut Hill Apartments $8,616,119 Harris Electricity only
34 400028302 Fourth Ward Square Apartments $7,980,096 Mecklenburg Electricity only
36 655313-3 Brandon Oaks Apartments $7,960,493 Bexar Electricity only
37 400028293 Duck Creek Apartments $7,860,508 Arapahoe Electricity only
41 400028268 Schooner Cove II Apartments $7,552,491 Washtenaw County Electricity/Gas
47 400028265 Parkway Apartments $6,872,974 Harris Electricity only
53 400028297 Woodman Village Apartments $6,623,382 San Diego Electricity only
54 400028283 Windridge Townhomes $6,580,262 Boone Electricity only
59 400028232 Summit Point Apartments $6,283,311 Harris Electricity only
60 655316-2 Sugar Tree Apartments $6,268,889 Nueces Electricity only
61 400028243 Dove Tree Apartments $6,143,646 Bexar Electricity only
62 655311-7 Grove Park $6,069,876 Bexar Electricity only
64 655366-7 Edgewood Terrace/Four Season Apts $5,867,009 Hinds Electricity only
65 400028266 Coral Club Apartments $5,693,269 Harris Electricity only
67 400029125 Twin River Apartments $5,621,564 Mercer County Electricity only
72 400028267 Pine Hill Apartments $5,379,098 Livingston Electricity only
73 655525-4 Rockwell Apartments $5,287,570 Electricity only
76 400028251 Eastbrooke Apartments $5,258,615 Macomb Electricity only
84 655315-9 Cimarron Crossing $4,935,506 Travis Electricity only
86 655526-7 Twin Lakes Apartments $4,688,977 Oklahoma Electricity only
87 400029142 Baywater Apartments $4,688,934 Hillsborough All utilities
89 400028263 Barrington Apartments $4,606,884 Harris Electricity only
93 400029135 Sharpstown Manor Apartments $4,489,257 Harris Electricity only
94 655600-4 Hunters Point Apartments $4,489,129 Boone Electricity only
95 400028236 Eastwood Village Apartments $4,473,803 San Diego Electricity only
97 655563-6 Forest Hills Apartments $4,389,983 Hamilton Electricity only
98 400028262 Normandy Square Apartments $4,330,608 Broward Electricity only
103 655483-1 Windsong Apartments $4,137,010 East King Electricity only
104 655321-4 The Reserve at Alamo Heights $4,114,580 Bexar Electricity only
107 655679-0 Oxford Square Apartments $3,992,980 Shelby County Electricity only
109 655527-0 Woodoaks Apartments $3,990,619 Canadian Electricity only
113 400028208 Kingsboro Village Apartments $3,935,728 Jackson Electricity only
114 655520-9 Concord Apartments $3,890,853 Oklahoma Electricity only
117 400028223 Potomac House Apartments $3,819,360 Oklahoma Electricity/Gas
126 655432-3 Sunset Rill Apartments $3,591,789 Knox Electricity/Gas
128 655521-2 Country Club Apartments $3,591,557 Canadian Electricity only
130 400028259 Beechnut Grove Apartments $3,587,284 Jackson Electricity only
134 655427-1 Braes Court Apartments $3,514,760 Harris County Electricity only
137 400028271 Brookfield Apartments $3,489,174 Maricopa Electricity only
139 655414-5 Gilmore Apartments $3,486,612 Shelby County No utilities
141 400028231 Almeda Chateau Apartments $3,418,190 Harris No utilities
143 400028298 The Greens Apartments $3,392,074 Jackson Electricity only
144 655657-0 Fairlawn Village Apartments $3,297,949 Champaign Water/Electricity
149 655412-9 Hillcrest Apartments $3,141,578 Shelby County Electricity only
150 400027550 Villa Royale Apartments $3,134,289 Harris Electricity only
151 400028299 Legacy I & II Apartments $3,093,137 Sanpete No utilities
<PAGE>
<CAPTION>
STUDIOS 1 BEDROOMS 2 BEDROOMS 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS
WTD. AVG. WTD. AVG. WTD. AVG. WTD. AVG. WTD. AVG. WTD. AVG.
# UNITS RENT/MONTH # UNITS RENT/MONTH # UNITS RENT/MONTH # UNITS RENT/MONTH # UNITS RENT/MONTH # UNITS RENT/MONTH ELEVATORS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
120 $885 232 $1,127 No
96 $1,115 204 $1,115 No
256 $720 96 $855 16 $945 No
480 $492 240 $579 3 $655
144 $488 72 $572 1 $655 No
112 $488 56 $581 1 $655 No
112 $488 56 $573 1 $655 No
112 $505 56 $591 No
160 $609 80 $829 32 $865 No
42 $605 138 $704 36 $865 No
24 $516 32 $605 83 $709 52 $914 No
340 $400 120 $515 No
106 $736 48 $980 No
60 $395 184 $603 32 $795 No
183 $507 85 $671 Yes
74 $579 154 $654 No
252 $415 96 $553 No
28 $605 120 $715 No
40 $660 80 $730 24 $855 No
24 $405 211 $474 54 $585 2 $650 No
206 $496 44 $685 No
80 $373 184 $527 No
56 $290 72 $345 232 $426 No
83 $449 99 $650 4 $875 No
109 $457 76 $598 35 $775 No
180 $722 3 $830 No
81 $551 126 $630 No
77 $254 151 $282 76 $376 No
55 $582 121 $657 No
24 $444 100 $603 36 $754 No
32 $251 80 $285 160 $356 24 $493 No
96 $468 80 $644 No
228 $397 80 $515 No
72 $310 106 $370 90 $470 Yes
32 $545 56 $666 24 $850 No
45 $415 133 $503 12 $685 No
80 $530 84 $631 No
22 $462 135 $565 32 $684 Yes
27 $745-$810 54 $885-$970 9 $1,060 No
32 $318 120 $550 48 $649 No
68 $371 96 $430 36 $510 No
103 $300 78 $407 No
97 $378 156 $420 No
80 $373 48 $483 No
36 $265 120 $305 131 $387 No
36 $407 128 $440 16 $597 No
48 $300 98 $340 34 $459 No
78 $400 124 $480 5 $500 Yes
212 $321 54 $440 16 $555 No
72 $488 52 $621 No
129 $399 18 $640 1 $1,200 Yes
18 $350 83 $472 94 $548 12 $675 No
42 $403 108 $516 No
27 $447 82 $521 No
64 $345 136 $425 16 $490 No
208 $301 92 $435 4 $550 No
3 $703 27 $1,363 5 $1,742 No
</TABLE>
A-6
<PAGE>
<TABLE>
<CAPTION>
CERTAIN CHARACTERISTICS OF THE MULTIFAMILY MORTGAGED PROPERTIES
LOAN LOAN CUT-OFF DATE UTILITIES
COUNTER NUMBER PROPERTY NAME BALANCE PROPERTY COUNTY TENANT PAYS
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
155 400028250 Imperial Towers Apartments $2,937,279 Brevard Electricity only
162 400029128 Oasis Townhouse Apartments $2,792,811 San Bernardino Electricity/Gas
165 400029122 Seaside Village Apartments $2,710,933 Galveston Electricity only
166 400027580 Northtown Village Apartments $2,702,254 Ellis Electricity only
169 400028290 Redwood Terrace Apartments $2,591,732 Clackamas Electricity only
175 655548-7 Stonewood Apartments $2,521,623 Dallas Electricity only
177 655486-0 Soundview Apartments $2,492,591 King County Electricity only
181 400028284 Valentine Place Apartments $2,487,990 Tompkins County Electricity/Gas
183 400028255 Hillcrest Residence Apartments $2,459,123 Oklahoma No utilities
189 655428-4 Woodstone Apartments $2,318,246 Harris County Electricity only
198 400028257 Shades of Covington $2,090,872 Hillsborough Electricity only
199 400028234 Goshen Country Club Apartments $2,028,723 Augusta-Richmond Electricity only
201 M0092 Gregory Avenue Apartments $1,997,986 Passaic Electricity only
204 400028224 Oakcreek Apartments $1,989,250 Oklahoma County Electricity/Gas
210 655522-5 Dor Jay / Trinity Place Aggregate $1,795,779
655522-5A Dor Jay Apartments Oklahoma Electricity only
655522-5B Trinity Place Apartments Oklahoma Electricity only
211 655381-6 University Village Apartments $1,793,855 Gallatin Electricity only
213 400029138 Highland Estates Apartments $1,723,854 Hillsborough Electricity only
215 400029151 Leisure Villa Apartments $1,606,283 Rapides Electricity only
216 655586-9 Park Meadow $1,567,034 Champaign Water/Electricity
217 400027569 Pinewood North Apartments $1,469,554 Harris Electricity only
220 400028279 Alpine Apartments $1,435,330 Broward County Electricity only
221 400028207 Hickory Hills Apartments $1,411,473 Johnson Electricity only
225 655587-2 Westwood Village $1,346,700 Champaign Electricity only
226 M0037 Manor House Apartments $1,299,221 Hancock County Electricity only
230 1700019982 Mark Manor Apartments $1,186,492 Maricopa Electricity/Gas
231 M0214 Monaco Lakes East Apartments $1,149,444 Jackson Electricity only
234 400028300 Palm Court Apartments $1,117,420 Maricopa Electricity only
236 400029123 Meadowcreek Apartments $1,097,420 Dallas No utilities
237 400028235 Kristen's Place Apartments $1,095,636 Harris Electricity only
238 400027585 Brentwood Apartments $1,089,206 Dallas Electricity only
239 655436-5 Westview Terrace Apartments $1,077,642 Tarrant Electricity only
249 655523-8 Park Ridge Apartments $698,358 Oklahoma Electricity only
250 1700020031 Sunny Palms Apartments $696,268 Maricopa County Electricity only
251 1700020057 Mahoney Village $660,880 Maricopa Electricity/Gas
252 400029152 7 Railroad Avenue Apartments $548,046 Rockingham Electricity/Gas
253 400029153 11 Railroad Avenue Apartments $418,508 Rockingham Electricity only
<PAGE>
<CAPTION>
STUDIOS 1 BEDROOMS 2 BEDROOMS 3 BEDROOMS 4 BEDROOMS 5 BEDROOMS
WTD. AVG. WTD. AVG. WTD. AVG. WTD. AVG. WTD. AVG. WTD. AVG.
# UNITS RENT/MONTH # UNITS RENT/MONTH # UNITS RENT/MONTH # UNITS RENT/MONTH # UNITS RENT/MONTH # UNITS RENT/MONTH ELEVATORS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
37 $350 42 $400 103 $455 Yes
118 $595 No
30 $675 60 $704 No
16 $387 74 $439 32 $545 No
13 $601 44 $681 No
32 $380 126 $470 No
54 $532 36 $645 No
22 $543 12 $630 17 $815 2 $1,389 6 $1,380 No
120 $431 26 $500 No
48 $355 72 $455 24 $605 No
40 $465 56 $565 No
1 $365 76 $502 22 $587 No
16 $500 34 $600 16 $735 14 $845 2 $850 No
2 $275 99 $307 69 $392 No
68 $279 48 $352
44 $275 16 $345 No
24 $285 32 $355 No
84 $516 No
5 $515 55 $546 No
12 $330 48 $400 40 $460 No
16 $617 18 $749 No
48 $354 80 $468 No
60 $425 16 $600 No
23 $407 50 $494 1 $542 No
48 $500 No
5 $390 64 $449 2 $500 No
12 $502 36 $607 No
16 $324 88 $369 16 $437 No
4 $350 8 $400 40 $483 No
15 $432 14 $415 39 $521 3 $610 No
102 $335 1 $500 No
4 $297 83 $349 20 $465 No
60 $380 32 $500 No
54 $285 No
14 $400 13 $486 4 $561 No
28 $438 No
18 $591 No
17 $513 No
</TABLE>
A-7
<PAGE>
UNDERWRITING DEBT SERVICE COVERAGE RATIO
<TABLE>
<CAPTION>
NUMBER OF % OF NUMBER OF AGGREGATE
RANGE OF MORTGAGE MORTGAGE MORTGAGED CUT-OFF DATE
UNDERWRITING DSCR(X) LOANS LOANS PROPERTIES BALANCE
- ---------------------- ----------- ---------- ------------ -----------------
<S> <C> <C> <C> <C>
0.72 - 1.00 .......... 2 0.79% 2 $ 6,746,664
1.01 - 1.10 .......... 2 0.79% 2 $ 3,723,361
1.11 - 1.20 .......... 18 7.11% 19 $ 93,569,938
1.21 - 1.30 .......... 75 29.64% 76 $ 412,142,140
1.31 - 1.40 .......... 73 28.85% 74 $ 427,332,970
1.41 - 1.50 .......... 42 16.60% 47 $ 208,496,581
1.51 - 1.60 .......... 20 7.91% 20 $ 85,095,972
1.61 - 1.70 .......... 5 1.98% 5 $ 16,409,251
1.71 - 1.80 .......... 3 1.19% 3 $ 18,586,185
1.81 - 1.90 .......... 4 1.58% 4 $ 18,501,056
1.91 - 2.00 .......... 2 0.79% 2 $ 9,096,414
2.01 - 2.10 .......... 2 0.79% 2 $ 6,826,988
2.11 - 2.20 .......... 2 0.79% 2 $ 1,984,657
2.31 - 2.40 .......... 1 0.40% 1 $ 2,797,356
2.41 - 2.50 .......... 1 0.40% 1 $ 897,727
2.51 - 2.54 .......... 1 0.40% 1 $ 6,986,497
-- ------ -- --------------
Total ................ 253 100.00% 261 $1,319,193,758
=== ====== === ==============
<CAPTION>
PERCENTAGE WEIGHTED WEIGHTED WEIGHTED
OF AGGREGATE AVERAGE AVERAGE AVERAGE
RANGE OF CUT-OFF DATE UNDERWRITING CUT-OFF DATE MORTGAGE
UNDERWRITING DSCR(X) BALANCE DSCR LTV RATIO RATE
- ---------------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
0.72 - 1.00 .......... 0.51% 0.84x 69.2% 8.6433%
1.01 - 1.10 .......... 0.28% 1.10x 76.5% 8.3352%
1.11 - 1.20 .......... 7.09% 1.18x 81.2% 7.4646%
1.21 - 1.30 .......... 31.24% 1.27x 75.6% 7.5444%
1.31 - 1.40 .......... 32.39% 1.35x 74.6% 7.4606%
1.41 - 1.50 .......... 15.80% 1.46x 70.0% 7.5120%
1.51 - 1.60 .......... 6.45% 1.54x 69.4% 7.4382%
1.61 - 1.70 .......... 1.24% 1.64x 65.0% 7.5537%
1.71 - 1.80 .......... 1.41% 1.74x 52.7% 7.2957%
1.81 - 1.90 .......... 1.40% 1.86x 65.7% 7.1551%
1.91 - 2.00 .......... 0.69% 1.93x 63.3% 7.2999%
2.01 - 2.10 .......... 0.52% 2.05x 36.4% 7.0957%
2.11 - 2.20 .......... 0.15% 2.19x 42.8% 7.6228%
2.31 - 2.40 .......... 0.21% 2.31x 63.6% 7.4400%
2.41 - 2.50 .......... 0.07% 2.47x 42.7% 7.4200%
2.51 - 2.54 .......... 0.53% 2.54x 46.3% 6.7100%
------ ---- ---- ------
Total ................ 100.00% 1.37x 73.2% 7.4900%
====== ==== ==== ======
</TABLE>
CUT-OFF DATE LOAN TO VALUE RATIO
<TABLE>
<CAPTION>
NUMBER OF % OF NUMBER OF AGGREGATE
RANGE OF MORTGAGE MORTGAGE MORTGAGED CUT-OFF DATE
CUT-OFF DATE LTV LOANS LOANS PROPERTIES BALANCE
- ------------------------- ----------- ---------- ------------ -----------------
<S> <C> <C> <C> <C>
30.1% - 50.0% ......... 7 2.77% 7 $ 18,059,257
50.1% - 60.0% ......... 8 3.16% 8 $ 27,060,137
60.1% - 65.0% ......... 21 8.30% 21 $ 96,013,860
65.1% - 70.0% ......... 34 13.44% 39 $ 153,618,924
70.1% - 75.0% ......... 86 33.99% 88 $ 534,643,627
75.1% - 80.0% ......... 83 32.81% 83 $ 406,033,901
80.1% - 85.0% ......... 11 4.35% 12 $ 75,184,222
85.1% - 90.0% ......... 1 0.40% 1 $ 698,358
95.1% - 100.0% ......... 1 0.40% 1 $ 3,890,853
100.1% - 101.0% ......... 1 0.40% 1 $ 3,990,619
-- ------ -- --------------
Total ................... 253 100.00% 261 $1,319,193,758
=== ====== === ==============
<PAGE>
<CAPTION>
PERCENTAGE OF WEIGHTED WEIGHTED WEIGHTED
AGGREGATE AVERAGE AVERAGE AVERAGE
RANGE OF CUT-OFF DATE UNDERWRITING CUT-OFF DATE MORTGAGE
CUT-OFF DATE LTV BALANCE DSCR LTV RATIO RATE
- ------------------------- --------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
30.1% - 50.0% ......... 1.37% 2.23x 42.2% 7.1349%
50.1% - 60.0% ......... 2.05% 1.58x 53.2% 7.3601%
60.1% - 65.0% ......... 7.28% 1.58x 62.5% 7.6736%
65.1% - 70.0% ......... 11.64% 1.46x 67.3% 7.6357%
70.1% - 75.0% ......... 40.53% 1.34x 73.3% 7.5163%
75.1% - 80.0% ......... 30.78% 1.31x 78.3% 7.4357%
80.1% - 85.0% ......... 5.70% 1.25x 82.2% 7.2219%
85.1% - 90.0% ......... 0.05% 1.16x 85.2% 7.2700%
95.1% - 100.0% ......... 0.29% 1.13x 96.1% 7.2700%
100.1% - 101.0% ......... 0.30% 1.12x 101.0% 7.2700%
------ ---- ----- ------
Total ................... 100.00% 1.37x 73.2% 7.4900%
====== ==== ===== ======
</TABLE>
PROPERTY TYPE
<TABLE>
<CAPTION>
PERCENTAGE OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE UNDERWRITING CUT-OFF DATE MORTGAGE
PROPERTY TYPE PROPERTIES BALANCE BALANCE DSCR LTV RATIO RATE
- ------------------------------ ------------ ----------------- --------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Multifamily .................. 93 $ 410,971,596 31.15% 1.30x 77.6% 7.4382%
Office ....................... 45 $ 314,208,008 23.82% 1.38x 70.6% 7.3877%
Anchored Retail .............. 42 $ 300,108,035 22.75% 1.34x 73.5% 7.5355%
Retail ....................... 38 $ 119,879,390 9.09% 1.41x 71.6% 7.6277%
Lodging ...................... 19 $ 94,616,991 7.17% 1.57x 64.8% 7.7168%
Industrial/Warehouse ......... 11 $ 42,798,362 3.24% 1.30x 77.4% 7.6026%
Mobile Home Park ............. 5 $ 15,666,391 1.19% 1.91x 57.7% 7.0530%
Other ........................ 3 $ 12,296,696 0.93% 1.52x 73.3% 7.1793%
Health Care .................. 3 $ 6,464,236 0.49% 1.99x 70.5% 8.4304%
Self-Storage ................. 2 $ 2,184,053 0.17% 1.47x 66.2% 8.2200%
-- -------------- ------ ---- ---- ------
Total ........................ 261 $1,319,193,758 100.00% 1.37x 73.2% 7.4900%
=== ============== ====== ==== ==== ======
</TABLE>
A-8
<PAGE>
GEOGRAPHIC DISTRIBUTION
<TABLE>
<CAPTION>
PERCENTAGE OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE UNDERWRITING CUT-OFF DATE MORTGAGE
PROPERTY STATE PROPERTIES BALANCE BALANCE DSCR LTV RATIO RATE
- ------------------------------ ------------ ----------------- --------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
California ................... 28 $ 162,632,161 12.33% 1.41x 70.7% 7.4746%
Texas ........................ 42 $ 158,205,519 11.99% 1.33x 74.8% 7.7722%
Florida ...................... 17 $ 107,056,112 8.12% 1.31x 74.8% 7.3679%
Oregon ....................... 5 $ 106,252,310 8.05% 1.39x 71.2% 7.1461%
New York ..................... 8 $ 80,396,172 6.09% 1.31x 74.0% 7.3810%
Illinois ..................... 11 $ 64,063,008 4.86% 1.25x 77.8% 7.3168%
New Jersey ................... 13 $ 55,733,943 4.22% 1.37x 75.8% 7.1642%
Tennessee .................... 12 $ 48,098,973 3.65% 1.43x 71.6% 7.2984%
Oklahoma ..................... 13 $ 47,823,577 3.63% 1.32x 79.1% 7.3581%
Michigan ..................... 8 $ 45,845,822 3.48% 1.36x 76.3% 7.7160%
Virginia ..................... 8 $ 44,724,749 3.39% 1.40x 72.6% 7.7905%
Ohio ......................... 7 $ 36,603,532 2.77% 1.30x 73.4% 7.8018%
Arizona ...................... 11 $ 33,581,837 2.55% 1.35x 74.3% 7.5564%
Kentucky ..................... 4 $ 30,841,029 2.34% 1.33x 74.9% 7.3968%
Massachusetts ................ 4 $ 27,982,646 2.12% 1.31x 72.5% 7.4174%
Colorado ..................... 4 $ 26,753,286 2.03% 1.77x 67.7% 7.0870%
Nevada ....................... 9 $ 24,193,536 1.83% 1.46x 68.9% 8.1234%
Mississippi .................. 6 $ 17,762,488 1.35% 1.31x 75.0% 7.3712%
North Carolina ............... 4 $ 16,966,137 1.29% 1.54x 75.0% 7.2065%
Indiana ...................... 3 $ 16,628,201 1.26% 1.50x 69.2% 7.5787%
Washington ................... 3 $ 16,211,290 1.23% 1.38x 69.7% 6.8961%
District of Columbia ......... 1 $ 13,759,302 1.04% 1.34x 70.6% 7.5800%
Alabama ...................... 2 $ 13,733,312 1.04% 1.45x 69.2% 7.8545%
Iowa ......................... 2 $ 13,466,615 1.02% 1.29x 77.1% 7.5418%
Utah ......................... 5 $ 13,066,234 0.99% 1.54x 64.2% 7.9951%
Maryland ..................... 2 $ 11,732,737 0.89% 1.34x 67.8% 7.5651%
Wisconsin .................... 3 $ 11,013,502 0.83% 1.29x 74.5% 7.8952%
South Carolina ............... 3 $ 10,425,398 0.79% 1.36x 75.0% 8.1473%
Nebraska ..................... 4 $ 9,564,911 0.73% 1.53x 71.9% 7.7428%
Maine ........................ 2 $ 9,217,110 0.70% 1.37x 66.7% 7.9829%
Missouri ..................... 2 $ 7,327,802 0.56% 1.29x 81.8% 7.8854%
Connecticut .................. 3 $ 7,172,850 0.54% 1.42x 77.0% 7.7192%
Georgia ...................... 2 $ 7,012,571 0.53% 1.86x 45.0% 7.3659%
Vermont ...................... 1 $ 5,482,019 0.42% 1.48x 69.4% 7.8200%
Idaho ........................ 1 $ 3,985,325 0.30% 1.47x 71.2% 7.6200%
Rhode Island ................. 1 $ 3,548,080 0.27% 1.38x 68.9% 7.4600%
Pennsylvania ................. 1 $ 2,827,644 0.21% 1.29x 79.8% 7.2200%
New Hampshire ................ 3 $ 2,690,408 0.20% 1.37x 78.3% 7.3000%
Montana ...................... 1 $ 1,793,855 0.14% 1.42x 59.8% 7.5500%
Louisiana .................... 1 $ 1,606,283 0.12% 1.30x 79.3% 7.3100%
Kansas ....................... 1 $ 1,411,473 0.11% 1.25x 79.1% 8.8250%
-- -------------- ------ ---- ---- ------
Total ........................ 261 $1,319,193,758 100.00% 1.37x 73.2% 7.4900%
=== ============== ====== ==== ==== ======
</TABLE>
A-9
<PAGE>
MORTGAGE RATES
<TABLE>
<CAPTION>
NUMBER OF % OF NUMBER OF AGGREGATE
RANGE OF MORTGAGE MORTGAGE MORTGAGED CUT-OFF DATE
MORTGAGE RATES LOANS LOANS PROPERTIES BALANCE
- ------------------------ ----------- ---------- ------------ -----------------
<S> <C> <C> <C> <C>
6.5001 - 6.7500 ....... 1 0.40% 1 $ 6,986,497
6.7501 - 7.0000 ....... 17 6.72% 17 $ 131,447,209
7.0001 - 7.2500 ....... 43 17.00% 43 $ 305,899,526
7.2501 - 7.5000 ....... 85 33.60% 88 $ 450,348,186
7.5001 - 7.7500 ....... 29 11.46% 29 $ 124,229,141
7.7501 - 8.0000 ....... 26 10.28% 26 $ 119,438,490
8.0001 - 8.2500 ....... 15 5.93% 17 $ 50,995,105
8.2501 - 8.5000 ....... 14 5.53% 17 $ 71,564,770
8.5001 - 8.7500 ....... 9 3.56% 9 $ 22,708,716
8.7501 - 9.0000 ....... 7 2.77% 7 $ 18,925,887
9.0001 - 9.2500 ....... 5 1.98% 5 $ 14,181,878
9.5001 - 9.7500 ....... 1 0.40% 1 $ 1,186,492
9.7501 - 10.0000 ....... 1 0.40% 1 $ 1,281,863
-- ------ -- --------------
Total .................. 253 100.00% 261 $1,319,193,758
=== ====== === ==============
<CAPTION>
PERCENTAGE WEIGHTED WEIGHTED WEIGHTED
OF AGGREGATE AVERAGE AVERAGE AVERAGE
RANGE OF CUT-OFF DATE UNDERWRITING CUT-OFF DATE MORTGAGE
MORTGAGE RATES BALANCE DSCR LTV RATIO RATE
- ------------------------ -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
6.5001 - 6.7500 ....... 0.53% 2.54x 46.3% 6.7100%
6.7501 - 7.0000 ....... 9.96% 1.44x 71.7% 6.9121%
7.0001 - 7.2500 ....... 23.19% 1.36x 74.6% 7.1488%
7.2501 - 7.5000 ....... 34.14% 1.36x 74.1% 7.3636%
7.5001 - 7.7500 ....... 9.42% 1.33x 73.0% 7.6214%
7.7501 - 8.0000 ....... 9.05% 1.37x 73.4% 7.8753%
8.0001 - 8.2500 ....... 3.87% 1.37x 69.9% 8.1302%
8.2501 - 8.5000 ....... 5.42% 1.34x 71.9% 8.4026%
8.5001 - 8.7500 ....... 1.72% 1.18x 68.9% 8.6674%
8.7501 - 9.0000 ....... 1.43% 1.26x 72.0% 8.9001%
9.0001 - 9.2500 ....... 1.08% 1.43x 71.8% 9.1339%
9.5001 - 9.7500 ....... 0.09% 1.51x 74.2% 9.7500%
9.7501 - 10.0000 ....... 0.10% 1.50x 67.5% 9.8400%
------ ---- ---- ------
Total .................. 100.00% 1.37x 73.2% 7.4900%
====== ==== ==== ======
</TABLE>
CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
NUMBER OF % OF NUMBER OF AGGREGATE
RANGE OF MORTGAGE MORTGAGE MORTGAGED CUT-OFF DATE
CURRENT PRINCIPAL BALANCES LOANS LOANS PROPERTIES BALANCE
- ---------------------------- ----------- ---------- ------------ -----------------
<S> <C> <C> <C> <C>
$ 418,508 - $ 499,999 1 0.40% 1 $ 418,508
$ 500,000 - $ 999,999 13 5.14% 13 $ 10,546,969
$ 1,000,000 - $ 1,999,999 39 15.42% 40 $ 58,117,861
$ 2,000,000 - $ 2,999,999 47 18.58% 48 $ 117,756,837
$ 3,000,000 - $ 3,999,999 47 18.58% 47 $ 167,619,522
$ 4,000,000 - $ 4,999,999 26 10.28% 26 $ 117,165,347
$ 5,000,000 - $ 5,999,999 18 7.11% 19 $ 97,534,056
$ 6,000,000 - $ 6,999,999 18 7.11% 18 $ 118,236,507
$ 7,000,000 - $ 7,999,999 13 5.14% 13 $ 99,489,887
$ 8,000,000 - $ 8,999,999 6 2.37% 6 $ 51,235,485
$ 9,000,000 - $ 9,999,999 2 0.79% 2 $ 19,563,858
$10,000,000 - $11,999,999 6 2.37% 7 $ 66,135,200
$12,000,000 - $13,999,999 5 1.98% 5 $ 66,620,214
$14,000,000 - $16,999,999 4 1.58% 7 $ 62,513,296
$17,000,000 - $19,999,999 1 0.40% 1 $ 17,158,037
$20,000,000 - $24,999,999 3 1.19% 4 $ 68,098,071
$25,000,000 - $49,999,999 2 0.79% 2 $ 73,981,280
$50,000,000 - $56,871,141 2 0.79% 2 $ 107,002,824
-- ------ -- --------------
Total ...................... 253 100.00% 261 $1,319,193,758
=== ====== === ==============
<PAGE>
<CAPTION>
PERCENTAGE WEIGHTED WEIGHTED WEIGHTED
OF AGGREGATE AVERAGE AVERAGE AVERAGE
RANGE OF CUT-OFF DATE UNDERWRITING CUT-OFF DATE MORTGAGE
CURRENT PRINCIPAL BALANCES BALANCE DSCR LTV RATIO RATE
- ---------------------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
$ 418,508 - $ 499,999 0.03% 1.37x 73.4% 7.3000%
$ 500,000 - $ 999,999 0.80% 1.46x 64.7% 8.0105%
$ 1,000,000 - $ 1,999,999 4.41% 1.40x 71.5% 7.7548%
$ 2,000,000 - $ 2,999,999 8.93% 1.41x 71.4% 7.6424%
$ 3,000,000 - $ 3,999,999 12.71% 1.33x 74.9% 7.6808%
$ 4,000,000 - $ 4,999,999 8.88% 1.39x 71.3% 7.4462%
$ 5,000,000 - $ 5,999,999 7.39% 1.34x 74.0% 7.6820%
$ 6,000,000 - $ 6,999,999 8.96% 1.44x 73.4% 7.5494%
$ 7,000,000 - $ 7,999,999 7.54% 1.37x 74.8% 7.4225%
$ 8,000,000 - $ 8,999,999 3.88% 1.47x 71.1% 7.3360%
$ 9,000,000 - $ 9,999,999 1.48% 1.24x 77.5% 6.9943%
$10,000,000 - $11,999,999 5.01% 1.42x 69.0% 7.3850%
$12,000,000 - $13,999,999 5.05% 1.36x 72.5% 7.6301%
$14,000,000 - $16,999,999 4.74% 1.36x 76.3% 7.5370%
$17,000,000 - $19,999,999 1.30% 1.31x 73.3% 7.0700%
$20,000,000 - $24,999,999 5.16% 1.30x 76.0% 7.2136%
$25,000,000 - $49,999,999 5.61% 1.37x 73.0% 7.0533%
$50,000,000 - $56,871,141 8.11% 1.30x 73.9% 7.3590%
------ ---- ---- ------
Total ...................... 100.00% 1.37x 73.2% 7.4900%
====== ==== ==== ======
</TABLE>
YEARS OF MORTGAGE ORIGINATION
<TABLE>
<CAPTION>
NUMBER OF % OF NUMBER OF AGGREGATE
MORTGAGE MORTGAGE MORTGAGED CUT-OFF DATE
YEAR OF ORIGINATION LOANS LOANS PROPERTIES BALANCE
- --------------------- ----------- ---------- ------------ -----------------
<S> <C> <C> <C> <C>
1997 ................ 204 80.63% 212 $1,061,756,223
1998 ................ 49 19.37% 49 $ 257,437,535
--- ------ --- --------------
Total ............... 253 100.00% 261 $1,319,193,758
=== ====== === ==============
<CAPTION>
PERCENTAGE WEIGHTED WEIGHTED WEIGHTED
OF AGGREGATE AVERAGE AVERAGE AVERAGE
CUT-OFF DATE UNDERWRITING CUT-OFF DATE MORTGAGE
YEAR OF ORIGINATION BALANCE DSCR LTV RATIO RATE
- --------------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
1997 ................ 80.49% 1.36x 73.3% 7.5863%
1998 ................ 19.51% 1.41x 72.7% 7.0928%
------ ---- ---- ------
Total ............... 100.00% 1.37x 73.2% 7.4900%
====== ==== ==== ======
</TABLE>
A-10
<PAGE>
ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
NUMBER OF % OF NUMBER OF AGGREGATE
ORIGINAL TERM MORTGAGE MORTGAGE MORTGAGED CUT-OFF DATE
TO MATURITY LOANS LOANS PROPERTIES BALANCE
- -------------------- ----------- ---------- ------------ -----------------
<S> <C> <C> <C> <C>
84 Months ......... 8 3.16% 8 $ 47,487,947
119 Months ......... 1 0.40% 1 $ 3,281,496
120 Months ......... 240 94.86% 247 $1,245,294,874
121 Months ......... 3 1.19% 4 $ 19,537,652
132 Months ......... 1 0.40% 1 $ 3,591,789
--- ------ --- --------------
Total .............. 253 100.00% 261 $1,319,193,758
=== ====== === ==============
<CAPTION>
PERCENTAGE WEIGHTED WEIGHTED WEIGHTED
OF AGGREGATE AVERAGE AVERAGE AVERAGE
ORIGINAL TERM CUT-OFF DATE UNDERWRITING CUT-OFF DATE MORTGAGE
TO MATURITY BALANCE DSCR LTV RATIO RATE
- -------------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
84 Months ......... 3.60% 1.44x 69.1% 7.3613%
119 Months ......... 0.25% 1.32x 61.3% 8.8300%
120 Months ......... 94.40% 1.37x 73.5% 7.4934%
121 Months ......... 1.48% 1.31x 69.4% 7.3778%
132 Months ......... 0.27% 1.49x 70.8% 7.4100%
------ ---- ---- ------
Total .............. 100.00% 1.37x 73.2% 7.4900%
====== ==== ==== ======
</TABLE>
ORIGINAL AMORTIZATION TERM
<TABLE>
<CAPTION>
NUMBER OF % OF NUMBER OF AGGREGATE
ORIGINAL MORTGAGE MORTGAGE MORTGAGED CUT-OFF DATE
AMORTIZATION TERM LOANS LOANS PROPERTIES BALANCE
- -------------------- ----------- ---------- ------------ -----------------
<S> <C> <C> <C> <C>
120 Months ......... 1 0.40% 1 $ 885,314
178 Months ......... 1 0.40% 1 $ 2,545,584
180 Months ......... 2 0.79% 2 $ 2,723,690
240 Months ......... 11 4.35% 11 $ 33,254,561
264 Months ......... 1 0.40% 1 $ 10,751,719
300 Months ......... 76 30.04% 78 $ 295,135,379
324 Months ......... 2 0.79% 2 $ 5,836,544
330 Months ......... 1 0.40% 1 $ 2,521,623
336 Months ......... 1 0.40% 1 $ 1,469,554
360 Months ......... 157 62.06% 163 $ 964,069,791
--- ------ --- --------------
Total .............. 253 100.00% 261 $1,319,193,758
=== ====== === ==============
<CAPTION>
PERCENTAGE WEIGHTED WEIGHTED WEIGHTED
OF AGGREGATE AVERAGE AVERAGE AVERAGE
ORIGINAL CUT-OFF DATE UNDERWRITING CUT-OFF DATE MORTGAGE
AMORTIZATION TERM BALANCE DSCR LTV RATIO RATE
- -------------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
120 Months ......... 0.07% 2.18x 34.7% 8.2100%
178 Months ......... 0.19% 1.26 66.3% 8.0600%
180 Months ......... 0.21% 1.19 65.8% 7.2672%
240 Months ......... 2.52% 1.32 73.8% 7.7728%
264 Months ......... 0.82% 1.52 64.8% 7.5700%
300 Months ......... 22.37% 1.44 70.5% 7.7442%
324 Months ......... 0.44% 1.20 78.4% 8.6754%
330 Months ......... 0.19% 1.35 84.1% 7.4000%
336 Months ......... 0.11% 0.72 74.6% 8.2600%
360 Months ......... 73.08% 1.35 74.1% 7.3919%
------ ---- ---- ------
Total .............. 100.00% 1.37x 73.2% 7.4900%
====== ==== ==== ======
</TABLE>
<PAGE>
YEARS OF MORTGAGE MATURITY
<TABLE>
<CAPTION>
PERCENTAGE
OF WEIGHTED WEIGHTED WEIGHTED
YEAR OF NUMBER OF % OF NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE AVERAGE
MORTGAGE MORTGAGE MORTGAGE MORTGAGED CUT-OFF DATE CUT-OFF DATE UNDERWRITING CUT-OFF DATE MORTGAGE
MATURITY LOANS LOANS PROPERTIES BALANCE BALANCE DSCR LTV RATIO RATE
- ---------- ----------- ---------- ------------ ----------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2008 ..... 131 51.78% 134 $ 751,486,830 56.97% 1.38x 73.5% 7.2711%
2007 ..... 113 44.66% 118 $ 516,627,192 39.16% 1.35x 73.2% 7.8207%
2005 ..... 5 1.98% 5 $ 32,501,916 2.46% 1.57x 69.1% 6.9308%
2004 ..... 3 1.19% 3 $ 14,986,031 1.14% 1.15x 69.3% 8.2950%
2009 ..... 1 0.40% 1 $ 3,591,789 0.27% 1.49x 70.8% 7.4100%
--- ------ --- -------------- ------ ---- ---- ------
Total .... 253 100.00% 261 $1,319,193,758 100.00% 1.37x 73.2% 7.4900%
=== ====== === ============== ====== ==== ==== ======
</TABLE>
REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
RANGE OF NUMBER OF % OF NUMBER OF AGGREGATE
REMAINING MORTGAGE MORTGAGE MORTGAGED CUT-OFF DATE
TERM TO MATURITY LOANS LOANS PROPERTIES BALANCE
- -------------------- ----------- ---------- ------------ -----------------
<S> <C> <C> <C> <C>
71 - 90 .......... 8 3.16% 8 $ 47,487,947
91 - 110 .......... 11 4.35% 14 $ 37,856,704
111 - 120 ......... 233 92.09% 238 $1,230,257,318
121 - 130 ......... 1 0.40% 1 $ 3,591,789
--- ------ --- --------------
Total .............. 253 100.00% 261 $1,319,193,758
=== ====== === ==============
<CAPTION>
PERCENTAGE WEIGHTED WEIGHTED WEIGHTED
RANGE OF OF AGGREGATE AVERAGE AVERAGE AVERAGE
REMAINING CUT-OFF DATE UNDERWRITING CUT-OFF DATE MORTGAGE
TERM TO MATURITY BALANCE DSCR LTV RATIO RATE
- -------------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
71 - 90 .......... 3.60% 1.44x 69.1% 7.3613%
91 - 110 .......... 2.87% 1.41x 71.1% 8.7994%
111 - 120 ......... 93.26% 1.37x 73.4% 7.4549%
121 - 130 ......... 0.27% 1.49x 70.8% 7.4100%
------ ---- ---- ------
Total .............. 100.00% 1.37x 73.2% 7.4900%
====== ==== ==== ======
</TABLE>
A-11
<PAGE>
PREPAYMENT LOCK-OUT/PREPAYMENT PREMIUM ANALYSIS
PERCENTAGE OF MORTGAGE LOANS BY OUTSTANDING PRINCIPAL BALANCE*
<TABLE>
<CAPTION>
04/98 04/99 04/00 04/01 04/02
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Locked out ....... 99.57% 98.06% 95.25% 59.39% 0.89%
Defeasance ....... 0.00 0.00 0.00 33.52 33.56
Yield
Maintenance...... 0.43 1.94 3.87 5.28 63.14
5.00 - 5.99% ..... 0.00 0.00 0.61 0.19 0.77
4.00 - 4.99% ..... 0.00 0.00 0.00 1.02 0.00
3.00 - 3.99% ..... 0.00 0.00 0.27 0.00 1.02
2.00 - 2.99% ..... 0.00 0.00 0.00 0.27 0.00
1.00 - 1.99% ..... 0.00 0.00 0.00 0.34 0.61
No Penalty ....... 0.00% 0.00% 0.00% 0.00% 0.00%
---------- ---------- ---------- ---------- ----------
Total** .......... 100.00% 100.00% 100.00% 100.00% 100.00%
========== ========== ========== ========== ==========
Aggregate
Principal
Balance of
the Mortgage
Loans
($ Millions)..... $ 1,319.19 $ 1,305.17 $ 1,290.21 $ 1,273.92 $ 1,256.35
<CAPTION>
04/03 04/04 04/05 04/06 04/07 04/08
------------- ------------- ------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Locked out ....... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Defeasance ....... 33.61 33.67 33.75 33.83 33.91 0.00
Yield
Maintenance...... 63.50 63.44 64.68 64.60 48.06 100.00
5.00 - 5.99% ..... 0.48 0.00 0.00 0.00 0.00 0.00
4.00 - 4.99% ..... 0.77 0.19 0.00 0.00 0.00 0.00
3.00 - 3.99% ..... 0.00 1.06 0.69 0.00 0.00 0.00
2.00 - 2.99% ..... 1.03 0.00 0.61 0.19 0.00 0.00
1.00 - 1.99% ..... 0.34 0.96 0.00 1.10 1.18 0.00
No Penalty ....... 0.27% 0.68% 0.28% 0.28% 16.85% 0.00%
---------- ---------- ---------- ---------- ---------- -------
Total** .......... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
========== ========== ========== ========== ========== =======
Aggregate
Principal
Balance of
the Mortgage
Loans
($ Millions)..... $ 1,237.41 $ 1,217.12 $ 1,151.76 $ 1,128.80 $ 1,104.04 $ 3.10
</TABLE>
- ----------
For purposes of the above table, the Prepayment Premium for the Mortgage Loan
secured by the Mortgaged Property identified on Annex A as Embassy Suites,
Portland, Maine, which Prepayment Premium is the lesser of yield maintenance
and a declining percentage of the amount prepaid, will be treated as if it
was solely a declining percentage of the amount prepaid.
* Table calculated using modeling assumptions and assuming no prepayments of
principal.
** Totals may not equal due to rounding.
A-12
<PAGE>
<TABLE>
<S><C>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date:
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date:
Multifamily/Commercial Pass-Through Certificates Prior Payment:
Administrator: Series 1998-MC1 Record Date:
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9 WAC:
Chicago, IL 60674-4107 WAMM:
==================================================================================================================================
Number Of Pages
Table Of Contents 1
REMIC Certificate Report 1
Other Related Information 3
Asset Backed Facts Sheets 1
Delinquency Loan Detail 1
Mortgage Loan Characteristics 2
Loan Level Listing 1
Total Pages Included In This Package 10
Specially Serviced Loan Detail Appendix A
Modified Loan Detail Appendix B
Realized Loss Detail Appendix C
==================================================================================================================================
Page 1 of 10
B-1
<PAGE>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date:
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date:
Multifamily/Commercial Pass-Through Certificates Prior Payment:
Administrator: Series 1998-MC1 Record Date:
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9 WAC:
Chicago, IL 60674-4107 WAMM:
========================================================================================================================
Original Opening Principal Principal
Class Face Value (1) Balance Payment Adj. or Loss
CUSIP Per $1,000 Per $1,000 Per $1,000 Per $1,000
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
========================================================================================================================
<PAGE>
=============================================================================================================
Negative Closing Interest Interest Pass-Through
Amortization Balance Payment Adjustment Rate (2)
Per $1,000 Per $1,000 Per $1,000 Per $1,000 Next Rate (3)
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
=============================================================================================================
==============================================
Total P&I Payment
==============================================
Page 2 of 10
Notes: (1) N denotes notional balance not included in total
(2) Interest Paid minus Interest Adjustment minus Deferred Interest equals Accrual (3) Estimated
B-2
<PAGE>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date:
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date:
Multifamily/Commercial Pass-Through Certificates Prior Payment:
Administrator: Series 1998-MC1 Record Date:
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60674-4107
Other Related Information
========================================================================================================================
-------------------------------------------------------------------------------------------
Accrued Net
Certificate Prepayment Prepayment
Class Interest Int. Shortfalls Premiums
===========================================================================================
===========================================================================================
Totals: 0.00 0.00 0.00
===========================================================================================
-------------------------------------------------------------------------------------------
Advances
-------------------------------------------------------------------------------------------
Prior Outstanding Current Period
Principal Interest Principal Interest
===========================================================================================
Servicer 0.00 0.00 0.00 0.00
Trustee: 0.00 0.00 0.00 0.00
Fiscal Agent: 0.00 0.00 0.00 0.00
===========================================================================================
0.00 0.00 0.00 0.00
===========================================================================================
========================================================================================================================
<PAGE>
====================================================================================
- ------------------------------------------------------------------------------------
Prior Ending Actual
Unpaid Unpaid Interest Distribution
Interest Interest Loss of Interest
====================================================================================
====================================================================================
0.00 0.00 0.00 0.00
====================================================================================
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Recovered Outstanding
Principal Interest Principal Interest
====================================================================================
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
====================================================================================
0.00 0.00 0.00 0.00
====================================================================================
====================================================================================
Page 3 of 10
B-3
<PAGE>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date:
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date:
Multifamily/Commercial Pass-Through Certificates Prior Payment:
Administrator: Series 1998-MC1 Record Date:
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60674-4107
Other Related Information
==============================================================================================================================
----------------------------------------------------------------------------------------------------------------------------
Servicing Compensation
----------------------------------------------------------------------------------------------------------------------------
Type of Master Sub Special
Compensation Servicer Servicer Servicer
============================================================================================================================
Current Accrued Fees: 0.00 0.00 0.00
Prepayment Interest Excess: 0.00 0.00 0.00
Penalty Charges: 0.00 0.00 0.00
Assumption Fees: 0.00 0.00 0.00
Modification Fees: 0.00 0.00 0.00
Workout Fees: 0.00 0.00 0.00
Interest on Servicing Advances: 0.00 0.00 0.00
Other Fees: 0.00 0.00 0.00
============================================================================================================================
Totals: 0.00 0.00 0.00
============================================================================================================================
============================================================================================================================
General Mortgage Pool Information
============================================================================================================================
Available Distribution Amount: 0.00
Beginning Loan Count: 0
Ending Loan Count: 0
Beginning Aggregate Principal Balance: 0.00
Ending Aggregate Principal Balance: 0.00
Current Period Scheduled Principal: 0.00
Current Period Unscheduled Principal: 0.00
Current Period Realized Losses: 0.00
Current Period Additional Trust Fund Expenses: 0.00
Current Weighted Average Mortgage Rate: 0.000%
Next Weighted Average Mortgage Rate: 0.000%
Current Weighted Average Net Mortgage Rate: 0.000%
Next Weighted Average Net Mortgage Rate: 0.000%
==================================================================================================================================
Page 4 of 10
B-4
<PAGE>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date:
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date:
Multifamily/Commercial Pass-Through Certificates Prior Payment:
Administrator: Series 1998-MC1 Record Date:
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60674-4107
Other Related Information
================================================================================================================================
-----------------------------------------------------------------------------------------------------------------------------
REO Property Information
Principal Date of Amount of
# Collateral Id Date of REO Balance Book Value Final Recovery Proceeds
=============================================================================================================================
1.
2.
3. No REO Properties to Report as of the Current Prepayment Period
4.
5.
=============================================================================================================
Cumulative realized losses on the Mortgage Pool as of Cutoff: 0.00
Cumulative realized losses on the Certificates as of Cutoff: 0.00
*Cumulative additional trust fund expenses applied to the Certificates since the closing date: 0.00
=============================================================================================================
* included in cumulative losses on the certificates
================================================================================================================================
Page 5 of 10
B-5
<PAGE>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date:
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date:
Multifamily/Commercial Pass-Through Certificates Prior Payment:
Administrator: Series 1998-MC1 Record Date:
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60674-4107
======================================================================--------------------------=============================
Distribution Delinq 1 Month Delinq 2 Months Delinq 3+ Months Foreclosure/Bankruptcy
=============================================================================================================
Date # Balance # Balance # Balance # Balance
=============================================================================================================================
================------------------------------------------------------------------------------------------==================-
- -----------------------------------------------------------------------------------------------------------------------------
================------------------------------------------------------------------------------------------==================-
- -----------------------------------------------------------------------------------------------------------------------------
================------------------------------------------------------------------------------------------==================-
- -----------------------------------------------------------------------------------------------------------------------------
================------------------------------------------------------------------------------------------==================-
- -----------------------------------------------------------------------------------------------------------------------------
================------------------------------------------------------------------------------------------==================-
- -----------------------------------------------------------------------------------------------------------------------------
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- -----------------------------------------------------------------------------------------------------------------------------
================------------------------------------------------------------------------------------------==================-
- -----------------------------------------------------------------------------------------------------------------------------
=============================================================================================================================
<PAGE>
=========================================================================================================
REO Modifications Prepayments Curr Weighted Avg.
=========================================================================================================
# Balance # Balance # Balance Coupon Remit
=========================================================================================================
- ------------------------------------================----------------------------------------=============
- ---------------------------------------------------------------------------------------------------------
- ------------------------------------================----------------------------------------=============
- ---------------------------------------------------------------------------------------------------------
- ------------------------------------================----------------------------------------=============
- ---------------------------------------------------------------------------------------------------------
- ------------------------------------================----------------------------------------=============
- ---------------------------------------------------------------------------------------------------------
- ------------------------------------================----------------------------------------=============
- ---------------------------------------------------------------------------------------------------------
- ------------------------------------================----------------------------------------=============
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- ------------------------------------================----------------------------------------=============
- ---------------------------------------------------------------------------------------------------------
- ------------------------------------================----------------------------------------=============
- ---------------------------------------------------------------------------------------------------------
=========================================================================================================
Page 6 of 10
Note: Foreclosure and REO Totals are Included in the Appropriate Delinquency Aging Category
B-6
<PAGE>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date:
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date:
Multifamily/Commercial Pass-Through Certificates Prior Payment:
Administrator: Series 1998-MC1 Record Date:
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60674-4107
Delinquent Loan Detail
============================================================================================================================
Paid Outstanding Out. Property
Disclosure Doc Thru Current P&I P&I Protection
Control # Date Advance Advances** Advances
============================================================================================================================
Total
============================================================================================================================
A. P&I Advance - Loan in Grace Period 1. P&I Advance - Loan delinquent 1 month
B. P&I Advance - Late Payment but less than one month delinq 2. P&I Advance - Loan delinquent 2 month
============================================================================================================================
<PAGE>
========================================================================================================
Special
Advance Servicer Foreclosure Bankruptcy REO
Description (1) Transfer Date Date Date Date
========================================================================================================
========================================================================================================
3. P&I Advance - Loan delinquent 3 months or More
s 4. Matured Balloon/Assumed Scheduled Payment
========================================================================================================
** Outstanding P&I Advances include the current period P&I Advance Page 7 of 10
B-7
<PAGE>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date:
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date:
Multifamily/Commercial Pass-Through Certificates Prior Payment:
Administrator: Series 1998-MC1 Record Date:
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60674-4107
Pool Total
Distribution of Principal Balances
- -------------------------------------------------------------------
Current Scheduled Number Scheduled Based on
Balances of Loans Balance Balance
===================================================================
$0 to $999,999
$1,000,000 to $1,249,999
$1,250,000 to $1,499,999
$1,500,000 to $1,999,999
$2,000,000 to $2,499,999
$2,500,000 to $2,999,999
$3,000,000 to $3,499,999
$3,500,000 to $3,999,999
$4,000,000 to $4,499,999
$4,500,000 to $4,999,999
$5,000,000 to $5,999,999
$6,000,000 to $6,999,999
$7,000,000 to $7,499,999
$7,500,000 to $8,499,999
$8,500,000 to $9,999,999
$10,000,000 to $12,499,999
$12,500,000 to $14,999,999
$15,000,000 to $17,999,999
$18,000,000 to $19,999,999
$20,000,000 & Above
- ---------------------------------------------------------------
Total 0 0 0.00%
- ---------------------------------------------------------------
Average Scheduled Balance is 0
Maximum Scheduled Balance is 0
Minimum Scheduled Balance is 0
Distribution of Property Types
-----------------------------------------------------
Number Scheduled Based on
Property Types of Loans Balance Balance
=====================================================
-----------------------------------------------------
Total 0 0 0.00%
-----------------------------------------------------
<PAGE>
Distribution of Mortgage Interest Rates
-------------------------------------------------------------
Current Mortgage Number Scheduled Based on
Interest Rate of Loans Balance Balance
=============================================================
7.500% or less
7.500% to 8.000%
8.000% to 8.125%
8.125% to 8.250%
8.250% to 8.375%
8.375% to 8.500%
8.500% to 8.625%
8.625% to 8.750%
8.750% to 9.000%
9.000% to 9.125%
9.125% to 9.500%
9.500% to 9.900%
9.900% to 10.250%
10.250% to 10.500%
10.500% & Above
-----------------------------------------------------------
Total 0 0 0.00%
-----------------------------------------------------------
W/Avg Mortgage Interest Rate is 0.0000%
Minimum Mortgage Interest Rate is 0.0000%
Maximum Mortgage Interest Rate is 0.0000%
Geographic Distribution
- -----------------------------------------------------
Number Scheduled Based on
Geographic Location of Loans Balance Balance
=====================================================
- -----------------------------------------------------
Total 0 0 0.00%
- -----------------------------------------------------
Page 8 of 10
B-8
<PAGE>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date: 01/00/00
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date: 01/00/00
Multifamily/Commercial Pass-Through Certificates Prior Payment: 01/00/00
Administrator: Series 1998-MC1 Record Date: 01/00/00
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60674-4107
Pool Total
Loan Seasoning
- ---------------------------------------------------------------
Number Scheduled Based on
Number of Years of Loans Balance Balance
===============================================================
1 year or less
1+ to 2 years
2+ to 3 years
3+ to 4 years
4+ to 5 years
5+ to 6 years
6+ to 7 years
7+ to 8 years
8+ to 9 years
9+ to 10 years
10 years or more
- ---------------------------------------------------------------
Total 0 0 0.00%
- ---------------------------------------------------------------
Weighted Average Seasoning is 0.0
Distribution of Amortization Type
- ---------------------------------------------------------------
Number Scheduled Based on
Amortization Type of Loans Balance Balance
===============================================================
- ---------------------------------------------------------------
Total 0 0 0.00%
- ---------------------------------------------------------------
Distribution of Remaining Term
Fully Amortizing
-----------------------------------------------------
Fully Amortizing Number Scheduled Based on
Mortgage Loans of Loans Balance Balance
=====================================================
60 months or less
61 to 120 months
121 to 180 months
181 to 240 months
241 to 360 months
-----------------------------------------------------
Total 0 0 0.00%
-----------------------------------------------------
Weighted Average Months to Maturity is NA
<PAGE>
Distribution of Remaining Term
Balloon Loans
-----------------------------------------------------
Balloon Number Scheduled Based on
Mortgage Loaof Loans Balance Balance
=====================================================
12 months or less
13 to 24 months
25 to 36 months
37 to 48 months
49 to 60 months
61 to 120 months
121 to 180 months
181 to 240 months
-----------------------------------------------------
Total 0 0 0.00%
-----------------------------------------------------
Weighted Average Months to Maturity is 0
Distribution of DSCR
-----------------------------------------------------
Debt Service Number Scheduled Based on
Coverage Ratof Loans Balance Balance
=====================================================
1.000 or less
1.001 to 1.125
1.126 to 1.250
1.251 to 1.375
1.376 to 1.500
1.501 to 1.625
1.626 to 1.750
1.751 to 1.875
1.876 to 2.000
2.001 to 2.125
2.126 to 2.250
2.251 to 2.375
2.376 to 2.500
2.501 to 2.625
2.626 & above
Unknown
-----------------------------------------------------
Total 0 0 0.00%
-----------------------------------------------------
Weighted Average Debt Service Coverage Ratio is 0.000
NOI Aging
-----------------------------------------------------
Number Scheduled Based on
NOI Date of Loans Balance Balance
=====================================================
1 year or less
1 to 2 years
2 Years or More
Unknown
-----------------------------------------------------
Total 0 0 0.00%
-----------------------------------------------------
(1) Debt Service Coverage Ratios are calculated as described in the prospectus,
values are updated periodically as new NOI figures became available from borrowers
on an asset level.
Neither the Trustee, Servicer, Special Servicer or Underwriter makes any
representation as to the accuracy of the data provided by the borrower for
this calculation.
Page 9 of 10
B-9
<PAGE>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date: 01/00/00
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date: 01/00/00
Multifamily/Commercial Pass-Through Certificates Prior Payment: 01/00/00
Administrator: Series 1998-MC1 Record Date: 01/00/00
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60674-4107
Loan Level Detail
=====================================================================================================================
Property Operating Ending
Disclosure Type Maturity Statement Principal Note
Control # Group Code Date DSCR Date State Balance Rate
=====================================================================================================================
=====================================================================================================================
====================================================
Loan
Scheduled Prepayment Status
P&I Prepayment Date Code (1)
====================================================
====================================================
* NOI and DSCR, if available and reportable under the terms of the trust agreement, are based on information obtained from
the related borrower, and no other party to the agreement shall be held liable for the accuracy or methodology used to
determine such figures.
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Legend:
A. P&I Adv - in Grace Period
B. P&I Adv - less than one month delinq
1. P&I Adv - delinquent 1 month
2. P&I Adv - delinquent 2 months
3. P&I Adv - delinquent 3+ months
4. Mat. Balloon/Assumed P&I
5. Prepaid in Full
6. Specially Serviced
7. Foreclosure
8. Bankruptcy
9. REO
10. DPO
11. Modification
==============================================================================================================================
Page 10 of 10
B-10
<PAGE>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date:
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date:
Multifamily/Commercial Pass-Through Certificates Prior Payment:
Administrator: Series 1998-MC1 Record Date:
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60674-4107
Specially Serviced Loan Detail
=================================================================================================================================
Beginning Specially
Disclosure Scheduled Interest Maturity Property Serviced
Control # Balance Rate Date Type Status Code (1) Comments
=================================================================================================================================
=================================================================================================================================
(1)Legend :
1) Request for waiver of Prepayment Penalty 4) Loan with Borrower Bankruptcy 7) Loans Paid Off
2) Payment default 5) Loan in Process of Foreclosure 8) Loans Returned to Master Servicer
3) Request for Loan Modification or Workout 6) Loan now REO Property
=================================================================================================================================
Appendix A
B-11
<PAGE>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date:
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date:
Multifamily/Commercial Pass-Through Certificates Prior Payment:
Administrator: Series 1998-MC1 Record Date:
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60674-4107
Modified Loan Detail
===============================================================================================================================
Disclosure Modification Modification
Control # Date Description
- -------------------------------------------------------------------------------------------------------------------------------
------------------------------
==============================================================================================================================
Appendix B
B-12
<PAGE>
ABN AMRO Mortgage Capital Funding, Inc. Statement Date:
LaSalle National Bank AMRESCO Services, L.P. as Master Servicer Payment Date:
Multifamily/Commercial Pass-Through Certificates Prior Payment:
Administrator: Series 1998-MC1 Record Date:
Alyssa Stahl (800) 246-5761
135 S. LaSalle Street Suite 1625 ABN AMRO Acct: 99-9999-99-9
Chicago, IL 60674-4107
Realized Loss Detail
=============================================================================================================
Beginning Gross Proceeds
Dist. Disclosure Appraisal Appraisal Scheduled Gross as a % of
Date Control # Date Value Balance Proceeds Sched Principal
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Current Total 0.00 0.00
Cumulative 0.00 0.00
------------------------------
=============================================================================================================
==========================================================
Aggregate Net Net Proceeds
Liquidation Liquidation as a % of Realized
Expenses * Proceeds Sched. Balance Loss
- ----------------------------------------------------------
- ---------------------------------------------------------
0.00 0.00 0.00
0.00 0.00 0.00
=========================================================
Appendix C
* Aggregate liquidation expenses also include outstanding P&I advances and unpaid servicing fees, unpaid trustee fees, etc..
B-13
</TABLE>
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING
ANY SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE
INFORMATION CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD
TO YOU.
PRELIMINARY STRUCTURAL AND COLLATERAL TERM SHEET
APRIL 21, 1998
$1,154,294,000 (APPROXIMATE)
MORTGAGE CAPITAL FUNDING, INC.
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-MC1
APPROX. SECURITIES STRUCTURE - SUBJECT TO CHANGE
APPROX. EXPECTED EXPECTEDEXPECTED
EXPECTED FACE/ CREDIT WEIGHTEDPRINCIPAL
RATING NOTIONAL SUPPORT AVERAGE PAYMENT
CLASS (S&P/FITCH) AMT (% OF LIFE(A) WINDOW(A)
($MM) UPB)
- ---------------------------------------------------------------
PUBLICLY OFFERED CLASSES
X AAAr/AAA $1,319.2(b) 05/98-01/09
A1 AAA/AAA 228.2 32.00 5.54 05/98-06/07
%
A2 AAA/AAA 668.8 32.00 9.55 06/07-01/08
B AA/AA 52.8 28.00 9.70 01/08-01/08
C A/A+ 72.6 22.50 9.70 01/08-01/08
D A-/A 13.2 21.50 9.70 01/08-01/08
E BBB+/BBB+ 66.0 16.50 9.70 01/08-01/08
F BBB/BBB 13.2 15.50 9.70 01/08-01/08
G --/BBB- 39.6 12.50 9.77 01/08-02/08
PRIVATELY PLACED CLASSES (144A)
- ---------------------------------------------------------------
H NOT OFFERED HEREBY
J NOT OFFERED HEREBY
K NOT OFFERED HEREBY
L NOT OFFERED HEREBY
M NOT OFFERED HEREBY
N NOT OFFERED HEREBY
TOTAL SECURITIES: $1,319.2
- ---------------------------------------------------------------
- ---------------------------------------------------------------
(a) Calculated at 0% CPR, no balloon extension and Hyper-Amortization Loans pay
in full on Anticipated Repayment Dates. (b) Notional amount.
KEY FEATURES:
Co-Lead Managers: Goldman, Sachs & Co. and Citibank,
N.A.
Mortgage Loan Sellers: Citicorp Real Estate, Inc.
($525.5mm), Amresco Capital, L.P.
($541.3mm) and Goldman Sachs
Mortgage Company ($252.4mm)
Master Servicer: Amresco Services, L.P.
Special Servicer: CRIIMI MAE Inc.
Purchaser of Classes J, CRIIMI MAE Inc.
K, L,M,N:
Trustee: LaSalle National Bank/ABN AMRO Bank
N.V.
Pricing: On or about April 28th
Closing: On or about May 5th
Settlement: All classes will settle plus
accrued from April 6th to but
excluding May 5th
Cut-Off Date: April 1, 1998 (April 11, 1998 for
200 Market Building)
Distribution Date: 18th of each month, or following
business day (commencing May 1998)
ERISA Eligible: Classes A1, A2 and X are ERISA
eligible subject to certain
conditions for eligibility
Representations & Provided by applicable Mortgage
Warranties: Loan Sellers
Structure: Sequential pay
Interest Accrual Period: From April 6th to May 5th in the
case of initial Distribution Date
and prior calendar month thereafter
Day Count: 30/360
Tax Treatment: REMIC
Rated Final Distribution March 18, 2030
Date:
Clean up Call: 1.0%
Minimum Denominations: Publicly Offered Classes except
Class X: $10,000 & $1
Class X: $1,000,000 Notional Amount
& $1
Privately Placed Classes: $100,000
& $1
<PAGE>
COLLATERAL FACTS
INITIAL POOL BALANCE: $1,319,193,758
NUMBER OF MORTGAGE LOANS: 253
AVERAGE CUT-OFF DATE BALANCE: $5,214,205
WEIGHTED AVERAGE CURRENT MORTGAGE RATE(A): 7.490%
WEIGHTED AVERAGE REMAINING AMORTIZATION TERM: 339 mos.
WEIGHTED AVERAGE U/W DSCR (B): 1.37x
WEIGHTED AVERAGE CUT-OFF DATE LTV RATIO: 73.21%
WEIGHTED AVERAGE REMAINING TERM TO
MATURITY(C): 115 mos.
WEIGHTED AVERAGE SEASONING: 4 mos.
(a) Gross Coupon.
(b) U/W DSCR is the ratio of Underwritten NCF over the annualized debt service
payments.
(c) Anticipated Repayment Date for loans with Hyper-Amortization. All
information presented herein with respect to Hyper-Amortization Loans
assumes that they mature on their respective Anticipated Repayment Dates.
PREPAYMENT SENSITIVITY TABLE AT ORIGINATION
WTD. AVG.
ORIGINAL
CUT-OFF % OF WTD. AVG. WTD. AVG. TERM WTD.
# OF DATE INITIAL REMAINING STATED AFTER AVG.
RESTRICTION MORTGAGE BALANCE POOL LOCKOUT REMAINING ALL OPEN OPEN
AT ORIGINATION LOANS (MM) BALANCE TERM (MO.) TERM (MO.) PENALTIES PERIOD
- ------------------------------------------------------------------------------
Lockout/Yield 107 502.9 38.12% 43.7 116.5 113.5 6.1
Maint
Lockout/
greater than of YM 80 331.9 25.16 40.3 113.2 113.2 6.2
or 1%
Lockout/Defeasance 49 440.8 33.42 30.0 115.5 115.2 3.5
Lockout/Declining 13 27.1 2.05 29.9 97.8 89.2 13.1
Fee greater than
of YM or 1% 2 5.6 0.43 - 113.4 114.0 6.0
Lockout/less than
Declining 1 6.5 0.49 57.0 116.0 114.0 6.0
Fee or YM
Lockout/1% of UPB 1 4.4 0.33 33.0 81.0 78.0 6.0
----- ------- ------ ----- ------ ------ ---
TOTAL\WTD.AVG. 253 1,319.2 100.00% 37.8 114.9 113.4 5.4
- ------------------------------------------------------------------------------
<PAGE>
SELECTED LOAN DATA:
CUT-OFF DATE BALANCE
NUMBER OF (AS OF APRIL 1, 1998)(A)(B)
GEOGRAPHIC MORTGAGE % BY WTD.
DISTRIBUTION PROPERTIES (MM) BALANCE AVG. DSCR
- -----------------------------------------------------------------
CALIFORNIA 28 $ 162.6 12.33% 1.41x
TEXAS 42 158.2 11.99 1.33
FLORIDA 17 107.1 8.12 1.31
OREGON 5 106.3 8.05 1.39
NEW YORK 8 80.4 6.09 1.31
ILLINOIS 11 64.1 4.86 1.25
NEW JERSEY 13 55.7 4.22 1.37
OTHER 137 584.9 44.33 1.40
--- -------- ------- ----
TOTAL\WTD.AVG. 261 $1,319.2 100.00% 1.37x
- ----------------------------------------------------------------
CUT-OFF DATE BALANCE
NUMBER OF (AS OF APRIL 1, 1998)(A)(B)
MORTGAGE % BY WTD.
PROPERTY TYPE PROPERTIES (MM) BALANCE AVG. DSCR
- -----------------------------------------------------------------
MULTIFAMILY 93 $ 411.0 31.15% 1.30x
OFFICE 45 314.2 23.82 1.38
ANCHORED RETAIL 42 300.1 22.75 1.34
RETAIL 38 119.9 9.09 1.41
LODGING 19 94.6 7.17 1.57
INDUSTRIAL/WAREHOUSE 11 42.8 3.24 1.30
MOBILE HOME PARK 5 15.7 1.19 1.91
HEALTH CARE 3 6.5 0.49 1.99
SELF-STORAGE 2 2.2 0.17 1.47
OTHER 3 12.3 0.93 1.52
----- --------- -------- ----
TOTAL\WTD.AVG. 261 $1,319.2 100.00% 1.37x
- -----------------------------------------------------------------
(a) Column totals may not add due to rounding.
(b) April 11, 1998 for 200 Market Building
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY STRUCTURAL AND COLLATERAL TERM SHEET
APPROXIMATE SECURITIES STRUCTURE - SUBJECT TO CHANGE
<TABLE>
<CAPTION>
EXPECTED EXPECTED WGTD EXPECTED
EXPECTED RATING APPROX. SIZE CREDIT COUPON AVERAGE LIFE PRINCIPAL
CLASS (S&P/FITCH) ($MM) SUPPORT DESCRIPTION DELIVERY (YRS.)(A) PAYMENT WINDOW(A)
- -----------------------------------------------------------------------------------------------------------------------------------
PUBLICLY OFFERED CLASSES:
<S> <C> <C> <C> <C> <C> <C>
X AAAr/AAA $1,319.2 (b) WAC IO(c) DTC 05/98-01/09
A1 AAA/AAA 228.2 32.00% Fixed DTC 5.54 05/98-06/07
A2 AAA/AAA 668.8 32.00 Fixed DTC 9.55 06/07-01/08
B AA/AA 52.8 28.00 Fixed DTC 9.70 01/08-01/08
C A/A+ 72.6 22.50 min(Fixed,WAC)(d) DTC 9.70 01/08-01/08
D A-/A 13.2 21.50 min(Fixed,WAC)(d) DTC 9.70 01/08-01/08
E BBB+/BBB+ 66.0 16.50 min(Fixed,WAC)(d) DTC 9.70 01/08-01/08
F BBB/BBB 13.2 15.50 min(Fixed,WAC)(d) DTC 9.70 01/08-01/08
G --/BBB- 39.6 12.50 min(Fixed,WAC)(d) DTC 9.77 01/08-02/08
PRIVATELY PLACED CLASSES (144A):
- -----------------------------------------------------------------------------------------------------------------------------------
H NOT OFFERED HEREBY
J NOT OFFERED HEREBY
K NOT OFFERED HEREBY
L NOT OFFERED HEREBY
M NOT OFFERED HEREBY
N NOT OFFERED HEREBY
TOTAL SECURITIES: $1,319.2
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated at 0% CPR, no balloon extension and Hyper-Amortization
Loans pay in full on Anticipated Repayment Dates.
(b) Notional amount.
(c) The Class X coupon is calculated, in general, as the excess of (i) the
weighted average Net Mortgage Rate, determined without regard to any
modifications of the mortgage loans, in effect from time to time on the
mortgage loans over (ii) the weighted average of the Pass-Through Rates in
effect from time to time on the Class A1 through Class N Certificates.
(d) Subject to a cap equal to the weighted average Net Mortgage Rate,
determined without regard to any modifications of the mortgage loans, in effect
from time to time on the mortgage loans.
(e) Not offered hereby.
STRUCTURAL OVERVIEW
[BAR GRAPHIC OMITTED]
[ ] Offered Certificates [ ] Certificates Not Offered
Net WAC = 7.36%
X-IO AAr/AAA $1,319.3mm Notional Balance
A1 AAA/AAA $228.2mm
A2 AAA/AAA $668.8mm
B AA/AA $52.8mm
C A/A+ $72.6mm
D A-/A $13.2mm
E BBB+/BBB+ $66.0mm
F BBB/BBB $13.2mm
G --/BBB $39.6mm
H
J
K
L
M
N
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY STRUCTURAL AND COLLATERAL TERM SHEET
STRUCTURAL OVERVIEW - CONT.
The Mortgage Pool will be comprised of one Loan Group
Principal will be allocated sequentially to A1, A2, B, C, D, E, F, G, H,
J, K, L, M and N Certificates (If all classes other than classes A1 and
A2 have reduced to zero, principal will be allocated to Class A1 and A2
pro-rata)
Class X will receive interest payments pro-rata (based on interest
entitlements) with the Class A1 and Class A2 Certificates each month
Each of the Classes (except Class X) will be subordinate to earlier
alphabetically lettered classes (Losses will be allocated in reverse
alphabetical order to Classes with certificate balances and pro-rata to
Classes A1 and A2)
The Master Servicer will cover net prepayment interest shortfalls, up to
the portion of the Master Servicing Fee equal to 0.04% per annum. Net
shortfalls (after application of prepayment interest excesses and other
Servicer coverage from the Master Servicing Fee) will be allocated in
reverse alphabetical order to the Subordinate Certificates and then
pro-rata (based on interest entitlements) to the Senior Certificates
All classes will pay interest on a 30/360 basis
Shortfalls resulting from Master Servicer and Special Servicer
modifications, Special Servicer compensation or other extraordinary trust
fund expenses will be allocated in reverse alphabetical order to Classes
with certificate balances
MORTGAGE POOL OVERVIEW
The Mortgage Pool is comprised of 253 multifamily and commercial loans
with an aggregate Cut-Off Date Balance of approximately $1,319,193,758
All of the Mortgage Loans are secured by first mortgage liens on
multifamily and commercial properties
The Mortgage Pool's average Cut-Off Date Balance is approximately
$5,214,205
The Mortgage Pool's weighted average current Underwritten Debt Service
Coverage Ratio is 1.37x (a)
The Mortgage Pool's Cut-Off Date LTV is 73.2%
The Mortgage Pool's weighted average Mortgage Rate is approximately
7.490% per annum
(a) Debt Service is the ratio of Underwritten NCF over the annualized debt
service payments.
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY STRUCTURAL AND COLLATERAL TERM SHEET
ALLOCATION OF PREPAYMENT PENALTIES
ALLOCATION OF PREPAYMENT PREMIUMS
Prepayment premiums will be allocated between the Offered Certificates then
entitled to principal distributions and the Class X Certificates as follows:
A percentage of all Prepayment Premiums (either fixed Prepayment
Premiums or yield maintenance amount) will be allocated to each class
of the Offered Certificates then entitled to principal distributions,
which percentage will be equal to the product of (a) the percentage
of the total principal distribution that such Class receives, and (b)
a percentage (which can be no greater than 100%), the numerator of
which is the excess of the Pass-Through Rate of the Class of the
Certificates currently receiving principal over the relevant Discount
Rate, and the denominator of which is the excess of the Mortgage Rate
of the related Mortgage Loan over the Discount Rate.
Prepayment (Pass-Through Rate - Discount Rate )
Premium Allocation = ----------------------------------------------
Percentage (Mortgage Rate - Discount Rate)
The remaining percentage of the Prepayment Premiums will be
allocated to the Class X Certificates
In general, this formula provides for an increase in the allocation
of Prepayment Premiums to the Offered Certificates then entitled to
principal distributions relative to the Class X Certificates as
Discount Rates decrease and a decrease in the allocation to such
Classes as Discount Rates rise
Allocation of Prepayment Premiums Example
<TABLE>
<S> <C>
Discount Rate Fraction Methodology:
Mortgage Rate = 9%
Bond Class Rate = 7%
Treasury Rate = 6%
BOND CLASS ALLOCATION CLASS X ALLOCATION
----------------------------------- ------------------------------------------------------
7% - 6%
------- = 33 1/3% Receives excess premiums = 66 2/3% thereof
9% - 6%
</TABLE>
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY STRUCTURAL AND COLLATERAL TERM SHEET
PREPAYMENT PROVISIONS
100.00% of the Initial Pool Balance has prepayment protection as of the
Cut-Off Date
Approximately 99.5% of the Initial Pool Balance is locked
out as of the Cut-Off Date
<TABLE>
<CAPTION>
PREPAYMENT LOCK-OUT/ PREMIUM ANALYSIS
- ----------------------------------------------------------------------------------------------------------------------------------
PERCENTAGE OF MORTGAGE POOL BY PREPAYMENT RESTRICTION ASSUMING NO PREPAYMENT (A)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PREPAYMENT APRIL APRIL APRIL APRIL APRIL APRIL APRIL APRIL APRIL APRIL APRIL
RESTRICTIONS 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
- ----------------------------------------------------------------------------------------------------------------------------------
Locked Out 99.57 % 98.06 % 95.25 % 59.39 % 0.89 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
Defeasance 0.00 0.00 0.00 33.52 33.56 33.61 33.67 33.75 33.83 33.91 0.00
Yield Maintenance 0.43 % 1.94 % 3.87 % 5.28 % 63.14 % 63.50 % 63.44 % 64.68 % 64.60 % 48.06 % 100.00 %
- ----------------------------------------------------------------------------------------------------------------------------------
SUBTOTAL 100.00 % 100.00 % 99.12 % 98.19 % 97.60 % 97.11 % 97.11 % 98.42 % 98.43 % 81.98 % 100.00 %
% Premium
5.00-5.99% 0.00 % 0.00 % 0.61 % 0.19 % 0.77 % 0.48 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
4.00-4.99% 0.00 % 0.00 % 0.00 % 1.02 % 0.00 % 0.77 % 0.19 % 0.00 % 0.00 % 0.00 % 0.00 %
3.00-3.99% 0.00 % 0.00 % 0.27 % 0.00 % 1.02 % 0.00 % 1.06 % 0.69 % 0.00 % 0.00 % 0.00 %
2.00 - 2.99% 0.00 % 0.00 % 0.00 % 0.27 % 0.00 % 1.03 % 0.00 % 0.61 % 0.19 % 0.00 % 0.00 %
1.00 - 1.99% 0.00 % 0.00 % 0.00 % 0.34 % 0.61 % 0.34 % 0.96 % 0.00 % 1.10 % 1.18 % 0.00 %
Open 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.27 % 0.68 % 0.28 % 0.28 % 16.85 % 0.00 %
- ----------------------------------------------------------------------------------------------------------------------------------
TOTALS (B) 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 %
Mortgage Pool
Balance ($ mm) $1,319.19 $1,305.17 $1,290.21 $1,273.92 $1,256.35 $1,237.41 $1,217.12 $1,151.76 $1,128.80 $1,104.04 $3.10
% of Initial Pool
Balance 100.00 % 98.94 % 97.80 % 96.57 % 95.24 % 93.80 % 92.26 % 87.31 % 85.43 % 83.70 % 0.23%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
For purposes of the above table, the Prepayment Premium for the Mortgage Loan
secured by the Mortgaged Property identified on Annex A as Embassy Suites,
Portland, Maine, which Prepayment Premium is the lesser of yield maintenance
and a declining percentage of the amount prepaid, will be treated as if it were
solely a declining percentage of the amount prepaid.
(a) Table calculated using modeling assumptions and assuming no prepayments
of principal.
(b) Totals may not equal due to rounding.
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY STRUCTURAL AND COLLATERAL TERM SHEET
DISTRIBUTION OF CUT-OFF DATE BALANCE (a)
<TABLE>
<CAPTION>
WEIGHTED
PERCENTAGE WEIGHTED WEIGHTED AVERAGE WEIGHTED
NUMBER OF AGGREGATE OF AVERAGE AVERAGE AVERAGE REMAINING AVERAGE
RANGE OF CUT-OFF DATE MORTGAGED CUT-OFF DATE AGGREGATE CUT-OFF U/W MORTGAGE TERM TO CUT-OFF DATE
BALANCE ($) LOANS BALANCE CUT-OFF DATE BALANCE DSCR RATE MATURITY LTV RATIO
DATE BALANCE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
418,508 - 499,999 1 $ 418,508 0.03% $ 418,508 1.37x 7.3000% 117.0 73.4%
500,000 - 999,999 13 10,546,969 0.80 811,305 1.46 8.0105 115.6 64.7
1,000,000 - 1,999,999 39 58,117,861 4.41 1,490,202 1.40 7.7548 115.0 71.5
2,000,000 - 2,999,999 47 117,756,837 8.93 2,505,465 1.41 7.6424 115.0 71.4
3,000,000 - 3,999,999 47 167,619,522 12.71 3,566,373 1.33 7.6808 115.9 74.9
4,000,000 - 4,999,999 26 117,165,347 8.88 4,506,359 1.39 7.4462 114.6 71.3
5,000,000 - 5,999,999 18 97,534,056 7.39 5,418,559 1.34 7.6820 113.7 74.0
6,000,000 - 6,999,999 18 118,236,507 8.96 6,568,695 1.44 7.5494 111.1 73.4
7,000,000 - 7,999,999 13 99,489,887 7.54 7,653,068 1.37 7.4225 113.4 74.8
8,000,000 - 8,999,999 6 51,235,485 3.88 8,539,247 1.47 7.3360 116.5 71.1
9,000,000 - 9,999,999 2 19,563,858 1.48 9,781,929 1.24 6.9943 118.0 77.5
10,000,000 - 11,999,999 6 66,135,200 5.01 11,022,533 1.42 7.3850 116.7 69.0
12,000,000 - 13,999,999 5 66,620,214 5.05 13,324,043 1.36 7.6301 109.2 72.5
14,000,000 - 16,999,999 4 62,513,296 4.74 15,628,324 1.36 7.5370 114.6 76.3
17,000,000 - 19,999,999 1 17,158,037 1.30 17,158,037 1.31 7.0700 117.0 73.3
20,000,000 - 24,999,999 3 68,098,071 5.16 22,699,357 1.30 7.2136 117.0 76.0
25,000,000 - 49,999,999 2 73,981,280 5.61 36,990,640 1.37 7.0533 118.0 73.0
50,000,000 - 56,871,142 2 107,002,824 8.11 53,501,412 1.30 7.3590 117.0 73.9
----- -------------- -------- ---------- ---- ------ ----- ----
TOTAL\AVG.\WTD.AVG. 253 $1,319,193,758 100.00% $ 5,214,205 1.37X 7.4900 114.9 73.2%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Column totals may not add due to rounding.
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY STRUCTURAL AND COLLATERAL TERM SHEET
GEOGRAPHIC DISTRIBUTION BY CUT-OFF DATE BALANCE (A)
<TABLE>
<CAPTION>
WEIGHTED
PERCENTAGE WEIGHTED WEIGHTED AVERAGE WEIGHTED
NUMBER OF AGGREGATE OF AGGREGATE AVERAGE AVERAGE AVERAGE REMAINING AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF U/W MORTGAGE TERM TO CUT-OFF DATE
PROPERTY STATE PROPERTIES BALANCE BALANCE DATE BALANCE DSCR RATE MATURITY LTV RATIO
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California 28 $ 162,632,161 12.33% $6,023,413 1.41x 7.4746% 115.0 70.7%
Texas 42 158,205,519 11.99 3,766,798 1.33 7.7722 113.9 74.8
Florida 17 107,056,112 8.12 6,691,007 1.31 7.3679 116.4 74.8
Oregon 5 106,252,310 8.05 21,250,462 1.39 7.1461 117.3 71.2
New York 8 80,396,172 6.09 10,049,521 1.31 7.3810 114.1 74.0
Illinois 11 64,063,008 4.86 5,823,910 1.25 7.3168 117.5 77.8
New Jersey 13 55,733,943 4.22 4,287,226 1.37 7.1642 117.3 75.8
Tennessee 12 48,098,973 3.65 4,008,248 1.43 7.2984 117.1 71.6
Oklahoma 13 47,823,577 3.63 3,985,298 1.32 7.3581 116.2 79.1
Michigan 8 45,845,822 3.48 5,730,728 1.36 7.7160 114.4 76.3
Virginia 8 44,724,749 3.39 5,590,594 1.40 7.7905 115.0 72.6
Ohio 7 36,603,532 2.77 5,229,076 1.30 7.8018 110.9 73.4
Arizona 11 33,581,837 2.55 3,358,184 1.35 7.5564 117.7 74.3
Kentucky 4 30,841,029 2.34 7,710,257 1.33 7.3968 101.1 74.9
Massachusetts 4 27,982,646 2.12 6,995,661 1.31 7.4174 113.6 72.5
Colorado 4 26,753,286 2.03 6,688,322 1.77 7.0870 107.9 67.7
Nevada 9 24,193,536 1.83 4,032,256 1.46 8.1234 111.9 68.9
Mississippi 6 17,762,488 1.35 2,960,415 1.31 7.3712 117.8 75.0
North Carolina 4 16,966,137 1.29 4,241,534 1.54 7.2065 117.6 75.0
Indiana 3 16,628,201 1.26 5,542,734 1.50 7.5787 116.4 69.2
Washington 3 16,211,290 1.23 5,403,763 1.38 6.8961 117.2 69.7
District of Columbia 1 13,759,302 1.04 13,759,302 1.34 7.5800 116.0 70.6
Alabama 2 13,733,312 1.04 6,866,656 1.45 7.8545 117.0 69.2
Iowa 2 13,466,615 1.02 6,733,308 1.29 7.5418 116.5 77.1
Utah 5 13,066,234 0.99 2,613,247 1.54 7.9951 115.1 64.2
Maryland 2 11,732,737 0.89 5,866,368 1.34 7.5651 116.4 67.8
Wisconsin 3 11,013,502 0.83 3,671,167 1.29 7.8952 92.1 74.5
South Carolina 3 10,425,398 0.79 3,475,133 1.36 8.1473 114.9 75.0
Nebraska 4 9,564,911 0.73 2,391,228 1.53 7.7428 116.2 71.9
Maine 2 9,217,110 0.70 4,608,555 1.37 7.9829 116.3 66.7
Missouri 2 7,327,802 0.56 3,663,901 1.29 7.8854 113.8 81.8
Connecticut 3 7,172,850 0.54 3,586,425 1.42 7.7192 115.8 77.0
Georgia 2 7,012,571 0.53 3,506,285 1.86 7.3659 114.8 45.0
Vermont 1 5,482,019 0.42 5,482,019 1.48 7.8200 117.0 69.4
Idaho 1 3,985,325 0.30 3,985,325 1.47 7.6200 115.0 71.2
Rhode Island 1 3,548,080 0.27 3,548,080 1.38 7.4600 119.0 68.9
Pennsylvania 1 2,827,644 0.21 2,827,644 1.29 7.2200 118.0 79.8
New Hampshire 3 2,690,408 0.20 896,803 1.37 7.3000 117.0 78.3
Montana 1 1,793,855 0.14 1,793,855 1.42 7.5500 117.0 59.8
Louisiana 1 1,606,283 0.12 1,606,283 1.30 7.3100 117.0 79.3
Kansas 1 1,411,473 0.11 1,411,473 1.25 8.8250 110.0 79.1
----- -------------- ------ ----------- ---- ------ ----- ----
TOTAL\AVG.\WTD.AVG. 261 $1,319,193,758 100.00% $5,214,205 1.37 7.4900% 114.9 73.2%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Column totals may not sum due to rounding.
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY STRUCTURAL AND COLLATERAL TERM SHEET
GEOGRAPHIC DISTRIBUTION BY CUT-OFF DATE BALANCE
[U.S. MAP OMITTED SHOWING % BY STATE--SEE PREVIOUS PAGE FOR DATA]
[PIE CHART OMITTED SHOWING % BY STATE--SEE PREVIOUS PAGE FOR DATA]
Totals may not sum due to rounding.
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY STRUCTURAL AND COLLATERAL TERM SHEET
PROPERTY TYPE DISTRIBUTION BY CUT-OFF DATE BALANCE (A)
[PIE CHART OMITTED SHOWING % BY PROPERTY TYPE--SEE TABLE BELOW FOR DATA]
<TABLE>
<CAPTION>
WEIGHTED
NUMBER PERCENTAGE OF WEIGHTED WEIGHTED AVERAGE WEIGHTED
OF AGGREGATE AGGREGATE AVERAGE AVERAGE AVERAGE REMAINING AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE U/W MORTGAGE TERM TO CUT-OFF DATE
PROPERTY TYPE PROPERTIES BALANCE BALANCE BALANCE DSCR RATE MATURITY LTV RATIO
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Multifamily 93 $ 410,971,596 31.15% $4,617,658 1.30x 7.4382% 113.8 77.6%
Office 45 314,208,008 23.82 7,141,091 1.38 7.3877 115.7 70.6
Anchored Retail 42 300,108,035 22.75 7,502,701 1.34 7.5355 114.5 73.5
Retail 38 119,879,390 9.09 3,154,721 1.41 7.6277 116.7 71.6
Lodging 19 94,616,991 7.17 4,979,842 1.57 7.7168 116.7 64.8
Industrial/Warehouse 11 42,798,362 3.24 3,890,760 1.30 7.6026 116.1 77.4
Mobile Home Park 5 15,666,391 1.19 3,133,278 1.91 7.0530 101.7 57.7
Health Care 3 6,464,236 0.49 2,154,745 1.99 8.4304 113.9 70.5
Self-Storage 2 2,184,053 0.17 2,184,053 1.47 8.2200 113.0 66.2
Other 3 12,296,696 0.93 4,098,899 1.52 7.1793 117.1 73.3
----- ------------ -------- --------- ---- ------ ----- ----
TOTAL\AVG.\WTD.AVG. 261 $1,319,193,758 100.00% $5,214,205 1.37X 7.4900% 114.9 73.2%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Column totals may not sum due to rounding.
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
DEBT SERVICE COVERAGE RATIO (a)
Weighted Average Current Debt Service Coverage Ratio: 1.37x
92.1% of the Portfolio has Debt Service Coverage Ratio greater than 1.20x
<TABLE>
<CAPTION>
WEIGHTED
PERCENTAGE OF WEIGHTED WEIGHTED AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE AVERAGE REMAINING AVERAGE
RANGE OF MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE U/W MORTGAGE TERM TO CUT-OFF DATE
U/W DSCR'S (B) LOANS BALANCE BALANCE BALANCE DSCR RATE MATURITY LTV RATIO
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.72 - 1.00 2 $ 6,746,664 0.51% $3,373,332 0.84x 8.6433% 82.8 69.2%
1.01 - 1.10 2 3,723,361 0.28 1,861,680 1.10 8.3352 113.5 76.5
1.11 - 1.20 18 93,569,938 7.09 5,198,330 1.18 7.4646 114.5 81.2
1.21 - 1.30 75 412,142,140 31.24 5,495,229 1.27 7.5444 115.1 75.6
1.31 - 1.40 73 427,332,970 32.39 5,853,876 1.35 7.4606 114.7 74.6
1.41 - 1.50 42 208,496,581 15.80 4,964,204 1.46 7.5120 116.3 70.0
1.51 - 1.60 20 85,095,972 6.45 4,254,799 1.54 7.4382 115.4 69.4
1.61 - 1.70 5 16,409,251 1.24 3,281,850 1.64 7.5537 116.3 65.0
1.71 - 1.80 3 18,586,185 1.41 6,195,395 1.74 7.2957 116.8 52.7
1.81 - 1.90 4 18,501,056 1.40 4,625,264 1.86 7.1551 116.7 65.7
1.91 - 2.00 2 9,096,414 0.69 4,548,207 1.93 7.2999 116.0 63.3
2.01 - 2.10 2 6,826,988 0.52 3,413,494 2.05 7.0957 116.3 36.4
2.11 - 2.20 2 1,984,657 0.15 992,328 2.19 7.6228 118.1 42.8
2.31 - 2.40 1 2,797,356 0.21 2,797,356 2.31 7.4400 119.0 63.6
2.41 - 2.50 1 897,727 0.07 897,727 2.47 7.4200 118.0 42.7
2.51 - 2.54 1 6,986,497 0.53 6,986,497 2.54 6.7100 82.0 46.3
----- ---------------- -------- --------- ---- ------ ----- ----
TOTAL\AVG.\WTD.AVG. 253 $1,319,193,758 100.00% $5,214,205 1.37x 7.4900% 114.9 73.2%
</TABLE>
(a) Column totals may not add due to rounding.
CUT-OFF DATE LOAN TO VALUE RATIO (A)
Weighted Average Cut-off Date Loan to Value Ratio: 73.21%(b)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE WEIGHTED WEIGHTED AVERAGE AVERAGE
NUMBER OF AGGREGATE OF AGGREGATE AVERAGE AVERAGE AVERAGE REMAINING CUT-OFF
RANGE OF CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE U/W MORTGAGE TERM TO DATE LTV
LOAN-TO-VALUE RATIOS LOANS BALANCE BALANCE BALANCE DSCR RATE MATURITY RATIO
- ----------------------- ---------- ---------------- -------------- --------------------------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30.01 - 50.00 7 $ 18,059,257 1.37% $2,579,894 2.23x 7.1349% 103.2 42.2%
50.01 - 60.00 8 27,060,137 2.05 3,382,517 1.58 7.3601 113.2 53.2
60.01 - 65.00 21 96,013,860 7.28 4,572,089 1.58 7.6736 116.3 62.5
65.01 - 70.00 34 153,618,924 11.64 4,518,204 1.46 7.6357 114.2 67.3
70.01 - 75.00 86 534,643,627 40.53 6,216,786 1.34 7.5163 114.6 73.3
75.01 - 80.00 83 406,033,901 30.78 4,891,975 1.31 7.4357 115.2 78.3
80.01 - 85.00 11 75,184,222 5.70 6,834,929 1.25 7.2219 117.7 82.2
85.01 - 90.00 1 698,358 0.05 698,358 1.16 7.2700 117.0 85.2
90.01 - 100.00 1 3,890,853 0.29 3,890,853 1.13 7.2700 117.0 96.1
100.01 - 101.00 1 3,990,619 0.30 3,990,619 1.12 7.2700 117.0 101.0
----- ---------------- -------- --------- ---- ------ ----- -----
TOTAL\AVG.\WTD.AVG. 253 $1,319,193,758 100.00% $5,214,205 1.37 X 7.4900% 114.9 73.2%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Column totals may not add due to rounding.
(b) Ratio of Cut-Off Date Balance over Appraisal Value at Origination.
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
REMAINING AMORTIZATION TERM (IN MONTHS) (a)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE WEIGHTED WEIGHTED AVERAGE AVERAGE
RANGE OF NUMBER OF AGGREGATE OF AGGREGATE AVERAGE AVERAGE AVERAGE REMAINING CUT-OFF
AMORTIZATION TERMS MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE U/W MORTGAGE TERM TO DATE
(MOS.) LOANS BALANCE BALANCE BALANCE DSCR RATE MATURITY LTV RATIO
- --------------------- ----------- ---------------- -------------- --------------- --------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
111 - 130 1 $ 885,314 0.07% $ 885,314 2.18x 8.2100% 117.0 34.7%
171 - 190 3 5,269,274 0.40 1,756,425 1.22 7.6502 115.0 66.1
211 - 230 1 1,281,863 0.10 1,281,863 1.50 9.8400 110.0 67.5
231 - 250 10 31,972,698 2.42 3,197,270 1.32 7.6899 117.0 74.1
251 - 270 1 10,751,719 0.82 10,751,719 1.52 7.5700 117.0 64.8
271 - 290 8 17,577,045 1.33 2,197,131 1.39 9.0598 110.0 73.2
291 - 310 68 277,558,334 21.04 4,081,740 1.44 7.6609 114.7 70.3
311 - 330 4 9,827,721 0.74 2,456,930 1.17 8.2860 112.3 79.3
331 - 360 157 964,069,791 73.08 6,140,572 1.35 7.3919 114.9 74.1
--- -------------- ------- --------- ---- ------ ----- ----
TOTAL\AVG.\WTD.AVG. 253 $1,319,193,758 100.00% $5,214,205 1.37x 7.4900 114.9 73.2%
- --------------------- ----------- ---------------- -------------- --------------- --------- ------------- ------------ -----------
</TABLE>
(a) Column totals may not add due to rounding.
CURRENT MORTGAGE RATES (a)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE WEIGHTED WEIGHTED AVERAGE AVERAGE
RANGE OF NUMBER OF AGGREGATE OF AGGREGATE AVERAGE AVERAGE AVERAGE REMAINING CUT-OFF
MORTGAGE RATES (%) MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF U/W MORTGAGE TERM TO DATE
LOANS BALANCE BALANCE DATE DSCR RATE MATURITY LTV RATIO
BALANCE
- ---------------------- ------------ ---------------- -------------- ------------ ------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6.5001 - 6.7500 1 $ 6,986,497 0.53% $6,986,497 2.54x 6.7100% 82.0 46.3 %
6.7501 - 7.0000 17 131,447,209 9.96 7,732,189 1.44 6.9121 112.1 71.7
7.0001 - 7.2500 43 305,899,526 23.19 7,113,942 1.36 7.1488 117.3 74.6
7.2501 - 7.5000 85 450,348,186 34.14 5,298,214 1.36 7.3636 116.5 74.1
7.5001 - 7.7500 29 124,229,141 9.42 4,283,763 1.33 7.6214 114.7 73.0
7.7501 - 8.0000 26 119,438,490 9.05 4,593,788 1.37 7.8753 115.1 73.4
8.0001 - 8.2500 15 50,995,105 3.87 3,399,674 1.37 8.1302 109.2 69.9
8.2501 - 8.5000 14 71,564,770 5.42 5,111,769 1.34 8.4026 111.8 71.9
8.5001 - 8.7500 9 22,708,716 1.72 2,523,191 1.18 8.6674 103.3 68.9
8.7501 - 9.0000 7 18,925,887 1.43 2,703,698 1.26 8.9001 110.9 72.0
9.0001 - 9.2500 5 14,181,878 1.08 2,836,376 1.43 9.1339 110.6 71.8
9.5001 - 9.7500 1 1,186,492 0.09 1,186,492 1.51 9.7500 110.0 74.2
9.7501 - 10.0000 1 1,281,863 0.10 1,281,863 1.50 9.8400 110.0 67.5
----- ---------------- -------- --------- ---- ------ ----- ----
TOTAL\AVG.\WTD.AVG. 253 $1,319,193,758 100.00% $5,214,205 1.37 X 7.4900% 114.9 73.2 %
------------------- ------------ ---------------- -------------- ------------ ------------- ----------- ---------- ------------
</TABLE>
(a) Column totals may not add due to rounding.
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
AMORTIZATION TYPES (a)
<TABLE>
<CAPTION>
WEIGHTED
PERCENTAGE OF WEIGHTED AVERAGE WEIGHTED AVERAGE WEIGHTED
NUMBER AGGREGATE AGGREGATE AVERAGE U/W AVERAGE REMAINING AVERAGE
OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE DSCR MORTGAGE TERM TO CUT-OFF DATE
AMORTIZATION TYPE MORTGAGE BALANCE BALANCE BALANCE RATE MATURITY LTV RATIO
LOANS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balloon 243 $1,134,388,280 85.99% $ 4,668,265 1.38x 7.5091% 114.6 73.1%
Hyperamortizing 9 183,920,165 13.94 20,435,574 1.32 7.3690 116.6 73.8
Fully Amortizing 1 885,314 0.07 885,314 2.18 8.2100 117.0 34.7
----- -------------- ------ ------------ ---- ------ ----- ----
TOTAL\AVG.\WTD.AVG. 253 $1,319,193,758 100.00% $ 5,214,205 1.37x 7.4900% 114.9 73.2%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Column totals may not add due to rounding.
REMAINING TERM TO MATURITY (IN MONTHS) (a) (b)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
RANGE OF REMAINING PERCENTAGE WEIGHTED WEIGHTED AVERAGE AVERAGE
TERM TO MATURITY NUMBER OF AGGREGATE OF AGGREGATE AVERAGE AVERAGE AVERAGE REMAINING CUT-OFF
(MOS.) MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE U/W MORTGAGE TERM TO DATE
LOANS BALANCE BALANCE BALANCE DSCR RATE MATURITY LTV RATIO
- ---------------------- ----------- ---------------- -------------- --------------- ------------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
71 - 90 8 $ 47,487,947 3.60% $5,935,993 1.44 x 7.3613 % 80.7 69.1 %
91 - 110 11 37,856,704 2.87 3,441,519 1.41 8.7994 110.0 71.1
111 - 120 233 1,230,257,318 93.26 5,280,074 1.37 7.4549 116.3 73.4
121 - 130 1 3,591,789 0.27 3,591,789 1.49 7.4100 129.0 70.8
----- ---------------- -------- --------- ---- ------ ----- ----
TOTAL\AVG.\WTD.AVG. 253 $1,319,193,758 100.00% $5,214,205 1.37 X 7.4900 % 114.9 73.2 %
- ---------------------- ----------- ---------------- -------------- --------------- ------------- ---------- ----------- ----------
</TABLE>
(a) Column totals may not add due to rounding.
(b) "Maturity" means the stated maturity date or, with respect to any
Hyper-Amortization Loan, its Anticipated Repayment Date.
<PAGE>
YEAR OF ORIGINATION (a)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE WEIGHTED WEIGHTED AVERAGE AVERAGE
NUMBER OF AGGREGATE OF AGGREGATE AVERAGE AVERAGE AVERAGE REMAINING CUT-OFF
MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF U/W MORTGAGE TERM TO DATE
YEAR OF ORIGINATION LOANS BALANCE BALANCE DATE BALANCE DSCR RATE MATURITY LTV RATIO
- --------------------- ----------- ---------------- -------------- -------------- ------------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 204 $1,061,756,223 80.49% $5,204,687 1.36x 7.5863% 115.0 73.3%
1998 49 257,437,535 19.51 5,253,827 1.41 7.0928 114.4 72.7
---- -------------- ------- --------- ---- ------ ----- ----
TOTAL\AVG.\WTD.AVG. 253 $1,319,193,758 100.00% $5,214,205 1.37x 7.4900% 114.9 73.2%
- --------------------- ----------- ---------------- -------------- -------------- ------------- ----------- ------------ ----------
</TABLE>
(a) Column totals may not add due to rounding.
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY COLLATERAL TERM SHEET
BOULEVARD MALL
- ------------------------------------------------------------------------------
LOAN INFORMATION
- ------------------------------------------------------------------------------
PRINCIPAL BALANCE: ORIGINAL CUT-OFF DATE(A)
$57,000,000 $56,871,141
ORIGINATION DATE: December 5, 1997
INTEREST RATE: 7.455%
AMORTIZATION: 360 months
HYPERAMORTIZATION: Yes
ANTICIPATED REPAYMENT
DATE ("ARD"): January 1, 2008
MATURITY DATE: June 1, 2029
THE BORROWER/SPONSOR: Boulevard Mall, LLC, a special
purpose entity
CALL PROTECTION: 28 month prepayment lockout followed
by defeasance for 91 months
NSF: 524,186
CUT-OFF DATE
BALANCE/NSF: $108.49
CROSS-COLLATERALIZATION/
DEFAULT: No
- ------------------------------------------------------------------------------
PROPERTY INFORMATION
- ------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Regional Mall
LOCATION: Amherst, New York
OCCUPANCY: 97%
YEAR BUILT/RENOVATED: 1962, 1968/1978, 1994, 1996-97
THE COLLATERAL: Regional mall located near
established residential
neighborhoods in Amherst, New York.
Constructed in 1962 and 1968,
renovated in 1978, 1994 and 1996-1997
MAJOR TENANTS:
NSF EXPIRATION
Kaufmann's 180,282 SF 1/31/14
Jenss Dept. Store 79,028 SF 12/31/02
PROPERTY MANAGEMENT: Forest City Commercial Management
UNDERWRITTEN NET CASH
FLOW: $6,152,249
APPRAISED VALUE: $76,800,000
APPRAISAL DATE: 9/1/97
CUT-OFF DATE LTV: 74%
DSCR (B): 1.29x
----------------------------------------------------------------
(a) April 1, 1998
(b) Based on Underwritten Net Cash Flow.
This material is for your private information and we are not soliciting
any action based upon it. This material is not to be construed as an offer to
sell or the solicitation of any offer to buy any security in any jurisdiction
where such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange
Commission (the "SEC") and incorporated by reference into an effective
registration statement previously filed with the SEC under Rule 415 of the
Securities Act of 1933, including in cases where the material does not pertain
to securities that are ultimately offered for sale pursuant to such
registration statement. Information contained in this material is current as of
the date appearing on this material only. Information in this material
regarding any assets backing any securities discussed herein supersedes all
prior information regarding such assets. All information in this Term Sheet,
whether regarding the assets backing any securities discussed herein or
otherwise, will be superseded by the information contained in any final
prospectus for any securities actually sold to you.
This material is furnished to you by Goldman, Sachs & Co. and Citibank,
N.A. and not by the issuer of the securities. Goldman, Sachs & Co. and
Citibank, N.A. are acting as co-lead underwriters and not acting as agents for
the issuer or its affiliates in connection with the proposed transaction. The
issuer has not prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY COLLATERAL TERM SHEET
200 MARKET BUILDING
- ------------------------------------------------------------------------------
LOAN INFORMATION
- ------------------------------------------------------------------------------
PRINCIPAL BALANCE: ORIGINAL CUT-OFF DATE(A)
$50,250,000 $50,131,683
ORIGINATION DATE: December 23, 1997
INTEREST RATE: 7.250%
AMORTIZATION: 360 months
HYPERAMORTIZATION: Yes
ANTICIPATED REPAYMENT
DATE ("ARD"): January 11, 2008
MATURITY DATE: January 11, 2028
THE BORROWER/SPONSOR: 200 Market Associates Limited
Partnership, a special purpose entity
CALL PROTECTION: 28 month prepayment lockout followed
by defeasance for 89 months
NSF: 377,185
CUT-OFF DATE
BALANCE/NSF: $132.91
CROSS-COLLATERALIZATION/
DEFAULT: No
- ------------------------------------------------------------------------------
PROPERTY INFORMATION
- ------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Office - General Urban
LOCATION: Portland, Oregon
OCCUPANCY: 94%
YEAR BUILT/RENOVATED: 1974/1990
THE COLLATERAL: 19-story Class A office building with
three levels of subterranean parking
in downtown Portland, Oregon. Built
in 1974, completely renovated in
1990. Blue Cross/Blue Shield owns a
50% limited partnership interest in
the related borrower. Borrower is
required to establish a credit
facility consisting of an
irrevocable, unconditional letter of
credit in favor of lender in the
amount of $2,000,000, which
constitutes additional security for
the loan, and may be drawn upon
following the occurrence of an event
of default.
MAJOR TENANTS (C)
NSF EXPIRATION
Blue Cross Blue Shield 123,544 SF 12/31/09
Aetna-EBD Claims 25,208 SF 12/31/98
PROPERTY MANAGEMENT: Cushman & Wakefield of Oregon
UNDERWRITTEN NET CASH
FLOW: $5,441,540
APPRAISED VALUE: $68,000,000
APPRAISAL DATE: 1/1/98
CUT-OFF DATE LTV: 74%
DSCR (B): 1.32x
-----------------------------------------------------------------
(a) April 11, 1998.
(b) Based on Underwritten Net Cash Flow.
(c) Aggregate NSF leased by tenant and affiliates.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do no represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may
not pertain to any securities that will actually be sold. The information
contained in this material may be based on assumptions regarding market
conditions and other matters as reflected therein. We make no representations
regarding the reasonableness of such assumptions or the likelihood that any of
such assumptions will coincide with actual market conditions or events, and
this material should not be relied upon for such purposes. We and our
affiliates, officers, directors, partners and employees, including persons
involved in the preparation or issuance of this material may, from time to
time, have long or short positions in, and buy or sell, the securities
mentioned herein or derivatives thereof (including options). This material may
be filed with the Securities and Exchange Commission (the "SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. Information contained
in this material is current as of the date appearing on this material only.
Information in this material regarding the securities and the assets backing
any securities discussed herein supersedes all prior information regarding such
securities and assets. Any information in the material, whether regarding the
assets backing any securities discussed herein or otherwise, will be superseded
by the information included in the final prospectus for any securities actually
sold to you.
This material is furnished to you solely by Goldman, Sachs & Co. and not
by the issuer of the securities or any of its affiliates. Goldman, Sachs & Co.
is acting as underwriter and not acting as agent for the issuer or its
affiliates in connection with the proposed transaction. The issuer has not
prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY COLLATERAL TERM SHEET
MONTGOMERY PARK
- ------------------------------------------------------------------------------
LOAN INFORMATION
- ------------------------------------------------------------------------------
PRINCIPAL BALANCE: ORIGINAL CUT-OFF DATE(A)
$41,650,000 $41,572,076
ORIGINATION DATE: January 27, 1998
INTEREST RATE: 6.900%
AMORTIZATION: 360 months
HYPERAMORTIZATION: No
ANTICIPATED REPAYMENT N/A
DATE ("ARD"):
MATURITY DATE: February 1, 2008
THE BORROWER/SPONSOR: Montgomery Park Company, LLC, a
special purpose entity
CALL PROTECTION: 48 month prepayment lockout followed
by yield maintenance for 66 months
NSF: 668,641
CUT-OFF DATE
BALANCE/NSF: $62.17
CROSS-COLLATERALIZATION/
DEFAULT: No
- ------------------------------------------------------------------------------
PROPERTY INFORMATION
- ------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Office
LOCATION: Portland, Oregon
OCCUPANCY: 98%
YEAR BUILT/RENOVATED: 1920/1988
THE COLLATERAL: Nine-story office building located in
Portland, Oregon. Built in 1920,
renovated in 1988.
MAJOR TENANTS
NSF EXPIRATION
NACCO Materials 78,127 SF 12/31/04
Handling
Wells Fargo Bank 74,935 SF 5/31/98
PROPERTY MANAGEMENT: H. Naito Properties
UNDERWRITTEN NET CASH
FLOW: $4,926,592
APPRAISED VALUE: $63,000,000
APPRAISAL DATE: 12/19/97
CUT-OFF DATE LTV: 66%
DSCR (B): 1.50x
-----------------------------------------------------------------
(a) April 1, 1998.
(b) Based on Underwritten Net Cash Flow.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do no represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may
not pertain to any securities that will actually be sold. The information
contained in this material may be based on assumptions regarding market
conditions and other matters as reflected therein. We make no representations
regarding the reasonableness of such assumptions or the likelihood that any of
such assumptions will coincide with actual market conditions or events, and
this material should not be relied upon for such purposes. We and our
affiliates, officers, directors, partners and employees, including persons
involved in the preparation or issuance of this material may, from time to
time, have long or short positions in, and buy or sell, the securities
mentioned herein or derivatives thereof (including options). This material may
be filed with the Securities and Exchange Commission (the "SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. Information contained
in this material is current as of the date appearing on this material only.
Information in this material regarding the securities and the assets backing
any securities discussed herein supersedes all prior information regarding such
securities and assets. Any information in the material, whether regarding the
assets backing any securities discussed herein or otherwise, will be superseded
by the information included in the final prospectus for any securities actually
sold to you.
This material is furnished to you solely by Goldman, Sachs & Co. and not
by the issuer of the securities or any of its affiliates. Goldman, Sachs & Co.
is acting as underwriter and not acting as agent for the issuer or its
affiliates in connection with the proposed transaction. The issuer has not
prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY COLLATERAL TERM SHEET
WHEATLANDS
- ------------------------------------------------------------------------------
LOAN INFORMATION
- ------------------------------------------------------------------------------
PRINCIPAL BALANCE: ORIGINAL CUT-OFF DATE(A)
$32,460,000 $32,409,203
ORIGINATION DATE: January 2, 1998
INTEREST RATE: 7.250%
AMORTIZATION: 360 months
HYPERAMORTIZATION: No
ANTICIPATED REPAYMENT N/A
DATE ("ARD"):
MATURITY DATE: February 1, 2008
THE BORROWER/SPONSOR: The Wheatlands LLC, a special purpose
entity
CALL PROTECTION: 48 month prepayment lockout followed
by yield maintenance for 66 months
NUMBER OF UNITS: 352
CUT-OFF DATE $92,071.60
BALANCE/UNIT:
CROSS-COLLATERALIZATION/
DEFAULT: No
- ------------------------------------------------------------------------------
PROPERTY INFORMATION
- ------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Multifamily
LOCATION: Buffalo Grove, Illinois
OCCUPANCY: 98%
YEAR BUILT: 1994
THE COLLATERAL: 352 unit apartment building located
in Buffalo Grove, Illinois. Its
amenities include clubhouse, heated
pool and fitness room.
PROPERTY MANAGEMENT: Penobscot Management
UNDERWRITTEN NET CASH
FLOW: $3,178,922
APPRAISED VALUE: $39,500,000
APPRAISAL DATE: 11/19/97
CUT-OFF DATE LTV: 82%
DSCR (B): 1.20x
-----------------------------------------------------------------
(a) April 1, 1998
(b) Based on Underwritten Net Cash Flow.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do no represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may
not pertain to any securities that will actually be sold. The information
contained in this material may be based on assumptions regarding market
conditions and other matters as reflected therein. We make no representations
regarding the reasonableness of such assumptions or the likelihood that any of
such assumptions will coincide with actual market conditions or events, and
this material should not be relied upon for such purposes. We and our
affiliates, officers, directors, partners and employees, including persons
involved in the preparation or issuance of this material may, from time to
time, have long or short positions in, and buy or sell, the securities
mentioned herein or derivatives thereof (including options). This material may
be filed with the Securities and Exchange Commission (the "SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. Information contained
in this material is current as of the date appearing on this material only.
Information in this material regarding the securities and the assets backing
any securities discussed herein supersedes all prior information regarding such
securities and assets. Any information in the material, whether regarding the
assets backing any securities discussed herein or otherwise, will be superseded
by the information included in the final prospectus for any securities actually
sold to you.
This material is furnished to you solely by Goldman, Sachs & Co. and not
by the issuer of the securities or any of its affiliates. Goldman, Sachs & Co.
is acting as underwriter and not acting as agent for the issuer or its
affiliates in connection with the proposed transaction. The issuer has not
prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
PRELIMINARY COLLATERAL TERM SHEET
PEMBROKE LANDINGS
- ------------------------------------------------------------------------------
LOAN INFORMATION
- ------------------------------------------------------------------------------
PRINCIPAL BALANCE: ORIGINAL CUT-OFF DATE(A)
$24,760,000 $24,699,237
ORIGINATION DATE: December 30, 1997
INTEREST RATE: 7.040%
AMORTIZATION: 360 months
HYPERAMORTIZATION: No
ANTICIPATED REPAYMENT N/A
DATE ("ARD"):
MATURITY DATE: January 1, 2008
THE BORROWER/SPONSOR: Pasadena at the Landings, Ltd., a
special purpose entity
CALL PROTECTION: 37 month prepayment lockout followed
by defeasance for 77 months
NUMBER OF UNITS: 300
CUT-OFF DATE $82,330.79
BALANCE/UNIT:
CROSS-COLLATERALIZATION/
DEFAULT: No
- ------------------------------------------------------------------------------
PROPERTY INFORMATION
- ------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Multifamily
LOCATION: Pembroke Pines, Florida
OCCUPANCY: 100%
YEAR BUILT: 1996 and 1997
THE COLLATERAL: 300-unit, Class A garden apartment
community on approximately 16.5-acre
site in Pembroke Pines, Florida.
Amenities include heated swimming
pool with sun deck, spa, sauna,
playground, fitness center,
racquetball and tennis courts and
6,500 s.f. clubhouse.
PROPERTY MANAGEMENT: Robert B. Miller
UNDERWRITTEN NET CASH
FLOW: $2,448,805
APPRAISED VALUE: $30,950,000
APPRAISAL DATE: 3/20/97
CUT-OFF DATE LTV: 80%
DSCR (B): 1.23x
-----------------------------------------------------------------
(a) April 1, 1998.
(b) Based on Underwritten Net Cash Flow.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do no represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may
not pertain to any securities that will actually be sold. The information
contained in this material may be based on assumptions regarding market
conditions and other matters as reflected therein. We make no representations
regarding the reasonableness of such assumptions or the likelihood that any of
such assumptions will coincide with actual market conditions or events, and
this material should not be relied upon for such purposes. We and our
affiliates, officers, directors, partners and employees, including persons
involved in the preparation or issuance of this material may, from time to
time, have long or short positions in, and buy or sell, the securities
mentioned herein or derivatives thereof (including options). This material may
be filed with the Securities and Exchange Commission (the "SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. Information contained
in this material is current as of the date appearing on this material only.
Information in this material regarding the securities and the assets backing
any securities discussed herein supersedes all prior information regarding such
securities and assets. Any information in the material, whether regarding the
assets backing any securities discussed herein or otherwise, will be superseded
by the information included in the final prospectus for any securities actually
sold to you.
This material is furnished to you solely by Goldman, Sachs & Co. and not
by the issuer of the securities or any of its affiliates. Goldman, Sachs & Co.
is acting as underwriter and not acting as agent for the issuer or its
affiliates in connection with the proposed transaction. The issuer has not
prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
GOLDMAN, SACHS & CO.
85 BROAD STREET
NEW YORK, N.Y. 10004
REAL ESTATE FINANCE
Rolf Edwards Phone: (212) 902-5637
Associate Fax: (212) 357-5505
Corey Owens Phone: (212) 902-4825
Associate Fax: (212) 357-5505
Brian Landau Phone: (212) 902-8139
Analyst Fax: (212) 357-5505
Viktor Spivakovsky Phone: (212) 902-5373
Analyst Fax: (212) 357-5505
MORTGAGE SALES AND TRADING
Mark Kogan Phone: (212) 902-2565
Managing Director Fax: (212) 902-1691
Justin Kennedy Phone: (212) 902-2914
Vice President Fax: (212) 902-1691
Heath Forusz Phone: (212) 902-2858
Analyst Fax: (212) 902-1691
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do no represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may
not pertain to any securities that will actually be sold. The information
contained in this material may be based on assumptions regarding market
conditions and other matters as reflected therein. We make no representations
regarding the reasonableness of such assumptions or the likelihood that any of
such assumptions will coincide with actual market conditions or events, and
this material should not be relied upon for such purposes. We and our
affiliates, officers, directors, partners and employees, including persons
involved in the preparation or issuance of this material may, from time to
time, have long or short positions in, and buy or sell, the securities
mentioned herein or derivatives thereof (including options). This material may
be filed with the Securities and Exchange Commission (the "SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. Information contained
in this material is current as of the date appearing on this material only.
Information in this material regarding the securities and the assets backing
any securities discussed herein supersedes all prior information regarding such
securities and assets. Any information in the material, whether regarding the
assets backing any securities discussed herein or otherwise, will be superseded
by the information included in the final prospectus for any securities actually
sold to you.
This material is furnished to you solely by Goldman, Sachs & Co. and not
by the issuer of the securities or any of its affiliates. Goldman, Sachs & Co.
is acting as underwriter and not acting as agent for the issuer or its
affiliates in connection with the proposed transaction. The issuer has not
prepared or taken part in the preparation of these materials.
<PAGE>
ALL INFORMATION IN THIS TERM SHEET, WHETHER REGARDING THE ASSETS BACKING ANY
SECURITIES DISCUSSED HEREIN OR OTHERWISE, WILL BE SUPERSEDED BY THE INFORMATION
CONTAINED IN ANY FINAL PROSPECTUS FOR ANY SECURITIES ACTUALLY SOLD TO YOU.
CITIBANK N.A.
399 PARK AVENUE
NEW YORK, NY 10043
REAL ESTATE FINANCE
Rich Jarocki Phone: (212) 559-0217
Vice President Fax: (212) 793-0474
Mark Horinbein Phone: (212) 559-0216
Vice President Fax: (212) 793-0474
Gary Rapp Phone: (212) 559-0940
Analyst Fax: (212) 793-5602
MORTGAGE TRADING AND ANALYTICS
Frank Forelle Phone: (212) 291-4108
Vice President Fax: (212) 291-3687
Jeff Sturdevant Phone: (212) 291-3320
Vice President Fax: (212) 291-3687
STRUCTURED FINANCE
- ------------------
Richard Cohen Phone: (212) 291-3320
Vice President
Nancy Wilt Phone: (212) 291-3320
Vice President Fax: (212) 291-3687
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do no represent that it is
accurate or complete and it should not be relied upon as such. By accepting
this material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may
not pertain to any securities that will actually be sold. The information
contained in this material may be based on assumptions regarding market
conditions and other matters as reflected therein. We make no representations
regarding the reasonableness of such assumptions or the likelihood that any of
such assumptions will coincide with actual market conditions or events, and
this material should not be relied upon for such purposes. We and our
affiliates, officers, directors, partners and employees, including persons
involved in the preparation or issuance of this material may, from time to
time, have long or short positions in, and buy or sell, the securities
mentioned herein or derivatives thereof (including options). This material may
be filed with the Securities and Exchange Commission (the "SEC") and
incorporated by reference into an effective registration statement previously
filed with the SEC under Rule 415 of the Securities Act of 1933, including in
cases where the material does not pertain to securities that are ultimately
offered for sale pursuant to such registration statement. Information contained
in this material is current as of the date appearing on this material only.
Information in this material regarding the securities and the assets backing
any securities discussed herein supersedes all prior information regarding such
securities and assets. Any information in the material, whether regarding the
assets backing any securities discussed herein or otherwise, will be superseded
by the information included in the final prospectus for any securities actually
sold to you.
This material is furnished to you solely by Goldman, Sachs & Co. and not
by the issuer of the securities or any of its affiliates. Goldman, Sachs & Co.
is acting as underwriter and not acting as agent for the issuer or its
affiliates in connection with the proposed transaction. The issuer has not
prepared or taken part in the preparation of these materials.
<PAGE>
P R O S P E C T U S
- -------------------
MORTGAGE CAPITAL FUNDING, INC.
(SPONSOR)
MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
The mortgage pass-through certificates (the "Offered Certificates")
offered hereby and by the supplements hereto (each, a "Prospectus Supplement")
will be offered from time to time in series. The Offered Certificates of each
series, together with any other mortgage pass-through certificates of such
series, are collectively referred to herein as the "Certificates".
Each series of Certificates will represent in the aggregate the entire
beneficial ownership interest in a trust fund (with respect to any series, the
"Trust Fund") consisting primarily of a segregated pool (a "Mortgage Asset
Pool") of one or more of various types of multifamily or commercial mortgage
loans or participations therein (the "Mortgage Loans"), mortgage-backed
securities ("MBS") that evidence interests in, or that are secured by pledges
of, one or more of various types of multifamily or commercial mortgage loans,
or a combination of Mortgage Loans and MBS (collectively, "Mortgage Assets").
If so specified in the related Prospectus Supplement, the Trust Fund for a
series of Certificates may include letters of credit, insurance policies,
guarantees, reserve funds or other types of credit support, or any combination
thereof (with respect to any series, collectively, "Credit Support"), and
currency or interest rate exchange agreements and other financial assets, or
any combination thereof (with respect to any series, collectively, "Cash Flow
Agreements"). See "Description of the Trust Funds", "Description of the
Certificates" and "Description of Credit Support".
As described in the related Prospectus Supplement, the Certificates of
each series, including the Offered Certificates of such series, may consist of
one or more classes of Certificates that: (i) provide for the accrual of
interest thereon based on a fixed, variable or adjustable interest rate; (ii)
are senior or subordinate to one or more other classes of Certificates in
entitlement to certain distributions on the Certificates; (iii) are entitled to
distributions of principal, with disproportionately small, nominal or no
distributions of interest; (iv) are entitled to distributions of interest, with
disproportionately small, nominal or no distributions of principal; (v) provide
for distributions of interest thereon or principal thereof that commence only
following the occurrence of certain events, such as the retirement of one or
more other classes of Certificates of such series; (vi) provide for
distributions of principal thereof to be made, from time to time or for
designated periods, at a rate that is faster (and, in some cases, substantially
faster) or slower (and, in some cases, substantially slower) than the rate at
which payments or other collections of principal are received on the Mortgage
Assets in the related Trust Fund; or (vii) provide for distributions of
principal thereof to be made, subject to available funds, based on a specified
principal payment schedule or other methodology. See "Description of the
Certificates".
(cover continued on next page)
--------------
FOR A DISCUSSION OF CERTAIN RISKS ASSOCIATED WITH AN INVESTMENT IN THE
SECURITIES, SEE THE INFORMATION UNDER "RISK FACTORS" ON PAGE 14 AND SUCH
INFORMATION AS MAY BE SET FORTH UNDER THE CAPTION "RISK FACTORS" IN THE
RELATED PROSPECTUS SUPPLEMENT.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------
The Offered Certificates of any series may be offered through one or more
different methods, including offerings through underwriters, as more fully
described under "Method of Distribution" and in the related Prospectus
Supplement.
Prior to issuance there will have been no market for the Certificates of
any series and there can be no assurance that a secondary market for any
Offered Certificates will develop or that, if it does develop, it will
continue. See "Risk Factors".
This Prospectus may not be used to consummate sales of the Offered
Certificates of any series unless accompanied by the Prospectus Supplement for
such series.
----------------
NOVEMBER 20, 1997
<PAGE>
(cover continued)
Distributions in respect of the Certificates of each series will be made
on a monthly, quarterly, semi-annual, annual or other periodic basis as
specified in the related Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, such distributions will be made only from
the assets of the related Trust Fund. No series of Certificates will represent
an obligation of or interest in the Sponsor or any of its affiliates, except to
the limited extent described herein and in the related Prospectus Supplement.
Neither the Certificates of any series nor the assets in any Trust Fund will be
guaranteed or insured by any governmental agency or instrumentality or by any
other person, unless otherwise provided in the related Prospectus Supplement.
The assets in each Trust Fund will be held in trust for the benefit of the
holders of the related series of Certificates (the "Certificateholders")
pursuant to a Pooling Agreement, as more fully described herein.
The yield on each class of Certificates of a series will be affected by,
among other things, the rate of payment of principal (including prepayments) on
the Mortgage Assets in the related Trust Fund and the timing of receipt of such
payments as described herein and in the related Prospectus Supplement. See
"Yield and Maturity Considerations". A Trust Fund may be subject to early
termination under the circumstances described herein and in the related
Prospectus Supplement. See "Description of the Certificates".
If so provided in the related Prospectus Supplement, one or more elections
may be made to treat the related Trust Fund or a designated portion thereof as
a "real estate mortgage investment conduit" (a "REMIC") for federal income tax
purposes. See "Material Federal Income Tax Consequences" herein.
PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement relating
to each series of Offered Certificates will, among other things, set forth, as
and to the extent appropriate: (i) a description of the class or classes of
such Offered Certificates, including the payment provisions with respect to
each such class, the aggregate principal amount of each such class (the
"Certificate Balance"), the rate at which interest accrues from time to time,
if at all, with respect to each such class (the "Pass-Through Rate") or the
method of determining such rate, and whether interest with respect to each such
class will accrue from time to time on its aggregate principal amount or a
specified notional amount, if at all; (ii) information with respect to any
other classes of Certificates of the same series; (iii) the respective dates on
which distributions are to be made; (iv) information as to the assets
constituting the related Trust Fund, including the general characteristics of
the assets included therein, including the Mortgage Assets and any Credit
Support and Cash Flow Agreements (with respect to the Certificates of any
series, the "Trust Assets"); (v) the circumstances, if any, under which the
related Trust Fund may be subject to early termination; (vi) additional
information with respect to the method of distribution of such Offered
Certificates; (vii) the initial percentage ownership interest in the related
Trust Fund to be evidenced by each class of Certificates of such series; (viii)
information concerning the trustee (as to any series, the "Trustee") of the
related Trust Fund; (ix) if the related Trust Fund includes Mortgage Loans,
information concerning the master servicer (as to any series, the "Master
Servicer") and, if different than the Master Servicer, the special servicer (as
to any series, the "Special Servicer") of such Mortgage Loans and the
circumstances under which all or a portion, as specified, of the servicing of a
Mortgage Loan would transfer from the Master Servicer to the Special Servicer;
(x) whether one or more REMIC elections will be made, the designation of the
"regular interests" and "residual interests" in each REMIC to be created and
the identity of the person (the "REMIC Administrator") responsible for the
various tax-related administrative duties in respect of each REMIC to be
created; (xi) information as to the nature and extent of subordination of any
class of Certificates of such series, including a class of Offered
Certificates; and (xii) whether such Offered Certificates will be initially
issued in definitive or book-entry form.
AVAILABLE INFORMATION
The Sponsor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus forms a part)
under the Securities Act of 1933, as amended, with respect to the Offered
Certificates. This Prospectus and the Prospectus Supplement relating to each
series of Offered Certificates contain summaries of the material terms of the
documents referred to herein and therein, but do not contain all of the
information set forth in the Registration Statement pursuant to the rules and
regulations of the Commission. For further information, reference is made to
such Registration Statement and the exhibits thereto. Such Registration
Statement and exhibits can be inspected and copied at prescribed rates at the
public reference facilities maintained by the Commission at its Public
2
<PAGE>
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its
Regional Offices located as follows: Midwest Regional Office, Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and
Northeast Regional Office, Seven World Trade Center, Suite 1300, New York, New
York 10048. The Commission maintains a Web site at http://www.sec.gov
containing reports, proxy and information statements and other information
regarding registrants, including the Sponsor, that file electronically with the
Commission.
No person has been authorized to give any information or to make any
representation not contained in this Prospectus and any related Prospectus
Supplement and, if given or made, such information or representation must not
be relied upon. This Prospectus and any related Prospectus Supplement do not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the Offered Certificates, or an offer of the Offered Certificates to
any person in any state or other jurisdiction in which such offer would be
unlawful. The delivery of this Prospectus at any time does not imply that
information herein is correct as of any time subsequent to its date; however,
if any material change occurs while this Prospectus is required by law to be
delivered, this Prospectus will be amended or supplemented accordingly.
The related Master Servicer or Trustee will be required to mail to holders
of the Offered Certificates of each series periodic unaudited reports
concerning the related Trust Fund. If beneficial interests in a class or series
of Offered Certificates are being held and transferred in book-entry format
through the facilities of The Depository Trust Company ("DTC") as described
herein, then unless otherwise provided in the related Prospectus Supplement,
such reports will be sent on behalf of the related Trust Fund to a nominee of
DTC as the registered holder of the Offered Certificates. Conveyance of notices
and other communications by DTC to its participating organizations, and
directly or indirectly through such participating organizations to the
beneficial owners of the applicable Offered Certificates, will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. See "Description of the
Certificates--Reports to Certificateholders" and "--Book-Entry Registration and
Definitive Certificates" and "Description of the Pooling Agreements--Evidence
as to Compliance."
The Sponsor or the Trustee will file or cause to be filed with the
Commission such periodic reports with respect to each Trust Fund as are
required under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder. The Sponsor
intends to make a written request to the staff of the Commission that the staff
either (i) issue an order pursuant to Section 12(h) of the Exchange Act
exempting the Sponsor from certain reporting requirements under the Exchange
Act with respect to each Trust Fund or (ii) state that the staff will not
recommend that the Commission take enforcement action if the Sponsor fulfills
its reporting obligations as described in its written request. If such request
is granted, the Sponsor will file or cause to be filed with the Commission as
to each Trust Fund the periodic unaudited reports to holders of the Offered
Certificates referenced in the preceding paragraph; however, because of the
nature of the Trust Funds, it is unlikely that any significant additional
information will be filed. In addition, because of the limited number of
Certificateholders expected for each series, the Sponsor anticipates that a
significant portion of such reporting requirements will be permanently
suspended following the first fiscal year for the related Trust Fund.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Sponsor with respect to a Trust Fund pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination
of an offering of Offered Certificates evidencing interests therein. The
Sponsor will provide or cause to be provided without charge to each person to
whom this Prospectus is delivered in connection with the offering of one or
more classes of Offered Certificates, upon written or oral request of such
person, a copy of any or all documents or reports incorporated herein by
reference, in each case to the extent such documents or reports relate to one
or more of such classes of such Offered Certificates, other than the exhibits
to such documents (unless such exhibits are specifically incorporated by
reference in such documents). Requests to the Sponsor should be directed in
writing to its principal executive offices specified herein under "Mortgage
Capital Funding, Inc." The Sponsor has determined that its financial statements
will not be material to the offering of any Offered Certificates.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT ......................... 2
AVAILABLE INFORMATION ......................... 2
INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE ................... 3
SUMMARY OF PROSPECTUS ......................... 6
RISK FACTORS .................................. 14
Certain Factors Adversely Affecting
Resale of the Offered Certificates ....... 14
Limited Assets for Payment of
Certificates ............................. 14
Prepayments; Average Life of Certificates;
Yields ................................... 15
Limited Nature of Credit Ratings ............ 16
Certain Risks Associated with Mortgage
Loans Secured by Commercial and
Multifamily Properties ................... 16
Balloon Payments; Borrower Default .......... 17
Credit Support Limitations .................. 18
Enforceability .............................. 18
Leases and Rents as Security for a
Mortgage Loan ............................ 18
Environmental Risks ......................... 19
Special Hazard Losses ....................... 19
ERISA Considerations ........................ 19
Certain Federal Tax Considerations
Regarding REMIC Residual
Certificates ............................. 19
Book-Entry Registration ..................... 20
Potential Conflicts of Interest ............. 20
Delinquent and Non-Performing Mortgage
Loans .................................... 20
DESCRIPTION OF THE TRUST FUNDS ................ 21
General ..................................... 21
Mortgage Loans .............................. 21
MBS ......................................... 23
Certificate Accounts ........................ 24
Credit Support .............................. 24
Cash Flow Agreements ........................ 24
YIELD AND MATURITY
CONSIDERATIONS ............................. 25
General ..................................... 25
Pass-Through Rate ........................... 25
Payment Delays .............................. 25
Certain Shortfalls in Collections of
Interest ................................. 25
Yield and Prepayment Considerations ......... 26
Weighted Average Life and Maturity .......... 27
Controlled Amortization Classes and
Companion Classes ........................ 28
Other Factors Affecting Yield, Weighted
Average Life and Maturity ................ 28
MORTGAGE CAPITAL FUNDING, INC ................. 30
USE OF PROCEEDS ............................... 30
DESCRIPTION OF THE CERTIFICATES................ 30
General ..................................... 30
Distributions ............................... 31
<PAGE>
PAGE
-----
Distributions of Interest on the
Certificates ............................. 31
Distributions of Principal of the
Certificates ............................. 32
Distributions on the Certificates in
Respect of Prepayment Premiums or in
Respect of Equity Participations ......... 33
Allocation of Losses and Shortfalls ......... 33
Advances in Respect of Delinquencies ........ 33
Reports to Certificateholders ............... 34
Voting Rights ............................... 35
Termination ................................. 35
Book-Entry Registration and Definitive
Certificates ............................. 35
DESCRIPTION OF THE POOLING
AGREEMENTS ................................. 37
General ..................................... 37
Assignment of Mortgage Loans;
Repurchases .............................. 37
Representations and Warranties;
Repurchases .............................. 38
Collection and Other Servicing
Procedures ............................... 39
Sub-Servicers ............................... 40
Certificate Account ......................... 40
Escrow Accounts ............................. 43
Modifications, Waivers and Amendments
of Mortgage Loans ........................ 43
Realization Upon Defaulted Mortgage
Loans .................................... 43
Hazard Insurance Policies ................... 45
Due-on-Sale and Due-on-Encumbrance
Provisions ............................... 46
Servicing Compensation and Payment of
Expenses ................................. 46
Evidence as to Compliance ................... 47
Certain Matters Regarding the Master
Servicer, the Special Servicer, the
REMIC Administrator and the Sponsor....... 47
Events of Default ........................... 48
Rights Upon Event of Default ................ 49
Amendment ................................... 49
List of Certificateholders .................. 50
The Trustee ................................. 50
Duties of the Trustee ....................... 50
Certain Matters Regarding the Trustee ....... 50
Resignation and Removal of the Trustee ...... 51
DESCRIPTION OF CREDIT SUPPORT ................. 51
General ..................................... 51
Subordinate Certificates .................... 51
Cross-Support Provisions .................... 52
Insurance or Guarantees with Respect to
Mortgage Loans ........................... 52
Letter of Credit ............................ 52
Certificate Insurance and Surety Bonds ...... 52
Reserve Funds ............................... 52
Credit Support with Respect to MBS .......... 53
CERTAIN LEGAL ASPECTS OF
MORTGAGE LOANS ............................. 53
General ..................................... 53
4
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PAGE
-----
Types of Mortgage Instruments ............... 53
Leases and Rents ............................ 54
Personalty .................................. 54
Foreclosure ................................. 54
Bankruptcy Laws ............................. 57
Environmental Risks ......................... 58
Due-on-Sale and Due-on-Encumbrance .......... 59
Subordinate Financing ....................... 60
Default Interest and Limitations on
Prepayments .............................. 60
Applicability of Usury Laws ................. 60
Soldiers' and Sailors' Civil Relief Act of
1940 ..................................... 60
Americans with Disabilities Act ............. 61
Forfeitures in Drug and RICO
Proceedings .............................. 61
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES ............................... 61
General ..................................... 61
REMICs ...................................... 62
Taxation of Owners of REMIC Regular
Certificates ............................. 63
Taxation of Owners of REMIC Residual
Certificates ............................. 67
Grantor Trust Funds ......................... 75
Characterization of Investments in
Grantor Trust Certificates ............... 76
Taxation of Owners of Grantor Trust
Fractional Interest Certificates ......... 76
Taxation of Owners of Stripped Interest
Certificates ............................. 81
STATE AND OTHER TAX
CONSEQUENCES ............................... 83
ERISA CONSIDERATIONS .......................... 84
General ..................................... 84
Plan Asset Regulations ...................... 84
LEGAL INVESTMENT .............................. 85
METHOD OF DISTRIBUTION ........................ 86
FINANCIAL INFORMATION ......................... 88
RATING ........................................ 88
</TABLE>
5
<PAGE>
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each series
of Certificates contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of Offered Certificates of such
series. An Index of Principal Definitions is included at the end of this
Prospectus.
Title of Certificates... Mortgage Pass-Through Certificates, issuable in
series (the "Certificates").
Sponsor................. Mortgage Capital Funding, Inc., a wholly-owned
subsidiary of Citicorp Banking Corporation, which
in turn is a wholly-owned subsidiary of Citicorp.
See "Mortgage Capital Funding, Inc."
Master Servicer......... The master servicer (the "Master Servicer"), if
any, for a series of Certificates will be named in
the related Prospectus Supplement. Any Master
Servicer may be an affiliate of the Sponsor. See
"Description of the Pooling Agreements--Collection
and Other Servicing Procedures".
Special Servicer........ The special servicer (the "Special Servicer"), if
any, for a series of Certificates will be named in
the related Prospectus Supplement. Any Special
Servicer may be an affiliate of the Sponsor and/or
may also be acting as Master Servicer. See
"Description of the Pooling Agreements--Collection
and Other Servicing Procedures".
Trustee................. The trustee (the "Trustee") for each series of
Certificates will be named in the related
Prospectus Supplement. See "Description of the
Pooling Agreements--The Trustee".
REMIC Administrator..... The person (the "REMIC Administrator") responsible
for the various tax-related administrative duties
for a series of Certificates as to which one or
more REMIC elections have been made, will be named
in the related Prospectus Supplement. Any REMIC
Administrator may be an affiliate of the Sponsor
and/or may also be acting as Master Servicer,
Special Servicer or Trustee. See "Material Federal
Income Tax Consequences--REMICs--Reporting and
Other Administrative Matters."
The Trust Assets........ Each series of Certificates will represent in the
aggregate the entire beneficial ownership interest
in a Trust Fund consisting primarily of:
A. Mortgage Assets.... The Mortgage Assets with respect to each series of
Certificates will, in general, consist of a pool
of mortgage loans, including participations
therein (collectively, the "Mortgage Loans"),
secured by liens on, or security interests in,
without limitation, (i) residential properties
consisting of five or more rental or
cooperatively-owned dwelling units (the
"Multifamily Properties") or (ii) office
buildings, shopping centers, retail stores,
hotels or motels, nursing homes, hospitals or
other health-care related facilities, mobile home
parks, warehouse facilities, mini-warehouse
facilities or self-storage facilities, industrial
facilities, mixed use or various other types of
income-producing properties or unimproved land
(the "Commercial Properties"). If so specified in
the related Prospectus Supplement, a Trust Fund
may include Mortgage Loans secured by liens on
real estate projects under construction. The
Mortgage Loans will not be guaranteed or insured
by the Sponsor or any of its affiliates or,
unless otherwise provided in the related
Prospectus Supplement, by any
6
<PAGE>
governmental agency or instrumentality or by any
other person. If so specified in the related
Prospectus Supplement, some Mortgage Loans may be
delinquent or non-performing as of the date the
related Trust Fund is formed.
As and to the extent described in the related
Prospectus Supplement, a Mortgage Loan (i) may
provide for accrual of interest thereon at an
interest rate (a "Mortgage Rate") that is fixed
over its term or that adjusts from time to time,
or that may be converted at the borrower's
election from an adjustable to a fixed Mortgage
Rate, or from a fixed to an adjustable Mortgage
Rate, and in some cases back again, (ii) may
provide for level payments to maturity or for
payments that adjust from time to time to
accommodate changes in the Mortgage Rate or to
reflect the occurrence of certain events, and may
permit negative amortization, (iii) may be fully
amortizing over its term to maturity or may
require a balloon payment on its stated maturity
date, (iv) may provide for no amortization prior
to its stated maturity date, (v) may contain a
prohibition on prepayment and/or require payment
of a premium or a yield maintenance penalty in
connection with a prepayment and (vi) may provide
for payments of principal, interest or both, on
due dates that occur monthly, quarterly,
semi-annually, annually or at such other interval
as is specified in the related Prospectus
Supplement. Unless otherwise provided in the
related Prospectus Supplement, each Mortgage Loan
will have had an original term to maturity of not
more than 40 years. Unless otherwise provided in
the related Prospectus Supplement, no Mortgage
Loan will have been originated by the Sponsor;
however, some or all of the Mortgage Loans in any
Trust Fund may have been originated by an
affiliate of the Sponsor. See "Description of the
Trust Funds--Mortgage Loans".
If and to the extent specified in the related
Prospectus Supplement, the Mortgage Assets with
respect to a series of Certificates may also
include, or consist of, (i) mortgage pass-through
certificates or other mortgage-backed securities
or (ii) certificates insured or guaranteed by the
Federal Home Loan Mortgage Corporation ("FHLMC"),
the Federal National Mortgage Association
("FNMA"), the Government National Mortgage
Association ("GNMA") or the Federal Agricultural
Mortgage Corporation ("FAMC") (collectively, the
mortgage-backed securities referred to in clauses
(i) and (ii), "MBS"), provided that each MBS will
evidence an interest in, or will be secured by a
pledge of, one or more mortgage loans that conform
to the descriptions of the Mortgage Loans
contained herein. See "Description of the Trust
Funds--MBS".
Each Mortgage Asset will be selected by the Sponsor
for inclusion in a Trust Fund from among those
purchased, either directly or indirectly, from a
prior holder thereof (a "Mortgage Asset Seller"),
which prior holder may or may not be the
originator of such Mortgage Loan or the issuer of
such MBS and may be an affiliate of the Sponsor.
B. Certificate Account.. Each Trust Fund will include one or more accounts
(collectively, the "Certificate Account")
established and maintained on behalf of the
Certificateholders into which the person or persons
designated in the related Prospectus Supplement
will, to the extent provided in the related Pooling
Agreement (as defined below) described herein and
in the related Prospectus Supplement, deposit all
payments and other collections received or advanced
with respect to the Mortgage Assets and other
assets in such Trust Fund. A Certificate Account
7
<PAGE>
may be maintained as an interest bearing or a
non-interest bearing account, and funds held
therein may be held as cash or invested in certain
obligations acceptable to each Rating Agency (as
defined below) rating one or more classes of the
related series of Offered Certificates. See
"Description of the Trust Funds--Certificate
Accounts" and "Description of the Pooling
Agreements--Certificate Account".
C. Credit Support..... If so provided in the related Prospectus
Supplement, partial or full protection against
certain defaults and losses on the Mortgage
Assets in the related Trust Fund may be provided
to one or more classes of Certificates of the
related series in the form of subordination of
one or more other classes of Certificates of such
series, which other classes may include one or
more classes of Offered Certificates, or by one
or more other types of credit support, such as a
letter of credit, insurance policy, guarantee,
reserve fund or another type of credit support,
or a combination thereof (any such coverage with
respect to the Certificates of any series,
"Credit Support"). If so specified in the related
Prospectus Supplement, any form of Credit Support
may offer protection only against specific types
of losses and shortfalls. The amount and types of
any Credit Support, the coverage afforded by it,
the identification of the entity providing it (if
applicable) and related information will be set
forth in the Prospectus Supplement for a series
of Offered Certificates. See "Risk
Factors--Credit Support Limitations",
"Description of the Trust Funds--Credit Support"
and "Description of Credit Support".
D. Cash
Flow Agreements........... If so provided in the related Prospectus
Supplement, a Trust Fund may include guaranteed
investment contracts pursuant to which moneys held
in the funds and accounts established for the
related series will be invested at a specified
rate. The Trust Fund may also include certain other
agreements, such as interest rate exchange
agreements, interest rate cap or floor agreements,
currency exchange agreements or similar agreements
designed to reduce the effects of interest rate or
currency exchange rate fluctuations on the Mortgage
Assets or on one or more classes of Certificates.
The principal terms of any such guaranteed
investment contract or other agreement (any such
agreement, a "Cash Flow Agreement"), including,
without limitation, provisions relating to the
timing, manner and amount of payments thereunder
and provisions relating to the termination thereof,
will be described in the Prospectus Supplement for
the related series. In addition, the related
Prospectus Supplement will contain certain
information that pertains to the obligor under any
such Cash Flow Agreement. See "Description of the
Trust Funds--Cash Flow Agreements".
Description of
Certificates.............. Each series of Certificates will be issued in one
or more classes pursuant to a pooling and
servicing agreement or other agreement specified
in the related Prospectus Supplement (in either
case, a "Pooling Agreement") and will represent
in the aggregate the entire beneficial ownership
interest in the related Trust Fund. As described
in the related Prospectus Supplement, the
Certificates of each series, including the
Offered Certificates of such series, may consist
of one or more classes of Certificates that: (i)
are senior (collectively, "Senior Certificates")
or subordinate (collectively, "Subordinate
Certificates") to one or more other classes of
Certificates in entitlement to certain
distributions on the Certificates; (ii) are
entitled to distributions of principal, with
disproportionately small, nominal or no
distributions of interest (collectively,
"Stripped Principal Certificates"); (iii) are
entitled to
8
<PAGE>
distributions of interest, with disproportionately
small, nominal or no distributions of principal
(collectively, "Stripped Interest Certificates");
(iv) provide for distributions of interest thereon
or principal thereof that commence only after the
occurrence of certain events, such as the
retirement of one or more other classes of
Certificates of such series; (v) provide for
distributions of principal thereof to be made,
from time to time or for designated periods, at a
rate that is faster (and, in some cases,
substantially faster) or slower (and, in some
cases, substantially slower) than the rate at
which payments or other collections of principal
are received on the Mortgage Assets in the related
Trust Fund; or (vi) provide for distributions of
principal thereof to be made, subject to available
funds, based on a specified principal payment
schedule or other method.
Each class of Certificates, other than certain
classes of Stripped Interest Certificates and
certain classes of REMIC Residual Certificates (as
defined below), will have a stated principal
amount (a "Certificate Balance"); and each class
of Certificates, other than certain classes of
Stripped Principal Certificates and certain REMIC
Residual Certificates, will accrue interest at a
fixed, variable or adjustable interest rate (a
"Pass-Through Rate") on its Certificate Balance
or, in the case of certain classes of Stripped
Interest Certificates, on a hypothetical or
notional amount (a "Notional Amount") used solely
for such purpose and not evidencing a right to
receive distributions of principal. The related
Prospectus Supplement will specify the Certificate
Balance, Notional Amount and/or Pass-Through Rate
(or, in the case of a variable or adjustable
Pass-Through Rate, the method for determining
such), as applicable, for each class of Offered
Certificates.
The Certificates will not be guaranteed or insured
by the Sponsor or any of its affiliates, by any
governmental agency or instrumentality or by any
other person, unless otherwise provided in the
related Prospectus Supplement. See "Risk
Factors--Limited Assets for Payment of
Certificates" and "Description of the
Certificates".
Distributions of Interest
on the Certificates.... Interest on each class of Offered Certificates
(other than certain classes of Stripped Principal
Certificates and certain classes of REMIC
Residual Certificates) of each series will accrue
at the applicable Pass-Through Rate on the
Certificate Balance or, in the case of certain
classes of Stripped Interest Certificates, the
Notional Amount thereof outstanding from time to
time and will be distributed to
Certificateholders as provided in the related
Prospectus Supplement (each of the specified
dates on which distributions are to be made, a
"Distribution Date"). Distributions of interest
with respect to one or more classes of
Certificates (collectively, "Accrual
Certificates") may not commence until the
occurrence of certain events, such as the
retirement of one or more other classes of
Certificates, and interest accrued with respect
to a class of Accrual Certificates prior to the
occurrence of such an event will either be added
to the Certificate Balance thereof or otherwise
deferred. Distributions of interest with respect
to one or more classes of Certificates may be
reduced to the extent of certain delinquencies,
losses and other contingencies described herein
and in the related Prospectus Supplement. See
"Risk Factors--Prepayments; Average Life of
Certificates; Yields", "Yield and Maturity
Considerations", and "Description of the
Certificates--Distributions of Interest on the
Certificates".
9
<PAGE>
Distributions of Principal
of the Certificates.... Each class of Certificates of each series (other
than certain classes of Stripped Interest
Certificates and certain classes of REMIC
Residual Certificates) will have a Certificate
Balance. The Certificate Balance of a class of
Certificates outstanding from time to time will
represent the maximum amount that the holders
thereof are then entitled to receive in respect
of principal from future cash flow on the assets
in the related Trust Fund. Unless otherwise
specified in the related Prospectus Supplement,
the initial aggregate Certificate Balance of all
classes of a series of Certificates will not be
greater than the outstanding principal balance of
the related Mortgage Assets as of a specified
date (the "Cut-off Date"), after application of
scheduled payments due on or before such date,
whether or not received. As and to the extent
described in the related Prospectus Supplement,
distributions of principal with respect to each
series of Certificates will be made on each
Distribution Date to the holders of the class or
classes of Certificates of such series entitled
thereto until the Certificate Balances of such
Certificates have been reduced to zero.
Distributions of principal with respect to one or
more classes of Certificates may be made at a
rate that is faster (and, in some cases,
substantially faster) than the rate at which
payments or other collections of principal are
received on the Mortgage Assets in the related
Trust Fund. Distributions of principal with
respect to one or more classes of Certificates
may not commence until the occurrence of certain
events, such as the retirement of one or more
other classes of Certificates of the same series,
or may be made at a rate that is slower (and, in
some cases, substantially slower) than the rate
at which payments or other collections of
principal are received on the Mortgage Assets in
the related Trust Fund. Distributions of
principal with respect to one or more classes of
Certificates (each such class, a "Controlled
Amortization Class") may be made, subject to
available funds, based on a specified principal
payment schedule. Distributions of principal with
respect to one or more classes of Certificates
(each such class, a "Companion Class") may be
contingent on the specified principal payment
schedule for a Controlled Amortization Class of
the same series and the rate at which payments
and other collections of principal on the
Mortgage Assets in the related Trust Fund are
received. Unless otherwise specified in the
related Prospectus Supplement, distributions of
principal of any class of Certificates will be
made on a pro rata basis among all of the
Certificates of such class. See "Description of
the Certificates--Distributions of Principal of
the Certificates".
Advances................ If and to the extent provided in the related
Prospectus Supplement, if a Trust Fund includes
Mortgage Loans, the Master Servicer, the Special
Servicer, the Trustee, any provider of Credit
Support and/or any other specified person may be
obligated to make, or have the option of making,
certain advances with respect to delinquent
scheduled payments of principal and/or interest
on such Mortgage Loans. Any such advances made
with respect to a particular Mortgage Loan will
be reimbursable from subsequent recoveries in
respect of such Mortgage Loan and otherwise to
the extent described herein and in the related
Prospectus Supplement. If and to the extent
provided in the Prospectus Supplement for a
series of Certificates, any entity making such
advances may be entitled to receive interest
thereon for the period that such advances are
outstanding, payable from amounts in the related
Trust Fund. See "Description of the
Certificates--Advances in Respect of
Delinquencies". If a Trust Fund includes MBS, any
comparable advancing obligation of a party
10
<PAGE>
to the related Pooling Agreement, or of a party to
the related MBS Agreement, will be described in
the related Prospectus Supplement.
Termination............. If so specified in the related Prospectus
Supplement, a series of Certificates may be
subject to optional early termination through the
repurchase of the Mortgage Assets in the related
Trust Fund by the party or parties specified
therein, under the circumstances and in the
manner set forth therein. If so provided in the
related Prospectus Supplement, upon the reduction
of the Certificate Balance of a specified class
or classes of Certificates by a specified
percentage or amount, a party specified therein
may be authorized or required to solicit bids for
the purchase of all of the Mortgage Assets of the
related Trust Fund, or of a sufficient portion of
such Mortgage Assets to retire such class or
classes, under the circumstances and in the
manner set forth therein. See "Description of the
Certificates--Termination."
Registration of Book-Entry
Certificates........... If so provided in the related Prospectus
Supplement, one or more classes of the Offered
Certificates of any series will be offered in
book-entry format (collectively, "Book-Entry
Certificates") through the facilities of The
Depository Trust Company ("DTC"). Each class of
Book-Entry Certificates will be initially
represented by one or more Certificates
registered in the name of a nominee of DTC. No
person acquiring an interest in a class of
Book-Entry Certificates (a "Certificate Owner")
will be entitled to receive a Certificate of such
class in fully registered, definitive form (a
"Definitive Certificate"), except under the
limited circumstances described herein. See "Risk
Factors-- Book-Entry Registration" and
"Description of the Certificates--Book-Entry
Registration and Definitive Certificates".
Tax Status of
the Certificates....... The Certificates of each series will constitute
either (i) "regular interests" ("REMIC Regular
Certificates") and "residual interests" ("REMIC
Residual Certificates") in a Trust Fund, or a
designated portion thereof, treated as a real
estate mortgage investment conduit (a "REMIC")
under Sections 860A through 860G of the Internal
Revenue Code of 1986 (the "Code"), or (ii)
interests ("Grantor Trust Certificates") in a
Trust Fund treated as a grantor trust under
applicable provisions of the Code.
A. REMIC.............. REMIC Regular Certificates generally will be
treated as debt obligations of the applicable
REMIC for federal income tax purposes. In
general, to the extent the assets and income of
the REMIC are treated as qualifying assets and
income under the following sections of the Code,
REMIC Regular Certificates owned by a real estate
investment trust will be treated as "real estate
assets" for purposes of Section 856(c)(5)(A) of
the Code and interest income therefrom will be
treated as "interest on obligations secured by
mortgages on real property" for purposes of
Section 856(c)(3)(B) of the Code. In addition,
REMIC Regular Certificates will be "qualified
mortgages" within the meaning of Section
860G(a)(3) of the Code. Moreover, if 95% or more
of the assets and the income of the REMIC qualify
for any of the foregoing treatments, the REMIC
Regular Certificates will qualify for the
foregoing treatments in their entirety. However,
REMIC Regular Certificates owned by a thrift
institution will constitute "loans . . . secured
by an interest in real property" for purposes of
Section 7701(a)(19)(C)(v) of the Code only if so
specified in the related Prospectus Supplement.
Holders of REMIC Regular Certificates must report
income with respect thereto on the accrual
method, regardless of their
11
<PAGE>
method of tax accounting generally. Holders of any
class of REMIC Regular Certificates issued with
original issue discount generally will be required
to include the original issue discount in income
as it accrues, which will be determined using an
initial prepayment assumption and taking into
account, from time to time, actual prepayments
occurring at a rate different than the prepayment
assumption. See "Material Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC
Regular Certificates" and "--REMICs--Foreign
Investors in REMIC Certificates".
REMIC Residual Certificates generally will be
treated as representing an interest in qualifying
assets and income to the same extent described
above for institutions subject to Sections
856(c)(5)(a) and 856(c)(3)(B) of the Code, but not
for purposes of Section 7701(a)(19)(C)(v) of the
Code unless otherwise stated in the related
Prospectus Supplement. A portion (or, in certain
cases, all) of the income from REMIC Residual
Certificates (i) may not be offset by any losses
from other activities of the holder of such REMIC
Residual Certificates, (ii) may be treated as
unrelated business taxable income for holders of
REMIC Residual Certificates that are subject to
tax on unrelated business taxable income (as
defined in Section 511 of the Code), and (iii) may
be subject to foreign withholding rules. In
addition, transfers of certain REMIC Residual
Certificates may be prohibited, or may be
disregarded under some circumstances for federal
income tax purposes. See "Material Federal Income
Tax Consequences--REMICs--Taxation of Owners of
REMIC Residual Certificates" and
"--REMICs--Foreign Investors in REMIC
Certificates".
B. Grantor Trust...... Unless otherwise provided in the related Prospectus
Supplement, Grantor Trust Certificates may be
either (i) Certificates that have a Certificate
Balance and a Pass-Through Rate or that are
Stripped Principal Certificates (collectively,
"Grantor Trust Fractional Interest Certificates")
or (ii) Stripped Interest Certificates.
Owners of Grantor Trust Fractional Interest
Certificates will be treated for federal income
tax purposes as owners of an undivided pro rata
interest in the assets of the related Trust Fund,
and generally will be required to report their pro
rata share of the entire gross income (including
amounts incurred as servicing or other fees and
expenses) from the Mortgage Assets and will be
entitled, subject to certain limitations, to
deduct their pro rata shares of any servicing or
other fees and expenses incurred during the year.
Holders of Grantor Trust Fractional Interest
Certificates generally will be treated as owning
an interest in qualifying assets and income under
Sections 856(c)(5)(A), 856(c)(3)(B) and
860G(a)(3)(A) of the Code, but will not be so
treated for purposes of Section 7701(a)(19)(C)(v)
of the Code unless otherwise stated in the related
Prospectus Supplement.
It is unclear whether Stripped Interest Certificates
will be treated as representing an ownership
interest in qualifying assets and income under
Sections 856(c)(5)(A) and 856(c)(3)(B) of the
Code. However, such Certificates will not be
treated as representing an ownership interest in
assets described in Section 7701(a)(19)(C)(v) of
the Code unless otherwise stated in the related
Prospectus Supplement. The taxation of holders of
Stripped Interest Certificates is uncertain in
various respects, including in particular the
method such
12
<PAGE>
holders should use to recover their purchase price
and to report their income with respect to such
Stripped Interest Certificates. See "Material
Federal Income Tax Consequences--Grantor Trust
Funds".
Investors are advised to consult their tax advisors
and to review "Material Federal Income Tax
Consequences" herein and "Certain Federal Income
Tax Consequences" in the related Prospectus
Supplement.
ERISA Considerations.... Fiduciaries of employee benefit plans and certain
other retirement plans and arrangements,
including individual retirement accounts,
annuities, Keogh plans, and collective investment
funds and separate accounts in which such plans,
accounts, annuities or arrangements are invested,
that are subject to the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code, should
carefully review with their legal advisors
whether the purchase or holding of Offered
Certificates could give rise to a transaction
that is prohibited or is not otherwise
permissible either under ERISA or Section 4975 of
the Code. See "ERISA Considerations" herein and
in the related Prospectus Supplement.
Legal Investment........ The Offered Certificates will constitute "mortgage
related securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984 only if
so specified in the related Prospectus
Supplement. Investors whose investment authority
is subject to legal restrictions should consult
their own legal advisors to determine whether and
to what extent the Offered Certificates
constitute legal investments for them. See "Legal
Investment" herein and in the related Prospectus
Supplement.
Rating.................. At their respective dates of issuance, each class
of Offered Certificates will be rated not lower
than investment grade by one or more nationally
recognized statistical rating agencies (each, a
"Rating Agency"). See "Rating" herein and in the
related Prospectus Supplement.
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<PAGE>
RISK FACTORS
In considering an investment in the Offered Certificates of any series,
investors should consider, among other things, the following factors and any
other factors set forth under the heading "Risk Factors" in the related
Prospectus Supplement. In general, to the extent that the factors discussed
below pertain to or are influenced by the characteristics or behavior of
Mortgage Loans included in a particular Trust Fund, they would similarly
pertain to and be influenced by the characteristics or behavior of the mortgage
loans underlying any MBS included in such Trust Fund.
CERTAIN FACTORS ADVERSELY AFFECTING RESALE OF THE OFFERED CERTIFICATES
There can be no assurance that a secondary market for the Offered
Certificates of any series will develop or, if it does develop, that it will
provide holders with liquidity of investment or will continue for as long as
such Certificates remain outstanding. The Prospectus Supplement for any series
of Offered Certificates may indicate that an underwriter specified therein
intends to make a secondary market in such Offered Certificates; however, no
underwriter will be obligated to do so. Any such secondary market may provide
less liquidity to investors than any comparable market for securities that
evidence interests in single-family mortgage loans.
The primary source of ongoing information regarding the Offered
Certificates of any series, including information regarding the status of the
related Mortgage Assets and any Credit Support for such Certificates, will be
the periodic reports to Certificateholders to be delivered pursuant to the
related Pooling Agreement as described herein under the heading "Description of
the Certificates--Reports to Certificateholders". There can be no assurance
that any additional ongoing information regarding the Offered Certificates of
any series will be available through any other source. The limited nature of
such information in respect of a series of Offered Certificates may adversely
affect the liquidity thereof, even if a secondary market for such Certificates
does develop.
Insofar as a secondary market does develop for any series of Offered
Certificates or class thereof, the market value of such Certificates will be
affected by several factors, including the perceived liquidity and riskiness
thereof, the anticipated cash flow thereon (which may vary widely depending
upon the prepayment and default assumptions applied in respect of the
underlying Mortgage Loans) and prevailing interest rates. The price payable at
any given time in respect of certain classes of Offered Certificates (in
particular, a class with a relatively long average life, a Companion Class or a
class of Stripped Interest Certificates or Stripped Principal Certificates) may
be extremely sensitive to small fluctuations in prevailing interest rates; and
the relative change in price for an Offered Certificate in response to an
upward or downward movement in prevailing interest rates may not necessarily
equal the relative change in price for such Offered Certificate in response to
an equal but opposite movement in such rates. Accordingly, the sale of Offered
Certificates by a holder in any secondary market that may develop may be at a
discount from the price paid by such holder. The Sponsor is not aware of any
source through which price information about the Offered Certificates will be
generally available on an ongoing basis.
Except to the extent described herein and in the related Prospectus
Supplement, Certificateholders will have no redemption rights, and the Offered
Certificates of each series are subject to early retirement only under certain
specified circumstances described herein and in the related Prospectus
Supplement. See "Description of the Certificates--Termination".
LIMITED ASSETS FOR PAYMENT OF CERTIFICATES
Unless otherwise specified in the related Prospectus Supplement, neither
the Offered Certificates of any series nor the Mortgage Assets in the related
Trust Fund will be guaranteed or insured by the Sponsor or any of its
affiliates, by any governmental agency or instrumentality or by any other
person; and no Offered Certificate of any series will represent a claim against
or security interest in the Trust Funds for any other series. Accordingly, if
the related Trust Fund has insufficient assets to make payments on a series of
Offered Certificates, no other assets will be available for payment of the
deficiency. Additionally, certain amounts on deposit from time to time in
certain funds or accounts constituting part of a Trust Fund, including the
Certificate Account and any accounts maintained as Credit Support, may be
withdrawn under certain conditions, as described in the related Prospectus
Supplement, for purposes other than the payment of principal of or interest on
the related series of Certificates. If so provided in the Prospectus Supplement
for a series of Certificates consisting of one or more classes of Subordinate
Certificates, on any Distribution Date in respect of which losses or shortfalls
in collections on the Mortgage Assets have been incurred, the amount of such
losses or shortfalls will be borne first by one or more classes of the
Subordinate Certificates, and, thereafter, by the remaining classes of
Certificates in the priority and manner and subject to the limitations
specified in such Prospectus Supplement.
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PREPAYMENTS; AVERAGE LIFE OF CERTIFICATES; YIELDS
As a result of, among other things, prepayments on the Mortgage Loans in
any Trust Fund, the amount and timing of distributions of principal and/or
interest on the Offered Certificates of the related series may be highly
unpredictable. Prepayments on the Mortgage Loans in any Trust Fund will result
in a faster rate of principal payments on one or more classes of the related
series of Certificates than if payments on such Mortgage Loans were made as
scheduled. Thus, the prepayment experience on the Mortgage Loans may affect the
average life of each class of such Certificates, including a class of Offered
Certificates. The rate of principal payments on pools of mortgage loans varies
among pools and from time to time is influenced by a variety of economic,
demographic, geographic, social, tax and legal factors, as well as acts of God.
For example, if prevailing interest rates fall significantly below the Mortgage
Rates borne by the Mortgage Loans included in a Trust Fund, principal
prepayments thereon are likely to be higher than if prevailing interest rates
remain at or above the rates borne by those Mortgage Loans. Conversely, if
prevailing interest rates rise significantly above the Mortgage Rates borne by
the Mortgage Loans included in a Trust Fund, principal prepayments thereon are
likely to be lower than if prevailing interest rates remain at or below the
rates borne by those Mortgage Loans. The foregoing is subject, however, to,
among other things, the particular terms of the Mortgage Loans (e.g.,
provisions which prohibit voluntary prepayments during specified periods or
impose penalties in connection therewith) and the ability of borrowers to get
new financing. There can be no assurance as to the actual rate of prepayment on
the Mortgage Loans in any Trust Fund or that such rate of prepayment will
conform to any model described herein or in any Prospectus Supplement. As a
result, depending on the anticipated rate of prepayment for the Mortgage Loans
in any Trust Fund, the retirement of any class of Certificates of the related
series could occur significantly earlier or later than expected.
The extent to which prepayments on the Mortgage Loans in any Trust Fund
ultimately affect the average life of any class of Certificates of the related
series will depend on the terms of such Certificates. A class of Certificates,
including a class of Offered Certificates, may provide that on any Distribution
Date the holders of such Certificates are entitled to a pro rata share of the
prepayments on the Mortgage Loans in the related Trust Fund that are
distributable on such date, to a disproportionately large share (which, in some
cases, may be all) of such prepayments, or to a disproportionately small share
(which, in some cases, may be none) of such prepayments. A class of
Certificates that entitles the holders thereof to a disproportionately large
share of the prepayments on the Mortgage Loans in the related Trust Fund
enhances the risk of early retirement of such class ("call risk") if the rate
of prepayment is relatively fast; while a class of Certificates that entitles
the holders thereof to a disproportionately small share of the prepayments on
the Mortgage Loans in the related Trust Fund enhances the risk of an extended
average life of such class ("extension risk") if the rate of prepayment is
relatively slow. As and to the extent described in the related Prospectus
Supplement, the respective entitlements of the various classes of
Certificateholders of any series to receive payments (and, in particular,
prepayments) of principal of the Mortgage Loans in the related Trust Fund may
vary based on the occurrence of certain events (e.g., the retirement of one or
more classes of Certificates of such series) or subject to certain
contingencies (e.g., prepayment and default rates with respect to such Mortgage
Loans).
A series of Certificates may include one or more Controlled Amortization
Classes that will entitle the holders thereof to receive principal
distributions according to a specified principal payment schedule. Although
prepayment risk cannot be eliminated entirely for any class of Certificates, a
Controlled Amortization Class will generally provide a relatively stable cash
flow so long as the actual rate of prepayment on the Mortgage Loans in the
related Trust Fund remains relatively constant at the rate, or within the range
of rates, of prepayment used to establish the specific principal payment
schedule for such Certificates. Prepayment risk with respect to a given
Mortgage Asset Pool does not disappear, however, and the stability afforded to
a Controlled Amortization Class comes at the expense of one or more Companion
Classes of the same series, any of which Companion Classes may also be a class
of Offered Certificates. In general, and as more specifically described in the
related Prospectus Supplement, a Companion Class may entitle the holders
thereof to a disproportionately large share of prepayments on the Mortgage
Loans in the related Trust Fund when the rate of prepayment is relatively fast,
and/or may entitle the holders thereof to a disproportionately small share of
prepayments on the Mortgage Loans in the related Trust Fund when the rate of
prepayment is relatively slow. As and to the extent described in the related
Prospectus Supplement, a Companion Class absorbs some (but not all) of the
"call risk" and/or "extension risk" that would otherwise belong to the related
Controlled Amortization Class if all payments of principal of the Mortgage
Loans in the related Trust Fund were allocated on a pro rata basis.
A series of Certificates may include one or more classes of Offered
Certificates offered at a premium or discount. Yields on such classes of
Certificates will be sensitive, and in some cases extremely sensitive, to
prepayments on the Mortgage Loans in the related Trust Fund and, where the
amount of interest payable with respect to a class is
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disproportionately large, as compared to the amount of principal, as with
certain classes of Stripped Interest Certificates, a holder might fail to
recoup its original investment under some prepayment scenarios. The extent to
which the yield to maturity of any class of Offered Certificates may vary from
the anticipated yield will depend upon the degree to which they are purchased
at a discount or premium and the amount and timing of distributions thereon. An
investor should consider, in the case of any Offered Certificate purchased at a
discount, the risk that a slower than anticipated rate of principal payments on
the Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield and, in the case of any Offered Certificate
purchased at a premium, the risk that a faster than anticipated rate of
principal payments could result in an actual yield to such investor that is
lower than the anticipated yield. See "Yield and Maturity Considerations"
herein.
When considering the effects of prepayments on the average life and yield
of an Offered Certificate, an investor should also consider provisions of the
related Pooling Agreement that permit the optional early termination of the
class of Certificates to which such Offered Certificate belongs. If so
specified in the related Prospectus Supplement, a series of Certificates may be
subject to optional early termination through the repurchase of the Mortgage
Assets in the related Trust Fund by the party or parties specified therein,
under the circumstances and in the manner set forth therein. If so provided in
the related Prospectus Supplement, upon the reduction of the Certificate
Balance of a specified class or classes of Certificates by a specified
percentage or amount, a party specified therein may be authorized or required
to solicit bids for the purchase of all of the Mortgage Assets of the related
Trust Fund, or of a sufficient portion of such Mortgage Assets to retire such
class or classes, under the circumstances and in the manner set forth therein.
See "Description of the Certificates--Termination".
LIMITED NATURE OF CREDIT RATINGS
Any rating assigned by a Rating Agency to a class of Offered Certificates
will reflect only its assessment of the likelihood that holders of such Offered
Certificates will receive payments to which such Certificateholders are
entitled under the related Pooling Agreement. Such rating will not constitute
an assessment of the likelihood that principal prepayments on the related
Mortgage Loans will be made, the degree to which the rate of such prepayments
might differ from that originally anticipated or the likelihood of early
optional termination of the related Trust Fund. Furthermore, such rating will
not address the possibility that prepayment of the related Mortgage Loans at a
higher or lower rate than anticipated by an investor may cause such investor to
experience a lower than anticipated yield or that an investor that purchases an
Offered Certificate at a significant premium might fail to recoup its initial
investment under certain prepayment scenarios.
The amount, type and nature of Credit Support, if any, provided with
respect to a series of Certificates will be determined on the basis of criteria
established by each Rating Agency rating classes of the Certificates of such
series. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, there can be no
assurance that the historical data supporting any such actuarial analysis will
accurately reflect future experience, or that the data derived from a large
pool of mortgage loans will accurately predict the delinquency, foreclosure or
loss experience of any particular pool of Mortgage Loans. In other cases, such
criteria may be based upon determinations of the values of the Mortgaged
Properties that provide security for the Mortgage Loans. However, no assurance
can be given that those values will not decline in the future. If the
commercial or multifamily residential real estate markets should experience an
overall decline in property values such that the outstanding principal balances
of the Mortgage Loans in a particular Trust Fund and any secondary financing on
the related Mortgaged Properties become equal to or greater than the value of
the Mortgaged Properties, the rates of delinquencies, foreclosures and losses
could be higher than those now generally experienced by institutional lenders.
In addition, adverse economic conditions (which may or may not affect real
property values) may affect the timely payment by mortgagors of scheduled
payments of principal and interest on the Mortgage Loans and, accordingly, the
rates of delinquencies, foreclosures and losses with respect to any Trust Fund.
To the extent that such losses are not covered by Credit Support, such losses
may be borne, at least in part, by the holders of one or more classes of
Offered Certificates of the related series. See "Description of Credit Support"
and "Rating".
CERTAIN RISKS ASSOCIATED WITH MORTGAGE LOANS SECURED BY COMMERCIAL AND
MULTIFAMILY PROPERTIES
Mortgage Loans made on the security of multifamily or commercial property
may entail risks of delinquency and foreclosure, and risks of loss in the event
thereof, that are greater than similar risks associated with loans made on the
security of single-family property. See "Description of the Trust
Funds--Mortgage Loans". The ability of a borrower to
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repay a loan secured by an income-producing property typically is dependent
primarily upon the successful operation of such property rather than upon the
existence of independent income or assets of the borrower; thus, the value of
an income-producing property is directly related to the net operating income
derived from such property. If the net operating income of the property is
reduced (for example, if rental or occupancy rates decline or real estate tax
rates or other operating expenses increase), the borrower's ability to repay
the loan may be impaired. A number of the Mortgage Loans may be secured by
liens on owner-occupied Mortgaged Properties or on Mortgaged Properties leased
to a single tenant. Accordingly, a decline in the financial condition of the
borrower or single tenant, as applicable, may have a disproportionately greater
effect on the net operating income from such Mortgaged Properties than would be
the case with respect to Mortgaged Properties with multiple tenants.
Furthermore, the value of any Mortgaged Property may be adversely affected by
risks generally incident to interests in real property, including various
events which the Sponsor, a Master Servicer and a Special Servicer may be
unable to predict or control such as changes in general or local economic
conditions and/or specific industry segments; declines in real estate values;
declines in rental or occupancy rates; increases in interest rates, real estate
tax rates and other operating expenses; changes in governmental rules,
regulations and fiscal policies, including environmental legislation; acts of
God; environmental hazards; and social unrest and civil disturbances.
In addition, additional risk may be presented by the type and use of a
particular Mortgaged Property. For instance, Mortgaged Properties that operate
as hospitals and nursing homes may present special risks to lenders due to the
significant governmental regulation of the ownership, operation, maintenance
and financing of health care institutions. Hotel and motel properties are often
operated pursuant to franchise, management or operating agreements which may be
terminable by the franchisor or operator. Moreover, the transferability of a
hotel's operating, liquor and other licenses upon a transfer of the hotel,
whether through purchase or foreclosure, is subject to local law requirements.
It is anticipated that some or all of the Mortgage Loans included in any
Trust Fund will be nonrecourse loans or loans for which recourse may be
restricted or unenforceable. As to those Mortgage Loans, recourse in the event
of borrower default will be limited to the specific real property and other
assets, if any, that were pledged to secure the Mortgage Loan. However, even
with respect to those Mortgage Loans that provide for recourse against the
borrower and its assets generally, there can be no assurance that enforcement
of such recourse provisions will be practicable, or that the assets of the
borrower will be sufficient to permit a recovery in respect of a defaulted
Mortgage Loan in excess of the liquidation value of the related Mortgaged
Property.
Further, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be greater
than for pools of single-family loans because Mortgage Loans in a Trust Fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
BALLOON PAYMENTS; BORROWER DEFAULT
Certain of the Mortgage Loans included in a Trust Fund may not be fully
amortizing, and in some cases may provide for no amortization over their terms
to maturity and, thus, will require substantial principal payments (that is,
balloon payments) at their stated maturity. Mortgage Loans of this type involve
a greater degree of risk than self-amortizing loans because the ability of a
borrower to make a balloon payment typically will depend upon its ability
either to refinance the loan or to sell the related Mortgaged Property. The
ability of a borrower to accomplish either of these goals will be affected by a
number of factors, including the value of the related Mortgaged Property, the
level of available mortgage rates at the time of sale or refinancing, the
borrower's equity in the related Mortgaged Property, the financial condition
and operating history of the borrower and the related Mortgaged Property, tax
laws, rent control laws (with respect to certain residential properties),
Medicaid and Medicare reimbursement rates (with respect to hospitals and
nursing homes), prevailing general economic conditions and the availability of
credit for loans secured by commercial or multifamily, as the case may be, real
properties generally. Neither the Sponsor nor any of its affiliates will be
required to refinance any Mortgage Loan.
If and to the extent described herein and in the related Prospectus
Supplement, in order to maximize recoveries on defaulted Mortgage Loans, the
Master Servicer and/or Special Servicer for a Trust Fund will be permitted
(within prescribed limits) to extend and modify the Mortgage Loans in such
Trust Fund that are in default or as to which a payment default is either
reasonably foreseeable or imminent. In addition, if any such Mortgage Loan
thereafter comes current in accordance with its modified terms, the Special
Servicer may receive a workout fee based on receipts from or proceeds of such
Mortgage Loans. While a Master Servicer and/or Special Servicer generally will
be required to determine
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that any such extension or modification is reasonably likely to produce a
greater recovery on a present value basis than liquidation, there can be no
assurance that any such extension or modification (particularly taking account
of the payment of a workout fee to the Special Servicer) will in fact increase
the present value of receipts from or proceeds of the affected Mortgage Loans.
CREDIT SUPPORT LIMITATIONS
The Prospectus Supplement for a series of Offered Certificates will
describe any Credit Support provided with respect thereto. Use of Credit
Support will be subject to the conditions and limitations described herein and
in the related Prospectus Supplement. Moreover, such Credit Support may not
cover all potential losses or risks; for example, Credit Support may or may not
cover fraud or negligence by a mortgage loan originator or other parties.
A series of Certificates may include one or more classes of Subordinate
Certificates (which may include Offered Certificates) if so provided in the
related Prospectus Supplement. Although subordination is intended to reduce the
risk to holders of Senior Certificates of delinquent distributions or ultimate
losses, the amount of subordination will be limited and may decline under
certain circumstances. In addition, if principal payments on one or more
classes of Certificates of a series are made in a specified order of priority,
any limits with respect to the aggregate amount of claims under any related
Credit Support may be exhausted before the principal of the later paid classes
of Certificates of such series has been repaid in full. As a result, the impact
of losses and shortfalls experienced with respect to the Mortgage Assets may
fall primarily upon those classes of Certificates having a later right of
payment. Moreover, if a form of Credit Support covers more than one series of
Certificates, holders of Certificates of one series will be subject to the risk
that such Credit Support will be exhausted by the claims of the holders of
Certificates of one or more other series.
The amount of any applicable Credit Support supporting one or more classes
of Offered Certificates, including the subordination of one or more classes of
Certificates, will be determined on the basis of criteria established by each
Rating Agency rating such classes of Certificates that take into account an
assumed level of defaults, delinquencies and losses on the underlying Mortgage
Assets. There can, however, be no assurance that the loss experience on the
related Mortgage Assets will not exceed such assumed levels. See "--Limited
Nature of Credit Ratings", "Description of the Certificates" and "Description
of Credit Support".
ENFORCEABILITY
Mortgages may contain a due-on-sale clause, which permits the lender to
accelerate the maturity of the Mortgage Loan if the mortgagor sells, transfers
or conveys the related Mortgaged Property or its interest in the Mortgaged
Property. Mortgages may also include a debt-acceleration clause, which permits
the lender to accelerate the debt upon a monetary or non-monetary default of
the mortgagor. Such clauses are generally enforceable subject to certain
exceptions. The courts of all states will generally enforce clauses providing
for acceleration in the event of a material payment default. The equity courts
of any state, however, may refuse the foreclosure of a mortgage or deed of
trust when an acceleration of the indebtedness would be inequitable or unjust
or the circumstances would render the acceleration unconscionable.
Notes and mortgages may contain provisions that obligate the Mortgagor to
pay a late charge or additional interest if payments are not timely made, and
in some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the Mortgagor's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a Mortgagor
for delinquent payments. Certain states also limit the amounts that a lender
may collect from a Mortgagor as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
LEASES AND RENTS AS SECURITY FOR A MORTGAGE LOAN
The Mortgage Loans included in any Trust Fund typically will be secured by
an assignment of leases and rents pursuant to which the borrower assigns to the
lender its right, title and interest as landlord under the leases of the
related Mortgaged Property, and the income derived therefrom, as further
security for the related Mortgage Loan, while retaining a license to collect
rents for so long as there is no default. If the borrower defaults, the license
terminates and the lender is entitled to collect rents. Some state laws may
require that the lender take possession of the Mortgaged Property and obtain a
judicial appointment of a receiver before becoming entitled to collect the
rents. In addition, if bankruptcy or similar proceedings are commenced by or in
respect of the borrower, the lender's ability to collect the rents may be
adversely affected. See "Certain Legal Aspects of Mortgage Loans--Leases and
Rents".
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ENVIRONMENTAL RISKS
Under the laws of certain states, contamination of real property may give
rise to a lien on the property to assure the costs of cleanup. In several
states, such a lien has priority over an existing mortgage lien on such
property. In addition, under the laws of some states and under the federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), a lender may be liable, as an "owner" or "operator", for costs of
addressing releases or threatened releases of hazardous substances on a
property, if agents or employees of the lender have become sufficiently
involved in the operations of the borrower, regardless of whether or not the
environmental damage or threat was caused by the borrower or a prior owner. A
lender also risks such liability on foreclosure of the mortgage. Unless
otherwise specified in the related Prospectus Supplement, if a Trust Fund
includes Mortgage Loans, then the related Pooling Agreement will contain
provisions generally to the effect that neither the Master Servicer nor the
Special Servicer may, on behalf of the Trust Fund, acquire title to a Mortgaged
Property or assume control of its operation unless the Special Servicer, based
upon a report prepared by a person who regularly conducts environmental site
assessments, has made the determination that it is appropriate to do so, as
described under "Description of the Pooling Agreements--Realization Upon
Defaulted Mortgage Loans". See "Certain Legal Aspects of Mortgage
Loans--Environmental Risks".
SPECIAL HAZARD LOSSES
Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer and Special Servicer for any Trust Fund will each be required
to cause the borrower on each Mortgage Loan serviced by it to maintain such
insurance coverage in respect of the related Mortgaged Property as is required
under the related Mortgage, including hazard insurance; provided that, as and
to the extent described herein and in the related Prospectus Supplement, each
of the Master Servicer and the Special Servicer may satisfy its obligation to
cause hazard insurance to be maintained with respect to any Mortgaged Property
through acquisition of a blanket policy. In general, the standard form of fire
and extended coverage policy covers physical damage to or destruction of the
improvements of the property by fire, lightning, explosion, smoke, windstorm
and hail, and riot, strike and civil commotion, subject to the conditions and
exclusions specified in each policy. Although the policies covering the
Mortgaged Properties will be underwritten by different insurers under different
state laws in accordance with different applicable state forms, and therefore
will not contain identical terms and conditions, most such policies typically
do not cover any physical damage resulting from war, revolution, governmental
actions, floods and other water-related causes, earth movement (including
earthquakes, landslides and mudflows), wet or dry rot, vermin, domestic animals
and other kinds of risks not specified in the preceding sentence. Unless the
related Mortgage specifically requires the mortgagor to insure against physical
damage arising from such causes, then, to the extent any consequent losses are
not covered by Credit Support, such losses may be borne, at least in part, by
the holders of one or more classes of Offered Certificates of the related
series. See "Description of the Pooling Agreements--Hazard Insurance Policies".
ERISA CONSIDERATIONS
Generally, ERISA applies to investments made by employee benefit plans and
transactions involving the assets of such plans. Due to the complexity of
regulations that govern such plans, prospective investors that are subject to
ERISA are urged to consult their own counsel regarding consequences under ERISA
of acquisition, ownership and disposition of the Offered Certificates of any
series. See "ERISA Considerations".
CERTAIN FEDERAL TAX CONSIDERATIONS REGARDING REMIC RESIDUAL CERTIFICATES
Holders of REMIC Residual Certificates will be required to report on their
federal income tax returns as ordinary income their pro rata share of the
taxable income of the REMIC, regardless of the amount or timing of their
receipt of cash payments, as described under "Material Federal Income Tax
Consequences--REMICs". REMIC Residual Certificates may have "phantom income"
associated with them, which is to say that taxable income may be reportable
with respect to a REMIC Residual Certificate early in the term of the related
REMIC with a corresponding amount of tax losses reportable in later years of
that REMIC's term. Under these circumstances, the present value of the tax
detriments with respect to the related REMIC Residual Certificates exceeds the
present value of the related tax benefits accruing later. Therefore, the
after-tax yield on a REMIC Residual Certificate may be significantly less than
that of a corporate bond or stripped instrument having similar cash flow
characteristics, and certain REMIC Residual Certificates may have a negative
"value". The requirement that holders of REMIC Residual Certificates report
their pro rata share of the taxable income and net loss of the REMIC will
continue until the Certificate Balances of all classes of Certificates of the
related series have been reduced to zero. All or a portion of such a
Certificateholder's share of the REMIC taxable income may
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be treated as "excess inclusion" income to such holder, which (i) generally
will not be subject to offset by losses from other activities, (ii) for a
tax-exempt holder, will be treated as unrelated business taxable income and
(iii) for a foreign holder, will not qualify for exemption from withholding
tax. Moreover, because an amount of gross income equal to the fees and
non-interest expenses of each REMIC will be allocated to the REMIC Residual
Certificates, but such expenses will be deductible by holders of REMIC Residual
Certificates who are individuals only as miscellaneous itemized deductions,
REMIC Residual Certificates will generally not be appropriate investments for
individuals, estates or trusts or for pass-through entities (including
partnerships and S corporations) beneficially owned by, or having as partners
or shareholders, one or more individuals, estates or trusts. In addition, REMIC
Residual Certificates are subject to certain restrictions on transfer,
including, but not limited to, a prohibition to investors that are not United
States Persons (as defined herein).
BOOK-ENTRY REGISTRATION
If so provided in the related Prospectus Supplement, one or more classes
of the Offered Certificates of any series will be issued as Book-Entry
Certificates. Each class of Book-Entry Certificates will be initially
represented by one or more Certificates registered in the name of a nominee for
DTC. As a result, unless and until corresponding Definitive Certificates are
issued, the Certificate Owners with respect to any class of Book-Entry
Certificates will be able to exercise the rights of Certificateholders only
indirectly through DTC and its participating organizations ("Participants"). In
addition, the access of Certificate Owners to information regarding the
Book-Entry Certificates in which they hold interests may be limited. Conveyance
of notices and other communications by DTC to its Participants, and directly
and indirectly through such Participants to Certificate Owners, will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Furthermore, as described
herein, Certificate Owners may suffer delays in the receipt of payments on the
Book-Entry Certificates, and the ability of any Certificate Owner to pledge or
otherwise take actions with respect to its interest in the Book-Entry
Certificates may be limited due to the lack of a physical certificate
evidencing such interest. See "Description of the Certificates--Book-Entry
Registration and Definitive Certificates".
POTENTIAL CONFLICTS OF INTEREST
If so specified in the related Prospectus Supplement, the Master Servicer
may also perform the duties of Special Servicer, and the Master Servicer, the
Special Servicer or the Trustee may also perform the duties of REMIC
Administrator. If so specified in the related Prospectus Supplement, an
affiliate of the Sponsor, or the Mortgage Asset Seller or an affiliate thereof,
may perform the functions of Master Servicer, Special Servicer and/or REMIC
Administrator. In addition, any party to a Pooling Agreement or any affiliate
thereof may own Certificates. Investors in the Offered Certificates should
consider that any resulting conflicts of interest could affect the performance
of duties under the related Pooling Agreement. For example, if the same party
serves as both Master Servicer and Special Servicer for any Trust Fund and, as
Master Servicer, such party is obligated to make advances in respect of
delinquent payments on the Mortgage Loans in such Trust Fund, or if the Master
Servicer or Special Servicer for any Trust Fund owns a significant portion of
any class of Offered Certificates of the related series, then, notwithstanding
the applicable servicing standard imposed by the related Prospectus Supplement,
either such fact could influence servicing decisions in respect of the Mortgage
Loans in such Trust Fund. Also, as specified in the related Prospectus
Supplement, the holders of interests in a specified class or classes of
Subordinate Certificates may have the ability to replace the Special Servicer
or direct the Special Servicer's actions in connection with liquidating or
modifying defaulted Mortgage Loans. Accordingly, investors in those Classes of
Offered Certificates more senior thereto should consider that, although the
Special Servicer will be obligated to act in accordance with the terms of the
Pooling Agreement and will be governed by the servicing standard described
therein, it may have interests when dealing with defaulted Mortgage Loans that
are in conflict with those of holders of the Offered Certificates.
DELINQUENT AND NON-PERFORMING MORTGAGE LOANS
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular series of Certificates may include Mortgage Loans that are past due
or are non-performing. Unless otherwise described in the related Prospectus
Supplement, the servicing of such Mortgage Loans as to which a specified number
of payments are delinquent will be performed by the Special Servicer; however,
the same entity may act as both Master Servicer and Special Servicer. Credit
Support provided with respect to a particular series of Certificates may not
cover all losses related to such delinquent or
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non-performing Mortgage Loans, and investors should consider the risk that the
inclusion of such Mortgage Loans in the Trust Fund may adversely affect the
rate of defaults and prepayments on the Mortgage Assets in such Trust Fund and
the yield on the Offered Certificates of such series. See "Description of the
Trust Funds--Mortgage Loans--General".
DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each Trust Fund will consist of (i) one or more
various types of multifamily or commercial mortgage loans or participations
therein (the "Mortgage Loans"), (ii) mortgage pass-through certificates or
other mortgage-backed securities ("MBS") that evidence interests in, or that
are secured by pledges of, one or more of various types of multifamily or
commercial mortgage loans or (iii) a combination of Mortgage Loans and MBS
(collectively, "Mortgage Assets"). Each Trust Fund will be established by
Mortgage Capital Funding, Inc. (the "Sponsor"). Each Mortgage Asset will be
selected by the Sponsor for inclusion in a Trust Fund from among those
purchased, either directly or indirectly, from a prior holder thereof (a
"Mortgage Asset Seller"), which prior holder may or may not be the originator
of such Mortgage Loan or the issuer of such MBS and may be an affiliate of the
Sponsor. The Mortgage Assets will not be guaranteed or insured by the Sponsor
or any of its affiliates or, unless otherwise provided in the related
Prospectus Supplement, by any governmental agency or instrumentality or by any
other person. The discussion below under the heading "--Mortgage Loans", unless
otherwise noted, applies equally to mortgage loans underlying any MBS included
in a particular Trust Fund.
MORTGAGE LOANS
General. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create liens on fee or leasehold estates in
properties (the "Mortgaged Properties") consisting of, without limitation, (i)
residential properties consisting of five or more rental or cooperatively-owned
dwelling units in high-rise, mid-rise or garden apartment buildings or other
residential structures ("Multifamily Properties") or (ii) office buildings,
retail stores, hotels or motels, nursing homes, hospitals or other health
care-related facilities, mobile home parks, warehouse facilities,
mini-warehouse facilities, self-storage facilities, industrial facilities,
mixed use or various other types of income-producing properties or unimproved
land ("Commercial Properties"). The Multifamily Properties may include mixed
commercial and residential structures and may include apartment buildings owned
by private cooperative housing corporations ("Cooperatives"). Unless otherwise
specified in the related Prospectus Supplement, each Mortgage will create a
first priority mortgage lien on a borrower's fee estate in a Mortgaged
Property. If a Mortgage creates a lien on a borrower's leasehold estate in a
property, then, unless otherwise specified in the related Prospectus
Supplement, the term of any such leasehold will exceed the term of the Mortgage
Note by at least ten years. Unless otherwise specified in the related
Prospectus Supplement, each Mortgage Loan will have been originated by a person
(the "Originator") other than the Sponsor; however, the Originator may be or
may have been an affiliate of the Sponsor.
If so specified in the related Prospectus Supplement, Mortgage Assets for
a series of Certificates may include Mortgage Loans made on the security of
real estate projects under construction. In that case, the related Prospectus
Supplement will describe the procedures and timing for making disbursements
from construction reserve funds as portions of the related real estate project
are completed. In addition, the Mortgage Assets for a particular series of
Certificates may include Mortgage Loans that are delinquent or non-performing
as of the date such Certificates are issued. In that case, the related
Prospectus Supplement will set forth, as to each such Mortgage Loan, available
information as to the period of such delinquency or non-performance, any
forbearance arrangement then in effect, the condition of the related Mortgaged
Property and the ability of the Mortgaged Property to generate income to
service the mortgage debt.
Default and Loss Considerations with Respect to the Mortgage
Loans. Mortgage loans secured by liens on income-producing properties are
substantially different from loans made on the security of owner-occupied
single-family homes. The repayment of a loan secured by a lien on an
income-producing property is typically dependent upon the successful operation
of such property (that is, its ability to generate income.) Moreover, some or
all of the Mortgage Loans included in a particular Trust Fund may be
non-recourse loans, which means that, absent special facts, recourse in the
case of default will be limited to the Mortgaged Property and such other
assets, if any, that were pledged to secure repayment of the Mortgage Loan.
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Lenders typically look to the Debt Service Coverage Ratio of a loan
secured by income-producing property as an important measure of the risk of
default on such a loan. Unless otherwise defined in the related Prospectus
Supplement, the "Debt Service Coverage Ratio" of a Mortgage Loan at any given
time is the ratio of (i) the Net Operating Income derived from the related
Mortgaged Property for a twelve-month period to (ii) the annualized scheduled
payments on the Mortgage Loan and any other loans senior thereto that are
secured by the related Mortgaged Property. Unless otherwise defined in the
related Prospectus Supplement, "Net Operating Income" means, for any given
period, the total operating revenues derived from a Mortgaged Property during
such period, minus the total operating expenses incurred in respect of such
Mortgaged Property during such period other than (i) non-cash items such as
depreciation and amortization, (ii) capital expenditures and (iii) debt service
on the related Mortgage Loan or on any other loans that are secured by such
Mortgaged Property. The Net Operating Income of a Mortgaged Property will
fluctuate over time and may or may not be sufficient to cover debt service on
the related Mortgage Loan at any given time. As the primary source of the
operating revenues of a non-owner occupied, income-producing property, rental
income (and maintenance payments from tenant-stockholders of a Cooperative) may
be affected by the condition of the applicable real estate market and/or area
economy. In addition, properties typically leased, occupied or used on a
short-term basis (i.e., six months or less) such as certain health care-related
facilities, hotels and motels, and mini-warehouse and self-storage facilities,
tend to be affected more rapidly by changes in market or business conditions
than do properties typically leased for longer periods, such as warehouses,
retail stores, office buildings and industrial facilities. Commercial
Properties may be owner-occupied or leased to a single tenant. Thus, the Net
Operating Income of such a Mortgaged Property may depend substantially on the
financial condition of the borrower or the single tenant, and Mortgage Loans
secured by liens on such properties may pose greater risks than loans secured
by liens on Multifamily Properties or on multi-tenant Commercial Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the risk of default on a Mortgage Loan. As may
be further described in the related Prospectus Supplement, in some cases leases
of Mortgaged Properties may provide that the lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses ("Net
Leases"). However, the existence of such "net of expense" provisions will
result in stable Net Operating Income to the borrower/landlord only to the
extent that the lessee is able to absorb operating expense increases while
continuing to make rent payments.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a
measure of risk of loss if a property must be liquidated following a default.
Unless otherwise defined in the related Prospectus Supplement, the
"Loan-to-Value Ratio" of a Mortgage Loan at any given time is the ratio
(expressed as a percentage) of (i) the then outstanding principal balance of
the Mortgage Loan and any other loans pari passu therewith or senior thereto
that are secured by the related Mortgaged Property to (ii) the Value of the
related Mortgaged Property. The "Value" of a Mortgaged Property is generally
its fair market value determined in an appraisal obtained by the Originator at
the origination of such loan. The lower the Loan-to-Value Ratio, the greater
the percentage of the borrower's equity in a Mortgaged Property, and thus the
greater the cushion provided to the lender against loss on liquidation
following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure
of the risk of liquidation loss in a pool of Mortgage Loans. For example, the
value of a Mortgaged Property as of the date of initial issuance of the related
series of Certificates may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
changes in economic conditions and the real estate market. Moreover, even when
current, an appraisal is not necessarily a reliable estimate of value.
Appraised values of income-producing properties are generally based on the
market comparison method (recent resale value of comparable properties at the
date of the appraisal), the cost replacement method (the cost of replacing the
property at such date), the income capitalization method (a projection of value
based upon the property's projected net cash flow), or upon a selection from or
interpolation of the values derived from such methods. Each of these appraisal
methods can present analytical difficulties. It is often difficult to find
truly comparable properties that have recently been sold; the replacement cost
of a property may have little to do with its current market value; and income
capitalization is inherently based on inexact projections of income and expense
and the selection of an appropriate capitalization rate. Where more than one of
these appraisal methods are used and provide significantly different results,
an accurate determination of value and, correspondingly, a reliable analysis of
default and loss risks, is even more difficult.
While the Sponsor believes that the foregoing considerations are important
factors that generally distinguish loans secured by liens on income-producing
real estate from single-family mortgage loans there is no assurance that all of
such
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factors will in fact have been prudently considered by the Originators of the
Mortgage Loans, or that, for a particular Mortgage Loan, they are complete or
relevant. See "Risk Factors--Certain Risks Associated with Mortgage Loans
Secured by Commercial and Multifamily Properties" and "--Balloon Payments;
Borrower Default".
Payment Provisions of the Mortgage Loans. Unless otherwise specified in
the related Prospectus Supplement, all of the Mortgage Loans will have had
original terms to maturity of not more than 40 years, and will provide for
scheduled payments of principal, interest or both, to be made on specified
dates ("Due Dates") that occur monthly, quarterly, semi-annually or annually. A
Mortgage Loan (i) may provide for accrual of interest thereon at an interest
rate (a "Mortgage Rate") that is fixed over its term or that adjusts from time
to time, or that may be converted at the borrower's election from an adjustable
to a fixed Mortgage Rate, or from a fixed to an adjustable Mortgage Rate, and
in some cases back again, (ii) may provide for level payments to maturity or
for payments that adjust from time to time to accommodate changes in the
Mortgage Rate or to reflect the occurrence of certain events, and may permit
negative amortization, (iii) may be fully amortizing over its term to maturity
or may require a balloon payment on its stated maturity date, (iv) may provide
for no amortization prior to its stated maturity date, and (v) may contain a
prohibition on prepayment (the period of such prohibition, a "Lock-out Period"
and its date of expiration, a "Lock-out Date") and/or require payment of a
premium or a yield maintenance penalty (a "Prepayment Premium") in connection
with a prepayment, in each case as described in the related Prospectus
Supplement. A Mortgage Loan may also contain a provision that entitles the
lender to a share of profits realized from the operation or disposition of the
Mortgaged Property (an "Equity Participation"), as described in the related
Prospectus Supplement. If holders of any class or classes of Offered
Certificates of a series will be entitled to all or a portion of an Equity
Participation in addition to normal payments of interest on and/or principal of
such Offered Certificates, the related Prospectus Supplement will describe the
Equity Participation and the method or methods by which distributions in
respect thereof will be made to such holders.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans
which will generally be current as of a date specified in the related
Prospectus Supplement and which, to the extent then applicable and specifically
known to the Sponsor, will include the following: (i) the aggregate outstanding
principal balance and the largest, smallest and average outstanding principal
balance of the Mortgage Loans, (ii) the type or types of property that provide
security for repayment of the Mortgage Loans, (iii) the origination date and
maturity date of the Mortgage Loans, (iv) the original and remaining terms to
maturity of the Mortgage Loans, or the respective ranges thereof, and the
weighted average original and remaining terms to maturity of the Mortgage
Loans, (v) the current Loan-to-Value Ratios of the Mortgage Loans, or the range
thereof, and the weighted average current Loan-to-Value Ratio of the Mortgage
Loans, in each case based on an appraisal done at origination or, in some
instances, a more recent appraisal, (vi) the Mortgage Rates borne by the
Mortgage Loans, or the range thereof, and the weighted average Mortgage Rate
borne by the Mortgage Loans, (vii) with respect to Mortgage Loans with
adjustable Mortgage Rates ("ARM Loans"), the index or indices upon which such
adjustments are based, the adjustment dates, the range of gross margins and the
weighted average gross margin, and any limits on Mortgage Rate adjustments at
the time of any adjustment and over the life of the ARM Loan, (viii)
information regarding the payment characteristics of the Mortgage Loans,
including without limitation balloon payment and other amortization provisions,
Lock-out Periods and Prepayment Premiums, (ix) the Debt Service Coverage Ratios
of the Mortgage Loans (either at origination or as of a more recent date), or
the range thereof, and the weighted average of such Debt Service Coverage
Ratios, and (x) the geographic distribution of the Mortgaged Properties on a
state-by-state basis. In appropriate cases, the related Prospectus Supplement
will, as to certain Mortgage Loans, provide the information described above on
a loan-by-loan basis and will also contain certain information available to the
Sponsor that pertains to the provisions of leases and the nature of tenants of
the Mortgaged Properties. If the Sponsor is unable to tabulate the specific
information described above at the time Offered Certificates of a series are
initially offered, more general information of the nature described above will
be provided in the related Prospectus Supplement, and specific information will
be set forth in a report which will be available to purchasers of those
Certificates at or before the initial issuance thereof and will be filed as
part of a Current Report on Form 8-K with the Commission within fifteen days
following such issuance.
MBS
MBS may include (i) private (that is, not guaranteed or insured by the
United States or any agency or instrumentality thereof) mortgage pass-through
certificates or other mortgage-backed securities or (ii) certificates insured
or guaranteed by FHLMC, FNMA, GNMA or FAMC, provided that each MBS will
evidence an interest in, or will be secured by a pledge of, mortgage loans that
conform to the descriptions of the Mortgage Loans contained herein.
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Any MBS will have been issued pursuant to a pooling and servicing
agreement, an indenture or similar agreement (an "MBS Agreement"). The issuer
of the MBS (the "MBS Issuer") and/or the servicer of the underlying mortgage
loans (the "MBS Servicer") will have entered into the MBS Agreement, generally
with a trustee (the "MBS Trustee") or, in the alternative, with the original
purchaser or purchasers of the MBS.
The MBS may have been issued in one or more classes with characteristics
similar to the classes of Certificates described herein. Distributions in
respect of the MBS will be made by the MBS Servicer or the MBS Trustee on the
dates specified in the related Prospectus Supplement. The MBS Issuer or the MBS
Servicer or another person specified in the related Prospectus Supplement may
have the right or obligation to repurchase or substitute assets underlying the
MBS after a certain date or under other circumstances specified in the related
Prospectus Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount of
such credit support, if any, will reflect the characteristics of the MBS and
the underlying mortgage loans and generally will have been established on the
basis of the requirements of any Rating Agency that may have assigned a rating
to the MBS, or by the initial purchasers of the MBS.
The Prospectus Supplement for a series of Certificates that evidence
interests in MBS will specify, to the extent available, (i) the aggregate
approximate initial and outstanding principal amount and type of the MBS to be
included in the Trust Fund, (ii) the original and remaining term to stated
maturity of the MBS, if applicable, (iii) the pass-through or bond rate of the
MBS or the formula for determining such rates, (iv) the payment characteristics
of the MBS, (v) the MBS Issuer, MBS Servicer and MBS Trustee, as applicable,
(vi) a description of the credit support, if any, (vii) the circumstances under
which the related underlying mortgage loans, or the MBS themselves, may be
purchased prior to their maturity, (viii) the terms on which mortgage loans may
be substituted for those originally underlying the MBS, (ix) the type of
mortgage loans underlying the MBS and, to the extent available to the Sponsor
and appropriate under the circumstances, such other information in respect of
the underlying mortgage loans described under "--Mortgage Loans--Mortgage Loan
Information in Prospectus Supplements" and (x) the characteristics of any cash
flow agreements that relate to the MBS.
CERTIFICATE ACCOUNTS
Each Trust Fund will include one or more accounts (collectively, the
"Certificate Account") established and maintained on behalf of the
Certificateholders into which the person or persons designated in the related
Prospectus Supplement will, to the extent provided in the related Pooling
Agreement and described herein and in the related Prospectus Supplement,
deposit all payments and collections received or advanced with respect to the
Mortgage Assets and other assets in the Trust Fund. A Certificate Account may
be maintained as an interest bearing or a non-interest bearing account, and
funds held therein may be held as cash or invested in certain obligations
acceptable to each Rating Agency rating one or more classes of the related
series of Offered Certificates.
CREDIT SUPPORT
If so provided in the related Prospectus Supplement, partial or full
protection against certain defaults and losses on the Mortgage Assets in the
related Trust Fund may be provided to one or more classes of Certificates in
the related series in the form of subordination of one or more other classes of
Certificates in such series or by one or more other types of credit support,
such as a letter of credit, insurance policy, guarantee or reserve fund, among
others, or a combination thereof (any such coverage with respect to the
Certificates of any series, "Credit Support"). If so specified in the related
Prospectus Supplement, any form of Credit Support may offer protection only
against specific types of losses and shortfalls. The amount and types of Credit
Support, the coverage afforded by it, the identification of the entity
providing it (if applicable) and related information with respect to each type
of Credit Support, if any, will be set forth in the Prospectus Supplement for a
series of Offered Certificates. See "Risk Factors--Credit Support Limitations"
and "Description of Credit Support".
CASH FLOW AGREEMENTS
If so provided in the related Prospectus Supplement, the Trust Fund may
include guaranteed investment contracts pursuant to which moneys held in the
funds and accounts established for the related series will be invested at a
specified rate. The Trust Fund may also include certain other agreements, such
as interest rate exchange agreements, interest rate cap or floor agreements,
currency exchange agreements or similar agreements designed to reduce the
effects of interest
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rate or currency exchange rate fluctuations on the Mortgage Assets on one or
more classes of Certificates. The principal terms of any such guaranteed
investment contract or other agreement (any such agreement, a "Cash Flow
Agreement"), and the identity of the Cash Flow Agreement obligor, will be
described in the Prospectus Supplement for a series of Offered Certificates.
YIELD AND MATURITY CONSIDERATIONS
GENERAL
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate and the amount and
timing of distributions on the Certificate. See "Risk Factors--Prepayments;
Average Life of Certificates; Yields". The following discussion contemplates a
Trust Fund that consists solely of Mortgage Loans. While the characteristics
and behavior of mortgage loans underlying MBS can generally be expected to have
the same effect on the yield to maturity and/or weighted average life of a
Class of Certificates as will the characteristics and behavior of comparable
Mortgage Loans, the effect may differ due to the payment characteristics of the
MBS. If a Trust Fund includes MBS, the related Prospectus Supplement will
discuss the effect that the MBS payment characteristics may have on the yield
to maturity and weighted average lives of the Offered Certificates offered
thereby.
PASS-THROUGH RATE
The Certificates of any class within a series may have a fixed, variable
or adjustable Pass-Through Rate, which may or may not be based upon the
interest rates borne by the Mortgage Loans in the related Trust Fund. The
Prospectus Supplement with respect to any series of Offered Certificates will
specify the Pass-Through Rate for each class of such Certificates or, in the
case of a class of Offered Certificates with a variable or adjustable
Pass-Through Rate, the method of determining the Pass-Through Rate; the effect,
if any, of the prepayment of any Mortgage Loan on the Pass-Through Rate of one
or more classes of Offered Certificates; and whether the distributions of
interest on the Offered Certificates of any class will be dependent, in whole
or in part, on the performance of any obligor under a Cash Flow Agreement.
PAYMENT DELAYS
With respect to any series of Certificates, a period of time will elapse
between the date upon which payments on the Mortgage Loans in the related Trust
Fund are due and the Distribution Date on which such payments are passed
through to Certificateholders. That delay will effectively reduce the yield
that would otherwise be produced if payments on such Mortgage Loans were
distributed to Certificateholders on or near the date they were due.
CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest only for the period from the Due
Date of the preceding scheduled payment up to the date of such prepayment,
instead of up to the Due Date for the next succeeding scheduled payment.
However, interest accrued on any series of Certificates and distributable
thereon on any Distribution Date will generally correspond to interest accrued
on the Mortgage Loans to their respective Due Dates during the related Due
Period. Unless otherwise specified in the related Prospectus Supplement, a "Due
Period" is a specified time period generally corresponding in length to the
time period between Distribution Dates, and all scheduled payments on the
Mortgage Loans in any Trust Fund that are due during a given Due Period will,
to the extent received by a specified date (the "Determination Date") or
otherwise advanced by the related Master Servicer, Special Servicer or other
specified person, be distributed to the related series of Certificateholders on
the next succeeding Distribution Date. Consequently, if a prepayment on any
Mortgage Loan is distributable to Certificateholders on a particular
Distribution Date, but such prepayment is not accompanied by interest thereon
to the Due Date for such Mortgage Loan in the related Due Period, then the
interest charged to the borrower (net of servicing and administrative fees) may
be less (such shortfall, a "Prepayment Interest Shortfall") than the
corresponding amount of interest accrued and otherwise payable on the
Certificates of the related series. If and to the extent that any such
shortfall is allocated to a class of Offered Certificates, the yield thereon
will be adversely affected. The Prospectus Supplement for a series of
Certificates will describe the manner in which any such shortfalls will be
allocated among the classes of such Certificates. If so specified in the
related Prospectus Supplement, the Master Servicer will be required to apply
some or
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all of its servicing compensation for the corresponding period to offset the
amount of any such shortfalls. The related Prospectus Supplement will also
describe any other amounts available to offset such shortfalls. See
"Description of the Pooling Agreements--Servicing Compensation and Payment of
Expenses".
YIELD AND PREPAYMENT CONSIDERATIONS
A Certificate's yield to maturity will be affected by the rate of
principal payments on the Mortgage Loans in the related Trust Fund and the
allocation thereof to reduce the principal balance (or notional amount, if
applicable) of such Certificate. The rate of principal payments on the Mortgage
Loans in any Trust Fund will in turn be affected by the amortization schedules
thereof (which, in the case of ARM Loans, will change periodically to
accommodate adjustments to the Mortgage Rates thereon), the dates on which any
balloon payments are due, and the rate of principal prepayments thereon
(including for this purpose, prepayments resulting from liquidations of
Mortgage Loans due to defaults, casualties or condemnations affecting the
Mortgaged Properties, or purchases of Mortgage Loans out of the related Trust
Fund). Because the rate of principal prepayments on the Mortgage Loans in any
Trust Fund will depend on future events and a variety of factors (as described
more fully below), no assurance can be given as to such rate.
The extent to which the yield to maturity of a class of Offered
Certificates of any series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and
to what degree, payments of principal on the Mortgage Loans in the related
Trust Fund are in turn distributed on such Certificates (or, in the case of a
class of Stripped Interest Certificates, result in the reduction of the
Notional Amount thereof). An investor should consider, in the case of any
Offered Certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Mortgage Loans in the related
Trust Fund could result in an actual yield to such investor that is lower than
the anticipated yield and, in the case of any Offered Certificate purchased at
a premium, the risk that a faster than anticipated rate of principal payments
on such Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield. In addition, if an investor purchases an
Offered Certificate at a discount (or premium), and principal payments are made
or otherwise result in reduction of the principal balance or notional amount of
such investor's Offered Certificates at a rate slower (or faster) than the rate
anticipated by the investor during any particular period, the consequent
adverse effects on such investor's yield would not be fully offset by a
subsequent like increase (or decrease) in the rate of such principal payments
at a later date.
A class of Certificates, including a class of Offered Certificates, may
provide that on any Distribution Date the holders of such Certificates are
entitled to a pro rata share of the prepayments on the Mortgage Loans in the
related Trust Fund that are distributable on such date, to a disproportionately
large share (which, in some cases, may be all) of such prepayments, or to a
disproportionately small share (which, in some cases, may be none) of such
prepayments. As and to the extent described in the related Prospectus
Supplement, the respective entitlements of the various classes of
Certificateholders of any series to receive payments (and, in particular,
prepayments) of principal of the Mortgage Loans in the related Trust Fund may
vary based on the occurrence of certain events (e.g., the retirement of one or
more classes of Certificates of such series) or subject to certain
contingencies (e.g., prepayment and default rates with respect to such Mortgage
Loans).
In general, the Notional Amount of a class of Stripped Interest
Certificates will either (i) be based on the principal balances of some or all
of the Mortgage Assets in the related Trust Fund or (ii) equal the Certificate
Balances of one or more of the other classes of Certificates of the same
series. Accordingly, the yield on such Stripped Interest Certificates will be
inversely related to the rate at which payments and other collections of
principal are received on such Mortgage Assets or distributions are made in
reduction of the Certificate Balances of such classes of Certificates, as the
case may be.
Consistent with the foregoing, if a class of Certificates of any series
consists of Stripped Interest Certificates or Stripped Principal Certificates,
a lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Trust Fund will negatively affect the yield to investors in
Stripped Principal Certificates, and a higher than anticipated rate of
principal prepayments on such Mortgage Loans will negatively affect the yield
to investors in Stripped Interest Certificates. If the Offered Certificates of
a series include any such Certificates, the related Prospectus Supplement will
include a table showing the effect of various assumed levels of prepayment on
yields on such Certificates. Such tables will be intended to illustrate the
sensitivity of yields to various assumed prepayment rates and will not be
intended to predict, or provide information that will enable investors to
predict, yields or prepayment rates.
The Sponsor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience
of a large group of multifamily or commercial mortgage loans. However, the
extent of
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prepayments of principal of the Mortgage Loans in any Trust Fund may be
affected by a number of factors, including, without limitation, the
availability of mortgage credit, the relative economic vitality of the area in
which the Mortgaged Properties are located, the quality of management of the
Mortgaged Properties, the servicing of the Mortgage Loans, possible changes in
tax laws and other opportunities for investment. In addition, the rate of
principal payments on the Mortgage Loans in any Trust Fund may be affected by
the existence of Lock-out Periods and requirements that principal prepayments
be accompanied by Prepayment Premiums, and by the extent to which such
provisions may be practicably enforced.
The rate of prepayment on a pool of mortgage loans is also affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
coupon, a borrower may have an increased incentive to refinance its mortgage
loan. Even in the case of ARM Loans, as prevailing market interest rates
decline, and without regard to whether the Mortgage Rates on such ARM Loans
decline in a manner consistent therewith, the related borrowers may have an
increased incentive to refinance for purposes of either (i) converting to a
fixed rate loan and thereby "locking in" such rate or (ii) taking advantage of
the initial "teaser rate" (a mortgage interest rate below what it would
otherwise be if the applicable index and gross margin were applied) on another
adjustable rate mortgage loan.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash
flow needs or to make other investments. In addition, some borrowers may be
motivated by federal and state tax laws (which are subject to change) to sell
Mortgaged Properties prior to the exhaustion of tax depreciation benefits. The
Sponsor will make no representation as to the particular factors that will
affect the prepayment of the Mortgage Loans in any Trust Fund, as to the
relative importance of such factors, as to the percentage of the principal
balance of such Mortgage Loans that will be paid as of any date or as to the
overall rate of prepayment on such Mortgage Loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the Mortgage Loans in
any Trust Fund will affect the ultimate maturity and the weighted average life
of one or more classes of the Certificates of such series. Weighted average
life refers to the average amount of time that will elapse from the date of
issuance of an instrument until each dollar allocable as principal of such
instrument is repaid to the investor.
The weighted average life and maturity of a class of Certificates of any
series will be influenced by the rate at which principal on the related
Mortgage Loans, whether in the form of scheduled amortization or prepayments
(for this purpose, the term "prepayment" includes voluntary prepayments,
liquidations due to default and purchases of Mortgage Loans out of the related
Trust Fund), is paid to such class. Prepayment rates on loans are commonly
measured relative to a prepayment standard or model, such as the Constant
Prepayment Rate ("CPR") prepayment model or the Standard Prepayment Assumption
("SPA") prepayment model. CPR represents an assumed constant rate of prepayment
each month (expressed as an annual percentage) relative to the then outstanding
principal balance of a pool of loans for the life of such loans. SPA represents
an assumed variable rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
loans, with different prepayment assumptions often expressed as percentages of
SPA. For example, a prepayment assumption of 100% of SPA assumes prepayment
rates of 0.2% per annum of the then outstanding principal balance of such loans
in the first month of the life of the loans and an additional 0.2% per annum in
each month thereafter until the thirtieth month. Beginning in the thirtieth
month, and in each month thereafter during the life of the loans, 100% of SPA
assumes a constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of loans. Moreover, the
CPR and SPA models were developed based upon historical prepayment experience
for single-family loans. Thus, it is unlikely that the prepayment experience of
the Mortgage Loans included in any Trust Fund will conform to any particular
level of CPR or SPA.
The Prospectus Supplement with respect to each series of Certificates will
contain tables, if applicable, setting forth the projected weighted average
life of each class of Offered Certificates of such series and the percentage of
the initial Certificate Balance of each such class that would be outstanding on
specified Distribution Dates based on the assumptions stated in such Prospectus
Supplement, including assumptions that prepayments on the related Mortgage
Loans are made
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at rates corresponding to various percentages of CPR or SPA, or at such other
rates specified in such Prospectus Supplement. Such tables and assumptions will
illustrate the sensitivity of the weighted average lives of the Certificates to
various assumed prepayment rates and will not be intended to predict, or to
provide information that will enable investors to predict, the actual weighted
average lives of the Certificates.
CONTROLLED AMORTIZATION CLASSES AND COMPANION CLASSES
A series of Certificates may include one or more Controlled Amortization
Classes that will entitle the holders thereof to receive principal
distributions according to a specified principal payment schedule, which
schedule is protected by prioritizing, as and to the extent described in the
related Prospectus Supplement, the principal payments from the Mortgage Loans
in the related Trust Fund. Unless otherwise specified in the related Prospectus
Supplement, each Controlled Amortization Class will either be a Planned
Amortization Class (a "PAC") or a Targeted Amortization Class (a "TAC"). In
general, a PAC has a "prepayment collar" (that is, a range of prepayment rates
that can be sustained without disruption) that determines the principal cash
flow of such Certificates. Such a prepayment collar is not static, and may
expand or contract after the issuance of the PAC depending upon the actual
prepayment experience for the underlying Mortgage Loans. Distributions of
principal on a PAC would be made in accordance with the specified schedule so
long as prepayments on the underlying Mortgage Loans remain at a relatively
constant rate within the prepayment collar and, as described below, Companion
Classes exist to absorb "excesses" or "shortfalls" in principal payments on the
underlying Mortgage Loans. If the rate of prepayment on the underlying Mortgage
Loans from time to time falls outside the prepayment collar, or fluctuates
significantly within the prepayment collar, especially for any extended period
of time, such an event may have material consequences in respect of the
anticipated weighted average life and maturity for a PAC. A TAC is structured
so that principal distributions generally will be payable thereon in accordance
with its specified principal payment schedule so long as the rate of
prepayments on the related Mortgage Assets remains relatively constant at the
particular rate used in establishing such schedule. A TAC will generally afford
the holders thereof some protection against early retirement or some protection
against an extended average life, but not both.
Although prepayment risk cannot be eliminated entirely for any class of
Certificates, a Controlled Amortization Class will generally provide a
relatively stable cash flow so long as the actual rate of prepayment on the
Mortgage Loans in the related Trust Fund remains relatively constant at the
rate, or within the range of rates, of prepayment used to establish the
specific principal payment schedule for such Certificates. Prepayment risk with
respect to a given Mortgage Asset Pool does not disappear, however, and the
stability afforded to a Controlled Amortization Class comes at the expense of
one or more Companion Classes of the same series, any of which Companion
Classes may also be a class of Offered Certificates. In general, and as more
particularly described in the related Prospectus Supplement, a Companion Class
will entitle the holders thereof to a disproportionately large share of
prepayments on the Mortgage Loans in the related Trust Fund when the rate of
prepayment is relatively fast, and will entitle the holders thereof to a
disproportionately small share of prepayments on the Mortgage Loans in the
related Trust Fund when the rate of prepayment is relatively slow. A class of
Certificates that entitles the holders thereof to a disproportionately large
share of the prepayments on the Mortgage Loans in the related Trust Fund
enhances the risk of early retirement of such class ("call risk") if the rate
of prepayment is relatively fast; while a class of Certificates that entitles
the holders thereof to a disproportionately small share of the prepayments on
the Mortgage Loans in the related Trust Fund enhances the risk of an extended
average life of such class ("extension risk") if the rate of prepayment is
relatively slow. Thus, as and to the extent described in the related Prospectus
Supplement, a Companion Class absorbs some (but not all) of the "call risk"
and/or "extension risk" that would otherwise belong to the related Controlled
Amortization Class if all payments of principal of the Mortgage Loans in the
related Trust Fund were allocated on a pro rata basis.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the Mortgage
Loans included in a particular Trust Fund may require that balloon payments be
made at maturity. Because the ability of a borrower to make a balloon payment
typically will depend upon its ability either to refinance the loan or to sell
the related Mortgaged Property, there is a risk that Mortgage Loans that
require balloon payments may default at maturity, or that the maturity of such
a Mortgage Loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things,
bankruptcy of the borrower or adverse conditions in the market where the
property is located. In order to minimize losses on defaulted Mortgage Loans,
the Master Servicer and/or Special Servicer for a Trust Fund, to the extent and
under the circumstances set forth herein and in the related Prospectus
Supplement, may be authorized to modify
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Mortgage Loans in such Trust Fund that are in default or as to which a payment
default is imminent. Any defaulted balloon payment or modification that extends
the maturity of a Mortgage Loan may delay distributions of principal on a class
of Offered Certificates and thereby extend the weighted average life of such
Certificates and, if such Certificates were purchased at a discount, reduce the
yield thereon.
Negative Amortization. The weighted average life of a class of
Certificates can be affected by Mortgage Loans that permit negative
amortization to occur. A Mortgage Loan that permits negative amortization would
be expected during a period of increasing interest rates to amortize at a
slower rate (and perhaps not at all) than if interest rates were declining or
were remaining constant. Such slower rate of Mortgage Loan amortization would
correspondingly be reflected in a slower rate of amortization for one or more
classes of Certificates of the related series. In addition, negative
amortization on one or more Mortgage Loans in any Trust Fund may result in
negative amortization on the Certificates of the related series. The related
Prospectus Supplement will describe, if applicable, the manner in which
negative amortization in respect of the Mortgage Loans in any Trust Fund is
allocated among the respective classes of Certificates of the related series.
The portion of any Mortgage Loan negative amortization allocated to a class of
Certificates (other than certain classes of REMIC Residual Certificates) will
result in a deferral of some or all of the interest payable thereon, which
deferred interest may be added to the Certificate Balance thereof. Accordingly,
the weighted average lives of Mortgage Loans that permit negative amortization
(and that of the classes of Certificates to which any such negative
amortization would be allocated or which would bear the effects of a slower
rate of amortization on such Mortgage Loans) may increase as a result of such
feature.
Notwithstanding the foregoing, negative amortization generally occurs in
respect of those ARM Loans that allow for such because the related Mortgage
Note limits the amount by which the scheduled payment thereon may adjust in
response to a change in the Mortgage Rate thereon and/or the related Mortgage
Note provides that the scheduled payment thereon will adjust less frequently
than the Mortgage Rate thereon. Accordingly, during a period of declining
interest rates, the scheduled payment on a Mortgage Loan that permits negative
amortization may exceed the amount necessary to amortize the loan fully over
its remaining amortization schedule and pay interest at the then applicable
Mortgage Rate, thereby resulting in the accelerated amortization of such
Mortgage Loan. Any such acceleration in amortization of its principal balance
will shorten the weighted average life of such Mortgage Loan and,
correspondingly, the weighted average lives of those classes of Certificates
entitled to a portion of the principal payments on such Mortgage Loan.
The extent to which the yield on any Offered Certificate will be affected
by the inclusion in the related Trust Fund of Mortgage Loans that permit
negative amortization, will depend upon (i) whether such Offered Certificate
was purchased at a premium or a discount and (ii) the extent to which the
payment characteristics of such Mortgage Loans delay or accelerate the
distributions of principal on such Certificate (or, in the case of a Stripped
Interest Certificate, delay or accelerate the amortization of the notional
amount thereof). See "--Yield and Prepayment Considerations" above.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance
with their terms will affect the weighted average lives of those Mortgage Loans
and, accordingly, the weighted average lives of and yields on the Certificates
of the related series. Servicing decisions made with respect to the Mortgage
Loans, including the use of payment plans prior to a demand for acceleration
and the restructuring of Mortgage Loans in bankruptcy proceedings, may also
have an effect upon the payment patterns of particular Mortgage Loans and thus
the weighted average lives of and yields on the Certificates of the related
series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
Offered Certificates of any series will directly depend on the extent to which
such holders are required to bear the effects of any losses or shortfalls in
collections arising out of defaults on the Mortgage Loans in the related Trust
Fund and the timing of such losses and shortfalls. In general, the earlier that
any such loss or shortfall occurs, the greater will be the negative effect on
yield for any class of Certificates that is required to bear the effects
thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority
and manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may result in reductions in the entitlements to interest and/or Certificate
Balances of one or more such classes of Certificates, or may be effected simply
by a prioritization of payments among such classes of Certificates.
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The yield to maturity on a class of Subordinate Certificates may be
extremely sensitive to losses and shortfalls in collections on the Mortgage
Loans in the related Trust Fund.
Additional Certificate Amortization. In addition to entitling the holders
thereof to a specified portion (which may range from none to all) of the
principal payments received on the Mortgage Assets in the related Trust Fund,
one or more classes of Certificates of any series, including one or more
classes of Offered Certificates of such series, may provide for distributions
of principal thereof from (i) amounts attributable to interest accrued but not
currently distributable on one or more classes of Accrual Certificates, (ii)
Excess Funds or (iii) any other amounts described in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
"Excess Funds" will, in general, represent that portion of the amounts
distributable in respect of the Certificates of any series on any Distribution
Date that represent (i) interest received or advanced on the Mortgage Assets in
the related Trust Fund that is in excess of the interest currently
distributable on the Certificates of such series, as well as any interest
accrued but not currently distributable on any Accrual Certificates of such
series, or (ii) Prepayment Premiums, payments from Equity Participations or any
other amounts received on the Mortgage Assets in the related Trust Fund that do
not constitute interest thereon or principal thereof.
The amortization of any class of Certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Certificates and, if such Certificates were purchased at a premium, reduce the
yield thereon. The related Prospectus Supplement will discuss the relevant
factors to be considered in determining whether distributions of principal of
any class of Certificates out of such sources would have any material effect on
the rate at which such Certificates are amortized.
Optional Early Termination. If so specified in the related Prospectus
Supplement, a series of Certificates may be subject to optional early
termination through the repurchase of the Mortgage Assets in the related Trust
Fund by the party or parties specified therein, under the circumstances and in
the manner set forth therein. If so provided in the related Prospectus
Supplement, upon the reduction of the Certificate Balance of a specified class
or classes of Certificates by a specified percentage or amount, a party
specified therein may be authorized or required to solicit bids for the
purchase of all of the Mortgage Assets of the related Trust Fund, or of a
sufficient portion of such Mortgage Assets to retire such class or classes,
under the circumstances and in the manner set forth therein. In the absence of
other factors, any such early retirement of a class of Offered Certificates
would shorten the weighted average life thereof and, if such Certificates were
purchased at premium, reduce the yield thereon.
MORTGAGE CAPITAL FUNDING, INC
The Sponsor was incorporated in the State of Delaware on October 7, 1986
under its former name of CitiCMO, Inc., and is a direct wholly-owned subsidiary
of Citicorp Banking Corporation, which in turn is a direct wholly-owned
subsidiary of Citicorp. The principal executive offices of the Sponsor are
located at 399 Park Avenue, 3rd floor, New York, New York 10043, and its
telephone number is (212) 559-6899. All inquiries, requests and other
communications to the Sponsor regarding the matters described herein should be
made or sent to the attention of "Real Estate Capital Markets". The Sponsor
does not have, nor is it expected in the future to have, any significant
assets.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates of any
series will be applied by the Sponsor to the purchase of Trust Assets or will
be used by the Sponsor for general corporate purposes. The Sponsor expects to
sell the Certificates from time to time, but the timing and amount of offerings
of Certificates will depend on a number of factors, including the volume of
Mortgage Assets acquired by the Sponsor, prevailing interest rates,
availability of funds and general market conditions.
DESCRIPTION OF THE CERTIFICATES
GENERAL
Each series of Certificates will represent the entire beneficial ownership
interest in the Trust Fund created pursuant to the related Pooling Agreement.
As described in the related Prospectus Supplement, the Certificates of each
series, including the Offered Certificates of such series, may consist of one
or more classes of Certificates that: (i) provide for the accrual of interest
thereon at a fixed, variable or adjustable rate; (ii) are senior (collectively,
"Senior Certificates") or
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subordinate (collectively, "Subordinate Certificates") to one or more other
classes of Certificates in entitlement to certain distributions on the
Certificates; (iii) are entitled to distributions of principal, with
disproportionately small, nominal or no distributions of interest
(collectively, "Stripped Principal Certificates"); (iv) are entitled to
distributions of interest, with disproportionately small, nominal or no
distributions of principal (collectively, "Stripped Interest Certificates");
(v) provide for distributions of interest thereon or principal thereof that
commence only after the occurrence of certain events, such as the retirement of
one or more other classes of Certificates of such series; (vi) provide for
distributions of principal thereof to be made, from time to time or for
designated periods, at a rate that is faster (and, in some cases, substantially
faster) or slower (and, in some cases, substantially slower) than the rate at
which payments or other collections of principal are received on the Mortgage
Assets in the related Trust Fund; or (vii) provide for distributions of
principal thereof to be made, subject to available funds, based on a specified
principal payment schedule or other methodology.
Each class of Offered Certificates of a series will be issued in minimum
denominations corresponding to the principal balances or, in case of Stripped
Interest Certificates or certain REMIC Residual Certificates, notional amounts
or percentage interests, specified in the related Prospectus Supplement. As
provided in the related Prospectus Supplement, one or more classes of Offered
Certificates of any series may be issued in fully registered, definitive form
(such Certificates, "Definitive Certificates") or may be offered in book-entry
format (such Certificates, "Book-Entry Certificates") through the facilities of
The Depository Trust Company ("DTC"). The Offered Certificates of each series
(if issued as Definitive Certificates) may be transferred or exchanged, subject
to any restrictions on transfer described in the related Prospectus Supplement,
at the location specified in the related Prospectus Supplement, without the
payment of any service charges, other than any tax or other governmental charge
payable in connection therewith. Interests in a class of Book-Entry
Certificates will be transferred on the book-entry records of DTC and its
participating organizations ("Participants"). See "Risk Factors--Limited Assets
for Payment of Certificates" and "--Book-Entry Registration".
DISTRIBUTIONS
Distributions on the Certificates of each series will be made by or on
behalf of the related Trustee or Master Servicer on each Distribution Date as
specified in the related Prospectus Supplement from the Available Distribution
Amount for such series and such Distribution Date. Unless otherwise provided in
the related Prospectus Supplement, the "Available Distribution Amount" for any
series of Certificates and any Distribution Date will refer to the total of all
payments or other collections (or advances in lieu thereof) on, under or in
respect of the Mortgage Assets and any other assets included in the related
Trust Fund that are available for distribution to the Certificateholders of
such series on such date. The particular components of the Available
Distribution Amount for any series on each Distribution Date will be more
specifically described in the related Prospectus Supplement.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each series (other than the final
distribution in retirement of any such Certificate) will be made to the persons
in whose names such Certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
Distribution Date occurs (the "Record Date"), and the amount of each
distribution will be determined as of the close of business on the date (the
"Determination Date") specified in the related Prospectus Supplement. All
distributions with respect to each class of Certificates on each Distribution
Date will be allocated pro rata among the outstanding Certificates in such
class. Payments will be made either by wire transfer in immediately available
funds to the account of a Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder has provided the
person required to make such payments with wiring instructions (which may be
provided in the form of a standing order applicable to all subsequent
distributions) no later than the date specified in the related Prospectus
Supplement (and, if so provided in the related Prospectus Supplement, such
Certificateholder holds Certificates in the requisite amount or denomination
specified therein), or by check mailed to the address of such Certificateholder
as it appears on the Certificate Register; provided, however, that the final
distribution in retirement of any class of Certificates (whether Definitive
Certificates or Book-Entry Certificates) will be made only upon presentation
and surrender of such Certificates at the location specified in the notice to
Certificateholders of such final distribution.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Principal Certificates and certain classes of REMIC Residual
Certificates that have no Pass-Through Rate) may have a different Pass-Through
Rate, which in each case may be fixed, variable or adjustable. The related
Prospectus Supplement will specify the Pass-Through Rate or, in the case of a
variable or adjustable Pass-Through Rate, the method for determining the
Pass-Through Rate, for each class.
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Unless otherwise specified in the related Prospectus Supplement, interest on
the Certificates of each series will be calculated on the basis of a 360-day
year consisting of twelve 30-day months.
Distributions of interest in respect of any class of Certificates (other
than certain classes of Certificates that will be entitled to distributions of
accrued interest commencing only on the Distribution Date, or under the
circumstances, specified in the related Prospectus Supplement ("Accrual
Certificates"), and other than any class of Stripped Principal Certificates or
REMIC Residual Certificates that is not entitled to any distributions of
interest) will be made on each Distribution Date based on the Accrued
Certificate Interest for such class and such Distribution Date, subject to the
sufficiency of the portion of the Available Distribution Amount allocable to
such class on such Distribution Date. Prior to the time interest is
distributable on any class of Accrual Certificates, the amount of Accrued
Certificate Interest otherwise distributable on such class will be added to the
Certificate Balance thereof on each Distribution Date. With respect to each
class of Certificates (other than certain classes of Stripped Interest
Certificates and certain classes of REMIC Residual Certificates), the "Accrued
Certificate Interest" for each Distribution Date will be equal to interest at
the applicable Pass-Through Rate accrued for a specified period (generally
equal to the time period between Distribution Dates) on the outstanding
Certificate Balance of such class of Certificates immediately prior to such
Distribution Date. Unless otherwise provided in the related Prospectus
Supplement, the Accrued Certificate Interest for each Distribution Date on a
class of Stripped Interest Certificates will be similarly calculated except
that it will accrue on a hypothetical or notional amount (a "Notional Amount")
that is either (i) based on the principal balances of some or all of the
Mortgage Assets in the related Trust Fund or (ii) equal to the Certificate
Balances of one or more other classes of Certificates of the same series.
Reference to a Notional Amount with respect to a class of Stripped Interest
Certificates is solely for convenience in making certain calculations and does
not represent the right to receive any distributions of principal. If so
specified in the related Prospectus Supplement, the amount of Accrued
Certificate Interest that is otherwise distributable on (or, in the case of
Accrual Certificates, that may otherwise be added to the Certificate Balance
of) one or more classes of the Certificates of a series will be reduced to the
extent that any Prepayment Interest Shortfalls, as described under "Yield and
Maturity Considerations--Certain Shortfalls in Collections of Interest", exceed
the amount of any sums (including, if and to the extent specified in the
related Prospectus Supplement, the Master Servicer's servicing compensation)
that are applied to offset such shortfalls. The particular manner in which such
shortfalls will be allocated among some or all of the classes of Certificates
of that series will be specified in the related Prospectus Supplement. The
related Prospectus Supplement will also describe the extent to which the amount
of Accrued Certificate Interest that is otherwise distributable on (or, in the
case of Accrual Certificates, that may otherwise be added to the Certificate
Balance of) a class of Offered Certificates may be reduced as a result of any
other contingencies, including delinquencies, losses and deferred interest on
or in respect of the Mortgage Assets in the related Trust Fund. Unless
otherwise provided in the related Prospectus Supplement, any reduction in the
amount of Accrued Certificate Interest otherwise distributable on a class of
Certificates by reason of the allocation to such class of a portion of any
deferred interest on or in respect of the Mortgage Assets in the related Trust
Fund will result in a corresponding increase in the Certificate Balance of such
class. See "Risk Factors--Prepayments; Average Life of Certificates; Yields"
and "Yield and Maturity Considerations".
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Interest Certificates and certain classes of REMIC Residual
Certificates) will have a "Certificate Balance" which, at any time, will equal
the then maximum amount that the holders of Certificates of such class will be
entitled to receive in respect of principal out of the future cash flow on the
Mortgage Assets and other assets included in the related Trust Fund. The
outstanding Certificate Balance of a class of Certificates will be reduced by
distributions of principal made thereon from time to time and, if so provided
in the related Prospectus Supplement, further by any losses incurred in respect
of the related Mortgage Assets allocated thereto from time to time. In turn,
the outstanding Certificate Balance of a class of Certificates may be increased
as a result of any deferred interest on or in respect of the related Mortgage
Assets being allocated thereto from time to time, and will be increased, in the
case of a class of Accrual Certificates prior to the Distribution Date on which
distributions of interest thereon are required to commence, by the amount of
any Accrued Certificate Interest in respect thereof (reduced as described
above). Unless otherwise provided in the related Prospectus Supplement, the
initial aggregate Certificate Balance of all classes of a series of
Certificates will not be greater than the aggregate outstanding principal
balance of the related Mortgage Assets as of the applicable Cut-off Date, after
application of scheduled payments due on or before such date, whether or not
received. The initial Certificate Balance of each class of a series of
Certificates will be specified in the related Prospectus Supplement. As and to
the extent described in the related Prospectus Supplement, distributions of
principal with respect to a series of Certificates will be made on each
Distribution Date to the holders of the class or classes
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of Certificates of such series entitled thereto until the Certificate Balances
of such Certificates have been reduced to zero. Distributions of principal with
respect to one or more classes of Certificates may be made at a rate that is
faster (and, in some cases, substantially faster) than the rate at which
payments or other collections of principal are received on the Mortgage Assets
in the related Trust Fund. Distributions of principal with respect to one or
more classes of Certificates may not commence until the occurrence of certain
events, such as the retirement of one or more other classes of Certificates of
the same series, or may be made at a rate that is slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund.
Distributions of principal with respect to one or more classes of Certificates
(each such class, a "Controlled Amortization Class") may be made, subject to
available funds, based on a specified principal payment schedule. Distributions
of principal with respect to one or more classes of Certificates (each such
class, a "Companion Class") may be contingent on the specified principal
payment schedule for a Controlled Amortization Class of the same series and the
rate at which payments and other collections of principal on the Mortgage
Assets in the related Trust Fund are received. Unless otherwise specified in
the related Prospectus Supplement, distributions of principal of any class of
Certificates will be made on a pro rata basis among all of the Certificates of
such class.
DISTRIBUTIONS ON THE CERTIFICATES IN RESPECT OF PREPAYMENT PREMIUMS OR IN
RESPECT OF EQUITY PARTICIPATIONS
If so provided in the related Prospectus Supplement, Prepayment Premiums
or payments in respect of Equity Participations received on or in connection
with the Mortgage Assets in any Trust Fund will be distributed on each
Distribution Date to the holders of the class of Certificates of the related
series entitled thereto in accordance with the provisions described in such
Prospectus Supplement. Alternatively, payments in respect of Equity
Participations received on or in respect of any Mortgage Asset in any Trust
Fund may be retained by the Sponsor or another prior owner of such Mortgage
Asset.
ALLOCATION OF LOSSES AND SHORTFALLS
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority
and manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may result in reductions in the entitlements to interest and/or Certificate
Balances of one or more such classes of Certificates, or may be effected simply
by a prioritization of payments among such classes of Certificates.
ADVANCES IN RESPECT OF DELINQUENCIES
If and to the extent provided in the related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the Master Servicer, the Special Servicer,
the Trustee, any provider of Credit Support and/or any other specified person
may be obligated to advance, or have the option of advancing, on or before each
Distribution Date, from its or their own funds or from excess funds held in the
related Certificate Account that are not part of the Available Distribution
Amount for the related series of Certificates for such Distribution Date, an
amount up to the aggregate of any payments of principal (other than any balloon
payments) and interest that were due on or in respect of such Mortgage Loans
during the related Due Period and were delinquent on the related Determination
Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Certificates entitled
thereto, rather than to guarantee or insure against losses. Accordingly, all
advances made out of a specific entity's own funds will be reimbursable out of
related recoveries on the Mortgage Loans (including amounts received under any
instrument of Credit Support) respecting which such advances were made (as to
any Mortgage Loan, "Related Proceeds") and such other specific sources as may
be identified in the related Prospectus Supplement, including in the case of a
series that includes one or more classes of Subordinate Certificates,
collections on other Mortgage Loans in the related Trust Fund that would
otherwise be distributable to the holders of one or more classes of such
Subordinate Certificates. No advance will be required to be made by a Master
Servicer, Special Servicer or Trustee if, in the judgment of the Master
Servicer, Special Servicer or Trustee, as the case may be, such advance would
not be recoverable from Related Proceeds or another specifically identified
source (any such advance, a "Nonrecoverable Advance"); and, if previously made
by a Master Servicer, Special Servicer or Trustee, a Nonrecoverable Advance
will be reimbursable thereto from any amounts in the related Certificate
Account prior to any distributions being made to the related series of
Certificateholders.
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If advances have been made by a Master Servicer, Special Servicer, Trustee
or other entity from excess funds in a Certificate Account, such Master
Servicer, Special Servicer, Trustee or other entity, as the case may be, will
be required to replace such funds in such Certificate Account on any future
Distribution Date to the extent that funds in such Certificate Account on such
Distribution Date are less than payments required to be made to the related
series of Certificateholders on such date. If so specified in the related
Prospectus Supplement, the obligation of a Master Servicer, Special Servicer,
Trustee or other entity to make advances may be secured by a cash advance
reserve fund or a surety bond. If applicable, information regarding the
characteristics of, and the identity of any obligor on, any such surety bond,
will be set forth in the related Prospectus Supplement.
If and to the extent so provided in the related Prospectus Supplement, any
entity making advances may be entitled to receive interest thereon for the
period that such advances are outstanding at the rate specified in such
Prospectus Supplement, and such entity will be entitled to payment of such
interest periodically from general collections on the Mortgage Loans in the
related Trust Fund prior to any payment to the related series of
Certificateholders or as otherwise provided in the related Pooling Agreement
and described in such Prospectus Supplement.
The Prospectus Supplement for any series of Certificates evidencing an
interest in a Trust Fund that includes MBS will describe any comparable
advancing obligation of a party to the related Pooling Agreement or of a party
to the related MBS Agreement.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, together with the distribution to the holders
of each class of the Offered Certificates of a series, a Master Servicer or
Trustee, as provided in the related Prospectus Supplement, will forward to each
such holder, a statement (a "Distribution Date Statement") that, unless
otherwise provided in the related Prospectus Supplement, will set forth, among
other things, in each case to the extent applicable:
(i) the amount of such distribution to holders of such class of Offered
Certificates that was applied to reduce the Certificate Balance thereof;
(ii) the amount of such distribution to holders of such class of Offered
Certificates that is allocable to Accrued Certificate Interest;
(iii) the amount, if any, of such distribution to holders of such class
of Offered Certificates that is allocable to (A) Prepayment Premiums and
(B) payments on account of Equity Participations;
(iv) the amount, if any, by which such distribution is less than the
amounts to which holders of such class of Offered Certificates are
entitled;
(v) the Certificate Balance or Notional Amount, as the case may be, of
each class of Certificates (including any class of Certificates not offered
hereby) at the close of business on such Distribution Date, separately
identifying any reduction in such Certificate Balance or Notional Amount
due to the allocation of any losses in respect of the related Mortgage
Assets, any increase in such Certificate Balance or Notional Amount due to
the allocation of any negative amortization in respect of the related
Mortgage Assets and any increase in the Certificate Balance of a class of
Accrual Certificates, if any, in the event that Accrued Certificate
Interest has been added to such balance;
(vi) information regarding the aggregate principal balance of the related
Mortgage Assets on or shortly before such Distribution Date;
(vii) if such class of Offered Certificates has a variable Pass-Through
Rate or an adjustable Pass-Through Rate, the Pass-Through Rate applicable
thereto for such Distribution Date;
(viii) the amount deposited in or withdrawn from any reserve fund on such
Distribution Date, and the amount remaining on deposit in such reserve fund
as of the close of business on such Distribution Date;
(ix) if the related Trust Fund includes one or more instruments of Credit
Support, such as a letter of credit, an insurance policy and/or a surety
bond, the amount of coverage under each such instrument as of the close of
business on such Distribution Date; and
(x) to the extent not otherwise reflected through the information
furnished pursuant to subclauses (v) and (vi) above, the amount of Credit
Support being afforded by any classes of Subordinate Certificates.
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In the case of information furnished pursuant to subclauses (i)-(iii)
above, the amounts will be expressed as a dollar amount per minimum
denomination of the relevant class of Offered Certificates or per a specified
portion of such minimum denomination. The Prospectus Supplement for each series
of Offered Certificates will describe any additional information to be included
in reports to the holders of such Certificates. Upon request, a
Certificateholder may receive with respect to the Mortgage Loans, if any, in
the related Trust Fund, a monthly report regarding the delinquencies thereon,
indicating the number and aggregate principal amount of such Mortgage Loans
delinquent one month and two or more months, as well as the book value of any
related Mortgaged Property acquired through foreclosure, deed in lieu of
foreclosure or other exercise of rights respecting the Trustee's interest in
such Mortgage Loans.
Within a reasonable period of time after the end of each calendar year,
the related Master Servicer or Trustee, as the case may be, will be required to
furnish to each person who at any time during the calendar year was a holder of
an Offered Certificate a statement containing the information set forth in
subclauses (i)-(iii) above, aggregated for such calendar year or the applicable
portion thereof during which such person was a Certificateholder, together with
such other customary information as the Sponsor or the reporting party
determines to be necessary to enable Certificateholders to prepare their tax
returns for such calendar year. See, however, "Description of the
Certificates--Book-Entry Registration and Definitive Certificates". If the
Trust Fund for a series of Certificates includes MBS, the ability of the
related Master Servicer or Trustee, as the case may be, to include in any
Distribution Date Statement information regarding the mortgage loans underlying
such MBS will depend on the reports received with respect to such MBS. In such
cases, the related Prospectus Supplement will describe the loan-specific
information to be included in the Distribution Date Statements that will be
forwarded to the holders of the Offered Certificates of that series in
connection with distributions made to them.
VOTING RIGHTS
The voting rights evidenced by each series of Certificates (as to such
series, the "Voting Rights") will be allocated among the respective classes of
such series in the manner described in the related Prospectus Supplement.
Certificateholders will generally not have a right to vote, except with
respect to required consents to certain amendments to the related Pooling
Agreement and as otherwise specified in the related Prospectus Supplement. See
"Description of the Pooling Agreements--Amendment". The holders of specified
amounts of Certificates of a particular series will have the right to act as a
group to remove the related Trustee and also upon the occurrence of certain
events which if continuing would constitute an Event of Default on the part of
the related Master Servicer, Special Servicer or REMIC Administrator. See
"Description of the Pooling Agreements--Events of Default", "--Rights Upon
Event of Default" and "--Resignation and Removal of the Trustee".
TERMINATION
The obligations created by the Pooling Agreement for each series of
Certificates will terminate following (i) the final payment or other
liquidation of the last Mortgage Asset subject thereto or the disposition of
all property acquired upon foreclosure of any Mortgage Loan subject thereto and
(ii) the payment to Certificateholders of that series of all amounts required
to be paid to them pursuant to such Pooling Agreement. Written notice of
termination of a Pooling Agreement will be given to each Certificateholder of
the related series, and the final distribution will be made only upon
presentation and surrender of the Certificates of such series at the location
to be specified in the notice of termination.
If so specified in the related Prospectus Supplement, a series of
Certificates may be subject to optional early termination through the
repurchase of the Mortgage Assets in the related Trust Fund by the party or
parties specified therein, under the circumstances and in the manner set forth
therein. If so provided in the related Prospectus Supplement, upon the
reduction of the Certificate Balance of a specified class or classes of
Certificates by a specified percentage or amount, a party specified therein may
be authorized or required to solicit bids for the purchase of all the Mortgage
Assets of the related Trust Fund, or of a sufficient portion of such Mortgage
Assets to retire such class or classes, under the circumstances and in the
manner set forth therein.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the related Prospectus Supplement, one or more classes
of the Offered Certificates of any series will be offered in book-entry format
through the facilities of The Depository Trust Company ("DTC"), and each such
class will be represented by one or more global Certificates registered in the
name of DTC or its nominee.
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DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking corporation" within the meaning of the New York Banking
Law, 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 Exchange Act. DTC
was created to hold securities for its participating organizations
("Participants") and facilitate the clearance and settlement of securities
transactions between Participants through electronic computerized book-entry
changes in their accounts, thereby eliminating the need for physical movement
of securities certificates. "Direct Participants", which maintain accounts with
DTC, include securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations. DTC is owned
by a number of its Direct Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system also is available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The Rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Book-Entry Certificates under the DTC system must be made by
or through Direct Participants, which will receive a credit for the Book-Entry
Certificates on DTC's records. The ownership interest of each actual purchaser
of a Book-Entry Certificate (a "Certificate Owner") is in turn to be recorded
on the Direct and Indirect Participants' records. Certificate Owners will not
receive written confirmation from DTC of their purchases, but Certificate
Owners are expected to receive written confirmations providing details of such
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which each Certificate Owner entered into the
transaction. Transfers of ownership interest in the Book-Entry Certificates are
to be accomplished by entries made on the books of Participants acting on
behalf of Certificate Owners. Certificate Owners will not receive certificates
representing their ownership interests in the Book-Entry Certificates, except
in the event that use of the book-entry system for the Book-Entry Certificates
of any series is discontinued as described below.
DTC has no knowledge of the actual Certificate Owners of the Book-Entry
Certificates; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Certificates are credited, which may or may
not be the Certificate Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Certificate Owners will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the related Distribution
Date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by Participants to Certificate Owners will
be governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or registered
in "street name", and will be the responsibility of each such Participant (and
not of DTC, the Sponsor or any Trustee, Master Servicer or Special Servicer),
subject to any statutory or regulatory requirements as may be in effect from
time to time. Under a book-entry system, Certificate Owners may receive
payments after the related Distribution Date.
Unless otherwise provided in the related Prospectus Supplement, the only
"Certificateholder" (as such term is used in the related Pooling Agreement)
will be the nominee of DTC, and the Certificate Owners will not be recognized
as Certificateholders under the Pooling Agreement. Certificate Owners will be
permitted to exercise the rights of Certificateholders under the related
Pooling Agreement only indirectly through the Participants who in turn will
exercise their rights through DTC. The Sponsor is informed that DTC will take
action permitted to be taken by a Certificateholder under a Pooling Agreement
only at the direction of one or more Participants to whose account with DTC
interests in the Book-Entry Certificates are credited.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain Certificate Owners, the ability of
a Certificate Owner to pledge its interest in Book-Entry Certificates to
persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of its interest in Book-Entry Certificates, may be
limited due to the lack of a physical certificate evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued in fully
registered, certificated form (as so issued, "Definitive Certificates") to
Certificate Owners or their
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nominees, rather than to DTC or its nominee, only if (i) the Sponsor advises
the Trustee in writing that DTC is no longer willing or able to properly
discharge its responsibilities as depository with respect to such Certificates
and the Sponsor is unable to locate a qualified successor or (ii) the Sponsor,
at its option, elects to terminate the book-entry system through DTC with
respect to such Certificates. Upon the occurrence of either of the events
described in the preceding sentence, DTC will be required to notify all
Participants of the availability through DTC of Definitive Certificates. Upon
surrender by DTC of the certificate or certificates representing a class of
Book-Entry Certificates, together with instructions for registration, the
Trustee or other designated party will be required to issue to the Certificate
Owners identified in such instructions the Definitive Certificates to which
they are entitled, and thereafter the holders of such Definitive Certificates
will be recognized as Certificateholders under the related Pooling Agreement.
DESCRIPTION OF THE POOLING AGREEMENTS
GENERAL
The Certificates of each series will be issued pursuant to a pooling and
servicing agreement or other agreement specified in the related Prospectus
Supplement (in either case, a "Pooling Agreement"). In general, the parties to
a Pooling Agreement will include the Sponsor, the Trustee, the Master Servicer,
the Special Servicer and, if one or more REMIC elections have been made with
respect to the related Trust Fund, the REMIC Administrator. However, a Pooling
Agreement may also include a Mortgage Asset Seller as a party, and a Pooling
Agreement that relates to a Trust Fund that consists solely of MBS may not
include a Master Servicer, Special Servicer or other servicer as a party. All
parties to each Pooling Agreement under which Certificates of a series are
issued will be identified in the related Prospectus Supplement. If so specified
in the related Prospectus Supplement, the Mortgage Asset Seller or an affiliate
thereof or of the Sponsor may perform the duties of Master Servicer, Special
Servicer or REMIC Administrator. If so specified in the related Prospectus
Supplement, the Master Servicer may also perform the duties of Special
Servicer, and the Master Servicer, the Special Servicer or the Trustee may also
perform the duties of REMIC Administrator. Any party to a Pooling Agreement may
own Certificates issued thereunder; however, except with respect to required
consents to certain amendments to a Pooling Agreement, Certificates issued
thereunder that are held by the related Master Servicer or Special Servicer
will not be allocated Voting Rights. See "Risk Factors--Conflicts of Interest
Involving Parties to a Pooling Agreement".
A form of a pooling and servicing agreement has been filed as an exhibit
to the Registration Statement of which this Prospectus is a part. However, the
provisions of each Pooling Agreement will vary depending upon the nature of the
Certificates to be issued thereunder and the nature of the related Trust Fund.
The following summaries describe certain provisions that may appear in a
Pooling Agreement under which Certificates that evidence interests in Mortgage
Loans will be issued. The Prospectus Supplement for a series of Certificates
will describe any provision of the related Pooling Agreement that materially
differs from the description thereof contained in this Prospectus and, if the
related Trust Fund includes MBS, will summarize all of the material provisions
of the related Pooling Agreement. The summaries herein do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all of the provisions of the Pooling Agreement for each series of
Certificates and the description of such provisions in the related Prospectus
Supplement. As used herein with respect to any series, the term "Certificate"
refers to all of the Certificates of that series, whether or not offered hereby
and by the related Prospectus Supplement, unless the context otherwise
requires. The Sponsor will provide a copy of the Pooling Agreement (without
exhibits) that relates to any series of Certificates without charge upon
written request of a holder of a Certificate of such series addressed to it at
its principal executive offices specified herein under "Mortgage Capital
Funding, Inc."
ASSIGNMENT OF MORTGAGE LOANS; REPURCHASES
At the time of issuance of any series of Certificates, the Sponsor will
assign (or cause to be assigned) to the designated Trustee the Mortgage Loans
to be included in the related Trust Fund, together with, unless otherwise
specified in the related Prospectus Supplement, all principal and interest to
be received on or with respect to such Mortgage Loans after the Cut-off Date,
other than principal and interest due on or before the Cut-off Date. The
Trustee will, concurrently with such assignment, deliver the Certificates to or
at the direction of the Sponsor in exchange for the Mortgage Loans and the
other assets to be included in the Trust Fund for such series. Each Mortgage
Loan will be identified in a schedule appearing as an exhibit to the related
Pooling Agreement. Such schedule generally will include detailed information
that pertains to each Mortgage Loan included in the related Trust Fund, which
information will typically include: the address of the related
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Mortgaged Property and type of such property; the Mortgage Rate and, if
applicable, the applicable index, gross margin, adjustment date and any rate
cap information; the original and remaining term to maturity; the original
amortization term; and the original and outstanding principal balance.
With respect to each Mortgage Loan to be included in a Trust Fund, the
Sponsor will deliver (or cause to be delivered) to the related Trustee (or to a
custodian appointed by the Trustee) certain loan documents which, unless
otherwise specified in the related Prospectus Supplement, will include the
original Mortgage Note endorsed, without recourse, to the order of the Trustee,
the original Mortgage or a certified copy thereof, with evidence of recording
or filing indicated thereon, and an assignment of the Mortgage to the Trustee
in recordable form. In certain cases where documents respecting a Mortgage Loan
may not be available prior to execution of the related Pooling Agreement, the
Sponsor may be permitted to deliver (or cause to be delivered) copies thereof
(if applicable, without evidence of recording or filing thereon) to the related
Trustee (or to a custodian appointed by the Trustee), provided that such
documents or certified copies thereof are delivered (if applicable, with
evidence of recording or filing thereon) promptly upon receipt.
Assignments of Mortgage to a Trustee will be recorded or filed in the
appropriate jurisdictions except in states where, in the written opinion of
local counsel acceptable to the Sponsor, such filing or recording is not
required to protect the Trustee's interests in the related Mortgage Loans
against sale, further assignment, satisfaction or discharge by the related
Mortgage Asset Seller, the related Master Servicer, the related Special
Servicer, any Sub-Servicers or the Sponsor.
The related Trustee (or a custodian appointed by the Trustee) will be
required to review the Mortgage Loan documents delivered to it within a
specified period of days after receipt thereof, and the Trustee (or such
custodian) will hold such documents in trust for the benefit of the
Certificateholders of the related series. Unless otherwise specified in the
related Prospectus Supplement, if any such document is found to be missing or
defective, and such omission or defect, as the case may be, materially and
adversely affects the interests of the related series of Certificateholders,
the Trustee (or such custodian) will be required to notify the Master Servicer,
the Special Servicer and the Sponsor, and one of such persons will be required
to notify the relevant Mortgage Asset Seller. In that case, and if the Mortgage
Asset Seller cannot deliver the document or cure the defect within a specified
number of days after receipt of such notice, then, except as otherwise
specified below or in the related Prospectus Supplement, the Mortgage Asset
Seller will be obligated to repurchase the related Mortgage Loan from the
Trustee at a price that will be specified in the related Prospectus Supplement.
If so provided in the Prospectus Supplement for a series of Certificates, a
Mortgage Asset Seller, in lieu of repurchasing a Mortgage Loan as to which
there is missing or defective loan documentation, will have the option,
exercisable upon certain conditions and/or within a specified period after
initial issuance of such series of Certificates, to replace such Mortgage Loan
with one or more other mortgage loans, in accordance with standards that will
be described in the Prospectus Supplement. Unless otherwise specified in the
related Prospectus Supplement, this repurchase or substitution obligation will
constitute the sole remedy to holders of the Certificates of any series or to
the related Trustee on their behalf for missing or defective loan
documentation, and none of the Sponsor, the Master Servicer or the Special
Servicer, in the last two cases unless it is the Mortgage Asset Seller, will be
obligated to purchase or replace a Mortgage Loan if a Mortgage Asset Seller
defaults on its obligation to do so. Notwithstanding the foregoing, if a
document has not been delivered to the related Trustee (or to a custodian
appointed by the Trustee) because such document has been submitted for
recording, and neither such document nor a certified copy thereof, in either
case with evidence of recording thereon, can be obtained because of delays on
the part of the applicable recording office, then the Mortgage Asset Seller
will not be required to repurchase or replace the affected Mortgage Loan on the
basis of such missing document so long as it continues in good faith to attempt
to obtain such document or such certified copy.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the related Prospectus Supplement, the
Sponsor will, with respect to each Mortgage Loan in the related Trust Fund,
make or assign, or cause to be made or assigned, certain representations and
warranties (each person making such representations and warranties, the
"Warranting Party") covering, by way of example: (i) the accuracy of the
information set forth for such Mortgage Loan on the schedule of Mortgage Loans
appearing as an exhibit to the related Pooling Agreement; (ii) the
enforceability of the related Mortgage Note and Mortgage and the existence of
title insurance insuring the lien priority of the related Mortgage; (iii) the
Warranting Party's title to the Mortgage Loan and the authority of the
Warranting Party to sell the Mortgage Loan; and (iv) the payment status of the
Mortgage Loan. It is expected that in most cases the Warranting Party will be
the Mortgage Asset Seller; however, the Warranting Party may also be an
affiliate of the Mortgage Asset Seller, the Sponsor or an affiliate of the
Sponsor, the Master Servicer, the Special Servicer or another person acceptable
to the Sponsor. The Warranting Party, if other than the Mortgage Asset Seller,
will be identified in the related Prospectus Supplement.
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Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will provide that the Master Servicer, Special Servicer
and/or Trustee will be required to notify promptly any Warranting Party of any
breach of any representation or warranty made by it in respect of a Mortgage
Loan that materially and adversely affects the interests of the related series
of Certificateholders. If such Warranting Party cannot cure such breach within
a specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the related Prospectus Supplement, it will
be obligated to repurchase such Mortgage Loan from the Trustee at a price that
will be specified in the related Prospectus Supplement. If so provided in the
Prospectus Supplement for a series of Certificates, a Warranting Party, in lieu
of repurchasing a Mortgage Loan as to which a breach has occurred, will have
the option, exercisable upon certain conditions and/or within a specified
period after initial issuance of such series of Certificates, to replace such
Mortgage Loan with one or more other mortgage loans, in accordance with
standards that will be described in the Prospectus Supplement. Unless otherwise
specified in the related Prospectus Supplement, this repurchase or substitution
obligation will constitute the sole remedy available to holders of the
Certificates of any series or to the related Trustee on their behalf for a
breach of representation and warranty by a Warranting Party, and none of the
Sponsor, the Master Servicer or the Special Servicer, in each case unless it is
the Warranting Party, will be obligated to purchase or replace a Mortgage Loan
if a Warranting Party defaults on its obligation to do so.
In some cases, representations and warranties will have been made in
respect of a Mortgage Loan as of a date prior to the date upon which the
related series of Certificates is issued, and thus may not address events that
may occur following the date as of which they were made. However, the Sponsor
will not include any Mortgage Loan in the Trust Fund for any series of
Certificates if anything has come to the Sponsor's attention that would cause
it to believe that the representations and warranties made in respect of such
Mortgage Loan will not be accurate in all material respects as of the date of
issuance. The date as of which the representations and warranties regarding the
Mortgage Loans in any Trust Fund were made, will be specified in the related
Prospectus Supplement.
COLLECTION AND OTHER SERVICING PROCEDURES
The Master Servicer and Special Servicer for any Trust Fund, directly or
through Sub-Servicers, will each be required to make reasonable efforts to
collect all scheduled payments under the Mortgage Loans in such Trust Fund
serviced thereby, and will each be required to follow such collection
procedures as it would follow with respect to mortgage loans that are
comparable to the Mortgage Loans in such Trust Fund serviced thereby and held
for its own account, provided such procedures are consistent with (i) the terms
of the related Pooling Agreement and any related instrument of Credit Support
included in such Trust Fund, (ii) applicable law and (iii) the servicing
standard specified in the related Pooling Agreement and Prospectus Supplement
(the "Servicing Standard").
The Master Servicer and Special Servicer for any Trust Fund, either
jointly or separately, directly or through Sub-Servicers, also will be required
to perform as to the Mortgage Loans in such Trust Fund various other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts for payment of taxes, insurance premiums, ground rents and
similar items, or otherwise monitoring the timely payment of those items;
attempting to collect delinquent payments; supervising foreclosures; conducting
property inspections on a periodic or other basis; managing Mortgaged
Properties acquired on behalf of such Trust Fund through foreclosure,
deed-in-lieu of foreclosure or otherwise (each, an "REO Property"); and
maintaining servicing records relating to such Mortgage Loans. The related
Prospectus Supplement will specify when and the extent to which servicing of a
Mortgage Loan is to be transferred from the Master Servicer to the Special
Servicer. In general, and subject to the discussion in the related Prospectus
Supplement, a Special Servicer will be responsible for the servicing and
administration of: (i) Mortgage Loans that are delinquent in respect of a
specified number of scheduled payments; (ii) Mortgage Loans as to which the
related borrower has entered into or consented to bankruptcy, appointment of a
receiver or conservator or similar insolvency proceeding, or the related
borrower has become the subject of a decree or order for such a proceeding
which shall have remained in force undischarged or unstayed for a specified
number of days; and (iii) REO Properties. If so specified in the related
Prospectus Supplement, a Pooling Agreement also may provide that if a default
on a Mortgage Loan has occurred or, in the judgment of the related Master
Servicer, a payment default is imminent, the related Master Servicer may elect
to transfer the servicing thereof, in whole or in part, to the related Special
Servicer. Unless otherwise provided in the related Prospectus Supplement, when
the circumstances no longer warrant a Special Servicer's continuing to service
a particular Mortgage Loan (e.g., the related borrower is paying in accordance
with the forbearance arrangement entered into between the Special Servicer and
such borrower), the Master Servicer will resume the servicing duties with
respect thereto. If and to the extent provided in the related Pooling Agreement
and described in the related Prospectus Supplement, a Special Servicer may
perform certain limited duties in respect of Mortgage Loans for which the
Master
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Servicer is primarily responsible (including, if so specified, performing
property inspections and evaluating financial statements); and a Master
Servicer may perform certain limited duties in respect of any Mortgage Loan for
which the Special Servicer is primarily responsible (including, if so
specified, continuing to receive payments on such Mortgage Loan (including
amounts collected by the Special Servicer), making certain calculations with
respect to such Mortgage Loan and making remittances and preparing certain
reports to the Trustee and/or Certificateholders with respect to such Mortgage
Loan). Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer will be responsible for filing and settling claims in respect
of particular Mortgage Loans under any applicable instrument of Credit Support.
See "Description of Credit Support".
SUB-SERVICERS
A Master Servicer or Special Servicer may delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that, unless otherwise
specified in the related Prospectus Supplement, such Master Servicer or Special
Servicer will remain obligated under the related Pooling Agreement. Unless
otherwise provided in the related Prospectus Supplement, each sub-servicing
agreement between a Master Servicer or Special Servicer, as the case may be,
and a Sub-Servicer (a "Sub-Servicing Agreement") must provide that, if for any
reason such Master Servicer or Special Servicer is no longer acting in such
capacity, the Trustee or any successor to such Master Servicer or Special
Servicer may assume such party's rights and obligations under such
Sub-Servicing Agreement. The Master Servicer and Special Servicer for any Trust
Fund will each be required to monitor the performance of Sub-Servicers retained
by it, and will each have the right to remove a Sub-Servicer retained by it at
any time it considers such removal to be in the best interests of
Certificateholders.
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer or Special Servicer will be solely liable for all fees owed by it to
any Sub-Servicer, irrespective of whether its compensation pursuant to the
related Pooling Agreement is sufficient to pay such fees. Each Sub-Servicer
will be reimbursed by the Master Servicer or Special Servicer, as the case may
be, that retained it for certain expenditures which it makes, generally to the
same extent such Master Servicer or Special Servicer would be reimbursed under
a Pooling Agreement. See "--Certificate Account" and "--Servicing Compensation
and Payment of Expenses".
CERTIFICATE ACCOUNT
General. The Master Servicer, the Special Servicer and/or the Trustee
will, as to each Trust Fund that includes Mortgage Loans, establish and
maintain or cause to be established and maintained one or more separate
accounts for the collection of payments on or in respect of such Mortgage Loans
(collectively, the "Certificate Account"), which will be established so as to
comply with the standards of each Rating Agency that has rated any one or more
classes of Certificates of the related series. A Certificate Account may be
maintained as an interest-bearing or a non-interest-bearing account and the
funds held therein may be invested pending each succeeding Distribution Date in
United States government securities and other obligations (including guaranteed
investment contracts) that are acceptable to each Rating Agency that has rated
any one or more classes of Certificates of the related series ("Permitted
Investments"). Unless otherwise provided in the related Prospectus Supplement,
any interest or other income earned on funds in a Certificate Account will be
paid to the related Master Servicer, Special Servicer or Trustee as additional
compensation. A Certificate Account may be maintained with the related Master
Servicer, Special Servicer or Mortgage Asset Seller or with a depository
institution that is an affiliate of any of the foregoing or of the Sponsor,
provided that it complies with applicable Rating Agency standards. If permitted
by the applicable Rating Agency or Agencies and so specified in the related
Prospectus Supplement, a Certificate Account may contain funds relating to more
than one series of mortgage pass-through certificates and may contain other
funds representing payments on mortgage loans owned by the related Master
Servicer or Special Servicer or any related Sub-Servicer or serviced by any of
them on behalf of others.
Deposits. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, a Master Servicer, Special
Servicer or Trustee will be required to deposit or cause to be deposited in the
Certificate Account for each Trust Fund that includes Mortgage Loans, within a
certain period following receipt (in the case of collections on or in respect
of the Mortgage Loans) or otherwise as provided in the related Pooling
Agreement, the following payments and collections received or made by the
Master Servicer, the Special Servicer or the Trustee subsequent to the Cut-off
Date (other than payments due on or before the Cut-off Date):
(i) all payments on account of principal, including principal
prepayments, on the Mortgage Loans;
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(ii) all payments on account of interest on the Mortgage Loans, including
any default interest collected, in each case net of any portion thereof
retained by the Master Servicer, the Special Servicer or any Sub-Servicer
as its servicing compensation or as compensation to the Trustee;
(iii) all proceeds received under any hazard, title or other insurance
policy that provides coverage with respect to a Mortgaged Property or the
related Mortgage Loan (other than proceeds applied to the restoration of
the property or released to the related borrower in accordance with the
customary servicing practices of the Master Servicer (or the Special
Servicer, with respect to Mortgage Loans serviced by it) and/or the terms
and conditions of the related Mortgage) (collectively, "Insurance
Proceeds"), all proceeds received in connection with the condemnation or
other governmental taking of all or any Mortgaged Property (other than
proceeds applied to the restoration of the property or released to the
related borrower in accordance with the customary servicing practices of
the Master Servicer (or the Special Servicer, with respect to Mortgage
Loans serviced by it) and/or the terms and conditions of the related
Mortgage) (collectively, "Condemnation Proceeds") and all other amounts
received and retained in connection with the liquidation of defaulted
Mortgage Loans or property acquired in respect thereof, by foreclosure or
otherwise ("Liquidation Proceeds"), together with the net operating income
(less reasonable reserves for future expenses) derived from the operation
of any Mortgaged Properties acquired by the Trust Fund through foreclosure
or otherwise;
(iv) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related series of Certificates as
described under "Description of Credit Support";
(v) any advances made as described under "Description of the
Certificates--Advances in Respect of Delinquencies";
(vi) any amounts paid under any Cash Flow Agreement, as described under
"Description of the Trust Funds--Cash Flow Agreements";
(vii) all proceeds of the purchase of any Mortgage Loan, or property
acquired in respect thereof, by the Sponsor, any Mortgage Asset Seller or
any other specified person as described under "--Assignment of Mortgage
Loans; Repurchases" and "--Representations and Warranties; Repurchases",
all proceeds of the purchase of any defaulted Mortgage Loan as described
under "--Realization Upon Defaulted Mortgage Loans", and all proceeds of
any Mortgage Asset purchased as described under "Description of the
Certificates--Termination" (all of the foregoing, also "Liquidation
Proceeds");
(viii) any amounts paid by the Master Servicer to cover Prepayment
Interest Shortfalls arising out of the prepayment of Mortgage Loans as
described under "--Servicing Compensation and Payment of Expenses";
(ix) to the extent that any such item does not constitute additional
servicing compensation to the Master Servicer or Special Servicer, any
payments on account of modification or assumption fees, late payment
charges, Prepayment Premiums or Equity Participations on the Mortgage
Loans;
(x) all payments required to be deposited in the Certificate Account with
respect to any deductible clause in any blanket insurance policy described
under "--Hazard Insurance Policies";
(xi) any amount required to be deposited by the Master Servicer, the
Special Servicer or the Trustee in connection with losses realized on
investments for the benefit of the Master Servicer, the Special Servicer or
the Trustee, as the case may be, of funds held in the Certificate Account;
and
(xii) any other amounts required to be deposited in the Certificate
Account as provided in the related Pooling Agreement and described in the
related Prospectus Supplement.
Withdrawals. Unless otherwise provided in the related Pooling Agreement
and described in the related Prospectus Supplement, a Master Servicer, Special
Servicer or Trustee may make withdrawals from the Certificate Account for each
Trust Fund that includes Mortgage Loans for any of the following purposes:
(i) to make distributions to the Certificateholders on each Distribution
Date;
(ii) to pay the Master Servicer, the Special Servicer or any Sub-Servicer
any servicing fees not previously retained thereby, such payment to be
made, unless otherwise provided in the related Prospectus Supplement, out
of payments on the particular Mortgage Loans as to which such fees were
earned;
(iii) to reimburse the Master Servicer, the Special Servicer, the Trustee
or any other specified person for any unreimbursed amounts advanced by it
as described under "Description of the Certificates--Advances in Respect of
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Delinquencies", such reimbursement to be made out of amounts received which
were identified and applied by the Master Servicer or Special Servicer, as
applicable, as late collections of interest on and principal of the
particular Mortgage Loans with respect to which the advances were made or
out of amounts drawn under any form of Credit Support with respect to such
Mortgage Loans;
(iv) to reimburse the Master Servicer or the Special Servicer for unpaid
servicing fees earned by it and certain unreimbursed servicing expenses
incurred by it with respect to Mortgage Loans in the Trust Fund and
properties acquired in respect thereof, such reimbursement to be made out
of amounts that represent Liquidation Proceeds, Condemnation Proceeds and
Insurance Proceeds collected on the particular Mortgage Loans and
properties, and net income collected on the particular properties, with
respect to which such fees were earned or such expenses were incurred or
out of amounts drawn under any form of Credit Support with respect to such
Mortgage Loans and properties;
(v) to reimburse the Master Servicer, the Special Servicer or the Trustee
for any advances described in clause (iii) above made by it and/or any
servicing expenses referred to in clause (iv) above incurred by it which,
in the good faith judgment of the Master Servicer, the Special Servicer or
the Trustee, as applicable, will not be recoverable from the amounts
described in clauses (iii) and (iv), respectively, such reimbursement to be
made from amounts collected on other Mortgage Loans in the same Trust Fund
or, if and to the extent so provided by the related Pooling Agreement and
described in the related Prospectus Supplement, only from that portion of
amounts collected on such other Mortgage Loans that is otherwise
distributable on one or more classes of Subordinate Certificates of the
related series;
(vi) if and to the extent described in the related Prospectus Supplement,
to pay the Master Servicer, the Special Servicer, the Trustee or any other
specified person interest accrued on the advances described in clause (iii)
above made by it and/or the servicing expenses described in clause (iv)
above incurred by it while such remain outstanding and unreimbursed;
(vii) to pay for costs and expenses incurred by the Trust Fund for
environmental site assessments performed with respect to Mortgaged
Properties that constitute security for defaulted Mortgage Loans, and for
any containment, clean-up or remediation of hazardous wastes and materials
present on such Mortgaged Properties, as described under "--Realization
Upon Defaulted Mortgage Loans";
(viii) to reimburse the Master Servicer, the Special Servicer, the REMIC
Administrator (if any), the Sponsor, or any of their respective directors,
officers, employees and agents, as the case may be, for certain expenses,
costs and liabilities incurred thereby, as and to the extent described
under "--Certain Matters Regarding the Master Servicer, the Special
Servicer, the REMIC Administrator and the Sponsor";
(ix) if and to the extent described in the related Prospectus Supplement,
to pay the fees of the Trustee and/or the REMIC Administrator (if any);
(x) if and to the extent described in the related Prospectus Supplement,
to pay the fees of any provider of Credit Support;
(xi) if and to the extent described in the related Prospectus Supplement,
to reimburse prior draws on any form of Credit Support;
(xii) to reimburse the Trustee or any of its directors, officers,
employees and agents, as the case may be, for certain expenses, costs and
liabilities incurred thereby, as and to the extent described under
"--Certain Matters Regarding the Trustee";
(xiii) to pay the Master Servicer, the Special Servicer or the Trustee,
as appropriate, interest and investment income earned in respect of amounts
held in the Certificate Account as additional compensation;
(xiv) to pay (generally from related income) for costs incurred in
connection with the operation, management and maintenance of any Mortgaged
Property acquired by the Trust Fund by foreclosure or otherwise;
(xv) if one or more elections have been made to treat the Trust Fund or
designated portions thereof as a REMIC, to pay any federal, state or local
taxes imposed on the Trust Fund or its assets or transactions, as and to
the extent described under "Material Federal Income Tax
Consequences--REMICS--Prohibited Transactions Tax and Other Taxes";
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(xvi) to pay for the cost of an independent appraiser or other expert in
real estate matters retained to determine a fair sale price for a defaulted
Mortgage Loan or a property acquired in respect thereof in connection with
the liquidation of such Mortgage Loan or property;
(xvii) to pay for the cost of various opinions of counsel obtained
pursuant to the related Pooling Agreement for the benefit of
Certificateholders;
(xviii) to make any other withdrawals permitted by the related Pooling
Agreement and described in the related Prospectus Supplement ; and
(xix) to clear and terminate the Certificate Account upon the
termination of the Trust Fund.
ESCROW ACCOUNTS
A Pooling Agreement may require the Master Servicer or Special Servicer
thereunder to establish and maintain, as and to the extent permitted by the
terms of the related Mortgage Loans, one or more escrow accounts into which
mortgagors deposit amounts sufficient to pay taxes, assessments, hazard
insurance premiums or comparable items. Withdrawals from the escrow accounts
maintained in respect of the Mortgage Loans in any Trust Fund may be made to
effect timely payment of taxes, assessments and hazard insurance premiums or
comparable items, to reimburse the related Master Servicer or Special Servicer
out of related collections for prior advances in respect of taxes, assessments
and hazard insurance premiums or comparable items, to refund to mortgagors
amounts determined to be overages, to remit to mortgagors, if required,
interest earned, if any, on balances in any of the escrow accounts, to repair
or otherwise protect the related Mortgaged Property and to clear and terminate
any of the escrow accounts. The Master Servicer and Special Servicer each will
be solely responsible for administration of the escrow accounts maintained by
it.
MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer or Special Servicer may agree to modify, waive or amend any term of
any Mortgage Loan serviced by it in a manner consistent with the applicable
Servicing Standard; provided that the modification, waiver or amendment (i)
will not affect the amount or timing of any scheduled payments of principal or
interest on the Mortgage Loan, (ii) will not, in the judgment of the Master
Servicer or Special Servicer, as the case may be, materially impair the
security for the Mortgage Loan or reduce the likelihood of timely payment of
amounts due thereon, (iii) will not adversely affect the coverage under any
applicable instrument of Credit Support or (iv) will not adversely affect the
Trust Fund's status as a REMIC or grantor trust, as the case may be. Unless
otherwise provided in the related Prospectus Supplement, a Special Servicer
also may agree to any other modification, waiver or amendment that would have
the effect described in clauses (i) and (ii) of the proviso to the preceding
sentence if, in its judgment, (i) a material default on the Mortgage Loan has
occurred or a payment default is imminent, (ii) such modification, waiver or
amendment is reasonably likely to produce a greater recovery with respect to
the Mortgage Loan on a present value basis than would liquidation, (iii) such
modification, waiver or amendment will not adversely affect the coverage under
any applicable instrument of Credit Support and (iv) such modification, waiver
or amendment would not adversely affect the Trust Fund's status as a REMIC or
grantor trust, as the case may be.
If described in the related Prospectus Supplement, the holders of
interests in a specified class or classes of Subordinate Certificates may have
the ability to direct the Special Servicer's actions in connection with
liquidating or modifying defaulted Mortgage Loans or to replace the Special
Servicer and substitute any such holder or an affiliate thereof as the
successor. See "Risk Factors--Potential Conflicts of Interest." The Prospectus
Supplement will describe, however, whether and to what extent holders of
Offered Certificates may object to the Special Servicer extending the maturity
of a defaulted Mortgage Loan beyond a certain date.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
A borrower's failure to make required Mortgage Loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a borrower that is unable to make Mortgage Loan payments may also be
unable to make timely payment of taxes and insurance premiums and to otherwise
maintain the related Mortgaged Property. In general, and subject to the
discussion in the related Prospectus Supplement, the related Special Servicer
will be required to monitor any Mortgage Loan that is in default more than a
specified number of scheduled payments, evaluate whether the causes of the
default can be
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corrected over a reasonable period without significant impairment of the value
of the related Mortgaged Property, initiate corrective action in cooperation
with the borrower if cure is likely, inspect the related Mortgaged Property and
take such other actions as are consistent with the Servicing Standard. A
significant period of time may elapse before the Special Servicer is able to
assess the success of any such corrective action or the need for additional
initiatives.
The time within which the Special Servicer can make the initial
determination of appropriate action, evaluate the success of corrective action,
develop additional initiatives, institute foreclosure proceedings and actually
foreclose (or accept a deed to a Mortgaged Property in lieu of foreclosure) on
behalf of the Certificateholders may vary considerably depending on the
particular Mortgage Loan, the Mortgaged Property, the borrower, the presence of
an acceptable party to assume the Mortgage Loan and the laws of the
jurisdiction in which the Mortgaged Property is located. If a borrower files a
bankruptcy petition, the Special Servicer may not be permitted to accelerate
the maturity of the related Mortgage Loan or to foreclose on the related
Mortgaged Property for a considerable period of time, and such Mortgage Loan
may be restructured in the resulting bankruptcy proceedings. See "Certain Legal
Aspects of Mortgage Loans".
A Pooling Agreement may grant to the Master Servicer, the Special
Servicer, a provider of Credit Support and/or the holder or holders of certain
classes of the related series of Certificates a right of first refusal to
purchase from the Trust Fund, at a predetermined purchase price (which, if
insufficient to fully fund the entitlements of Certificateholders to principal
and interest thereon, will be specified in the related Prospectus Supplement),
any Mortgage Loan as to which a specified number of scheduled payments are
delinquent. In addition, unless otherwise specified in the related Prospectus
Supplement, the Special Servicer may offer to sell any defaulted Mortgage Loan
if and when the Special Servicer determines, consistent with the applicable
Servicing Standard, that such a sale would produce a greater recovery on a
present value basis than would liquidation of the related Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the related
Pooling Agreement will require that the Special Servicer accept the highest
cash bid received from any person (including itself, the Master Servicer, the
Sponsor or any affiliate of any of them or any Certificateholder) that
constitutes a fair price for such defaulted Mortgage Loan. In the absence of
any bid determined in accordance with the related Pooling Agreement to be fair,
the Special Servicer will generally be required to proceed against the related
Mortgaged Property, subject to the discussion below.
If a default on a Mortgage Loan has occurred or, in the Special Servicer's
judgment, a payment default is imminent, the Special Servicer, on behalf of the
Trustee, may at any time institute foreclosure proceedings, exercise any power
of sale contained in the related Mortgage, obtain a deed in lieu of
foreclosure, or otherwise acquire title to the related Mortgaged Property, by
operation of law or otherwise, if such action is consistent with the Servicing
Standard. Unless otherwise specified in the related Prospectus Supplement,
however, neither the Special Servicer nor the Master Servicer may acquire title
to any Mortgaged Property, have a receiver of rents appointed with respect to
any Mortgaged Property or take any other action with respect to any Mortgage
Property that would cause the Trustee, for the benefit of the related series of
Certificateholders, or any other specified person to be considered to hold
title to, to be a "mortgagee-in-possession" of, or to be an "owner" or an
"operator" of such Mortgaged Property within the meaning of certain federal
environmental laws, unless the Special Servicer has previously determined,
based on a report prepared by a person who regularly conducts environmental
audits (which report will be an expense of the Trust Fund), that either:
(i) the Mortgaged Property is in compliance with applicable environmental
laws and regulations or, if not, that taking such actions as are necessary
to bring the Mortgaged Property into compliance therewith is reasonably
likely to produce a greater recovery to Certificateholders on a present
value basis than not taking such actions; and
(ii) there are no circumstances or conditions present at the Mortgaged
Property that have resulted in any contamination for which investigation,
testing, monitoring, containment, clean-up or remediation could be required
under any applicable environmental laws and regulations or, if such
circumstances or conditions are present for which any such action could be
required, taking such actions with respect to the Mortgaged Property is
reasonably likely to produce a greater recovery to Certificateholders on a
present value basis than not taking such actions. See "Certain Legal
Aspects of Mortgage Loans--Environmental Risks".
Unless otherwise provided in the related Prospectus Supplement, if title
to any Mortgaged Property is acquired by a Trust Fund as to which a REMIC
election has been made, the Special Servicer, on behalf of the Trust Fund, will
be required to sell the Mortgaged Property by the end of the third taxable year
following the taxable year in which such acquisition occurred, unless (i) the
Internal Revenue Service grants an extension of time to sell such property or
(ii) the Trustee and REMIC Administrator each receives an opinion of
independent counsel to the effect that the holding of the property by the Trust
Fund beyond the end of the third taxable year following the taxable year in
which the property was
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acquired will not result in the imposition of a tax on the Trust Fund or cause
the Trust Fund (or any designated portion thereof) to fail to qualify as a
REMIC under the Code at any time that any Certificate is outstanding. Subject
to the foregoing, the Special Servicer will generally be required to solicit
bids for any Mortgaged Property so acquired in such a manner as will be
reasonably likely to realize a fair cash price for such property. If the Trust
Fund acquires title to any Mortgaged Property, the Special Servicer, on behalf
of the Trust Fund, may retain an independent contractor to manage and operate
such property. The retention of an independent contractor, however, will not
relieve the Special Servicer of its obligation to manage such Mortgaged
Property in a manner consistent with the Servicing Standard. The Special
Servicer may be authorized to conduct activities with respect to a Mortgaged
Property acquired by a Trust Fund that cause the Trust Fund to incur a federal
income or other tax, provided that doing so would, in reasonable discretion of
the Special Servicer, maximize net after-tax proceeds to Certificateholders.
If Liquidation Proceeds collected with respect to a defaulted Mortgage
Loan are less than the outstanding principal balance of the defaulted Mortgage
Loan plus interest accrued thereon plus the aggregate amount of reimbursable
expenses incurred by the Special Servicer and/or Master Servicer in connection
with such Mortgage Loan, the Trust Fund will realize a loss in the amount of
such difference. The Special Servicer and/or Master Servicer will be entitled
to reimbursement out of the Liquidation Proceeds recovered on any defaulted
Mortgage Loan, prior to the distribution of such Liquidation Proceeds to
Certificateholders, amounts that represent unpaid servicing compensation in
respect of the Mortgage Loan, unreimbursed servicing expenses incurred with
respect to the Mortgage Loan and any unreimbursed advances of delinquent
payments made with respect to the Mortgage Loan.
If any Mortgaged Property suffers damage such that the proceeds, if any,
of the related hazard insurance policy are insufficient to fully restore the
damaged property, neither the Special Servicer nor the Master Servicer will be
required to expend its own funds to effect such restoration unless (to the
extent not otherwise provided in the related Prospectus Supplement) it
determines (i) that such restoration will increase the proceeds to
Certificateholders on liquidation of the Mortgage Loan after reimbursement of
the Special Servicer or Master Servicer, as the case may be, for its expenses
and (ii) that such expenses will be recoverable by it from related Insurance
Proceeds or Liquidation Proceeds.
Notwithstanding the foregoing discussion, if and to the extent described
in the related Prospectus Supplement, the related Pooling Agreement may provide
that any or all of the rights, duties and obligations of a Special Servicer
with respect to any defaulted Mortgage Loan or REO Property as described under
this section "--Realization Upon Defaulted Mortgage Loans" and elsewhere in
this Prospectus, may be exercised or performed by a Master Servicer with the
consent of, at the direction of or following consultation with the Special
Servicer. Moreover, a single entity may act as both Master Servicer and Special
Servicer for any Trust Fund.
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will require the Master Servicer (or the Special Servicer
with respect to Mortgage Loans serviced thereby) to cause each Mortgage Loan
borrower to maintain a hazard insurance policy that provides for such coverage
as is required under the related Mortgage or, if the Mortgage permits the
holder thereof to dictate to the borrower the insurance coverage to be
maintained on the related Mortgaged Property, such coverage as is consistent
with the requirements of the Servicing Standard. Unless otherwise specified in
the related Prospectus Supplement, such coverage generally will be in an amount
equal to the lesser of the principal balance owing on such Mortgage Loan and
the replacement cost of the related Mortgaged Property. The ability of a Master
Servicer (or Special Servicer) to assure that hazard insurance proceeds are
appropriately applied may be dependent upon its being named as an additional
insured under any hazard insurance policy and under any other insurance policy
referred to below, or upon the extent to which information concerning covered
losses is furnished by borrowers. All amounts collected by a Master Servicer
(or Special Servicer) under any such policy (except for amounts to be applied
to the restoration or repair of the Mortgaged Property or released to the
borrower in accordance with the Master Servicer's (or Special Servicer's)
normal servicing procedures and/or to the terms and conditions of the related
Mortgage and Mortgage Note) will be deposited in the related Certificate
Account. The Pooling Agreement may provide that the Master Servicer (or Special
Servicer) may satisfy its obligation to cause borrowers to maintain such hazard
insurance policies by maintaining a blanket policy insuring against hazard
losses on all of the related Mortgage Loans. If such blanket policy contains a
deductible clause, the Master Servicer (or Special Servicer) will be required,
in the event of a casualty covered by such blanket policy, to deposit or cause
to be deposited in the related Certificate Account all sums that would have
been deposited therein but for such deductible clause.
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In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the Mortgaged Properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), wet or dry rot, vermin, domestic animals and other kinds of risks
not specified in the preceding sentence. Accordingly, a Mortgaged Property may
not be insured for losses arising from any such cause unless the related
Mortgage specifically requires, or permits the holder thereof to require, such
coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of
the full replacement value of the improvements on the property in order to
recover the full amount of any partial loss. If the insured's coverage falls
below this specified percentage, such clauses generally provide that the
insurer's liability in the event of partial loss does not exceed the lesser of
(i) the replacement cost of the improvements less physical depreciation and
(ii) such proportion of the loss as the amount of insurance carried bears to
the specified percentage of the full replacement cost of such improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the Mortgage Loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the Mortgage Loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer or the Special Servicer will determine whether to exercise any right
the Trustee may have under any such provision in a manner consistent with the
Servicing Standard. Unless otherwise specified in the related Prospectus
Supplement, the Master Servicer or Special Servicer, as applicable, will be
entitled to retain as additional servicing compensation any fee collected in
connection with the permitted transfer of a Mortgaged Property. See "Certain
Legal Aspects of Mortgage Loans--Due-on-Sale and Due-on-Encumbrance".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer's primary servicing compensation with respect to a series of
Certificates will come from the periodic payment to it of a specified portion
of the interest payments on each Mortgage Loan in the related Trust Fund,
including Mortgage Loans serviced by the related Special Servicer. If and to
the extent described in the related Prospectus Supplement, a Special Servicer's
primary compensation with respect to a series of Certificates may consist of
any or all of the following components: (i) a specified portion of the interest
payments on each Mortgage Loan in the related Trust Fund, whether or not
serviced by it; (ii) an additional specified portion of the interest payments
on each Mortgage Loan then currently serviced by it; and (iii) subject to any
specified limitations, a fixed percentage of some or all of the collections and
proceeds received with respect to each Mortgage Loan which was at any time
serviced by it, including Mortgage Loans for which servicing was returned to
the Master Servicer. As additional compensation, a Master Servicer or Special
Servicer may be entitled to retain all or a portion of late payment charges,
Prepayment Premiums, modification fees and other fees collected from borrowers
and any interest or other income that may be earned on funds held in the
related Certificate Account. A more detailed description of each Master
Servicer's and Special Servicer's compensation will be provided in the related
Prospectus Supplement. Any Sub-Servicer will receive as its sub-servicing
compensation a portion of the servicing compensation to be paid to the Master
Servicer or Special Servicer that retained such Sub-Servicer.
In addition to amounts payable to any Sub-Servicer retained by it, a
Master Servicer or Special Servicer may be required, to the extent provided in
the related Prospectus Supplement, to pay from amounts that represent its
servicing compensation certain expenses incurred in connection with the
administration of the related Trust Fund, including, without limitation,
payment of the fees and disbursements of independent accountants and payment of
expenses incurred in connection with distributions and reports to
Certificateholders. Certain other expenses, including certain expenses related
to Mortgage Loan defaults and liquidations and, to the extent so provided in
the related Prospectus Supplement, interest on such expenses at the rate
specified therein, may be required to be borne by the Trust Fund.
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If and to the extent provided in the related Prospectus Supplement, a
Master Servicer may be required to apply a portion of the servicing
compensation otherwise payable to it in respect of any period to Prepayment
Interest Shortfalls. See "Yield and Maturity Considerations--Certain Shortfalls
in Collections of Interest".
EVIDENCE AS TO COMPLIANCE
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will require that, on or before a specified date in each
year, the Master Servicer and, if and to the extent appropriate, the Special
Servicer each cause a firm of independent public accountants to furnish to the
Trustee a statement to the effect that (i) such firm has obtained a letter of
representations regarding certain matters relating to the management of the
Master Servicer or the Special Servicer, as the case may be, which includes an
assertion that the Master Servicer or the Special Servicer, as the case may be,
has complied with certain minimum mortgage loan servicing standards (to the
extent applicable to commercial and multifamily mortgage loans), identified in
the Uniform Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America, with respect to the servicing of
commercial and multifamily mortgage loans during the most recently completed
calendar year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. In rendering its report, such firm may rely, as to matters
relating to the direct servicing of commercial and multifamily mortgage loans
by sub-servicers, upon comparable reports of firms of independent public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those sub-servicers. A Prospectus Supplement may provide that additional or
alternative reports of independent certified public accountants relating to the
servicing of mortgage loans may be required to be delivered to the Trustee.
Each Pooling Agreement will also require that, on or before a specified
date in each year, the Master Servicer and Special Servicer each deliver to the
Trustee a statement signed by one or more officers thereof to the effect that
the Master Servicer or the Special Servicer, as the case may be, has fulfilled
its material obligations under the Pooling Agreement throughout the preceding
calendar year or other specified twelve month period.
CERTAIN MATTERS REGARDING THE MASTER SERVICER, THE SPECIAL SERVICER, THE REMIC
ADMINISTRATOR AND THE SPONSOR
Any entity serving as Master Servicer, Special Servicer or REMIC
Administrator under a Pooling Agreement may be an affiliate of the Sponsor and
may have other normal business relationships with the Sponsor or the Sponsor's
affiliates. Unless otherwise specified in the Prospectus Supplement for a
series of Certificates, the related Pooling Agreement will permit the Master
Servicer, the Special Servicer and any REMIC Administrator to resign from its
obligations thereunder only upon (a) the appointment of, and the acceptance of
such appointment by, a successor thereto and receipt by the Trustee of written
confirmation from each applicable Rating Agency that such resignation and
appointment will not have an adverse effect on the rating assigned by such
Rating Agency to any class of Certificates of such series or (b) a
determination that such obligations are no longer permissible under applicable
law or are in material conflict by reason of applicable law with any other
activities carried on by it. No such resignation will become effective until
the Trustee or other successor has assumed the obligations and duties of the
resigning Master Servicer, Special Servicer or REMIC Administrator, as the case
may be, under the Pooling Agreement. The Master Servicer and Special Servicer
for each Trust Fund will be required to maintain a fidelity bond and errors and
omissions policy or their equivalent that provides coverage against losses that
may be sustained as a result of an officer's or employee's misappropriation of
funds or errors and omissions, subject to certain limitations as to amount of
coverage, deductible amounts, conditions, exclusions and exceptions permitted
by the related Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will further provide that none of the Master Servicer, the
Special Servicer, the REMIC Administrator (if any), the Sponsor or any
director, officer, employee or agent of any of them will be under any liability
to the related Trust Fund or Certificateholders for any action taken, or not
taken, in good faith pursuant to the Pooling Agreement or for errors in
judgment; provided, however, that none of the Master Servicer, the Special
Servicer, the REMIC Administrator (if any), the Sponsor or any such person will
be protected against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of
obligations or duties thereunder or by reason of reckless disregard of such
obligations and duties. Unless otherwise specified in the related Prospectus
Supplement, each Pooling Agreement will further provide that the Master
Servicer, the Special Servicer, the REMIC Administrator (if any), the Sponsor
and any director, officer,
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employee or agent of any of them will be entitled to indemnification by the
related Trust Fund against any loss, liability or expense incurred in
connection with any legal action that relates to such Pooling Agreement or the
related series of Certificates; provided, however, that such indemnification
will not extend to any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of obligations or
duties under such Pooling Agreement, or by reason of reckless disregard of such
obligations or duties. In addition, each Pooling Agreement will provide that
none of the Master Servicer, the Special Servicer, the REMIC Administrator (if
any) or the Sponsor will be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its respective
responsibilities under the Pooling Agreement and that in its opinion may
involve it in any expense or liability. However, each of the Master Servicer,
the Special Servicer, the REMIC Administrator (if any) and the Sponsor will be
permitted, in the exercise of its discretion, to undertake any such action that
it may deem necessary or desirable with respect to the enforcement and/or
protection of the rights and duties of the parties to the Pooling Agreement and
the interests of the related series of Certificateholders thereunder. In such
event, the legal expenses and costs of such action, and any liability resulting
therefrom, will be expenses, costs and liabilities of the related series of
Certificateholders, and the Master Servicer, the Special Servicer, the REMIC
Administrator or the Sponsor, as the case may be, will be entitled to charge
the related Certificate Account therefor.
Any person into which the Master Servicer, the Special Servicer, the REMIC
Administrator (if any) or the Sponsor may be merged or consolidated, or any
person resulting from any merger or consolidation to which the Master Servicer,
the Special Servicer, the REMIC Administrator (if any) or the Sponsor is a
party, or any person succeeding to the business of the Master Servicer, the
Special Servicer, the REMIC Administrator (if any) or the Sponsor, will be the
successor of the Master Servicer, the Special Servicer, the REMIC Administrator
or the Sponsor, as the case may be, under the related Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, a REMIC
Administrator will be entitled to perform any of its duties under the related
Pooling Agreement either directly or by or through agents or attorneys, and the
REMIC Administrator will not be responsible for any willful misconduct or gross
negligence on the part of any such agent or attorney appointed by it with due
care.
EVENTS OF DEFAULT
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, "Events of Default" under the related Pooling Agreement will
include (i) any failure by the Master Servicer to distribute or cause to be
distributed to the Certificateholders of such series, or to remit to the
Trustee for distribution to such Certificateholders, any amount required to be
so distributed or remitted, which failure continues unremedied for five days
after written notice thereof has been given to the Master Servicer by any other
party to the related Pooling Agreement, or to the Master Servicer, with a copy
to each other party to the related Pooling Agreement, by Certificateholders
entitled to not less than 25% (or such other percentage specified in the
related Prospectus Supplement) of the Voting Rights for such series; (ii) any
failure by the Special Servicer to remit to the Master Servicer or the Trustee
any amount required to be so remitted, which failure continues unremedied for
five days after written notice thereof has been given to the Special Servicer
by any other party to the related Pooling Agreement, or to the Special
Servicer, with a copy to each other party to the related Pooling Agreement, by
the Certificateholders entitled to not less than 25% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights of such
series; (iii) any failure by the Master Servicer or the Special Servicer duly
to observe or perform in any material respect any of its other covenants or
obligations under the related Pooling Agreement, which failure continues
unremedied for sixty days after written notice thereof has been given to the
Master Servicer or the Special Servicer, as the case may be, by any other party
to the related Pooling Agreement, or to the Master Servicer or the Special
Servicer, as the case may be, with a copy to each other party to the related
Pooling Agreement, by Certificateholders entitled to not less than 25% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such series; (iv) any failure by a REMIC Administrator (if any) duly
to observe or perform in any material respect any of its covenants or
obligations under the related Pooling Agreement, which failure continues
unremedied for sixty days after written notice thereof has been given to the
REMIC Administrator by any other party to the related Pooling Agreement, or to
the REMIC Administrator, with a copy to each other party to the related Pooling
Agreement, by Certificateholders entitled to not less than 25% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
for such series; and (v) certain events of insolvency, readjustment of debt,
marshaling of assets and liabilities, or similar proceedings in respect of or
relating to the Master Servicer, the Special Servicer, or a REMIC Administrator
(if any), and certain actions by or on behalf of the Master Servicer, the
Special Servicer or a REMIC Administrator (if any) indicating its insolvency or
inability to pay its obligations. Material variations
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to the foregoing Events of Default (other than to add thereto or shorten cure
periods or eliminate notice requirements) will be specified in the related
Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, when a single entity acts as Master Servicer, Special Servicer and
REMIC Administrator, or in any two of the foregoing capacities, for any Trust
Fund, an Event of Default described above in one capacity will constitute an
Event of Default in each capacity.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default occurs with respect to the Master Servicer, the
Special Servicer or a REMIC Administrator (if any) under a Pooling Agreement,
then, in each and every such case, so long as the Event of Default remains
unremedied, the Sponsor or the Trustee will be authorized, and at the direction
of Certificateholders of the related series entitled to not less than 51% (or
such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such series, the Trustee will be required, to terminate all
of the rights and obligations of the defaulting party as Master Servicer,
Special Servicer or REMIC Administrator, as applicable, under the Pooling
Agreement, whereupon the Trustee will succeed to all of the responsibilities,
duties and liabilities of the defaulting party as Master Servicer, Special
Servicer or REMIC Administrator, as applicable, under the Pooling Agreement
(except that if the defaulting party is required to make advances thereunder
regarding delinquent Mortgage Loans, but the Trustee is prohibited by law from
obligating itself to make such advances, or if the related Prospectus
Supplement so specifies, the Trustee will not be obligated to make such
advances) and will be entitled to similar compensation arrangements. Unless
otherwise specified in the related Prospectus Supplement, if the Trustee is
unwilling or unable so to act, it may (or, at the written request of
Certificateholders of the related series entitled to not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such series, it will be required to) appoint, or petition a court of
competent jurisdiction to appoint, a qualified and established institution that
(unless otherwise provided in the related Prospectus Supplement) is acceptable
to each applicable Rating Agency to act as successor to the Master Servicer,
Special Servicer or REMIC Administrator, as the case may be, under the Pooling
Agreement. Pending such appointment, the Trustee will be obligated to act in
such capacity.
No Certificateholder will have the right under any Pooling Agreement to
institute any proceeding with respect thereto unless such holder previously has
given to the Trustee written notice of default and unless Certificateholders of
the same series entitled to not less than 25% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights for such
series shall have made written request upon the Trustee to institute such
proceeding in its own name as Trustee thereunder and shall have offered to the
Trustee reasonable indemnity, and the Trustee for sixty days (or such other
period specified in the related Prospectus Supplement) shall have neglected or
refused to institute any such proceeding. The Trustee, however, will be under
no obligation to exercise any of the trusts or powers vested in it by any
Pooling Agreement or to make any investigation of matters arising thereunder or
to institute, conduct or defend any litigation thereunder or in relation
thereto at the request, order or direction of any of the holders of
Certificates of the related series, unless such Certificateholders have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby.
AMENDMENT
Each Pooling Agreement may be amended by the respective parties thereto,
without the consent of any of the holders of the related series of
Certificates, (i) to cure any ambiguity, (ii) to correct a defective provision
therein or to correct, modify or supplement any provision therein that may be
inconsistent with any other provision therein, (iii) to add any other
provisions with respect to matters or questions arising under the Pooling
Agreement that are not inconsistent with the provisions thereof, (iv) to comply
with any requirements imposed by the Code, or (v) for any other purpose;
provided that such amendment (other than an amendment for the specific purpose
referred to in clause (iv) above) may not (as evidenced by an opinion of
counsel to such effect satisfactory to the Trustee) adversely affect in any
material respect the interests of any such holder without such holder's consent
or adversely affect the status of the Trust Fund as either a REMIC or grantor
trust, as the case may be, for federal income tax purposes; and provided
further that such amendment (other than an amendment for one of the specific
purposes referred to in clauses (i) through (iv) above) must be acceptable to
each applicable Rating Agency. Unless otherwise specified in the related
Prospectus Supplement, each Pooling Agreement may also be amended by the
respective parties thereto, with the consent of the holders of the related
series of Certificates entitled to not less than 51% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights for such
series allocated to the affected classes, for any purpose; provided that,
unless otherwise specified
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in the related Prospectus Supplement, no such amendment may (i) reduce in any
manner the amount of, or delay the timing of, payments received or advanced on
Mortgage Loans that are required to be distributed in respect of any
Certificate without the consent of the holder of such Certificate, (ii)
adversely affect in any material respect the interests of the holders of any
class of Certificates, in a manner other than as described in clause (i),
without the consent of the holders of all Certificates of such class or (iii)
modify the amendment provisions of the Pooling Agreement described in this
paragraph without the consent of the holders of all Certificates of the related
series. However, unless otherwise specified in the related Prospectus
Supplement, the Trustee will be prohibited from consenting to any amendment of
a Pooling Agreement pursuant to which a REMIC election is to be or has been
made unless the Trustee shall first have received an opinion of counsel to the
effect that such amendment will not result in the imposition of a tax on the
related Trust Fund or cause the related Trust Fund (or designated portion
thereof) to fail to qualify as a REMIC at any time that the related
Certificates are outstanding.
LIST OF CERTIFICATEHOLDERS
Unless otherwise specified in the related Prospectus Supplement, upon
written request of three or more Certificateholders of record made for purposes
of communicating with other holders of Certificates of the same series with
respect to their rights under the related Pooling Agreement, the Trustee or
other specified person will afford such Certificateholders access during normal
business hours to the most recent list of Certificateholders of that series
held by such person. If such list is as of a date more than 90 days prior to
the date of receipt of such Certificateholders' request, then such person, if
not the registrar for such series of Certificates, will be required to request
from such registrar a current list and to afford such requesting
Certificateholders access thereto promptly upon receipt.
THE TRUSTEE
The Trustee under each Pooling Agreement will be named in the related
Prospectus Supplement. The commercial bank, national banking association,
banking corporation or trust company that serves as Trustee may have typical
banking relationships with the Sponsor and its affiliates and with any Master
Servicer, Special Servicer or REMIC Administrator and its affiliates.
DUTIES OF THE TRUSTEE
The Trustee for each series of Certificates will make no representation as
to the validity or sufficiency of the related Pooling Agreement, the
Certificates or any underlying Mortgage Loan or related document and will not
be accountable for the use or application by or on behalf of any Master
Servicer or Special Servicer of any funds paid to the Master Servicer or
Special Servicer in respect of the Certificates or the underlying Mortgage
Loans, or any funds deposited into or withdrawn from the Certificate Account
for such series or any other account by or on behalf of the Master Servicer or
Special Servicer. If no Event of Default has occurred and is continuing, the
Trustee for each series of Certificates will be required to perform only those
duties specifically required under the related Pooling Agreement. However, upon
receipt of any of the various certificates, reports or other instruments
required to be furnished to it pursuant to the related Pooling Agreement, a
Trustee will be required to examine such documents and to determine whether
they conform to the requirements of such agreement.
CERTAIN MATTERS REGARDING THE TRUSTEE
As and to the extent described in the related Prospectus Supplement, the
fees and normal disbursements of any Trustee may be the expense of the related
Master Servicer or other specified person or may be required to be borne by the
related Trust Fund.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to indemnification,
from amounts held in the Certificate Account for such series, for any loss,
liability or expense incurred by the Trustee in connection with the Trustee's
acceptance or administration of its trusts under the related Pooling Agreement;
provided, however, that such indemnification will not extend to any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence on the part of the Trustee in the performance of its
obligations and duties thereunder, or by reason of its reckless disregard of
such obligations or duties.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to execute any of its
trusts or powers under the related Pooling Agreement or perform any of its
duties thereunder either directly or by or through agents or attorneys, and the
Trustee will not be responsible for any willful misconduct or gross negligence
on the part of any such agent or attorney appointed by it with due care.
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RESIGNATION AND REMOVAL OF THE TRUSTEE
A Trustee will be permitted at any time to resign from its obligations and
duties under the related Pooling Agreement by giving written notice thereof to
the Sponsor. Upon receiving such notice of resignation, the Sponsor (or such
other person as may be specified in the related Prospectus Supplement) will be
required to use its best efforts to promptly appoint a successor trustee. If no
successor trustee shall have accepted an appointment within a specified period
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction to appoint a successor trustee.
If at any time a Trustee ceases to be eligible to continue as such under
the related Pooling Agreement, or if at any time the Trustee becomes incapable
of acting, or if certain events of (or proceedings in respect of) bankruptcy or
insolvency occur with respect to the Trustee, the Sponsor will be authorized to
remove the Trustee and appoint a successor trustee. In addition, holders of the
Certificates of any series entitled to at least 33 1/3% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
for such series may at any time (with or without cause) remove the Trustee
under the related Pooling Agreement and appoint a successor trustee, provided
that other holders of Certificates of the same series entitled to a greater
percentage of the Voting Rights for such series do not object.
Any resignation or removal of a Trustee and appointment of a successor
trustee will not become effective until acceptance of appointment by the
successor trustee.
DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit Support may be provided with respect to one or more classes of the
Certificates of any series, or with respect to the related Mortgage Assets.
Credit Support may be in the form of a letter of credit, the subordination of
one or more classes of Certificates, the use of a pool insurance policy or
guarantee insurance, the establishment of one or more reserve funds or another
method of Credit Support described in the related Prospectus Supplement, or any
combination of the foregoing. If so provided in the related Prospectus
Supplement, any form of Credit Support may provide credit enhancement for more
than one series of Certificates to the extent described therein.
Unless otherwise provided in the related Prospectus Supplement for a
series of Certificates, the Credit Support will not provide protection against
all risks of loss and will not guarantee payment to Certificateholders of all
amounts to which they are entitled under the related Pooling Agreement. If
losses or shortfalls occur that exceed the amount covered by the related Credit
Support or that are not covered by such Credit Support, Certificateholders will
bear their allocable share of deficiencies. Moreover, if a form of Credit
Support covers more than one series of Certificates, holders of Certificates of
one series will be subject to the risk that such Credit Support will be
exhausted by the claims of the holders of Certificates of one or more other
series before the former receive their intended share of such coverage.
If Credit Support is provided with respect to one or more classes of
Certificates of a series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (i) the nature and
amount of coverage under such Credit Support, (ii) any conditions to payment
thereunder not otherwise described herein, (iii) the conditions (if any) under
which the amount of coverage under such Credit Support may be reduced and under
which such Credit Support may be terminated or replaced and (iv) the material
provisions relating to such Credit Support. Additionally, the related
Prospectus Supplement will set forth certain information with respect to the
obligor under any instrument of Credit Support, including (i) a brief
description of its principal business activities, (ii) its principal place of
business, place of incorporation and the jurisdiction under which it is
chartered or licensed to do business, (iii) if applicable, the identity of
regulatory agencies that exercise primary jurisdiction over the conduct of its
business and (iv) its total assets, and its stockholders' equity or
policyholders' surplus, if applicable, as of a date that will be specified in
the Prospectus Supplement. See "Risk Factors--Credit Support Limitations".
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more classes
of Certificates of a series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the Certificate Account
on any Distribution Date will be subordinated to the corresponding rights of
the holders of Senior Certificates. If so provided in the related Prospectus
Supplement, the
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subordination of a class may apply only in the event of (or may be limited to)
certain types of losses or shortfalls. The related Prospectus Supplement will
set forth information concerning the manner and amount of subordination
provided by a class or classes of Subordinate Certificates in a series and the
circumstances under which such subordination will be available.
CROSS-SUPPORT PROVISIONS
If the Mortgage Assets in any Trust Fund are divided into separate groups,
each supporting a separate class or classes of Certificates of the related
series, Credit Support may be provided by cross-support provisions requiring
that distributions be made on Senior Certificates evidencing interests in one
group of Mortgage Assets prior to distributions on Subordinate Certificates
evidencing interests in a different group of Mortgage Assets within the Trust
Fund. The Prospectus Supplement for a series that includes a cross-support
provision will describe the manner and conditions for applying such provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the Prospectus Supplement for a series of Certificates,
Mortgage Loans included in the related Trust Fund will be covered for certain
default risks by insurance policies or guarantees. To the extent material, a
copy of each such instrument will accompany the Current Report on Form 8-K to
be filed with the Commission within 15 days of issuance of the Certificates of
the related series.
LETTER OF CREDIT
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or financial institution specified in such Prospectus Supplement (the "L/C
Bank"). Under a letter of credit, the L/C Bank will be obligated to honor draws
thereunder in an aggregate fixed dollar amount, net of unreimbursed payments
thereunder, generally equal to a percentage specified in the related Prospectus
Supplement of the aggregate principal balance of the Mortgage Assets on the
related Cut-off Date or of the initial aggregate Certificate Balance of one or
more classes of Certificates. If so specified in the related Prospectus
Supplement, the letter of credit may permit draws only in the event of certain
types of losses and shortfalls. The amount available under the letter of credit
will, in all cases, be reduced to the extent of the unreimbursed payments
thereunder and may otherwise be reduced as described in the related Prospectus
Supplement. The obligations of the L/C Bank under the letter of credit for each
series of Certificates will expire at the earlier of the date specified in the
related Prospectus Supplement or the termination of the Trust Fund. A copy of
any such letter of credit will accompany the Current Report on Form 8-K to be
filed with the Commission within 15 days of issuance of the Certificates of the
related series.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by insurance policies and/or surety bonds
provided by one or more insurance companies or sureties. Such instruments may
cover, with respect to one or more classes of Certificates of the related
series, timely distributions of interest and/or full distributions of principal
on the basis of a schedule of principal distributions set forth in or
determined in the manner specified in the related Prospectus Supplement. The
related Prospectus Supplement will describe any limitations on the draws that
may be made under any such instrument. A copy of any such instrument will
accompany the Current Report on Form 8-K to be filed with the Commission within
15 days of issuance of the Certificates of the related series.
RESERVE FUNDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered (to the extent of available funds) by one or
more reserve funds in which cash, a letter of credit, Permitted Investments, a
demand note or a combination thereof will be deposited, in the amounts
specified in such Prospectus Supplement. If so specified in the related
Prospectus Supplement, the reserve fund for a series may also be funded over
time by a specified amount of the collections received on the related Mortgage
Assets.
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Amounts on deposit in any reserve fund for a series, together with the
reinvestment income thereon, if any, will be applied for the purposes, in the
manner, and to the extent specified in the related Prospectus Supplement. If so
specified in the related Prospectus Supplement, reserve funds may be
established to provide protection only against certain types of losses and
shortfalls. Following each Distribution Date, amounts in a reserve fund in
excess of any amount required to be maintained therein may be released from the
reserve fund under the conditions and to the extent specified in the related
Prospectus Supplement.
If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, any reinvestment income or
other gain from such investments will be credited to the related reserve fund
for such series, and any loss resulting from such investments will be charged
to such reserve fund. However, such income may be payable to any related Master
Servicer or another service provider as additional compensation for its
services. The reserve fund, if any, for a series will not be a part of the
Trust Fund unless otherwise specified in the related Prospectus Supplement.
CREDIT SUPPORT WITH RESPECT TO MBS
If so provided in the Prospectus Supplement for a series of Certificates,
any MBS included in the related Trust Fund and/or the related underlying
mortgage loans may be covered by one or more of the types of Credit Support
described herein. The related Prospectus Supplement will specify, as to each
such form of Credit Support, the information indicated above with respect
thereto, to the extent such information is material and available.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties.
Because such legal aspects are governed by applicable state law (which laws may
differ substantially), the summaries do not purport to be complete, to reflect
the laws of any particular state, or to encompass the laws of all states in
which the security for the Mortgage Loans (or mortgage loans underlying any
MBS) is situated. Accordingly, the summaries are qualified in their entirety by
reference to the applicable laws of those states. If the Mortgage Assets in any
Trust Fund that are ultimately secured by the properties in a particular state
represent a significant concentration (by balance) of all the Mortgage Assets
in such Trust Fund, the Sponsor will include in the related Prospectus
Supplement such additional information regarding the real estate laws of such
state as may be material to an investment decision with respect to the related
series of Offered Certificates. See "Description of the Trust Funds--Mortgage
Loans". For purposes of the following discussion, "Mortgage Loan" includes a
mortgage loan underlying an MBS.
GENERAL
Each Mortgage Loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as "mortgages". A mortgage creates a lien upon, or
grants a title interest in, the real property covered thereby, and represents
the security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of
separate subordination agreements or intercreditor agreements with others that
hold interests in the real property, the knowledge of the parties to the
mortgage and, generally, the order of recordation of the mortgage in the
appropriate public recording office. However, the lien of a recorded mortgage
will generally be subordinate to later-arising liens for real estate taxes and
assessments and other charges imposed under governmental police powers.
TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In contrast, a
deed of trust is a three-party instrument, among a trustor (the equivalent of a
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. Under a deed of trust,
the trustor grants the property, irrevocably until the debt is paid, in trust
and generally with a power of sale, to the trustee to secure repayment of the
indebtedness evidenced by the related note. A deed to secure debt typically has
two parties. The borrower, or grantor, conveys title to the real property to
the grantee,
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or lender, generally with a power of sale, until such time as the debt is
repaid. In a case where the borrower is a land trust, there would be an
additional party because legal title to the property is held by a land trustee
under a land trust agreement for the benefit of the borrower. At origination of
a mortgage loan involving a land trust, the borrower executes a separate
undertaking to make payments on the mortgage note. The mortgagee's authority
under a mortgage, the trustee's and beneficiary's authority under a deed of
trust and the grantee's authority under a deed to secure debt are governed by
the express provisions of the related instrument, the law of the state in which
the real property is located, certain federal laws (including, without
limitation, the Soldiers' and Sailors' Civil Relief Act of 1940). In addition,
in some deed of trust transactions, the trustee's authority may be governed by
the directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease
and the income derived therefrom, while (unless rents are to be paid directly
to the lender) retaining a revocable license to collect the rents for so long
as there is no default. If the borrower defaults, the license terminates and
the lender is entitled to collect the rents. Local law may require that the
lender take possession of the property and/or obtain a court-appointed receiver
before becoming entitled to collect the rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the
borrower as additional security for the loan. In general, the lender must file
financing statements in order to perfect its security interest in the room
rates and must file continuation statements, generally every five years, to
maintain perfection of such security interest. In certain cases, Mortgage Loans
secured by hotels or motels may be included in a Trust Fund even if the
security interest in the room rates was not perfected or the requisite UCC
filings were allowed to lapse; and, if such fact is deemed by the Sponsor to be
material to the investment decision with respect to a series of Offered
Certificates, it will be set forth in the related Prospectus Supplement. Even
if the lender's security interest in room rates is perfected under the UCC, it
will generally be required to commence a foreclosure action or otherwise take
possession of the property in order to collect the room rates following a
default. In the bankruptcy setting, the lender will be stayed from enforcing
its rights to collect room rates, but those room rates (in light of certain
revisions to the Bankruptcy Code which are effective for all bankruptcy cases
commenced on or after October 22, 1994) constitute "cash collateral" and
therefore cannot be used by the bankruptcy debtor without a hearing or lender's
consent and unless the lender's interest in the room rates is given adequate
protection (e.g., cash payment for otherwise encumbered funds or a replacement
lien on unencumbered property, in either case equal in value to the amount of
room rates that the debtor proposes to use, or other similar relief). See
"--Bankruptcy Laws".
PERSONALTY
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the
borrower and not previously pledged) may constitute a significant portion of
the property's value as security. The creation and enforcement of liens on
personal property are governed by the UCC. Accordingly, if a borrower pledges
personal property as security for a mortgage loan, the lender generally must
file UCC financing statements in order to perfect its security interest
therein, and must file continuation statements, generally every five years, to
maintain that perfection. In certain cases, Mortgage Loans secured in part by
personal property may be included in a Trust Fund even if the security interest
in such personal property was not perfected or the requisite UCC filings were
allowed to lapse; and, if such fact is deemed by the Sponsor to be material to
the investment decision with respect to a series of Offered Certificates, it
will be set forth in the related Prospectus Supplement.
FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the borrower defaults in payment or performance of its
obligations under the note or mortgage, the lender has the right to institute
foreclosure proceedings to sell the real property at public auction to satisfy
the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and non-judicial foreclosure pursuant to a power of sale granted in the
mortgage
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instrument. Other foreclosure procedures are available in some states, but they
are either infrequently used or available only in limited circumstances. A
foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed, and sometimes
requires several years to complete.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon the borrower and all parties
having a subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating defendants. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon successful completion of a judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property, the proceeds of
which are used to satisfy the judgment. Such sales are made in accordance with
procedures that vary from state to state.
Equitable Limitations on Enforceability of Certain Provision. United
States courts have traditionally imposed general equitable principles to limit
the remedies available to lenders in foreclosure actions. These principles are
generally designed to relieve borrowers from the effects of mortgage defaults
perceived as harsh or unfair. Relying on such principles, a court may alter the
specific terms of a loan to the extent it considers necessary to prevent or
remedy an injustice, undue oppression or overreaching, or may require the
lender to undertake affirmative actions to determine the cause of the
borrower's default and the likelihood that the borrower will be able to
reinstate the loan. In some cases, courts have substituted their judgment for
the lender's and have required that lenders reinstate loans or recast payment
schedules in order to accommodate borrowers who are suffering from a temporary
financial disability. In other cases, courts have limited the right of the
lender to foreclose in the case of a non-monetary default, such as a failure to
adequately maintain the mortgaged property or an impermissible further
encumbrance of the mortgaged property. Finally, some courts have addressed the
issue of whether federal or state constitutional provisions reflecting due
process concerns for adequate notice require that a borrower receive notice in
addition to statutorily-prescribed minimum notice. For the most part, these
cases have upheld the reasonableness of the notice provisions or have found
that a public sale under a mortgage providing for a power of sale does not
involve sufficient state action to trigger constitutional protections. In
addition, some states may provide statutory protections such as the right of
the borrower to cure outstanding defaults and reinstate a mortgage loan after
commencement of foreclosure proceedings but prior to a foreclosure sale.
Non-Judicial Foreclosure/Power of Sale. Foreclosure of a deed of trust is
generally accomplished by a non-judicial trustee's sale pursuant to a power of
sale typically granted in the deed of trust. A power of sale may also be
contained in any other type of mortgage instrument if applicable law so
permits. A power of sale under a deed of trust allows a non-judicial public
sale to be conducted generally following a request from the beneficiary/lender
to the trustee to sell the property upon default by the borrower and after
notice of sale is given in accordance with the terms of the mortgage and
applicable state law. In some states, prior to such sale, the trustee under the
deed of trust must record a notice of default and notice of sale and send a
copy to the borrower and to any other party who has recorded a request for a
copy of a notice of default and notice of sale. In addition, in some states the
trustee must provide notice to any other party having an interest of record in
the real property, including junior lienholders. A notice of sale must be
posted in a public place and, in most states, published for a specified period
of time in one or more newspapers. The borrower or junior lienholder may then
have the right, during a reinstatement period required in some states, to cure
the default by paying the entire actual amount in arrears (without regard to
the acceleration of the indebtedness), plus the lender's expenses incurred in
enforcing the obligation. In other states, the borrower or the junior
lienholder is not provided a period to reinstate the loan, but has only the
right to pay off the entire debt to prevent the foreclosure sale. Generally,
state law governs the procedure for public sale, the parties entitled to
notice, the method of giving notice and the applicable time periods.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the exact
status of title to the property (due to, among other things, redemption rights
that may exist) (see "--Foreclosure--Rights of Redemption" below) and because
of the possibility that physical deterioration of the property may have
occurred during the foreclosure proceedings. Potential buyers may also be
reluctant to purchase property at a foreclosure sale as a result of the 1980
decision of the United States Court of Appeals for the Fifth Circuit in Durrett
v. Washington National Insurance Company. The court in Durrett held that even a
non-collusive, regularly conducted foreclosure sale was a fraudulent transfer
under Section 67d of the former Bankruptcy Act (Section 548 of the Bankruptcy
Code, Bankruptcy Reform Act of 1978, as amended, 11 U.S.C. Section 101-1330
(the "Bankruptcy Code")) regardless of the parties' intent and, therefore,
could be rescinded in favor of the bankrupt's estate, if (i) the foreclosure
sale was held while the debtor was insolvent, maintained unreasonably small
capital or intended to incur debts beyond its
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ability to pay and not more than one year prior to the filing of the bankruptcy
petition and (ii) the price paid for the foreclosed property did not represent
"fair consideration" ("reasonably equivalent value" under the Bankruptcy Code).
Although the reasoning and result of Durrett were rejected by the United States
Supreme Court in May 1994, the case could nonetheless be persuasive to a court
applying a state fraudulent conveyance law with provisions similar to those
construed in Durrett. For these reasons, it is common for the lender to
purchase the mortgaged property for an amount equal to the secured indebtedness
and accrued and unpaid interest plus the expenses of foreclosure, in which
event the borrower's debt will be extinguished, or for a lesser amount in order
to preserve its right to seek a deficiency judgment if such is available under
state law. (The Mortgage Loans, however, are generally expected to be
non-recourse. See "Risk Factors--Certain Risks Associated with Mortgage Loans
Secured by Commercial and Multifamily Properties".) Thereafter, subject to the
borrower's right in some states to remain in possession during a redemption
period, the lender will become the owner of the property and have both the
benefits and burdens of ownership, including the obligation to pay debt service
on any senior mortgages, to pay taxes, to obtain casualty insurance and to make
such repairs as are necessary to render the property suitable for sale. The
costs of operating and maintaining a commercial or multifamily residential
property may be significant and may be greater than the income derived from
that property. The lender also will commonly obtain the services of a real
estate broker and pay the broker's commission in connection with the sale or
lease of the property. Depending upon market conditions, the ultimate proceeds
of the sale of the property may not equal the lender's investment in the
property. Moreover, because of the expenses associated with acquiring, owning
and selling a mortgaged property, a lender could realize an overall loss on a
mortgage loan even if the mortgaged property is sold at foreclosure, or resold
after it is acquired through foreclosure, for an amount equal to the full
outstanding principal amount of the loan plus accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all
persons who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption". The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (non-statutory) right which
should be distinguished from post-sale statutory rights of redemption. In some
states, after sale pursuant to a deed of trust or foreclosure of a mortgage,
the borrower and foreclosed junior lienors are given a statutory period in
which to redeem the property. In some states, statutory redemption may occur
only upon payment of the foreclosure sale price. In other states, redemption
may be permitted if the former borrower pays only a portion of the sums due.
The effect of a statutory right of redemption is to diminish the ability of the
lender to sell the foreclosed property because the exercise of a right of
redemption would defeat the title of any purchaser through a foreclosure.
Consequently, the practical effect of the redemption right is to force the
lender to maintain the property and pay the expenses of ownership until the
redemption period has expired. In some states, a post-sale statutory right of
redemption may exist following a judicial foreclosure, but not following a
trustee's sale under a deed of trust.
Anti-Deficiency Legislation. Some or all of the Mortgage Loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure the Mortgage Loan. However, even if a mortgage loan by its terms
provides for recourse to the borrower's other assets, a lender's ability to
realize upon those assets may be limited by state law. For example, in some
states a lender cannot obtain a deficiency judgment against the borrower
following foreclosure or sale under a deed of trust. A deficiency judgment is a
personal judgment against the former borrower equal to the difference between
the net amount realized upon the public sale of the real property and the
amount due to the lender. Other statutes may require the lender to exhaust the
security afforded under a mortgage before bringing a personal action against
the borrower. In certain other states, the lender has the option of bringing a
personal action against the borrower on the debt without first exhausting such
security; however, in some of those states, the lender, following judgment on
such personal action, may be deemed to have elected a remedy
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and thus may be precluded from foreclosing upon the security. Consequently,
lenders in those states where such an election of remedy provision exists will
usually proceed first against the security. Finally, other statutory
provisions, designed to protect borrowers from exposure to large deficiency
judgments that might result from bidding at below-market values at the
foreclosure sale, limit any deficiency judgment to the excess of the
outstanding debt over the fair market value of the property at the time of the
sale.
Leasehold Risks. Mortgage Loans may be secured by a lien on the borrower's
leasehold interest in a ground lease. Leasehold mortgage loans are subject to
certain risks not associated with mortgage loans secured by a lien on the fee
estate of the borrower. The most significant of these risks is that if the
borrower's leasehold were to be terminated (for example, as a result of a lease
default or the bankruptcy of the ground lessor or the borrower/ground lessee),
the leasehold mortgagee would be left without its security. This risk may be
substantially lessened if the ground lease contains provisions protective of
the leasehold mortgagee, such as a provision that requires the ground lessor to
give the leasehold mortgagee notices of lessee defaults and an opportunity to
cure them, a provision that permits the leasehold estate to be assigned to and
by the leasehold mortgagee or the purchaser at a foreclosure sale, a provision
that gives the leasehold mortgagee the right to enter into a new ground lease
with the ground lessor on the same terms and conditions as the old ground lease
or a provision that prohibits the ground lessee/borrower from treating the
ground lease as terminated in the event of the ground lessor's bankruptcy and
rejection of the ground lease by the trustee for the debtor/ground lessor.
Certain Mortgage Loans, however, may be secured by liens on ground leases that
do not contain these provisions. In addition, the enforceability of certain of
these provisions is not assured.
BANKRUPTCY LAWS
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a lender to realize upon collateral and/or to enforce
a deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) to
collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, no interest or principal payments are made during the
course of the bankruptcy case. The delay and the consequences thereof caused by
such automatic stay can be significant. Also, under the Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienor may stay
the senior lender from taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender are met, the amount and terms of a mortgage
loan secured by a lien on property of the debtor may be modified under certain
circumstances. For example, the outstanding amount of the loan may be reduced
to the then-current value of the property (with a corresponding partial
reduction of the amount of lender's security interest) pursuant to a confirmed
plan or lien avoidance proceeding, thus leaving the lender a general unsecured
creditor for the difference between such value and the outstanding balance of
the loan. Other modifications may include the reduction in the amount of each
scheduled payment, by means of a reduction in the rate of interest and/or an
alteration of the repayment schedule (with or without affecting the unpaid
principal balance of the loan), and/or by an extension (or shortening) of the
term to maturity. Some bankruptcy courts have approved plans, based on the
particular facts of the reorganization case, that effected the cure of a
mortgage loan default by paying arrearages over a number of years. Also, a
bankruptcy court may permit a debtor, through its rehabilitative plan, to
reinstate a loan mortgage payment schedule even if the lender has obtained a
final judgment of foreclosure prior to the filing of the debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
affecting the ability of the secured lender to enforce the borrower's
assignment of rents and leases related to the mortgaged property even where the
secured lender has received an absolute assignment of rents rather than an
assignment of rents as additional security. Under Section 362 of the Bankruptcy
Code, the lender will usually be stayed from enforcing the assignment, and the
legal proceedings necessary to resolve the issue could be time-consuming, with
resulting delays in the lender's receipt of the rents. However, the Bankruptcy
Code has recently been amended to provide that a lender's perfected
pre-petition security interest in leases, rents and hotel revenues continues in
the post-petition leases, rents and hotel revenues, unless a bankruptcy court
orders to the contrary "based on the equities of the case". Thus, unless a
court orders otherwise, revenues from a mortgaged property generated after the
date the bankruptcy petition is filed will constitute "cash collateral" under
the Bankruptcy Code. Debtors may only use cash collateral upon obtaining the
lender's consent or a prior court order finding that the lender's interest in
the mortgaged properties and the cash collateral is "adequately protected" as
such term is defined and interpreted under the Bankruptcy Code.
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If a borrower's ability to make payment on a mortgage loan is dependent on
its receipt of rent payments under a lease of the related property, that
ability may be impaired by the commencement of a bankruptcy proceeding relating
to a lessee under such lease. Under the Bankruptcy Code, the filing of a
petition in bankruptcy by or on behalf of a lessee results in a stay in
bankruptcy against the commencement or continuation of any state court
proceeding for past due rent, for accelerated rent, for damages or for a
summary eviction order with respect to a default under the lease that occurred
prior to the filing of the lessee's petition. In addition, the Bankruptcy Code
generally provides that a trustee or debtor-in-possession may, subject to
approval of the court, (i) assume the lease and retain it or assign it to a
third party even when the lease prohibits such assignment or (ii) reject the
lease. If the lease is assumed, the trustee or debtor-in-possession (or
assignee, if applicable) must cure any pre-and post-petition defaults under the
lease, compensate the lessor for its losses and provide the lessor with
"adequate assurance" of future performance. Such remedies may be insufficient,
and any assurances provided to the lessor may, after the fact, eventually be
inadequate. If the lease is rejected, the lessor will be treated as an
unsecured creditor (except potentially to the extent of any security deposit)
with respect to its claim for damages for termination of the lease. The
Bankruptcy Code also limits a lessor's damages for lease rejection to (a) the
rent reserved by the lease (without regard to acceleration) for the greater of
one year, or 15%, not to exceed three years, of the remaining term of the
lease, plus (b) unpaid rent to the earlier of the surrender of the property or
the lessee's bankruptcy filing. In addition, some courts have limited a
lessor's post-petition pre-rejection priority claim for lease payments to fair
market value or less based on the benefit of the lease to the debtor's
bankruptcy estate.
ENVIRONMENTAL RISKS
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties
that are or have been used for industrial, manufacturing, military or disposal
activity. Such environmental risks include the risk of the diminution of the
value of a contaminated property or, as discussed below, liability for clean-up
costs or other remedial actions that could exceed the value of the property or
the amount of the lender's loan. In certain circumstances, a lender could
determine to abandon a contaminated mortgaged property as collateral for its
loan rather than foreclose and risk liability for clean-up costs.
Superlien Laws. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several states,
such a lien has priority over all existing liens, including those of existing
mortgages. In these states, the lien of a mortgage may lose its priority to
such a "superlien".
CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. A secured lender may be liable as an "owner" or "operator"
of a contaminated mortgaged property if agents or employees of the lender have
become sufficiently involved in the management of such mortgaged property or
the operations of the borrower. Such liability may exist even if the lender did
not cause or contribute to the contamination and regardless of whether or not
the lender has actually taken possession of a mortgaged property through
foreclosure, deed in lieu of foreclosure or otherwise. Moreover, such liability
is not limited to the original or unamortized principal balance of a loan or to
the value of the property securing a loan. Excluded from CERCLA's definition of
"owner" or "operator", however, is a person who without participating in the
management of the facility, holds indicia of ownership primarily to protect his
security interest. This is the so called "secured creditor exemption".
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996
(the "Act") amended, among other things, the provisions of CERCLA with respect
to lender liability and the secured creditor exemption. The Act offers
substantial protection to lenders by defining the activities in which a lender
can engage and still have the benefit of the secured creditor exemption. In
order for a lender to be deemed to have participated in the management of a
mortgaged property, the lender must actually participate in the operational
affairs of the property of the borrower. The Act provides that "merely having
the capacity to influence, or unexercised right to control" operations does not
constitute participation in management. A lender will lose the protection of
the secured creditor exemption only if it exercises decision-making control
over the borrower's environmental compliance and hazardous substance handling
and disposal practices, or assumes day-to-day management of operational
functions of the mortgaged property. The Act also provides that a lender will
continue to have the benefit of the secured creditor exemption even if it
forecloses on a mortgaged property, purchases it at a foreclosure sale or
accepts a deed-in-lieu of foreclosure provided that the lender seeks to sell
the mortgaged property at the earliest practicable commercially reasonable time
on commercially reasonable terms.
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Certain Other Federal and State Laws. Many states have statutes similar to
CERCLA, and not all those statutes provide for a secured creditor exemption. In
addition, under federal law, there is potential liability relating to hazardous
waste and underground storage tanks pursuant to Subtitle I of the federal
Resource Conservation and Recovery Act ("RCRA").
In addition, the definition of "hazardous substances" under CERCLA
specifically excludes petroleum products. Subtitle I of RCRA governs
underground petroleum storage tanks. Under the Act the protections accorded to
lenders under CERCLA are also accorded to the holders of security interests in
underground storage tanks. It should be noted, however, that liability for
cleanup of petroleum contamination may be governed by state law, which may not
provide for any specific protection for secured creditors.
In a few states, transfer of some types of properties is conditioned upon
clean-up of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of
foreclosure or otherwise, may be required to clean-up the contamination before
selling or otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law
causes of action (for example, actions based on nuisance or on toxic tort
resulting in death, personal injury or damage to property) related to hazardous
environmental conditions on a property. While it may be more difficult to hold
a lender liable in such cases, unanticipated or uninsurable liabilities of the
borrower may jeopardize the borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or operator who created
the environmental hazard, but that individual or entity may be without
substantial assets. Accordingly, it is possible that such costs could become a
liability of a Trust Fund and occasion a loss to Certificateholders of the
related series.
To reduce the likelihood of such a loss, and unless otherwise provided in
the related Prospectus Supplement, the related Pooling Agreement will provide
that neither the Master Servicer nor the Special Servicer, acting on behalf of
the Trustee, may acquire title to a Mortgaged Property or take over its
operation unless the Special Servicer, based on a report prepared by a person
who regularly conducts environmental audits, has made the determination that
certain conditions relating to environmental matters, as described under
"Description of the Pooling Agreements--Realization Upon Defaulted Mortgage
Loans", have been satisfied.
If a lender forecloses on a mortgage secured by a property, the operations
on which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers
(including prospective buyers at a foreclosure sale or following foreclosure).
Such disclosure may decrease the amount that prospective buyers are willing to
pay for the affected property, sometimes substantially, and thereby decrease
the ability of the lender to recoup its investment in a loan upon foreclosure.
Environmental Site Assessments. In most cases, an environmental site
assessment of each Mortgaged Property will have been performed in connection
with the origination of the related Mortgage Loan or at some time prior to the
issuance of the related series of Certificates. Environmental site assessments,
however, vary considerably in their content, quality and cost. Even when
adhering to good, commercial and customary professional practices,
environmental consultants will sometimes not detect significant environmental
problems because carrying out an exhaustive environmental assessment would be
far too costly and time-consuming to be practical.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate
the maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. By virtue, however, of the Garn-St Germain Depository
Institutions Act of 1982 (the "Garn Act"), effective October 15, 1982 (which
purports to preempt state laws that prohibit the enforcement of due-on-sale
clauses by providing among other matters, that "due-on-sale" clauses in certain
loans made after the effective date of the Garn Act are enforceable, within
certain limitations as set forth in the Garn Act and the regulations
promulgated thereunder), a
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Master Servicer may nevertheless have the right to accelerate the maturity of a
Mortgage Loan that contains a "due-on-sale" provision upon transfer of an
interest in the property, regardless of the Master Servicer's ability to
demonstrate that a sale threatens its legitimate security interest.
SUBORDINATE FINANCING
Certain of the Mortgage Loans may not restrict the ability of the borrower
to use the Mortgaged Property as security for one or more additional loans.
Where a borrower encumbers a mortgaged property with one or more junior liens,
the senior lender is subjected to additional risk. First, the borrower may have
difficulty servicing and repaying multiple loans. Moreover, if the subordinate
financing permits recourse to the borrower (as is frequently the case) and the
senior loan does not, a borrower may have more incentive to repay sums due on
the subordinate loan. Second, acts of the senior lender that prejudice the
junior lender or impair the junior lender's security may create a superior
equity in favor of the junior lender. For example, if the borrower and the
senior lender agree to an increase in the principal amount of or the interest
rate payable on the senior loan, the senior lender may lose its priority to the
extent any existing junior lender is harmed or the borrower is additionally
burdened. Third, if the borrower defaults on the senior loan and/or any junior
loan or loans, the existence of junior loans and actions taken by junior
lenders can impair the security available to the senior lender and can
interfere with or delay the taking of action by the senior lender. Moreover,
the bankruptcy of a junior lender may operate to stay foreclosure or similar
proceedings by the senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and
in some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower
for delinquent payments. Certain states also limit the amounts that a lender
may collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply
to certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any
state to reimpose interest rate limits by adopting, before April 1, 1983, a law
or constitutional provision that expressly rejects application of the federal
law. In addition, even where Title V is not so rejected, any state is
authorized by the law to adopt a provision limiting discount points or other
charges on mortgage loans covered by Title V. Certain states have taken action
to reimpose interest rate limits and/or to limit discount points or other
charges.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund unless (i) such Mortgage Loan
provides for such interest rate, discount points and charges as are permitted
in such state or (ii) such Mortgage Loan provides that the terms thereof are to
be construed in accordance with the laws of another state under which such
interest rate, discount points and charges would not be usurious and the
borrower's counsel has rendered an opinion that such choice of law provision
would be given effect.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of such borrower's mortgage loan (including a borrower who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies
to individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service (including reservists who are called to
active duty) after origination of the related mortgage loan, no information can
be provided as to the number of
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loans with individuals as borrowers that may be affected by the Relief Act.
Application of the Relief Act would adversely affect, for an indeterminate
period of time, the ability of a Master Servicer or Special Servicer to collect
full amounts of interest on certain of the Mortgage Loans. Any shortfalls in
interest collections resulting from the application of the Relief Act would
result in a reduction of the amounts distributable to the holders of the
related series of Certificates, and would not be covered by advances or, unless
otherwise specified in the related Prospectus Supplement, any form of Credit
Support provided in connection with such Certificates. In addition, the Relief
Act imposes limitations that would impair the ability of a Master Servicer or
Special Servicer to foreclose on an affected Mortgage Loan during the
borrower's period of active duty status, and, under certain circumstances,
during an additional three month period thereafter.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers that are
structural in nature from existing places of public accommodation to the extent
"readily achievable". In addition, under the ADA, alterations to a place of
public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, such altered portions are readily accessible to and
usable by disabled individuals. The "readily achievable" standard takes into
account, among other factors, the financial resources of the affected site,
owner, landlord or other applicable person. The requirements of the ADA may
also be imposed on a foreclosing lender who succeeds to the interest of the
borrower as owner or landlord. Since the "readily achievable" standard may vary
depending on the financial condition of the owner or landlord, a foreclosing
lender who is financially more capable than the borrower of complying with the
requirements of the ADA may be subject to more stringent requirements than
those to which the borrower is subject.
FORFEITURES IN DRUG AND RICO PROCEEDINGS
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, such crimes. Under
procedures contained in the Comprehensive Crime Control Act of 1984, the
government may seize the property even before conviction. The government must
publish notice of the forfeiture proceeding and may give notice to all parties
"known to have an alleged interest in the property", including the holders of
mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that: (i) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (ii) the lender was, at the
time of execution of the mortgage, "reasonably without cause to believe" that
the property was used in, or purchased with the proceeds or, illegal drug or
RICO activities.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of Offered
Certificates by Certificateholders that will hold the Certificates as capital
assets within the meaning of Section 1221 of the Internal Revenue Code of 1986
(the "Code"), and is based on the advice of the special tax counsel to the
Sponsor specified in the related Prospectus Supplement. However, the following
discussion does not purport to discuss all federal income tax consequences that
may be applicable to particular categories of investors, some of which (such as
banks, insurance companies and foreign investors) may be subject to special
rules. Further, the authorities on which this discussion, and the opinion
referred to below are based are subject to change or differing interpretations,
which could apply retroactively. Taxpayers and preparers of tax returns
(including those filed by any REMIC or other issuer) should be aware that under
applicable Treasury regulations a provider of advice on specific issues of law
is not considered an income tax return preparer unless the advice (i) is given
with respect to events that have occurred at the time the advice is rendered
and is not given with respect to the consequences of contemplated actions, and
(ii) is directly relevant to the determination of an entry on a tax return.
Accordingly, taxpayers should consult their own tax advisors and tax return
preparers regarding the treatment of any item on their tax return, even where
the anticipated tax consequences have been discussed herein. In addition to the
federal income tax consequences described herein,
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potential investors should consider the state and local tax consequences, if
any, of the purchase, ownership and disposition of the Certificates. See "State
and Other Tax Consequences". Certificateholders are advised to consult their
own tax advisors concerning the federal, state, local or other tax consequences
to them of the purchase, ownership and disposition of Offered Certificates.
The following discussion addresses securities of two general types: (i)
certificates ("REMIC Certificates") representing interests in a Trust Fund, or
a portion thereof, that a REMIC Administrator will elect to have treated as a
real estate mortgage investment conduit ("REMIC") under Sections 860A through
860G (the "REMIC Provisions") of the Code, and (ii) certificates ("Grantor
Trust Certificates") representing interests in a Trust Fund ("Grantor Trust
Fund") as to which no such election will be made. The Prospectus Supplement for
each series of Certificates will indicate whether a REMIC election (or
elections) will be made for the related Trust Fund and, if such an election is
to be made, will identify all "regular interests" and "residual interests" in
the REMIC. For purposes of this tax discussion, references to a
"Certificateholder" or a "holder" are to the beneficial owner of a Certificate.
The following discussion is limited in applicability to Offered
Certificates. Moreover, this discussion applies only to the extent that
Mortgage Assets held by a Trust Fund consist solely of Mortgage Loans. To the
extent that other Mortgage Assets, including REMIC certificates and mortgage
pass-through certificates, are to be held by a Trust Fund, the tax consequences
associated with the inclusion of such assets will be disclosed in the related
Prospectus Supplement. In addition, if Cash Flow Agreements, other than
guaranteed investment contracts, are included in a Trust Fund, the tax
consequences associated with such Cash Flow Agreements also will be disclosed
in the related Prospectus Supplement. See "Description of the Trust Funds--Cash
Flow Agreements".
The following discussion is based in part upon the rules governing
original issue discount that are set forth in Sections 1271-1273 and 1275 of
the Code and in the Treasury regulations issued thereunder (the "OID
Regulations"), and in part upon the REMIC Provisions and the Treasury
regulations issued thereunder (the "REMIC Regulations"). The OID Regulations do
not adequately address certain issues relevant to, and in some instances
provide that they are not applicable to, securities such as the Certificates.
REMICS
Classification of REMICs. Upon the issuance of each series of REMIC
Certificates, counsel to the Sponsor will deliver its opinion generally to the
effect that, assuming compliance with all provisions of the related Pooling
Agreement and certain other documents (and subject to certain assumptions set
forth therein), the related Trust Fund (or each applicable portion thereof)
will qualify as a REMIC and the REMIC Certificates offered with respect thereto
will be considered to evidence ownership of "regular interests" ("REMIC Regular
Certificates") or "residual interests" ("REMIC Residual Certificates") in that
REMIC within the meaning of the REMIC Provisions.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the entity may lose its status as a REMIC for such year and thereafter.
In that event, such entity may be taxable as a corporation and the related
REMIC Certificates may not be accorded the status or given the tax treatment
described below. Although the Code authorizes the Treasury Department to issue
regulations providing relief in the event of an inadvertent termination of
REMIC status, no such regulations have been issued. Any such relief, moreover,
may be accompanied by sanctions, such as the imposition of a corporate tax on
all or a portion of the Trust Fund's income for the period in which the
requirements for such status are not satisfied. The Pooling Agreement with
respect to each REMIC will include provisions designed to maintain the Trust
Fund's status as a REMIC under the REMIC Provisions. It is not anticipated that
the status of any Trust Fund as a REMIC will be terminated.
Characterization of Investments in REMIC Certificates. In general, unless
otherwise provided in the related Prospectus Supplement, the REMIC Certificates
will be "real estate assets" within the meaning of Section 856(c)(5)(A) of the
Code and assets described in Section 7701(a)(19)(C) of the Code in the same
proportion that the assets of the REMIC underlying such Certificates would be
so treated. However, to the extent that the REMIC assets constitute mortgages
on property not used for residential or certain other prescribed purposes, the
REMIC Certificates will not be treated as assets qualifying under Section
7701(a)(19)(C)(v). Moreover, if 95% or more of the assets of the REMIC qualify
for any of the foregoing treatments at all times during a calendar year, the
REMIC Certificates will qualify for the corresponding status in their entirety
for that calendar year. Interest (including original issue discount) on the
REMIC Regular Certificates and income allocated to the class of REMIC Residual
Certificates will be interest described in Section 856(c)(3)(B) of the Code to
the extent that such Certificates are treated as "real estate assets" within
the meaning of
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Section 856(c)(5)(A) of the Code. In addition, the REMIC Regular Certificates
will be "qualified mortgages" within the meaning of Section 860G(a)(3) of the
Code in the hands of another REMIC and will be "permitted assets" under Section
860L(c)(1)(G) for a "financial asset securitization investment trust", or
"FASIT". The determination as to the percentage of the REMIC's assets that
constitute assets described in the foregoing sections of the Code will be made
with respect to each calendar quarter based on the average adjusted basis of
each category of the assets held by the REMIC during such calendar quarter. The
REMIC Administrator will report those determinations to Certificateholders in
the manner and at the times required by the applicable Treasury regulations.
The assets of the REMIC will include, in addition to Mortgage Loans,
payments on Mortgage Loans held pending distribution on the REMIC Certificates
and property acquired by foreclosure held pending sale, and may include amounts
in reserve accounts. It is unclear whether property acquired by foreclosure
held pending sale and amounts in reserve accounts would be considered to be
part of the Mortgage Loans, or whether such assets (to the extent not invested
in assets described in the foregoing sections) otherwise would receive the same
treatment as the Mortgage Loans for purposes of all of the foregoing sections.
In addition, in some instances Mortgage Loans may not be treated entirely as
assets described in the foregoing sections. If so, the related Prospectus
Supplement will describe those Mortgage Loans that may be so treated. Treasury
Regulations do provide, however, that payments on Mortgage Loans held pending
distribution are considered part of the Mortgage Loans for purposes of Section
856(c)(5)(A) of the Code.
Tiered REMIC Structures. For certain series of REMIC Certificates, two or
more separate elections may be made to treat designated portions of the related
Trust Fund as separate REMICs ("Tiered REMICs") for federal income tax
purposes. Upon the issuance of any such series of REMIC Certificates, counsel
to the Sponsor will deliver its opinion generally to the effect that, assuming
compliance with all provisions of the related Pooling Agreement, each of the
Tiered REMICs will qualify as a REMIC, and the REMIC Certificates issued by
each of the Tiered REMICs will be considered to evidence ownership of REMIC
Regular Certificates or REMIC Residual Certificates, as the case may be, in
such REMIC, within the meaning of the REMIC Provisions.
Solely for purposes of determining whether the REMIC Certificates will be
"real estate assets" within the meaning of Section 856(c)(5)(A) of the Code,
and "loans secured by an interest in real property" under Section
7701(a)(19)(C) of the Code, and whether the income on such Certificates is
interest described in Section 856(c)(3)(B) of the Code, the Tiered REMICs will
be treated as one REMIC.
TAXATION OF OWNERS OF REMIC REGULAR CERTIFICATES
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt
instruments issued by the REMIC and not as ownership interests in the REMIC or
its assets. Moreover, holders of REMIC Regular Certificates that otherwise
report income under the cash method of accounting will be required to report
income with respect to REMIC Regular Certificates under the accrual method.
Original Issue Discount. Certain classes of REMIC Regular Certificates may
be issued with "original issue discount" within the meaning of Section 1273(a)
of the Code. Any holders of REMIC Regular Certificates issued with original
issue discount generally will be required to include original issue discount in
income as it accrues, in accordance with the method described below, in advance
of the receipt of the cash attributable to such income. In addition, Section
1272(a)(6) of the Code provides special rules applicable to REMIC Regular
Certificates and certain other debt instruments issued with original issue
discount; regulations, however, have not been issued under that section.
The Code requires that a prepayment assumption be used with respect to
Mortgage Loans held by a REMIC in computing the accrual of original issue
discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner
prescribed in Treasury regulations; as noted above, those regulations have not
been issued. The Conference Committee Report accompanying the Tax Reform Act of
1986 (the "Committee Report") indicates that the regulations will provide that
the prepayment assumption used with respect to a REMIC Regular Certificate must
be the same as that used in pricing the initial offering of such REMIC Regular
Certificate. The prepayment assumption (the "Prepayment Assumption") used in
reporting original issue discount for each series will be consistent with this
standard and will be disclosed in the related Prospectus Supplement. However,
neither the Sponsor nor any other person will make any representation that the
Mortgage Loans will in fact prepay at a rate conforming to the Prepayment
Assumption or at any other rate or that such Prepayment Assumption will not be
challenged by the Internal Revenue Service (the "IRS") on audit.
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The original issue discount, if any, on a REMIC Regular Certificate will
be the excess of its stated redemption price at maturity over its issue price.
The issue price of a particular class of REMIC Regular Certificates will be the
first cash price at which a substantial amount of REMIC Regular Certificates of
that class is sold (excluding sales to bond houses, brokers and underwriters).
If less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the date of their initial issuance
(the "Closing Date") the issue price for such class will be the fair market
value of such class on the Closing Date. Under the OID Regulations, the stated
redemption price of a REMIC Regular Certificate is equal to the total of all
payments to be made on such Certificate other than "qualified stated interest".
"Qualified stated interest" includes interest that is unconditionally payable
at least annually at a single fixed rate, at a "qualified floating rate" or at
an "objective rate", at a combination of a single fixed rate and one or more
"qualified floating rates" or one "qualified inverse floating rate", or at a
combination of "qualified floating rates" that does not operate in a manner
that accelerates or defers interest payments on such REMIC Regular Certificate.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
such REMIC Regular Certificates. If the original issue discount rules apply to
such Certificates, the related Prospectus Supplement will describe the manner
in which such rules will be applied with respect to those Certificates in
preparing information returns to the Certificateholders and the IRS.
Certain classes of the REMIC Regular Certificates may provide for the
first interest payment with respect to such Certificates to be made more than
one month after the date of issuance, a period which is longer than the
subsequent monthly intervals between interest payments. Assuming the "accrual
period" (as defined below) for original issue discount is each monthly period
that ends on a Distribution Date, in some cases, as a consequence of this "long
first accrual period", some or all interest payments may be required to be
included in the stated redemption price of the REMIC Regular Certificate and
accounted for as original issue discount. Because interest on REMIC Regular
Certificates must in any event be accounted for under an accrual method,
applying this analysis would result in only a slight difference in the timing
of the inclusion in income of the yield on the REMIC Regular Certificates.
In addition, if the accrued interest to be paid on the first Distribution
Date is computed with respect to a period that begins prior to the Closing
Date, a portion of the purchase price paid for a REMIC Regular Certificate will
reflect such accrued interest. In such cases, information returns provided to
the Certificateholders and the IRS will be based on the position that the
portion of the purchase price paid for the interest accrued with respect to
periods prior to the Closing Date is treated as part of the overall cost of
such REMIC Regular Certificate (and not as a separate asset the cost of which
is recovered entirely out of interest received on the next Distribution Date)
and that portion of the interest paid on the first Distribution Date in excess
of interest accrued for a number of days corresponding to the number of days
from the Closing Date to the first Distribution Date should be included in the
stated redemption price of such REMIC Regular Certificate. However, the OID
Regulations state that all or some portion of such accrued interest may be
treated as a separate asset the cost of which is recovered entirely out of
interest paid on the first Distribution Date. It is unclear how an election to
do so would be made under the OID Regulations and whether such an election
could be made unilaterally by a Certificateholder.
Notwithstanding the general definition of original issue discount,
original issue discount on a REMIC Regular Certificate will be considered to be
de minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average life. For this purpose,
the weighted average life of the REMIC Regular Certificate is computed as the
sum of the amounts determined, as to each payment included in the stated
redemption price of such REMIC Regular Certificate, by multiplying (i) the
number of complete years (rounding down for partial years) from the issue date
until such payment is expected to be made (presumably taking into account the
Prepayment Assumption) by (ii) a fraction, the numerator of which is the amount
of the payment and the denominator of which is the stated redemption price at
maturity of such REMIC Regular Certificate. Under the OID Regulations, original
issue discount of only a de minimis amount (other than de minimis original
issue discount attributable to a so-called "teaser" interest rate or an initial
interest holiday) will be included in income as each payment of stated
principal is made, based on the product of the total amount of such de minimis
original issue discount and a fraction, the numerator of which is the amount of
such principal payment and the denominator of which is the outstanding stated
principal amount of the REMIC Regular Certificate. The OID Regulations also
would permit a Certificateholder to elect to accrue de minimis original issue
discount into income currently based on a constant yield method. See
"--Taxation of Owners of REMIC Regular Certificates--Market Discount" for a
description of such election under the OID Regulations.
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If original issue discount on a REMIC Regular Certificate is in excess of
a de minimis amount, the holder of such Certificate must include in ordinary
gross income the sum of the "daily portions" of original issue discount for
each day during its taxable year on which it held such REMIC Regular
Certificate, including the purchase date but excluding the disposition date. In
the case of an original holder of a REMIC Regular Certificate, the daily
portions of original issue discount will be determined as follows.
As to each "accrual period", that is, unless otherwise stated in the
related Prospectus Supplement, each period that ends on a date that corresponds
to a Distribution Date and begins on the first day following the immediately
preceding accrual period (or in the case of the first such period, begins on
the Closing Date), a calculation will be made of the portion of the original
issue discount that accrued during such accrual period. The portion of original
issue discount that accrues in any accrual period will equal the excess, if
any, of (i) the sum of (a) the present value, as of the end of the accrual
period, of all of the distributions remaining to be made on the REMIC Regular
Certificate, if any, in future periods and (b) the distributions made on such
REMIC Regular Certificate during the accrual period of amounts included in the
stated redemption price, over (ii) the adjusted issue price of such REMIC
Regular Certificate at the beginning of the accrual period. The present value
of the remaining distributions referred to in the preceding sentence will be
calculated (i) assuming that distributions on the REMIC Regular Certificate
will be received in future periods based on the Mortgage Loans being prepaid at
a rate equal to the Prepayment Assumption and (ii) using a discount rate equal
to the original yield to maturity of the Certificate. For these purposes, the
original yield to maturity of the Certificate will be calculated based on its
issue price and assuming that distributions on the Certificate will be made in
all accrual periods based on the Mortgage Loans being prepaid at a rate equal
to the Prepayment Assumption. The adjusted issue price of a REMIC Regular
Certificate at the beginning of any accrual period will equal the issue price
of such Certificate, increased by the aggregate amount of original issue
discount that accrued with respect to such Certificate in prior accrual
periods, and reduced by the amount of any distributions made on such REMIC
Regular Certificate in prior accrual periods of amounts included in the stated
redemption price. The original issue discount accruing during any accrual
period, computed as described above, will be allocated ratably to each day
during the accrual period to determine the daily portion of original issue
discount for such day.
A subsequent purchaser of a REMIC Regular Certificate that purchases such
Certificate at a cost (excluding any portion of such cost attributable to
accrued qualified stated interest) less than its remaining stated redemption
price will also be required to include in gross income the daily portions of
any original issue discount with respect to such Certificate. However, each
such daily portion will be reduced, if such cost is in excess of its "adjusted
issue price", in proportion to the ratio such excess bears to the aggregate
original issue discount remaining to be accrued on such REMIC Regular
Certificate. The adjusted issue price of a REMIC Regular Certificate on any
given day equals the sum of (i) the adjusted issue price (or, in the case of
the first accrual period, the issue price) of such Certificate at the beginning
of the accrual period which includes such day and (ii) the daily portions of
original issue discount for all days during such accrual period prior to such
day.
If the foregoing method for computing original issue discount results in a
negative amount of original issue discount as to any accrual period with
respect to a REMIC Regular Certificate, the amount of original issue discount
allocable to such accrual period will be zero. That is, no current deduction of
such negative amount will be allowed to the holder of such Certificate. The
holder will instead only be permitted to offset such negative amount against
future positive original issue discount (if any) attributable to such a
Certificate. Although not free from doubt, it is possible that a
Certificateholder may be permitted to deduct a loss to the extent his or her
basis in the Certificate exceeds the maximum amount of payments such
Certificateholder could ever receive with respect to such Certificate. However,
any such loss may be a capital loss, which is limited in its deductibility. The
foregoing considerations are particularly relevant to Stripped Interest
Certificates which can have negative yields under certain circumstances that
are not default related. See "Risk Factors--Prepayments; Average Life of
Certificates; Yields" herein.
Market Discount. A Certificateholder that purchases a REMIC Regular
Certificate at a market discount (other than a de minimis amount), that is, in
the case of a REMIC Regular Certificate issued without original issue discount,
at a purchase price less than its remaining stated principal amount, or in the
case of a REMIC Regular Certificate issued with original issue discount, at a
purchase price less than its adjusted issue price, will recognize gain upon
receipt of each distribution representing some or all of the stated redemption
price. In particular, under Section 1276 of the Code such a Certificateholder
generally will be required to allocate the portion of each such distribution
representing stated redemption price first to accrued market discount not
previously included in income, and to recognize ordinary income to
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that extent. A Certificateholder may elect to include market discount in income
currently as it accrues rather than including it on a deferred basis in
accordance with the foregoing. If made, such election will apply to all market
discount bonds acquired by such Certificateholder on or after the first day of
the first taxable year to which such election applies.
The OID Regulations also permit a Certificateholder to elect to accrue all
interest, discount (including de minimis market or original issue discount) and
premium in income as interest, based on a constant yield method. If such an
election were made with respect to a REMIC Regular Certificate with market
discount, the Certificateholder would be deemed to have made an election to
include currently market discount in income with respect to all other debt
instruments having market discount that such Certificateholder acquires during
the taxable year of the election or thereafter, and possibly previously
acquired instruments. Similarly, a Certificateholder that made this election
for a Certificate that is acquired at a premium would be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such Certificateholder owns or acquires. See
"--Taxation of Owners of REMIC Regular Certificates--Premium" below. Each of
the elections in this and the preceding paragraph to accrue interest, discount
and premium with respect to a Certificate on a constant yield method or as
interest would be irrevocable.
However, market discount with respect to a REMIC Regular Certificate will
be considered to be de minimis for purposes of Section 1276 of the Code if such
market discount is less than 0.25% of the remaining stated redemption price of
such REMIC Regular Certificate multiplied by the number of complete years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect
to market discount, presumably taking into account the Prepayment Assumption.
If market discount is treated as de minimis under this rule, it appears that
the actual discount would be treated in a manner similar to original issue
discount of a de minimis amount. See "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount". Such treatment would result in discount
being included in income at a slower rate than discount would be required to be
included in income using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than
one installment. Until regulations are issued by the Treasury Department,
certain rules described in the Committee Report apply. The Committee Report
indicates that in each accrual period market discount on REMIC Regular
Certificates should accrue, at the Certificateholder's option: (i) on the basis
of a constant yield method, (ii) in the case of a REMIC Regular Certificate
issued without original issue discount, in an amount that bears the same ratio
to the total remaining market discount as the stated interest paid in the
accrual period bears to the total amount of stated interest remaining to be
paid on the REMIC Regular Certificate as of the beginning of the accrual
period, or (iii) in the case of a REMIC Regular Certificate issued with
original issue discount, in an amount that bears the same ratio to the total
remaining market discount as the original issue discount accrued in the accrual
period bears to the total original issue discount remaining on the REMIC
Regular Certificate at the beginning of the accrual period. Moreover, the
Prepayment Assumption used in calculating the accrual of original issue
discount is also used in calculating the accrual of market discount. Because
the regulations referred to in this paragraph have not been issued, it is not
possible to predict what effect such regulations might have on the tax
treatment of a REMIC Regular Certificate purchased at a discount in the
secondary market.
To the extent that REMIC Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which such discount would accrue if it
were original issue discount. Moreover, in any event a holder of a REMIC
Regular Certificate generally will be required to treat a portion of any gain
on the sale or exchange of such Certificate as ordinary income to the extent of
the market discount accrued to the date of disposition under one of the
foregoing methods, less any accrued market discount previously reported as
ordinary income.
Further, under Section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed the market discount that accrues
during such taxable year and is, in general, allowed as a deduction not later
than the year in which such market discount is includible in income. If such
holder, however, has elected to include market discount in income currently as
it accrues, the interest deferral rule described above would not apply.
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Premium. A REMIC Regular Certificate purchased at a cost (excluding any
portion of such cost attributable to accrued qualified stated interest) greater
than its remaining stated redemption price will be considered to be purchased
at a premium. The holder of such a REMIC Regular Certificate may elect under
Section 171 of the Code to amortize such premium under the constant yield
method over the life of the Certificate. On June 27, 1996, the IRS published in
the Federal Register proposed regulations on the amortization of bond premium.
Under those regulations, if a holder elects to amortize bond premium, bond
premium would be amortized on a constant yield method and would be applied
against qualified stated interest. The proposed regulations generally would be
effective for Certificates acquired on or after the date 60 days after the date
final regulations are published in the Federal Register. If made, such an
election will apply to all debt instruments having amortizable bond premium
that the holder owns or subsequently acquires. The OID Regulations also permit
Certificateholders to elect to include all interest, discount and premium in
income based on a constant yield method, further treating the Certificateholder
as having made the election to amortize premium generally. See "--Taxation of
Owners of REMIC Regular Certificates--Market Discount". The Committee Report
states that the same rules that apply to accrual of market discount (which
rules will require use of a Prepayment Assumption in accruing market discount
with respect to REMIC Regular Certificates without regard to whether such
Certificates have original issue discount) will also apply in amortizing bond
premium under Section 171 of the Code.
Realized Losses. Under Section 166 of the Code, both corporate holders of
the REMIC Regular Certificates and noncorporate holders of the REMIC Regular
Certificates that acquire such Certificates in connection with a trade or
business should be allowed to deduct, as ordinary losses, any losses sustained
during a taxable year in which their Certificates become wholly or partially
worthless as the result of one or more realized losses on the Mortgage Loans.
However, it appears that a noncorporate holder that does not acquire a REMIC
Regular Certificate in connection with a trade or business will not be entitled
to deduct a loss under Section 166 of the Code until such holder's Certificate
becomes wholly worthless (i.e., until its outstanding principal balance has
been reduced to zero) and that the loss will be characterized as a short-term
capital loss.
Each holder of a REMIC Regular Certificate will be required to accrue
interest and original issue discount with respect to such Certificate, without
giving effect to any reductions in distributions attributable to defaults or
delinquencies on the Mortgage Assets until it can be established that any such
reduction ultimately will not be recoverable. As a result, the amount of
taxable income reported in any period by the holder of a REMIC Regular
Certificate could exceed the amount of economic income actually realized by the
holder in such period. Although the holder of a REMIC Regular Certificate
eventually will recognize a loss or reduction in income attributable to
previously accrued and included income that as a result of a realized loss
ultimately will not be realized, the law is unclear with respect to the timing
and character of such loss or reduction in income.
TAXATION OF OWNERS OF REMIC RESIDUAL CERTIFICATES
General. As residual interests, the REMIC Residual Certificates will be
subject to tax rules that differ significantly from those that would apply if
the REMIC Residual Certificates were treated for federal income tax purposes as
direct ownership interests in the Mortgage Loans or as debt instruments issued
by the REMIC.
A holder of a REMIC Residual Certificate generally will be required to
report its daily portion of the taxable income or, subject to the limitations
noted in this discussion, the net loss of the REMIC for each day during a
calendar quarter that such holder owned such REMIC Residual Certificate. For
this purpose, the taxable income or net loss of the REMIC will be allocated to
each day in the calendar quarter ratably using a "30 days per month/90 days per
quarter/360 days per year" convention unless otherwise disclosed in the related
Prospectus Supplement. The daily amounts so allocated will then be allocated
among the Residual Certificateholders in proportion to their respective
ownership interests on such day. Any amount included in the gross income or
allowed as a loss of any Residual Certificateholder by virtue of this paragraph
will be treated as ordinary income or loss. The taxable income of the REMIC
will be determined under the rules described below in "--Taxable Income of the
REMIC" and will be taxable to the Residual Certificateholders without regard to
the timing or amount of cash distributions by the REMIC. Ordinary income
derived from REMIC Residual Certificates will be "portfolio income" for
purposes of the taxation of taxpayers subject to limitations under Section 469
of the Code on the deductibility of "passive losses".
A holder of a Residual Certificate that purchased such Certificate from a
prior holder of such Certificate also will be required to report on its federal
income tax return amounts representing its daily share of the taxable income
(or net loss) of the REMIC for each day that it holds such REMIC Residual
Certificate. Those daily amounts generally will equal the amounts of taxable
income or net loss determined as described above. The Committee Report
indicates that certain
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modifications of the general rules may be made, by regulations, legislation or
otherwise to reduce (or increase) the income of a Residual Certificateholder
that purchased such REMIC Residual Certificate from a prior holder of such
Certificate at a price greater than (or less than) the adjusted basis (as
defined below) such REMIC Residual Certificate would have had in the hands of
an original holder of such Certificate. The REMIC Regulations, however, do not
provide for any such modifications.
Any payments received by a holder of a REMIC Residual Certificate in
connection with the acquisition of such REMIC Residual Certificate will be
taken into account in determining the income of such holder for federal income
tax purposes. Although it appears likely that any such payment would be
includible in income immediately upon its receipt, the IRS might assert that
such payment should be included in income over time according to an
amortization schedule or according to some other method. Because of the
uncertainty concerning the treatment of such payments, holders of REMIC
Residual Certificates should consult their tax advisors concerning the
treatment of such payments for income tax purposes.
The amount of income Residual Certificateholders will be required to
report (or the tax liability associated with such income) may exceed the amount
of cash distributions received from the REMIC for the corresponding period.
Consequently, Residual Certificateholders should have other sources of funds
sufficient to pay any federal income taxes due as a result of their ownership
of REMIC Residual Certificates or unrelated deductions against which income may
be offset, subject to the rules relating to "excess inclusions", residual
interests without "significant value" and "noneconomic" residual interests
discussed below. The fact that the tax liability associated with the income
allocated to Residual Certificateholders may exceed the cash distributions
received by such Residual Certificateholders for the corresponding period may
significantly adversely affect such Residual Certificateholders' after-tax rate
of return. REMIC Residual Certificates may in some instances have negative
"value". See "Risk Factors--Certain Federal Tax Considerations Regarding REMIC
Residual Certificates".
Taxable Income of the REMIC. The taxable income of the REMIC will equal
the income from the Mortgage Loans and other assets of the REMIC plus any
cancellation of indebtedness income due to the allocation of realized losses to
REMIC Regular Certificates, less the deductions allowed to the REMIC for
interest (including original issue discount and reduced by any premium on
issuance) on the REMIC Regular Certificates (and any other class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby),
for amortization of any premium on the Mortgage Loans, for bad debt losses with
respect to the Mortgage Loans and, except as described below, for servicing,
administrative and other expenses.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC Certificates (or, if a class of REMIC Certificates is not sold
initially, their fair market values). Such aggregate basis will be allocated
among the Mortgage Loans and the other assets of the REMIC in proportion to
their respective fair market values. The issue price of any REMIC Certificates
offered hereby will be determined in the manner described above under
"--Taxation of Owners of REMIC Regular Certificates--Original Issue Discount".
The issue price of a REMIC Certificate received in exchange for an interest in
the Mortgage Loans or other property will equal the fair market value of such
interests in the Mortgage Loans or other property. Accordingly, if one or more
classes of REMIC Certificates are retained initially rather than sold, the
REMIC Administrator may be required to estimate the fair market value of such
interests in order to determine the basis of the REMIC in the Mortgage Loans
and other property held by the REMIC.
Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income with respect to Mortgage Loans that it holds will be equivalent to the
method for accruing original issue discount income for holders of REMIC Regular
Certificates (that is, under the constant yield method taking into account the
Prepayment Assumption). However, a REMIC that acquires loans at a market
discount must include such market discount in income currently, as it accrues,
on a constant yield basis. See "--Taxation of Owners of REMIC Regular
Certificates" above, which describes a method for accruing such discount income
that is analogous to that required to be used by a REMIC as to Mortgage Loans
with market discount that it holds.
A Mortgage Loan will be deemed to have been acquired with discount (or
premium) to the extent that the REMIC's basis therein, determined as described
in the preceding paragraph, is less than (or greater than) its stated
redemption price. Any such discount will be includible in the income of the
REMIC as it accrues, in advance of receipt of the cash attributable to such
income, under a method similar to the method described above for accruing
original issue discount on
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the REMIC Regular Certificates. It is anticipated that each REMIC will elect
under Section 171 of the Code to amortize any premium on the Mortgage Loans.
Premium on any Mortgage Loan to which such election applies may be amortized
under a constant yield method, presumably taking into account a Prepayment
Assumption.
A REMIC will be allowed deductions for interest (including original issue
discount) on the REMIC Regular Certificates (including any other class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby)
equal to the deductions that would be allowed if the REMIC Regular Certificates
(including any other class of REMIC Certificates constituting "regular
interests" in the REMIC not offered hereby) were indebtedness of the REMIC.
Original issue discount will be considered to accrue for this purpose as
described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount", except that the de minimis rule and the
adjustments for subsequent holders of REMIC Regular Certificates (including any
other class of REMIC Certificates constituting "regular interests" in the REMIC
not offered hereby) described therein will not apply.
If a class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of such class (such excess "Issue Premium"), the
net amount of interest deductions that are allowed the REMIC in each taxable
year with respect to the REMIC Regular Certificates of such class will be
reduced by an amount equal to the portion of the Issue Premium that is
considered to be amortized or repaid in that year. Although the matter is not
entirely certain, it is likely that Issue Premium would be amortized under a
constant yield method in a manner analogous to the method of accruing original
issue discount described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount".
As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its
taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "--Prohibited Transactions Tax and Other Taxes" below.
Further, the limitation on miscellaneous itemized deductions imposed on
individuals by Section 67 of the Code (which allows such deductions only to the
extent they exceed in the aggregate two percent of the taxpayer's adjusted
gross income) will not be applied at the REMIC level so that the REMIC will be
allowed deductions for servicing, administrative and other non-interest
expenses in determining its taxable income. All such expenses will be allocated
as a separate item to the holders of REMIC Certificates, subject to the
limitation of Section 67 of the Code. See "--Possible Pass-Through of
Miscellaneous Itemized Deductions" below. If the deductions allowed to the
REMIC exceed its gross income for a calendar quarter, such excess will be the
net loss for the REMIC for that calendar quarter.
Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for such REMIC Residual
Certificate, increased by amounts included in the income of the Residual
Certificateholder and decreased (but not below zero) by distributions made, and
by net losses allocated, to such Residual Certificateholder.
A Residual Certificateholder is not allowed to take into account any net
loss for any calendar quarter to the extent such net loss exceeds such Residual
Certificateholder's adjusted basis in its REMIC Residual Certificate as of the
close of such calendar quarter (determined without regard to such net loss).
Any loss that is not currently deductible by reason of this limitation may be
carried forward indefinitely to future calendar quarters and, subject to the
same limitation, may be used only to offset income from the REMIC Residual
Certificate. The ability of Residual Certificateholders to deduct net losses
may be subject to additional limitations under the Code, as to which Residual
Certificateholders should consult their tax advisors.
Any distribution on a REMIC Residual Certificate will be treated as a
non-taxable return of capital to the extent it does not exceed the holder's
adjusted basis in such REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of such REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in such REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in such REMIC
Residual Certificates will initially equal the amount paid for such REMIC
Residual Certificates and will be increased by their allocable shares of
taxable income of the Trust Fund. However, such bases increases may not occur
until the end of the calendar quarter, or perhaps the end of the calendar year,
with respect to which such REMIC taxable income is allocated to the REMIC
Residual Certificateholders. To the extent such REMIC Residual
Certificateholders' initial bases are less than the
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distributions to such Residual Certificateholders, and increases in such
initial bases either occur after such distributions or (together with their
initial bases) are less than the amount of such distributions, gain will be
recognized to such Residual Certificateholders on such distributions and will
be treated as gain from the sale of their REMIC Certificates.
The effect of these rules is that a Residual Certificateholder may not
amortize its basis in a REMIC Residual Certificate, but may only recover its
basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "--Sales of REMIC
Certificates". For a discussion of possible modifications of these rules that
may require adjustments to income of a holder of a REMIC Residual Certificate
other than an original holder in order to reflect any difference between the
cost of such REMIC Residual Certificate to such Residual Certificateholder and
the adjusted basis such REMIC Residual Certificate would have in the hands of
an original holder. See "--Taxation of Owners of REMIC Residual
Certificates--General".
Excess Inclusions. Any "excess inclusions" with respect to a REMIC
Residual Certificate will be subject to federal income tax in all events.
In general, the "excess inclusions" with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of (i) the sum
of the daily portions of REMIC taxable income allocable to such REMIC Residual
Certificate over (ii) the sum of the "daily accruals" (as defined below) for
each day during such quarter that such REMIC Residual Certificate was held by
such Residual Certificateholder. The daily accruals of a Residual
Certificateholder will be determined by allocating to each day during a
calendar quarter its ratable portion of the product of the "adjusted issue
price" of the REMIC Residual Certificate at the beginning of the calendar
quarter and 120% of the "long-term Federal rate" in effect on the Closing Date.
For this purpose, the adjusted issue price of a REMIC Residual Certificate as
of the beginning of any calendar quarter will be equal to the issue price of
the REMIC Residual Certificate, increased by the sum of the daily accruals for
all prior quarters and decreased (but not below zero) by any distributions made
with respect to such REMIC Residual Certificate before the beginning of such
quarter. The issue price of a REMIC Residual Certificate is the initial
offering price to the public (excluding bond houses and brokers) at which a
substantial amount of the REMIC Residual Certificates were sold. The "long-term
Federal rate" is an average of current yields on Treasury securities with a
remaining term of greater than nine years, computed and published monthly by
the IRS. Although it has not done so, the Treasury has the authority to issue
regulations that would treat the entire amount of income accruing on a REMIC
Residual Certificate as an excess inclusion if the REMIC Residual Certificates
are considered not to have "significant value." Unless otherwise stated in the
related Prospectus Supplement, no REMIC Residual Certificate will have
"significant value" for these purposes.
For Residual Certificateholders, an excess inclusion (i) will not be
permitted to be offset by deductions, losses or loss carryovers from other
activities, (ii) will be treated as "unrelated business taxable income" to an
otherwise tax-exempt organization and (iii) will not be eligible for any rate
reduction or exemption under any applicable tax treaty with respect to the 30%
United States withholding tax imposed on distributions to Residual
Certificateholders that are foreign investors. See, however, "--Foreign
Investors in REMIC Certificates," below. Furthermore, for purposes of the
alternative minimum tax, (i) excess inclusions will not be permitted to be
offset by the alternative tax net operating loss deduction and (ii) alternative
minimum taxable income may not be less than the taxpayer's excess inclusions.
This last rule has the effect of preventing nonrefundable tax credits from
reducing the taxpayer's income tax to an amount lower than the alternative
minimum tax on excess inclusions.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Section 857(b)(2) of the
Code, excluding any net capital gain), will be allocated among the shareholders
of such trust in proportion to the dividends received by such shareholders from
such trust, and any amount so allocated will be treated as an excess inclusion
with respect to a REMIC Residual Certificate as if held directly by such
shareholder. Treasury regulations yet to be issued could apply a similar rule
to regulated investment companies, common trust funds and certain cooperatives;
the REMIC Regulations currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the REMIC Regulations,
transfers of "noneconomic" REMIC Residual Certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was
to enable the transferor to impede the assessment or collection of tax". If
such transfer is disregarded, the purported transferor will continue to remain
liable for any taxes due with respect to the income on such "noneconomic" REMIC
Residual Certificate. The REMIC Regulations provide that a REMIC Residual
Certificate is noneconomic unless, based on the Prepayment Assumption and on
any required or permitted clean up calls, or required liquidation provided for
in
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the REMIC's organizational documents, (1) the present value of the expected
future distributions (discounted using the "applicable Federal rate" for
obligations whose term ends on the close of the last quarter in which excess
inclusions are expected to accrue with respect to the REMIC Residual
Certificate, which rate is computed and published monthly by the IRS) on the
REMIC Residual Certificate equals at least the present value of the expected
tax on the anticipated excess inclusions, and (2) the transferor reasonably
expects that the transferee will receive distributions with respect to the
REMIC Residual Certificate at or after the time the taxes accrue on the
anticipated excess inclusions in an amount sufficient to satisfy the accrued
taxes. Accordingly, all transfers of REMIC Residual Certificates that may
constitute noneconomic residual interests will be subject to certain
restrictions under the terms of the related Pooling Agreement that are intended
to reduce the possibility of any such transfer being disregarded. Such
restrictions will require each party to a transfer to provide an affidavit that
no purpose of such transfer is to impede the assessment or collection of tax,
including certain representations as to the financial condition of the
prospective transferee, as to which the transferor is also required to make a
reasonable investigation to determine such transferee's historic payment of its
debts and ability to continue to pay its debts as they come due in the future.
Prior to purchasing a REMIC Residual Certificate, prospective purchasers should
consider the possibility that a purported transfer of such REMIC Residual
Certificate by such a purchaser to another purchaser at some future date may be
disregarded in accordance with the above-described rules which would result in
the retention of tax liability by such purchaser.
The related Prospectus Supplement will disclose whether offered REMIC
Residual Certificates may be considered "noneconomic" residual interests under
the REMIC Regulations; provided, however, that any disclosure that a REMIC
Residual Certificate will not be considered "noneconomic" will be based upon
certain assumptions, and the Sponsor will make no representation that a REMIC
Residual Certificate will not be considered "noneconomic" for purposes of the
above-described rules.
Unless otherwise stated in the related Prospectus Supplement, transfers of
REMIC Residual Certificates to investors that are not United States Persons (as
defined below in "--Foreign Investors in REMIC Certificates") will be
prohibited under the related Pooling Agreement. If transfers of REMIC Residual
Certificates to investors that are not United States Persons are permitted
pursuant to the related Pooling Agreement, the related Prospectus Supplement
will describe additional restrictions applicable to transfers of certain REMIC
Residual Certificates to such persons.
Mark-to-Market Rules. On December 24, 1996, the IRS released regulations
under Section 475 of the Code (the "Mark-to-Market Regulations") relating to
the requirement that a securities dealer mark-to-market securities held for
sale to customers. This mark-to-market requirement applies to all securities
owned by a dealer, except to the extent that the dealer has specifically
identified a security as held for investment. The Mark-to-Market Regulations
provide that a REMIC residual interest issued after January 4, 1995, is not a
"security" for the purposes of Section 475 of the Code, and thus is not subject
to the mark-to-market rules. Prospective purchasers of a REMIC Residual
Certificate should consult their tax advisors regarding the Mark-to-Market
Regulations.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and other
non-interest expenses of a REMIC generally will be allocated to the holders of
the related REMIC Residual Certificates. The applicable Treasury regulations
indicate, however, that in the case of a REMIC that is similar to a single
class grantor trust, all or a portion of such fees and expenses should be
allocated to the holders of the related REMIC Regular Certificates. Unless
otherwise stated in the related Prospectus Supplement, such fees and expenses
will be allocated to holders of the related REMIC Residual Certificates in
their entirety and not to the holders of the related REMIC Regular
Certificates.
With respect to REMIC Residual Certificates or REMIC Regular Certificates
the holders of which receive an allocation of fees and expenses in accordance
with the preceding discussion, if any holder thereof is an individual, estate
or trust, or a "pass-through entity" beneficially owned by one or more
individuals, estates or trusts, (i) an amount equal to such individual's,
estate's or trust's share of such fees and expenses will be added to the gross
income of such holder and (ii) such individual's, estate's or trust's share of
such fees and expenses will be treated as a miscellaneous itemized deduction
allowable subject to the limitation of Section 67 of the Code, which permits
such deductions only to the extent they exceed in the aggregate two percent of
a taxpayer's adjusted gross income. In addition, Section 68 of the Code
provides that the amount of itemized deductions otherwise allowable for an
individual whose adjusted gross income exceeds a specified amount will be
reduced by the lesser of (i) 3% of the excess of the individual's adjusted
gross income over such amount or (ii) 80% of the amount of itemized deductions
otherwise allowable for the taxable year. The amount of additional taxable
income reportable by REMIC Certificateholders that are subject to the
limitations of either Section 67 or Section 68 of the Code may be substantial.
Furthermore, in determining the alternative minimum taxable income of
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such a holder of a REMIC Certificate that is an individual, estate or trust, or
a "pass-through entity" beneficially owned by one or more individuals, estates
or trusts, no deduction will be allowed for such holder's allocable portion of
servicing fees and other miscellaneous itemized deductions of the REMIC, even
though an amount equal to the amount of such fees and other deductions will be
included in such holder's gross income. Accordingly, such REMIC Certificates
may not be appropriate investments for individuals, estates, or trusts, or
pass-through entities beneficially owned by one or more individuals, estates or
trusts. Such prospective investors should carefully consult with their own tax
advisors prior to making an investment in such Certificates.
Sales of REMIC Certificates. If a REMIC Certificate is sold, the selling
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the REMIC
Certificate. The adjusted basis of a REMIC Regular Certificate generally will
equal the cost of such REMIC Regular Certificate to such Certificateholder,
increased by income reported by such Certificateholder with respect to such
REMIC Regular Certificate (including original issue discount and market
discount income) and reduced (but not below zero) by distributions on such
REMIC Regular Certificate received by such Certificateholder and by any
amortized premium. The adjusted basis of a REMIC Residual Certificate will be
determined as described under "--Taxation of Owners of REMIC Residual
Certificates--Basis Rules, Net Losses and Distributions". Except as described
below, any such gain or loss will be capital gain or loss, provided such REMIC
Certificate is held as a capital asset (generally, property held for
investment) within the meaning of Section 1221 of the Code. The Code as of the
date of this Prospectus provides for lower rates as to mid-term capital gains,
and still lower rates as to long-term capital gains, than those applicable to
the short-term capital gains and ordinary income realized or received by
individuals. No such rate differential exists for corporations. In addition,
the distinction between a capital gain or loss and ordinary income or loss
remains relevant for other purposes.
Gain from the sale of a REMIC Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent such gain does
not exceed the excess, if any, of (i) the amount that would have been
includible in the seller's income with respect to such REMIC Regular
Certificate assuming that income had accrued thereon at a rate equal to 110% of
the "applicable Federal rate" (generally, a rate based on an average of current
yields on Treasury securities having a maturity comparable to that of the
Certificate based on the application of the Prepayment Assumption to such
Certificate, which rate is computed and published monthly by the IRS),
determined as of the date of purchase of such REMIC Regular Certificate, over
(ii) the amount of ordinary income actually includible in the seller's income
prior to such sale. In addition, gain recognized on the sale of a REMIC Regular
Certificate by a seller who purchased such REMIC Regular Certificate at a
market discount will be taxable as ordinary income in an amount not exceeding
the portion of such discount that accrued during the period such REMIC
Certificate was held by such holder, reduced by any market discount included in
income under the rules described above under "--Taxation of Owners of REMIC
Regular Certificates--Market Discount" and "--Premium".
REMIC Certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, so that gain or loss recognized from the sale
of a REMIC Certificate by a bank or thrift institution to which such Section
applies will be ordinary income or loss.
A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that such Certificate is held as part of a "conversion transaction" within the
meaning of Section 1258 of the Code. A conversion transaction generally is one
in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in such transaction. The amount of gain so realized in a conversion
transaction that is recharacterized as ordinary income generally will not
exceed the amount of interest that would have accrued on the taxpayer's net
investment at 120% of the appropriate "applicable Federal rate" (which rate is
computed and published monthly by the IRS) at the time the taxpayer enters into
the conversion transaction, subject to appropriate reduction for prior
inclusion of interest and other ordinary income items from the transaction.
Finally, a taxpayer may elect to have net capital gains taxed at ordinary
income rates rather than capital gain rates in order to include such net
capital gain in total net investment income for the taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires a REMIC Residual Certificate,
or acquires any other residual interest in a REMIC or any similar interest in a
"taxable mortgage pool" (as defined in Section 7701(i) of the Code) during the
period beginning six months before, and
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ending six months after, the date of such sale, such sale will be subject to
the "wash sale" rules of Section 1091 of the Code. In that event, any loss
realized by the REMIC Residual Certificateholder on the sale will not be
deductible, but instead will be added to such REMIC Residual
Certificateholder's adjusted basis in the newly-acquired asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax on
REMICs equal to 100% of the net income derived from "prohibited transactions"
(a "Prohibited Transactions Tax"). In general, subject to certain specified
exceptions a prohibited transaction means the disposition of a Mortgage Loan,
the receipt of income from a source other than a Mortgage Loan or certain other
permitted investments, the receipt of compensation for services, or gain from
the disposition of an asset purchased with the payments on the Mortgage Loans
for temporary investment pending distribution on the REMIC Certificates. Unless
otherwise disclosed in the related Prospectus Supplement, it is not anticipated
that any REMIC will engage in any prohibited transactions as to which it would
be subject to a material Prohibited Transaction Tax.
In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax
on the REMIC equal to 100% of the value of the contributed property (a
"Contributions Tax"). Each Pooling Agreement will include provisions designed
to prevent the acceptance of any contributions that would be subject to such
tax.
REMICs also are subject to federal income tax at the highest corporate
rate on "net income from foreclosure property", determined by reference to the
rules applicable to real estate investment trusts. "Net income from foreclosure
property" generally means income from foreclosure property other than
qualifying rents and other qualifying income for a real estate investment
trust. Under certain circumstances, the Special Servicer may be authorized to
conduct activities with respect to a Mortgaged Property acquired by a Trust
Fund that causes the Trust Fund to incur a tax, provided that doing so would,
in reasonable discretion of the Special Servicer, maximize net after-tax
proceeds to Certificateholders.
Unless otherwise disclosed in the related Prospectus Supplement, it is not
anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless otherwise stated in the related Prospectus Supplement, and to the
extent permitted by then applicable laws, any Prohibited Transactions Tax,
Contributions Tax, tax on "net income from foreclosure property" or state or
local income or franchise tax that may be imposed on the REMIC will be borne by
the related REMIC Administrator, Master Servicer, Special Servicer or Trustee
in any case out of its own funds, provided that such person has sufficient
assets to do so and provided further that such tax arises out of a breach of
such person's obligations under the related Pooling Agreement. Any such tax not
borne by a REMIC Administrator, Master Servicer, Special Servicer or Trustee
would be charged against the related Trust Fund resulting in a reduction in
amounts payable to holders of the related REMIC Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to
Certain Organizations. If a REMIC Residual Certificate is transferred to a
"disqualified organization" (as defined below), a tax would be imposed in an
amount (determined under the REMIC Regulations) equal to the product of (i) the
present value (discounted using the "applicable Federal rate" for obligations
whose term ends on the close of the last quarter in which excess inclusions are
expected to accrue with respect to the REMIC Residual Certificate, which rate
is computed and published monthly by the IRS) of the total anticipated excess
inclusions with respect to such REMIC Residual Certificate for periods after
the transfer and (ii) the highest marginal federal income tax rate applicable
to corporations. The anticipated excess inclusions must be determined as of the
date that the REMIC Residual Certificate is transferred and must be based on
events that have occurred up to the time of such transfer, the Prepayment
Assumption and any required or permitted clean up calls or required liquidation
provided for in the REMIC's organizational documents. Such a tax generally
would be imposed on the transferor of the REMIC Residual Certificate, except
that where such transfer is through an agent for a disqualified organization,
the tax would instead be imposed on such agent. However, a transferor of a
REMIC Residual Certificate would in no event be liable for such tax with
respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a disqualified organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. Moreover, an entity will not qualify as a REMIC unless
there are reasonable arrangements designed to ensure that (i) residual
interests in such entity are not held by disqualified organizations and (ii)
information necessary for the application of the tax described herein will be
made available. Restrictions on the transfer of REMIC Residual Certificates and
certain other provisions that are intended to meet this requirement will be
included in the Pooling Agreement, and will be discussed more fully in any
Prospectus Supplement relating to the offering of any REMIC Residual
Certificate.
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In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a REMIC Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (i) the
amount of excess inclusions on the REMIC Residual Certificate that are
allocable to the interest in the pass-through entity held by such disqualified
organization and (ii) the highest marginal federal income tax rate imposed on
corporations. A pass-through entity will not be subject to this tax for any
period, however, if each record holder of an interest in such pass-through
entity furnishes to such pass-through entity (i) such holder's social security
number and a statement under penalty of perjury that such social security
number is that of the record holder or (ii) a statement under penalty of
perjury that such record holder is not a disqualified organization.
For these purposes, 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
(but would not include 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.
Termination. A REMIC will terminate immediately after the Distribution
Date following receipt by the REMIC of the final payment in respect of the
Mortgage Loans or upon a sale of the REMIC's assets following the adoption by
the REMIC of a plan of complete liquidation. The last distribution on a REMIC
Regular Certificate will be treated as a payment in retirement of a debt
instrument. In the case of a REMIC Residual Certificate, if the last
distribution on such REMIC Residual Certificate is less than the Residual
Certificateholder's adjusted basis in such REMIC Residual Certificate, such
Residual Certificateholder should (but may not) be treated as realizing a
capital loss equal to the amount of such difference.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and Residual Certificateholders will be treated as partners. Unless
otherwise stated in the related Prospectus Supplement, the REMIC Administrator
will file REMIC federal income tax returns on behalf of the REMIC, will be
designated as and will act as the "tax matters person" with respect to the
REMIC in all respects, and will generally hold at least a nominal amount of
REMIC Residual Certificates.
As the tax matters person, the REMIC Administrator, subject to certain
notice requirements and various restrictions and limitations, generally will
have the authority to act on behalf of the REMIC and the Residual
Certificateholders in connection with the administrative and judicial review of
items of income, deduction, gain or loss of the REMIC, as well as the REMIC's
classification. Residual Certificateholders generally will be required to
report such REMIC items consistently with their treatment on the related
REMIC's tax return and may in some circumstances be bound by a settlement
agreement between the REMIC Administrator, as tax matters person, and the IRS
concerning any such REMIC item. Adjustments made to the REMIC's tax return may
require a Residual Certificateholder to make corresponding adjustments on its
return, and an audit of the REMIC's tax return, or the adjustments resulting
from such an audit, could result in an audit of a Residual Certificateholder's
return. No REMIC will be registered as a tax shelter pursuant to Section 6111
of the Code because it is not anticipated that any REMIC will have a net loss
for any of the first five taxable years of its existence. Any person that holds
a REMIC Residual Certificate as a nominee for another person may be required to
furnish the related REMIC, in a manner to be provided in Treasury regulations,
with the name and address of such person and other information.
Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC Regular Interests and
the IRS; holders of REMIC Regular Certificates that are corporations, trusts,
securities dealers and certain other non-individuals will be provided interest
and original issue discount income information and the information set forth in
the following paragraph upon request in accordance with the requirements of the
applicable regulations. The information must be provided by the later of 30
days after the end of the quarter for which the information was requested, or
two weeks after the receipt of the request. The REMIC must also comply with
rules requiring a REMIC Regular Certificate issued with original issue discount
to disclose
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on its face the amount of original issue discount and the issue date, and
requiring such information to be reported to the IRS. Reporting with respect to
the REMIC Residual Certificates, including income, excess inclusions,
investment expenses and relevant information regarding qualification of the
REMIC's assets will be made as required under the Treasury regulations,
generally on a quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular
Certificate at the beginning of each accrual period. In addition, the reports
will include information required by regulations with respect to computing the
accrual of any market discount. Because exact computation of the accrual of
market discount on a constant yield method would require information relating
to the holder's purchase price that the REMIC may not have, such regulations
only require that information pertaining to the appropriate proportionate
method of accruing market discount be provided. See "--Taxation of Owners of
REMIC Regular Certificates--Market Discount".
Unless otherwise specified in the related Prospectus Supplement, the
responsibility for complying with the foregoing reporting rules will be borne
by the person designated as REMIC Administrator.
Backup Withholding with Respect to REMIC Certificates. Payments of
interest and principal, as well as payments of proceeds from the sale of REMIC
Certificates, may be subject to the "backup withholding tax" under Section 3406
of the Code at a rate of 31% if recipients of such payments fail to furnish to
the payor certain information, including their taxpayer identification numbers,
or otherwise fail to establish an exemption from such tax. Any amounts deducted
and withheld from a distribution to a recipient would be allowed as a credit
against such recipient's federal income tax. Furthermore, certain penalties may
be imposed by the IRS on a recipient of payments that is required to supply
information but that does not do so in the proper manner.
Foreign Investors in REMIC Certificates. A REMIC Regular Certificateholder
that is not a "United States person" (as defined below) and is not subject to
federal income tax as a result of any direct or indirect connection to the
United States in addition to its ownership of a REMIC Regular Certificate will
not, unless otherwise disclosed in the related Prospectus Supplement, be
subject to United States federal income or withholding tax in respect of a
distribution on a REMIC Regular Certificate, provided that the holder complies
to the extent necessary with certain identification requirements (including
delivery of a statement, signed by the Certificateholder under penalties of
perjury, certifying that such Certificateholder is not a United States person
and providing the name and address of such Certificateholder). For these
purposes, "United States person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or
an estate whose income is subject to United States federal income tax
regardless of its source, or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States fiduciaries have the authority to control all
substantial decisions of the trust. It is possible that the IRS may assert that
the foregoing tax exemption should not apply with respect to a REMIC Regular
Certificate held by a Residual Certificateholder that owns directly or
indirectly a 10% or greater interest in the REMIC Residual Certificates. If the
holder does not qualify for exemption, distributions of interest, including
distributions in respect of accrued original issue discount, to such holder may
be subject to a tax rate of 30%, subject to reduction under any applicable tax
treaty.
In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on such United
States shareholder's allocable portion of the interest income received by such
controlled foreign corporation.
Further, it appears that a REMIC Regular Certificate would not be included
in the estate of a non-resident alien individual and would not be subject to
United States estate taxes. However, Certificateholders who are non-resident
alien individuals should consult their tax advisors concerning this question.
Unless otherwise stated in the related Prospectus Supplement, transfers of
REMIC Residual Certificates to investors that are not United States Persons
will be prohibited under the related Pooling Agreement.
GRANTOR TRUST FUNDS
Classification of Grantor Trust Funds. With respect to each series of
Grantor Trust Certificates, counsel to the Sponsor will deliver its opinion to
the effect that, assuming compliance with all provisions of the related Pooling
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Agreement, the related Grantor Trust Fund will be classified as a grantor trust
under subpart E, part I of subchapter J of the Code and not as a partnership or
an association taxable as a corporation. Accordingly, each holder of a Grantor
Trust Certificate generally will be treated as the owner of an interest in the
underlying Mortgage Loans included in the Grantor Trust Fund.
For purposes of the following discussion, a Grantor Trust Certificate
representing an undivided equitable ownership interest in the principal of the
Mortgage Loans constituting the related Grantor Trust Fund, together with
interest thereon at a specified rate, will be referred to as a "Grantor Trust
Fractional Interest Certificate". A Grantor Trust Certificate representing
ownership of all or a portion of the difference between interest paid on the
Mortgage Loans constituting the related Grantor Trust Fund (net of normal
administration fees and any spread) and interest paid to the holders of Grantor
Trust Fractional Interest Certificates issued with respect to such Grantor
Trust Fund will be referred to as a "Stripped Interest Certificate". A Stripped
Interest Certificate may also evidence a nominal ownership interest in the
principal of the Mortgage Loans constituting the related Grantor Trust Fund.
CHARACTERIZATION OF INVESTMENTS IN GRANTOR TRUST CERTIFICATES
Grantor Trust Fractional Interest Certificates. In the case of Grantor
Trust Fractional Interest Certificates, unless otherwise disclosed in the
related Prospectus Supplement, counsel to the Sponsor will deliver an opinion
that, in general, Grantor Trust Fractional Interest Certificates will represent
interests in (i) "loans . . . secured by an interest in real property" within
the meaning of Section 7701(a)(19)(C)(v) of the Code (but generally only to the
extent that the underlying Mortgage Loans have been made with respect to
property that is used for residential or certain other prescribed purposes);
(ii) "obligations (including any participation or certificate of beneficial
ownership therein) which . . . [are] principally secured by an interest in real
property" within the meaning of Section 860G(a)(3)(A) of the Code; and (iii)
"real estate assets" within the meaning of Section 856(c)(5)(A) of the Code. In
addition, counsel to the Sponsor will deliver an opinion that interest on
Grantor Trust Fractional Interest Certificates will to the same extent be
considered "interest on obligations secured by mortgages on real property or on
interests in real property" within the meaning of Section 856(c)(3)(B) of the
Code.
Stripped Interest Certificates. It is unclear whether Stripped Interest
Certificates evidence an interest in a Grantor Trust Fund consisting of
Mortgage Loans that are "loans . . . secured by an interest in real property"
within the meaning of Section 7701(a)(19)(C)(v) of the Code, and "real estate
assets" within the meaning of Section 856(c)(5)(A) of the Code, and the
interest on which is "interest on obligations secured by mortgages on real
property" within the meaning of Section 856(c)(3)(B) of the Code. Counsel to
the Sponsor will not deliver any opinion on this question. Prospective
purchasers to which such characterization of an investment in Stripped Interest
Certificates is material should consult their tax advisors regarding whether
the Stripped Interest Certificates, and the income therefrom, will be so
characterized.
The Stripped Interest Certificates will be "obligations (including any
participation or certificate of beneficial ownership therein) which . . . [are]
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3)(A) of the Code.
TAXATION OF OWNERS OF GRANTOR TRUST FRACTIONAL INTEREST CERTIFICATES
General. Holders of a particular series of Grantor Trust Fractional
Interest Certificates generally will be required to report on their federal
income tax returns their shares of the entire income from the Mortgage Loans
(including amounts used to pay reasonable servicing fees and other expenses)
and will be entitled to deduct their shares of any such reasonable servicing
fees and other expenses. Because of stripped interests, market or original
issue discount, or premium, the amount includible in income on account of a
Grantor Trust Fractional Interest Certificate may differ significantly from the
amount distributable thereon representing interest on the Mortgage Loans.
Under Section 67 of the Code, an individual, estate or trust holding a
Grantor Trust Fractional Interest Certificate directly or through certain
pass-through entities will be allowed a deduction for such reasonable servicing
fees and expenses only to the extent that the aggregate of such holder's
miscellaneous itemized deductions exceeds two percent of such holder's adjusted
gross income. In addition, Section 68 of the Code provides that the amount of
itemized deductions otherwise allowable for an individual whose adjusted gross
income exceeds a specified amount will be reduced by the lesser of (i) 3% of
the excess of the individual's adjusted gross income over such amount or (ii)
80% of the amount of itemized deductions otherwise allowable for the taxable
year. The amount of additional taxable income reportable by holders of Grantor
Trust Fractional Interest Certificates who are subject to the limitations of
either Section 67 or Section 68 of the
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Code may be substantial. Further, Certificateholders (other than corporations)
subject to the alternative minimum tax may not deduct miscellaneous itemized
deductions in determining such holder's alternative minimum taxable income.
Although it is not entirely clear, it appears that in transactions in which
multiple classes of Grantor Trust Certificates (including Stripped Interest
Certificates) are issued, such fees and expenses should be allocated among the
classes of Grantor Trust Certificates using a method that recognizes that each
such class benefits from the related services. In the absence of statutory or
administrative clarification as to the method to be used, it currently is
intended to base information returns or reports to the IRS and
Certificateholders on a method that allocates such expenses among classes of
Grantor Trust Certificates with respect to each period based on the
distributions made to each such class during that period.
The federal income tax treatment of Grantor Trust Fractional Interest
Certificates of any series will depend on whether they are subject to the
"stripped bond" rules of Section 1286 of the Code. Grantor Trust Fractional
Interest Certificates may be subject to those rules if (i) a class of Stripped
Interest Certificates is issued as part of the same series of Certificates or
(ii) the Sponsor or any of its affiliates retains (for its own account or for
purposes of resale) a right to receive a specified portion of the interest
payable on a Mortgage Asset. Further, the IRS has ruled that an unreasonably
high servicing fee retained by a seller or servicer will be treated as a
retained ownership interest in mortgages that constitutes a stripped coupon.
The servicing fees paid with respect to the Mortgage Loans for certain series
of Grantor Trust Fractional Interest Certificates may not constitute reasonable
servicing compensation. The related Prospectus Supplement will include
information regarding servicing fees paid to a Master Servicer, a Special
Servicer, any Sub-Servicer or their respective affiliates.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
Grantor Trust Fractional Interest Certificate will be treated as having been
issued with "original issue discount" within the meaning of Section 1273(a) of
the Code, subject, however, to the discussion below regarding the treatment of
certain stripped bonds as market discount bonds and the discussion regarding de
minimis market discount. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--Market Discount". Under the stripped bond rules, the
holder of a Grantor Trust Fractional Interest Certificate (whether a cash or
accrual method taxpayer) will be required to report interest income from its
Grantor Trust Fractional Interest Certificate for each month in an amount equal
to the income that accrues on such Certificate in that month calculated under a
constant yield method, in accordance with the rules of the Code relating to
original issue discount.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of such Certificate's stated redemption price
over its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by such
purchaser for the Grantor Trust Fractional Interest Certificate. The stated
redemption price of a Grantor Trust Fractional Interest Certificate will be the
sum of all payments to be made on such Certificate, other than "qualified
stated interest", if any, as well as such Certificate's share of reasonable
servicing fees and other expenses. See "--Taxation of Owners of Grantor Trust
Fractional Interest Certificates--If Stripped Bond Rules Do Not Apply" for a
definition of "qualified stated interest". In general, the amount of such
income that accrues in any month would equal the product of such holder's
adjusted basis in such Grantor Trust Fractional Interest Certificate at the
beginning of such month (see "--Sales of Grantor Trust Certificates") and the
yield of such Grantor Trust Fractional Interest Certificate to such holder.
Such yield would be computed at the rate (compounded based on the regular
interval between payment dates) that, if used to discount the holder's share of
future payments on the Mortgage Loans, would cause the present value of those
future payments to equal the price at which the holder purchased such
Certificate. In computing yield under the stripped bond rules, a
Certificateholder's share of future payments on the Mortgage Loans will not
include any payments made in respect of any spread or any other ownership
interest in the Mortgage Loans retained by the Sponsor, a Master Servicer, a
Special Servicer, any Sub-Servicer or their respective affiliates, but will
include such Certificateholder's share of any reasonable servicing fees and
other expenses.
Section 1272(a)(6) of the Code requires (i) the use of a reasonable
prepayment assumption in accruing original issue discount and (ii) adjustments
in the accrual of original issue discount when prepayments do not conform to
the prepayment assumption, with respect to certain categories of debt
instruments, and regulations could be, but have not been, adopted applying
those provisions to the Grantor Trust Fractional Interest Certificates. It is
unclear whether use of a reasonable prepayment assumption may be required or
permitted without reliance on these rules. It is also uncertain, if a
prepayment assumption is used, whether the assumed prepayment rate would be
determined based on conditions at the time of the first sale of the Grantor
Trust Fractional Interest Certificate or, with respect to any holder, at the
time of purchase of the Grantor Trust Fractional Interest Certificate by that
holder. Certificateholders are advised to consult their own tax advisors
concerning reporting original issue discount in general and, in particular,
whether a prepayment assumption should be used in reporting original issue
discount with respect to Grantor Trust Fractional Interest Certificates.
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In the case of a Grantor Trust Fractional Interest Certificate acquired at
a price equal to the principal amount of the Mortgage Loans allocable to such
Certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest
income. In the case, however, of a Grantor Trust Fractional Interest
Certificate acquired at a discount or premium (that is, at a price less than or
greater than such principal amount, respectively), the use of a reasonable
prepayment assumption would increase or decrease such yield, and thus
accelerate or decelerate, respectively, the reporting of income.
If a prepayment assumption is not used, then when a Mortgage Loan prepays
in full, the holder of a Grantor Trust Fractional Interest Certificate acquired
at a discount or a premium generally will recognize ordinary income or loss
equal to the difference between the portion of the prepaid principal amount of
the Mortgage Loan that is allocable to such Certificate and the portion of the
adjusted basis of such Certificate that is allocable to such
Certificateholder's interest in the Mortgage Loan. If a prepayment assumption
is used, it appears that no separate item of income or loss should be
recognized upon a prepayment. Instead, a prepayment should be treated as a
partial payment of the stated redemption price of the Grantor Trust Fractional
Interest Certificate and accounted for under a method similar to that described
for taking account of original issue discount on REMIC Regular Certificates.
See "--REMICs--Taxation of Owners of REMIC Regular Certificates--Original Issue
Discount". It is unclear whether any other adjustments would be required to
reflect differences between an assumed prepayment rate and the actual rate of
prepayments.
In the absence of statutory or administrative clarification, it is
currently intended to base information reports or returns to the IRS and
Certificateholders in transactions subject to the stripped bond rules on a
prepayment assumption (the "Prepayment Assumption") that will be disclosed in
the related Prospectus Supplement and on a constant yield computed using a
representative initial offering price for each class of Certificates. However,
neither the Sponsor nor any other person will make any representation that the
Mortgage Loans will in fact prepay at a rate conforming to such Prepayment
Assumption or any other rate or that the Prepayment Assumption will not be
challenged by the IRS on audit. Certificateholders also should bear in mind
that the use of a representative initial offering price will mean that such
information returns or reports, even if otherwise accepted as accurate by the
IRS, will in any event be accurate only as to the initial Certificateholders of
each series who bought at that price.
Under Treasury Regulation Section 1.1286-1, certain stripped bonds are to
be treated as market discount bonds and, accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon (i) there is no
original issue discount (or only a de minimis amount of original issue
discount) or (ii) the annual stated rate of interest payable on the original
bond is no more than one percentage point lower than the gross interest rate
payable on the original mortgage loan (before subtracting any servicing fee or
any stripped coupon). If interest payable on a Grantor Trust Fractional
Interest Certificate is more than one percentage point lower than the gross
interest rate payable on the Mortgage Loans, the related Prospectus Supplement
will disclose that fact. If the original issue discount or market discount on a
Grantor Trust Fractional Interest Certificate determined under the stripped
bond rules is less than 0.25% of the stated redemption price multiplied by the
weighted average maturity of the Mortgage Loans, then such original issue
discount or market discount will be considered to be de minimis. Original issue
discount or market discount of only a de minimis amount will be included in
income in the same manner as de minimis original issue and market discount
described in "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--If Stripped Bond Rules Do Not Apply" and "--Market Discount".
If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, the Certificateholder will be required
to report its share of the interest income on the Mortgage Loans in accordance
with such Certificateholder's normal method of accounting. In that case, the
original issue discount rules will apply to a Grantor Trust Fractional Interest
Certificate only to the extent it evidences an interest in Mortgage Loans
issued with original issue discount.
The original issue discount, if any, on the Mortgage Loans will equal the
difference between the stated redemption price of such Mortgage Loans and their
issue price. Under the OID Regulations the stated redemption price is equal to
the total of all payments to be made on such Mortgage Loan other than
"qualified stated interest". "Qualified stated interest" includes interest that
is unconditionally payable at least annually at a single fixed rate, at a
"qualified floating rate", or at an "objective rate", a combination of a single
fixed rate and one or more "qualified floating rates" or one "qualified inverse
floating rate", or a combination of "qualified floating rates" that does not
operate in a manner that
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accelerates or defers interest payments on such Mortgage Loan. In general, the
issue price of a Mortgage Loan will be the amount received by the borrower from
the lender under the terms of the Mortgage Loan, less any "points" paid by the
borrower, and the stated redemption price of a Mortgage Loan will equal its
principal amount, unless the Mortgage Loan provides for an initial below-market
rate of interest or the acceleration or the deferral of interest payments.
In the case of Mortgage Loans bearing adjustable or variable interest
rates, the related Prospectus Supplement will describe the manner in which such
rules will be applied with respect to those Mortgage Loans by the Trustee or
Master Servicer, as applicable, in preparing information returns to the
Certificateholders and the IRS.
Notwithstanding the general definition of original issue discount,
original issue discount will be considered to be de minimis if such original
issue discount is less than 0.25% of the stated redemption price multiplied by
the weighted average maturity of the Mortgage Loan. For this purpose, the
weighted average maturity of the Mortgage Loan will be computed as the sum of
the amounts determined, as to each payment included in the stated redemption
price of such Mortgage Loan, by multiplying (i) the number of complete years
(rounding down for partial years) from the issue date until such payment is
expected to be made, by (ii) a fraction, the numerator of which is the amount
of the payment and the denominator of which is the stated redemption price of
the Mortgage Loan. Under the OID Regulations, original issue discount of only a
de minimis amount (other than de minimis original issue discount attributable
to a so-called "teaser" rate or initial interest holiday) will be included in
income as each payment of stated principal is made, based on the product of the
total amount of such de minimis original issue discount and a fraction, the
numerator of which is the amount of each such payment and the denominator of
which is the outstanding stated principal amount of the Mortgage Loan. The OID
Regulations also permit a Certificateholder to elect to accrue de minimis
original issue discount into income currently based on a constant yield method.
See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--Market Discount" below.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a Mortgage Loan will be required to be
accrued and reported in income in each month, based on a constant yield. The
OID Regulations suggest that no prepayment assumption is appropriate in
computing the yield on prepayable obligations issued with original issue
discount. In the absence of statutory or administrative clarification, it
currently is not intended to base information reports or returns to the IRS and
Certificateholders on the use of a prepayment assumption in transactions not
subject to the stripped bond rules. However, Section 1272(a)(6) of the Code may
require that a prepayment assumption be made in computing yield with respect to
all mortgage-backed securities. Certificateholders are advised to consult their
own tax advisors concerning whether a prepayment assumption should be used in
reporting original issue discount with respect to Grantor Trust Fractional
Interest Certificates. Certificateholders should refer to the related
Prospectus Supplement with respect to each series to determine whether and in
what manner the original issue discount rules will apply to Mortgage Loans in
such series.
A purchaser of a Grantor Trust Fractional Interest Certificate that
purchases such Grantor Trust Fractional Interest Certificate at a cost less
than such Certificate's allocable portion of the aggregate remaining stated
redemption price of the Mortgage Loans held in the related Trust Fund will also
be required to include in gross income such Certificate's daily portions of any
original issue discount with respect to such Mortgage Loans. However, each such
daily portion will be reduced, if the cost of such Grantor Trust Fractional
Interest Certificate to such purchaser is in excess of such Certificate's
allocable portion of the aggregate "adjusted issue prices" of the Mortgage
Loans held in the related Trust Fund, approximately in proportion to the ratio
such excess bears to such Certificate's allocable portion of the aggregate
original issue discount remaining to be accrued on such Mortgage Loans. The
adjusted issue price of a Mortgage Loan on any given day equals the sum of (i)
the adjusted issue price (or, in the case of the first accrual period, the
issue price) of such Mortgage Loan at the beginning of the accrual period that
includes such day and (ii) the daily portions of original issue discount for
all days during such accrual period prior to such day. The adjusted issued
price of a Mortgage Loan at the beginning of any accrual period will equal the
issue price of such Mortgage Loan, increased by the aggregate amount of
original issue discount with respect to such Mortgage Loan that accrued in
prior accrual periods, and reduced by the amount of any payments made on such
Mortgage Loan in prior accrual periods of amounts included in its stated
redemption price.
Unless otherwise provided in the related Prospectus Supplement, the
Trustee or Master Servicer, as applicable, will provide to any holder of a
Grantor Trust Fractional Interest Certificate such information as such holder
may reasonably request from time to time with respect to original issue
discount accruing on Grantor Trust Fractional Interest Certificates. See
"--Grantor Trust Reporting" below.
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Market Discount. If the stripped bond rules do not apply to the Grantor
Trust Fractional Interest Certificate, a Certificateholder may be subject to
the market discount rules of Sections 1276 through 1278 of the Code to the
extent an interest in a Mortgage Loan is considered to have been purchased at a
"market discount", that is, in the case of a Mortgage Loan issued without
original issue discount, at a purchase price less than its remaining stated
redemption price (as defined above), or in the case of a Mortgage Loan issued
with original issue discount, at a purchase price less than its adjusted issue
price (as defined above). If market discount is in excess of a de minimis
amount (as described below), the holder generally will be required to include
in income in each month the amount of such discount that has accrued (under the
rules described in the next paragraph) through such month that has not
previously been included in income, but limited, in the case of the portion of
such discount that is allocable to any Mortgage Loan, to the payment of stated
redemption price on such Mortgage Loan that is received by (or, in the case of
accrual basis Certificateholders, due to) the Trust Fund in that month. A
Certificateholder may elect to include market discount in income currently as
it accrues (under a constant yield method based on the yield of the Certificate
to such holder) rather than including it on a deferred basis in accordance with
the foregoing. If made, such election will apply to all market discount bonds
acquired by such Certificateholder during or after the first taxable year to
which such election applies. In addition, the OID Regulations would permit a
Certificateholder to elect to accrue all interest, discount (including de
minimis market or original issue discount) and premium in income as interest,
based on a constant yield method. If such an election were made with respect to
a Mortgage Loan with market discount, the Certificateholder would be deemed to
have made an election to include currently market discount in income with
respect to all other debt instruments having market discount that such
Certificateholder acquires during the taxable year of the election and
thereafter, and possibly previously acquired instruments. Similarly, a
Certificateholder that made this election for a Certificate acquired at a
premium would be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
Certificateholder owns or acquires. See "--REMICs--Taxation of Owners of REMIC
Regular Certificates--Premium". Each of these elections to accrue interest,
discount and premium with respect to a Certificate on a constant yield method
or as interest is irrevocable.
Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until such time as regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. Under those rules, in each
accrual period market discount on the Mortgage Loans should accrue, at the
Certificateholder's option: (i) on the basis of a constant yield method, (ii)
in the case of a Mortgage Loan issued without original issue discount, in an
amount that bears the same ratio to the total remaining market discount as the
stated interest paid in the accrual period bears to the total stated interest
remaining to be paid on the Mortgage Loan as of the beginning of the accrual
period, or (iii) in the case of a Mortgage Loan issued with original issue
discount, in an amount that bears the same ratio to the total remaining market
discount as the original issue discount accrued in the accrual period bears to
the total original issue discount remaining at the beginning of the accrual
period. The prepayment assumption, if any, used in calculating the accrual of
original issue discount is to be used in calculating the accrual of market
discount. The effect of using a prepayment assumption could be to accelerate
the reporting of such discount income. Because the regulations referred to in
this paragraph have not been issued, it is not possible to predict what effect
such regulations might have on the tax treatment of a Mortgage Loan purchased
at a discount in the secondary market.
Because the Mortgage Loans will provide for periodic payments of stated
redemption price, such discount may be required to be included in income at a
rate that is not significantly slower than the rate at which such discount
would be included in income if it were original issue discount.
Market discount with respect to Mortgage Loans generally will be
considered to be de minimis if it is less than 0.25% of the stated redemption
price of the Mortgage Loans multiplied by the number of complete years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect
to market discount, presumably taking into account the prepayment assumption
used, if any. The effect of using a prepayment assumption could be to
accelerate the reporting of such discount income. If market discount is treated
as de minimis under the foregoing rule, it appears that actual discount would
be treated in a manner similar to original issue discount of a de minimis
amount. See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--If Stripped Bond Rules Do Not Apply".
Further, under the rules described in "--REMICs--Taxation of Owners of
REMIC Regular Certificates--Market Discount", any discount that is not original
issue discount and exceeds a de minimis amount may require the deferral of
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interest expense deductions attributable to accrued market discount not yet
includible in income, unless an election has been made to report market
discount currently as it accrues. This rule applies without regard to the
origination dates of the Mortgage Loans.
Premium. If a Certificateholder is treated as acquiring the underlying
Mortgage Loans at a premium, that is, at a price in excess of their remaining
stated redemption price, such Certificateholder may elect under Section 171 of
the Code to amortize using a constant yield method the portion of such premium
allocable to Mortgage Loans originated after September 27, 1985. Amortizable
premium is treated as an offset to interest income on the related debt
instrument, rather than as a separate interest deduction. However, premium
allocable to Mortgage Loans originated before September 28, 1985 or to Mortgage
Loans for which an amortization election is not made, should be allocated among
the payments of stated redemption price on the Mortgage Loan and be allowed as
a deduction as such payments are made (or, for a Certificateholder using the
accrual method of accounting, when such payments of stated redemption price are
due).
It is unclear whether a prepayment assumption should be used in computing
amortization of premium allowable under Section 171 of the Code. If premium is
not subject to amortization using a prepayment assumption and a Mortgage Loan
prepays in full, the holder of a Grantor Trust Fractional Interest Certificate
acquired at a premium should recognize a loss equal to the difference between
the portion of the prepaid principal amount of the Mortgage Loan that is
allocable to the Certificate and the portion of the adjusted basis of the
Certificate that is allocable to the Mortgage Loan. If a prepayment assumption
is used to amortize such premium, it appears that such a loss would be
unavailable. Instead, if a prepayment assumption is used, a prepayment should
be treated as a partial payment of the stated redemption price of the Grantor
Trust Fractional Interest Certificate and accounted for under a method similar
to that described for taking account of original issue discount on REMIC
Regular Certificates. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount". It is unclear whether any other
adjustments would be required to reflect differences between the prepayment
assumption and the actual rate of prepayments.
TAXATION OF OWNERS OF STRIPPED INTEREST CERTIFICATES
General. The "stripped coupon" rules of Section 1286 of the Code will
apply to the Stripped Interest Certificates. Except as described above in
"--Taxation of Owners of Grantor Trust Fractional Interest Certificates--If
Stripped Bond Rules Apply", no regulations or published rulings under Section
1286 of the Code have been issued and some uncertainty exists as to how such
Section will be applied to securities such as the Stripped Interest
Certificates. Accordingly, holders of Stripped Interest Certificates should
consult their own tax advisors concerning the method to be used in reporting
income or loss with respect to such Certificates.
The OID Regulations do not apply to "stripped coupons", although they
provide general guidance as to how the original issue discount sections of the
Code will be applied. In addition, the discussion below is subject to the
discussion under "--Possible Application of Contingent Payment Rules" below and
assumes that the holder of a Stripped Interest Certificate will not own any
Grantor Trust Fractional Interest Certificates.
It appears that original issue discount will be required to be accrued in
each month on the Stripped Interest Certificates based on a constant yield
method. In effect, each holder of Stripped Interest Certificates would include
as interest income in each month an amount equal to the product of such
holder's adjusted basis in such Stripped Interest Certificate at the beginning
of such month and the yield of such Stripped Interest Certificate to such
holder. Such yield would be calculated based on the price paid for that
Stripped Interest Certificate by its holder and the payments remaining to be
made thereon at the time of the purchase, plus an allocable portion of the
servicing fees and expenses to be paid with respect to the Mortgage Loans. See
"--Taxation of Owners of Grantor Trust Fractional Interest Certificates--If
Stripped Bond Rules Apply" above.
As noted above, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing the accrual of original issue discount with
respect to certain categories of debt instruments, and that adjustments be made
in the amount and rate of accrual of such discount when prepayments do not
conform to such prepayment assumption. Regulations could be adopted applying
those provisions to the Stripped Interest Certificates. It is unclear whether
those provisions would be applicable to the Stripped Interest Certificates or
whether use of a prepayment assumption may be required or permitted in the
absence of such regulations. It is also uncertain, if a prepayment assumption
is used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the Stripped Interest Certificate
or, with respect to any subsequent holder, at the time of purchase of the
Stripped Interest Certificate by that holder.
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The accrual of income on the Stripped Interest Certificates will be
significantly slower if a prepayment assumption is permitted to be made than if
yield is computed assuming no prepayments. In the absence of statutory or
administrative clarification, it currently is intended to base information
returns or reports to the IRS and Certificateholders on the Prepayment
Assumption disclosed in the related Prospectus Supplement and on a constant
yield computed using a representative initial offering price for each class of
Certificates. However, neither the Sponsor nor any other person will make any
representation that the Mortgage Loans will in fact prepay at a rate conforming
to the Prepayment Assumption or at any other rate or that the Prepayment
Assumption will not be challenged by the IRS on audit. Certificateholders also
should bear in mind that the use of a representative initial offering price
will mean that such information returns or reports, even if otherwise accepted
as accurate by the IRS, will in any event be accurate only as to the initial
Certificateholders of each series who bought at that price. Prospective
purchasers of the Stripped Interest Certificates should consult their own tax
advisors regarding the use of the Prepayment Assumption.
It is unclear under what circumstances, if any, the prepayment of a
Mortgage Loan will give rise to a loss to the holder of a Stripped Interest
Certificate. If a Stripped Interest Certificate is treated as a single
instrument (rather than an interest in discrete mortgage loans) and the effect
of prepayments is taken into account in computing yield with respect to such
Stripped Interest Certificate, it appears that no loss may be available as a
result of any particular prepayment unless prepayments occur at a rate faster
than the Prepayment Assumption. However, if a Stripped Interest Certificate is
treated as an interest in discrete Mortgage Loans, or if the Prepayment
Assumption is not used, then when a Mortgage Loan is prepaid, the holder of a
Stripped Interest Certificate should be able to recognize a loss equal to the
portion of the adjusted issue price of the Stripped Interest Certificate that
is allocable to such Mortgage Loan.
Possible Application of Contingent Payment Rules. The coupon stripping
rules' general treatment of stripped coupons is to regard them as newly issued
debt instruments in the hands of each purchaser. To the extent that payments on
the Stripped Interest Certificates would cease if the Mortgage Loans were
prepaid in full, Stripped Interest Certificates could be considered to be debt
instruments providing for contingent payments. Under the OID Regulations, debt
instruments providing for contingent payments are not subject to the same rules
as debt instruments providing for noncontingent payments. Regulations have been
promulgated regarding contingent payment debt instruments (the "Contingent
Payment Regulations"), but it appears that Stripped Interest Certificates due
to their similarity to other mortgage-backed securities (such as REMIC regular
interests and debt instruments subject to Section 1272(a)(6) of the Code) that
are expressly excepted from the application of the Contingent Payment
Regulations, may be excepted from such regulations. Like the OID Regulations,
the Contingent Payment Regulations do not specifically address securities, such
as the Stripped Interest Certificates, that are subject to the stripped bond
rules of Section 1286 of the Code.
If the contingent payment rules under the Contingent Payment Regulations
were to apply, the holder of a Stripped Interest Certificate would be required
to apply the "noncontingent bond method." Under the "noncontingent bond
method", the issuer of a Stripped Interest Certificate determines a projected
payment schedule on which interest will accrue. Holders of Stripped Interest
Certificates are bound by the issuer's projected payment schedule. The
projected payment schedule consists of all noncontingent payments and a
projected amount for each contingent payment based on the projected yield (as
described below) of the Stripped Interest Certificate. The projected amount of
each payment is determined so that the projected payment schedule reflects the
projected yield. The projected amount of each payment must reasonably reflect
the relative expected values of the payments to be received by the holders of a
Stripped Interest Certificate. The projected yield referred to above is a
reasonable rate, not less than the "applicable Federal rate" that, as of the
issue date, reflects general market conditions, the credit quality of the
issuer, and the terms and conditions of the Mortgage Loans. The holder of a
Stripped Interest Certificate would be required to include as interest income
in each month the adjusted issue price of the Stripped Interest Certificate at
the beginning of the period multiplied by the projected yield.
Assuming that a prepayment assumption were used, if the Continent Payment
Regulations or their principles were applied to Stripped Interest Certificates,
the amount of income reported with respect thereto would be substantially
similar to that described under "Taxation of Owners of Stripped Interest
Certificates".
Certificateholders should consult their tax advisors concerning the
possible application of the contingent payment rules to the Striped Interest
Certificates.
Sales of Grantor Trust Certificates. Any gain or loss, equal to the
difference between the amount realized on the sale or exchange of a Grantor
Trust Certificate and its adjusted basis, recognized on such sale or exchange
of a Grantor Trust Certificate by an investor who holds such Grantor Trust
Certificate as a capital asset, will be capital gain or loss, except
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to the extent of accrued and unrecognized market discount, which will be
treated as ordinary income, and (in the case of banks and other financial
institutions) except as provided under Section 582(c) of the Code. The adjusted
basis of a Grantor Trust Certificate generally will equal its cost, increased
by any income reported by the seller (including original issue discount and
market discount income) and reduced (but not below zero) by any previously
reported losses, any amortized premium and by any distributions with respect to
such Grantor Trust Certificate. The Code as of the date of this Prospectus
provides for lower rates as to mid-term capital gains, and still lower rates as
to long-term capital gains, than those applicable to the short-term capital
gains and ordinary income realized or received by individuals. No such rate
differential exists for corporations. In addition, the distinction between a
capital gain or loss and ordinary income or loss remains relevant for other
purposes.
Gain or loss from the sale of a Grantor Trust Certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable
to accrued and unrecognized market discount will be treated as ordinary income,
as will gain or loss recognized by the banks and other financial institutions
subject to Section 582(c) of the Code. Furthermore, a portion of any gain that
might otherwise be capital gain may be treated as ordinary income to the extent
that the Grantor Trust Certificate is held as part of a "conversion
transaction" within the meaning of Section 1258 of the Code. A conversion
transaction generally is one in which the taxpayer has taken two or more
positions in the same or similar property that reduce or eliminate market risk,
if substantially all of the taxpayer's return is attributable to the time value
of the taxpayer's net investment in such transaction. The amount of gain
realized in a conversion transaction that is recharacterized as ordinary income
generally will not exceed the amount of interest that would have accrued on the
taxpayer's net investment at 120% of the appropriate "applicable Federal rate"
(which rate is computed and published monthly by the IRS) at the time the
taxpayer enters into the conversion transaction, subject to appropriate
reduction for prior inclusion of interest and other ordinary income items from
the transaction. Finally, a taxpayer may elect to have net capital gain taxed
at ordinary income rates rather than capital gains rates in order to include
such net capital gain in total net investment income for that taxable year, for
purposes of the rule that limits the deduction of interest on indebtedness
incurred to purchase or carry property held for investment to a taxpayer's net
investment income.
Grantor Trust Reporting. Unless otherwise provided in the related
Prospectus Supplement, the Trustee or Master Servicer, as applicable, will
furnish to each holder of a Grantor Trust Certificate with each distribution a
statement setting forth the amount of such distribution allocable to principal
on the underlying Mortgage Loans and to interest thereon at the related
Pass-Through Rate. In addition, within a reasonable time after the end of each
calendar year, the Trustee or Master Servicer, as applicable, will furnish to
each Certificateholder during such year such customary factual information as
the Sponsor or the reporting party deems necessary or desirable to enable
holders of Grantor Trust Certificates to prepare their tax returns and will
furnish comparable information to the IRS as and when required by law to do so.
Because the rules for accruing discount and amortizing premium with respect to
the Grantor Trust Certificates are uncertain in various respects, there is no
assurance the IRS will agree with the Trustee's or Master Servicer's, as the
case may be, information reports of such items of income and expense. Moreover,
such information reports, even if otherwise accepted as accurate by the IRS,
will in any event be accurate only as to the initial Certificateholders that
bought their Certificates at the representative initial offering price used in
preparing such reports.
Backup Withholding. In general, the rules described in "--Taxation of
Owners of REMIC Residual Certificates--
Backup Withholding with Respect to REMIC Certificates" will also apply to
Grantor Trust Certificates.
Foreign Investors. In general, the discussion with respect to REMIC
Regular Certificates in "--REMICs--Foreign Investors in REMIC Certificates"
applies to Grantor Trust Certificates except that Grantor Trust Certificates
will, unless otherwise disclosed in the related Prospectus Supplement, be
eligible for exemption from United States withholding tax, subject to the
conditions described in such discussion, only to the extent the related
Mortgage Loans were originated after July 18, 1984.
To the extent that interest on a Grantor Trust Certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the Grantor Trust Certificate is not held in connection with a
Certificateholder's trade or business in the United States, such Grantor Trust
Certificate will not be subject to U.S. estate taxes in the estate of
non-resident alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Material
Federal Income Tax Consequences", potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of
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the Offered Certificates. State tax law may differ substantially from the
corresponding federal law, and the discussion above does not purport to
describe any aspect of the tax laws of any state or other jurisdiction.
Therefore, prospective investors should consult their own tax advisors with
respect to the various tax consequences of investments in the Offered
Certificates.
ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on employee benefit plans, and on
certain other retirement plans and arrangements, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested that are subject to the fiduciary responsibility provisions of ERISA
and Section 4975 of the Code (all of which are hereinafter referred to as
"Plans"), and on persons who are fiduciaries with respect to Plans, in
connection with the investment of Plan assets. Certain employee benefit plans,
such as governmental plans (as defined in ERISA Section 3(32)), and, if no
election has been made under Section 410(d) of the Code, church plans (as
defined in Section 3(33) of ERISA) are not subject to ERISA requirements.
Accordingly, assets of such plans may be invested in Offered Certificates
without regard to the ERISA considerations described below, subject to the
provisions of other applicable federal and state law. Any such plan which is
qualified and exempt from taxation under Sections 401(a) and 501(a) of the
Code, however, is subject to the prohibited transaction rules set forth in
Section 503 of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and
the requirement that a Plan's investments be made in accordance with the
documents governing the Plan. In addition, ERISA and the Code prohibit a broad
range of transactions involving assets of a Plan and persons ("Parties in
Interest") who have certain specified relationships to the Plan, unless a
statutory or administrative exemption is available. The types of transactions
between Plans and Parties in Interest that are prohibited include: (a) sales,
exchanges or leases of property, (b) loans or other extensions of credit and
(c) the furnishing of goods and services. Certain Parties in Interest that
participate in a prohibited transaction may be subject to an excise tax imposed
pursuant to Section 4975 of the Code, unless a statutory or administrative
exemption is available. In addition, the persons involved in the prohibited
transaction may have to rescind the transaction and pay an amount to the Plan
for any losses realized by the Plan or profits realized by such persons,
individual retirement accounts involved in the transaction may be disqualified
resulting in adverse tax consequences to the owner of such account and certain
other liabilities could result that have a significant adverse effect on such
person.
PLAN ASSET REGULATIONS
A Plan's investment in Certificates may cause the Trust Assets to be
deemed Plan assets. Section 2510.3-101 of the regulations of the United States
Department of Labor ("DOL") provides that when a Plan acquires an equity
interest in an entity, the Plan's assets include both such equity interest and
an undivided interest in each of the underlying assets of the entity, unless
certain exceptions apply, including that the equity participation in the entity
by "benefit plan investors" (that is, Plans and certain employee benefit plans
not subject to ERISA) is not "significant". For this purpose, in general,
equity participation in a Trust Fund will be "significant" on any date if,
immediately after the most recent acquisition of any Certificate, 25% or more
of any class of Certificates is held by benefit plan investors (determined by
not including the investments of persons with discretionary authority or
control over the assets of such entity, of any person who provides investment
advice for a fee (direct or indirect) with respect to such assets, and of
"affiliates" (as defined in the Plan Asset Regulations) of such persons).
Equity participation in a Trust Fund will be significant on any date if
immediately after the most recent acquisition of any Certificate, 25% or more
of any class of Certificates is held by benefit plan investors (determined by
not including the investments of the Sponsor, the Trustee, the Master Servicer,
the Special Servicer, any other parties with discretionary authority over the
assets of a Trust Fund and their respective affiliates).
Any person who has discretionary authority or control respecting the
management or disposition of Plan assets, and any person who provides
investment advice with respect to such assets for a fee, is a fiduciary of the
investing Plan. If the Trust Assets constitute Plan assets, then any party
exercising management or discretionary control regarding those assets, such as
a Master Servicer, a Special Servicer, any Sub-Servicer, a Trustee, the obligor
under any credit enhancement mechanism, or certain affiliates thereof, may be
deemed to be a Plan "fiduciary" with respect to the investing Plan, and thus
subject to the fiduciary responsibility provisions of ERISA. In addition, if
the underlying assets of a Trust Fund
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constitute Plan assets, the Sponsor, the REMIC Administrator, any borrower, as
well as each of the parties described in the preceding sentence, may become
Parties in Interest with respect to an investing Plan (or of a Plan holding an
interest in an investing entity). Thus, if the Trust Assets constitute Plan
assets, the operation of the Trust Fund may involve a prohibited transaction
under ERISA and the Code. For example, if a person who is a Party in Interest
with respect to an investing Plan is borrower, the purchase of Certificates by
the Plan could constitute a prohibited loan between a Plan and a Party in
Interest.
Any Plan fiduciary that proposes to cause such Plan to purchase Offered
Certificates should consult with its counsel with respect to the potential
applicability of ERISA and the Code, in particular the fiduciary responsibility
and prohibited transaction provisions, to such investment and the availability
of (and scope of relief provided by) any prohibited transaction exemption in
connection therewith. The Prospectus Supplement with respect to a series of
Certificates may contain additional information regarding the application of
any exemption with respect to the Certificates offered thereby. In addition,
any Plan fiduciary that proposes to cause a Plan to purchase Stripped Interest
Certificates should consider the federal income tax consequences of such
investment.
LEGAL INVESTMENT
The Offered Certificates will constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA")
only if so specified in the related Prospectus Supplement. Accordingly,
investors whose investment authority is subject to legal restrictions should
consult their own legal advisors to determine whether and to what extent the
Offered Certificates constitute legal investments for them.
Prior to December 31, 1996, only classes of Offered Certificates that (i)
were rated in one of the two highest rating categories by one or more Rating
Agencies and (ii) were part of a series evidencing interests in a Trust Fund
consisting of loans secured by a single parcel of real estate upon which is
located a dwelling or mixed residential and commercial structure, such as
certain Multifamily Loans, and originated by types of Originators specified in
SMMEA, will be "mortgage related securities" for purposes of SMMEA. "Mortgage
related securities" are legal investments to the same extent that, under
applicable law, obligations issued by or guaranteed as to principal and
interest by the United States or any agency or instrumentality thereof
constitute legal investments for persons, trusts, corporations, partnerships,
associations, business trusts and business entities (including depository
institutions, insurance companies and pension funds created pursuant to or
existing under the laws of the United States or of any state, the authorized
investments of which are subject to state regulation). However, under SMMEA as
originally enacted, if a state enacted legislation prior to October 3, 1991
that specifically limited the legal investment authority of any such entities
with respect to "mortgage related securities" under such definition, Offered
Certificates would constitute legal investments for entities subject to such
legislation only to the extent provided in such legislation.
Effective December 31, 1996, the definition of "mortgage related
securities" was modified to include among the types of loans to which such
securities may relate, loans secured by "one or more parcels of real estate
upon which is located one or more commercial structures". In addition, the
related legislative history states that this expanded definition includes
multifamily loans secured by more than one parcel of real estate upon which is
located more than one structure. Until September 23, 2001, any state may enact
legislation limiting the extent to which "mortgage related securities" under
this expanded definition would constitute legal investments under that state's
laws.
SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal with "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in such securities, and
national banks may purchase such securities for their own account without
regard to the limitations generally applicable to investment securities set
forth in 12 U.S.C. 24 (Seventh), subject in each case to such regulations as
the applicable federal regulatory authority may prescribe. In this connection,
effective December 31, 1996, the Office of the Comptroller of the Currency (the
"OCC") amended 12 C.F.R. Part 1 to authorize national banks to purchase and
sell for their own account, without limitation as to a percentage of the bank's
capital and surplus (but subject to compliance with certain general standards
concerning "safety and soundness" and retention of credit information in 12
C.F.R. Section 1.5), certain "Type IV securities", defined in 12 C.F.R. Section
1.2(1) to include certain "commercial mortgage-related securities" and
"residential mortgage-related securities". As so defined, "commercial
mortgage-related security" and "residential mortgage-related security" mean, in
relevant part, "mortgage related security" within the meaning of SMMEA,
provided that, in the case of a "commercial mortgage-related security," it
"represents ownership of a promissory note or certificate of interest or
participation that is directly secured by a first lien on one or more parcels
of real estate
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upon which one or more commercial structures are located and that is fully
secured by interests in a pool of loans to numerous obligors." In the absence
of any rule or administrative interpretation by the OCC defining the term
"numerous obligors," no representation is made as to whether any class of
Offered Certificates will qualify as "commercial mortgage-related securities",
and thus as "Type IV securities", for investment by national banks. Federal
credit unions should review NCUA Letter to Credit Unions No. 96, as modified by
Letter to Credit Unions No. 108, which includes guidelines to assist federal
credit unions in making investment decisions for mortgage related securities.
The NCUA has adopted rules, codified as 12 C.F.R. Section 703.5(f)-(k), which
prohibit federal credit unions from investing in certain mortgage related
securities (including securities such as certain classes of Offered
Certificates), except under limited circumstances.
The Federal Financial Institutions Examination Council has issued a
supervisory policy statement (the "Policy Statement") applicable to all
depository institutions, setting forth guidelines for and significant
restrictions on investments in "high-risk mortgage securities". The Policy
Statement has been adopted by the Federal Reserve Board, the Office of the
Comptroller of the Currency, the FDIC and the OTS. The Policy Statement
generally indicates that a mortgage derivative product will be deemed to be
high risk if it exhibits greater price volatility than a standard fixed rate
thirty-year mortgage security. According to the Policy Statement, prior to
purchase, a depository institution will be required to determine whether a
mortgage derivative product that it is considering acquiring is high-risk, and
if so that the proposed acquisition would reduce the institution's overall
interest rate risk. Reliance on analysis and documentation obtained from a
securities dealer or other outside party without internal analysis by the
institution would be unacceptable. There can be no assurance as to which
classes of Certificates, including Offered Certificates, will be treated as
high-risk under the Policy Statement.
The predecessor to the Office of Thrift Supervision (the "OTS") issued a
bulletin, entitled "Mortgage Derivative Products and Mortgage Swaps", which is
applicable to thrift institutions regulated by the OTS. The bulletin
established guidelines for the investment by savings institutions in certain
"high-risk" mortgage derivative securities and limitations on the use of such
securities by insolvent, undercapitalized or otherwise "troubled" institutions.
According to the bulletin, such "high-risk" mortgage derivative securities
include securities having certain specified characteristics, which may include
certain classes of Offered Certificates. In addition, the National Credit Union
Administration has issued regulations governing federal credit union
investments which prohibit investment in certain specified types of securities,
which may include certain classes of Offered Certificates. Similar policy
statements have been issued by regulators having jurisdiction over other types
of depository institutions.
There may be other restrictions on the ability of certain investors either
to purchase certain classes of Offered Certificates or to purchase any class of
Offered Certificates representing more than a specified percentage of the
investor's assets. Except as to the status of certain classes of Offered
Certificates as "mortgage related securities", the Sponsor will make no
representations as to the proper characterization of any class of Offered
Certificates for legal investment or other purposes, or as to the ability of
particular investors to purchase any class of Offered Certificates under
applicable legal investment restrictions. These uncertainties (and any
unfavorable future determinations concerning legal investment or financial
institution regulatory characteristics of the Offered Certificates) may
adversely affect the liquidity of any class of Offered Certificates.
Accordingly, all investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Offered Certificates of any class
constitute legal investments or are subject to investment, capital or other
restrictions.
METHOD OF DISTRIBUTION
The Offered Certificates offered hereby and by Prospectus Supplements
hereto will be offered in series through one or more of the methods described
below. The Prospectus Supplement prepared for each series will describe the
method of offering being utilized for that series and will state the net
proceeds to the Sponsor from such sale.
The Sponsor intends that Offered Certificates will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of a particular
series of Certificates may be made through a combination of two or more of
these methods. Such methods are as follows:
(i) By negotiated firm commitment underwriting and public offering by one
or more underwriters specified in the related Prospectus Supplement;
86
<PAGE>
(ii) by placements through one or more placement agents specified in the
related Prospectus Supplement primarily with institutional investors and
dealers; and
(iii) through offerings by the Sponsor.
The Prospectus Supplement for each series of Offered Certificates will, as
to each class of such Certificates, describe the method of offering being used
for that class and either the price at which such class is being offered, the
nature and amount of any underwriting discounts or additional compensation to
underwriters and the proceeds of the offering to the Sponsor, or the method for
determining the price at which such class will be sold to the public. A firm
commitment underwriting and public offering by underwriters may be done through
underwriting syndicates led by one or more managing underwriters or through one
or more underwriters acting alone. The managing underwriter or underwriters
with respect to the offer and sale of a particular series of Offered
Certificates will be set forth on the cover of the Prospectus Supplement
relating to such series and the members of the underwriting syndicate, if any,
will be named in such Prospectus Supplement. The firms acting as underwriters
with respect to the Offered Certificates of any series may include Citicorp
Securities, Inc. and Citibank, N.A., each of which is an affiliate of the
Sponsor. Any of the above-named firms not named in the related Prospectus
Supplement will not be parties to the Underwriting Agreement in respect of a
series of Offered Certificates, will not be purchasing any such Certificates
from the Sponsor and will have no direct or indirect participation in the
underwriting of such Certificates, although any of such firms may participate
in the distribution of such Certificates under circumstances entitling it to a
dealer's commission. Each Prospectus Supplement for an underwritten offering
will also contain information regarding the nature of the underwriters'
obligations, any material relationships between the Sponsor and any
underwriter, and, where appropriate, information regarding any discounts or
concessions to be allowed or reallowed to dealers or others and any
arrangements to stabilize the market for the Certificates so offered. In a firm
commitment underwritten offering, the underwriters will be obligated to
purchase all of the Offered Certificates of a series if any such Certificates
are purchased. Offered Certificates may be acquired by the underwriters for
their own accounts and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. In connection with
the sale of the Offered Certificates of any series, underwriters may receive
compensation from the Sponsor or from purchasers of such Certificates in the
form of discounts, concessions or commissions. The related Prospectus
Supplement will describe any such compensation paid by the Sponsor.
In underwritten offerings, the underwriters and their agents may be
entitled, under agreements entered into with the Sponsor, to indemnification
from the Sponsor against certain civil liabilities, including liabilities under
the Securities Act of 1933, as amended (the "Securities Act"), or to
contribution with respect to payments which such underwriters or agents may be
required to make in respect thereof. Such rights to indemnification or
contribution may also extend to each person, if any, who controls any such
underwriter within the meaning of the Securities Act.
If a series or class of Offered Certificates is offered otherwise than
through underwriters, the Prospectus Supplement relating thereto will contain
information regarding the nature of such offering and any agreements to be
entered into between the Sponsor and purchasers of such Certificates. It is
contemplated that Citicorp Securities, Inc. or Citibank, N.A. will act as
placement agent on behalf of the Sponsor in such offerings of a series or class
of Offered Certificates. If Citicorp Securities, Inc. does act as placement
agent in the sale of Offered Certificates, it will receive a selling commission
which will be disclosed in the related Prospectus Supplement. Citicorp
Securities, Inc. or Citibank, N.A. may also purchase Offered Certificates
acting as principal.
It is expected that the Sponsor will from time to time form Mortgage Asset
Pools and cause series of Offered Certificates evidencing an ownership interest
in such Mortgage Asset Pools to be issued to the related Mortgage Asset
Sellers. Thereafter, and pending final sale of such a series of Offered
Certificates, the related Mortgage Asset Seller may enter into repurchase
arrangements or secured lending arrangements with institutions that may include
Citicorp Securities, Inc. or any of its affiliates for purposes of financing
the holding of such series. Prior to any sales of such Certificates to
investors, the related Mortgage Asset Seller will prepare and deliver a
Prospectus Supplement containing updated information regarding the Mortgage
Asset Pool as of the first day of the month in which such sale occurs.
Affiliates of the Sponsor may act as principals or agents in connection
with market-making transactions relating to the Offered Certificates. This
Prospectus and the related Prospectus Supplement may be used by such affiliates
in connection with offers and sales related to market-making transactions in
the Offered Certificates. Such sales will be made at prices related to
prevailing market prices at the time of sale.
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<PAGE>
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each series of
Certificates, and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement.
RATING
It is a condition to the issuance of any class of Offered Certificates
that they shall have been rated not lower than investment grade, that is, in
one of the four highest rating categories, by at least one Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders thereof of all collections on the underlying mortgage
assets to which such holders are entitled. These ratings address the
structural, legal and issuer-related aspects associated with such certificates,
the nature of the underlying mortgage assets and the credit quality of the
guarantor, if any. Ratings on mortgage pass-through certificates do not
represent any assessment of the likelihood of principal prepayments by
borrowers or of the degree by which such prepayments might differ from those
originally anticipated. As a result, Certificateholders might suffer a lower
than anticipated yield, and, in addition, holders of stripped interest
certificates in extreme cases might fail to recoup their initial investments.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning
rating organization. Each security rating should be evaluated independently of
any other security rating.
88
<PAGE>
INDEX OF PRINCIPAL TERMS
PAGE
----
Accrual Certificates .................................... 9, 32
Act ..................................................... 58
ADA ..................................................... 61
ARM Loans ............................................... 23
Bankruptcy Code ......................................... 55
Book-Entry Certificates ................................. 11, 31
Cash Flow Agreement ..................................... 8, 25
Cash Flow Agreements .................................... 1
CERCLA .................................................. 19, 58
Certificate Account ..................................... 7, 24, 40
Certificate Balance ..................................... 2, 9
Certificate Owner ....................................... 11, 36
Certificateholders ...................................... 2
Certificates ............................................ 6
Closing Date ............................................ 64
Code .................................................... 11, 61
Commercial Properties ................................... 6, 21
Commission .............................................. 2
Committee Report ........................................ 63
Companion Class ......................................... 10, 33
Condemnation Proceeds ................................... 41
Contingent Payment Regulations .......................... 82
Contributions Tax ....................................... 73
Controlled Amortization Class ........................... 10, 33
Cooperatives ............................................ 21
CPR ..................................................... 27
Credit Support .......................................... 1, 8, 24
Cut-off Date ............................................ 10
Definitive Certificate .................................. 11
Definitive Certificates ................................. 31, 36
Determination Date ...................................... 25, 31
Distribution Date ....................................... 9
Distribution Date Statement ............................. 34
DOL ..................................................... 84
DTC ..................................................... 3, 11, 31, 35
Due Dates ............................................... 23
Equity Participation .................................... 23
ERISA ................................................... 13, 84
Exchange Act ............................................ 3
FAMC .................................................... 7
FHLMC ................................................... 7
FNMA .................................................... 7
Garn Act ................................................ 59
GNMA .................................................... 7
Grantor Trust Certificates .............................. 11, 62
Grantor Trust Fractional Interest Certificates .......... 12
Grantor Trust Fund ...................................... 62
Indirect Participants ................................... 36
89
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PAGE
----
Insurance Proceeds .................... 41
IRS ................................... 63
Issue Premium ......................... 69
L/C Bank .............................. 52
Liquidation Proceeds .................. 41
Lock-out Date ......................... 23
Lock-out Period ....................... 23
Mark-to-Market Regulations ............ 71
Master Servicer ....................... 2, 6
MBS ................................... 1, 21
MBS Agreement ......................... 24
MBS Issuer ............................ 24
MBS Servicer .......................... 24
MBS Trustee ........................... 24
Mortgage Asset Pool ................... 1
Mortgage Asset Seller ................. 7, 21
Mortgage Assets ....................... 1, 21
Mortgage Loans ........................ 1, 6, 21
Mortgage Notes ........................ 21
Mortgage Rate ......................... 7, 23
Mortgaged Properties .................. 21
Mortgages ............................. 21
Multifamily Properties ................ 6, 21
Net Leases ............................ 22
Nonrecoverable Advance ................ 33
Notional Amount ....................... 9, 32
OCC ................................... 85
Offered Certificates .................. 1
OID Regulations ....................... 62
Originator ............................ 21
OTS ................................... 86
PAC ................................... 28
Participants .......................... 20, 31, 36
Parties in Interest ................... 84
Pass-Through Rate ..................... 2, 9
Permitted Investments ................. 40
Plans ................................. 84
Policy Statement ...................... 86
Pooling Agreement ..................... 8, 37
Prepayment Assumption ................. 63, 78
Prepayment Interest Shortfall ......... 25
Prepayment Premium .................... 23
Prohibited Transactions Tax ........... 73
Prospectus Supplement ................. 1
Rating Agency ......................... 13
RCRA .................................. 59
Record Date ........................... 31
Related Proceeds ...................... 33
Relief Act ............................ 60
REMIC ................................. 2, 11, 62
90
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PAGE
-------
REMIC Administrator ..................... 2, 6
REMIC Certificates ...................... 62
REMIC Provisions ........................ 62
REMIC Regular Certificates .............. 11, 62
REMIC Regulations ....................... 62
REMIC Residual Certificates ............. 11, 62
REO Property ............................ 39
RICO .................................... 61
Securities Act .......................... 87
Senior Certificates ..................... 8, 30
Servicing Standard ...................... 39
SMMEA ................................... 85
SPA ..................................... 27
Special Servicer ........................ 2, 6
Sponsor ................................. 21
Stripped Interest Certificates .......... 9, 31
Stripped Principal Certificates ......... 8, 31
Subordinate Certificates ................ 8, 31
Sub-Servicer ............................ 40
Sub-Servicing Agreement ................. 40
TAC ..................................... 28
Tiered REMICs ........................... 63
Title V ................................. 60
Trust Assets ............................ 2
Trust Fund .............................. 1
Trustee ................................. 2, 6
UCC ..................................... 54
Voting Rights ........................... 35
Warranting Party ........................ 38
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This diskette contains a spreadsheet file that can be put on a user-specified
hard drive or network drive. The file is "MCF98s1.xls". The file "MCF98s1.xls"
is a Microsoft Excel1, Version 5.0 spreadsheet. The file provides, in
electronic format, certain loan level information shown in ANNEX A of the
Preliminary Prospectus Supplement.
Open the file as you would normally open any spreadsheet in Microsoft
Excel. After the file is opened, a securities law legend will be displayed.
READ THE LEGEND CAREFULLY. To view the ANNEX A data, "click" on the worksheet
labeled "Sheet 2."
- ----------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
SPONSOR OR BY THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SINCE THE DATE OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
PROSPECTUS SUPPLEMENT
Executive Summary ......................................... S-8
Summary of Prospectus Supplement .......................... S-10
Risk Factors .............................................. S-34
Description of the Mortgage Pool .......................... S-43
Servicing of the Mortgage Loans ........................... S-57
Description of the Certificates ........................... S-68
Yield and Maturity Considerations ......................... S-86
Use of Proceeds ...........................................S-105
Certain Federal Income Tax Consequences ...................S-105
Certain ERISA Considerations ..............................S-108
Legal Investment ..........................................S-111
Underwriting ..............................................S-111
Legal Matters .............................................S-112
Ratings ...................................................S-112
Index of Principal Definitions ............................S-114
Annex A -- Certain Characteristics of the
Mortgage Loans .......................................... A-1
Annex B -- Trustee Reports ................................ B-1
Annex C -- Preliminary Term Sheet ......................... C-1
PROSPECTUS
Prospectus Supplement ..................................... 2
Available Information ..................................... 2
Incorporation of Certain Information by Reference ......... 3
Summary of Prospectus ..................................... 6
Risk Factors .............................................. 14
Description of the Trust Funds ............................ 21
Yield and Maturity Considerations ......................... 25
Mortgage Capital Funding, Inc. ............................ 30
Use of Proceeds ........................................... 30
Description of the Certificates ........................... 30
Description of the Pooling Agreements ..................... 37
Description of Credit Support ............................. 51
Certain Legal Aspects of Mortgage Loans ................... 53
Material Federal Income Tax Consequences .................. 61
State and Other Tax Consequences .......................... 83
ERISA Considerations ...................................... 84
Legal Investment .......................................... 85
Method of Distribution .................................... 86
Financial Information ..................................... 88
Rating .................................................... 88
Index of Principal Terms .................................. 89
</TABLE>
THROUGH AND INCLUDING AUGUST , 1998, ALL DEALERS EFFECTING TRANSACTIONS
IN THE OFFERED CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION,
MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS. THIS
DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE>
$1,154,294,000
(APPROXIMATE)
MORTGAGE CAPITAL
FUNDING, INC.
(SPONSOR)
CITICORP REAL ESTATE, INC.
(MORTGAGE LOAN SELLER)
CLASS A-1, CLASS A-2, CLASS X,
CLASS B, CLASS C, CLASS D,
CLASS E, CLASS F AND CLASS G
MORTGAGE CAPITAL FUNDING, INC.
MULTIFAMILY/COMMERCIAL
MORTGAGE PASS-THROUGH
CERTIFICATES
SERIES 1998-MC1
-----------------------------------------------------
PROSPECTUS SUPPLEMENT
-----------------------------------------------------
GOLDMAN, SACHS & CO.
[CITI BANK LOGO]
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