SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended Commission
File Number
December 31, 1997 333-24489
Mortgage Capital Funding, Inc.
(Issuer in respect of Mortgage Pass-Through
Certificates, Series 1997-MC2)
(Exact name of registrant as specified in its charter)
Delaware 13-3408716
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
399 Park Avenue, 3rd Floor
New York, New York 10043
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (212) 793-5880
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No ______.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant. The aggregate market value shall be computed
by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to the
date of filing.
NOT APPLICABLE
<PAGE>
PART I
Item 1. Business.
Omitted pursuant to a request to the Securities and Exchange Commission
for an exemption of Mortgage Capital Funding, Inc. ("MCFI" or the "registrant")
pursuant to Section 12(h) of the Securities Exchange Act of 1934 (the "12(h)
Exemption"), filed by Thacher Proffitt & Wood on behalf of the registrant on
October 17, 1995.
Item 2. Properties.
The Trust did not acquire any mortgaged property in connection with the
foreclosure of a defaulted Mortgage Asset or otherwise. As of December 31, 1997,
no mortgage loan had a principal balance greater than 10% of the aggregate
principal balance of the Mortgage Pool.
Item 3. Legal Proceedings.
The registrant knows of no material pending legal proceeding involving the
Mortgage Properties, or, to the extent related to the Trust Fund, any of MCFI,
the sponsor (the "Sponsor"), Citicorp Real Estate, Inc. ("CREI"), as mortgage
loan seller, NationsBanc Mortgage Capital Corporation ("NMCC"), as Additional
Warranting Party, Midland Loan Services, L.P., as master servicer (the "Master
Servicer"), CRIIMI MAE Services Limited Partnership ("CRIIMI MAE"), as special
servicer (the "Special Servicer") or the trust (the "Trust") evidenced by the
registrant's Mortgage Pass-Through Certificates, Series 1997-MC2 (the
"Certificates"), or LaSalle National Bank, as trustee (the "Trustee") or REMIC
administrator (the "REMIC Administrator"), or ABN AMRO Bank N.V. as fiscal agent
(the "Fiscal Agent") for the Certificates, other than routine litigation
incidental to the duties of the Sponsor, CREI, NMCC, the Master Servicer, the
Special Servicer, the Trustee, the REMIC Administrator or the Fiscal Agent under
the Pooling and Servicing Agreement (the "Pooling Agreement") dated as of
November 1, 1997, between the Sponsor, CREI, as mortgage loan seller, NMCC, as
Additional Warranting Party, the Master Servicer, the Special Servicer, the
Trustee, the REMIC Administrator and the Fiscal Agent.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder's
Matters.
(a)
(1) There is no established public trading market for the Certificates. To
the best of the registrant's knowledge, there are no reported high and low bid
quotations for any of the Certificates.
(2) As of December 31, 1997, the number of record holders of the
registrant's Mortgage Pass-Through Certificates, Series 1997-MC2 was 4.
(3) Omitted pursuant to the 12(h) Exemption.
(b) Not applicable.
Item 6. Selected Financial Data.
Omitted pursuant to the 12(h) Exemption.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
Omitted pursuant to the 12(h) Exemption.
Item 7A. Quantitive and Qualitive Disclosure re Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data.
Omitted pursuant to the 12(h) Exemption.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Omitted pursuant to the 12(h) Exemption.
Item 11. Executive Compensation.
Omitted pursuant to the 12(h) Exemption.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) As of December 31, 1997, 100% of all the publicly offered Mortgage
Pass-Through Certificates, Series 1997-MC2 were held of record by Cede & Co., 55
Water Street, New York, NY 10041.
(b) Omitted pursuant to the 12(h) Exemption.
(c) Omitted pursuant to the 12(h) Exemption.
Item 13. Certain Relationships and Related Transactions.
(a)(1) Omitted pursuant to the 12(h) Exemption.
(a)(2) Omitted pursuant to the 12(h) Exemption.
(a)(3) The registrant has been informed that as of December 31, 1997,
CRIIMI MAE was the beneficial owner of Certificates issued by the Trust with an
outstanding principal amount of $17,411,549 (representing 2% of the Certificates
and 100% of the Class K Certificates) CRIIMI MAE serves as Special Servicer
under the Pooling Agreement for which it will be entitled to certain Standby
Fees, Special Servicing Fees, Workout Fees and Liquidation Fees and all
assumption and modification fees, late payment charges and penalty interest in
excess of interest at the related Mortgage Rate received on or with respect to
Mortgage Loans serviced thereby. The Standby Fee accrues as to each Mortgage
Loan at a rate of .02% per annum which will be payable out of the Master
Servicing Fee. In 1997, CRIIMI MAE did not receive any fees for its services as
Special Servicer.
(a)(4) None.
(b) Omitted pursuant to the 12(h) Exemption.
(c) Omitted pursuant to the 12(h) Exemption.
(d) Omitted pursuant to the 12(h) Exemption.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) (1) Annual Statement of Compliance, pursuant to Pooling Agreement and
participation agreements referred to therein.
Delivered by Midland as Master Servicer and CRIIMI MAE as Special
Servicer.
(2) Annual Servicing Report from independent public accountants, pursuant
to Pooling Agreement and participation agreements referred to therein.
(i) Delivered by Master Servicer.
(ii) Omitted with respect to Special Servicer as no Mortgage Loans became
Specially Serviced Mortgage Loans or REO Properties during the time period
covered by this 10-K.
(b) Reports on Form 8-K. During the last quarter of the prior calendar
year, Reports on Form 8-K were filed by the registrant as follows: Reports on
Form 8-K dated November 10, 1997, November 24, 1997, and November 25, 1997 were
filed in response to Item 5 (Other Events) of Form 8-K with respect to certain
information that may be considered to be computational materials and ABS term
sheets furnished to prospective investors in connection with the offering of the
Certificates; a Report on Form 8-K dated November 25, 1997 was filed in response
to Item 2 (Acquisition or Disposition of Assets) of Form 8-K with respect to the
issuance of the Certificates and the acquisition by the Trust Fund of the Trust
Fund assets.
(c) (1) Articles of incorporation of MCFI have been previously filed with
the Securities and Exchange Commission.
(2) By-laws of MCFI have been previously filed with the Securities and
Exchange Commission.
(3) Pooling and Servicing Agreement dated as of November 1, 1997 among the
Sponsor, CREI, as Mortgage Loan Seller, NMCC, as Additional Warranting Party,
the Master Servicer, the Special Servicer, LaSalle National Bank, as Trustee and
REMIC Administrator, and ABN AMRO Bank N.V., as Fiscal Agent, has been
previously filed in a Report on Form 8-K dated November 25, 1997.
(d) As required pursuant to the 12(h) Exemption, information aggregating
certain data reported with respect to each distribution date will be set forth
as Exhibit 99(d) hereto.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
No annual report covering the registrant's last fiscal year or proxy material
with respect to any annual or other meeting of security holders has been sent to
security holders.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MORTGAGE CAPITAL FUNDING, INC.
(Issuer in respect of Mortgage
Pass-Through Certificates, Series
1997-MC2)
(Registrant)
By: /s/ Richard L. Jarocki, Jr.
Richard L. Jarocki, Jr.
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant in
the capacities indicated on March 30, 1998.
Signature Capacity
/s/ Richard L. Jarocki, Jr. President and Director
Richard L. Jarocki, Jr. (Principal Executive Officer)
/s/ Theresa D. DeGuisto Vice President and Treasurer
Theresa D. DeGuisto (Principal Financial and
Accounting Officer)
/s/ Frank Forelle Vice President and Director
Frank Forelle
<PAGE>
EXHIBIT INDEX
Exhibit No.
99(a)(1) Annual Statement of Compliance, pursuant to Pooling Agreement and
participation agreements referred to therein.
Delivered by Midland Loan Services, L.P. as Master Servicer and CRIIMI
MAE Services Limited Partnership as Special Servicer.
99(a)(2) Annual Servicing Report from independent public accountants,
pursuant to Pooling Agreement and participation agreements referred to therein.
Delivered by Master Servicer.
99(d) Aggregate data with respect to distributions made in 1997.
Exhibit 99(a)(1)
ANNUAL STATEMENT AS TO COMPLIANCE
OFFICER'S CERTIFICATE
Re: Mortgage Capital Funding, Inc.
Multifamily/Commercial Mortgage Pass-through Certificates
Series 1997-MC2 (the "Trust")
As an authorized officer of CRIIMI MAE Services Limited Partnership, Special
Servicer for the Trust, I hereby certify that (i) a review of the activities and
performance of the Special Servicer under the Pooling and Servicing Agreement
dated November 1, 1997 (the "Agreement"), for the period ending December 31,
1997 has been made under my supervision; (ii) to the best of my knowledge, based
on such review, the Special Servicer has fulfilled all of its obligations in all
material respects under this Agreement throughout the aforementioned period; and
(iii) no notice has been received regarding the qualification or status as a
REMIC of, or otherwise asserting a tax (other than ad valorem real property
taxes or other similar taxes on REO property) on the income or assets of, any
portion of the Trust Fund from the Internal Revenue Service or from any other
governmental agency or body.
CRIIMI MAE SERVICES LIMITED PARTNERSHIP
By: CRIIMI MAE Services, Inc.,
Its general partner
/s/Maribeth Stahl
By: Maribeth Stahl
Vice President
March 13, 1998
<PAGE>
March 6, 1998
ABS Trust Services Group-MCFI Series 1997-MC2
LaSalle National Bank
135 South LaSalle Street
Suite 1740
Chicago, IL 60603-0000
Mortgage Capital Funding, Inc.
Multifamily/Commercial Mortgage Pass-Through Certificates
Series 1997-MC2
OFFICER'S CERTIFICATE
Pursuant to the requirements of that certain Pooling and Servicing Agreement
governing the referenced Trust (the "PSA"), it is hereby certified that (i) the
undersigned has completed a review of the Servicer's performance of its
obligations under the PSA for the current calendar year; (ii) to the best of the
undersigned's knowledge on the basis of that review the Servicer has fulfilled
all of its obligations under the PSA throughout such period; (iii) to the best
of the undersigned's knowledge, the sub-servicer, if any, has fulfilled its
obligations under its sub-servicing agreement in all material respects; and (iv)
no notice has been received from any governmental agency or body which would
indicate a challenge or question as to the status of the Trust's qualification
as a REMIC under the Code.
/s/ Charles J. Sipple 3/10/98
Charles J. Sipple Date
Senior Vice President
/s/ Paula J. Mickelson 3/10/98
Paula J. Mickelson Date
Vice President
cc: Mortgage Finance
Mortgage Capital Funding, Inc.
399 Park Avenue
3rd Floor
New York, NY 10043-0000
Exhibit 99(a)(2)
Independent Auditors' Report on Management's
Assertion on Compliance with Minimum
Servicing Standards Set Forth in the Uniform
Single Attestation Program for Mortgage Bankers
The Board of Directors and Stockholder
Of Midland Data Systems, Inc.
The Partners of Midland Loan Services, L.P.
We have examined management's assertion that Midland Data Systems, Inc. and
Midland Loan Services, L.P. (the Companies) complied with the minimum servicing
standards set forth in the Mortgage Bankers Association of America's (MBA)
Uniform single Attestation program for Mortgage Bankers, except for commercial
loan and multifamily loan servicing, minimum servicing standards V.4 and VI.1.,
which the MBA has interpreted as inapplicable to such servicing during the year
ended December 31, 1997, included in the accompanying report titled Report of
Management. Management is responsible for the Companies' compliance with those
requirements. Our responsibility is to express an opinion on management's
assertion about the Companies' compliance based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about the Companies' compliance with those
requirements and performing such other procedures as we considered necessary in
the circumstances. We believe that our examination provides a reasonable basis
for our opinion. Our examination does not provide a legal determination on the
Companies' compliance with specified requirements.
In our opinion, management's assertion that the Companies complied with the
aforementioned requirements during the year ended December 31, 1997 is fairly
stated, in all material respects.
/s/ Ernst & Young LLP
January 28, 1998
<PAGE>
Report of Management
We, as members of management of Midland Data Systems, Inc. and Midland Loan
Services, L.P. (the Companies), are responsible for complying with the minimum
servicing standards as set forth in the Mortgage Bankers Association of
America's (MBA) Uniform Single Attestation Program for Mortgage Bankers (USAP)
except, for commercial loan and multifamily loan servicing, minimum servicing
standards V.4. and VI.1., which the MBA has interpreted as inapplicable to such
servicing. We are also responsible for establishing and maintaining effective
internal control over compliance with these standards. We have performed an
evaluation of the Companies' compliance with the minimum servicing standards as
set forth in the USAP as of December 31, 1997 and for the year then ended. Based
on this evaluation, we assert that during the year ended December 31, 1997 the
Companies complied with the minimum servicing standards set forth in the USAP.
As of and for this same period, the Companies had in effect a fidelity bond and
errors and omissions policy in the amount of not less than $13 million.
January 28, 1998
/s/ C.J. Sipple
C.J. Sipple
Senior Vice President
/s/ Paula Mickelson
Paula Mickelson
Vice President
Exhibit 99(d)
(i) Class A-1 Certificates received distributions of principal in the aggregate
amount of $760,995.08 in 1997. No other Class received any distributions of
principal in 1997.
(ii) All Classes received distributions of interest in 1997.
(iii) Aggregate collections on the mortgage loans for 1997 $6,439,450.75
(iv) Advances of principal and interest of $274,363.33 were made by the Master
Servicer in 1997.
(vii) Two Mortgage Loans having an aggregate principal balance of $6,025,348
were 30 days or more deliquent in 1997.
(ix) Same as (ii) above.
(x) Same as (ii) above.
(xiv) The Trust Fund suffered no losses or additional expenses in 1997.
(xvii)
Master Servicer Compensation for $115,599.72
1997 (including fees paid to
primary servicers)
Special Servicer Compensation for $0
1997
