<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-61783
THE INFORMATION CONTAINED HEREIN IS NOT COMPLETE AND MAY BE CHANGED. THIS
PROSPECTUS SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 9, 1999
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED AUGUST 18, 1998)
APPROXIMATELY $999,659,000
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1999-WF2
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
AS DEPOSITOR
WELLS FARGO BANK, NATIONAL ASSOCIATION
AS SERVICER AND SELLER
BEAR, STEARNS FUNDING, INC.
AS SELLER
The Series 1999-WF2 Commercial Mortgage Pass-Through Certificates will
consist of eighteen classes of certificates, some of which are not offered by
this prospectus supplement and the accompanying prospectus. All of the Series
1999-WF2 Certificates will represent beneficial ownership interests in a trust
fund whose principal assets consist of mortgage loans secured by commercial
properties, multi-family properties and manufactured housing communities with
an aggregate principal balance of approximately $1,080,711,380 as of July 1,
1999. The Series 1999-WF2 Certificates are payable only from the assets of the
trust fund described herein. Certain classes of Series 1999-WF2 Certificates
are subordinated to other classes as described herein. The following table sets
forth certain information with respect to the classes of Series 1999-WF2
certificates offered hereby, but all such information is incomplete and subject
to clarifications and limitations set forth herein. Multifamily properties
(consisting of multiple rental dwellings), office properties, industrial
properties, retail properties and hotel properties will represent security for
material concentrations of these mortgage loans.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INITIAL CLASS
CERTIFICATE INITIAL DESCRIPTION CERTIFICATE
BALANCE OR PASS- OF PASS- EXPECTED FINAL RATING
NOTIONAL AMOUNT THROUGH THROUGH DISTRIBUTION RATED FINAL ----------------------
(+ / --5%) RATE (1) RATE DATE (2) DISTRIBUTION DATE (3) MOODY'S (4) DCR (5)
----------------- ---------- ------------ -------------------- ---------------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A-1 ....... $338,780,000 Fixed September 15, 2008 July 15, 2031 Aaa AAA
- ----------------- ------------ ------------ -------------------- ---------------------- ---- -----
Class A-2 ....... $525,789,000 Fixed June 15, 2009 July 15, 2031 Aaa AAA
- ----------------- ------------ ------------ -------------------- ---------------------- ---- -----
Class B ......... $ 43,229,000 Variable July 15, 2009 July 15, 2031 Aa2 AA
- ----------------- ------------ ------------ -------------------- ---------------------- ---- -----
Class C ......... $ 43,229,000 Variable February 15, 2010 July 15, 2031 A2 A
- ----------------- ------------ ------------ -------------------- ---------------------- ---- -----
Class D ......... $ 10,807,000 Variable October 15, 2010 July 15, 2031 A3 A--
- ----------------- ------------ ------------ -------------------- ---------------------- ---- -----
Class E ......... $ 27,018,000 Variable November 15, 2012 July 15, 2031 Baa2 BBB
- ----------------- ------------ ------------ -------------------- ---------------------- ---- -----
Class F ......... $ 10,807,000 Variable August 15, 2013 July 15, 2031 Baa3 BBB--
- ----------------- ------------ ------------ -------------------- ---------------------- ---- -----
</TABLE>
- --------------------------------------------------------------------------------
Notes on next page
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE OFFERED CERTIFICATES OR DETERMINED THAT THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE, ADEQUATE OR COMPLETE.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-22 OF THIS
PROSPECTUS SUPPLEMENT AND PAGE 17 OF THE ACCOMPANYING PROSPECTUS.
The Series 1999-WF2 Certificates do not represent an interest in or
obligation of Bear Stearns Commercial Mortgage Securities Inc. or any of its
affiliates. The Series 1999-WF2 Certificates and the Mortgage Loans and other
assets of the trust fund are not insured or guaranteed by Bear Stearns
Commercial Mortgage Securities Inc. or any of its affiliates, or by any
governmental agency or instrumentality.
BEAR, STEARNS & CO. INC. MORGAN STANLEY DEAN WITTER
NORWEST INVESTMENT SERVICES, INC.
, 1999
<PAGE>
Bear Stearns Commercial Mortgage Securities Inc.
Commercial Mortgage Pass-Through Certificates Series 1999-WF2
ALASKA
1 property
$1,354,511
0.13% of total
MASSACHUSETTS
4 properties
$6,028,784
0.56% of total
CONNECTICUT
3 properties
$8,792,002
0.81% of total
NEW JERSEY
2 properties
$4,840,850
0.45% of total
WASHINGTON D.C.
2 properties
$7,500,000
0.69% of total
MARYLAND
6 properties
$37,852,882
3.50% of total
VIRGINIA
2 properties
$28,361,955
2.62% of total
NORTH CAROLINA
6 properties
$17,620,943
1.63% of total
GEORGIA
8 properties
$17,584,174
1.63% of total
FLORIDA
9 properties
$34,461,384
3.19% of total
TENNESSEE
1 property
$4,236,424
0.39% of total
KENTUCKY
1 property
$5,525,000
0.51% of total
MISSISSIPPI
1 property
$7,461,880
0.69% of total
LOUISIANA
1 property
$2,811,962
0.26% of total
OKLAHOMA
1 property
$2,005,849
0.19% of total
TEXAS
27 properties
$76,982,935
7.12% of total
COLORADO
10 properties
$35,261,934
3.26% of total
ARIZONA
9 properties
$28,386,334
2.63% of total
NEVADA
10 properties
$37,038,827
3.43% of total
CALIFORNIA
135 properties
$429,744,626
39.76% of total
UTAH
4 properties
$11,844,398
1.10% of total
OREGON
7 properties
$23,161,274
2.14% of total
WASHINGTON
9 properties
$27,226,301
2.52% of total
WYOMING
1 property
$1,898,110
0.18% of total
MISSOURI
3 properties
$21,854,114
2.02% of total
MINNESOTA
8 properties
$14,936,034
1.38% of total
WISCONSIN
3 properties
$13,637,100
1.26% of total
ILLINOIS
11 properties
$48,222,013
4.46% of total
INDIANA
2 properties
$4,063,000
0.38% of total
MICHIGAN
5 properties
$17,608,863
1.63% of total
OHIO
3 properties
$8,511,847
0.79% of total
PENNSYLVANIA
6 properties
$31,049,634
2.87% of total
NEW YORK
10 properties
$62,845,405
5.82% of total
- ----------------------------------------------------------
(greater than or equal to) 10.0% of Initial Pool Balance
5.01% - 9.99% of Initial Pool Balance
1.01% - 5.00% of Initial Pool Balance
(less than or equal to) 1.00% of Initial Pool Balance
- ----------------------------------------------------------
<PAGE>
[picture]
TORREY RESERVE NORTH COURT Office
Loan No. 9122 San Diego, CA
[picture]
KING STREET METRO PLACE-PHASE I Mixed Use
Loan No. 851563 Alexandria, VA
[picture]
COMPUCOM SYSTEMS HEADQUARTERS Office
Loan No. 851550 Dallas, TX
[picture]
BRINKLEY HOUSE APARTMENTS Multifamily
Loan No. 25764 Oxon Hill, MD
[picture]
INLAND PORTFOLIO-FAIRVIEW HEIGHTS PLAZA
Anchored Retail
Loan No. 25489
Fairview Heights, IL
[picture]
INLAND PORTFOLIO-SPRINGBORO PLAZA Retail
Loan No. 25489 Springboro, OH
<PAGE>
[picture]
225 BROADWAY Office
Loan No. 18041 New York, NY
[picture]
ST. CHARLES 18 CINE Theater
Loan No. 851445 St. Charles, MO
[picture]
AMC THEATERS Theater
Loan No. 851087 Westminster, CO
[picture]
800 WEST EL CAMINO REAL Office
Loan No. 851476 Mountain View, CA
[picture]
PLEASANTON OFFICE PORTFOLIO Office
Loan No. 851499 Pleasanton, CA
<PAGE>
Notes relating to table on cover
(1) The Pass-Through Rates of the Class A-1 and Class A-2 Certificates shall
be the indicated fixed rate per annum or, if a lower rate, the weighted
average of the Net Mortgage Rates of the Mortgage Loans (such Net
Mortgage Rates determined without taking into account any reductions
thereto resulting from modifications of the Mortgage Loans or otherwise
following the Cut-Off Date), (the "NWAC Rate"). The Pass-Through Rates of
the Class B, Class C, Class D, Class E and Class F Certificates set forth
in the table above are initial Pass-Through Rates for such classes. For
interest periods relating to Distribution Dates after August 16, 1999,
the Pass-Through Rate of the Class B Certificates will be a per annum
rate equal to the NWAC Rate for such Distribution Date minus %, and
the Pass-Through Rate of the Class C, Class D, Class E and Class F
Certificates will be the NWAC Rate for such Distribution Date.
(2) The Expected Final Distribution Dates set forth above have been
determined on the basis of the assumptions described in "Description of
the Certificates--Expected Final Distribution Date; Rated Final
Distribution Date" herein.
(3) The Rated Final Distribution Date is the first Distribution Date after
the 24th month following the end of the amortization term of the Mortgage
Loan that, as of the Cut-Off Date, has the longest remaining amortization
term.
(4) Moody's Investors Service, Inc.
(5) Duff & Phelps Credit Rating Co.
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
General information about mortgage pass-through certificates we might
offer publicly is contained in the accompanying prospectus, some of which may
not apply to the Series 1999-WF2 Certificates or the particular classes of
Series 1999-WF2 Certificates being offered. This prospectus supplement
describes the specific terms of the series of mortgage pass-through
certificates being offered to you.
IF WE DESCRIBE TERMS OF THE SERIES OF MORTGAGE PASS-THROUGH CERTIFICATES
OFFERED HEREBY DIFFERENTLY IN THIS PROSPECTUS SUPPLEMENT THAN WE DO IN THE
PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT
RATHER THAN ON THE MORE GENERAL INFORMATION IN THE PROSPECTUS. HOWEVER, YOU
SHOULD CAREFULLY REVIEW THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS TOGETHER, BECAUSE NEITHER ONE BY ITSELF PROVIDES COMPLETE
INFORMATION ABOUT THE SERIES OF MORTGAGE PASS-THROUGH CERTIFICATES OFFERED
HEREBY.
Sometimes the discussion of a particular topic in this prospectus
supplement or in the prospectus relates to a separate discussion in another
section of this prospectus supplement or in the prospectus. We make
cross-references to other sections of the prospectus supplement and the
prospectus whenever we believe that they will enhance your understanding of the
topic under discussion. The table of contents of this prospectus supplement and
the table of contents included in the accompanying prospectus list the pages on
which these captions are located.
Whenever we use words like "intends," "anticipates" or "expects" or
similar words in this prospectus supplement, we are making a forward-looking
statement, or a projection of what we think will happen in the future.
Forward-looking statements are inherently subject to a variety of
circumstances, many of which are beyond our control, that could cause actual
results to differ materially from what we think they will be. Any
forward-looking statements in this prospectus supplement speak only as of the
date of this prospectus supplement. We do not assume any responsibility to
update or review any forward-looking statement contained in this prospectus
supplement to reflect any change in our expectation with respect to the subject
of such forward-looking statement or to reflect any change in events,
conditions or circumstances on which any such forward-looking statement is
based.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement and the prospectus are defined under the caption "Index
of Significant Definitions" beginning on page S-101 in this prospectus
supplement and under the caption "Index of Significant Definitions" beginning
on page 109 in the accompanying prospectus.
S-ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SUMMARY ....................................... S-1
Overview of Series 1999-WF2
Certificates: ........................... S-1
Summary of Subordination Levels: ........... S-2
Description of the Series 1999-WF2
Certificates ............................ S-3
General .................................... S-3
Book-Entry Certificates .................... S-3
Denominations .............................. S-4
Service Providers .......................... S-4
Mortgage Loan Sellers ...................... S-4
Closing Date ............................... S-4
Cut-Off Date ............................... S-4
Distributions .............................. S-5
Amounts Available for Distribution ......... S-5
Interest Distributions ..................... S-6
Principal Distributions .................... S-6
Yield and Prepayment
Considerations .......................... S-7
Yield Maintenance
Charges/Prepayment Premiums ............. S-9
Shortfalls in Available Funds .............. S-9
Advances ................................... S-10
Credit Enhancement ......................... S-11
Optional Termination ....................... S-12
The Mortgage Pool Generally ................ S-12
Mortgage Pool Summary ...................... S-13
Release and Defeasance Provisions .......... S-18
Information Available to
Certificateholders ...................... S-19
Ratings .................................... S-19
Certain Federal Income Tax
Consequences ............................ S-20
ERISA Considerations ....................... S-21
Legal Investment ........................... S-21
RISK FACTORS .................................. S-22
Borrower Default; Nonrecourse
Mortgage Loans .......................... S-22
Risks Associated with Commercial
and Multifamily Lending Generally........ S-23
Property Value May Be Adversely
Affected Even When Current
Operating Income Is Not ................. S-24
Exposure of the Mortgage Pool to
Adverse Economic or Other
Developments Based on
Geographic Concentration ................ S-24
Limitations of Appraisals .................. S-24
Increased Risk of Loss Associated
With Concentration of Mortgage
Loans, Borrowers and Managers ........... S-25
Risks Relating to Conflicts of
Interest ................................ S-25
Risks Relating to Servicing
Compensation ............................ S-26
Risk of Bankruptcy Proceedings ............. S-26
Risks Relating to Prepayments and
Repurchases ............................. S-26
</TABLE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Other Financing and Additional
Debt .................................... S-27
Risks Associated with Recently
Constructed Properties .................. S-28
Risks Associated with Balloon
Payments and the ARD Loan ............... S-28
Dependence on Tenants/Tenant
Bankruptcy .............................. S-28
Risks Particular to Retail Properties ...... S-29
Risks Particular to Multifamily
Properties .............................. S-29
Risks Particular to Government
Assisted Properties ..................... S-30
Risks Particular to Office Properties ...... S-30
Risks Particular to Hotel Properties ....... S-30
Risks Particular to Affiliation with a
Franchise or Hotel Management
Company ................................. S-30
Risks Particular to Industrial
Properties .............................. S-31
Risks Particular to Properties Leased
to Multiple Tenants ..................... S-31
Risks Particular to Leasehold
Interests ............................... S-31
Risks Particular to Theater
Properties .............................. S-32
Risks Created by State Laws of
Particular Jurisdictions ................ S-32
Management ................................. S-32
Risks Relating to Property
Inspections ............................. S-33
Risks Relating to Lack of
Certificateholder Control Over
Trust Fund .............................. S-33
Servicer or Special Servicer May
Purchase Certificates ................... S-33
Certain Yield and Prepayment
Considerations .......................... S-33
Yield Risk Associated With Changes
in Concentrations ....................... S-34
Sequential Pay and Subordination of
Subordinate Offered Certificates ........ S-34
Potential Liability to the Trust Fund
Relating to Environmental
Conditions .............................. S-35
Certain Tax Considerations Related
to Foreclosure .......................... S-35
Limitations on Enforceability of
Cross-Collateralization
Arrangements ............................ S-36
Absence or Inadequacy of Insurance
Coverage Entails Risks .................. S-36
Zoning Compliance .......................... S-36
Litigation ................................. S-36
Absence of Attornment Provisions
Entails Risks ........................... S-37
Risks Relating to Compliance with
the Americans with Disabilities
Act ..................................... S-37
</TABLE>
S-iii
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Risks of Limited Liquidity and
Market Value ............................. S-37
Risks of Limited Assets ..................... S-37
Risks Associated with Year 2000 ............. S-37
DESCRIPTION OF THE
MORTGAGE POOL ............................... S-38
General ..................................... S-38
Additional Debt ............................. S-38
The ARD Loan ................................ S-39
Certain Terms and Conditions of the
Mortgage Loans ........................... S-39
Yield Maintenance and Prepayment
Provisions ............................... S-39
Defeasance .................................. S-41
"Due-on-Sale" and
"Due-on-Encumbrance" Provisions,
Assumptions .............................. S-42
Additional Mortgage Loan
Information .............................. S-42
Ten Largest Mortgage Loans .................. S-53
Underwritten Cash Flow ...................... S-53
Escrow Requirements ......................... S-54
Assessments of Property Condition ........... S-54
Property Inspection ......................... S-54
Appraisals .................................. S-54
Property Condition Assessments .............. S-54
Seismic Review Process ...................... S-55
The Mortgage Loan Sellers ................... S-55
Representations and Warranties;
Repurchases .............................. S-55
Mortgaged Property Accounts ................. S-58
Lock Box Accounts ........................... S-58
DESCRIPTION OF THE
CERTIFICATES ................................ S-60
General ..................................... S-60
Book-Entry Registration and
Definitive Certificates .................. S-61
Distributions ............................... S-62
Method, Timing and Amount ................... S-62
Available Distribution Amount ............... S-62
Application of Available Distribution
Amount ................................... S-63
Pass-Through Rates .......................... S-66
Distributable Certificate Interest
Amount ................................... S-67
Prepayment Interest Shortfalls and
Prepayment Interest Excesses ............. S-67
Principal Distribution Amount ............... S-69
Allocation of Yield Maintenance
Charges .................................. S-70
Allocation of Prepayment Premiums ........... S-70
Expected Final Distribution Date;
Rated Final Distribution Date ............ S-71
Examples of Distributions ................... S-71
Subordination; Allocation of Losses,
Shortfalls and Expenses .................. S-72
Advances .................................... S-73
P&I Advances ................................ S-73
</TABLE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Servicing Advances .......................... S-74
Nonrecoverable Advances ..................... S-75
Appraisal Reductions ........................ S-75
Reports to Certificateholders; Certain
Available Information .................... S-76
Paying Agent Reports ........................ S-76
Special Servicer Reports .................... S-77
Other Information ........................... S-77
Optional Termination; Retirement of
Certificates ............................. S-78
Treatment of REO Properties ................. S-78
The Trustee ................................. S-79
The Fiscal Agent ............................ S-79
The Paying Agent, Certificate
Registrar and Authenticating
Agent .................................... S-79
YIELD AND MATURITY
CONSIDERATIONS .............................. S-80
Yield Considerations ........................ S-80
General ..................................... S-80
Pass-Through Rate ........................... S-80
Rate and Timing of Principal
Payments ................................. S-80
Losses and Shortfalls ....................... S-81
Certain Relevant Factors .................... S-81
Delay in Payment of Distributions ........... S-82
Unpaid Distributable Certificate
Interest ................................. S-82
Certificate Deferred Interest ............... S-82
Weighted Average Life ....................... S-82
SERVICING OF THE MORTGAGE
LOANS ....................................... S-87
General ..................................... S-87
The Servicer ................................ S-89
Servicer Events of Default .................. S-89
Rights Upon Event of Default ................ S-90
The Special Servicer ........................ S-90
Termination of the Special Servicer ......... S-90
The Operating Adviser ....................... S-91
Servicing and Other Compensation
and Payment of Expenses .................. S-92
Modifications, Waiver and
Amendments ............................... S-93
Realization Upon Defaulted
Mortgage Loans ........................... S-94
Foreclosures ................................ S-94
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES ................................ S-95
METHOD OF DISTRIBUTION ......................... S-96
LEGAL MATTERS .................................. S-97
RATINGS ........................................ S-97
LEGAL INVESTMENT
CONSIDERATIONS .............................. S-98
ERISA CONSIDERATIONS ........................... S-98
</TABLE>
S-iv
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
SUMMARY
This summary highlights selected information contained in this document
and does not contain all of the information that you need to consider in
deciding whether to buy any class of mortgage pass-through certificates. To
understand all of the terms of the mortgage pass-through certificates, read
carefully this entire document and the accompanying prospectus.
OVERVIEW OF SERIES 1999-WF2 CERTIFICATES:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
INITIAL
AGGREGATE WEIGHTED
RATINGS CERTIFICATE AVERAGE PRINCIPAL OR
-------------- BALANCE OR PASS-THROUGH INITIAL LIFE NOTIONAL
MOODY'S DCR NOTIONAL % OF RATE PASS-THROUGH (APPROX. PRINCIPAL
CLASS (1) (2) AMOUNT TOTAL DESCRIPTION RATE (4) YEARS) (6) WINDOW
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Senior Classes
- ---------------------------------------------------------------------------------------------------------------------------
A-1 Aaa AAA $ 338,780,000 31.35 Fixed % 5.7 8/1999-9/2008
- ---------------------------------------------------------------------------------------------------------------------------
A-2 Aaa AAA $ 525,789,000 48.65 Fixed % 9.7 9/2008-6/2009
- ---------------------------------------------------------------------------------------------------------------------------
X Not Offered $1,080,711,380(3) N/A Variable %(5) 9.1 8/1999-5/2019
- ---------------------------------------------------------------------------------------------------------------------------
Subordinate Classes
- ---------------------------------------------------------------------------------------------------------------------------
B Aa2 AA $ 43,229,000 4.000 Variable % 10.0 6/2009-7/2009
- ---------------------------------------------------------------------------------------------------------------------------
C A2 A $ 43,229,000 4.000 Variable % 10.1 7/2009-2/2010
- ---------------------------------------------------------------------------------------------------------------------------
D A3 A-- $ 10,807,000 1.000 Variable % 11.0 2/2010-10/2010
- ---------------------------------------------------------------------------------------------------------------------------
E Baa2 BBB $ 27,018,000 2.500 Variable % 12.3 10/2010-11/2012
- ---------------------------------------------------------------------------------------------------------------------------
F Baa3 BBB-- $ 10,807,000 1.000 Variable % 13.8 11/2012-8/2013
- ---------------------------------------------------------------------------------------------------------------------------
G Not Offered $ 21,614,000 2.000 Fixed % 14.3 8/2013-11/2013
- ---------------------------------------------------------------------------------------------------------------------------
H Not Offered $ 16,211,000 1.500 Fixed % 14.5 11/2013-6/2014
- ---------------------------------------------------------------------------------------------------------------------------
I Not Offered $ 8,105,000 0.750 Fixed % 15.2 6/2014-3/2015
- ---------------------------------------------------------------------------------------------------------------------------
J Not Offered $ 9,456,000 0.875 Fixed % 16.3 3/2015-5/2016
- ---------------------------------------------------------------------------------------------------------------------------
K Not Offered $ 10,807,000 1.000 Fixed % 17.6 5/2016-9/2017
- ---------------------------------------------------------------------------------------------------------------------------
L Not Offered $ 4,053,000 0.375 Fixed % 18.4 9/2017-2/2018
- ---------------------------------------------------------------------------------------------------------------------------
M Not Offered $ 10,806,380 1.000 Fixed % 19.2 2/2018-5/2019
- ---------------------------------------------------------------------------------------------------------------------------
Residual Classes
- ---------------------------------------------------------------------------------------------------------------------------
R-I Not Offered N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
R-II Not Offered N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
R-III Not Offered N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Moody's Investors Service, Inc. ("Moody's").
(2) Duff & Phelps Credit Rating Co. ("DCR").
(3) The Class X Certificates are interest-only certificates. Class X
Certificateholders will not receive any principal. However, they will be
entitled to receive interest that accrues on a notional amount
outstanding (the "Notional Amount") equal to the aggregate of the
Scheduled Principal Balances of the Mortgage Loans (determined as
described herein) outstanding from time to time.
(4) The Pass-Through Rates of the Class A-1 and Class A-2 Certificates shall
be the indicated fixed rate per annum or, if a lower rate, the weighted
average of the Net Mortgage Rates of the Mortgage Loans (such Net
Mortgage Rates determined without taking into account any reductions
thereto resulting from modifications of the Mortgage Loans or otherwise
following the Cut-Off Date). The Pass-Through Rates of the Class B, Class
C, Class D, Class E and Class F Certificates set forth in the table above
are initial Pass-Through Rates for such classes. For interest periods
relating to Distribution Dates after August 16, 1999, the Pass-Through
Rate of the Class B Certificates will be a per annum rate equal to the
NWAC Rate for such Distribution Date minus %, and the Pass-Through Rate
of the Class C, Class D, Class E and Class F Certificates will be a per
annum rate equal to the NWAC Rate for such Distribution Date.
(5) Initial Pass-Through Rate. The Class X Pass-Through Rate with respect to
any Distribution Date will be equal to the excess, if any, of (i) the
weighted average of the non-default interest rates specified in the notes
relating to each Mortgage Loan in the trust fund, net of the related
Administrative Cost Rate, over (ii) the weighted average of the
Pass-Through Rates of the other classes of Certificates, as more fully
described herein.
(6) The weighted average life and the period during which distributions of
principal (or, for the Class X Certificates, reductions in the Notional
Amount) will occur have been calculated using assumptions set forth under
"Yield and Maturity Considerations--Weighted Average Life" herein and
assuming that there are no extensions of Maturity Dates, delinquencies,
losses or prepayments (other than the prepayment in full of the ARD Loan
on its Anticipated Repayment Date).
S-1
<PAGE>
SUMMARY OF SUBORDINATION LEVELS:
Credit support for certain classes of Certificates is provided by the
sequential payment of interest and principal thereto (including reimbursement
of certain losses allocated thereto) based (other than with respect to the
Class X Certificates) on their alphabetical designations, and by the
subordination of certain other classes thereto in respect of the allocation of
certain losses, shortfalls and other reductions of the assets of the Trust Fund
(generally in reverse sequential order), as described more fully herein. The
following chart summarizes the protection afforded to each class of
Certificates by the initial principal amount of other classes that are
subordinated thereto.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
CLASS SIZE AS A
PRINCIPAL AND INITIAL RATINGS PERCENTAGE
APPROXIMATE INITIAL INTEREST-ONLY INTEREST CERTIFICATE -------------- OF INITIAL POOL
CREDIT SUPPORT CERTIFICATES CERTIFICATES BALANCE MOODY'S DCR BALANCE (1)
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
20.000% Class A-1 $338,780,000 Aaa AAA 31.35 %
------------------------------------------------
20.000% Class A-2 $525,789,000 Aaa AAA 48.65 %
------------------------------------------------
16.000% Class B $ 43,229,000 Aa2 AA 4.000%
------------------------------------------------
12.000% Class C $ 43,229,000 A2 A 4.000%
------------------------------------------------
11.000% Class X Class D $ 10,807,000 A3 A-- 1.000%
------------------------------------------------
8.500% (Not Offered) Class E $ 27,018,000 Baa2 BBB 2.500%
------------------------------------------------
7.500% Class F $ 10,807,000 Baa3 BBB-- 1.000%
------------------------------------------------
5.500% $1,080,711,380 Class G $ 21,614,000 Not Offered 2.000%
------------------------------------------------
4.000% Initial Class H $ 16,211,000 Not Offered 1.500%
------------------------------------------------
3.250% Notional Class I $ 8,105,000 Not Offered 0.750%
------------------------------------------------
2.375% Amount Class J $ 9,456,000 Not Offered 0.875%
------------------------------------------------
1.375% Class K $ 10,807,000 Not Offered 1.000%
------------------------------------------------
1.000% Class L $ 4,053,000 Not Offered 0.375%
------------------------------------------------
N/A Class M $ 10,806,380 Not Offered 1.000%
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
(1) Initial Pool Balance means the aggregate of the Scheduled Principal Balances of the Mortgage
Loans on July 1, 1999.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
S-2
<PAGE>
DESCRIPTION OF THE
SERIES 1999-WF2 CERTIFICATES
General..................... Bear Stearns Commercial Mortgage Securities
Inc., as depositor (the "Depositor", "we" or
"us"), is forming a trust fund that will issue
the Commercial Mortgage Pass-Through
Certificates, Series 1999-WF2, pursuant to a
pooling and servicing agreement dated as of July
1, 1999. This series consists of 18 classes. Our
address is 245 Park Avenue, New York, New York
10167. Our telephone number is (212) 272-2000.
The Certificates evidence all of the beneficial
ownership interests in this trust fund. The
primary assets of the trust fund are the fixed
rate mortgage loans (the "Mortgage Loans")
described herein under "--The Mortgage Pool" and
"Description of the Mortgage Pool".
The aggregate of the Certificate Balances of
each class of Certificates (other than the Class
X, Class R-I, Class R-II and Class R-III
Certificates) as of the Closing Date will equal
the aggregate of the Scheduled Principal
Balances of the Mortgage Loans as of the Cut-Off
Date. Each class of Offered Certificates will
have the initial Certificate Balance set forth
on the cover page, subject to a permitted
variance of plus or minus 5%.
We are offering the Class A-1, Class A-2, Class
B, Class C, Class D, Class E and Class F
Certificates pursuant to this prospectus
supplement and the accompanying prospectus (we
refer to these classes as the "Offered
Certificates"). We are not offering the Class X,
Class G, Class H, Class I, Class J, Class K,
Class L, Class M, Class R-I, Class R-II or Class
R-III Certificates hereby (we refer to those
classes as the "Private Certificates"). We refer
to the Offered Certificates and the Private
Certificates collectively as the "Series
1999-WF2 Certificates" or the "Certificates".
We refer to the Class R-I, Class R-II and Class
R-III Certificates as "Residual Certificates"
because they represent limited rights to
distributions of certain amounts remaining after
required distributions are made to all other
classes of Certificates. The Residual
Certificates do not have principal balances. The
Residual Certificates are not offered hereby.
Book-Entry Certificates..... Each class of Offered Certificates will be
initially issued as a global security registered
in the name of The Depository Trust Company
("DTC") or its nominee. Investors in such classes
will hold beneficial ownership interests in the
relevant global security. You may hold your
Offered Certificates through (i) DTC in the
United States, or (ii) Cedelbank, S.A. ("CEDEL")
or The Euroclear System ("Euroclear") in Europe.
Investors in such classes will not receive
definitive certificates representing their
interests except under certain limited
circumstances described herein under "Description
of the Certificates--Reports to
Certificateholders; Certain Available
Information--Book-Entry Certificates."
S-3
<PAGE>
Denominations............... You may hold and trade the Class A-1 and Class
A-2 Certificates only in minimum denominations of
$25,000. The remaining Offered Certificates will
be offered in minimum denominations of $100,000.
Investments in excess of the minimum
denominations may be made in any whole dollar
denomination in excess thereof.
Service Providers........... Servicer. Wells Fargo Bank, National
Association is the servicer of the Mortgage Loans
for the Certificateholders.
Special Servicer. GMAC Commercial Mortgage
Corporation is the special servicer of the
Mortgage Loans for the Certificateholders.
Trustee. LaSalle Bank National Association, a
nationally chartered bank, is the trustee for
the Certificateholders.
Fiscal Agent. ABN AMRO Bank N.V. is the
trustee's fiscal agent.
Paying Agent. Norwest Bank Minnesota, National
Association, is the Paying Agent and will also
act as certificate registrar and authenticating
agent.
Operating Adviser. The holders of Certificates
representing more than 50% of the Certificate
Balance of the most subordinate class of
Certificates outstanding at any time of
determination (or, in general, if the
Certificate Balance of such class of
Certificates is less than 25% of the initial
Certificate Balance of such class, the next most
subordinate class of Certificates) may appoint a
representative who will have the rights
described under "Servicing of the Mortgage
Loans--The Operating Adviser" in this prospectus
supplement.
Mortgage Loan Sellers....... We will purchase 217 of the Mortgage Loans,
representing 64.62% of the Initial Pool Balance,
from Wells Fargo Bank, National Association
pursuant to a Mortgage Loan Purchase and Sale
Agreement dated as of July 1, 1999, and 68 of the
Mortgage Loans, representing 35.38% of the
Initial Pool Balance, from Bear, Stearns Funding,
Inc. pursuant to a Mortgage Loan Purchase and
Sale Agreement dated as of July 1, 1999 (each, a
"Mortgage Loan Purchase and Sale Agreement").
Each Mortgage Loan Seller will make certain
representations and warranties regarding the
Mortgage Loans sold by it pursuant to the
relevant Mortgage Loan Purchase and Sale
Agreement. We will assign those representations
and warranties, and our remedies with respect to
any breach thereof, to the Trustee on behalf of
the holders of the Certificates.
Closing Date................ We expect to deliver the Offered Certificates
on or about July 1, 1999.
Cut-Off Date................ July 1, 1999. All payments on the Mortgage
Loans that are due on or before this date are not
included in the trust fund.
S-4
<PAGE>
Distributions............... Distributions on the Certificates will be made
monthly on the 15th day of the month or, if such
day is not a business day, the next succeeding
business day, commencing in August 1999 (the
"Distribution Date"). Distributions of (1)
interest accrued thereon, (2) principal thereof,
and (3) reimbursements of previously allocated
Realized Losses will be made on each Distribution
Date to each class of Certificates in sequential
order based on their alphabetical designations,
except that the Class A-1, Class A-2 and Class X
Certificates will be paid interest on a pro rata
basis before any interest is paid to any other
Classes of Certificates. You will receive your
share of any distributions ratably with other
holders of Certificates of the same class.
We expect that the final distribution on each
class of Offered Certificates will be made on
the following dates (which we refer to as the
related "Expected Final Distribution Dates"),
assuming that there are no prepayments (other
than with respect to the ARD Loan), defaults,
delinquencies or modifications of the Mortgage
Loans after July 1, 1999:
Class A-1 ......... September 15, 2008
Class A-2 ......... June 15, 2009
Class B ........... July 15, 2009
Class C ........... February 15, 2010
Class D ........... October 15, 2010
Class E ........... November 15, 2012
Class F ........... August 15, 2013
Moody's and DCR have indicated that their
ratings of the Offered Certificates address the
likelihood of payment of principal amounts due
to Certificateholders on or before July 15, 2031
(the "Rated Final Distribution Date") and not
any other date.
Amounts Available for
Distribution............... Distributions on the Certificates will be made
on each Distribution Date from the Available
Distribution Amount.
The "Available Distribution Amount" with respect
to any Distribution Date will, in general, equal
the sum of all amounts on deposit in the
Distribution Account as of the commencement of
business on such Distribution Date, P&I Advances
and Compensating Interest Payments made by the
Servicer or Special Servicer and, if the
Distribution Date occurs in March, Interest
Reserve Amounts then on deposit in the Interest
Reserve Account, but shall exclude any Scheduled
Payments collected but due prior to the Cut-Off
Date or on a Due Date subsequent to the related
Collection Period, Prepayment Premiums and Yield
Maintenance Charges, amounts deposited in the
Certificate Account in error, or payable or
reimbursable to any Person other than
Certificateholders, such as trust fund expenses
(which may include indemnity payments
reimbursable
S-5
<PAGE>
to the Servicer, the Special Servicer or the
Trustee) and amounts reimbursable to the
Servicer and Special Servicer, and, if the
Distribution Date occurs during January or
February, the Interest Reserve Amounts with
respect to the Interest Reserve Loans listed on
Annex D. A more detailed description of
Available Distribution Amounts is provided
herein under Description of the
Certificates--Distributions--The Available
Distribution Amount".
For each Distribution Date, the Determination
Date is the 5th business day prior to the
Distribution Date.
For each Distribution Date, the related
"Collection Period" will be the period beginning
with the day after the Determination Date in the
month preceding the month of such Distribution
Date (or, in the case of the first Distribution
Date, the Cut-Off Date) and ending with the
Determination Date occurring in the month in
which such Distribution Date occurs.
For each Mortgage Loan, ignoring grace periods,
scheduled payments are due on the first day of
each month. We refer to such date as the "Due
Date".
Interest Distributions...... Investors will receive interest distributions
on each Distribution Date from the Available
Distribution Amount (and subject to the
sequential payment and subordination features
described below), in amounts up to the interest
accrued on each class of Certificates during the
preceding calendar month at the applicable
Pass-Through Rate (calculated on the basis of a
360-day year consisting of twelve 30-day months),
together with any previously accrued and unpaid
interest amounts, in each case subject to
reduction in connection with the allocation to
any such class of Realized Losses with respect to
interest amounts and Net Aggregate Prepayment
Interest Shortfalls and Net Aggregate Balloon
Interest Shortfalls.
In general, each class of Certificates will
receive an interest distribution on any
Distribution Date only after each class with an
earlier alphabetical designation has received
all amounts distributable thereto on such date.
The Class A-1, Class A-2 and Class X
Certificates will receive interest distributions
on a pro rata basis before any other class
receives interest.
Principal Distributions..... In general, each class of Certificates will
receive a principal distribution on any
Distribution Date only after each class with an
earlier alphabetical designation has received all
amounts distributable thereto on such date and
the Certificate Balance of each class with an
earlier alphabetical designation has been reduced
to zero. Subject to the reallocation thereof
pursuant to the subordination features described
below, the Principal Distribution Amount
generally will be distributed to the outstanding
class with the earliest alphabetical designation
until the principal balance of such class is
reduced to zero.
S-6
<PAGE>
The "Principal Distribution Amount" for any
Distribution Date will, in general, equal the
sum of (i) the principal portion of all
scheduled payments (other than the principal
portion of balloon payments) and assumed
scheduled payments, whether or not received, due
during the related Collection Period; (ii) all
principal prepayments and the principal portion
of balloon payments received during the related
Collection Period; (iii) the principal portion
of other collections on the Mortgage Loans
received during the related Collection Period
and identified as principal by the Servicer
(i.e., the principal portions of liquidation
proceeds, condemnation proceeds, insurance
proceeds and income on "real estate owned"
property); and (iv) the principal portion of
proceeds of Mortgage Loan repurchases received
during the related Collection Period, net of
reimbursements of Advances in respect of
principal.
Yield and Prepayment
Considerations............. The yield on any Offered Certificate will be
affected by (i) the related Pass-Through Rate
(and whether such rate is limited by the weighted
average Net Mortgage Rate of the Mortgage Loans),
(ii) the purchase price paid for such Certificate
(and whether such price represents a premium over
or discount to the principal amount represented
by such Certificate), (iii) the rate and timing
of principal payments (including voluntary and
involuntary principal prepayments and delinquent
payments) and losses on the Mortgage Loans and
(iv) the extent to which such principal payments
or losses are applied or losses are allocated on
any Distribution Date in reduction of the
Certificate Balance of, or interest accrued and
otherwise distributable to, the Class to which
such Certificate belongs. See "Description of the
Certificates--Distributions--Priority" and
"Distributions--Principal Distribution Amount"
herein.
An investor that purchases an Offered
Certificate at a discount should consider the
risk that a slower than anticipated rate of
principal payments on the Mortgage Loans will
result in an actual yield that is lower than
such investor's expected yield. Insofar as an
investor's initial investment in any Offered
Certificate is repaid, there can be no assurance
that such amounts can be reinvested in a
comparable alternative investment with a
comparable yield.
The rate per annum at which any Class of
Certificates (other than the Residual
Certificates) accrues interest is referred to
herein as its "Pass-Through Rate." The
Pass-Through Rates applicable to the Class A-1
and Class A-2 Certificates for each Distribution
Date will, at all times, be equal to % and
% per annum, respectively; provided,
however, that each such Pass-Through Rate will
not exceed the Weighted Average Net Mortgage
Rate for such Distribution Date.
S-7
<PAGE>
The Pass-Through Rates on the Class B, Class C,
Class D, Class E and Class F Certificates for
the initial Distribution Date will equal
approximately %, %, %, %, %
and % per annum, respectively. For interest
periods relating to Distribution Dates after
August 16, 1999, the Pass-Through Rate of the
Class B Certificates will be a per annum rate
equal to the NWAC Rate for such Distribution
Date minus % and the Pass-Through Rate, of
the Class C, Class D, Class E and Class F
Certificates will be the NWAC Rate for such
Distribution Date.
Certain of the Mortgage Loans have a Net
Mortgage Rate which may be less than the
Pass-Through Rate of the Class A-1 or Class A-2
Certificates. However, the shortfall between the
Net Mortgage Rate of such Mortgage Loans and the
fixed Pass-Through Rates of the Offered
Certificates is expected to be covered at all
times during the life of the Offered
Certificates by the amount of interest payments
on the other Mortgage Loans in the Mortgage
Pool, all of which bear interest at Mortgage
Rates (and with corresponding Net Mortgage
Rates) greater than the Net Mortgage Rate for
such Mortgage Loans. In the unlikely event that
substantially all of the other Mortgage Loans
pay off or are otherwise liquidated before the
Offered Certificates are retired, it is possible
that the Pass-Through Rate could be adjusted
downward to avoid a mismatch between such rate
and the Net Mortgage Rate of such Mortgage
Loans.
The actual rate of prepayment of principal on
the Mortgage Loans cannot be predicted. All of
the Mortgage Loans contain provisions
prohibiting voluntary prepayments for a
specified period of time after origination
and/or allow voluntary prepayments only with the
payment of a Yield Maintenance Charge or
Prepayment Premium for a specified period of
time from origination. For a discussion of
certain factors affecting prepayment of the
Mortgage Loans, see "Yield and Maturity
Considerations" herein.
The structure of the Offered Certificates causes
the yield of certain classes to be particularly
sensitive to changes in the rates and timing of
prepayment of the Mortgage Loans and other
factors. Allocation on each Distribution Date to
the outstanding Class or Classes of Certificates
having the highest priority with respect to
distributions of principal, for so long as such
Class remains outstanding, of the entire
Principal Distribution Amount for such
Distribution Date will generally cause such
Certificates to amortize at a faster rate than
the actual amortization rate of the Mortgage
Loans.
S-8
<PAGE>
Yield Maintenance Charges/
Prepayment Premiums........ When a borrower prepays its Mortgage Loan, in
certain circumstances it must make an additional
payment intended to compensate the lender for the
adverse effect that the prepayment has on the
lender's anticipated yield on the Mortgage Loan.
These amounts may be calculated pursuant to a
yield maintenance formula described below ("Yield
Maintenance Charges") or, in certain cases, may
be an amount generally calculated as a percentage
(which percentage typically reduces over the term
of the related Mortgage Loan) of the then
outstanding principal balance of such Mortgage
Loan ("Prepayment Premiums"), and we describe the
circumstances under which they must be paid below
under "--The Mortgage Pool" and "Description of
the Mortgage Pool".
On each Distribution Date, any Yield Maintenance
Charges or Prepayment Premiums paid by borrowers
during the related Collection Period will be
distributed to investors pursuant to the related
formula described under "Description of the
Certificates--Distributions--Allocation of Yield
Maintenance Charges" and "--Allocation of
Prepayment Premiums". Each such formula
generally will allocate a portion of such
amounts to be distributed among the class or
classes of Offered Certificates then outstanding
in proportion to the amount of principal being
distributed thereto on the related Distribution
Date, with the remaining portion being
distributed to the Class X Certificates.
Shortfalls in
Available Funds............. The following types of shortfalls in available
funds will be allocated in the same manner as
Mortgage Loan losses: (i) shortfalls resulting
from compensation which the Special Servicer is
entitled to receive; (ii) shortfalls resulting
from interest on P&I Advances and Servicing
Advances (each, as defined in this prospectus
supplement, and collectively, "Advances") made by
the Servicer, the Trustee or the Fiscal Agent (to
the extent not covered by default interest and
late payment charges paid by the borrower); (iii)
shortfalls resulting from extraordinary expenses
of the Trust Fund; and (iv) shortfalls resulting
from other unanticipated or default-related
expenses of the Trust Fund.
Shortfalls in Mortgage Loan interest as a result
of the timing of prepayments and certain Balloon
Payments (net of any Prepayment Interest Excess,
Balloon Interest Excess, the Servicer's or
Special Servicer's servicing fee and the
Trustee's trustee fee as applicable, payable on
the related Distribution Date) will be allocated
to each class of Certificates, pro rata, in
accordance with their respective interest
entitlements.
See "Description of the
Certificates--Distributions" in this prospectus
supplement.
S-9
<PAGE>
Advances.................... On the business day before each Distribution
Date, the Servicer is required to advance, from
its own funds, the scheduled monthly payment of
principal and interest on each delinquent
Mortgage Loan (each such advance, a "P&I
Advance"). The Servicer will not be required to
advance interest in excess of interest accrued at
a Mortgage Loan's regular interest rate (i.e.,
not including excess interest accrued as a result
of the imposition of any default rate or any
increased rate imposed after an Anticipated
Repayment Date). In addition, in the case of each
Mortgage Loan that is delinquent in respect of
its balloon payment, the Servicer must advance an
amount equal to the regular monthly payment that
would have been required if the Mortgage Loan had
not yet matured. The Servicer will not advance
the amount of any Balloon Payment. The Servicer
also is not required to advance Prepayment
Premiums or Yield Maintenance Charges. If a P&I
Advance is made, the Servicer will defer rather
than advance its Servicing Fee, but will advance
the Trustee Fee.
The Servicer must also make advances from its
own funds to pay delinquent real estate taxes,
assessments, hazard insurance premiums or other
similar costs and expenses necessary to protect
and maintain the Mortgaged Property, to maintain
the lien of the Mortgage on the related
Mortgaged Property or to enforce the related
Mortgage Loan documents.
Notwithstanding the foregoing, the Servicer (or
the Trustee or Fiscal Agent) is not required to
make any advance if it reasonably believes in
good faith that such advance, together with
interest thereon at the prime rate, ultimately
would not be recoverable from collections on the
related Mortgage Loan. If the Servicer fails to
make any required advance, the Trustee or the
Fiscal Agent is required to make such advance.
If an advance cannot be reimbursed from
collections on, or in respect of, the related
Mortgage Loan, the Servicer (or the Trustee or
Fiscal Agent) may be reimbursed for that advance
(and interest accrued thereon) from collections
on other Mortgage Loans. Any such reimbursement
will cause Certificateholders to bear losses in
the priority specified in this prospectus
supplement.
The occurrence of an Appraisal Reduction Event
with respect to any Mortgage Loan may result in
reduced P&I Advances with respect to such
Mortgage Loan as herein under "Description of
the Certificates--Advances".
For a more detailed discussion of advances, see
"Description of the Certificates--Advances" in
this prospectus supplement and "Description of
the Certificates--Advances in Respect of
Delinquencies" and "Description of the Pooling
Agreements--Certificate Account" in the
prospectus.
Advances do not constitute a form of credit
enhancement and are reimbursable, with interest
thereon, to the Servicer or
S-10
<PAGE>
Special Servicer, as the case may be, prior to
distributions to holders of Certificates of
amounts subsequently collected with respect to
the related Mortgage Loans (and in certain cases
from collections generally).
Credit Enhancement.......... Credit enhancement is provided by the
sequential payment and subordination mechanisms
set forth in the Agreement and described herein.
Generally, distributions in respect of interest
and principal will be made to each class of
Certificates sequentially, based on the
alphabetical designations of each class other
than the Class X Certificates (e.g., Class D
will receive all interest distributions to be
made to it before Class E receives any interest
distribution, and, if Class D is then receiving
principal distributions, Class D will receive
all interest and principal distributions to be
made to it before Class E receives any
distribution in respect of principal). This is
referred to as "sequential payment." The Class
A-1, Class A-2 and Class X Certificates will
receive interest distributions on a pro rata
basis before any other class receives interest.
On any Distribution Date, after making all
required distributions on the Certificates, the
aggregate of the Certificate Balances of the
Certificates may exceed the aggregate of the
Scheduled Principal Balances of the Mortgage
Loans due to losses or shortfalls in respect of
the Mortgage Loans or reductions of the assets
of the Trust Fund other than the Mortgage Loans.
On any such Distribution Date, the aggregate of
the Certificate Balances of the Certificates
will be reduced without an accompanying
principal distribution until it equals the
aggregate of the Scheduled Principal Balances of
the Mortgage Loans. Any such reduction will be
allocated to the classes of Certificates (other
than Class X) in reverse sequential order, based
on the alphabetical designations of each class
(e.g., no such reduction will be made to the
Class D principal balance until the principal
balances of each class of Certificates with
later alphabetical designations are reduced to
zero). This reverse sequential reduction feature
is referred to as "subordination." See
"Description of the Certificates--Distributions
--Subordination; Allocation of Shortfalls,
Losses and Expenses" in this prospectus
supplement.
If there is a recovery of losses or shortfalls
on any Mortgage Loans previously allocated to
reduce the principal balances of one or more
classes, reimbursement to the extent of such
recovery with accrued interest at the applicable
Pass-Through Rate will be made in sequential
order to classes whose principal balances had
previously been reduced.
Classes with earlier alphabetical designations
generally are said to be "senior" to classes
with later alphabetical designations, and
classes with later alphabetical designations are
said to be "subordinated" to classes with
earlier alphabetical designations.
S-11
<PAGE>
Notwithstanding the foregoing, the Class A-1,
Class A-2 and Class X Certificates are not
subordinated to any other class of Certificates
and rank equally with each other with respect to
interest distributions. However, the Class A-1
and Class A-2 Certificates are paid sequentially
with respect to principal distributions, and, if
the principal balance of the Class B
Certificates has been reduced to zero as a
result of the allocation of losses, shortfalls
or expenses, the principal balance of the Class
A-1 and Class A-2 Certificates will thereafter
be reduced with respect to any further losses,
shortfalls or expenses on a pro rata basis (and
will receive any reimbursements thereof on a pro
rata basis).
As a result of these sequential payment and
subordination features, the most senior class of
Certificates outstanding will amortize more
rapidly than the other classes relative to the
amortization of the Mortgage Loans. To the
extent that a class amortizes faster than the
Mortgage Loans (e.g. as a result of the
sequential payments of distributions in respect
of principal), such class will represent a
reduced percentage of the Trust Fund relative to
the percentages evidenced by other classes, and
the degree of protection provided to such senior
class by the subordination of the other
outstanding classes will increase.
Optional Termination........ On any Distribution Date on which the aggregate
Certificate Balance of all classes of
Certificates is less than 1% of the Initial Pool
Balance, the Depositor, Servicer, the Special
Servicer, the majority holders of the Controlling
Class and any holder of a majority interest in
the Class R-I Certificates, each in turn, will
have the option to purchase all of the remaining
Mortgage Loans (and all property acquired through
exercise of remedies in respect of any Mortgage
Loan), at the price specified in this prospectus
supplement. Exercise of this option will
terminate the Trust Fund and retire the then
outstanding Certificates at par plus accrued
interest. See "Description of the Certificates--
Optional Termination; Retirement of the
Certificates" herein and "Description of the
Certificates--Termination" in the prospectus.
The Mortgage
Pool Generally.............. The Certificates will represent undivided
beneficial ownership interests in a pool of
Mortgage Loans (the "Mortgage Pool") that
consists of 216 commercial, 89 multifamily and 6
manufactured housing community fixed-rate
Mortgage Loans with an Initial Pool Balance of
approximately $1,080,711,380. As of the Cut-Off
Date, none of the Mortgage Loans is delinquent.
Each Mortgage Loan is secured by a first
priority lien on a fee simple estate or a
leasehold estate on one or more commercial,
multifamily or manufactured housing community
properties. Where a Mortgage Loan is secured in
whole or in part by a leasehold interest, each
related ground lease expires at least 10 years
after the scheduled maturity of such Mortgage
Loan (including extensions exercisable at the
lender's option).
S-12
<PAGE>
Each Mortgage Loan provides for scheduled
payments of principal and/or interest
("Scheduled Payments") to be due on the first
day of each month (the "Due Date") and for a
grace period of no more than 10 days (with the
exception of three Mortgage Loans that have
grace periods of 15 days and one Mortgage Loan
that has a grace period of 14 days). See
"Description of the Mortgage Pool--Certain Terms
and Conditions of the Mortgage Loans" herein.
Mortgage Pool Summary....... The following tables set forth certain
anticipated characteristics of the Mortgage Loans
as of the Cut-Off Date. The sum in any column may
not equal the indicated total due to rounding.
SUMMARY OF MORTGAGE POOL
<TABLE>
<S> <C>
Initial Pool Balance ......................... $1,080,711,380
Number of Mortgage Loans ..................... 285(1)
Number of Mortgaged Properties ............... 311
Number of Balloon Loans/ARD Loans ............ 228(2)
Number of Fully-Amortizing Loans ............. 57
Average Cut-Off Date Balance ................. $3,791,970
Weighted Average Net Mortgage Rate ............ 7.2338%
Weighted Average Original Term to Maturity 132 months(3)
Weighted Average Remaining Term to Maturity.... 127 months
Weighted Average Original Amortization Term.... 307 months
Weighted Average DSCR as of the Cut-Off Date... 1.70x(4)
Weighted Average LTV Ratio as of the Cut-Off
Date ....................................... 61.2%(4)
Weighted Average LTV Ratio as of Maturity. 43.9%
Weighted Average Current Occupancy Rate for
Commercial, Multifamily and Manufactured
Housing Properties ......................... 97.2%
Weighted Average Current Occupancy Rate
for Hotels ................................. 81.3%
Balloon Loans/ARD Loan as a Percentage of
the Initial Pool Balance ................... 85.3%
Fully Amortizing Loans as a Percentage of
the Initial Pool Balance ................... 14.7%(5)
</TABLE>
See "Risk Factors" and "Description of the
Mortgage Pool--
Additional Mortgage Loan Information" herein.
(1) Certain groups of Mortgage Loans made to the
same borrower or related borrowers are
comprised of Mortgage Loans that are
cross-collateralized and cross-defaulted
with each other. The Mortgage Loans within
such a group
S-13
<PAGE>
may be treated as a single Mortgage Loan for
purposes of this prospectus supplement and
the accompanying prospectus except where the
context otherwise requires.
(2) Mortgage Loan No. 17583 is an "ARD Loan",
meaning that because of the automatic
imposition of rapid amortization features
and an interest rate increase (with the
Excess Interest accruing thereon generally
being deferred) and the imposition of a
lockbox arrangement with respect to rent
collections if the Mortgage Loan is not
prepaid in full on a specified date (the
"Anticipated Repayment Date"), the borrower
is expected to repay such loan on such
date, which is substantially earlier than
the maturity date specified in the mortgage
(the "Maturity Date"). For purposes of the
tables and descriptions herein, the ARD
Loan is treated as a Balloon Loan with a
Maturity Date on the same date as the
Anticipated Repayment Date.
(3) The Maturity or Maturity Date of a Mortgage
Loan, as used herein with respect to any
Mortgage Loan other than the ARD Loan,
shall refer to the stated maturity of the
Mortgage Loan and, in the case of the ARD
Loan, shall refer to the Anticipated
Repayment Date.
(4) "DSCR", "LTV Ratio" and "Current Occupancy
Rate" are calculated as described under
"Description of the Mortgage
Pool--Additional Mortgage Loan Information"
herein.
(5) Certain of the Mortgage Loans identified as
"fully-amortizing" provide for the accrual
of interest on the basis of the actual
number of days in each payment period and a
year assumed to consist of 360 days. As a
result, the Scheduled Payments due on the
maturity dates for such Mortgage Loans will
be greater than the other Scheduled Payments
for such Mortgage Loans.
GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
NUMBER AGGREGATE % OF
OF CUT-OFF INITIAL
MORTGAGED DATE POOL
STATE PROPERTIES BALANCE BALANCE
- --------------------------- ------------ ----------------- -----------
<S> <C> <C> <C>
California .............. 135 $ 429,744,626 39.76%
Texas ................... 27 76,982,935 7.12
New York ................ 10 62,845,405 5.82
Illinois ................ 11 48,222,013 4.46
Maryland ................ 6 37,852,882 3.50
28 other states ......... 122 425,063,519 39.33
--- -------------- ------
Totals .................. 311 $1,080,711,380 100.00%
=== ============== ======
</TABLE>
S-14
<PAGE>
PROPERTY TYPE
<TABLE>
<CAPTION>
WEIGHTED
NUMBER AGGREGATE % OF AVERAGE
OF CUT-OFF INITIAL CUT-OFF
MORTGAGE DATE POOL DATE
PROPERTY TYPE PROPERTIES BALANCE BALANCE LTV
- ----------------------------- ------------ ----------------- ----------- -----------
<S> <C> <C> <C> <C>
Multifamily ............... 89 $ 253,352,356 23.44% 60.25%
Office .................... 45 242,724,352 22.46 59.99%
Industrial/Warehouse ...... 59 159,577,025 14.77 64.23%
Retail, Anchored .......... 20 91,363,800 8.45 58.12%
Retail, Unanchored ........ 29 90,679,826 8.39 62.13%
Theater ................... 6 50,045,300 4.63 64.06%
Mixed Use ................. 4 33,272,889 3.08 63.33%
Medical Office ............ 7 23,333,052 2.16 64.70%
Retail, Big Box ........... 7 22,735,048 2.10 60.96%
Hospitality, Limited
Service ................... 6 21,785,655 2.02 62.06%
Mobile Home Park .......... 6 21,773,309 2.01 67.11%
Ministorage ............... 10 20,157,938 1.87 50.97%
Hospitality, Extended
Stay ...................... 8 19,876,424 1.84 63.86%
Retail, Shadow/Minor
Anchored .................. 10 $ 18,017,020 1.67% 64.32%
Hospitality, Full
Service ................... 1 6,843,469 0.63 63.37%
Other ..................... 3 4,039,285 0.37 49.08%
Hospitality, Resort ....... 1 1,134,631 0.10 8.10%
Totals/Weighted Avg. ...... 311 $1,080,711,380 100.00% 61.20%
=== ============== ======
</TABLE>
RANGE OF CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
AGGREGATE % OF
RANGE OF CUT-OFF INITIAL
CUT-OFF DATE NUMBER DATE POOL
BALANCES OF LOANS BALANCE BALANCE
- --------------------------------- ---------- ----------------- ----------
<S> <C> <C> <C>
$1 to $999,999................. 27 $ 22,796,745 2.11%
$1,000,000 to $1,999,999....... 94 140,525,737 13.00
$2,000,000 to $3,999,999....... 91 255,818,239 23.67
$4,000,000 to $5,999,999....... 33 164,084,844 15.18
$6,000,000 to $7,999,999....... 16 110,084,453 10.19
$8,000,000 to $9,999,999....... 8 73,391,537 6.79
$10,000,000 to $11,999,999..... 4 44,238,566 4.09
$12,000,000 to $13,999,999..... 1 12,825,000 1.19
$14,000,000 to $15,999,999..... 3 46,906,945 4.34
$18,000,000 to $19,999,999..... 3 56,132,671 5.19
$20,000,000 to $24,999,999..... 2 45,288,734 4.19
$25,000,000 to $26,999,999..... 2 51,167,910 4.73
$27,000,000 to $59,999,999..... 1 57,450,000 5.32
Totals ........................ 285 $1,080,711,380 100%
=== ============== =====
</TABLE>
The average Cut-off Date Balance is $3,791,970
S-15
<PAGE>
RANGE OF DSCRS AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE % OF
RANGE OF CUT-OFF INITIAL
DEBT SERVICE NUMBER DATE POOL
COVERAGE RATIOS OF LOANS BALANCE BALANCE
- --------------------------- ---------- ----------------- ----------
<S> <C> <C> <C>
1.04x to 1.14x .......... 1 $ 6,806,976 0.63%
1.15x to 1.19x .......... 5 10,945,362 1.01
1.20x to 1.24x .......... 6 12,719,273 1.18
1.25x to 1.29x .......... 15 43,658,678 4.04
1.30x to 1.34x .......... 18 73,134,184 6.77
1.35x to 1.39x .......... 29 123,414,142 11.42
1.40x to 1.44x .......... 22 104,594,096 9.68
1.45x to 1.49x .......... 24 86,820,953 8.03
1.50x to 1.59x .......... 38 165,997,315 15.36
1.60x to 1.69x .......... 36 138,393,448 12.81
1.70x to 1.79x .......... 26 92,061,575 8.52
1.80x to 1.89x .......... 23 70,723,998 6.54
1.90x to 1.99x .......... 7 23,318,123 2.16
2.00x to 2.49x .......... 16 94,306,199 8.73
2.50x to 2.99x .......... 7 11,021,942 1.02
3.00x to 6.49x .......... 10 15,660,486 1.45
6.50x to 16.50x ......... 2 7,134,631 0.66
-- -------------- ------
Totals .................. 285 $1,080,711,380 100.00%
=== ============== ======
</TABLE>
The weighted average DSCR as of the Cut-Off Date is approximately 1.70x.
RANGE OF LTV RATIOS AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE % OF
RANGE OF CUT-OFF INITIAL
CUT-OFF DATE NUMBER DATE POOL
LTV RATIOS OF LOANS BALANCE BALANCE
- ---------------------------- ---------- ----------------- ----------
<S> <C> <C> <C>
0.00% to 30.00% .......... 10 $ 19,911,067 1.84%
30.01% to 40.00% ......... 8 19,965,517 1.85
40.01% to 45.00% ......... 14 28,977,787 2.68
45.01% to 50.00% ......... 12 84,751,171 7.84
50.01% to 55.00% ......... 36 104,299,997 9.65
55.01% to 60.00% ......... 33 161,708,020 14.96
60.01% to 65.00% ......... 55 246,360,677 22.80
65.01% to 70.00% ......... 46 177,882,789 16.46
70.01% to 75.00% ......... 63 212,613,090 19.67
75.01% to 80.00% ......... 8 24,241,267 2.24
-- -------------- ------
Totals ................... 285 $1,080,711,380 100.00%
=== ============== ======
</TABLE>
The weighted average LTV Ratio as of the Cut-Off Date is approximately 61.20%.
S-16
<PAGE>
RANGE OF REMAINING TERM TO MATURITY AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE % OF
RANGE OF CUT-OFF INITIAL
REMAINING TERMS NUMBER DATE POOL
(MOS.) OF LOANS BALANCE BALANCE
- ---------------------- ---------- ----------------- ----------
<S> <C> <C> <C>
51 to 70 ........... 2 $ 63,450,000 5.87%
71 to 100 .......... 5 52,953,122 4.90
101 to 120 ......... 203 749,655,984 69.37
121 to 140 ......... 2 8,843,509 0.82
161 to 180 ......... 44 101,209,393 9.37
181 to 240 ......... 29 104,599,373 9.68
- ----------------------- --- -------------- ------
Totals ............. 285 $1,080,711,380 100.00%
=== ============== ======
</TABLE>
The weighted average Remaining Term to Maturity as of the Cut-Off Date is
approximately 127 months.
RANGE OF MORTGAGE RATES AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE % OF
CUT-OFF INITIAL
RANGE OF NUMBER DATE POOL
MORTGAGE RATES OF LOANS BALANCE BALANCE
- ------------------------------ ---------- ----------------- ----------
<S> <C> <C> <C>
5.0001% to 5.7500% ......... 6 $ 9,963,265 0.92%
5.7501% to 6.2500% ......... 21 41,469,444 3.84
6.2501% to 6.5000% ......... 25 50,442,323 4.67
6.5001% to 6.7500% ......... 41 121,705,210 11.26
6.7501% to 7.0000% ......... 47 261,612,604 24.21
7.0001% to 7.2500% ......... 34 120,478,929 11.15
7.2501% to 7.5000% ......... 33 190,003,735 17.58
7.5001% to 7.7500% ......... 24 90,080,474 8.34
7.7501% to 8.0000% ......... 18 52,453,470 4.85
8.0001% to 8.5000% ......... 25 83,454,645 7.72
8.5001% to 9.0000% ......... 11 59,047,283 5.46
-- -------------- ------
Totals ..................... 285 $1,080,711,380 100.00%
=== ============== ======
</TABLE>
The weighted average Mortgage Rate as of the Cut-Off Date is 7.2338%.
SUMMARY OF CALL PROTECTION
<TABLE>
<CAPTION>
AGGREGATE % OF
CUT-OFF INITIAL
NUMBER DATE POOL
CALL PROTECTION OF LOANS BALANCE BALANCE
- --------------------------------- ---------- ----------------- -----------
<S> <C> <C> <C>
Lockout through Maturity
Date .......................... 56 $ 240,844,478 22.29%
Lockout to six (6) months
or less prior to Maturity
Date .......................... 160 707,081,596 65.43
YM/Flex to six (6) months
or less prior to Maturity
Date .......................... 63 114,555,284 10.60
Other Call Protection ......... 6 18,229,991 1.69
Totals ........................ 285 $1,080,711,380 100.00%
=== ============== ======
</TABLE>
As used above, "Flex" refers to an option exercisable at the borrower's
option to prepay with a YM charge or defease the related Mortgage Loan.
As used above, "YM" means yield maintenance.
S-17
<PAGE>
SUMMARY OF INTEREST ACCRUAL METHODS
<TABLE>
<CAPTION>
AGGREGATE
CUT-OFF % OF
NUMBER DATE CUT-OFF
ACCRUAL METHOD OF LOANS BALANCE DATE LTV
- ---------------------- ---------- ----------------- -----------
<S> <C> <C> <C>
Actual/360 ......... 231 $ 876,642,900 81.12%
30/360 ............. 54 204,068,481 18.88
Totals ............. 285 $1,080,711,380 100.00%
=== ============== ======
</TABLE>
Release and
Defeasance Provisions...... Full Release of Mortgaged Property or Mortgaged
Properties. 216 Mortgage Loans, representing
approximately 87.7% of the Initial Pool Balance,
permit the related borrower, at any time
commencing generally three to seven years after
the date of origination, but in no event before
the second anniversary of the formation of the
Trust Fund, to substitute non-callable U.S.
Treasury obligations for the Mortgaged Property
and to obtain the release of the related Mortgage
on the Mortgaged Property. Such U.S. Treasury
obligations must provide for payments on or
before each Due Date and the Maturity Date in an
amount at least equal to (and in the case of
certain Mortgage Loans that are cross-
collateralized with other Mortgage Loans, in
amounts at least equal to 110% or 125% of) the
amounts payable on each such date under the terms
of the related Mortgage Loan. Following such
substitution, the U.S. Treasury obligations may
be the only collateral for the Mortgage Loan, and
the released Mortgaged Property will no longer
provide security for the Mortgage Loan. In order
for such a release to occur, certain conditions
specified in the Pooling and Servicing Agreement
must be satisfied including that Moody's and in
certain cases DCR, must confirm in writing that
such release will not cause it to downgrade,
withdraw or qualify its then current rating of
any class of Offered Certificates.
Partial Release of Mortgaged Property. 4 Mortgage
Loans, representing approximately 8.1% of the
Initial Pool Balance, are secured by two or more
Mortgaged Properties and permit the related
borrower, at any time commencing generally three
to four years after the date of origination, but
in no case less than 2 years after the issuance
of the Certificates, to substitute non-callable
U.S. Treasury obligations for some of the
Mortgaged Properties and to obtain the release of
the related Mortgage on such Mortgaged
Properties, subject to the satisfaction of a
specified debt service coverage ratio test with
respect to the remaining Mortgaged Property or
Properties. Such U.S. Treasury obligations must
be sufficient to pay, on or before each day on
which payment is due on the Mortgage Loan,
including on the related Maturity Date, at least
125%, and in some cases 130%, of the amounts
payable under the related Note and Mortgage on
each such date under the terms of the related
Mortgage Loan. Following such substitution and
release, the U.S. Treasury obligations and the
remaining Mort-
S-18
<PAGE>
gaged Properties will be the only collateral for
the Mortgage Loan, and the released Mortgaged
Property or Properties will no longer provide
security for the Mortgage Loan. Any defeasance
collateral in excess of the par amount of the
monthly payments and balloon payments allocable
to the Released Mortgage Property or Properties
will effectively support the borrower's ability
to make payments with respect to the Note or
Notes related to the remaining Mortgaged
Property or Properties.
"Flex Loans." 57 Mortgage Loans, representing
approximately 8.6% of the Initial Pool Balance,
provide the borrower the option to either prepay
in full the outstanding principal balance
accompanied by a Yield Maintenance Charge as
described above under "--Yield Maintenance
Charges/Prepayment Premiums" or to defease such
Mortgage Loan as described in the preceding
paragraphs.
Releases of Properties Without Defeasance. In
the case of 4 Mortgage Loans, representing
approximately 4.5% of the Initial Pool Balance,
the related Mortgage Loan Documents provide for
the release of certain parcels of real estate
that secure such Mortgages but were not ascribed
value or cash flow for purposes of determining
the related Net Underwritten Cash Flow. Subject
to compliance with zoning regulations and
certain other requirements, such real estate is
generally subject to release without reduction
of the principal balance of the related Mortgage
Note or substitution of additional collateral.
Such parcels were not generating cash flow as of
the date of origination and the release thereof
will not result in any reduction of the related
Net Underwritten Cash Flow.
Information Available to
Certificateholders......... On each Distribution Date commencing in August
1999, the Paying Agent will provide to you a
report concerning the Certificates and the
Mortgage Loans, a form of which is included in
Annex C. These reports will be based solely on
information prepared by the Servicer and the
Special Servicer and delivered to the Paying
Agent. Each report will contain the items
described herein under "Description of the
Certificates--Reports to Certificateholders;
Certain Available Information".
Ratings..................... It is a condition of the issuance of the
Offered Certificates that they receive the
following credit ratings from Moody's and DCR.
S-19
<PAGE>
RATING
MOODY'S DCR
--------- ------
Class A-1 .......... Aaa AAA
Class A-2 .......... Aaa AAA
Class B ............ Aa2 AA
Class C ............ A2 A
Class D ............ A3 A--
Class E ............ Baa2 BBB
Class F ............ Baa3 BBB--
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.
The ratings on the Certificates do not represent
any assessment of (i) the likelihood or
frequency of principal prepayments on the
Mortgage Loans, (ii) the degree to which such
prepayments might differ from those originally
anticipated or (iii) whether and to what extent
Prepayment Premiums, Yield Maintenance Charges
and default interest will be received or Net
Aggregate Prepayment Interest Shortfalls or Net
Aggregate Balloon Interest Shortfalls will be
realized. Also, a security rating does not
represent any assessment of the yield to
maturity that investors may experience.
There can be no assurance as to whether any
rating agency not requested to rate the
Certificates of any Class will nonetheless issue
a rating to such Certificates and, if so, what
such rating would be. A rating assigned to the
Certificates by a rating agency that has not
been requested by the Depositor to do so may be
lower than the ratings assigned thereto by
Moody's and DCR.
Certain Federal Income Tax
Consequences............... For federal income tax purposes, the Depositor
will make elections to treat the assets
comprising the trust fund as three separate real
estate mortgage investment conduits. All of the
Offered Certificates and the Class X, Class G,
Class H, Class I, Class J, Class K, Class L and
Class M Certificates will constitute the "regular
interests" in one such REMIC. The Class R-I,
Class R-II and Class R-III Certificates will each
constitute the sole class of "residual interests"
with respect to the three REMICs.
For federal income tax purposes, the Offered
Certificates generally will be treated as newly
originated debt instruments issued by a REMIC.
You will be required to include in income all
interest on your Offered Certificates in
accordance with the accrual method of
accounting, regardless of your usual method of
accounting. We also anticipate that the Class D,
Class E and Class F Certificates will each be
issued with original issue discount in an amount
equal to the excess of its initial principal
S-20
<PAGE>
balance over its issue price (including accrued
interest). We further anticipate that the Class
A-1, Class A-2, Class B and Class C Certificates
will be issued at a premium.
For further information regarding the federal
income tax consequences of investing in the
Offered Certificates, see "Certain Federal
Income Tax Consequences" in this prospectus
supplement and in the prospectus.
ERISA Considerations........ Subject to the considerations discussed under
"ERISA Considerations" herein and in the
prospectus, the Class A-1 and Class A-2
Certificates may be acquired by ERISA plans.
However, except as described under "ERISA
Considerations" herein with respect to insurance
company general accounts, ERISA plans may not
acquire any other class of Offered Certificates.
In addition, you may not use the assets of an
ERISA plan to acquire such Certificates.
For further information about considerations
that are relevant to an investment in the
Offered Certificates by employee benefit plans,
see "ERISA Considerations" in this prospectus
supplement and in the prospectus.
Legal Investment............ The Class A and Class B Certificates will
constitute "mortgage related securities" within
the meaning of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA").
S-21
<PAGE>
RISK FACTORS
In deciding whether to purchase any Offered Certificates, you should
consider the following risk factors as well as the risk factors that begin on
page 17 of the accompanying prospectus.
BORROWER DEFAULT; NONRECOURSE MORTGAGE LOANS
The Mortgage Loans are not insured or guaranteed by anyone.
In general, the only source of payment for any Mortgage Loan is the
Mortgaged Property and/or other assets that have been pledged to secure the
Mortgage Loan. Before a Mortgage Loan matures, the borrower's ability to repay
the Mortgage Loan will depend primarily on the net cash flow of the related
Mortgaged Property. At maturity of a Mortgage Loan (or, upon the acceleration
of maturity following an event of default) the borrower's ability to repay the
Mortgage Loan will depend on the then market value of the related Mortgaged
Property or the ability of the related borrower to refinance the Mortgaged
Property. The net cash flow and market value of any Mortgaged Property may be
affected by a variety of factors, some of which are discussed below, and many
of which are not within the control of the borrower or originator.
The rate and timing of delinquencies or defaults on the Mortgage Loans
will affect the following aspects of the Offered Certificates: the aggregate
amount of distributions on them, their yields to maturity, their rates of
principal payments; and their weighted average lives. The rights of holders of
each class of subordinate certificates to receive payments of principal and
interest otherwise payable on their certificates will be subordinated to such
rights of the holders of the more senior certificates having an earlier
alphabetical class designation. Losses on the Mortgage Loans will be allocated
to the Class M, Class L, Class K, Class J, Class I, Class H, Class G, Class F,
Class E, Class D, Class C and Class B Certificates, in that order, reducing
amounts otherwise payable to each class. Any remaining losses would then be
allocated to the Class A-1 and Class A-2 Certificates on a pro rata basis. If
losses on the Mortgage Loans exceed the aggregate certificate balance of the
classes of certificates subordinated to a particular class, such class will
suffer a loss equal to the full amount of such excess (up to the outstanding
certificate balance of such class). If you calculate your anticipated yield
based on assumed rates of default and losses that are lower than the default
rate and losses actually experienced and such losses are allocable to your
certificates, your actual yield to maturity will be lower than the assumed
yield. Under certain extreme scenarios, such yield could be negative. In
general, the earlier a loss borne by your certificates occurs, the greater the
effect on your yield to maturity.
Even if losses on the Mortgage Loans are not borne by your certificates,
those losses may affect the weighted average life and yield to maturity of your
certificates. This may be so because those losses cause your certificates to
have a higher percentage ownership interest in the trust (and therefore related
distributions of principal payments on the Mortgage Loans) than would otherwise
have been the case. The effect on the weighted average life and yield to
maturity of your certificates will depend upon the characteristics of the
remaining Mortgage Loans.
Additionally, delinquencies and defaults on the Mortgage Loans may
significantly delay the receipt of distributions by you on your certificates,
unless Advances are made to cover delinquent payments or the subordination of
another class of certificates fully offsets the effects of any such delinquency
or default.
Also, if the related borrower does not repay an ARD Loan by its
Anticipated Repayment Date, the effect will be to increase the weighted average
life of your certificates and may reduce your yield to maturity.
It is likely that any foreclosure proceedings would adversely affect the
market value and the refinanceability of the Mortgaged Property. 105 Mortgage
Loans, representing approximately 52.9% of the Initial Pool Balance, were
originated within six months prior to the Cut-Off Date. Consequently, such
Mortgage Loans do not have long-standing payment histories.
S-22
<PAGE>
RISKS ASSOCIATED WITH COMMERCIAL AND MULTIFAMILY LENDING GENERALLY
The Mortgage Loans are secured by multifamily properties, anchored and
unanchored retail properties, office buildings, industrial properties, hotels
and other types of commercial properties and manufactured housing communities.
The repayment of loans secured by commercial or multifamily properties is
typically dependent upon the successful operation of the related real estate
project, the tenants' businesses and the creditworthiness of such tenants.
Commercial and multifamily lending also typically involves larger loans to a
single obligor than one-to-four-family residential lending.
Lenders typically look to the debt service coverage ratio (i.e. the ratio
of net cash flow to debt service described more fully under "Description of the
Mortgage Pool--Underwritten Cash Flow" herein) and loan to value ratio (i.e.
the ratio of the unpaid principal balance of a Mortgage Loan to the appraised
value of the related Mortgaged Property) as measures of the risk of default on
a loan secured by income-producing property. Commercial and multifamily
property values and cash flows are subject to volatility and may be
insufficient to cover debt service on the related Mortgage Loans at any given
time. The volatility of property values and cash flows depends upon a number of
factors, including:
1. the ratio of total property operating expenses to property revenue
(what we call "operating leverage");
2. the level of capital expenditures required to maintain the property and
retain or replace tenants;
3. the volatility of property revenue; and
4. the relative amounts of property operating expenses that are fixed as
compared to those that vary with revenue generated at the Mortgaged Property or
based on occupancy levels.
Each of the foregoing is a function of a variety of other factors specific
to the related Mortgaged Property, some of which are described below and many
of which are not within the control of the related borrower or the originator.
Properties with short-term, less creditworthy revenue sources and/or relatively
high operating leverage can be expected to have more volatile cash flows than
properties with medium to long-term tenant commitments from creditworthy
tenants and/or relatively low operating leverage.
A decline in the real estate market or in the financial condition of a
major tenant or a general decline in the local or national economy will tend to
have a more immediate effect on the net operating income of such properties and
may lead to higher rates of delinquency or defaults. Historical operating
results of the Mortgaged Properties may not be comparable to future operating
results.
The net cash flow and market value of any Mortgaged Property may be
adversely affected by a number of factors including, but not limited to, the
following:
1. national, regional and local economic conditions;
2. local real estate conditions;
3. changes or continued weakness in specific industry segments;
4. perceptions by prospective tenants (and, in the case of retail
properties, retailers and shoppers) of the safety, convenience, services and
attractiveness of the property;
5. the willingness and ability of the property's owner to provide capable
management and adequate maintenance;
6. demographic factors;
7. retroactive changes to building codes or similar codes;
8. increases in operating expenses (such as energy costs);
9. the number of tenants (or, if applicable, the diversity of types of
business operated by such tenants); and
10. rent control laws.
S-23
<PAGE>
The net cash flow and value of such Mortgaged Properties could be reduced
if competing properties of a similar type are built in the areas where the
Mortgaged Properties are located or if similar properties in the vicinity of
the Mortgaged Properties are substantially updated and refurbished. We cannot
assure you that the market value of any Mortgaged Property during the term of
the related Mortgage Loan will equal or exceed its appraised value determined
in connection with the origination of such Mortgage Loan.
Additionally, some of the Mortgaged Properties may not readily be
converted to alternative uses if such Mortgaged Properties become unprofitable
due to competition, age, decreased demand or other factors. Such lack of
convertibility could adversely affect the liquidation value of any such
Mortgaged Property and reduce the amount that can be realized if an event of
default occurs on the related Mortgage Loan.
PROPERTY VALUE MAY BE ADVERSELY AFFECTED EVEN WHEN CURRENT OPERATING INCOME IS
NOT
Various factors may adversely affect the value of the mortgaged properties
without affecting the properties' current net operating income. These factors
include, changes in governmental regulations, fiscal policy, zoning or tax
laws; potential environmental legislation or liabilities or other legal
liabilities; the availability of refinancing; and changes in interest rate
levels, among others.
EXPOSURE OF THE MORTGAGE POOL TO ADVERSE ECONOMIC OR OTHER DEVELOPMENTS BASED
ON GEOGRAPHIC CONCENTRATION
Adverse conditions in the region where a Mortgaged Property is located may
reduce the Mortgaged Property's income and its foreclosure value. Such adverse
conditions may include:
1. general economic or demographic conditions in the state or region or
adverse developments affecting an industry that is concentrated in the state or
region;
2. real estate market conditions in the state or region;
3. state or local government regulations;
4. natural disasters, such as earthquakes, floods, tornadoes and
hurricanes, which may not be fully covered by insurance; and
5. other factors that are beyond the control of the related borrower.
Certain states or geographic regions may be more severely affected by such
factors than other states or regions, and to the extent that there is a
concentration of Mortgaged Properties or borrowers in such state or region, the
impact on the Trust Fund may be more significant than would be the case if the
properties were more geographically diversified.
135, 27 and 10 Mortgaged Properties representing approximately 39.8%, 7.1%
and 5.8% of the Mortgaged Properties by Initial Pool Balance, respectively, are
located in California, Texas and New York. Less than 4.5% of the Mortgaged
Properties (by Cut-Off Date Balance) are located in any other state.
LIMITATIONS OF APPRAISALS
An appraisal was conducted in respect of each mortgaged property in
connection with the origination or acquisition of the related Mortgage Loan.
The resulting estimates of value are the basis of the Cut-Off Date
Loan-to-Value Ratios referred to herein. Those estimates represent the analysis
and opinion of the person performing the appraisal or market analysis and are
not guarantees of present or future values. Moreover, the values of the
mortgaged properties may have changed significantly since the appraisal or
market study was performed. 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. Information
regarding the values of mortgaged properties available to the depositor as of
the Cut-Off Date is presented for illustrative purposes only in Annex A and
Annex B. See "Description of the Mortgage Loans--Assessments of Property Value
and Condition".
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INCREASED RISK OF LOSS ASSOCIATED WITH CONCENTRATION OF MORTGAGE LOANS,
BORROWERS AND MANAGERS
In general, a mortgage pool with a concentration of larger-than-average
loans can result in more severe losses, relative to the size of the pool, than
would be the case if the aggregate balance of the Mortgage Loans in the pool
was more evenly distributed.
Several of the Mortgage Loans have Principal Balances as of the Cut-Off
Date that are substantially higher than the average Principal Balance of all
Mortgage Loans as of the Cut-Off Date.
The largest Mortgage Loan (including cross-collateralized Mortgage Loans)
in the trust fund (identified as Loan Number 25489 on the Mortgage Loan
Schedule) represents approximately 5.3% of the Initial Pool Balance.
The ten largest Mortgage Loans (including cross-collateralized Mortgage
Loans) have Cut-Off Date Balances that represent, in the aggregate,
approximately 23.9% of the Initial Pool Balance. See the table entitled "Ten
Largest Mortgage Loans" under "Description of the Mortgage Pool--Additional
Mortgage Loan Information" herein.
If a mortgage pool has a high concentration of Mortgage Loans to related
borrowers, the financial difficulties of such a borrower could have a greater
impact on the mortgage pool than it would if the borrower and its affiliates
represented a smaller proportion of the mortgage pool. Two groups of Mortgage
Loans made to affiliated borrowers represent 4.2% and 3.3%, respectively, of
the Mortgage Loans by Initial Pool Balance.
To the extent that mortgaged properties owned by a group of related
borrowers have common management, any financial or other difficulties
experienced by the property manager would have a greater impact on the
mortgaged properties than would be the case if the properties did not have
common management. For example, if a person that owns or controls several
mortgaged properties experiences financial difficulty at one such 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.
In addition, a financial failure or bankruptcy filing involving an
affiliate of a group of affiliated borrowers, such as a common general partner
or the owner of a common general partner, would have a greater impact on the
Mortgage Pool than a financial failure or bankruptcy filing involving only one
of several borrowers without such an affiliation. Nonetheless, the filing of a
bankruptcy petition should not invalidate the first lien position held by the
Trustee on the related Mortgaged Property, and the Servicer is required to make
Advances through liquidation unless the Servicer determines that such Advances
will not be recoverable. See "Description of the Certificates--Advances"
herein.
RISKS RELATING TO CONFLICTS OF INTEREST
The Special Servicer is given considerable latitude in determining whether
and in what manner to liquidate or modify defaulted Mortgage Loans. The
Operating Adviser will have the right to replace the Special Servicer under
certain circumstances. At any given time, the Operating Adviser will be
controlled generally by the holders of the Controlling Class, and such holders
may have interests in conflict with those of the holders of the other
certificates. For instance, the holders of certificates of the Controlling
Class might desire to mitigate the potential for loss to that class from a
troubled Mortgage Loan by deferring enforcement in the hope of maximizing
future proceeds. However, the interests of the trust fund may be better served
by prompt action, since delay followed by a market downturn could result in
less proceeds to the trust fund than would have been realized if earlier action
had been taken. The Special Servicer or an affiliate will acquire certain of
the most subordinated certificates (including those of the initial Controlling
Class). Under such circumstances, the Special Servicer itself may have
interests that conflict with the interests of the other holders of the
certificates. Substantially all of the property managers for the mortgaged
properties (or their affiliates) manage additional properties, including
properties that
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may compete with the mortgaged properties. Affiliates of the managers, and
certain of the managers themselves, also may own other properties, including
competing properties. The managers of the mortgaged properties may accordingly
experience conflicts of interest in the management of such mortgaged
properties.
RISKS RELATING TO SERVICING COMPENSATION
To the extent described in this Prospectus Supplement, the Servicer, the
Special Servicer, the Trustee or the Fiscal Agent, as applicable, will be
entitled to receive interest on unreimbursed Advances. This interest will
generally accrue from the date on which the related Advance is made or the
related expense is incurred through the date of reimbursement. In addition,
under certain circumstances, including delinquencies in the payment of
principal and interest, a Mortgage Loan will be serviced by the Special
Servicer, and the Special Servicer is entitled to compensation for special
servicing activities. The right to receive interest on Advances and special
servicing compensation is senior to the rights of Certificateholders to receive
distributions and may lead to shortfalls or losses being allocated to one or
more classes of certificates on one or more Distribution Dates.
RISK OF BANKRUPTCY PROCEEDINGS
Under the Bankruptcy Code, the filing of a bankruptcy petition by or
against a borrower may stay the commencement or continuation of a foreclosure
action. In addition, if a court determines that the value of the Mortgaged
Property is less than the principal balance of the Mortgage Loan it secures,
the court may reduce the amount of secured indebtedness to the then-current
value of the Mortgaged Property. Such an action would make the lender a general
unsecured creditor for the difference between the then-current value and the
amount of its outstanding mortgage indebtedness. A bankruptcy court also may:
(i) grant a debtor a reasonable time to cure a payment default on a Mortgage
Loan; (ii) reduce monthly payments due under a Mortgage Loan; (iii) change the
rate of interest due on a Mortgage Loan; or (iv) otherwise alter the Mortgage
Loan's repayment schedule. Additionally, the borrower's trustee or the
borrower, as debtor in possession, has certain special powers to avoid,
subordinate or disallow debts. In certain circumstances, the claims of the
mortgage lender may be subordinated to financing obtained by a
debtor-in-possession subsequent to its bankruptcy.
The filing of a bankruptcy petition may also stay the lender from
enforcing a borrower's assignment of rents and leases. The Bankruptcy Code also
may interfere with the Trustee's ability to enforce any lockbox requirements.
The legal proceedings necessary to resolve these issues can be time consuming
and may significantly delay the lender's receipt of rents. Rents also may
escape an assignment to the extent they are used by the borrower to maintain
the mortgaged property or for other court authorized expenses.
As a result of the foregoing, the Trustee's recovery with respect to
borrowers in bankruptcy proceedings may be significantly delayed, and the
aggregate amount ultimately collected may be substantially less than the amount
owed.
In addition, a number of the borrowers under the Mortgage Loans are
limited or general partnerships. Under certain circumstances, the bankruptcy of
a general partner in 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. See "Certain Legal
Aspects of Mortgage Loans--Bankruptcy" and "--Due-on-Sale and
Due-on-Encumbrance Provisions" and "--Subordinate Financing" in the prospectus.
RISKS RELATING TO PREPAYMENTS AND REPURCHASES
The yield to maturity on your certificates will depend, in significant
part, upon the rate and timing of principal payments on the Mortgage Loans. For
this purpose, principal payments include both voluntary prepayments, if
permitted, and involuntary prepayments, such as prepayments resulting from
casualty or condemnation of mortgaged properties, defaults and liquidations by
borrowers, or repurchases as a result of a Seller's breaches of representations
and warranties. The investment performance of your certificates may vary
materially and adversely from your expectations if the actual rate of
prepayment is higher or
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lower than you anticipate. Voluntary prepayments under certain of the Mortgage
Loans require payment of a prepayment premium or yield maintenance charge. See
"Description of the Mortgage Pool--Prepayment Charges and Yield Maintenance
Premiums". Nevertheless, we cannot assure you that the related borrowers will
refrain from prepaying their Mortgage Loans due to the existence of a
prepayment premium. We also cannot assure you that involuntary prepayments will
not occur. The rate at which voluntary prepayments occur on the Mortgage Loans
will be affected by a variety of factors, including: the terms of the Mortgage
Loans, the length of any prepayment lockout period; the level of prevailing
interest rates, the availability of mortgage credit, the applicable yield
maintenance charges or prepayment premiums; the occurrence of casualties or
natural disasters; and economic, demographic, tax or legal factors. Generally,
no prepayment premium will be required for prepayments in connection with a
casualty or condemnation.
In addition, if a Seller repurchases any Mortgage Loan from the trust due
to the breach of a representation or warranty, the repurchase price paid will
be passed through to the holders of the certificates with the same effect as if
the Mortgage Loan had been prepaid in part or in full, except that no
prepayment premium or yield maintenance charge will be payable. Such a
repurchase may, therefore, adversely affect the yield to maturity on your
certificates.
OTHER FINANCING AND ADDITIONAL DEBT
Generally, the Mortgage Loans do not permit borrowers to incur additional
indebtedness secured by the Mortgaged Properties. However, 3 Mortgage Loans,
representing approximately 1.6% of the Initial Pool Balance, permit the
borrower to incur additional indebtedness secured by the related Mortgaged
Property subject to the satisfaction of certain conditions, including lender
approval. Substantially all of the Mortgage Loans also permit the related
borrower to incur limited unsecured indebtedness in the ordinary course of
business. 8 Mortgage Loans, representing approximately 3.9% of the Initial Pool
Balance, permit the borrower to incur additional debt other than debt secured
by the Mortgage Property, of which 2 Mortgage Loans, representing approximately
2.0% of the Initial Pool Balance, permit such additional unsecured debt only up
to an amount equal to 5% of the original principal balance thereof. See
"Description of the Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans" in this prospectus supplement.
When a Mortgage Loan borrower (or its constituent members) also has one or
more other outstanding loans (even if subordinated or mezzanine loans), the
Trust Fund is subjected to additional risk. The borrower may have difficulty
servicing and repaying multiple loans. Also, the existence of another loan
generally will make it more difficult for the borrower to obtain refinancing of
the Mortgage Loan and may thus jeopardize repayment of the Mortgage Loan at
maturity. Moreover, the need to service additional debt may reduce the cash
flow available to the borrower to operate and maintain the mortgaged property.
Additionally, if the borrower (or its constituent members) defaults on the
Mortgage Loan and/or any other loan, actions taken by other lenders could
impair the security available to the Trust Fund. If a junior lender files an
involuntary bankruptcy petition against the borrower (or the borrower files a
voluntary petition to stay enforcement by a junior lender), the Trust Fund's
ability to foreclose on the property may be automatically stayed, and principal
and interest payments might not be made during the course of the bankruptcy
case. The bankruptcy of a junior lender also may operate to stay foreclosure by
the Trust Fund. See "Certain Legal Aspects of Mortgage Loans--Bankruptcy" and
"--Due-on-Sale and Due-on-Encumbrance Provisions" and "--Subordinate Financing"
in the prospectus.
Further, if another loan secured by the Mortgaged Property is in default,
the other lender may foreclose on the Mortgaged Property, absent an agreement
to the contrary, thereby causing a delay in payments and/or an involuntary
repayment of the Mortgage Loan prior to maturity. The Trust Fund may also be
subject to the costs and administrative burdens of involvement in foreclosure
proceedings or related litigation.
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RISKS ASSOCIATED WITH RECENTLY CONSTRUCTED PROPERTIES
29 of the Mortgage Loans, representing approximately 12.3% of the Initial
Pool Balance, are secured by Mortgaged Properties constructed within the last
18 months. Consequently, such Mortgaged Properties do not have significant
operating histories. There can be no assurance that the businesses will be
successful as operated at such Mortgaged Properties. There can be no assurances
that current occupancy levels of such Mortgaged Properties will be maintained
or that full occupancy will be achieved. There also can be no assurance that as
yet undiscovered physical or design problems with the recently constructed
properties will not adversely affect occupancy levels of the Mortgaged
Property.
RISKS ASSOCIATED WITH BALLOON PAYMENTS AND THE ARD LOAN
228 Mortgage Loans, representing approximately 85.3% of the Initial Pool
Balance, do not fully amortize over their stated term to maturity (or until the
Anticipated Repayment Date in the case of the ARD Loan) and will have
substantial payments of principal ("Balloon Payments") due at maturity unless
previously prepaid, including, in the case of 3 Mortgage Loans, representing
approximately 6.6% of the Initial Pool Balance, which are interest-only
Mortgage Loans, the entire original principal balance thereof.
If a loan requires the borrower to make a significant principal payment at
maturity (or on the Anticipated Repayment Date), the borrower will typically be
able to repay the loan only if it can refinance the loan or sell the related
Mortgaged Property at a price sufficient to permit it to pay the Mortgage Loan
in full. A borrower's ability to sell or refinance a Mortgaged Property depends
upon many factors. Some of those factors that affect property value and cash
flow are described above in this section. Other relevant factors include the
level of available mortgage rates, prevailing economic conditions, the general
availability of credit for the type of property being financed at the time of
the sale or refinancing and changes in governmental regulations, zoning and tax
laws.
DEPENDENCE ON TENANTS/TENANT BANKRUPTCY
The borrower under a Mortgage Loan secured by an income-producing property
generally relies on periodic lease or rental payments from tenants to pay for
maintenance and other operating expenses of the building, to fund capital
improvements and to service the Mortgage Loan and any other debt or obligations
it may have outstanding. 43 Mortgage Loans, representing approximately 14.9% of
the Initial Pool Balance, are secured by Mortgaged Properties subject to a
lease with a single-tenant. The net cash flow and market value of such
Mortgaged Properties are at more risk to changes in the performance of such
tenants' business than are multi-tenant properties.
There can be no guaranty that tenants will renew leases upon expiration
(or, in the case of such renewal, whether the renewal rent will be at least
equal to the rent previously paid) or, in the case of a commercial tenant, that
it will continue operations throughout the term of its lease. A borrower would
be adversely affected if its tenants were unable to pay rent or if the borrower
could not rent space on favorable terms or at all. In addition, upon reletting
or renewing existing leases, the borrower under a mortgage loan secured by
commercial properties will likely be required to pay leasing commissions and
tenant improvement costs which may adversely affect cash flow from the
Mortgaged Property. We cannot give you any assurances as to whether, or to what
extent, economic, legal or social factors will affect future rental or
repayment patterns.
The bankruptcy or insolvency of a major tenant, or a number of smaller
tenants, in retail and office properties may adversely affect the income
produced by the property. Under the Bankruptcy Code, a tenant/debtor has the
option of assuming or rejecting any unexpired lease. If the tenant rejects the
lease, the landlord's claim for breach of the lease would be a general
unsecured claim against the tenant (absent collateral securing the claim). The
claim would be limited to the unpaid rent under the lease for the periods prior
to the bankruptcy petition (or earlier surrender of the leased premises), plus
the rent under the lease for the greater of one year, or 15% (not to exceed
three years), of the remaining term of such lease.
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RISKS PARTICULAR TO RETAIL PROPERTIES
50 Mortgage Loans, representing approximately 20.6% of the Initial Pool
Balance, are secured by mortgages on fee or leasehold interests in retail
properties.
Mortgage Loans that are secured by liens on retail properties are exposed
to certain unique risks. In certain cases, rents on retail properties are
linked to a percentage of gross sales generated by the tenant's business. Such
arrangements cause the value of such properties to correlate to the performance
of tenant businesses, and increase the risk that the borrower will be unable to
make payments on the related Mortgage Loan if the tenants' businesses perform
poorly. Therefore, the value of retail properties are significantly impacted by
the quality of the tenants as well as fundamental aspects of real estate such
as location and market demographics.
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 than those that do not have
an anchor tenant. While there is no strict definition of an anchor tenant, it
is generally understood that a retail anchor tenant is proportionately larger
in size and is vital in attracting customers to the retail property.
Unlike office or hotel properties, retail properties also face competition
from sources outside a given real estate market. For example, catalogue
retailers, home shopping networks, internet based "e-commerce", telemarketers,
multi-level marketers and outlet centers all compete with more traditional
retail properties for consumer dollars. Continued growth of these alternative
retail outlets (which are often characterized by lower operating costs than
traditional retail properties) could adversely affect the rents collectible at
the retail properties included in the Mortgage Pool. See "Risk Factors--Certain
Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage--Risks
Particular to Retail Properties" in the prospectus.
RISKS PARTICULAR TO MULTIFAMILY PROPERTIES
88 Mortgage Loans, representing approximately 23.4% of the Initial Pool
Balance, are secured by mortgages on fee or leasehold interests in multifamily
properties.
The successful operation of a multifamily property will depend on, among
other factors, its reputation, the ability of management to provide adequate
maintenance and insurance, and the types of services it provides. In some
cases, the operation of a multifamily property may be affected by circumstances
outside the borrower's control, such as the deterioration of the surrounding
neighborhood, the development of competitive projects, the imposition of rent
control or changes in tax laws. All of these conditions and events may increase
the possibility that a borrower may be unable to meet its obligations under a
Mortgage Loan.
Certain states strictly regulate the relationship between landlords and
tenants. Commonly, these laws require a written lease, good cause for eviction
and disclosure of fees, and prohibit unreasonable rules and retaliatory
evictions. Apartment building owners also have been the subject of suits under
state "Unfair and Deceptive Practices Acts" and other general consumer
protection statutes for coercive, abusive or unconscionable leasing and sales
practices. In such jurisdictions and potentially others, borrowers are facing
new and more complicated challenges to their rights to tenant rents, which may
reduce the value of multifamily properties or increase the volatility of the
related net cash flows. A few states offer especially significant protection to
tenants. For example, some states limit the basis on which a landlord may
terminate a tenancy or increase its rent or prohibit a landlord from
terminating a tenancy solely by reason of the sale of the building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control or rent stabilization
regulations on apartment buildings. These ordinances may limit rent increases
to fixed percentages which in turn may be linked to increases in the consumer
price index, schedules approved by a governmental agency, or to increases
determined through mediation or binding arbitration. In many cases, rent
control or rent stabilization laws do not permit vacancy decontrol or
destabilization, and therefore limit the projected future net cash flows and
market value of
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the affected multifamily properties. Any limitations on a borrower's ability to
raise property rents may impair such borrower's ability to repay its Mortgage
Loan from its net cash flow or the proceeds of a sale or refinancing of the
related Mortgaged Property. See "Risk Factors--Certain Factors Affecting
Delinquency, Foreclosure and Loss of the Mortgage-Risks Particular to
Multifamily Properties" in the prospectus.
RISKS PARTICULAR TO GOVERNMENT ASSISTED PROPERTIES
11 Mortgage Loans, representing approximately 2.9% of the Initial Pool
Balance, are secured by multi-family properties believed to have tenants
eligible for rental subsidy payments under certain federal housing assistance
payment programs, including Section 8 of United States Housing Act of 1937, as
amended. Under that program, administered by the Department of Housing and
Urban Development, a property must satisfy certain requirements to qualify for
inclusion in the program. These requirements relate to, among other things,
income limitations on tenants. The borrower under these Mortgage Loans may be
adversely affected if it or the mortgaged property fails to qualify for
inclusion in the program, if subsidies thereunder are reduced, or if the
programs are otherwise terminated.
RISKS PARTICULAR TO OFFICE PROPERTIES
45 Mortgage Loans, representing approximately 22.6% of the Initial Pool
Balance, are secured by office properties.
Significant factors determining the value of office properties are the
quality of the tenants in the building, the physical attributes of the building
in relation to competing buildings and the strength and stability of the market
area as a desirable business location. Negative changes in the physical plant
or surroundings with respect to such features may have a significant impact on
occupancy levels, tenant turnover and lease or rental income with respect to
such properties. The risk of such an adverse effect is increased if revenue is
dependent on a single tenant or if there is a significant concentration of
tenants in a particular business or industry. See "Risk Factors--Certain
Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage--Risks
Particular to Office Properties" in the prospectus.
RISKS PARTICULAR TO HOSPITALITY PROPERTIES
8 Mortgage Loans, representing approximately 4.5% of the Initial Pool
Balance, are secured by full service hotels, limited service hotels or extended
stay hotels.
Various factors, including location, quality and franchise affiliation
affect the economic performance of a hotel. Adverse economic conditions, either
local, regional or national, may limit the amount that can be charged for a
room and may result in a reduction in occupancy levels. To meet competition in
the industry and to maintain economic values, continuing expenditures must be
made for modernizing, refurbishing, and maintaining existing facilities at
higher levels than are applicable to many other property types. Hotels tend to
respond more quickly to adverse economic conditions and to competition than
other commercial properties because hotel rooms generally are rented for short
periods of time. Furthermore, the financial strength and capabilities of the
owner and operator of a hotel may have a substantial impact on that hotel's
quality of service and economic performance. Additionally, the hotel and
lodging industry is generally seasonal in nature and this seasonality can be
expected to cause periodic fluctuations in room and other revenues, occupancy
levels, room rates and operating expenses.
If the Servicer forecloses on a hotel property, the Trustee (or Servicer
or Special Servicer) or the purchaser of such hotel property would probably not
be able to use the borrower's liquor license and would have to apply for a new
liquor license. We cannot assure you that a new license could be obtained or
that it could be obtained promptly. See "Risk Factors--Certain Factors
Affecting Delinquency, Foreclosure and Loss of the Mortgage--Risks Particular
to Hotel and Motel Properties in the prospectus.
RISKS PARTICULAR TO AFFILIATION WITH A FRANCHISE OR HOTEL MANAGEMENT COMPANY
7 Mortgage Loans, representing approximately 3.9% of the Initial Pool
Balance, are secured by hotel properties operated as franchises of national
hotel chains or managed by a hotel management company.
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The performance of a hotel property operated as a franchise or by a hotel
management company depends in part on: (1) the continued existence and
financial strength of the franchisor or hotel management company; (2) the
public perception of the franchise or hotel chain service mark; and (3) the
duration of the franchise license or management agreement.
The transferability of franchise license agreements may be restricted. In
the event of a foreclosure, the lender or its agent may not have the right to
use the franchise license without the franchisor's consent. Conversely, in the
case of certain Mortgage Loans, the lender may be unable to remove a franchisor
or a hotel management company that it desires to replace following a
foreclosure.
Further, in the event of a foreclosure, the Trustee or a purchaser of such
mortgaged property probably would not be entitled to the rights under any
liquor license for the mortgaged property. Such party would be required to
apply in its own right for such a license, and we cannot assure you that a new
license could be obtained.
RISKS PARTICULAR TO INDUSTRIAL PROPERTIES
58 Mortgage Loans, representing approximately 5.1% of the Initial Pool
Balance, are secured by industrial properties.
Significant factors determining the value of industrial properties are the
quality of tenants, building design and adaptability and the location of the
property. Concerns about the quality of tenants, particularly major tenants,
are similar in both office properties and industrial properties, although
industrial properties are more frequently dependent on a single tenant.
Industrial properties may be adversely affected by reduced demand for
industrial space occasioned by a decline in a particular industry segment (for
example, a decline in defense spending), and a particular industrial or
warehouse property that suited the needs of its original tenant may be
difficult to relet to another tenant or may become functionally obsolete
relative to newer properties.
Aspects of building site design and adaptability affect the value of an
industrial property. Site characteristics which are valuable to an industrial
property include high ceilings, wide column spacing, a large number of bays and
large bay depths, divisibility, large minimum truck turning radii and overall
functionality and accessibility.
Location is also important because an industrial property requires the
availability of labor sources, proximity to supply sources and customers and
accessibility to rail lines, major roadways and other distribution channels.
See "Risk Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss
of the Mortgage--Risks Particular to Industrial Properties" in the prospectus.
RISKS PARTICULAR TO PROPERTIES LEASED TO MULTIPLE TENANTS
147 Mortgage Loans, representing approximately 59.6% of the Initial Pool
Balance, are secured by properties leased to multiple tenants. If a Mortgaged
Property has multiple tenants, re-leasing expenditures may be more frequent
than in the case of Mortgaged Properties with fewer tenants, thereby reducing
the cash flow available for debt service payments. Multi-tenanted Mortgaged
Properties also may experience higher continuing vacancy rates and greater
volatility in rental income and expenses.
RISKS PARTICULAR TO LEASEHOLD INTERESTS
8 Mortgage Loans, representing 3.4% of the Initial Pool Balance are
secured solely by mortgages on borrowers' leasehold interests under ground
leases.
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 upon a lease default, the leasehold mortgagee would lose its
security. Generally, the related ground lease requires the lessor to give the
leasehold mortgagee notice of lessee defaults and an opportunity to cure them,
permits the leasehold estate to be assigned to the leasehold mortgagee or the
purchaser at a foreclosure sale, and contains certain other protective
provisions typically included in a "mortgageable" ground lease.
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Upon the bankruptcy of a lessor or a lessee under a ground lease, the
debtor entity has the right to assume or reject the lease. If a debtor lessor
rejects the lease, the lessee has the right to remain in possession of its
leased premises under the rent under the lease for the term of the lease
(including renewals). If a debtor lessee/borrower rejects any or all of its
leases, the leasehold lender could succeed to the lessee/borrower's position
under the lease only if the lessor specifically grants the lender such right.
As a result, the lender may lose its security. If both the lessor and the
lessee/borrower are involved in bankruptcy proceedings, the Trustee may be
unable to enforce the bankrupt lessee/borrower's obligation to refuse to treat
a ground lease rejected by a bankrupt lessor as terminated. In such
circumstances, a lease could be terminated notwithstanding lender protection
provisions contained therein or in the mortgage so that the lender would lose
its security. Some of the ground leases securing the mortgaged properties
provide that the ground rent payable thereunder increases during the term of
the lease. These increases may adversely affect the cash flow and net income of
the borrower from the mortgaged property.
RISKS PARTICULAR TO THEATER PROPERTIES
6 Mortgage Loans, representing approximately 4.6% of the Initial Pool
Balance, are secured by theater properties.
Significant factors determining the value of a theater property include
the talent and experience of the operator, its ability to secure film license
agreements for first-run movies and its ability to maintain high attendance
levels. Theater operators are also highly reliant on sales of food and
beverages to attendees. Physical attributes of the building, including number
of screens, the size of individual auditoriums within the theater, quality and
modernity of sound and projection systems and quality and comfort of common
areas (including box office, lobby and concessions area) will also impact
property value. The performance of a theater property can also be impacted by
the quality, size and proximity of competitive theater properties and the
relative appeal of films being screened at other theater properties within the
market. The theater industry is highly dependent on the quality and popularity
of films being produced by film production companies both in the US and
overseas; a slowdown in movie production or decrease in the appeal of films
being produced can negatively impact the value of a theater property. The
theater industry is also subject to competitive distribution channels for
first-run movies, such as cable and satellite television, videotape and
videodisk sales and rentals, and electronic distribution via the internet.
RISKS CREATED BY STATE LAWS OF PARTICULAR JURISDICTIONS
Some states (including California) have laws prohibiting more than one
"judicial action" to enforce a mortgage obligation. Some courts have construed
the term "judicial action" broadly. In the case of a Mortgage Loan secured by
mortgaged properties located in multiple states, the Servicer or Special
Servicer may be required to foreclose first on mortgaged properties located in
states where such "one action" rules apply (and where non-judicial foreclosure
is permitted) before foreclosing on properties located in states where judicial
foreclosure is the only permitted method of foreclosure. As a result, the
ability to realize upon the Mortgage Loans may be limited by the application of
state laws. Violations of such statutes may result in the loss of some or all
of the security under the loan. Other statutory provisions (including
provisions of California law) limit any deficiency judgment (if otherwise
permitted) against the borrower following a judicial sale to the excess of the
outstanding debt over the greater of (i) the fair market value of the property
at the time of the public sale and (ii) the amount of the winning bid in the
foreclosure. Further, under the laws of some states, including California, once
a property has been sold pursuant to a power-of-sale clause contained in a deed
of trust, the lender is precluded from seeking a deficiency judgment from the
borrower or, under certain circumstances, guarantors. In certain circumstances,
the lender may have a receiver appointed.
MANAGEMENT
Each Mortgaged Property is managed by a property manager (which, in many
cases, is an affiliate of the borrower) or by the borrower itself. The
successful operation of a real estate project is largely dependent on the
performance and viability of the manager of the property. The property manager
is responsible for responding to changes in the local market, planning and
implementing the rental structure,
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including establishing levels of rent payments and advising the borrowers so
that maintenance and capital improvements can be carried out in a timely
fashion. Properties deriving revenues primarily from short-term sources are
generally more management-intensive than properties leased to creditworthy
tenants under long-term leases. A good property manager, by controlling costs,
providing appropriate service to tenants and seeing to the maintenance of
improvements, can improve cash flow, reduce vacancy, leasing and repair costs
and preserve building value. On the other hand, management errors can, in some
cases, impair short-term cash flow and the long-term viability of an income
producing property.
There is no assurance regarding the performance of any operator or manager
that is currently in place or put in place upon the expiration or termination
of current management agreements or following any default or foreclosure under
a Mortgage Loan. In addition, the property managers generally are operating
companies and unlike limited purpose entities, may not be restricted from
incurring debt and other liabilities in the ordinary course of business or
otherwise. We cannot assure you that the property managers will always be in a
financial condition to continue to fulfill their management responsibilities
under the related management agreements throughout the terms thereof.
RISKS RELATING TO PROPERTY INSPECTIONS
Except in cases where the mortgaged property was newly constructed,
licensed engineers or consultants inspected most of the mortgaged properties in
connection with the origination of the Mortgage Loans to assess items such as
structure, exterior walls, roofing, interior construction, mechanical and
electrical systems and general condition of the site, buildings and other
improvements. However, we cannot assure you that all conditions requiring
repair or replacement were identified. Engineering reports by licensed
engineers or consultants were prepared with respect to all of the mortgaged
properties in connection with the origination of all of the Mortgage Loans
other than with respect to one mortgaged property securing one Mortgage Loan
representing approximately 2.1% of the Initial Pool Balance.
RISKS RELATING TO LACK OF CERTIFICATEHOLDER CONTROL OVER TRUST FUND
Your Certificates generally do not entitle you to vote, except with
respect to required consents to certain amendments to the Pooling and Servicing
Agreement and, in certain cases, to replace parties to the Pooling and
Servicing Agreement. Generally, you have only very limited rights to
participate in decisions with respect to the administration of the Trust Fund
(although, among other things, the Controlling Class will have certain rights
with respect to advising the Special Servicer). See "Servicing of the Mortgage
Loans--General" herein. Such decisions are generally made, subject to the
express terms of the Pooling and Servicing Agreement, by the Servicer, the
Trustee or the Special Servicer, as applicable. Any decision made by one of
those parties in respect of the trust fund, even if made in the best interests
of the Certificateholders (as determined by such party in its good faith and
reasonable judgment), may be contrary to the decision that would have been made
by the holders of any particular Class or classes of Offered Certificates and
may negatively affect the interests of such holders.
SERVICER OR SPECIAL SERVICER MAY PURCHASE CERTIFICATES
The Servicer, Special Servicer, or one of their affiliates is expected to
purchase all or a portion of several classes of Certificates. In such event,
the Servicer and/or Special Servicer may be subject to a conflict of interest
because it would have an economic interest in the trust fund that is distinct
from that of holders of other classes of Certificates. However, the Pooling and
Servicing Agreement requires the Servicer and Special Servicer to service
Mortgage Loans in accordance with specified objective standards and without
regard to ownership of any Certificate by the Servicer, the Special Servicer or
any affiliate thereof. See "Servicing of the Mortgage Loans--General" herein.
CERTAIN YIELD AND PREPAYMENT CONSIDERATIONS
The yield on any Offered Certificate will be affected by (i) the related
Pass-Through Rate (and whether such rate is limited by the weighted average Net
Mortgage Rate of the Mortgage Loans), (ii) the
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purchase price paid for such Certificate (and whether such price represents a
premium over or discount to the principal amount represented by such
Certificate), (iii) the rate and timing of principal payments (including
voluntary and involuntary principal prepayments and delinquent payments) and
principal losses on the Mortgage Loans and (iv) the extent to which such
principal payments or losses are applied or losses are allocated on any
Distribution Date in reduction of the Certificate Balance of, or interest
accrued and otherwise distributable to, the Class to which such Certificate
belongs. See "Description of the Certificates--Distributions--Priority" and
"--Distributions--Principal Distribution Amount" herein.
If you purchase an Offered Certificate at a discount, you should consider
the risk that a slower than anticipated rate of principal payments on the
Mortgage Loans will result in an actual yield that is lower than your expected
yield. If you purchase a Certificate at a premium, you should consider the risk
that a faster than anticipated rate of principal payments on the Mortgage Loans
will result in an actual yield that is lower than your expected yield. Insofar
as your initial investment in any Offered Certificate is repaid, you may not be
able to reinvest such amounts in an alternative investment with a comparable
yield as the yield on your Offered Certificates.
Each Mortgage Loan restricts voluntary prepayments in one or more of the
following ways: (i) by prohibiting any prepayments for a specified period of
time generally two to five years after the date of origination of such Mortgage
Loan (a "Lockout Period"), (ii) by requiring that any principal prepayment made
during a specified period of time after the date of origination of such
Mortgage Loan or, in the case of a Mortgage Loan also subject to a Lockout
Period, after the date of expiration of such Lockout Period (a "Yield
Maintenance Period") be accompanied by a Yield Maintenance Charge, or (iii) by
requiring that any principal payment made during a specified period of time
after the date of origination, or in the case of a Mortgage Loan also subject
to a Lockout Period, after the date of expiration of such Lockout Period, or in
the case of a Mortgage Loan also subject to a Yield Maintenance Period, after
the expiration of such Yield Maintenance Period (a "Prepayment Premium
Period"), be accompanied by a prepayment premium which is generally equal to a
fixed percentage of the then outstanding principal balance of the Mortgage Loan
being prepaid.
We cannot predict the actual rate of prepayment of principal on the
Mortgage Loans. All of the Mortgage Loans contain provisions prohibiting
voluntary prepayments for a specified amount of time after origination and/or
allow voluntary prepayments only with the payment of an additional charge
intended to compensate the lender for foregone interest (a "Yield Maintenance
Charge" or "Prepayment Premium") for a specified amount of time from
origination.
The investment performance of your Offered Certificates may vary
materially and adversely from your investment expectations due to prepayments
on the Mortgage Loans (whether voluntary or otherwise) being higher or lower
than you anticipated. Even if the actual yield is equal to your anticipated
yield, you may not realize your expected total return on investment or the
expected weighted average life of your Certificate. For a discussion of certain
factors affecting prepayment of the Mortgage Loans, see "Yield and Maturity
Considerations" herein.
IN DECIDING WHETHER TO PURCHASE ANY OFFERED CERTIFICATES, AN INVESTOR
SHOULD MAKE AN INDEPENDENT DECISION AS TO THE APPROPRIATE PREPAYMENT
ASSUMPTIONS TO BE USED.
The structure of the Offered Certificates causes the yield of certain
Classes to be sensitive to changes in the rates of prepayment of the Mortgage
Loans and other factors. If you are purchasing any class of Offered
Certificates other than the Class A-1 Certificates you will not receive any
principal distributions until the Certificate Balance of each class that is
senior to your class is reduced to zero.
YIELD RISK ASSOCIATED WITH CHANGES IN CONCENTRATIONS
To the extent that any borrower pays down the principal of any of 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 or geographic location.
SEQUENTIAL PAY AND SUBORDINATION OF SUBORDINATE OFFERED CERTIFICATES
The sequential pay and subordination features governing the priority of
distributions to Certificateholders may result in delays in the payment of
interest and/or principal to any subordinated class of
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Certificates or to the reduction of the related Certificate Balance in
connection with the allocation thereto of losses, shortfalls or expenses which
may remain unreimbursed. Any such delay or reduction will adversely affect the
yield to maturity of such class of Certificates. See "Description of the
Certificates-- Distributions--Priority" and "--Subordination; Allocation of
Losses, Shortfalls and Expenses" herein.
POTENTIAL LIABILITY TO THE TRUST FUND RELATING TO ENVIRONMENTAL CONDITIONS
An environmental site assessment was performed at each of the Mortgaged
Properties during the 12-month period prior to the date of origination of the
related Mortgage Loan. In certain cases, the environmental consultant
identified a condition or circumstance:
(1) which was remediated or for which an escrow for remediation costs has
been established and/or
(2) for which an entity, other than the related borrower, is responsible
for remediation or the cost of such remediation and/or
(3) for which the consultant recommended an operations and maintenance
plan or periodic monitoring of the subject properties and/or nearby properties,
which recommendations were required to be implemented in a manner consistent
with industrywide practices and/or
(4) for which the related lender has obtained environmental insurance.
Federal law requires owners of multifamily housing constructed prior to
1978 to disclose to potential residents or purchasers any condition on the
property that causes exposure to lead-based paint and the related hazards to
pregnant women and young children. Property owners may be liable for tenant
injuries from such exposure under federal and state laws that impose
affirmative discovery and remediation obligations on owners of multifamily
housing containing lead-based paint. The environmental assessments revealed the
existence of lead-based paint at certain of the Multifamily Properties. In
these cases, the borrowers have either implemented operations and maintenance
programs (where such programs were recommended in the environmental assessment)
or are in the process of removing the lead-based paint.
The Pooling and Servicing Agreement requires the Special Servicer to
obtain an environmental site assessment of a Mortgaged Property securing a
defaulted Mortgaged Loan prior to acquiring title thereto or assuming its
operation. This restriction may delay enforcement of the security for the
related Mortgage Note and will make it impossible for the Servicer or Special
Servicer to foreclose on a Mortgaged Property if a satisfactory environmental
site assessment is not obtained (or required remedial action is not taken).
This prohibition is meant to decrease the likelihood that the trust fund will
become liable for an environmental condition at any Mortgaged Property.
However, we cannot assure you that the requirements of the Pooling and
Servicing Agreement will completely protect the assets of the trust fund from
liability for an environmental condition. See "Servicing of the Mortgage
Loans--Realization Upon Defaulted Mortgage Loans" herein and "Risk
Factors--Environmental Risks" and "Certain Legal Aspects of Mortgage
Loans--Environmental Risks" in the prospectus.
CERTAIN TAX CONSIDERATIONS RELATED TO FORECLOSURE
If the trust fund were to acquire a Mortgaged Property subsequent to a
default on the related Mortgage Loan pursuant to a foreclosure or deed in lieu
of foreclosure, the Special Servicer would be required to retain an independent
contractor to operate and manage the Mortgaged Property. Any net income from
such operation and management, other than qualifying "rents from real
property," or any rental income based on the net profits of a tenant or
sub-tenant or allocable to a service that is non-customary in the area and for
the type of building involved, will subject the trust fund to federal (and
possibly state or local) tax on such income at the highest marginal corporate
tax rate (currently 35%), thereby reducing net proceeds available for
distribution to you and to other Certificateholders. The trust fund will
generally be permitted to receive such taxable "net income from foreclosure
property" if the Special Servicer determines that the net after-tax recovery to
the trust fund would be greater than if such REO Property were leased to a
third party at a fixed rental so as to produce qualifying "rents from real
property" or such property could not reasonably be so leased.
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LIMITATIONS ON ENFORCEABILITY OF CROSS-COLLATERALIZATION ARRANGEMENTS
When a Mortgage Loan ("Loan A") is cross-collateralized with another
Mortgage Loan ("Loan B"), the collateral securing Loan A also secures Loan B
and the collateral securing Loan B also secures Loan A. In some cases, but not
all, each borrower also guarantees the performance of the cross-collateralized
loan.
Cross-collateralization arrangements seek to minimize defaults and
ultimate losses that could result if the Mortgaged Property primarily securing
a Mortgage Loan fails to generate enough net operating income to pay debt
service on that Mortgage Loan. However, when a borrower pledges its property to
secure repayment of another borrower's obligations, there is a risk that the
creditors of that borrower (or that borrower's trustee in bankruptcy) could
challenge the arrangement as a "fraudulent conveyance." Such a challenge could
eliminate or reduce the benefits of cross-collateralization with respect to one
or more cross-collateralized Mortgage Loans.
In general, a pledge or transfer may be set aside as a "fraudulent
conveyance" if a court finds that the following circumstances exist:
1. Insufficient Consideration. The pledgor or transferor did not receive
fair consideration or reasonably equivalent value in exchange for its agreement
to pledge its property for the equal benefit of the other borrower; and
2. Insolvency. The pledgor or transferor was insolvent at the time of
granting the lien on its property or was rendered insolvent as a result of
granting the lien on its property.
ABSENCE OR INADEQUACY OF INSURANCE COVERAGE ENTAILS RISKS
The Mortgaged Properties may suffer casualty losses due to risks that are
not covered by insurance or for which insurance coverage is not available at
commercially reasonable rates. In addition, a substantial number of Mortgage
Loans are secured by Mortgaged Properties located in areas, including
California and Texas and in coastal areas of Florida, that have historically
been at greater risk of acts of nature for which adequate insurance may not be
generally available (such as earthquakes, hurricanes and floods). Certain of
such Mortgage Loans generally do not require borrowers to maintain earthquake
or hurricane insurance, or flood insurance in excess of the federal limit, and
we cannot assure you that borrowers will attempt or be able to obtain adequate
insurance against such risks. Moreover, if reconstruction or major repairs are
required following a casualty, changes in laws that have occurred since the
time of original construction may materially affect the borrower's ability to
effect such reconstruction or major repairs or may materially increase the cost
thereof.
ZONING COMPLIANCE
If there are changes in applicable building and zoning ordinances and
codes ("Zoning Laws") affecting certain of the Mortgaged Properties which have
come into effect after the construction of improvements on such Mortgaged
Properties and for other reasons, certain improvements may not comply fully
with current Zoning Laws, including density, use, parking and setback
requirements, but in certain cases qualify as permitted non-conforming uses.
Such changes may limit the ability of the borrower to rebuild the premises "as
is" in the event of a substantial casualty loss with respect thereto and, to
the extent law and ordinance insurance coverage is not in place, may adversely
affect the ability of the borrower to meet its Mortgage Loan obligations from
cash flow.
LITIGATION
There may be 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. We cannot assure you that such litigation will not have a material
adverse effect on the performance of the related Mortgaged Properties and,
thus, the distributions to Certificateholders.
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ABSENCE OF ATTORNMENT PROVISIONS ENTAILS RISKS
In some jurisdictions, if tenant leases are subordinate to the liens
created by the mortgage and do not contain attornment provisions (i.e.,
provisions requiring the tenant to recognize a successor owner following
foreclosure as landlord under the lease), the leases may terminate upon the
transfer of the property to a foreclosing lender or purchaser at foreclosure.
Not all leases were reviewed to ascertain the existence of attornment or
subordination provisions. Accordingly, if a mortgaged property is located in
such a jurisdiction and is leased to one or more desirable tenants under leases
that are subordinate to the mortgage and do not contain attornment provisions,
such mortgaged property could experience a further decline in value if such
tenants' leases were terminated. This is particularly likely if such tenants
were paying above-market rents or could not be replaced.
If a lease is not subordinate to a mortgage, the trust will not possess
the right to dispossess the tenant upon foreclosure of the mortgaged property
(unless it has otherwise agreed with the tenant). If the lease contains
provisions inconsistent with the mortgage (e.g., provisions relating to
application of insurance proceeds or condemnation awards) or which could affect
the enforcement of the lender's rights (e.g., a right of first refusal to
purchase the property), the provisions of the lease will take precedence over
the provisions of the mortgage. Certain of the leases included in the trust may
not be subordinate to the related mortgage.
RISKS RELATING TO COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT
Under the Americans with Disabilities Act of 1990 ("ADA"), all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. Borrowers may incur costs complying with
the ADA. In addition, noncompliance could result in the imposition of fines by
the federal government or an award of damages to private litigants.
RISKS OF LIMITED LIQUIDITY AND MARKET VALUE
Your Certificates will not be listed on any securities exchange, and there
is currently no secondary market for the Offered Certificates. While each
Underwriter currently intends to make a secondary market in the Offered
Certificates, none is obligated to do so. Accordingly, you may not have an
active or liquid secondary market for your certificates. Lack of liquidity
could result in a substantial decrease in the market value of your
certificates. The market value of your certificates also may be affected by
many other factors, including the then-prevailing interest rates. Furthermore,
you should be aware that the market for securities of the same type as the
certificates has recently been volatile and offered very limited liquidity.
RISK OF LIMITED ASSETS
The Offered Certificates will represent interests solely in the assets of
the trust and will not represent an interest in or an obligation of or any
other entity or person. Distributions on the Offered Certificates will depend
solely on the amount and timing of payments on the Mortgage Loans.
RISKS ASSOCIATED WITH YEAR 2000
The transition from the year 1999 to the year 2000 may disrupt the ability
of computerized systems to process information, the collection of payments on
the Mortgaged Loans, the servicing of the Mortgage Loans and the performance of
related duties by the Servicer, the Special Servicer, the Trustee, the Paying
Agent the borrowers and other third parties. We have been advised by each of
the Servicer, the Special Servicer and the Paying Agent that they are committed
either to (i) implement modifications to their respective existing systems to
the extent required to cause them to be year 2000 compliant or (ii) acquire
computer systems that are year 2000 compliant, in each case prior to January 1,
2000. However, we have not made any independent investigation of the computer
systems of the Servicer, the Special Servicer or the Paying Agent. In the event
that computer problems arise out of a failure of such efforts to be completed
on time, or in the event that the computer systems of the Servicer, the Special
Servicer or the Paying Agent are not fully year 2000 compliant, the resulting
disruptions in the collection or distribution of receipts on the Mortgage Loans
could materially adversely affect your investment.
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
All percentages of the Mortgage Loans and Mortgaged Properties, or of any
specified group of Mortgage Loans and Mortgaged Properties, referred to herein
without further description are approximate percentages by Initial Pool
Balance. The Trust Fund will consist primarily of 216 commercial, 89
multifamily and 6 mobile home community Mortgage Loans. The Initial Pool
Balance is approximately $1,080,711,380. Each Mortgage Loan is evidenced by one
or more promissory notes (a "Mortgage Note") and secured by one or more
mortgages, deeds of trust or other similar security instruments (a "Mortgage")
that collectively create a first mortgage lien in one of the following
properties (each, a "Mortgaged Property"):
(i) with respect to 277 Mortgage Loans, representing approximately 96.6%
of the Initial Pool Balance, on a fee simple estate (i.e. the borrower owns
the land and any improvements that comprise the Mortgaged Property) in one
or more commercial, multifamily or manufactured housing community
properties (i.e., the borrower has the interest of a tenant in the land
and/or improvements that comprise the related Mortgaged Property); or
(ii) with respect to 8 Mortgage Loans, representing approximately 3.4% of
the Initial Pool Balance, a leasehold interest in the Mortgaged Property
(i.e., the borrower has the interest of a tenant in the land and/or
improvements that comprise the related Mortgaged Property).
The term (including extensions exercisable at the lender's option) of any
ground lease securing any Mortgage Loan, in whole or in part, that is not also
secured by the related fee interest, extends at least 10 years beyond the
Maturity Date of such Mortgage Loan. The "Cut-Off Date Balance" of any Mortgage
Loan is the unpaid principal balance thereof as of the Cut-Off Date, after
application of all payments due on or before such date, whether or not
received.
On or prior to the Closing Date, the Depositor will acquire the Mortgage
Loans from the Mortgage Loan Sellers pursuant to the Purchase Agreement and
will thereupon assign its interests in the Mortgage Loans, without recourse, to
the Trustee for the benefit of the Certificateholders. See "The Mortgage Loan
Sellers" and the "Representations and Warranties; Repurchases" below and
"Description of the Pooling Agreements--Assignment of Mortgage Loans;
Repurchases" in the prospectus.
The Mortgage Loans are not insured or guaranteed by the Mortgage Loan
Sellers, the Servicer, the Special Servicer, any governmental entity or private
mortgage insurer. The Depositor has not undertaken any evaluation of the
significance of the provisions of any of the Mortgage Loans that provide for
recourse against the related borrower or another person in the event of a
default. Accordingly, 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 specific property and such other assets, if any, pledged to secure a
Mortgage Loan.
A number of groups of Mortgage Loans made to the same borrower or related
borrowers are comprised of Mortgage Loans that are cross-collateralized and
cross-defaulted with each other. In the prospectus supplement we generally
treat the Mortgage Loans as a group as if they collectively constituted a
single Mortgage Loan except where the context makes it clear that we are
talking about the individual Mortgage Loans within that group.
ADDITIONAL DEBT
In general, borrowers may incur trade payables in the ordinary course of
business. In limited circumstances, borrowers may incur additional unsecured
indebtedness to finance equipment and other assets in the ordinary course of
business. In some circumstances borrowers may incur additional unsecured
indebtedness for other purposes. Although the Mortgage Loans generally do not
permit borrowers to incur additional indebtedness secured by the Mortgaged
Properties, potential investors should note the exceptions to this rule
described in "Risk Factors--Other Financing and Additional Debt" herein and
"Certain Legal Aspects of Mortgage Loans--Subordinate Financing" as described
in the prospectus.
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THE ARD LOAN
Mortgage Loan No. 17583 (the "ARD Loan"), representing approximately 0.5%
of the Initial Pool Balance, provides that if the related borrower has not
prepaid the ARD Loan in full on or before June 1, 2009 (the "Anticipated
Repayment Date"), any principal outstanding on such date shall accrue interest
at an increased interest rate (the "Revised Rate") rather than at the stated
Mortgage Rate (the "Initial Rate"). The Anticipated Repayment Date is 120
months after the first Due Date for the ARD Loan. The Revised Rate for the ARD
Loan will be equal to the sum of (x) the Initial Rate, plus (y) 2.0% per annum.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
All of the Mortgage Loans have Due Dates that occur on the first day of
each month, and all of the Mortgage Loans provide for grace periods which do
not exceed 10 days, except that three Mortgage Loans provide for grace periods
of 15 days and one Mortgage Loan provides for a grace period of 14 days in
accordance with applicable state law (however, default interest will begin to
accrue on such Mortgage Loans 5 days after the related Due Dates). In the
aggregate, such Mortgage Loans represent approximately 0.7% of the Initial Pool
Balance. Generally, all prepayments, if any, on the Mortgage Loans are required
to be made on a Due Date or, if not so required, provide that payments made on
a date other than a Due Date will be deemed to be paid on a Due Date, so that
prepayments are required to include one month's interest on the amount prepaid.
In the case of 3 Mortgage Loans, representing approximately 2.3% of the Initial
Pool Balance, however, interest is not required to be paid on the portion
prepaid from the date prepaid through the end of the month in which the
prepayment is made. All of the Mortgage Loans bear fixed interest rates. 54
Mortgage Loans, representing approximately 18.9% of the Initial Pool Balance
accrue interest on the basis of the actual number of days in a month, assuming
a 360 day year. 231 Mortgage Loans, representing approximately 81.1% of the
Initial Pool Balance, accrue interest on the basis of a 30-day month, assuming
a 360-day year. Approximately 85.3% of the Mortgage Loans provide for monthly
payments of principal based on amortization schedules significantly longer than
the remaining terms of such Mortgage Loans. In addition, the ARD Loan,
representing approximately 0.5% of the Initial Pool Balance, amortizes
principal (prior to its Anticipated Repayment Date) at a rate that will result
in a substantial principal payment being required to be paid on the related
"Anticipated Repayment Date."
YIELD MAINTENANCE AND PREPAYMENT PROVISIONS.
Each Mortgage Loan restricts voluntary prepayments in one or more of the
following ways: (i) by prohibiting any prepayments during a Lockout Period,
(ii) by requiring that any principal prepayment made during a Yield Maintenance
Period be accompanied by a Yield Maintenance Charge, or (iii) by requiring that
any principal payment made during a Prepayment Premium Period be accompanied by
a prepayment premium which is generally equal to a fixed percentage of the then
outstanding principal balance of the Mortgage Loan being prepaid. 57 Mortgage
Loans, representing approximately 8.6% of the Initial Pool Balance, provide the
borrower the option to either prepay in full the outstanding principal balance
accompanied by a Yield Maintenance Charge, or to defease such Mortgage Loan.
56 Mortgage Loans, representing approximately 22.3% of the Initial Pool
Balance, contain provisions that prohibit all voluntary prepayments.
160 Mortgage Loans, representing approximately 65.4% of the Initial Pool
Balance, prohibit voluntary prepayments until a specified date (generally
between one and six months prior to the Maturity Date of such Mortgage Loans)
and without restriction thereafter.
6 Mortgage Loans, representing approximately 2.0% of the Initial Pool
Balance, contain provisions that prohibit voluntary prepayment for a specified
period of time (generally between three and seven years) after origination, but
in all cases not less than two years after the date of issuance of the
Certificates, and permit voluntary prepayments thereafter with the payment of
the greater of (a) 1.0% of the outstanding principal balance of the Mortgage
Loan at the time of such prepayment and (b) a Yield Maintenance Charge until a
specified date (generally between three and seven months prior to the Maturity
Date of such Mortgage Loan) and without restriction thereafter.
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57 Mortgage Loans, representing approximately 8.6% of the Initial Pool
Balance, contain provisions that prohibit voluntary prepayment for a specified
period of time (generally between three and seven years) after origination, but
in all cases not less than two years after the date of issuance of the
Certificates, and thereafter permit (i) voluntary prepayment, provided that
such prepayment is accompanied by a Yield Maintenance Charge or (ii) a release
of the lien on the related Mortgaged Property upon substitution of US Treasury
securities as collateral for such Mortgage Loan until a time which is generally
three to six months prior to maturity, and thereafter permit prepayment without
restriction. See "Description of the Mortgage Pool--Certain Terms and
Conditions of the Mortgage Loans--Defeasance" herein.
5 Mortgage Loans, representing approximately 1.5% of the Initial Pool
Balance, contain provisions that prohibit voluntary prepayment for a period of
time (generally between three and four years) after origination (except in the
case of three such Mortgage Loans representing approximately 0.8% of the
Initial Pool Balance which permit voluntary prepayment at any time after
origination) and thereafter permit voluntary prepayment, provided that such
prepayment is accompanied by a Prepayment Premium generally equal to a fixed
percentage of the unpaid principal balance of such Mortgage Loan at the time of
prepayment until a date that is six or twelve months prior to maturity (except
in the case of one such Mortgage Loan, representing approximately 0.4% of the
Initial Pool Balance, under which prepayment is permitted without restriction
during the 36 months preceding the maturity date and following the maturity
date).
One Mortgage Loan, representing approximately 0.2% of the Initial Pool
Balance, contains a provision that prohibits voluntary prepayment for a period
of 60 months from origination, and thereafter permits prepayment during the
next 36 months provided such prepayment is accompanied by a Yield Maintenance
Charge, and thereafter permits prepayment provided that such prepayment is
accompanied by a Prepayment Premium until approximately 6 months prior to
maturity and thereafter permits prepayment without restriction.
Certain state laws limit the amounts that a lender may collect from a
borrower as an additional charge in connection with the prepayment of a
Mortgage Loan. In addition, the enforceability of provisions that provide for
prepayment fees or penalties is unclear under the laws of many states. As a
result, such charges may not be recoverable in certain states in the event of
foreclosure. See "Certain Legal Aspects of Mortgage Loans--Default Interest and
Limitations on Prepayments".
The yield maintenance charge contained in those Mortgage Loans that
provide for the payment of a yield maintenance charge in connection with a
Principal Prepayment (a "Yield Maintenance Charge") is calculated so as to
result in a payment to the lender of an amount which is generally equal to the
present value of the remaining principal and interest payments that would have
become due had such prepayment not occurred to the extent such interest
payments would have accrued at a rate in excess of the yield to maturity, as of
the date of the prepayment, on United States Treasury securities with a
maturity generally corresponding to the Maturity Date of the related Mortgage
Loan (and in certain cases, not less than 1% of the amount of the principal
prepayment). A Yield Maintenance Charge is determined utilizing a discount rate
generally equal to the rate which, when compounded monthly, is equal to the
semi-annual yield of the corresponding Treasury securities described in the
preceding sentence (the "Yield Rate").
7 Mortgage Loans, representing approximately 9.0% of the Initial Pool
Balance, are secured by more than one Mortgaged Property. In the case of one
such Mortgage Loan, representing approximately 0.2% of the Initial Pool
Balance, the Mortgage permits the borrower to obtain the release either of the
Mortgaged Properties from the lien of the Mortgage upon (a) satisfaction of (at
least) certain debt service coverage ratio tests and (b) payment of (i) 115% or
125% of the principal amount of the Mortgage Loan allocated to the Mortgaged
Property or Mortgaged Properties being released (depending on the property
being released) and (ii) a Yield Maintenance Charge. Following a partial
prepayment the debt service payable under the Mortgage Loan will be restated in
order to amortize its unpaid principal balance over its remaining amortization
term.
Yield Maintenance Charges are distributable as described herein under
"Description of the Certificates--Distribution--Allocation of Yield Maintenance
Charges".
S-40
<PAGE>
Unless a Mortgage Loan is relatively near its stated Maturity Date or
unless the sale price or the amount of the refinancing of the related Mortgaged
Property is considerably higher than the current outstanding principal balance
of such Mortgage Loan (due to an increase in the value of the Mortgaged
Property or otherwise), the Yield Maintenance Charge may, even in a relatively
low interest rate environment, offset entirely or render insignificant any
economic benefit to be received by the borrower upon a refinancing or sale of
the Mortgaged Property. The Yield Maintenance Charge provision of a Mortgage
Loan creates an economic disincentive for the borrower to prepay such Mortgage
Loan voluntarily and, accordingly, the related borrower may elect not to prepay
such Mortgage Loan. However, there can be no assurance that the imposition of a
Yield Maintenance Charge will provide a sufficient disincentive to prevent a
voluntary principal prepayment. All of the Mortgage Loans prohibit voluntary
partial prepayments. Notwithstanding the foregoing, as described under
"General--ARD Loan" above, after the Anticipated Repayment Date, the ARD Loan
will be freely prepayable in whole or in part on and after the Anticipated
Repayment Date. You should note that the enforceability of provisions
concerning Yield Maintenance Charges has been challenged in several states.
Involuntary prepayments due to casualty or condemnation may occur at any
time without the payment of a Yield Maintenance Charge.
DEFEASANCE
273 Mortgage Loans, representing approximately 96.3% of the Initial Pool
Balance, grant the related borrower the right at any time commencing generally
three to seven years after the date of origination, to obtain the release of
the lien of the Mortgage on the Mortgaged Property or Mortgaged Properties as
applicable, by substituting for such Mortgaged Property or Mortgaged Properties
as applicable, as collateral for the related Mortgage Note, direct non-callable
obligations of the United States of America which provide for payments on or
prior to each Due Date and the Maturity Date of amounts at least equal to (and
in the case of certain Mortgage Loans that are cross-collateralized with other
Mortgage Loans, in amounts at least equal to 110% or 125% of) the amounts which
would have been payable on each such date under the terms of the related
Mortgage Loan; provided, however, that, in the case of certain Mortgage Loans,
no such defeasance will be permitted if it will result in a downgrade,
withdrawal or qualification of the then current rating on the Offered
Certificates. In the case of 216 of such Mortgage Loans, representing
approximately 87.7% of the Initial Pool Balance, such collateral substitution
is the only method of obtaining a release of the lien on the Mortgaged Property
and all voluntary prepayments are prohibited during such defeasance period.
4 Mortgage Loans, representing 8.1% of the Initial Pool Balance, are
secured by two or more Mortgaged Properties and grant the related borrower the
right, at any time commencing generally three to seven years after the date of
origination, but in all cases not less than two years after the date of
issuance of the Certificates, (i) to obtain the release of all of such
Mortgaged Properties from the lien of the Mortgage on terms substantially
similar to those described in the immediately preceding paragraph and (ii) to
obtain the release of one or more (but less than all) of such Mortgaged
Properties (the "Partial Release Mortgaged Properties") by substituting for
such Partial Release Mortgaged Properties direct, non-callable obligations of
the United States of America which provide for payments on or prior to each Due
Date in an amount at least equal to 125% (and in some cases 130%) of the
amounts payable on each such date under the terms of the related Mortgage Loan;
provided, however, that, in the case of certain Mortgage Loans, a partial
release will be permitted only if certain debt service coverage ratio and/or
loan-to-value ratio tests are satisfied by the remaining Mortgaged Property or
Properties and it will not result in a downgrade, withdrawal or qualification
of the then current rating on the Offered Certificates (as evidenced by notice
to that effect in writing from each Rating Agency then rating the
Certificates).
Releases of Properties Without Principal Reduction or Substitution of
Collateral. In the case of 4 Mortgage Loans, representing approximately 4.5% of
the Initial Pool Balance, the related Mortgage Loan Documents provide for the
release of certain parcels of real estate that secure such Mortgages but were
not ascribed value or cash flow for purposes of determining the related Net
Underwritten Cash Flow. Such real estate is generally subject to release
without reduction of the principal balance of the related
S-41
<PAGE>
Mortgage Note or substitution of additional collateral if certain zoning and
other requirements are satisfied. Such parcels were not generating cash flow as
of the date of origination and the release thereof will not result in any
reduction of the related Net Underwritten Cash Flow.
"DUE-ON-SALE" AND "DUE-ON-ENCUMBRANCE" PROVISIONS, ASSUMPTIONS
The Mortgage Loans generally contain "due-on-sale" and
"due-on-encumbrance" provisions that in each case, with limited 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 without the consent of the holder of the Mortgage;
provided, however that, under the terms of certain of the Mortgage Loans such
consent must be granted if certain conditions are met. The Special Servicer
will be required to exercise (or waive its right to exercise) any right it may
have with respect to a Mortgage Loan containing a "due-on-sale" clause (i) to
accelerate the payments thereon, or (ii) to withhold its consent to any such
sale or transfer, consistent with the Servicing Standard. However, the Special
Servicer will not be permitted to waive a due-on-sale clause under a Mortgage
Loan with a Principal Balance greater than $2.5 million if such Mortgage Loan
represents 5% or more of the aggregate Certificate Principal Balance without
first confirming that such waiver will not result in a downgrade, withdrawal or
qualification of the then current rating of any class of Offered Certificates.
With respect to a Mortgage Loan with a "due-on-encumbrance" clause, the
Servicer (with respect to Mortgage Loans that are not Specially Serviced
Mortgage Loans) and the Special Servicer (with respect to any Specially
Serviced Mortgage Loan) will be required to exercise (or waive its right to
exercise) any right it may have (i) to accelerate the payments thereon, or (ii)
to withhold its consent to the creation of any additional lien or other
encumbrance, consistent with the Servicing Standard and the terms of the
related Mortgage Loan.
Certain Mortgage Loans expressly permit the assignment of the related
Mortgaged Property to, and assumption of such Mortgage Loan by, another Person.
In the event the Servicer receives a request from a Mortgagor to make such an
assignment pursuant to the provisions of any such Mortgage Loan (other than a
Specially Serviced Mortgage Loan), the Servicer shall obtain relevant
information for purposes of evaluating such request. If the Servicer recommends
approval of such assignment, the Servicer shall provide to the Special Servicer
a copy of such recommendation and the materials upon which such recommendation
is based. The Special Servicer shall have the right to grant or withhold
consent to any such request for such assignment and assumption in accordance
with the terms of the Mortgage Loan and the Pooling and Servicing Agreement,
provided that the Special Servicer may not unreasonably withhold such consent,
and any such decision of the Special Servicer is subject to the Servicing
Standard. Failure of the Special Servicer to notify the Servicer in writing of
its determination to grant or withhold such consent within five Business Days
of the Servicer's delivery of the recommendation described above and the
relevant loan information shall be deemed to constitute a grant of such
consent.
ADDITIONAL MORTGAGE LOAN INFORMATION
The following tables set forth the specified characteristics of the
Mortgage Loans. The sum in any column may not equal the indicated total due to
rounding. The descriptions in this prospectus supplement of the Mortgage Loans
and the Mortgaged Properties are based upon the Mortgage Pool as it is expected
to be constituted as of the close of business on the Cut-Off Date, assuming
that (i) all scheduled principal and interest payments due on or before the
Cut-Off Date will be made, and (ii) there will be no principal prepayments on
or before the Cut-Off Date. Mortgage Loans may be removed from the Mortgage
Pool (i.e. not sold by the related Mortgage Loan Seller to the Depositor) as a
result of prepayments, delinquencies, incomplete documentation or otherwise, if
the Depositor or the related Mortgage Loan Seller deems such removal necessary,
appropriate or desirable. A limited number of other Mortgage Loans may be
included in the Mortgage Pool prior to the issuance of the Certificates, unless
including such Mortgage Loans would materially alter the characteristics of the
Mortgage Pool as described herein.
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 Closing Date and
will be filed, together with the Pooling and Servicing
S-42
<PAGE>
Agreement, with the Securities and Exchange Commission within fifteen days
after the initial issuance of the Offered Certificates. In the event that
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.
The following table sets forth information as of the Cut-Off Date with
respect to the types of Mortgaged Properties. As used in the following tables,
"Cut-Off Date LTV" refers to the LTV Ratio based on the scheduled Cut-Off Date
Balance and "Maturity LTV" refers to the LTV ratio as of the Maturity Date of
the Mortgage Loan based on the Principal Balance of the Mortgage Loan on its
Maturity Date (assuming all Scheduled Payments have been made as of the date
due).
S-43
<PAGE>
TYPES OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
% OF
NUMBER AGGREGATE INITIAL
OF CUT-OFF DATE POOL
PROPERTY TYPE PROPERTIES BALANCE BALANCE
- ---------------------------------- ------------ ----------------- -----------
<S> <C> <C> <C>
Multifamily ...................... 89 $ 253,352,356 23.44%
Office ........................... 45 242,724,352 22.46
Industrial/Warehouse ............. 59 159,577,025 14.77
Retail, Anchored ................. 20 91,363,800 8.45
Retail, Unanchored ............... 29 90,679,826 8.39
Theater .......................... 6 50,045,300 4.63
Mixed Use ........................ 4 33,272,889 3.08
Medical Office ................... 7 23,333,052 2.16
Retail, Big Box .................. 7 22,735,048 2.10
Hospitality, Limited Service ..... 6 21,785,655 2.02
Mobile Home Park ................. 6 21,773,309 2.01
Ministorage ...................... 10 20,157,938 1.87
Hospitality, Extended Stay ....... 8 19,876,424 1.84
Retail, Shadow/Weak Anchored...... 10 18,017,020 1.67
Hospitality, Full Service ........ 1 6,843,469 0.63
Other ............................ 3 4,039,285 0.37
Hospitality, Resort .............. 1 1,134,631 0.10
Totals/Weighted Avg .............. 311 $1,080,711,380 100.00%
=== ============== ======
<CAPTION>
WEIGHTED AVERAGES
-----------------------------------------------------------------------------------------
STATED REMAINING
MORTGAGE REMAINING AMORT CUT-OFF DATE MATURITY
PROPERTY TYPE RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV OCCUPANCY
- ---------------------------------- ------------ ------------- ------------- ---------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Multifamily ...................... 6.9554% 127 308 1.86x 60.25% 44.70% 97.76%
Office ........................... 7.2607% 121 318 1.57x 59.99% 45.87% 97.00%
Industrial/Warehouse ............. 7.0132% 130 278 1.54x 64.23% 41.75% 98.75%
Retail, Anchored ................. 7.1553% 104 304 1.90x 58.12% 47.54% 94.14%
Retail, Unanchored ............... 7.4532% 112 330 1.68x 62.13% 52.12% 95.59%
Theater .......................... 7.8984% 225 225 1.36x 64.06% 0.97% 100.00%
Mixed Use ........................ 6.8779% 127 329 1.52x 63.33% 50.18% 95.05%
Medical Office ................... 7.2556% 123 312 1.55x 64.70% 52.81% 97.73%
Retail, Big Box .................. 7.4028% 92 339 1.87x 60.96% 55.83% 100.00%
Hospitality, Limited Service ..... 8.6350% 118 292 1.70x 62.06% 51.61% 78.21%
Mobile Home Park ................. 6.8375% 141 304 1.60x 67.11% 48.77% 99.59%
Ministorage ...................... 7.2378% 133 303 2.48x 50.97% 38.91% 92.44%
Hospitality, Extended Stay ....... 8.8323% 119 294 1.56x 63.86% 53.41% 84.55%
Retail, Shadow/Weak Anchored...... 7.6166% 150 290 1.49x 64.32% 39.66% 95.57%
Hospitality, Full Service ........ 6.9750% 172 232 1.62x 63.37% 26.54% 81.40%
Other ............................ 7.8505% 125 238 1.57x 49.08% 32.19% 100.00%
Hospitality, Resort .............. 6.6550% 110 290 16.27x 8.10% 6.40% 0.00%
Totals/Weighted Avg .............. 7.2338% 127 302 1.70x 61.20% 43.93% 96.38%
</TABLE>
The following table sets forth the Range of Mortgage Rates as of the
Cut-Off Date.
RANGE OF MORTGAGE RATES AS OF CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE % OF
NUMBER NUMBER CUT-OFF INITIAL CUM. % OF
OF OF DATE POOL CUT-OFF DATE
RANGE OF MORTGAGE RATES (%) LOANS PROPERTIES BALANCE BALANCE BALANCE
- -------------------------------- -------- ------------ ----------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
5.0010% to 5.7500% ............. 6 6 $ 9,963,265 0.92% 0.92%
5.7501% to 6.2500% ............. 21 21 41,469,444 3.84 4.76%
6.2501% to 6.5000% ............. 25 25 50,442,323 4.67 9.43%
6.5001% to 6.7500% ............. 41 42 121,705,210 11.26 20.69%
6.7501% to 7.0000% ............. 47 60 261,612,604 24.21 44.90%
7.0001% to 7.2500% ............. 34 37 120,478,929 11.15 56.04%
7.2501% to 7.5000% ............. 33 35 190,003,735 17.58 73.63%
7.5001% to 7.7500% ............. 24 24 90,080,474 8.34 81.96%
7.7501% to 8.0000% ............. 18 18 52,453,470 4.85 86.81%
8.0001% to 8.5000% ............. 25 25 83,454,645 7.72 94.54%
8.5001% to 9.0000% ............. 11 18 59,047,283 5.46 100.00%
-- -- -------------- ------ ------
Totals/Weighted Avg ............ 285 311 $1,080,711,380 100.00%
=== === ============== ======
<CAPTION>
WEIGHTED AVERAGES
--------------------------------------------------------------------------------
STATED REMAINING
MORTGAGE REMAINING AMORT CUT-OFF DATE MATURITY
RANGE OF MORTGAGE RATES (%) RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV
- -------------------------------- ------------ ------------- ------------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
5.0010% to 5.7500% ............. 5.7184% 129 254 2.39x 48.18% 29.15%
5.7501% to 6.2500% ............. 6.0991% 119 282 1.98x 57.60% 39.72%
6.2501% to 6.5000% ............. 6.3781% 125 286 1.99x 58.68% 40.67%
6.5001% to 6.7500% ............. 6.6438% 143 281 1.80x 61.48% 38.21%
6.7501% to 7.0000% ............. 6.8970% 109 308 1.88x 57.54% 46.65%
7.0001% to 7.2500% ............. 7.1661% 128 307 1.91x 59.68% 42.18%
7.2501% to 7.5000% ............. 7.4055% 130 314 1.47x 62.32% 43.02%
7.5001% to 7.7500% ............. 7.5929% 132 308 1.47x 66.25% 46.86%
7.7501% to 8.0000% ............. 7.8797% 124 323 1.41x 69.09% 57.47%
8.0001% to 8.5000% ............. 8.2021% 164 285 1.41x 62.75% 33.18%
8.5001% to 9.0000% ............. 8.8209% 119 314 1.46x 66.27% 57.07%
------ --- --- ---- ----- -----
Totals/Weighted Avg ............ 7.2338% 127 302 1.70x 61.20% 43.93%
</TABLE>
S-44
<PAGE>
The following table sets forth the Mortgaged Properties by State.
MORTGAGED PROPERTIES BY STATE
<TABLE>
<CAPTION>
% OF
NUMBER AGGREGATE INITIAL
OF CUT-OFF DATE POOL
STATE PROPERTIES BALANCE BALANCE
- ------------------------------ ------------ ----------------- -----------
<S> <C> <C> <C>
California ................... 135 $ 429,744,626 39.76%
Texas ........................ 27 76,982,935 7.12
New York ..................... 10 62,845,405 5.82
Illinois ..................... 11 48,222,013 4.46
Maryland ..................... 6 37,852,882 3.50
Nevada ....................... 10 37,038,827 3.43
Colorado ..................... 10 35,261,934 3.26
Florida ...................... 9 34,461,384 3.19
Pennsylvania ................. 6 31,049,634 2.87
Arizona ...................... 9 28,386,334 2.63
Virginia ..................... 2 28,361,955 2.62
Washington ................... 9 27,226,301 2.52
Oregon ....................... 7 23,161,274 2.14
Missouri ..................... 3 21,854,114 2.02
North Carolina ............... 6 17,620,943 1.63
Michigan ..................... 5 17,608,863 1.63
Georgia ...................... 8 17,584,174 1.63
Minnesota .................... 8 14,936,034 1.38
Wisconsin .................... 3 13,637,100 1.26
Utah ......................... 4 11,844,398 1.10
Connecticut .................. 3 8,792,002 0.81
Ohio ......................... 3 8,511,847 0.79
District of Columbia ......... 2 7,500,000 0.69
Mississippi .................. 1 7,461,880 0.69
Massachusetts ................ 4 6,028,784 0.56
Kentucky ..................... 1 5,525,000 0.51
New Jersey ................... 2 4,840,850 0.45
Tennessee .................... 1 4,236,424 0.39
Indiana ...................... 2 4,063,000 0.38
Louisiana .................... 1 2,811,962 0.26
Oklahoma ..................... 1 2,005,849 0.19
Wyoming ...................... 1 1,898,110 0.18
Alaska ....................... 1 1,354,511 0.13
--- -------------- ------
Totals/Weighted Avg .......... 311 $1,080,711,380 100.00%
=== ============== ======
<CAPTION>
WEIGHTED AVERAGES
------------------------------------------------------------------------------
STATED REMAINING
MORTGAGE REMAINING AMORT CUT-OFF DATE MATURITY
STATE RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV
- ------------------------------ ------------ ------------- ------------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
California ................... 7.0620% 129 298 1.67x 62.31% 43.86%
Texas ........................ 7.0949% 128 294 1.66x 63.15% 45.09%
New York ..................... 7.4880% 120 343 1.67x 51.14% 44.71%
Illinois ..................... 7.1251% 96 244 2.27x 49.33% 37.53%
Maryland ..................... 7.3735% 118 355 1.59x 65.52% 57.57%
Nevada ....................... 6.9841% 119 309 1.67x 61.98% 49.50%
Colorado ..................... 7.5021% 186 268 1.41x 65.88% 20.66%
Florida ...................... 7.0284% 127 295 1.75x 62.80% 47.43%
Pennsylvania ................. 7.7788% 136 322 1.47x 65.60% 48.80%
Arizona ...................... 7.1953% 125 309 1.43x 68.25% 50.62%
Virginia ..................... 6.9274% 118 358 1.55x 63.74% 55.57%
Washington ................... 6.9866% 117 308 1.54x 62.74% 47.94%
Oregon ....................... 7.1628% 134 275 1.59x 54.92% 31.17%
Missouri ..................... 8.1871% 218 218 1.35x 62.90% 0.00%
North Carolina ............... 7.7106% 154 296 1.47x 68.00% 46.64%
Michigan ..................... 6.9556% 115 289 1.75x 62.81% 48.74%
Georgia ...................... 8.7577% 120 300 1.55x 63.95% 53.89%
Minnesota .................... 7.0156% 117 255 2.31x 49.84% 28.32%
Wisconsin .................... 7.2809% 90 340 1.91x 61.52% 56.46%
Utah ......................... 7.7830% 118 305 1.51x 68.81% 56.56%
Connecticut .................. 7.5274% 119 333 1.76x 52.39% 44.76%
Ohio ......................... 7.1602% 82 298 2.07x 56.32% 51.21%
District of Columbia ......... 7.1840% 71 300 6.20x 29.12% 26.43%
Mississippi .................. 8.1200% 118 358 1.28x 63.78% 57.29%
Massachusetts ................ 7.6684% 120 347 1.53x 65.95% 57.70%
Kentucky ..................... 6.8600% 120 300 1.87x 56.96% 45.38%
New Jersey ................... 8.5781% 117 340 1.49x 62.49% 55.95%
Tennessee .................... 8.7300% 117 273 1.56x 63.23% 50.89%
Indiana ...................... 6.8650% 59 0 2.48x 46.87% 46.87%
Louisiana .................... 7.3850% 108 288 1.42x 74.00% 60.73%
Oklahoma ..................... 6.7200% 114 234 1.46x 69.17% 47.15%
Wyoming ...................... 8.3400% 119 299 1.19x 73.00% 60.84%
Alaska ....................... 7.2000% 232 232 1.58x 63.00% 2.18%
------ --- --- ---- ----- -----
Totals/Weighted Avg .......... 7.2338% 127 302 1.70x 61.20% 43.93%
</TABLE>
S-45
<PAGE>
The following table sets forth the original term and the remaining term of the
Mortgaged Loans.
RANGE OF ORIGINAL TERMS IN MONTHS
<TABLE>
<CAPTION>
AGGREGATE % OF
NUMBER NUMBER CUT-OFF INITIAL
RANGE OF ORIGINAL TERM OF OF DATE POOL
TO MATURITY (MOS.) LOANS PROPERTIES BALANCE BALANCE
- --------------------------- -------- ------------ ----------------- -----------
<S> <C> <C> <C> <C>
51 to 70 .................. 2 15 $ 63,450,000 5.87%
71 to 100 ................. 5 5 52,953,122 4.90
101 to 120 ................ 201 211 746,778,707 69.10
121 to 140 ................ 2 2 2,877,277 0.27
141 to 160 ................ 2 2 8,843,509 0.82
161 to 180 ................ 44 45 101,209,393 9.37
201 to 241 ................ 29 31 104,599,373 9.68
--- --- -------------- ------
Totals/Weighted Avg ....... 285 311 $1,080,711,380 100.00%
=== === ============== ======
<CAPTION>
WEIGHTED AVERAGES
------------------------------------------------------------------------------
STATED REMAINING
RANGE OF ORIGINAL TERM MORTGAGE REMAINING AMORT CUT-OFF DATE MATURITY
TO MATURITY (MOS.) RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV
- --------------------------- ------------ ------------- ------------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
51 to 70 .................. 6.8797% 59 0 2.94x 44.11% 44.11%
71 to 100 ................. 7.2984% 78 346 1.46x 60.25% 55.51%
101 to 120 ................ 7.2734% 116 319 1.66x 62.70% 52.33%
121 to 140 ................ 6.6225% 114 233 1.54x 57.47% 39.00%
141 to 160 ................ 6.7276% 137 215 1.61x 53.70% 23.83%
161 to 180 ................ 6.9525% 173 235 1.60x 58.76% 20.37%
201 to 241 ................ 7.4647% 231 234 1.45x 64.40% 2.61%
------ --- --- ---- ----- -----
Totals/Weighted Avg ....... 7.2338% 127 302 1.70x 61.20% 43.93%
</TABLE>
RANGE OF REMAINING TERMS IN MONTHS
<TABLE>
<CAPTION>
AGGREGATE % OF
NUMBER NUMBER CUT-OFF INITIAL
RANGE OF REMAINING TERMS OF OF DATE POOL
(MOS.) LOANS PROPERTIES BALANCE BALANCE
- ----------------------------- -------- ------------ ----------------- -----------
<S> <C> <C> <C> <C>
51 to 70 .................... 2 15 $ 63,450,000 5.87%
71 to 100 ................... 5 5 52,953,122 4.90
101 to 120 .................. 203 213 749,655,984 69.37
121 to 140 .................. 2 2 8,843,509 0.82
141 to 180 .................. 44 45 101,209,393 9.37
181 to 240 .................. 29 31 104,599,373 9.68
--- --- -------------- ------
Totals/Weighted Avg ......... 285 311 $1,080,711,380 100.00%
=== === ============== ======
<CAPTION>
WEIGHTED AVERAGES
------------------------------------------------------------------------------
STATED REMAINING
RANGE OF REMAINING TERMS MORTGAGE REMAINING AMORT CUT-OFF DATE MATURITY
(MOS.) RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV
- ----------------------------- ------------ ------------- ------------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
51 to 70 .................... 6.8797% 59 0 2.94x 44.11% 44.11%
71 to 100 ................... 7.2984% 78 346 1.46x 60.25% 55.51%
101 to 120 .................. 7.2709% 116 319 1.66x 62.68% 52.28%
121 to 140 .................. 6.7276% 137 215 1.61x 53.70% 23.83%
141 to 180 .................. 6.9525% 173 235 1.60x 58.76% 20.37%
181 to 240 .................. 7.4647% 231 234 1.45x 64.40% 2.61%
------ --- --- ---- ----- -----
Totals/Weighted Avg ......... 7.2338% 127 302 1.70x 61.20% 43.93%
</TABLE>
The following table sets forth the range of original amortization periods of the
Mortgage Loans.
<PAGE>
RANGE OF ORIGINAL AMORTIZATION TERMS IN MONTHS
<TABLE>
<CAPTION>
AGGREGATE % OF
NUMBER NUMBER CUT-OFF INITIAL
RANGE OF ORIGINAL OF OF DATE POOL
AMORTIZATION TERM (MOS.) LOANS PROPERTIES BALANCE BALANCE
- ----------------------------- -------- ------------ ----------------- -----------
<S> <C> <C> <C> <C>
0 to 59 ..................... 3 16 $ 71,100,000 6.58%
60 to 120 ................... 4 4 6,488,896 0.60
121 to 180 .................. 28 29 57,448,212 5.32
181 to 240 .................. 45 45 132,745,807 12.28
241 to 300 .................. 116 125 394,803,743 36.53
301 to 360 .................. 89 92 418,124,723 38.69
--- --- -------------- ------
Totals/Weighted Avg ......... 285 311 $1,080,711,380 100.00%
=== === ============== ======
<CAPTION>
WEIGHTED AVERAGES
------------------------------------------------------------------------------
STATED REMAINING
RANGE OF ORIGINAL MORTGAGE REMAINING AMORT CUT-OFF DATE MATURITY
AMORTIZATION TERM (MOS.) RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV
- ----------------------------- ------------ ------------- ------------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
0 to 59 ..................... 6.8738% 65 0 2.86x 43.38% 43.38%
60 to 120 ................... 7.0603% 113 113 1.65x 41.57% 0.14%
121 to 180 .................. 6.9195% 166 170 1.53x 52.90% 2.22%
181 to 240 .................. 7.3309% 206 231 1.48x 63.26% 9.81%
241 to 300 .................. 7.2451% 121 295 1.67x 63.14% 49.96%
301 to 360 .................. 7.2994% 114 353 1.62x 63.19% 55.57%
------ --- --- ---- ----- -----
Totals/Weighted Avg ......... 7.2338% 127 302 1.70x 61.20% 43.93%
</TABLE>
S-46
<PAGE>
The following table sets forth the years of scheduled maturity of the Mortgage
Loans.
YEARS OF SCHEDULED MATURITY OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
CUM. %
AGGREGATE % OF OF
NUMBER NUMBER CUT-OFF INITIAL CUT-OFF
SCHEDULED OF OF DATE POOL DATE
MATURITY YEAR LOANS PROPERTIES BALANCE BALANCE BALANCE
- -------------------- -------- ------------ ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
2004 ............... 2 15 $ 63,450,000 5.87% 5.87%
2005 ............... 1 1 1,288,668 0.12 5.99%
2006 ............... 4 4 51,664,454 4.78 10.77%
2008 ............... 88 89 207,197,995 19.17 29.94%
2009 ............... 115 124 542,457,988 50.19 80.14%
2010 ............... 1 1 4,446,767 0.41 80.55%
2011 ............... 1 1 4,396,742 0.41 80.96%
2013 ............... 34 35 76,689,837 7.10 88.05%
2014 ............... 10 10 24,519,555 2.27 90.32%
2015 ............... 2 2 3,731,051 0.35 90.67%
2018 ............... 19 19 61,093,852 5.65 96.32%
2019 ............... 8 10 39,774,471 3.68 100.00%
--- --- -------------- ------ ------
Totals/Weighted Avg 285 311 $1,080,711,380 100.00%
=== === ============== ======
<CAPTION>
WEIGHTED AVERAGES
------------------------------------------------------------------------------
STATED REMAINING
SCHEDULED MORTGAGE REMAINING AMORT CUT-OFF DATE MATURITY
MATURITY YEAR RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV
- -------------------- ------------ ------------- ------------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
2004 ............... 6.8797% 59 0 2.94x 44.11% 44.11%
2005 ............... 6.7800% 77 293 1.67x 58.58% 51.50%
2006 ............... 7.3113% 78 347 1.45x 60.29% 55.61%
2008 ............... 6.7182% 112 310 1.81x 62.77% 51.15%
2009 ............... 7.4820% 117 323 1.60x 62.65% 52.71%
2010 ............... 6.7450% 135 291 1.57x 65.39% 47.39%
2011 ............... 6.7100% 139 139 1.66x 41.87% 0.00%
2013 ............... 6.7944% 172 246 1.62x 61.06% 24.25%
2014 ............... 7.4472% 176 202 1.51x 51.57% 8.24%
2015 ............... 6.6301% 195 195 1.69x 51.86% 0.35%
2018 ............... 7.1556% 231 231 1.46x 64.77% 1.61%
2019 ............... 8.0177% 234 242 1.41x 65.01% 4.37%
------ --- --- ---- ----- -----
Totals/Weighted Avg 7.2338% 127 302 1.70x 61.20% 43.93%
</TABLE>
The following table sets forth the range of years in which the Mortgaged
Properties were built or renovated.
RANGE OF YEARS BUILT/RENOVATED FOR MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
% OF
NUMBER AGGREGATE INITIAL
RANGE OF OF CUT-OFF DATE POOL
YEARS BUILT/RENOVATED PROPERTIES BALANCE BALANCE
- ----------------------------- ------------ ----------------- -----------
<S> <C> <C> <C>
1900 to 1919 ................ 1 $ 1,629,491 0.15%
1920 to 1939 ................ 2 26,966,457 2.50
1940 to 1959 ................ 6 17,780,889 1.65
1960 to 1969 ................ 17 36,051,931 3.34
1970 to 1979 ................ 35 97,857,065 9.05
1980 to 1989 ................ 105 352,050,361 32.58
1990 to 1998 ................ 145 548,375,187 50.74
--- -------------- ------
Totals/Weighted Avg ......... 311 $1,080,711,380 100.00%
=== ============== ======
<PAGE>
<CAPTION>
WEIGHTED AVERAGES
------------------------------------------------------------------------------
STATED REMAINING
RANGE OF MORTGAGE REMAINING AMORT CUT-OFF DATE MATURITY
YEARS BUILT/RENOVATED RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV
- ----------------------------- ------------ ------------- ------------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
1900 to 1919 ................ 6.1500% 111 291 1.75x 70.85% 55.84%
1920 to 1939 ................ 7.4150% 118 355 1.64x 52.27% 45.88%
1940 to 1959 ................ 6.9721% 97 314 3.50x 48.73% 40.17%
1960 to 1969 ................ 6.9431% 127 281 1.84x 57.24% 38.07%
1970 to 1979 ................ 6.9579% 129 292 1.95x 59.87% 42.49%
1980 to 1989 ................ 7.1291% 124 312 1.64x 61.70% 46.12%
1990 to 1998 ................ 7.3721% 131 296 1.62x 62.19% 43.15%
------ --- --- ---- ----- -----
Totals/Weighted Avg ......... 7.2338% 127 302 1.70x 61.20% 43.93%
</TABLE>
S-47
<PAGE>
The following tables set forth a range of Debt Service Coverage Ratios for
the Mortgage Loans as of the Cut-Off Date. The "Debt Service Coverage Ratio" or
"DSCR" for any Mortgage Loan is the ratio of (i) Underwritten Cash Flow
produced by the related Mortgaged Property or Mortgaged Properties to (ii) the
aggregate amount of the Scheduled Payments due for the 12-month period
immediately following the Cut-Off Date.
RANGE OF DEBT SERVICE COVERAGE RATIOS AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
% OF
RANGE OF NUMBER NUMBER AGGREGATE INITIAL
DEBT SERVICE OF OF CUT-OFF DATE POOL
COVERAGE RATIOS LOANS PROPERTIES BALANCE BALANCE
- ---------------------- -------- ------------ ----------------- -----------
<S> <C> <C> <C> <C>
1.04x to 1.14x ....... 1 1 $ 6,806,976 0.63%
1.15x to 1.19x ....... 5 5 10,945,362 1.01
1.20x to 1.24x ....... 6 6 12,719,273 1.18
1.25x to 1.29x ....... 15 15 43,658,678 4.04
1.30x to 1.34x ....... 18 18 73,134,184 6.77
1.35x to 1.39x ....... 29 29 123,414,142 11.42
1.40x to 1.44x ....... 22 24 104,594,096 9.68
1.45x to 1.49x ....... 24 24 86,820,953 8.03
1.50x to 1.59x ....... 38 47 165,997,315 15.36
1.60x to 1.69x ....... 36 38 138,393,448 12.81
1.70x to 1.79x ....... 26 26 92,061,575 8.52
1.80x to 1.89x ....... 23 23 70,723,998 6.54
1.90x to 1.99x ....... 7 7 23,318,123 2.16
2.00x to 2.49x ....... 16 29 94,306,199 8.73
2.50x to 2.99x ....... 7 7 11,021,942 1.02
3.00x to 6.49x ....... 10 10 15,660,486 1.45
6.50x to 16.50x ...... 2 2 7,134,631 0.66
-- -- -------------- ------
Totals/Weighted Avg .. 285 311 $1,080,711,380 100.00%
=== === ============== ======
<CAPTION>
WEIGHTED AVERAGES
----------------------------------------------------------------------------
RANGE OF STATED REMAINING
DEBT SERVICE MORTGAGE REMAINING AMORT CUT-OFF DATE MATURITY
COVERAGE RATIOS RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV
- ---------------------- ------------ ------------- ------------- ---------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1.04x to 1.14x ....... 7.3600% 171 171 1.04x 68.07% 1.41%
1.15x to 1.19x ....... 7.3507% 186 218 1.18x 69.72% 11.58%
1.20x to 1.24x ....... 7.2255% 174 258 1.22x 67.45% 25.26%
1.25x to 1.29x ....... 7.7940% 153 298 1.27x 68.46% 40.80%
1.30x to 1.34x ....... 7.7003% 158 279 1.32x 69.62% 36.33%
1.35x to 1.39x ....... 7.6756% 121 312 1.37x 66.00% 50.02%
1.40x to 1.44x ....... 7.3029% 140 310 1.42x 68.74% 48.46%
1.45x to 1.49x ....... 7.2457% 129 318 1.47x 65.61% 49.64%
1.50x to 1.59x ....... 7.4654% 117 307 1.55x 64.04% 51.70%
1.60x to 1.69x ....... 6.9526% 129 305 1.65x 59.45% 42.76%
1.70x to 1.79x ....... 6.9058% 133 302 1.75x 59.24% 41.78%
1.80x to 1.89x ....... 6.9426% 126 294 1.86x 56.12% 41.21%
1.90x to 1.99x ....... 6.9760% 124 316 1.96x 52.08% 40.91%
2.00x to 2.49x ....... 6.7893% 84 296 2.36x 46.95% 42.88%
2.50x to 2.99x ....... 6.4123% 129 280 2.72x 41.06% 28.99%
3.00x to 6.49x ....... 6.3890% 130 330 4.05x 28.71% 21.56%
6.50x to 16.50x ...... 6.9620% 67 290 8.78x 16.13% 15.86%
------ --- --- ---- ----- -----
Totals/Weighted Avg .. 7.2338% 127 302 1.70x 61.20% 43.93%
</TABLE>
S-48
<PAGE>
The following table sets forth the range of Stated Principal Balances as of the
Cut-Off Date.
RANGE OF PRINCIPAL BALANCES AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
% OF
NUMBER NUMBER AGGREGATE INITIAL
RANGE OF CUT-OFF OF OF CUT-OFF DATE POOL
DATE BALANCES LOANS PROPERTIES BALANCE BALANCE
- ---------------------------- -------- ------------ ----------------- -----------
<S> <C> <C> <C> <C>
$ 1 to $ 999,999.. 27 27 $ 22,796,745 2.11%
$ 1,000,000 to $ 1,999,999.. 94 94 140,525,737 13.00
$ 2,000,000 to $ 3,999,999.. 91 93 255,818,239 23.67
$ 4,000,000 to $ 5,999,999.. 33 37 164,084,844 15.18
$ 6,000,000 to $ 7,999,999.. 16 16 110,084,453 10.19
$ 8,000,000 to $ 9,999,999.. 8 9 73,391,537 6.79
$10,000,000 to $11,999,999.. 4 4 44,238,566 4.09
$12,000,000 to $13,999,999.. 1 1 12,825,000 1.19
$14,000,000 to $15,999,999.. 3 9 46,906,945 4.34
$18,000,000 to $19,999,999.. 3 3 56,132,671 5.19
$20,000,000 to $24,999,999.. 2 2 45,288,734 4.19
$25,000,000 to $26,999,999.. 2 2 51,167,910 4.73
$27,000,000 to $59,999,999.. 1 14 57,450,000 5.32
-- -- -------------- ------
Totals/Weighted Avg ........ 285 311 $1,080,711,380 100.00%
=== === ============== ======
<CAPTION>
WEIGHTED AVERAGES
------------------------------------------------------------------------------
STATED REMAINING
RANGE OF CUT-OFF MORTGAGE REMAINING AMORT CUT-OFF DATE MATURITY
DATE BALANCES RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV
- ---------------------------- ------------ ------------- ------------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 1 to $ 999,999.. 6.7611% 143 262 1.89x 56.00% 29.94%
$ 1,000,000 to $ 1,999,999.. 6.9815% 134 282 1.82x 59.54% 38.64%
$ 2,000,000 to $ 3,999,999.. 7.2567% 139 289 1.66x 61.62% 39.84%
$ 4,000,000 to $ 5,999,999.. 7.3099% 125 309 1.54x 64.72% 50.43%
$ 6,000,000 to $ 7,999,999.. 7.2066% 129 301 1.92x 57.64% 39.24%
$ 8,000,000 to $ 9,999,999.. 7.5668% 136 320 1.44x 70.48% 52.04%
$10,000,000 to $11,999,999.. 7.2701% 132 302 1.57x 61.58% 39.97%
$12,000,000 to $13,999,999.. 7.0000% 120 300 1.69x 64.77% 51.84%
$14,000,000 to $15,999,999.. 7.7514% 119 339 1.60x 63.65% 55.19%
$18,000,000 to $19,999,999.. 7.2923% 153 293 1.57x 63.49% 35.20%
$20,000,000 to $24,999,999.. 7.0693% 117 327 1.49x 65.30% 54.88%
$25,000,000 to $26,999,999.. 7.4076% 98 356 1.51x 55.48% 50.40%
$27,000,000 to $59,999,999.. 6.8650% 59 0 2.48x 46.87% 46.87%
------ --- --- ---- ----- -----
Totals/Weighted Avg ........ 7.2338% 127 302 1.70x 61.20% 43.93%
</TABLE>
S-49
<PAGE>
The following two tables set forth the range of LTV Ratios of the Mortgage
Loans as of the Cut-Off Date and the Maturity Date of the Mortgage Loans. An
"LTV Ratio" for any Mortgage Loan, as of any date of determination, is a
fraction, expressed as a percentage, the numerator of which is the principal
balance of such Mortgage Loan as of such date (assuming no defaults or
prepayments on such Mortgage Loan prior to such date), and the denominator of
which is the appraised value of the related Mortgaged Property or Mortgaged
Properties as determined by an appraisal thereof obtained in connection with
the origination of such Mortgage Loan. The LTV Ratio as of the Maturity Date
described below was calculated based on the principal balance of the related
Mortgage Loan on the Maturity Date, assuming that all Mortgage Loans are repaid
at their expected Maturity Dates. In addition, because it is based on the value
of a Mortgaged Property determined as of loan origination, the information set
forth in the table below is not necessarily a reliable measure of the related
borrower's current equity in each Mortgaged Property or of the borrower's
equity in each Mortgaged Property as of the Maturity Date of the Mortgage Loan.
In a declining real estate market, the appraised value of a Mortgaged Property
could have decreased from the appraised value determined at origination, and
the LTV Ratio of a Mortgage Loan as of the Maturity Date may be higher than its
LTV Ratio at origination, even after taking into account amortization since
origination.
S-50
<PAGE>
RANGE OF LOAN TO VALUE RATIOS AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
% OF CUM. % OF
NUMBER NUMBER AGGREGATE INITIAL CUT-OFF
RANGE OF CUT-OFF DATE OF OF CUT-OFF DATE POOL DATE
LTV RATIOS LOANS PROPERTIES BALANCE BALANCE BALANCE
- -------------------------- -------- ------------ ----------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
0.00% to 30.00% ......... 10 10 $ 19,911,067 1.84% 1.84%
30.01% to 40.00% ......... 8 8 19,965,517 1.85 3.69%
40.01% to 45.00% ......... 14 14 28,977,787 2.68 6.37%
45.01% to 50.00% ......... 12 26 84,751,171 7.84 14.21%
50.01% to 55.00% ......... 36 36 104,299,997 9.65 23.86%
55.01% to 60.00% ......... 33 33 161,708,020 14.96 38.83%
60.01% to 65.00% ......... 55 61 246,360,677 22.80 61.62%
65.01% to 70.00% ......... 46 49 177,882,789 16.46 78.08%
70.01% to 75.00% ......... 63 65 212,613,090 19.67 97.76%
75.01% to 80.00% ......... 8 9 24,241,267 2.24 100.00%
Totals/Weighted Avg ...... 285 311 $1,080,711,380 100.00%
=== === ============== ======
<CAPTION>
WEIGHTED AVERAGES
------------------------------------------------------------------------------
STATED REMAINING
RANGE OF CUT-OFF DATE MORTGAGE REMAINING AMORT CUT-OFF DATE MATURITY
LTV RATIOS RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV
- -------------------------- ------------ ------------- ------------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
0.00% to 30.00% ......... 6.6328% 113 285 5.77x 21.85% 14.35%
30.01% to 40.00% ......... 6.8866% 125 261 2.44x 35.56% 25.87%
40.01% to 45.00% ......... 7.1252% 136 257 1.95x 42.46% 21.68%
45.01% to 50.00% ......... 6.8616% 87 273 2.28x 47.12% 39.85%
50.01% to 55.00% ......... 7.0673% 137 289 1.68x 52.07% 32.16%
55.01% to 60.00% ......... 7.1524% 118 311 1.67x 58.01% 43.81%
60.01% to 65.00% ......... 7.3861% 131 302 1.56x 63.20% 45.96%
65.01% to 70.00% ......... 7.3924% 141 299 1.44x 67.81% 43.94%
70.01% to 75.00% ......... 7.2972% 129 316 1.42x 72.55% 55.49%
75.01% to 80.00% ......... 7.4364% 145 327 1.37x 78.47% 53.31%
Totals/Weighted Avg ...... 7.2338% 127 302 1.70x 61.20% 43.93%
</TABLE>
RANGE OF LOAN TO VALUE RATIOS AT MATURITY
<TABLE>
<CAPTION>
% OF
NUMBER NUMBER AGGREGATE INITIAL CUM. % OF
RANGE OF MATURITY OF OF CUT-OFF DATE POOL CUT-OFF
LTV RATIOS LOANS PROPERTIES BALANCE BALANCE DATE BALANCE
- ----------------------------- -------- ------------ ----------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
0.00% to 10.00% ............ 58 59 $ 159,734,826 14.78% 14.78%
10.01% to 20.00% ............ 4 4 10,416,457 0.96 15.74%
20.01% to 30.00% ............ 14 16 34,305,854 3.17 18.92%
30.01% to 35.00% ............ 7 7 12,530,568 1.16 20.08%
35.01% to 40.00% ............ 16 16 38,343,120 3.55 23.63%
40.01% to 45.00% ............ 24 24 83,942,354 7.77 31.39%
45.01% to 50.00% ............ 35 48 176,491,187 16.33 47.72%
50.01% to 55.00% ............ 40 46 202,055,247 18.70 66.42%
55.01% to 60.00% ............ 47 48 200,568,354 18.56 84.98%
60.01% to 65.00% ............ 31 33 126,848,501 11.74 96.72%
65.01% to 70.00% ............ 6 7 22,049,414 2.04 98.76%
70.01% to 75.00% ............ 3 3 13,425,497 1.24 100.00%
-- -- -------------- ------ ------
Totals/Weighted Avg ......... 285 311 $1,080,711,380 100.00%
=== === ============== ======
<PAGE>
<CAPTION>
WEIGHTED AVERAGES
----------------------------------------------------------------------------
STATED REMAINING
RANGE OF MATURITY MORTGAGE REMAINING AMORT CUT-OFF DATE MATURITY
LTV RATIOS RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV
- ----------------------------- ------------ ------------- ------------- ---------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
0.00% to 10.00% ............ 7.2835% 205 206 1.59x 59.05% 1.01%
10.01% to 20.00% ............ 6.9094% 88 290 5.74x 24.00% 17.29%
20.01% to 30.00% ............ 6.8683% 156 278 2.42x 48.30% 26.45%
30.01% to 35.00% ............ 6.4376% 138 275 2.06x 56.03% 32.07%
35.01% to 40.00% ............ 6.9561% 127 302 1.97x 46.71% 37.00%
40.01% to 45.00% ............ 7.1598% 120 317 1.74x 53.62% 43.59%
45.01% to 50.00% ............ 6.8771% 102 300 1.95x 56.07% 46.97%
50.01% to 55.00% ............ 7.2601% 113 315 1.61x 62.84% 52.45%
55.01% to 60.00% ............ 7.5566% 113 330 1.45x 67.02% 57.49%
60.01% to 65.00% ............ 7.3624% 113 345 1.44x 71.29% 62.38%
65.01% to 70.00% ............ 7.4426% 116 356 1.39x 75.01% 66.37%
70.01% to 75.00% ............ 7.7394% 119 359 1.33x 79.70% 70.90%
------ --- --- ---- ----- -----
Totals/Weighted Avg ......... 7.2338% 127 302 1.70x 61.20% 43.93%
</TABLE>
S-51
<PAGE>
The following table sets forth the Mortgage Loans subject to
lockout/prepayment restrictions, expressed a percentage of the outstanding
principal balance at each period, assuming that each Mortgage Loan is repaid on
its respective Maturity Date.
REMAINING POOL BALANCE SUBJECT TO PREPAYMENT RESTRICTIONS
<TABLE>
<CAPTION>
(greater than) 1%
PERIOD LOCKOUT FLEX OR YM(1) 5%(2) 4%(2)
- ----------------- ----------------------- ------------------ ------------------ ------------------ ------------------
$ (MM) % $ (MM) % $ (MM) % $ (MM) % $ (MM) %
------------ ---------- -------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current 7/1/99 .. 1,071.0 99.1% -- 0.0% -- 0.0% -- 0.0% -- 0.0%
Year 1 7/1/00 ... 1,055.7 99.1% -- 0.0% -- 0.0% -- 0.0% -- 0.0%
Year 2 7/1/01 ... 1,035.3 98.8% 3.7 0.4% -- 0.0% -- 0.0% -- 0.0%
Year 3 7/1/02 ... 930.8 90.3% 76.1 7.4% 8.4 0.8% 5.8 0.6% -- 0.0%
Year 4 7/1/03 ... 903.3 89.4% 75.5 7.5% 17.5 1.7% 5.5 0.5% -- 0.0%
Year 5 7/1/04 ... 811.2 87.5% 80.9 8.7% 20.5 2.2% 5.3 0.6% -- 0.0%
Year 6 7/1/05 ... 792.6 87.7% 77.1 8.5% 19.8 2.2% -- 0.0% 5.0 0.6%
Year 7 7/1/06 ... 724.0 87.0% 75.2 9.0% 19.4 2.3% -- 0.0% -- 0.0%
Year 8 7/1/07 ... 703.3 87.2% 72.2 9.0% 17.3 2.1% 1.2 0.2% -- 0.0%
Year 9 7/1/08 ... 575.1 75.2% 38.3 5.0% 5.5 0.7% 1.1 0.1% -- 0.0%
Year 10 7/1/09 .. 112.0 82.7% 15.9 11.8% 3.2 2.4% -- 0.0% 0.9 0.7%
Year 11 7/1/10 .. 102.9 83.0% 14.5 11.7% 2.6 2.1% -- 0.0% -- 0.0%
Year 12 7/1/11 .. 93.3 85.9% 12.9 11.9% 1.9 1.7% -- 0.0% -- 0.0%
Year 13 7/1/12 .. 83.4 86.8% 11.3 11.7% 1.1 1.2% -- 0.0% -- 0.0%
Year 14 7/1/13 .. 49.0 59.8% 2.8 3.5% -- 0.0% -- 0.0% -- 0.0%
Year 15 7/1/14 .. 37.6 95.1% 1.9 4.9% -- 0.0% -- 0.0% -- 0.0%
Year 16 7/1/15 .. 30.5 95.0% 1.5 4.6% -- 0.0% -- 0.0% -- 0.0%
Year 17 7/1/16 .. 23.1 95.4% 1.1 4.6% -- 0.0% -- 0.0% -- 0.0%
Year 18 7/1/17 .. 15.2 95.4% 0.7 4.6% -- 0.0% -- 0.0% -- 0.0%
Year 19 7/1/18 .. 4.2 65.8% 0.1 1.9% -- 0.0% -- 0.0% -- 0.0%
Year 20 7/1/19 .. -- 0.0% -- 0.0% -- 0.0% -- 0.0% -- 0.0%
<CAPTION>
PREPAYABLE
PERIOD 3%(2) 2%(2) 1%(2) WITHOUT PENALTY TOTALS
- ----------------- ------------------ ------------------ ------------------ ------------------ ------------------------------------
% OF % OF
$ (MM) % $ (MM) % $ (MM) % $ (MM) % $ (MM) TOTAL IPB(3)
-------- --------- -------- --------- -------- --------- -------- --------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current 7/1/99 .. 9.7 0.9% -- 0.0% -- 0.0% -- 0.0% 1,080.7 100.0% 100.0%
Year 1 7/1/00 ... 9.5 0.9% -- 0.0% -- 0.0% -- 0.0% 1,065.2 100.0% 98.6%
Year 2 7/1/01 ... 9.4 0.9% -- 0.0% -- 0.0% -- 0.0% 1,048.4 100.0% 97.0%
Year 3 7/1/02 ... -- 0.0% 9.2 0.9% -- 0.0% -- 0.0% 1,030.3 100.0% 95.3%
Year 4 7/1/03 ... -- 0.0% 9.0 0.9% -- 0.0% -- 0.0% 1,010.9 100.0% 93.5%
Year 5 7/1/04 ... -- 0.0% 8.8 1.0% -- 0.0% -- 0.0% 926.7 100.0% 85.7%
Year 6 7/1/05 ... -- 0.0% -- 0.0% 8.6 1.0% 1.1 0.1% 904.3 100.0% 83.7%
Year 7 7/1/06 ... 4.7 0.6% -- 0.0% 8.4 1.0% -- 0.0% 831.7 100.0% 77.0%
Year 8 7/1/07 ... -- 0.0% 4.4 0.5% 8.2 1.0% -- 0.0% 806.6 100.0% 74.6%
Year 9 7/1/08 ... -- 0.0% -- 0.0% -- 0.0% 144.3 18.9% 764.3 100.0% 70.7%
Year 10 7/1/09 .. -- 0.0% -- 0.0% -- 0.0% 3.4 2.5% 135.4 100.0% 12.5%
Year 11 7/1/10 .. 0.7 0.6% -- 0.0% -- 0.0% 3.3 2.6% 123.9 100.0% 11.5%
Year 12 7/1/11 .. -- 0.0% 0.5 0.5% -- 0.0% -- 0.0% 108.7 100.0% 10.1%
Year 13 7/1/12 .. -- 0.0% -- 0.0% 0.3 0.3% -- 0.0% 96.1 100.0% 8.9%
Year 14 7/1/13 .. -- 0.0% -- 0.0% -- 0.0% 30.1 36.7% 81.9 100.0% 7.6%
Year 15 7/1/14 .. -- 0.0% -- 0.0% -- 0.0% -- 0.0% 39.6 100.0% 3.7%
Year 16 7/1/15 .. -- 0.0% -- 0.0% -- 0.0% 0.1 0.4% 32.1 100.0% 3.0%
Year 17 7/1/16 .. -- 0.0% -- 0.0% -- 0.0% -- 0.0% 24.3 100.0% 2.2%
Year 18 7/1/17 .. -- 0.0% -- 0.0% -- 0.0% -- 0.0% 16.0 100.0% 1.5%
Year 19 7/1/18 .. -- 0.0% -- 0.0% -- 0.0% 2.0 32.3% 6.3 100.0% 0.6%
Year 20 7/1/19 .. -- 0.0% -- 0.0% -- 0.0% -- 0.0% -- 0.0% 0.0%
</TABLE>
- -------
(1) As used above, "YM" means Yield Maintenance Charge.
(2) Prepayment Premium as a percentage of the unpaid principal balance at the
time of prepayment.
(3) As used above, "IPB" means Initial Pool Balance.
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<PAGE>
MORTGAGE LOANS BY ORIGINATOR
<TABLE>
<CAPTION>
% OF
AGGREGATE INITIAL
NUMBER OF NUMBER OF CUT-OFF DATE POOL
ORIGINATORS LOANS PROPERTIES BALANCE BALANCE
- --------------------- ----------- ------------ ----------------- -----------
<S> <C> <C> <C> <C>
BSCMI ............... 68 90 $ 382,342,371 35.38%
Wells Fargo ......... 217 221 698,369,009 64.62
--- --- -------------- ------
Totals/Weighted
Avg ................ 285 311 $1,080,711,380 100.00%
=== === ============== ======
<CAPTION>
WEIGHTED AVERAGES
------------------------------------------------------------------------
REMAINING
STATED AMORT CUT-OFF
MORTGAGE REMAINING TERM DATE MATURITY
ORIGINATORS RATE TERM (MOS.) (MOS.) DSCR LTV LTV
- --------------------- ------------ ------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BSCMI ............... 7.6153% 110 336 1.81x 58.58% 51.48%
Wells Fargo ......... 7.0249% 137 287 1.64x 62.63% 39.79%
------ --- --- ---- ----- -----
Totals/Weighted
Avg ................ 7.2338% 127 302 1.70x 61.20% 43.93%
</TABLE>
The following table sets forth certain characteristics of the ten largest
Mortgage Loans.
TEN LARGEST MORTGAGE LOANS
<TABLE>
<CAPTION>
AGGREGATE % OF
NUMBER OF CUT-OFF DATE POOL
TOP TEN PROPERTIES BALANCE BALANCE
- ------------------------------ ------------ -------------- ---------
<S> <C> <C> <C>
Inland Portfolio ............. 14 $ 57,450,000 5.32%
Wehrenberg Portfolio ......... 5 31,555,731 2.92
Pleasanton Office
Portfolio ................... 1 25,701,453 2.38
225 Broadway ................. 1 25,466,457 2.36
(7) CompuCom Systems
Headquarters Loan ........... 1 22,921,816 2.12
(8) King Street Metro
Place -- Phase 1 Loan 1 22,366,917 2.07
(9) 800 West El Camino
Real ........................ 1 19,356,534 1.79
Torrey Reserve North
Loan Group .................. 2 19,235,870 1.78
(10) AMC Theatres ............ 1 18,489,569 1.71
Brinkley House
Apartments .................. 1 15,986,768 1.48
-- ------------ -----
Totals/Weighted Avg .......... 28 $258,531,116 23.92%
== ============ =====
<CAPTION>
WEIGHTED AVERAGES
----------------------------------------------------------------
MORTGAGE REMAINING CUT-OFF DATE MATURITY
TOP TEN RATE TERM (MOS.) DSCR LTV LTV
- ------------------------------ ------------ ------------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Inland Portfolio ............. 6.8650% 59 2.48x 46.87% 46.87%
Wehrenberg Portfolio ......... 8.2080% 223 1.40x 60.79% 0.00%
Pleasanton Office
Portfolio ................... 7.4250% 79 1.37x 59.98% 55.80%
225 Broadway ................. 7.3900% 118 1.65x 50.93% 44.95%
(7) CompuCom Systems
Headquarters Loan ........... 7.2150% 117 1.55x 63.67% 51.46%
(8) King Street Metro
Place -- Phase 1 Loan 6.9200% 118 1.43x 66.97% 58.39%
(9) 800 West El Camino
Real ........................ 6.9700% 114 1.89x 56.76% 45.70%
Torrey Reserve North
Loan Group .................. 7.5550% 119 1.49x 64.62% 57.23%
(10) AMC Theatres ............ 7.3700% 228 1.30x 69.64% 2.63%
Brinkley House
Apartments .................. 6.9550% 119 1.76x 59.21% 51.63%
------ --- ---- ----- -----
Totals/Weighted Avg .......... 7.2730% 121 1.74x 58.95% 41.07%
</TABLE>
TEN LARGEST MORTGAGE LOANS
Annex B contains a brief summary of the ten largest Mortgage Loans
(including cross-collateralized Mortgage Loans) in the pool. The ten largest
Mortgage Loans represent, in the aggregate, less than 23.9% of the Initial Pool
Balance and no single Mortgage Loan represents more than 5.3% of the Initial
Pool Balance. The Cut-Off Date Balance of each of such Mortgage Loans is
indicated in parentheses following the name of the related Mortgaged Property.
UNDERWRITTEN CASH FLOW
In general, the "Underwritten Cash Flow" for a Mortgaged Property is the
estimated stabilized revenue derived from the use and operation of a Mortgaged
Property (consisting primarily of rental income) less the sum of (a) estimated
stabilized operating expenses (such as utilities, administrative expenses,
repairs and maintenance, management fees and advertising), (b) fixed expenses
(such as insurance, real estate taxes and, if applicable, ground lease
payments) and (c) reserves for capital expenditures, including tenant
improvement costs and leasing commissions. Underwritten Cash Flow generally
does not reflect interest expenses and non-cash items such as depreciation and
amortization. In determining Underwritten Cash Flow for a Mortgaged Property,
the related Mortgage Loan Seller relied on rent rolls and other generally
unaudited financial information provided by the respective borrowers and
calculated stabilized estimates of cash flow that took into consideration
historical financial statements,
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<PAGE>
material changes in the operating position of the Mortgaged Property of which
the related Mortgage Loan Seller was aware (e.g., new signed leases or end of
"free rent" periods and market data), and estimated capital expenditures,
leasing commission and tenant improvement reserves. The related Mortgage Loan
Seller made certain changes to operating statements and operating information
obtained from the respective borrowers, resulting in either an increase or
decrease in the estimate of Underwritten Cash Flow derived therefrom, based
upon the related Mortgage Loan Seller's evaluation of such operating statements
and operating information and the assumptions applied by the respective
borrowers in preparing such statements and information. In most cases,
borrower-supplied "trailing-12 months" income and/or expense information was
utilized. In certain cases, partial year operating income data was annualized,
with certain adjustments for items deemed not appropriate to be annualized. In
certain instances, historical expenses were inflated. For purposes of
calculating Underwritten Cash Flow for Mortgage Loans the rents under some
leases have been adjusted downward to reflect market rents for similar
properties if the rent actually being paid under the lease was significantly
higher than the market rent for similar properties. Several Mortgage Loans are
secured by newly constructed improvements or recently acquired Mortgaged
Properties and, accordingly, there were no historical operating results or
financial statements available with respect to such Mortgaged Properties. In
such cases, items of revenue and expense used in calculating Underwritten Cash
Flow were generally derived from rent rolls, estimates set forth in the related
appraisal or from borrower-supplied information. No assurance can be given with
respect to the accuracy of the information provided by any borrowers, or the
adequacy of the procedures used by the related Mortgage Loan Seller in
determining the presented operating information.
ESCROW REQUIREMENTS. Each Mortgage Loan Seller generally requires a
borrower to fund various escrows for taxes and insurance. Such escrows
typically entail a pro rated initial deposit and monthly deposits equal to 1/12
of the annual property taxes (based on the most recent property assessment and
the current millage rate) and annual property insurance premiums. 239 Mortgage
Loans, representing approximately 81.1% of the Initial Pool Balance, require
escrows for taxes and 138 Mortgage Loans, representing approximately 40.1% of
the Initial Pool Balance, require escrows for insurance premiums. Additionally,
in the case of 64 Mortgage Loans, representing approximately 28.7% of the
Initial Pool Balance, the related Mortgage Loan Seller has required the
borrower to fund an escrow for capital expenditures.
ASSESSMENTS OF PROPERTY CONDITION
PROPERTY INSPECTION. All of the Mortgaged Properties except in certain
cases if a Mortgaged Property was newly constructed were inspected by a member
of the related Mortgage Loan Seller's professional staff or, in certain cases,
by a third party professional engaged by the related Mortgage Loan Seller to
assess the Mortgaged Property's general condition. No inspection revealed any
patent structural deficiency or any deferred maintenance considered material
and adverse to the interest of the mortgagee or for which the related Mortgage
Loan Seller has not established an escrow arrangement that it deemed adequate
to cover such deficiency.
APPRAISALS. In connection with the origination or acquisition of the
Mortgage Loans, the related Mortgaged Property was appraised by an independent
appraiser who, generally, was a Member of the Appraisal Institute. Each such
appraisal complied with the real estate appraisal regulations issued jointly by
the federal bank regulatory agencies under the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, as amended ("FIRREA"). In general, those
appraisals represent the analysis and opinion of the person performing the
appraisal and are not guarantees of, and may not be indicative of, present or
future value. There can be no assurance that another person would not have
arrived at a different valuation, even if such person used the same general
approach to and same method of valuing the property. Moreover, such appraisals
sought to establish the amount of 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. Information regarding the values of the Mortgaged Properties
as of the Cut-Off Date is presented herein for illustrative purposes only.
PROPERTY CONDITION ASSESSMENTS. In connection with the origination of each
Mortgage Loan, a professional engineer, licensed architect or qualified
consultant inspected each related Mortgaged
S-54
<PAGE>
Property to assess the condition of the structure, exterior walls, roofing,
interior structure and mechanical and electrical systems. The resulting reports
indicated deferred maintenance items on certain Mortgaged Properties which were
generally required to be remediated and recommended certain capital
improvements which were required to be made or for which reserves were
generally established at origination. In addition, the property condition
assessments provided a projection of necessary replacements and repair of
structural and mechanical systems over the life of the related Mortgage Loan,
which were used to establish replacement reserve requirements and to derive
Underwritten Cash Flow.
SEISMIC REVIEW PROCESS. For the Wells Fargo Loans, loan requests secured
by properties located in California are screened using a software system to
perform a preliminary probable maximum loss ("PML") analysis. Properties with
any one of the following characteristics are subject to a third party seismic
survey performed by an approved seismic engineering firm: a property with a
preliminary PML over 20% of the estimated replacement cost of the improvements,
a loan of more than $10,000,000, a property located in an Alquist Priolo Zone
(a zone surrounding active California earthquake faults, as established under
California law), a property of three or more stories, a property constructed of
non-reinforced masonry, a property found to exhibit indications of significant
seismic stress during the completion of the property condition assessment or a
property located in a county having special inspection or retrofit
requirements.
For the Mortgage Loans sold by Bear Stearns Funding, seismic reports have
been completed for each Mortgaged Property located in areas classified as
seismic zones 3 or 4 in order to determine a PML estimate. Bear Stearns
Funding's technical services director, who is not a member of the Bear Stearns
Funding underwriting group, has reviewed substantially all seismic reports in
conjunction with the professional consultant who prepared such report.
Generally, any of the Mortgage Loans as to which the property was
estimated to have PML in excess of 20% of the estimated replacement cost would
either be subject to a lower loan-to-value limit at origination, be conditioned
on seismic upgrading, or be conditioned on satisfactory earthquake insurance.
The Mortgage Pool contains 8 Mortgage Loans, representing 4.9% of the Initial
Pool Balance, that have PMLs in excess of 20% of the estimated replacement
costs of the improvements and are subject to the above-described mitigants.
THE MORTGAGE LOAN SELLERS
On or prior to the Closing Date, the Depositor will acquire the Mortgage
Loans from Bear, Stearns Funding, Inc., a Delaware corporation ("Bear Stearns
Funding") and Wells Fargo Bank, National Association, a national banking
association ("Wells Fargo"), (each a "Mortgage Loan Seller") pursuant to the
relevant Mortgage Loan Purchase and Sale Agreements, each dated as of July 1,
1999, between the Depositor and the respective Mortgage Loan Seller (the
"Mortgage Loan Purchase and Sale Agreements").
Bear Stearns Funding is a wholly-owned subsidiary of Bear Stearns Mortgage
Capital Corporation, a Delaware corporation and affiliate of Bear, Stearns &
Co. Inc., one of the Underwriters. As of April 30, 1999, Bear Stearns Funding
had a net worth of approximately $46.7 million.
A description of Wells Fargo is contained under "Servicing of the Mortgage
Loans--The Servicer" in this prospectus supplement.
The information set forth herein concerning each Mortgage Loan Seller has
been provided by the respective Mortgage Loan Seller, and neither the Depositor
nor the Underwriters makes any representation or warranty as to the accuracy or
completeness of such information.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
In each Mortgage Loan Purchase and Sale Agreement, the related Mortgage
Loan Seller has represented and warranted with respect to each of its Mortgage
Loans, subject to certain specified exceptions, as of the Closing Date or as of
such other date specifically provided in the representation and warranty, among
other things, generally to the effect that:
S-55
<PAGE>
(i) Mortgage Loan Schedule. The information set forth in the schedule of
Mortgage Loans attached to the related Mortgage Loan Purchase and Sale
Agreement is true and correct in all material respects as of the Cut-Off
Date.
(ii) Ownership of Mortgage Loans. Immediately prior to the transfer to
the Depositor of the Mortgage Loans, the related Mortgage Loan Seller had
good title to, and was the sole owner of, each Mortgage Loan. free and
clear of any and all pledges, liens and/or other encumbrances.
(iii) Payment Record. No scheduled payment of principal and interest
under any Mortgage Loan was 30 days or more past due as of the Cut-Off
Date, and no Mortgage Loan was 30 days or more delinquent in the
twelve-month period immediately preceding the Cut-Off Date.
(iv) Lien; Valid Assignment. The Mortgage related to and delivered in
connection with each Mortgage Loan constitutes a valid and, subject to
certain creditors' rights exceptions, enforceable first priority mortgage
lien (subject to certain permitted encumbrances) upon the related Mortgaged
Property , and the assignment of the related Mortgage in favor of the
Trustee constitutes a legal, valid and binding assignment.
(v) Assignment of Leases and Rents. The Assignment of Leases set forth in
the Mortgage establishes and creates a valid and, subject to certain
creditor's rights exceptions, enforceable first priority lien in the
related borrower's interest in all leases of the Mortgaged Property.
(vi) Mortgage Status. The Mortgage has not been satisfied, cancelled,
rescinded or subordinated in whole or in material part, and the related
Mortgaged Property has not been released from the lien of such Mortgage, in
whole or in material part.
(vii) Condition of Property; Condemnation. Except as set forth in a
property inspection report prepared in connection with the origination of
the Mortgage Loan, the related Mortgaged Property is, to the Seller's
knowledge, free and clear of any damage that would materially and adversely
affect its value as security for the Mortgage Loan and, to the Seller's
knowledge, there is no proceeding pending for the condemnation of all or
any material portion of any Mortgaged Property.
(viii) Title Insurance. Each Mortgaged Property is covered by an American
Land Title Association (or an equivalent form of) lender's title insurance
policy or a mark-up title insurance commitment (on which the required
premium has been paid) which evidences such title insurance policy (the
"Title Policy") that insures that the related Mortgage is a valid, first
priority lien on such Mortgaged Property, subject only to certain permitted
encumbrances.
(ix) No Holdbacks. The proceeds of each Mortgage Loan have been fully
disbursed and there is no obligation for future advances with respect
thereto.
(x) Environmental Conditions. An environmental site assessment was
performed with respect to each Mortgaged Property in connection with the
origination of the related Mortgage Loan, a report of each such assessment
(an "Environmental Report") has been delivered, and the related Mortgage
Loan Seller has no knowledge of any material and adverse environmental
condition or circumstance affecting any Mortgaged Property that was not
disclosed in such report.
(xi) Loan Document Status. Each Mortgage Note, Mortgage and other
document conveyed to the Depositor with respect to a Mortgage Loan that
evidences or secures such Mortgage Loan and was executed by or on behalf of
the related Mortgagor is the legal, valid and binding obligation of the
maker thereof enforceable in accordance with its terms, and to the
knowledge of the Seller there is no valid defense, counterclaim or right of
offset or rescission available to the related borrower with respect to such
Mortgage Note, Mortgage or other agreement.
(xii) Insurance. Each Mortgaged Property is, and is required pursuant to
the related Mortgage, to be insured by casualty and liability insurance
policies of a type specified in the related Mortgage Loan Purchase
Agreement.
(xiii) Taxes and Assessments. As of the Closing Date, to such Seller's
knowledge, there are no delinquent taxes or taxes that are not yet due and
payable, assessments or other outstanding charges affecting the related
Mortgaged Property that are or may become a lien of priority equal to or
higher than the lien of the related Mortgage.
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<PAGE>
(xiv) Mortgagor Bankruptcy. No borrower is, to the related Mortgage Loan
Seller's knowledge, a debtor in any state or federal bankruptcy or
insolvency proceeding.
(xv) Leasehold Estate. Each Mortgaged Property consists of the related
borrower's fee simple estate in real estate (the "Fee Interest") or, if the
related Mortgage Loan is secured by the interest of a Mortgagor as a lessee
under a ground lease of a Mortgaged Property (a "Ground Lease"), by the
related borrower's interest in the Ground Lease, and with respect to each
Ground Lease:
(A) Such Ground Lease or a memorandum thereof has been or will be duly
recorded and permits the interest of the lessee thereunder to be
encumbered by the related Mortgage;
(B) The lessee's interest in such Ground Lease is not subject to any
liens or encumbrances superior to, or of equal priority with, the
related Mortgage, other than Permitted Encumbrances;
(C) The borrower's interest in such Ground Lease is assignable to the
Depositor and its successors and assigns upon notice to, but without the
consent of, the lessor thereunder;
(D) Such Ground Lease is in full force and and, to the knowledge of
the Seller, no material default has occurred thereunder;
(E) Such Ground Lease, or an estoppel letter related thereto, requires
the lessor under such ground lease to give notice of any default by the
lessee to the holder of the Mortgage, and further provides that no
notice of termination given under such ground lease is effective against
such holder unless a copy has been delivered to such holder.
(F) The holder of the Mortgage is permitted a reasonable opportunity
(including, where necessary, sufficient time to gain possession of the
interest of the lessee under such ground lease) to cure any default
under such ground lease, which is curable after the receipt of notice of
any such default, before the lessor thereunder may terminate such ground
lease; and
(G) Such Ground Lease has an original term (including any extension
options set forth therein) which extends not less than ten years beyond
the Maturity Date of the related Mortgage Loan.
(xvi) Cross-collateralization. No Mortgage Loan is cross-collateralized
or cross-defaulted with any loan other than one or more other Mortgage
Loans.
(xvii) Releases of Mortgaged Property. Except as described in the next
sentence, no Mortgage Note or Mortgage requires the mortgagee to release
all or any material portion of the related Mortgaged Property from the lien
of the related Mortgage except upon payment in full of all amounts due
under the related Mortgage Loan or in connection with the defeasance
provisions of the related Note and Mortgage. One Mortgage Loan,
representing approximately 0.2% of the Initial Pool Balance, requires the
mortgagee to grant releases of portions of the related Mortgaged Properties
upon (a) the satisfaction of certain legal and underwriting requirements
and (b) the payment of a release price set forth therein and prepayment
consideration in connection therewith.
(xviii) No Material Default. To the related Mortgage Loan Seller's best
knowledge, there exists no material default, breach, violation or event of
acceleration (and no event which, with the passage of time or the giving of
notice, or both, would constitute any of the foregoing) under the related
Mortgage Note or Mortgage in any such case to the extent the same
materially and adversely affects the value of the Mortgage Loan and the
related Mortgaged Property.
(xix) SMMEA Qualification. Each Mortgage Loan was originated by a savings
and loan association, savings bank, commercial bank, credit union,
insurance company, or similar institution which is supervised and examined
by a Federal or State authority, or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to Sections 203 and 211
of the National Housing Act.
If the related Mortgage Loan Seller has been notified that any document or
documents constituting a part of a Mortgage File has not been delivered as and
when required, has not been properly executed,
S-57
<PAGE>
or is defective on its face (any such omission or other defect a "Document
Defect") or of a breach of any of the foregoing representations and warranties
and, in either case, such Document Defect or such breach materially and
adversely affects the interests of the Certificateholders (a "Material Document
Defect" or "Material Breach", respectively), and if the related Mortgage Loan
Seller cannot cure such Material Breach or Material Document Defect within a
period of 90 days following the earlier of its receipt of such notice or its
discovery of such Material Breach or Material Document Defect (as such period
may be extended by up to an additional 90 days under the limited circumstances
specified in the related Mortgage Loan Purchase Agreement), then the related
Mortgage Loan Seller will be obligated pursuant to the related Mortgage Loan
Purchase and Sale Agreement (the relevant rights under which will be assigned,
together with its interests in the Mortgage Loans, by the Depositor to the
Trustee) to (A) repurchase the affected Mortgage Loan within such period at a
price (the "Purchase Price") equal to the sum of (i) the outstanding principal
balance of such Mortgage Loan as of the date of purchase, (ii) all accrued and
unpaid interest on such Mortgage Loan at the related Mortgage Rate, in effect
from time to time, to but not including the Due Date in the Collection Period
of purchase, and (iii) the amount of any expenses related to such Mortgage Loan
or REO Property (including unreimbursed Servicing Advances plus accrued and
unpaid interest on related Advances at the Reimbursement Rate, unpaid Special
Servicing Fees and Liquidation Fees), or (B) if within the three-month period
commencing on the Closing Date (or within the two-year period commencing on the
Closing Date if the related Mortgage Loan is a "defective obligation" within
the meaning of Section 860G(a)(4)(B)(ii) of the Code and Treasury Regulation
Section 1.860G-2(f)), (i) replace such Mortgage Loan with a Mortgage Loan
having certain payment terms comparable to the Mortgage Loan to be replaced and
that is acceptable to each Rating Agency (a "Qualifying Substitute Mortgage
Loan") and (ii) pay an amount generally equal to the excess of the applicable
Purchase Price for the Mortgage Loan to be replaced (calculated as if it were
to be repurchased instead of replaced), over the unpaid principal balance of
the applicable Qualifying Substitute Mortgage Loan as of the date of
substitution, after application of all payments due on or before such date,
whether or not received. If such Material Breach or Material Document Defect
would cause the Mortgage Loan to be other than a "qualified mortgage" (as
defined in the Code), then notwithstanding the previous sentence, repurchase
must occur within 90 days from the date the related Mortgage Loan Seller was
notified of the defect and substitution must occur within the sooner of (i) 90
days from the date the related Mortgage Loan Seller was notified of the defect
or (ii) two years from the Closing Date.
The foregoing obligations of each Mortgage Loan Seller to either cure a
Material Document Defect or a Material Breach with respect to any of its
Mortgage Loans within the permitted cure period or repurchase or replace the
defective Mortgage Loan will constitute the only remedies available to the
Certificateholders and the Trustee with respect to such Material Document
Defect or Material Breach. The related Mortgage Loan Seller will be the only
party making representations and warranties in respect of the Mortgage Loans
sold by such Mortgage Loan Seller to the Depositor, and none of the Depositor,
the Servicer, the Special Servicer, the Trustee, the Fiscal Agent, the
Underwriters or any of their respective affiliates (other than a Mortgage Loan
Seller that is an affiliate of an Underwriter) will be obligated to repurchase
any affected Mortgage Loan in connection with a breach of the related Mortgage
Loan Seller's representations and warranties if the related Mortgage Loan
Seller defaults on its obligation to do so. However, the Depositor will not
include any Mortgage Loan in the Mortgage Pool if anything has come to the
Depositor's attention prior to the Closing Date that causes it to believe that
the representations and warranties made by the related Mortgage Loan Seller
regarding such Mortgage Loan will not be correct in all material respects when
made. See "Description of the Pooling Agreements--Representations and
Warranties; Repurchases" in the prospectus.
MORTGAGED PROPERTY ACCOUNTS
LOCK BOX ACCOUNTS. With respect to 15 Mortgage Loans (the "Lock Box
Loans"), representing approximately 15.2% of the Initial Pool Balance, one or
more accounts (collectively, the "Lock Box Accounts") have been, or may be,
established in the name of the lender pursuant to the related loan documents.
With respect to 6 Lock Box Loans, representing approximately 5.0% of the
Initial Pool Balance, the tenants or related property manager are required to
directly deposit their rents into the related Lock Box Account. The terms of 9
Lock Box Loans, representing approximately 10.1% of the
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<PAGE>
Initial Pool Balance, provide for the establishment of a Lock Box Account upon
the occurrence and continuation of certain events, generally relating to the
failure of certain major tenants to renew or extend their respective leases, or
the failure of the related borrower to lease such premises to new tenants
acceptable to the lender, or the failure of the related borrower to lease such
premises to new tenants acceptable to the lender, or the failure of the
Mortgaged Property to meet certain DSCR requirements. The agreement which
governs the Lock Box Accounts provides that the existing borrower has no
withdrawal or transfer rights with respect thereto except to the extent that
funds on deposit in the related Lockbox Account are released to the borrower in
accordance with the applicable agreements. Pursuant to the terms of the
agreement governing the Lockbox Account for the ARD Loan, the funds in the
Lockbox Account may be released to the related borrower following the
Anticipated Repayment Date to the extent that such amounts are in excess of
amounts needed to pay debt service and property operating expenses and
reserves. After the Anticipated Repayment Date, all funds on deposit in the
Lock Box Accounts, in excess of amounts needed to pay property operating
expenses and reserves will be applied to repayment of the Mortgage Loan. The
Lock Box Accounts will not be assets of any REMIC.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Series 1999-WF2 Commercial Mortgage Pass-Through Certificates (the
"Certificates") will be issued on or about July 1, 1999 (the "Closing Date")
pursuant to a Pooling and Servicing Agreement to be dated as of the Cut-Off
Date (the "Pooling and Servicing Agreement"), among the Depositor, the
Servicer, the Special Servicer, the Paying Agent, the Trustee and the Fiscal
Agent. Registered holders of the Certificates are herein referred to as
Certificateholders (the "Certificateholders"). The Certificates will represent
in the aggregate the entire beneficial ownership interest in a trust fund (the
"Trust Fund") consisting primarily of: (i) the Mortgage Loans and all payments
under and proceeds of the Mortgage Loans received after the Cut-Off Date
(exclusive of principal prepayments received prior to the Cut-Off Date and
scheduled payments of principal and interest due on or before the Cut-Off
Date); (ii) any Mortgaged Property acquired on behalf of the Certificateholders
in respect of a defaulted Mortgage Loan through foreclosure, deed in lieu of
foreclosure or otherwise (any such Mortgaged Property, upon acquisition, an
"REO Property"); and (iii) certain rights of the Depositor under, or assigned
to the Depositor pursuant to, the relevant Mortgage Loan Purchase and Sale
Agreement relating to Mortgage Loan document delivery requirements and the
representations and warranties of the related Mortgage Loan Seller regarding
its Mortgage Loans.
The Certificates will consist of 18 classes (each, a "Class") thereof, to
be designated as the: (i) Class A-1 Certificates and Class A-2 Certificates
(collectively, the "Class A Certificates"); (ii) Class X Certificates (the
"Interest Only Certificates" and, collectively with the Class A Certificates,
the "Senior Certificates"); (iii) Class B Certificates, Class C Certificates,
Class D Certificates, Class E Certificates, Class F Certificates, Class G
Certificates, Class H Certificates, Class I Certificates, Class J Certificates,
Class K Certificates, Class L Certificates and Class M Certificates
(collectively, the "Subordinate Certificates" and, collectively with the Senior
Certificates, the "REMIC Regular Certificates"); and (iv) Class R-I, Class R-II
and Class R-III Certificates (collectively, the "Residual Certificates").
Only the Class A, Class B, Class C, Class D, Class E and Class F
Certificates (collectively, the "Offered Certificates") are offered hereby. The
Class G, Class H, Class I, Class J, Class K, Class L and Class M Certificates
and the Residual Certificates (collectively, the "Private Certificates") have
not been registered under the Securities Act of 1933, as amended, and are not
offered hereby.
Upon initial issuance, the Class A-1, Class A-2, Class B, Class C, Class
D, Class E, Class F, Class G, Class H, Class I, Class J, Class K, Class L and
Class M Certificates (collectively, the "Principal Balance Certificates") will
have the following aggregate Certificate Balances (in each case, subject to a
variance of plus or minus 5%):
<TABLE>
<CAPTION>
INITIAL AGGREGATE APPROXIMATE APPROXIMATE
CERTIFICATE PERCENT OF INITIAL PERCENT OF
CLASS BALANCE POOL BALANCE CREDIT SUPPORT
- --------------------- ------------------- -------------------- ---------------
<S> <C> <C> <C>
Class A-1 ........... $338,780,000 31.35% 20.000%
Class A-2 ........... $525,789,000 48.65% 20.000%
Class B ............. $ 43,229,000 4.000% 16.000%
Class C ............. $ 43,229,000 4.000% 12.000%
Class D ............. $ 10,807,000 1.000% 11.000%
Class E ............. $ 27,018,000 2.500% 8.500%
Class F ............. $ 10,807,000 1.00% 7.500%
Classes G-M ......... $ 81,052,380 7.50% --
</TABLE>
The "Certificate Balance" of any Principal Balance Certificate outstanding
at any time will equal the then maximum amount that the holder thereof will be
entitled to receive in respect of principal out of future cash flow on the
Mortgage Loans and other assets included in the Trust Fund. The initial
Certificate Balance of each Principal Balance Certificate will be set forth on
the face thereof. On each Distribution Date, the Certificate Balance of each
Principal Balance Certificate will be reduced by any distributions of principal
actually made on such Certificate on such Distribution Date, and will be
further reduced by any
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Realized Losses allocated to such Certificate on such Distribution Date. See
"--Distributions" and "----Distributions--Subordination; Allocation of Losses,
Shortfalls and Expenses" below.
The Residual Certificates will not have Certificate Balances or Notional
Amounts.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
You may hold and trade the Class A-1 and Class A-2 Certificates only in
minimum denominations of $25,000. The remaining Offered Certificates will be
offered in minimum denominations of $100,000. Investments in excess of the
minimum denominations may be made in any whole dollar denomination in excess
thereof.
Each Class of Offered Certificates will initially be represented by one or
more global Certificates registered in the name of the nominee of The
Depository Trust Company ("DTC"). The Depositor has been informed by DTC that
DTC's nominee initially will be Cede & Co. 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 as set forth in the prospectus
under "Description of the Certificates--Book-Entry Registration and Definitive
Certificates". Unless and until Definitive Certificates are issued in respect
of any Class of Offered Certificates, all references to actions by holders of
the Offered Certificates will refer to actions taken by DTC upon instructions
received from the related Certificate Owners through DTC's participating
organizations ("Participants"), and all references herein to payments, notices,
reports and statements to holders of the Offered Certificates will refer to
payments, notices, reports and statements to DTC or Cede & Co., as the
registered holder of the Offered Certificates, for distribution to the related
Certificate Owners through DTC's Participants in accordance with DTC
procedures. Until Definitive Certificates are issued in respect of any Class of
Offered Certificates, interests in such Certificates will be transferred on the
book-entry records of DTC (and its Participants). See "Description of the
Certificates--Book-Entry Registration and Definitive Certificates" in the
prospectus.
Certificateholders must hold their Offered Certificates in book-entry
form, and delivery of the Offered Certificates will be made through the
facilities of DTC (in the United States) and may be made through the facilities
of Cedelbank, societe anonyme ("CEDEL") or Euroclear System ("Euroclear") (in
Europe). Transfers within DTC, CEDEL or Euroclear, as the case may be, will be
in accordance with the usual rules and operating procedures of the relevant
system. Crossmarket transfers between persons holding directly or indirectly
through DTC, on the one hand, and counterparties holding directly or indirectly
through CEDEL or Euroclear, on the other, will be effected in DTC through
Citibank, N.A. or The Chase Manhattan Bank, the relevant depositaries of CEDEL
and Euroclear, respectively.
Because of time-zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a DTC participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear participant or Cedel customer on such business day. Cash received in
Cedel or Euroclear as a result of sales of securities by or through a Cedel
customer or a Euroclear participant to a DTC participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.
DTC management is aware that some computer applications, systems, and the
like for processing data (the "DTC Systems") that are dependent upon calendar
dates, including dates before, on, and after January 1, 2000, may encounter
"Year 2000 problems." DTC has informed its Participants and other members of
the financial community that it has developed and is implementing a program so
that the DTC Systems, as the same relate to the timely payment of distributions
(including principal and income payments) to securityholders, book-entry
deliveries, and settlement of trades within DTC, continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within appropriate time frames.
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However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information or the provisions of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed its Participants and other members of the
financial community that it is contacting (and will continue to contact) third
party vendors from whom DTC acquires services to: (i) impress upon them the
importance of such services being Year 2000 compliant; and (ii) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate,
testing) of their services. In addition, DTC is in the process of developing
such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to its Participants and other members of the financial community for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
Until such time, if any, as Definitive Certificates are issued in respect
of the Offered Certificates, the foregoing information and access will be
available to the related Certificate Owners only to the extent it is forwarded
by, or otherwise available through, DTC and its Participants or otherwise made
available publicly by the Paying Agent. The manner in which notices and other
communications are conveyed by DTC to its Participants, and by such
Participants to the 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 Servicer, the Special Servicer, the Trustee, the Paying
Agent and the Depositor 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 as of the related Record Date.
DISTRIBUTIONS
Method, Timing and Amount. Distributions on or with respect to the
Certificates will be made by the Paying Agent, to the extent of available
funds, and in accordance with the manner and priority set forth herein, on the
15th day of each month, or if any such 15th day is not a business day, on the
next succeeding business day (each, a "Distribution Date"), commencing in
August, 1999. 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 Paying
Agent with wiring instructions on or before the related Record Date, or
otherwise by check mailed to such Certificateholder. The final distribution on
any Certificate (determined without regard to any possible future reimbursement
of any Realized Losses previously allocated to such Certificate) will be made
in a 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 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.
The "Record Date" with respect to each Class of Offered Certificates for
each Distribution Date will be the last business day of the calendar month
immediately preceding the month in which such Distribution Date occurs. The
"Percentage Interest" evidenced by any REMIC Regular Certificate in the Class
to which it belongs will be a fraction, expressed as a percentage, the
numerator of which is equal to the initial Certificate Balance or Notional
Amount, as the case may be, of such Certificate as set forth on the face
thereof, and the denominator of which is equal to the initial Aggregate
Certificate Balance or Notional Amount, as the case may be, of such Class.
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
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the sum of (a) all amounts on deposit in the Distribution Account (described
below) as of the commencement of business on such Distribution Date, exclusive
of any portion thereof that represents one or more of the following:
(i) Scheduled Payments collected but due on a Due Date subsequent to the
related Collection Period;
(ii) Prepayment Premiums and Yield Maintenance Charges (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, among other things, amounts payable to
the Servicer, the Special Servicer and the Trustee as compensation or in
reimbursement of outstanding Advances);
(iv) amounts deposited in the Certificate Account in error; and
(v) if such Distribution Date occurs during January or February of any
year, the Interest Reserve Amounts with respect to the Interest Reserve
Loans to be deposited into the Interest Reserve Account;
(b) to the extent not already included in clause (a), any P&I Advances
made and any Compensating Interest Payments paid with respect to such
Distribution Date; and
(c) if such Distribution Date occurs during March of any year, the
aggregate of the Interest Reserve Amounts then on deposit in the Interest
Reserve Account in respect of each Interest Reserve Loan.
The "Determination Date" with respect to any Distribution Date will be the
5th business day prior to the related Distribution Date. The "Collection
Period" with respect to any Distribution Date will be the period beginning with
the day after the Determination Date in the month preceding such Distribution
Date (or, in the case of the first Distribution Date, the Cut-Off Date) and
ending with the Determination Date occurring in the month in which such
Distribution Date occurs.
The Servicer has established and will maintain an "Interest Reserve
Account" in the name of the Trustee for the benefit of the holders of the
Certificates. With respect to the Distribution Date occurring in each January
(other than a leap year) and each February, there will be deposited to the
Interest Reserve Account in respect of certain Mortgage Loans identified on
Annex D as Interest Reserve Loans (the "Interest Reserve Loans") an amount
equal to one day's interest at the related Net Mortgage Rate (without regard to
any adjustment for Interest Reserve Amounts or the interest accrual basis as
described above) on its Principal Balance as of the Due Date in the month in
which such Distribution Date occurs, [to the extent a Scheduled Payment or P&I
Advance is timely made in respect thereof for such Due Date] (all amounts so
deposited with respect to Scheduled Payments due in any applicable January and
February, the "Interest Reserve Amount"). With respect to the Distribution Date
occurring in March of each year (commencing in 2000), an amount is required to
be withdrawn from the Interest Reserve Account in respect of each Interest
Reserve Loan equal to the related Interest Reserve Amount from the preceding
January (if applicable) and February, and such withdrawn amount is to be
included as part of the Available Distribution Amount for such Distribution
Date.
Application of Available Distribution Amount. On each Distribution Date,
except as described under "----Optional Termination" below, for so long as any
Class of Offered Certificates remains outstanding, the Paying Agent will apply
the Available Distribution Amount (other than Excess Interest and Excess
Liquidation Proceeds, if any) for such date for the following purposes and in
the following order of priority:
(i) to the holders of the Class A-1, Class A-2 and Class X Certificates,
the Distributable Certificate Interest Amount in respect of each such Class
of Certificates for such Distribution Date, pro rata in proportion to the
Distributable Certificate Interest Amount payable in respect of each such
Class;
(ii) to the holders of the Class A-1 Certificates, the Principal
Distribution Amount for such Distribution Date, until the aggregate
Certificate Balance of the Class A-1 Certificates has been reduced to zero;
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(iii) upon payment in full of the aggregate Certificate Balance of the
Class A-1 Certificates, to the holders of the Class A-2 Certificates, the
Principal Distribution Amount for such Distribution Date (reduced by any
portion thereof distributed to the holders of the Class A-1 Certificates),
until the aggregate Certificate Balance of the Class A-2 Certificates has
been reduced to zero;
(iv) to the holders of the Class A and Class X Certificates, pro rata in
proportion to their respective entitlements to reimbursement described in
this clause (iv), to reimburse them for any Realized Losses previously
allocated to such Classes of Certificates (in the case of the Class X
Certificates, only insofar as Realized Losses have resulted in shortfalls
in the amount of interest distributed thereto), plus interest on such
Realized Losses at the applicable Pass-Through Rate;
(v) to the holders of the Class B Certificates, the Distributable
Certificate Interest Amount in respect of such Class of Certificates for
such Distribution Date;
(vi) upon payment in full of the aggregate Certificate Balance of the
Class A-2 Certificates, to the holders of the Class B Certificates, the
Principal Distribution Amount for such Distribution Date (reduced by any
portion thereof distributed to the holders of the Class A Certificates),
until the aggregate Certificate Balance of the Class B Certificates has
been reduced to zero;
(vii) to the holders of the Class B Certificates, to reimburse them for
any Realized Losses previously allocated to such Class of Certificates,
plus interest on such Realized Losses at the applicable Pass-Through Rate;
(viii) to the holders of the Class C Certificates, the Distributable
Certificate Interest Amount in respect of such Class of Certificates for
such Distribution Date;
(ix) upon payment in full of the aggregate Certificate Balance of the
Class B Certificates, to the holders of the Class C Certificates, the
Principal Distribution Amount for such Distribution Date (reduced by any
portion thereof distributed to the holders of the Class A and Class B
Certificates), until the aggregate Certificate Balance of the Class C
Certificates has been reduced to zero;
(x) to the holders of the Class C Certificates, to reimburse them for any
Realized Losses previously allocated to such Class of Certificates, plus
interest on such Realized Losses at the applicable Pass-Through Rate;
(xi) to the holders of the Class D Certificates, the Distributable
Certificate Interest Amount in respect of such Class of Certificates for
such Distribution Date;
(xii) upon payment in full of the aggregate Certificate Balance of the
Class C Certificates, to the holders of the Class D Certificates, the
Principal Distribution Amount for such Distribution Date (reduced by any
portion thereof distributed to the holders of the Class A, Class B and
Class C Certificates), until the aggregate Certificate Balance of the Class
D Certificates has been reduced to zero;
(xiii) to the holders of the Class D Certificates, to reimburse them for
any Realized Losses previously allocated to such Class of Certificates,
plus interest on such Realized Losses at the applicable Pass-Through Rate;
(xiv) to the holders of the Class E Certificates, the Distributable
Certificate Interest Amount in respect of such Class of Certificates for
such Distribution Date;
(xv) upon payment in full of the aggregate Certificate Balance of the
Class D Certificates, to the holders of the Class E Certificates, the
Principal Distribution Amount for such Distribution Date (reduced by any
portion thereof distributed to the holders of the Class A, Class B, Class C
and Class D Certificates), until the aggregate Certificate Balance of the
Class E Certificates has been reduced to zero;
(xvi) to the holders of the Class E Certificates, to reimburse them for
any Realized Losses previously allocated to such Class of Certificates,
plus interest on such Realized Losses at the applicable Pass-Through Rate;
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(xvii) to the holders of the Class F Certificates, the Distributable
Certificate Interest Amount in respect of such Class of Certificates for
such Distribution Date;
(xviii) upon payment in full of the aggregate Certificate Balance of the
Class E Certificates, to the holders of the Class F Certificates, the
Principal Distribution Amount for such Distribution Date (reduced by any
portion thereof distributed to the holders of the Class A, Class B, Class
C, Class D and Class E Certificates), until the aggregate Certificate
Balance of the Class F Certificates has been reduced to zero;
(xix) to the holders of the Class F Certificates, to reimburse them for
any Realized Losses previously allocated to such Class of Certificates,
plus interest on such Realized Losses at the applicable Pass-Through Rate;
and
(xx) to make payments to the holders of the Private Certificates as
contemplated below.
Notwithstanding the foregoing, on each Distribution Date occurring on or
after the date, if any, upon which the aggregate Certificate Balance of all
Classes of Subordinate Certificates has been reduced to zero or the aggregate
Appraisal Reduction in effect is greater than or equal to the aggregate
Certificate Balance of all Classes of Subordinate Certificates, the Principal
Distribution Amount will be distributed, first, to the Class A-1 and Class A-2
Certificates, pro rata, based on their respective Certificate Balances, in
reduction of their respective Certificate Balances, until the aggregate
Certificate Balance of each such Class is reduced to zero; and, second, to the
Class A-1 and Class A-2 Certificates, pro rata, based on their respective
Certificate Balances, for the unreimbursed amount of Realized Losses previously
allocated to such Classes.
On each Distribution Date, following the above-described distributions on
the Offered Certificates, the Paying Agent 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 respective Classes of Private Certificates (other than
the Residual 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 G Certificates, then payments under clauses (1), (2), and (3) below,
in that order, to the holders of the Class H, Class I, Class J, Class K, Class
L and Class M Certificates):
(1) to pay interest to the holders of the particular Class of Certificates,
up to an amount equal to the Distributable Certificate Interest Amount
in respect of such Class of Certificates for such Distribution Date;
(2) if the aggregate Certificate Balance of each other Class of Subordinate
Certificates, if any, with an earlier alphabetical Class designation
has been reduced to zero, to pay principal to the holders of the
particular Class of Certificates, up to an amount equal to the lesser
of (a) the then outstanding aggregate Certificate Balance of such Class
of Certificates and (b) the aggregate of the remaining Principal
Distribution Amount for such Distribution Date; and
(3) to reimburse the holders of the particular Class of Certificates, up to
an amount equal to (a) all Realized Losses, if any, previously
allocated to such Class of Certificates and for which no reimbursement
has previously been paid, plus (b) all unpaid interest on such amounts
accrued at the Pass-Through Rate of such Classes.
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 Class R-I Certificates.
Excess Interest, if any, will be paid to the holders of the Class M
Certificates and Excess Liquidation Proceeds will be deposited to the Reserve
Account.
The "Excess Interest" in respect of the ARD Loan that it does not repay on
its Anticipated Repayment Date is the excess, if any, of interest accrued at
the rate of interest applicable to such loan after the Anticipated Repayment
Date over interest accrued at the rate of interest applicable to such loan
before the Anticipated Repayment Date. Excess Interest on a Mortgage Loan is
not due and payable until the Mortgage Loan is paid in full.
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"Excess Liquidation Proceeds" are defined to be the excess of (i) proceeds
from the sale or liquidation of a Mortgage Loan or related REO Property, net of
expenses and any related Advances and interest thereon over (ii) the amount
that would have been received if a prepayment in full had been made with
respect to such Mortgage Loan on the date such proceeds were received.
The "Reserve Account" will be an account set up in the name of the Trustee
by the Paying Agent for the deposit of any Excess Liquidation Proceeds. On each
Distribution Date, amounts on deposit in the Reserve Account will be used,
first, to reimburse the holders of the Principal Balance Certificates (in order
of alphabetical Class designation) for any, and to the extent of, Realized
Losses previously allocated to them; second, to fund current shortfalls that
otherwise would constitute Realized Losses reimbursable on future Distribution
Dates; and third, upon the reduction of the aggregate Certificate Balance of
the Principal Balance Certificates to zero, to pay any amounts remaining on
deposit in such account to the Special Servicer as additional Special Servicer
compensation.
Pass-Through Rates. The rate per annum at which any Class of Certificates
(other than the Residual Certificates) accrues interest is referred to herein
as its "Pass-Through Rate." The Pass-Through Rates applicable to the Class A-1
and Class A-2 Certificates for each Distribution Date will, at all times, be
equal to % and % per annum, respectively; provided, however, that each
such Pass-Through Rate will not exceed the NWAC Rate for such Distribution
Date.
The Pass-Through Rates on the Class B, Class C, Class D, Class E and
Class F Certificates for the initial Distribution Date will equal approximately
%, %, %, %, % and % per annum, respectively. For interest periods relating to
Distribution Dates after August 16, 1999, the Pass-Through Rate for the Class B
Certificates will be a per annum rate equal to the NWAC Rate for such
Distribution Date minus % and, the Pass-Through Rate of the Class C, Class D,
Class E and Class F Certificates will be a per annum rate equal to the NWAC
Rate for such Distribution Date.
The Pass-Through Rates applicable to the Class G, Class H, Class I, Class
J, Class K, Class L and Class M Certificates, which are Private Certificates,
for each Distribution Date will each, at all times, be equal to 6.0% per annum;
provided, however, that each such Pass-Through Rate will not exceed 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 will initially equal approximately % per annum. The
Pass-Through Rate applicable to the Class X Certificates for each Distribution
Date subsequent to the initial 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 the respective Classes of Principal Balance Certificates for such
Distribution Date, the relevant weighting to be on the basis of the respective
aggregate Certificate Balances of such Classes of Certificates immediately
prior to such Distribution Date.
The "Weighted Average Net Mortgage Rate" or "NWAC Rate" for any
Distribution Date is the weighted average of the Net Mortgage Rates for the
Mortgage Loans (in the case of each Mortgage Loan that is an Interest Reserve
Loan, adjusted as described below), weighted on the basis of their respective
Scheduled Principal Balances as of the close of business on the preceding
Distribution Date.
The "Net Mortgage Rate" with respect to any Mortgage Loan will, in
general, be a per annum rate equal to the related Mortgage Rate minus the
related Administrative Cost Rate; provided that, for purposes of calculating
the limit on the Pass-Through Rates for the Class A-1 and Class A-2
Certificates, or the Pass-Through Rates for each other Class of REMIC Regular
Certificates (other than the Class X Certificates) from time to time, the Net
Mortgage Rate for any Mortgage Loan will be calculated without regard to any
modification, waiver or amendment of the terms of such Mortgage Loan subsequent
to the Closing Date. In addition, because the Certificates accrue interest on
he basis of a 360-day year consisting of twelve 30-day months, when
calculating the Pass-Through Rate for each Class of Certificates for each
Distribution Date, the Net Mortgage Rate of each Interest Reserve Loan will be
appropriately adjusted to reflect such difference. However, with respect to
each Interest Reserve Loan, (i) the Net Mortgage Rate that would otherwise be
in effect for purposes of the Scheduled Payment due in January of each year
(other than a leap year) and February of each year will be adjusted to take
into account the applicable
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Interest Reserve Amount and (ii) the Net Mortgage Rate that would otherwise be
in effect for purposes of the Scheduled Payment due in March of each year will
be adjusted to take into account the applicable Interest Reserve Amount for the
preceding January (if applicable) and February.
The "Administrative Cost Rate" for any Mortgage Loan in any month will
equal the sum of the related Servicing Fee and the Trustee Fee for such month
(in each case, expressed as a per annum rate) and is 0.053% per annum. The
Administrative Cost Rate will be payable on the Scheduled Principal Balance of
each Mortgage Loan outstanding from time to time. The Administrative Cost Rate
applicable to a Mortgage Loan in any month will be determined using the same
interest accrual basis (i.e., a 360-day year consisting of twelve 30-day months
or a 360 day year and actual days elapsed) on which interest accrues under the
terms of such Mortgage Loan.
The "Scheduled Principal Balance" of any Mortgage Loan on any Distribution
Date will generally equal the Cut-Off Date Balance, as defined below, thereof,
reduced (to not less than zero) by (a) any payments or other collections of
principal (or Advances in lieu thereof) on such Mortgage Loan that have been
collected or received during any preceding Collection Period, other than any
Scheduled Payments due in any subsequent Collection Period, and (b) the
principal portion of any Realized Loss incurred in respect of such Mortgage
Loan during any preceding Collection Period.
The "Cut-Off Date Balance" of any Mortgage Loan will generally equal its
principal balance outstanding as of the Cut-Off Date, after application of all
payments of principal due on or before such date, whether or not received.
Distributable Certificate Interest Amount. The "Distributable Certificate
Interest Amount" in respect of any Class of REMIC Regular Certificates for any
Distribution Date will equal the sum of (a) Accrued Certificate Interest in
respect of such Class of Certificates for such Distribution Date, reduced (to
not less than zero) by (i) any Net Aggregate Prepayment Interest Shortfalls and
Net Aggregate Balloon Interest Shortfalls and (ii) Realized Losses specifically
allocated with respect to such Distribution Date to reduce the Distributable
Certificate Interest Amount payable in respect of such Class in accordance with
the terms of the Pooling and Servicing Agreement and (b) the portion of the
Distributable Certificate Interest Amount for such Class remaining unpaid as of
the close of business on the preceding Distribution Date, plus interest accrued
thereon at the applicable Pass-Through Rate (such amount, "Unpaid Interest").
The "Accrued Certificate Interest" in respect of each Class of REMIC Regular
Certificates for each Distribution Date will equal the amount of interest for
the applicable Interest Accrual Period accrued at the applicable Pass-Through
Rate on the aggregate Certificate Balance or Notional Amount, as the case may
be, of such Class of Certificates 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 each Class of REMIC Regular Certificates
and each Distribution Date will be the calendar month immediately preceding the
month in which such Distribution Date occurs.
Prepayment Interest Shortfalls and Prepayment Interest Excesses. For any
Distribution Date, a "Prepayment Interest Shortfall" will arise with respect to
any Mortgage Loan if the related borrower makes a full or partial Principal
Prepayment (including any Balloon Payment received not more than 60 days after
the Maturity Date thereof) during the related Collection Period, and the date
such payment was made occurred prior to the Due Date for such Mortgage Loan in
such Collection Period. For any Distribution Date, a "Balloon Interest
Shortfall" will arise with respect to any Balloon Payment made more than 60
days after its Maturity Date during the related Collection Period, and the date
such payment was made occurred prior to the Due Date for such Mortgage Loan in
such Collection Period. Such shortfalls arise because the amount of interest
(net of the Servicing Fee or Special Servicing Fee, as applicable, and the
Trustee Fee) that accrues on the amount of such Principal Prepayment or Balloon
Payment will be less than the corresponding amount of interest accruing on the
Certificates. The related Prepayment Interest Shortfall will generally equal
the excess of (a) the aggregate amount of interest which would have accrued on
the Scheduled Principal Balance of such Mortgage Loan or on such Balloon
Payment made not more than 60 days after its Maturity Date for the 30 days
ending on such Due Date
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if such Principal Prepayment or Balloon Payment had not been made prior to such
Due Date (net of the Servicing Fee or Special Servicing Fee, as applicable, and
the Trustee Fee) over (b) the aggregate interest that did accrue on such
Mortgage Loan or Balloon Payment through the date such payment was made. The
related Balloon Interest Shortfall will generally equal the excess of (a) the
aggregate amount of interest which would have accrued on such Balloon Payment
made more than 60 days after its Maturity Date for the 30 days ending on the
related Due Date if such Balloon Payment had not been made prior to such Due
Date (net of the Servicing Fee, the Special Servicing Fee and the Trustee Fee)
over (b) the aggregate interest that did so accrue on such Balloon Payment
through the date such payment was made.
In any case in which a full or partial Principal Prepayment or Balloon
Payment that is made not more than 60 days after its related Due Date is made
during any Collection Period after the Due Date for such Mortgage Loan or
Balloon Payment, a "Prepayment Interest Excess" will arise since the amount of
interest which accrues on the amount of such Principal Prepayment or Balloon
Payment will exceed the corresponding amount of interest accruing on the
Certificates. The amount of the Prepayment Interest Excess in any such case
will generally equal the interest that accrues on the Mortgage Loan or Balloon
Payment from such Due Date to the date such payment was made (net of the
Servicing Fee or Special Servicing Fee, as applicable, and the Trustee Fee), to
the extent collected.
In any case in which a Balloon Payment is made 60 or more days after the
related Maturity Date and after the related Due Date occurring during a
Collection Period, a "Balloon Interest Excess" will arise since the amount of
interest which accrues on the amount of such Balloon Payment will exceed the
corresponding amount of interest accruing on the Certificates. The amount of
the Balloon Interest Excess in any such case will generally equal the interest
that accrues on such Balloon Payment from such Due Date to the date such
payment was made (net of the Servicing Fee or Special Servicing Fee, as
applicable, and the Trustee Fee), to the extent collected.
To the extent that the aggregate Prepayment Interest Shortfalls on all
Mortgage Loans other than Specially Serviced Mortgage Loans exceed the
aggregate Prepayment Interest Excesses for such Mortgage Loans for the
Collection Period related to a Distribution Date, the Servicing Fee (other than
the portion thereof payable to Sub-Servicers) will be reduced by the amount of
such excess. Likewise, to the extent that the aggregate Prepayment Interest
Shortfalls on all Specially Serviced Mortgage Loans that result from voluntary
payments (and not from Liquidation Proceeds or from modifications to Specially
Serviced Mortgage Loans) exceed the aggregate Prepayment Interest Excesses for
such Mortgage Loans for the Collection Period related to a Distribution Date,
the Special Servicing Fee will be reduced by the amount of such excess.
Additionally, to the extent that Balloon Interest Shortfalls that result from
voluntary Balloon Payments exceed Balloon Interest Excesses for such Collection
Period, the Special Servicing Fee will be reduced by the amount of such excess.
See "Servicing of the Mortgage Loans----The Servicer----Servicer Compensation"
and "----The Special Servicer----Special Servicer Compensation" in this
prospectus supplement. Any such reduction of the Servicing Fee or the Special
Servicing Fee to cover such shortfalls will constitute a "Compensating Interest
Payment" by the Servicer or the Special Servicer, as applicable. The aggregate
of all Prepayment Interest Shortfalls incurred in respect of all of the
Mortgage Loans during any Collection Period that are neither offset by
Prepayment Interest Excesses collected on the Mortgage Loans during such
Collection Period nor covered by a Compensating Interest Payment paid by the
Servicer or Special Servicer will constitute the "Net Aggregate Prepayment
Interest Shortfall" for the related Distribution Date. The aggregate of all
Balloon Interest Shortfalls incurred in respect of all of the Balloon Loans
during any Collection Period that are not offset by Balloon Interest Excesses
or compensating interest payments paid by the Servicer or Special Servicer will
constitute "Net Aggregate Balloon Interest Shortfalls" for the related
Distribution Date. Compensating Interest Payments will not be required to be
made in connection with Prepayment Interest Shortfalls or Balloon Interest
Shortfalls relating to involuntary prepayments.
Any Net Aggregate Prepayment Interest Shortfall and any Net Aggregate
Balloon Interest Shortfall for a Distribution Date will be allocated to each
Class of Certificates, pro rata, in each case reducing interest otherwise
payable thereon. The Distributable Certificate Interest Amount in respect of
any Class of REMIC Regular Certificates will be reduced to the extent any Net
Aggregate Prepayment Interest Shortfalls and any Net Aggregate Balloon Interest
Shortfalls are allocated to such Class of Certificates. See "Servicing of the
Mortgage Loans--Servicing and Other Compensation and Payment of Expense" in
this prospectus supplement.
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On any Distribution Date, to the extent that the aggregate Prepayment
Interest Excesses on all Mortgage Loans other than Specially Serviced Mortgage
Loans exceed the aggregate Prepayment Interest Shortfalls for such Mortgage
Loans for such Distribution Date, the excess amount will be payable to the
Servicer as additional servicing compensation. Likewise, to the extent that the
aggregate Prepayment Interest Excesses on all Specially Serviced Mortgage Loans
exceed the aggregate Prepayment Interest Shortfalls for such Mortgage Loans for
such Distribution Date, or to the extent that any Balloon Interest Excesses on
all Balloon Loans exceed the aggregate Balloon Interest Shortfalls for such
Balloon Loans for such Distribution Date, the excess amount will be payable to
the Special Servicer as additional servicing compensation.
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 Scheduled Payments (other than the
principal portion of Balloon Payments) and any Assumed Scheduled
Payments due or deemed due, as the case may be, in respect of the
Mortgage Loans for their respective Due Dates occurring during the
related Collection Period; and
(b) all payments (including Principal Prepayments and the principal portion
of Balloon Payments) and other collections (including Liquidation
Proceeds, condemnation proceeds, Insurance Proceeds and REO Income
(each as defined herein) and proceeds of Mortgage Loan repurchases)
that were received on or in respect of the Mortgage Loans during the
related Collection Period and that were identified and applied by the
Servicer as recoveries of principal thereof, in each case net of any
portion of such payment or other collection that represents a recovery
of the principal portion of any Scheduled Payment (other than a Balloon
Payment) due, or the principal portion of any Assumed Scheduled Payment
deemed due, in respect of the related Mortgage Loan on a Due Date
during or prior to the related Collection Period and not previously
recovered.
Payments and collections with respect to principal of the Mortgage Loans
include all voluntary and involuntary prepayments of principal made prior to
their scheduled Due Dates ("Principal Prepayments"), all amounts paid by an
insurer in connection with a Mortgage Loan, other than any amounts required to
be paid to the related borrower ("Insurance Proceeds"), Liquidation Proceeds
and income received in connection with the operation of an REO Property, net of
certain expenses ("REO Income").
"Liquidation Proceeds" are proceeds from the sale or liquidation of a
Mortgage Loan or related REO Property (exclusive of Excess Liquidation
Proceeds), net of expenses and any related Advances and interest thereon.
The "Scheduled Payment" for any Mortgage Loan on any Due Date will, in
general, be the amount of the scheduled payment of principal and interest (or
interest only) due thereon on such date (taking into account any waiver,
modification or amendment of the terms of such Mortgage Loan subsequent to the
Closing Date, whether agreed to by the Special Servicer or occurring in
connection with a bankruptcy proceeding involving the related borrower).
An "Assumed Scheduled Payment" is an amount deemed due in respect of (i)
any Balloon Loan that is delinquent in respect of its Balloon Payment beyond
the first Determination Date that follows its original stated Maturity Date or
(ii) any Mortgage Loan as to which the related Mortgaged Property has become an
REO Property. The Assumed Scheduled Payment deemed due on any such Balloon
Mortgage Loan on its original stated Maturity Date and on each successive Due
Date that it remains or is deemed to remain outstanding will equal the
Scheduled 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 in effect immediately
prior to its Maturity Date. With respect to any Mortgage Loan as to which the
related Mortgaged Property has become an REO Property, the Assumed Scheduled
Payment deemed due on each Due Date for so long as the REO Property remains
part of the Trust Fund, equals the Scheduled Payment (or Assumed Scheduled
Payment) due on the last Due Date prior to the acquisition of such REO
Property.
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Allocation of Yield Maintenance Charges. On any Distribution Date, Yield
Maintenance Charges collected during the related Collection Period will be
distributed by the Paying Agent on the classes of Offered Certificates as
follows: to each of the Class A, Class B, Class C, Class D, Class E and Class F
Certificates, for each such Class an amount equal to the product of (a) a
fraction, the numerator of which is the amount distributed as principal to such
Class on such Distribution Date, and the denominator of which is the total
amount distributed as principal to all classes of Certificates on such
Distribution Date, (b) the Base Interest Fraction for the related principal
prepayment and such class of Offered Certificates and (c) the aggregate amount
of Yield Maintenance Charges collected on such principal prepayment during the
related Collection Period. Any Yield Maintenance Charges collected during the
related Collection Period remaining after such distributions will be
distributed to the holders of the Class X Certificates.
The "Base Interest Fraction" with respect to any principal prepayment on
any Mortgage Loan that provides for payment of a Yield Maintenance Charge and
with respect to any class of Offered Certificates is a fraction (A) whose
numerator is the greater of (x) zero and (y) the difference between (i) the
Pass-Through Rate on such class of Offered Certificates and (ii) the Yield Rate
used in calculating the Yield Maintenance Charge with respect to such principal
prepayment and (B) whose denominator is the difference between (i) the Mortgage
Rate on the related Mortgage Loan and (ii) the Yield Rate used in calculating
the Yield Maintenance Charge with respect to such principal prepayment;
provided, however, that under no circumstances shall the Base Interest Fraction
be greater than one. If such Yield Rate is greater than the Mortgage Rate on
the related Mortgage Loan, then the Base Interest Fraction shall equal zero.
No Yield Maintenance Charges will be distributed to holders of the Class
G, Class H, Class I, Class J, Class K, Class L, Class M or Residual
Certificates; instead, after the Certificate Principal Balances of the Class A,
Class B, Class C, Class D, Class E and Class F Certificates have been reduced
to zero, all Yield Maintenance Charges will be distributed to holders of the
Class X Certificates.
For a description of Yield Maintenance Charges, see "Description of the
Mortgage Pool--Certain Terms and Conditions of the Mortgage Loans--Prepayment
Provisions" herein. See also "Certain Legal Aspects of the Mortgage
Loans--Default Interest and Limitations on Prepayments" in the prospectus
regarding the enforceability of Yield Maintenance Charges.
Allocation of Prepayment Premiums. On any Distribution Date, Prepayment
Premiums collected during the related Collection Period will be distributed by
the Paying Agent to the Classes of Offered Certificates for each such Class in
an amount equal to the product of (a) a fraction the numerator of which is the
amount distributed as principal to such Class on such Distribution Date and the
denominator of which is the total amount distributed as principal to all
Classes of Certificates on such Distribution Date, (b) 25% and (c) the total
amount of Prepayment Premiums collected during the related Collection Period.
Any Prepayment Premiums collected during the related Collection Period
remaining after such distributions will be distributed to the holders of the
Class X Certificates.
No Prepayment Premiums will be distributed to holders of the Class G,
Class H, Class I, Class J, Class K, Class L, Class M or Residual Certificates;
instead, after the Certificate Principal Balances of the Class A, Class B,
Class C, Class D, Class E and Class F Certificates have been reduced to zero,
all Prepayment Premiums will be distributed to the holders of the Class X
Certificates.
Any Prepayment Premiums or Yield Maintenance Charges distributed to
holders of a Class of Certificates may not be sufficient to compensate such
holders for any loss in yield attributable to the related Principal
Prepayments.
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Expected Final Distribution Date; Rated Final Distribution Date. The
"Expected Final Distribution Date" with respect to any class of Offered
Certificates is the Distribution Date on which the aggregate Certificate
Balance of such class of Certificates would be reduced to zero based on the
assumptions set forth below. Such Distribution Date shall in each case be as
follows:
<TABLE>
<CAPTION>
CLASS DESIGNATION EXPECTED FINAL DISTRIBUTION DATE
- ---------------------------- ---------------------------------
<S> <C>
Class A-1 ................ September 15, 2008
Class A-2 ................ June 15, 2009
Class B .................. July 15, 2009
Class C .................. February 15, 2010
Class D .................. October 15, 2010
Class E .................. November 15, 2012
Class F .................. August 15, 2013
</TABLE>
The Expected Final Distribution Dates set forth above were calculated
without regard to any delays in the collection of Balloon Payments, without
regard to a reasonable liquidation time with respect to any Mortgage Loans that
may become delinquent and assuming the ARD Loan is prepaid on the Anticipated
Repayment Date. Accordingly, in the event of defaults on the Mortgage Loans (or
in the event the ARD Loan is not prepaid on the Anticipated Repayment Date),
the actual final Distribution Date for one or more classes of the Offered
Certificates may be later, and could be substantially later, than the related
Expected Final Distribution Date(s).
In addition, the Expected Final Distribution Dates set forth above were
calculated on the basis of a 0% CPR. Since the rate of payment (including
prepayments) of the Mortgage Loans may exceed the scheduled rate of payments,
and could exceed such scheduled rate by a substantial amount, the actual final
Distribution Date for one or more classes of the Offered Certificates may be
earlier, and could be substantially earlier, than the related Expected Final
Distribution Date(s). The rate of payments (including prepayments) on the
Mortgage Loans will depend on the characteristics of the Mortgage Loans, as
well as on the prevailing level of interest rates and other economic factors,
and no assurance can be given as to actual payment experience. Finally, the
Expected Final Distribution Dates were calculated assuming that there would not
be an early termination of the Trust Fund and that no losses were experienced
as a result of a default on any of the Mortgage Loans.
The "Rated Final Distribution Date" for each class of Offered Certificates
will be the first Distribution Date after the 24th month following the end of
the amortization term for the Mortgage Loan that, as of the Cut-Off Date, has
the longest remaining amortization term.
Examples of Distributions. The following chart sets forth an example of
distributions on the Certificates for the first month of the Trust Fund's
existence, assuming the Certificates are issued in July, 1999:
<TABLE>
<S> <C> <C>
The close of business on
July 1 (A) Cut-Off Date.
July 31 (B) Record Date for all Classes of Certificates.
July 1 -- August 9 (C) The Collection Period. The Servicer
receives Scheduled Payments due on July 1
and any Principal Prepayments made
after the Cut-Off Date and on or prior to
August 9.
August 9 (D) Determination Date.
August 13 (E) Servicer Remittance Date.
August 16 (F) Distribution Date.
</TABLE>
Succeeding monthly periods follow the pattern of (B) through (F) (except
as described below).
(A) The outstanding principal balance of the Mortgage Loans will be the
aggregate outstanding principal balance of the Mortgage Loans at the close of
business on July 1, 1999 (after deducting principal
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payments due on or before such date, whether or not received). Principal
payments due on or before such date, and the accompanying interest payments,
are not part of the Trust Fund.
(B) Distributions on the next Distribution Date will be made to those
persons that are Certificateholders of record on this date. Each subsequent
Record Date will be the last business day of the month preceding the related
Distribution Date.
(C) Any Scheduled Payments due and collected and Principal Prepayments
collected, after the Cut-Off Date and on or prior to August 9, 1999 will be
deposited in the Certificate Account. Each subsequent Collection Period will
begin on the day after the Determination Date in the month preceding the month
of each Distribution Date and will end on the Determination Date in the month
in which the Distribution Date occurs.
(D) As of the close of business on the Determination Date, the Servicer
will have determined the amounts of principal and interest that will be
remitted with respect to the related Collection Period.
(E) The Servicer will remit to the Paying Agent on the business day
preceding the related Distribution Date all amounts held by the Servicer, and
any P&I Advances required to be made by the Servicer, that together constitute
the Available Distribution Amount for such Distribution Date.
(F) The Paying Agent will make distributions to Certificateholders on the
15th day of each month or, if such day is not a business day, the next
succeeding business day.
SUBORDINATION; ALLOCATION OF LOSSES, SHORTFALLS AND 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 be subordinated, to the extent described
herein, to the rights of holders of the Senior Certificates, and to the rights
of the holders of each other Class of Subordinate Certificates with an earlier
alphabetical Class designation. This subordination is intended to enhance the
likelihood of timely receipt by the holders of the Senior Certificates of the
full amount of all interest payable in respect of the Senior Certificates on
each Distribution Date, and the ultimate receipt by the holders of each Class
of Class A Certificates of principal in an amount equal to the entire
Certificate Balance of the Class A Certificates. Similarly, but to decreasing
degrees (in alphabetical order of Class designation), this subordination is
also intended to enhance the likelihood of timely receipt by the holders of the
Subordinate Certificates (other than the Class M Certificates, which do not
have the benefit of any effective subordination) of the full amount of interest
payable in respect of such Classes of Certificates on each Distribution Date,
and the ultimate receipt by such holders of principal equal to, in each case,
the entire Certificate Balance of such Class of Certificates. This
subordination will be accomplished by the application of the Available
Distribution Amount on each Distribution Date in accordance with the order of
priority described above under "----Application of the Available Distribution
Amount" and by the allocation of Realized Losses as described below. No other
form of credit support will be available for the benefit of the holders of the
Certificates.
Allocation to the Class A Certificates, for so long as they are
outstanding, of the entire Principal Distribution Amount for each Distribution
Date will generally have the effect of reducing the Certificate Balance of that
Class at a faster rate than would be the case if principal payments were
allocated pro rata to all Classes of Certificates with Certificate Balances.
Thus, as principal is distributed to the holders of the Class A Certificates,
the percentage interest in the Trust Fund evidenced by the Class A Certificates
will be decreased (with a corresponding increase in the percentage interest in
the Trust Fund evidenced by the Subordinate Certificates), thereby increasing,
relative to their respective Certificate Balances, the subordination afforded
the Class A Certificates by the Subordinate Certificates. Following retirement
of the Class A Certificates, the herein described successive allocation to the
Subordinate Certificates, in alphabetical order of Class designation, in each
case until such Class is paid in full, of the entire Principal Distribution
Amount for each Distribution Date will provide a similar benefit to each such
Class of Certificates as regards the relative amount of subordination afforded
thereto by the other Classes of Certificates with later alphabetical Class
designations.
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Realized Losses of principal and interest on the Mortgage Loans for any
Distribution Date (to the extent not previously allocated and net of amounts,
if any, on deposit in the Reserve Account) will be allocated to the Class M,
Class L, Class K, Class J, Class I, Class H, Class G, Class F, Class E, Class
D, Class C and Class B Certificates, in that order, and then to the Class A-1
and Class A-2 Certificates and, solely with respect to Realized Losses that
reduce the amount of interest otherwise distributable, to the Class X
Certificates, pro rata, in each case reducing principal and/or interest
otherwise payable thereon.
"Realized Losses" are generally losses arising from the inability of the
Servicer, the Trustee or the Special Servicer to collect all amounts due and
owing under any defaulted Mortgage Loan, including by reason of any
modifications to the terms of a Mortgage Loan, bankruptcy of the related
borrower or a casualty of any nature at the related Mortgaged Property, to the
extent not covered by insurance. Realized Losses also include Expense Losses.
The Realized Loss, if any, in respect of a liquidated Mortgage Loan (or related
REO Property) will generally equal the excess, if any, of (a) the outstanding
principal balance of such Mortgage Loan as of the date of liquidation, together
with all accrued and unpaid interest thereon at the related Mortgage Rate, over
(b) the aggregate amount of Liquidation Proceeds, if any, recovered in
connection with such liquidation (net of any portion of such liquidation
proceeds that is payable or reimbursable in respect of related liquidation and
other servicing expenses). If the Mortgage Rate on any Mortgage Loan is reduced
or a portion of the debt due under any Mortgage Loan is forgiven, whether in
connection with a modification, waiver or amendment granted or agreed to by the
Special Servicer or in connection with a bankruptcy or similar proceeding
involving the related borrower, the resulting reduction in interest paid and
the principal amount so forgiven, as the case may be, also will be treated as a
Realized Loss.
"Expense Losses", which are included among Realized Losses, include, among
other things: (i) any interest paid to the Servicer, Trustee, Fiscal Agent
and/or Special Servicer in respect of unreimbursed Advances; (ii) all Special
Servicer Compensation payable to the Special Servicer from amounts that are
part of the Trust Fund; (iii) any of certain other expenses of the Trust Fund,
including, but not limited to, certain reimbursements and indemnification
payments to the Trustee, the Paying Agent and certain related persons, certain
reimbursements and indemnification payments to the Depositor, the Servicer, the
Special Servicer and certain related persons, certain taxes payable from the
assets of the Trust Fund, the costs and expenses of any tax audits with respect
to the Trust Fund and certain other tax-related expenses and the cost of
various opinions of counsel required to be obtained in connection with the
servicing of the Mortgage Loans and administration of the Trust Fund; and (iv)
any other expense of the Trust Fund not otherwise specifically included in the
calculation of "Realized Loss" for which there is no corresponding collection
from the borrower.
Any shortfall in the amount of the Distributable Certificate Interest
Amount paid to the Certificateholders of any Class of Certificates on any
Distribution Date will result in Unpaid Interest for such Class which, together
with interest thereon accrued at the applicable Pass-Through Rate, will be
distributable in subsequent periods to the extent of funds available therefor.
ADVANCES
P&I Advances. On the business day prior to each Distribution Date, the
Servicer will be obligated to make an advance (each, a "P&I Advance") in the
amount of any Scheduled Payments (net of the related Servicing Fees), other
than any Balloon Payment, on the Mortgage Loans that are delinquent as of the
close of business on the preceding Determination Date, but only to the extent
that the Servicer determines, in its sole discretion, exercised in good faith,
that the amount so advanced, plus interest expected to accrue thereon, will be
recoverable from subsequent payments or collections (including Insurance
Proceeds and Liquidation Proceeds) in respect of the related Mortgage Loan, and
only until the Mortgage Loan has been liquidated; provided, however, that the
amount of any P&I Advance required to be made by the Servicer with respect to a
Mortgage Loan as to which there has been an Appraisal Reduction will be an
amount equal to the product of (i) the amount required to be advanced by the
Servicer without giving effect to this proviso and (ii) a fraction, the
numerator of which is the Principal Balance of such Mortgage Loan as of the
immediately preceding Determination Date less any Appraisal Reduction in effect
with respect to such Mortgage Loan and the denominator of which is the
Scheduled
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<PAGE>
Principal Balance of the Mortgage Loan as of such Determination Date; and
provided, further, that with respect to Scheduled Payments on any Mortgage Loan
that has been modified for which the Servicer is obligated to make a P&I
Advance, the amount of any such P&I Advance shall be adjusted in conformity
with the modification.
With respect to any Mortgage Loan that is delinquent in respect of its
Balloon Payment (including any REO Property as to which the related Mortgage
Loan provided for a Balloon Payment), P&I Advances will be required in an
amount equal to the Assumed Scheduled Payment, less the related Servicing Fee,
subject to the same conditions and limitations (as described above) that apply
to P&I Advances of other Scheduled Payments. The Servicer will not be required
to advance interest accrued above the non-default Mortgage Rate as a result of
the imposition of any default rate or any Excess Interest.
The Servicer will be entitled to interest on P&I Advances, which interest
will accrue at a rate equal to the "Prime Rate" as reported in The Wall Street
Journal from time to time (the "Advance Rate").
P&I Advances (and interest accrued thereon at the Advance Rate) will be
reimbursable (or payable) from recoveries on the related Mortgage Loans and, to
the extent the Servicer determines in its sole discretion, exercised in good
faith, that a P&I Advance will not be ultimately recoverable from related
recoveries, from any funds on deposit in the Certificate Account and
Distribution Account. In no event will the Servicer be required to make
aggregate P&I Advances with respect to any Mortgage Loan which, when including
the amount of interest accrued thereon at the Advance Rate, equals an amount
greater than the Principal Balance (plus all overdue amounts) thereof, less any
Appraisal Reductions with respect thereto. Such right of the Servicer to
reimbursement (or payment) out of recoveries will be prior to the right of the
Certificateholders to receive any amounts recovered with respect to any
Mortgage Loan. If the Servicer fails to make a required P&I Advance, the
Trustee is required to make such P&I Advance, and if the Trustee fails to make
any required P&I Advance, the Fiscal Agent is required to make such P&I
Advance.
Servicing Advances. In general, customary, reasonable and necessary
"out-of-pocket" costs and expenses required to be incurred by the Servicer in
connection with the servicing of a Mortgage Loan after a default (whether or
not a payment 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 as described below. The
Servicer will be permitted to pay, or to direct the payment of, certain
servicing expenses directly out of the Certificate Account or Distribution
Account and under certain circumstances without regard to the relationship
between the expense and the funds from which it is being paid.
With respect to Mortgage Loans, the Servicer will be obligated to make
Servicing Advances for real estate taxes and insurance premiums not paid by the
related borrower on a timely basis and for collection or foreclosure costs
(including reasonable attorneys fees). With respect to REO Properties, the
Servicer will be obligated to make Servicing Advances, if necessary and to the
extent that funds from the operation of the related REO Property are
unavailable to pay any amounts due and payable, for (i) insurance premiums,
(ii) real estate taxes and assessments in respect of such REO Property that may
result in the imposition of a lien, (iii) any ground rents in respect of such
REO Property and (iv) costs and expenses necessary to maintain, manage or
operate such REO Property. Notwithstanding the foregoing, the Servicer will be
obligated to make such Servicing Advances only to the extent that the Servicer
determines that the amount so advanced will be recoverable from subsequent
payments or collections (including Insurance Proceeds, Liquidation Proceeds and
REO Income) in respect of such Mortgage Loan or REO Property. Servicing
Advances (including interest accrued thereon at the Advance Rate) will be
reimbursable from recoveries or collections on the related Mortgage Loan or REO
Property. However, if the Servicer determines (as described below) that any
Servicing Advance previously made (and accrued interest thereon at the Advance
Rate) will not be ultimately recoverable from such related recoveries, such
advances will be reimbursable from any amounts on deposit in the Certificate or
Distribution Account. If the Servicer fails to make a required Servicing
Advance, the Trustee is required to make such Servicing Advance, and if the
Trustee fails to make any such Servicing Advance, the Fiscal Agent is required
to make such Servicing Advance.
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Nonrecoverable Advances. The determination by the Servicer that any P&I
Advance or Servicing Advance, previously made or proposed to be made, would not
be recoverable will be made in the sole discretion of the Servicer, exercising
good faith, and is required to be accompanied by an officer's certificate
delivered to the Trustee and the Paying Agent and setting forth the reasons for
such determination, with copies of appraisals or internal valuations, if any,
or other information that supports such determination. The Servicer's
determination of nonrecoverability will be conclusive and binding upon the
Certificateholders, the Trustee and the Fiscal Agent. The Trustee and the
Fiscal Agent shall be entitled to rely conclusively on any determination by the
Servicer of nonrecoverability with respect to such Advance and shall have no
obligation (but will be entitled) to make a separate determination of
recoverability.
APPRAISAL REDUCTIONS
Not later than the earliest of (i) the date 120 days after the occurrence
of any delinquency in payment with respect to a Mortgage Loan if such
delinquency remains uncured, (ii) the date 30 days after receipt of notice that
the related borrower has filed a bankruptcy petition or a receiver is appointed
in respect of the related Mortgaged Property, provided that such petition or
appointment remains in effect, (iii) the effective date of any modification to
a Money Term of a Mortgage Loan, other than an extension of the date that a
Balloon Payment is due for a period of less than six months, and (iv) the date
30 days following the date a Mortgaged Property becomes an REO Property (each
of (i), (ii), (iii) and (iv), an "Appraisal Event"), the Special Servicer is
required to have obtained an MAI appraisal (if the Scheduled Principal Balance
of the Mortgage Loan is greater than $1,000,000) or an internal valuation (if
the Scheduled Principal Balance of the Mortgage Loan is equal to or less than
$1,000,000) of the related Mortgaged Property or REO Property, as the case may
be, unless such an appraisal or valuation had been obtained within the prior
twelve months; provided, that if the Special Servicer is required to obtain an
MAI appraisal of a Mortgaged Property after receipt of the notice described in
(ii) above, such appraisal will be obtained no later than 60 days after receipt
of such notice and an internal valuation will be obtained no later than 30 days
after receipt of such notice. As a result of such appraisal or internal
valuation, an "Appraisal Reduction" may be created.
The "Appraisal Reduction" for any Mortgage Loan, including a Mortgage Loan
as to which the related Mortgaged Property has become an REO Property, will be
an amount, calculated as of the first Determination Date that is at least
fifteen days after the date on which the appraisal is obtained or the internal
valuation is performed, equal to the excess, if any, of (a) the sum of (i) the
Scheduled Principal Balance of such Mortgage Loan, (ii) to the extent not
previously advanced by the Servicer, the Trustee or the Fiscal Agent, all
accrued and unpaid interest on the Mortgage Loan, (iii) all related
unreimbursed Advances and interest on such Advances at the Advance Rate (as
defined herein) and (iv) to the extent not previously advanced by the Servicer,
the Trustee or the Fiscal Agent, all currently due and unpaid real estate taxes
and assessments, insurance premiums and, if applicable, ground rents and other
amounts in respect of the related Mortgaged Property or REO Property, as the
case may be (in each case, net of any amounts escrowed for such item,
including, but not limited to maintenance reserves, replacement reserves and
environmental reserves), over (b) 90% of the value (net of any prior mortgage
liens) of such Mortgaged Property or REO Property as determined by such
appraisal or internal valuation. Notwithstanding the foregoing, if an internal
valuation of the Mortgaged Property is performed, the Appraisal Reduction will
equal the greater of (a) the amount calculated in the preceding sentence and
(b) 25% of the Principal Balance of the Mortgage Loan. An Appraisal Reduction
will be reduced to zero as of the date the related Mortgage Loan is brought
current under the then current terms of the Mortgage Loan for at least three
consecutive months (and no Appraisal Reduction will exist as to any Mortgage
Loan after it has been paid in full, liquidated, repurchased or otherwise
disposed of). An appraisal for any Mortgage Loan that has not been brought
current for at least three consecutive months (or paid in full, liquidated,
repurchased or otherwise disposed of) will be updated annually, with a
corresponding adjustment to the amount of the related Appraisal Reduction.
The existence of an Appraisal Reduction will proportionately reduce the
Servicer's, the Trustee's or the Fiscal Agent's, as the case may be, obligation
to make P&I Advances in respect of the related Mortgage Loan, which will
generally result in a reduction in current distributions of interest in respect
of the then most subordinate Class of Principal Balance Certificates. See
"----Advances----P&I Advances" below.
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REPORTS TO CERTIFICATEHOLDERS; CERTAIN AVAILABLE INFORMATION
Paying Agent Reports. Based solely on information provided in monthly
reports prepared by the Servicer and the Special Servicer and delivered to the
Trustee and the Paying Agent, the Paying Agent will be required to provide or
make available to each Certificateholder on each Distribution Date a statement,
in the form included in Annex C (the "Distribution Date Statement") setting
forth, to the extent applicable:
(i) the amount, if any, of such distributions to the holders of each
Class of Principal Balance Certificates applied to reduce the aggregate
Certificate Balance thereof;
(ii) the amount of such distribution to holders of each Class of REMIC
Regular Certificates allocable to (A) interest, (B) Yield Maintenance
Charges and (C) Prepayment Premiums;
(iii) the number of outstanding Mortgage Loans and the aggregate
Principal Balance and Scheduled Principal Balance of the Mortgage Loans at
the close of business on such Distribution Date;
(iv) the number, the aggregate Principal Balance and aggregate Scheduled
Principal Balance of Mortgage Loans (a) delinquent 30 to 59 days, (b)
delinquent 60 to 89 days, (c) delinquent 90 days or more, or (d) as to
which foreclosure proceedings have been commenced;
(v) with respect to any REO Property included in the Trust Fund, the
principal balance of the related Mortgage Loan as of the date of
acquisition of the REO Property, the aggregate Principal Balance and the
Scheduled Principal Balance thereof;
(vi) as of the related Determination Date (a) as to any REO Property sold
during the related Collection Period, the date of the related determination
by the Special Servicer or Servicer, as the case may be, that it has
recovered all payments which it expects to be finally recoverable and the
amount of the proceeds of such sale deposited into the Certificate Account,
and (b) the aggregate amount of other revenues collected by the Special
Servicer with respect to each REO Property during the related Collection
Period and credited to the Certificate Account, in each case identifying
such REO Property by the loan number of the related Mortgage Loan;
(vii) the aggregate Certificate Balance or Notional Amount of each Class
of REMIC Regular Certificates before and after giving effect to the
distribution made on such Distribution Date;
(viii) the aggregate amount of Principal Prepayments made during the
related Collection Period;
(ix) the Pass-Through Rate applicable to each Class of REMIC Regular
Certificates for such Distribution Date;
(x) the aggregate amount of servicing fees paid to the Servicer and the
Special Servicer;
(xi) the amount of Unpaid Interest, Realized Losses, if any, incurred
with respect to the Mortgage Loans;
(xii) the aggregate amount of Servicing Advances and P&I Advances
outstanding that have been made by the Servicer, the Special Servicer, the
Trustee and the Fiscal Agent separately stated;
(xiii) the amount of any Appraisal Reductions effected during the related
Collection Period on a loan-by-loan basis and the total Appraisal
Reductions in effect as of such Distribution Date; and
(xiv) such other information and in such form as shall be specified in
the Pooling and Servicing Agreement.
In the case of information furnished pursuant to subclauses (a)(i),
(a)(ii) and (a)(xi) above, the amounts shall be expressed as a dollar amount
per $1,000 of original actual principal amount of the Certificates for all
Certificates of each applicable Class.
The Paying Agent will make available each month, to any interested party,
the foregoing reports via its website, initially located at
"www.ctslink.com/cmbs" (the "Paying Agent's Website"), electronic
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bulletin board and its fax-on-demand service. The Paying Agent's electronic
bulletin board may be accessed by calling (301) 815-6620, and its fax-on-demand
service may be accessed by calling (301) 815-6610. For assistance with the
above-mentioned services, Certificateholders may call (301) 815-6600. The
Paying Agent will also make Mortgage Loan information as presented in the CSSA
loan setup file format, the CSSA loan periodic update file format, the Special
Servicer Reports (as defined herein) and the Annual Report (as defined herein)
available each month to any Certificateholder, any Certificate Owner, the
Rating Agencies or any other interested party via the Paying Agent's Website.
In addition, pursuant to the Pooling and Servicing Agreement, the Paying Agent
will make available as a convenience for interested parties (and not in
furtherance of the distribution of the prospectus or the prospectus supplement
under the securities laws), the Pooling and Servicing Agreement, the prospectus
and the prospectus supplement via the Paying Agent's Website. The Trustee and
the Paying Agent will make no representations or warranties as to the accuracy
or completeness of such documents and will assume no responsibility therefor.
In addition, the Trustee and the Paying Agent may disclaim responsibility for
any information of which it is not the original source.
In connection with providing access to the Paying Agent's Website or
electronic bulletin board, the Paying Agent may require registration and the
acceptance of a disclaimer. The Trustee and the Paying Agent shall not be
liable for the dissemination of information in accordance with the Pooling and
Servicing Agreement.
On an annual basis, the Servicer is required to deliver to the Trustee and
to the Paying Agent, who will deliver such report to the Underwriters, the
Certificateholders, the Depositor and anyone the Depositor or any Underwriter
reasonably designates, the Special Servicer and the Rating Agencies, a report
for each Mortgage Loan based on the most recently available year-end financial
statements and most recently available rent rolls of each applicable borrower
(to the extent such information is provided to the Servicer) containing such
information and analyses as required by the Pooling and Servicing Agreement
including, without limitation, Debt Service Coverage Ratios, to the extent
available, substantially in the form included in Annex C (the "Annual Report").
SPECIAL SERVICER REPORTS.
On or about each Determination Date, the Special Servicer will prepare, or
provide the Servicer with the information to prepare, reports with respect to
Specially Serviced Mortgage Loans as required by the Pooling and Servicing
Agreement (collectively, the "Special Servicer Reports"), which are
substantially similar to the forms included in Annex C. Such reports generally
will include a report showing loan-by-loan detail on each Specially Serviced
Mortgage Loan that is 60 days delinquent, 90 days delinquent, or in the process
of foreclosure, an REO status report for each REO Property and a modification
report showing loan-by-loan detail for each modification closed during the most
recent reporting period. Such reports will be delivered, no later than the
business day prior to each Distribution Date, to the Underwriters, the Rating
Agencies and the Depositor; provided that certain limitations will be imposed
on such recipients with respect to the use and further dissemination of the
information in such reports to the extent described in the Pooling and
Servicing Agreement.
OTHER INFORMATION.
The Pooling and Servicing Agreement generally requires that the Servicer
make available, at its offices primarily responsible for servicing the Mortgage
Loans or at such other office as it may reasonably designate, during normal
business hours, upon reasonable advance notice for review by any holder of a
Certificate, each Rating Agency or the Depositor, originals or copies of, among
other things, the following items (except to the extent not permitted by
applicable law or under any of the Mortgage Loan documents):
(i) the Pooling and Servicing Agreement and any amendments thereto;
(ii) all reports or statements delivered to holders of the relevant Class
of Certificates since the Closing Date;
(iii) all officer's certificates delivered to the Trustee or the Paying
Agent since the Closing Date;
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(iv) all accountants' reports delivered to the Trustee or the Paying Agent
since the Closing Date;
(v) the most recent property inspection report prepared by or on behalf of
the Servicer or the Special Servicer in respect of each Mortgaged Property and
any Appraisal obtained by the Special Servicer;
(vi) the most recent Mortgaged Property annual operating statements and
rent rolls, if any, collected by or on behalf of the Servicer or the Special
Servicer;
(vii) any and all modifications, waivers and amendments of the terms of a
Mortgage Loan entered into by the Servicer and/or the Special Servicer; and
(viii) any and all officer's certificates and other evidence delivered to
the Trustee or the Paying Agent to support the Servicer's determination that
any Advance was not or, if made, would not be, recoverable.
Copies of any and all of the foregoing items and any servicer reports will
be available from the Servicer upon request; however, the Servicer will be
permitted to require payment of a sum sufficient to cover the reasonable costs
and expenses of providing such copies. Recipients of such information will
generally be required to acknowledge that such information may be used only in
connection with an evaluation of the Certificates by such recipient.
OPTIONAL TERMINATION; RETIREMENT OF CERTIFICATES
The Depositor, the Servicer, the Special Servicer and the holder of the
majority interest in the Class R-I Certificates, each in turn, will have the
option to purchase, in whole but not in part, the Mortgage Loans and any other
property remaining in the Trust Fund on any Distribution Date on or after the
Distribution Date on which the aggregate Certificate Balance of all Classes of
Principal Balance Certificates then outstanding is less than or equal to 1% of
the Initial Pool Balance. The purchase price for any such purchase will be 100%
of the aggregate unpaid principal balances of the Mortgage Loans (other than
any Mortgage Loans as to which the Servicer has determined that all payments or
recoveries with respect thereto have been made), plus accrued and unpaid
interest at the Mortgage Rate (or the Mortgage Rate less the Servicing Fee Rate
if the Servicer is the purchaser) to the Due Date for each Mortgage Loan ending
in the Collection Period with respect to which such purchase occurs, plus
unreimbursed Advances, with interest thereon at the Advance Rate, and the fair
market value of any other property remaining in the Trust Fund. The optional
termination of the Trust Fund must be conducted so as to constitute a
"qualified liquidation" of each REMIC under Section 860F of the Code. Upon any
such termination, the purchase price for the Mortgage Loans and the other
property in the Trust Fund will be applied to pay accrued and unpaid interest
on and reduce the Certificate Balance of all outstanding Classes to zero in the
manner provided under "Description of the Certificates----
Distributions----Application of the Available Distribution Amount" in this
prospectus supplement. Notice of any optional termination must be mailed by the
Trustee to the Certificateholders and the Rating Agencies upon the receipt of
written notice of such optional termination by the Trustee.
ANY SUCH TERMINATION WILL HAVE AN ADVERSE EFFECT ON THE YIELD OF ANY
OUTSTANDING OFFERED CERTIFICATES PURCHASED AT A PREMIUM. SEE "YIELD, PREPAYMENT
AND MATURITY CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT.
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 Pass-Through Rates of, distributions on and
allocations of Realized Losses to the Certificates, as well as the amount of
Servicing Fees, Trustee Fees and Special Servicing Fees payable under the
Pooling and Servicing Agreement, be treated as having remained outstanding
until such REO Property is liquidated. In connection therewith, operating
revenues and other proceeds derived from such REO Property (exclusive of
related operating costs) will be "applied" by the Servicer as principal,
interest and other amounts "due" on such Mortgage Loan; and, subject to the
recoverability determination described under "----Advances" below and the
effect of any Appraisal Reductions described under "----Appraisal Reductions"
below, the Servicer 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.
References to "Mortgage Loan" and "Mortgage Loans" in the definitions of
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"Weighted Average Net Mortgage Rate" and "Principal Distribution Amount" are
intended to include any Mortgage Loan or Mortgage Loans as to which the related
Mortgaged Property has become an REO Property.
THE TRUSTEE
LaSalle Bank National Association ("LaSalle") will act as Trustee. LaSalle
is a subsidiary of LaSalle National Corporation which is a subsidiary of the
Fiscal Agent. The Trustee is at all times required to be, and will be required
to resign if it fails to be: (i) an institution insured by the FDIC, (ii) a
corporation or national bank, 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 (iii) an institution whose long-term senior unsecured
debt (or that of its fiscal agent, if applicable) is rated not less than "AA"
by DCR and "Aa" by Moody's (or such lower ratings as the Rating Agencies would
permit without an adverse effect on any of the then-current ratings of 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, Suite 1625, Chicago, Illinois 60674, Attention:
Asset-Backed Securities Trust Services Group--Bear Stearns Commercial Mortgage
Securities Inc., Commercial Mortgage Pass-Through Certificates, Series
1999-WF2. On April 30, 1999, LaSalle National Bank and LaSalle Bank N.A.
merged, with the surviving entity being LaSalle National Bank, but operating
under the name of LaSalle Bank National Association. As of March 31, 1999,
LaSalle Bank National Association restated to reflect the merger of the two
banks had total assets of $28.22 billion. See "Description of the
Agreements--The Trustee", "--Duties of the Trustee", "--Certain Matters
Regarding the Trustee" and "--Resignation and Removal of the Trustee" in the
prospectus.
As compensation for the performance of its duties, the Trustee will be
paid a monthly fee as set forth in the Pooling and Servicing Agreement (the
"Trustee Fee").
THE FISCAL AGENT
ABN AMRO Bank N.V., a Netherlands banking corporation and the indirect
corporate parent of the Trustee, will act as Fiscal Agent for the Trust Fund
and will be obligated to make any Advance required to be made, and not made, by
the Servicer and the Trustee under the Pooling and Servicing Agreement,
provided that the Fiscal Agent will not be obligated to make any Advance that
it determines, in its sole discretion, exercised in good faith, to be a
Nonrecoverable Advance. The Fiscal Agent will be entitled to rely conclusively
on any determination by the Servicer, the Special Servicer (solely in the case
of Servicing Advances) 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 Servicer and the Trustee. See "--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, 1998, the Fiscal Agent had
consolidated assets of approximately $505 billion. In the event that LaSalle
shall, for any reason, cease to act as Trustee under the Pooling and Servicing
Agreement, ABN AMRO Bank N.V. likewise shall no longer serve in the capacity of
Fiscal Agent thereunder.
THE PAYING AGENT, CERTIFICATE REGISTRAR AND AUTHENTICATING AGENT
Norwest Bank Minnesota, National Association ("Norwest Bank"), will serve
as the paying agent (in such capacity, the "Paying Agent"). In addition,
Norwest Bank Minnesota, National Association will serve as registrar (in such
capacity, the "Certificate Registrar") for purposes of recording and otherwise
providing for the registration of the Offered Certificates and of transfers and
exchanges of the Definitive Certificates, if issued, and as authenticating
agent of the Certificates (in such capacity, the "Authenticating Agent").
Norwest Bank's principal office is located at Norwest Center, Sixth and
Marquette, Minneapolis, Minnesota 55479-0113. Norwest Bank is an affiliate of
the Servicer. As compensation for the performance of its duties as Paying
Agent, Certificate Registrar and Authenticating Agent, Norwest Bank will be
paid a portion of the monthly Trustee Fee as set forth in the Pooling and
Servicing Agreement.
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YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Offered Certificate will be affected by (i) the
rate and timing of principal payments (including voluntary and involuntary
principal prepayments and delinquent payments) and principal losses on the
Mortgage Loans and (ii) the extent to which such principal payments or losses
are applied or losses are allocated on any Distribution Date in reduction of
the Certificate Balance of the Class to which such Certificate belongs. The
yield on any Offered Certificate that is purchased at a discount or premium
will also be affected by the rate and timing of principal payments (including
voluntary and involuntary principal prepayments and delinquent payments) and
principal losses on the Mortgage Loans. See "Description of the
Certificates--Distributions--Priority" and "--Distributions--Principal
Distribution Amount" herein.
Pass-Through Rate. The Pass-Through Rates applicable to the Class A-1 and
Class A-2, Certificates for each Distribution Date will, at all times, be equal
to % and % per annum, respectively; provided, however, that each such
Pass-Through Rate will not exceed the Weighted Average Net Mortgage Rate for
such Distribution Date. The initial Pass-Through Rates for the Class B, Class
C, Class D, Class E and Class F Certificates will be %, %, %, % and
%, respectively. For interest periods relating to Distribution Dates after
August 16, 1999, the Pass-Through Rate of the Class B Certificates will be a
per annum rate equal to the NWAC Rate minus % for such Distribution Date,
and the Pass-Through Rates of the Class C, Class D, Class E and Class F
Certificates will be a per annum rate equal to the NWAC Rate for such
Distribution Date.
Certain of the Mortgage Loans have a Net Mortgage Rate which may be less
than the Pass-Through Rate of the Class A-1 or Class A-2 Certificates. However,
the shortfall between the Net Mortgage Rate of such Mortgage Loans and the
fixed Pass-Through Rates of the Offered Certificates is expected to be covered
at all times during the life of the Offered Certificates by the amount of
interest payments on the other Mortgage Loans in the Mortgage Pool, all of
which bear interest at Mortgage Rates (and with corresponding Net Mortgage
Rates) greater than the Net Mortgage Rate for such Mortgage Loans. However, in
the unlikely event that substantially all of the other Mortgage Loans pay off
or are otherwise liquidated before the Offered Certificates are retired it is
possible that the Pass-Through Rate could be adjusted downward to avoid a
mismatch between such rate and the Net Mortgage Rate of such Mortgage Loans.
Rate and Timing of Principal Payments. The yield to holders of Offered
Certificates that are purchased at a discount or premium will be affected by
the rate and timing of principal payments on the Mortgage Loans (including
principal prepayments on the Mortgage Loans resulting from both voluntary
prepayments by the mortgagors and involuntary liquidations). The rate and
timing of principal payments on the Mortgage Loans will in turn be affected by
the amortization schedules thereof, the dates on which Balloon Payments are
due, any extensions of Maturity Dates by the Special Servicer 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). In
addition, although the borrower under the ARD Loan may have certain incentives
to prepay the Mortgage Loan on the related Anticipated Repayment Date, there
can be no assurance that the borrower under the ARD Loan will be able to prepay
such Mortgage Loan on the related Anticipated Repayment Date. The failure of
the related borrower to prepay the ARD Loan on the Anticipated Repayment Date
will not be an event of default under the terms of such Mortgage Loan;
provided, that the Servicer or the Special Servicer, as the case may be, may
take action to enforce the Trust Fund's right to apply excess cash flow to
principal in accordance with the terms of the related Mortgage Loan documents.
See "Risk Factors--Risks Associated with Balloon Payments and ARD Loan" herein.
Prepayments and, assuming the respective Maturity Dates therefor have not
occurred, liquidations and purchases of the Mortgage Loans, will result in
distributions on the Offered Certificates of amounts that would otherwise be
distributed over the remaining terms of the Mortgage Loans. Defaults on the
Mortgage Loans, particularly at or near their stated Maturity Dates, may result
in significant delays in
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payments of principal on the Mortgage Loans (and, accordingly, on the Offered
Certificates) while work-outs are negotiated or foreclosures are completed. See
"Servicing of the Mortgage Loans--Modifications, Waiver and Amendments" and
"--Realization Upon Defaulted Mortgage Loans" herein and "Certain Legal Aspects
of Mortgage Loans--Foreclosure" in the prospectus. Because the rate of
principal payments on the Mortgage Loans will depend on future events and a
variety of factors (as described below), no assurance can be given as to such
rate or the rate of principal prepayments in particular. The Depositor 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.
The extent to which the yield to maturity of any class of Offered
Certificates may vary from the anticipated yield will depend upon, among other
things, the degree to which such Certificates are purchased at a discount or
premium and when, and to what degree, payments of principal on the Mortgage
Loans are in turn distributed on 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 will 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
the Mortgage Loans will result in an actual yield to such investor that is
lower than the anticipated yield. In general, the earlier a payment of
principal is distributed on an 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 distributed
on such investor's Offered Certificates occurring at a rate higher (or lower)
than the rate anticipated by the investor during any particular period would
not be fully offset by a subsequent like reduction (or increase) in the rate of
principal payments.
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 or shortfalls or
losses otherwise resulting in the reduction of the assets of the Trust Fund.
Losses and other shortfalls on the Mortgage Loans will generally be borne by
the holders of the Class M, Class L, Class K, Class J, Class I, Class H, Class
G, Class F, Class E, Class D, Class C and Class B Certificates, in that order,
and in each case to the extent of amounts otherwise distributable in respect of
such class of Certificates. In the event of the reduction of the Certificate
Balances of all such classes of Certificates to zero, such losses and
shortfalls will then be borne, pro rata, by the Class A-1 and Class A-2
Certificates (and Class X Certificates with respect to shortfalls of interest).
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on 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, due-on-sale clauses, Lockout
Periods, Yield Maintenance Charges, Prepayment Premiums 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 rental properties 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" and "Description of the Mortgage Pool" herein and "Risk Factors" and
"Yield and Maturity Considerations--Yield and Prepayment Considerations" in the
prospectus. The rate of prepayment on the Mortgage Pool is likely to be
affected by prevailing market interest rates for Mortgage Loans of a comparable
type, term and risk level as the Mortgage Loans. When the prevailing market
interest rate is below a mortgage coupon, a borrower may have an increased
incentive to refinance its Mortgage Loan. However, under all of the Mortgage
Loans voluntary prepayments are subject to Lockout Periods, Yield Maintenance
Periods and/or Prepayment Premium Periods, although the enforceability of such
provisions is, in many states, subject to certain equitable principles even
outside of the bankruptcy context. See "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans--Yield Maintenance and
Prepayment Provisions" herein.
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
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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 Depositor makes no representation 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.
Delay in Payment of Distributions. Because each monthly distribution is
made on each Distribution Date, which is at least 15 days after the end of the
related Interest Accrual Period, the effective yield to the holders of the
Offered Certificates will be lower than the yield that would otherwise be
produced by the applicable Pass-Through Rates and purchase prices.
Unpaid Distributable Certificate Interest. As described under
"Description of the Certificates-- Distributions--Priority" 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.
Certificate Deferred Interest. Certificate Deferred Interest, which may
result from the modification of Mortgage Loans to reduce their interest payment
rates below their interest accrual rates, is added on each Distribution Date to
the Class M, Class L, Class K, Class J, Class I, Class H, Class G, Class F,
Class E, Class D, Class C and Class B Certificates in that order and then pro
rata to the Class A-1 Certificates and the Class A-2 Certificates, in each case
up to the respective Accrued Certificate Interest for each such Class for the
such Distribution Date. The effect of such an allocation of Certificate
Deferred Interest to the REMIC Regular Certificates other than the Class X
Certificates is to reduce the amount of interest that would have been
distributable on the Class X Certificates in the absence of such modification.
WEIGHTED AVERAGE LIFE
The weighted average life of an Offered Certificate refers to the average
amount of time that will elapse from the date of its issuance until each dollar
allocable to principal of such Certificate is distributed to the investor. The
weighted average life of an Offered Certificate will be influenced by, among
other things, the rate at which principal on the Mortgage Loans is paid or
otherwise collected, which may be in the form of scheduled amortization,
voluntary prepayments, Insurance and condemnation proceeds and Liquidation
Proceeds.
Prepayments on Mortgage Loans may be measured by a prepayment standard or
model. The model used in this prospectus supplement is the "Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant annual rate
of prepayment each month, expressed as a per annum percentage of the
then-outstanding Principal Balance of the pool of Mortgage Loans. As used in
each of the following tables, the column headed "0% CPR" assumes that none of
the Mortgage Loans is prepaid before the Mortgage Loan Maturity Date. The
columns headed "3% CPR", "6% CPR", "9% CPR" and "12% CPR" assume that
prepayments on the Mortgage Loans are made at those levels of CPR following the
expiration of any Lockout Period and/or Yield Maintenance Period. There is no
assurance, however, that prepayments of the Mortgage Loans will conform to any
level of CPR, and no representation is made that the Mortgage Loans will prepay
at the levels of CPR shown or at any other prepayment rate.
The following tables indicate the percentage of the initial Certificate
Balance of each class of the Offered Certificates that would be outstanding
after each of the dates shown at various CPRs and the corresponding weighted
average life of each such class of Certificates. The tables have been prepared
on the basis of the following assumptions, among others: (i) scheduled monthly
payments of principal and/or interest on the Mortgage Loans, in each case prior
to any prepayment of the Mortgage Loan, will be timely received (with no
defaults) and will be distributed on the 15th day of each month (or the next
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business day if the 15th day of the month is not a business day) commencing on
August 16, 1999; (ii) the Mortgage Rate in effect for each Mortgage Loan as of
the Cut-Off Date will remain in effect to the Maturity Date of such Mortgage
Loan; (iii) the monthly principal and interest payment due for each Mortgage
Loan on the first Due Date following the Cut-Off Date will continue to be due
on each Due Date until the Maturity Date of such Mortgage Loan; (iv) any
principal prepayments on the Mortgage Loans will be received on their
respective Due Dates after the expiration of any applicable Lockout Period
and/or Yield Maintenance Period at the respective levels of CPR set forth in
the tables; (v) the related Mortgage Loan Seller will not be required to
repurchase any Mortgage Loan, and none of the Servicer, the Special Servicer,
the holders of the Controlling Class or the holders of the Class R-I, R-II or
R-III Certificates will exercise its option to purchase all the Mortgage Loans
and thereby cause an early termination of the Trust Fund; (vi) no Yield
Maintenance Charges are included in any allocations or calculations; (vii) any
principal prepayments received on the Mortgage Loans are prepayments in full;
(viii) the Closing Date is July 1, 1999; and (ix) the ARD Loan prepays on the
Anticipated Repayment Date. To the extent that the Mortgage Loans have
characteristics that differ from those assumed in preparing the tables set
forth below, a class of Offered Certificates may mature earlier or later than
indicated by the tables. It is highly unlikely that the Mortgage Loans will
prepay at any constant rate until maturity or that all the Mortgage Loans will
prepay at the same rate. In addition, variations in the actual 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 equal any of the
specified CPR percentages. Investors are urged to conduct their own analyses of
the rates at which the Mortgage Loans may be expected to prepay. Based on the
foregoing assumptions, the following tables indicate the resulting weighted
average lives of each class of Offered Certificates and set forth the
percentage of the initial Certificate Balance of such class of Offered
Certificate that would be outstanding after each of the dates shown at the
indicated CPRs.
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS A-1 CERTIFICATES AT THE RESPECTIVE CPRS
<TABLE>
<CAPTION>
DATE 0%CPR 3%CPR 6%CPR 9%CPR 12%CPR
- ----------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Initial Percentage .......... 100 100 100 100 100
July 15, 2000 ............... 95 95 95 95 95
July 15, 2001 ............... 90 90 90 90 90
July 15, 2002 ............... 85 85 85 84 84
July 15, 2003 ............... 79 79 79 78 78
July 15, 2004 ............... 55 54 54 53 53
July 15, 2005 ............... 48 47 47 46 46
July 15, 2006 ............... 26 26 25 25 24
July 15, 2007 ............... 19 18 18 17 17
July 15, 2008 ............... 7 6 5 4 4
July 15, 2009 ............... 0 0 0 0 0
Weighted Average Life
(Years)(1) ................. 5.7 5.7 5.6 5.6 5.6
</TABLE>
- ----------
(1) The weighted average life of the Class A-1 Certificates is determined by
(i) multiplying the amount of each principal distribution thereon by the
number of years from the date of issuance of the Class A-1 Certificates
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 Class A-1 Certificates.
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<PAGE>
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS A-2 CERTIFICATES AT THE RESPECTIVE CPRS
<TABLE>
<CAPTION>
DATE 0%CPR 3%CPR 6%CPR 9%CPR 12%CPR
- ----------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Initial Percentage .......... 100 100 100 100 100
July 15, 2000 ............... 100 100 100 100 100
July 15, 2001 ............... 100 100 100 100 100
July 15, 2002 ............... 100 100 100 100 100
July 15, 2003 ............... 100 100 100 100 100
July 15, 2004 ............... 100 100 100 100 100
July 15, 2005 ............... 100 100 100 100 100
July 15, 2006 ............... 100 100 100 100 100
July 15, 2007 ............... 100 100 100 100 100
July 15, 2008 ............... 100 100 100 100 100
July 15, 2009 ............... 0 0 0 0 0
Weighted Average Life
(Years)(1) ................. 9.7 9.7 9.7 9.7 9.7
</TABLE>
- ----------
(1) The weighted average life of the Class A-2 Certificates is determined by
(i) multiplying the amount of each principal distribution thereon by the
number of years from the date of issuance of the Class A-2 Certificates
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 Class A-2 Certificates.
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS B CERTIFICATES AT THE RESPECTIVE CPRS
<TABLE>
<CAPTION>
DATE 0%CPR 3%CPR 6%CPR 9%CPR 12%CPR
- ----------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage .......... 100 100 100 100 100
July 15, 2000 ............... 100 100 100 100 100
July 15, 2001 ............... 100 100 100 100 100
July 15, 2002 ............... 100 100 100 100 100
July 15, 2003 ............... 100 100 100 100 100
July 15, 2004 ............... 100 100 100 100 100
July 15, 2005 ............... 100 100 100 100 100
July 15, 2006 ............... 100 100 100 100 100
July 15, 2007 ............... 100 100 100 100 100
July 15, 2008 ............... 100 100 100 100 100
July 15, 2009 ............... 0 0 0 0 0
Weighted Average Life
(Years)(1) ................. 10.0 10.0 10.0 10.0 10.0
</TABLE>
- ----------
(1) The weighted average life of the Class B Certificates is determined by
(i) multiplying the amount of each principal distribution thereon by the
number of years from the date of issuance of the Class B Certificates 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 Class B Certificates.
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<PAGE>
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS C CERTIFICATES AT THE RESPECTIVE CPRS
<TABLE>
<CAPTION>
DATE 0%CPR 3%CPR 6%CPR 9%CPR 12%CPR
- ----------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage .......... 100 100 100 100 100
July 15, 2000 ............... 100 100 100 100 100
July 15, 2001 ............... 100 100 100 100 100
July 15, 2002 ............... 100 100 100 100 100
July 15, 2003 ............... 100 100 100 100 100
July 15, 2004 ............... 100 100 100 100 100
July 15, 2005 ............... 100 100 100 100 100
July 15, 2006 ............... 100 100 100 100 100
July 15, 2007 ............... 100 100 100 100 100
July 15, 2008 ............... 100 100 100 100 100
July 15, 2009 ............... 13 11 9 8 7
July 15, 2010 ............... 0 0 0 0 0
Weighted Average Life
(Years)(1) ................. 10.1 10.1 10.1 10.1 10.1
</TABLE>
- ----------
(1) The weighted average life of the Class C Certificates is determined by
(i) multiplying the amount of each principal distribution thereon by the
number of years from the date of issuance of the Class C Certificates 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 Class C Certificates.
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS D CERTIFICATES AT THE RESPECTIVE CPRS
<TABLE>
<CAPTION>
DATE 0%CPR 3%CPR 6%CPR 9%CPR 12%CPR
- ----------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage .......... 100 100 100 100 100
July 15, 2000 ............... 100 100 100 100 100
July 15, 2001 ............... 100 100 100 100 100
July 15, 2002 ............... 100 100 100 100 100
July 15, 2003 ............... 100 100 100 100 100
July 15, 2004 ............... 100 100 100 100 100
July 15, 2005 ............... 100 100 100 100 100
July 15, 2006 ............... 100 100 100 100 100
July 15, 2007 ............... 100 100 100 100 100
July 15, 2008 ............... 100 100 100 100 100
July 15, 2009 ............... 100 100 100 100 100
July 15, 2010 ............... 47 37 30 25 21
July 15, 2011 ............... 0 0 0 0 0
Weighted Average Life
(Years)(1) ................. 11.0 11.0 11.0 11.0 11.0
</TABLE>
- ----------
(1) The weighted average life of the Class D Certificates is determined by
(i) multiplying the amount of each principal distribution thereon by the
number of years from the date of issuance of the Class D Certificates 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 Class D Certificates.
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<PAGE>
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS E CERTIFICATES AT THE RESPECTIVE CPRS
<TABLE>
<CAPTION>
DATE 0%CPR 3%CPR 6%CPR 9%CPR 12%CPR
- ----------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage .......... 100 100 100 100 100
July 15, 2000 ............... 100 100 100 100 100
July 15, 2001 ............... 100 100 100 100 100
July 15, 2002 ............... 100 100 100 100 100
July 15, 2003 ............... 100 100 100 100 100
July 15, 2004 ............... 100 100 100 100 100
July 15, 2005 ............... 100 100 100 100 100
July 15, 2006 ............... 100 100 100 100 100
July 15, 2007 ............... 100 100 100 100 100
July 15, 2008 ............... 100 100 100 100 100
July 15, 2009 ............... 100 100 100 100 100
July 15, 2010 ............... 100 100 100 100 100
July 15, 2011 ............... 62 62 62 62 61
July 15, 1012 ............... 16 16 15 15 15
July 15, 2013 ............... 0 0 0 0 0
Weighted Average Life
(Years)(1) ................. 12.3 12.3 12.3 12.3 12.3
</TABLE>
- ----------
(1) The weighted average life of the Class E Certificates is determined by
(i) multiplying the amount of each principal distribution thereon by the
number of years from the date of issuance of the Class E Certificates 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 Class E Certificates.
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS F CERTIFICATES AT THE RESPECTIVE CPRS
<TABLE>
<CAPTION>
DATE 0%CPR 3%CPR 6%CPR 9%CPR 12%CPR
- ----------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage .......... 100 100 100 100 100
July 15, 2000 ............... 100 100 100 100 100
July 15, 2001 ............... 100 100 100 100 100
July 15, 2002 ............... 100 100 100 100 100
July 15, 2003 ............... 100 100 100 100 100
July 15, 2004 ............... 100 100 100 100 100
July 15, 2005 ............... 100 100 100 100 100
July 15, 2006 ............... 100 100 100 100 100
July 15, 2007 ............... 100 100 100 100 100
July 15, 2008 ............... 100 100 100 100 100
July 15, 2009 ............... 100 100 100 100 100
July 15, 2010 ............... 100 100 100 100 100
July 15, 2011 ............... 100 100 100 100 100
July 15, 2012 ............... 100 100 100 100 100
July 15, 2013 ............... 8 6 4 3 1
July 15, 2014 ............... 0 0 0 0 0
Weighted Average Life
(Years)(1) ................. 13.8 13.8 13.8 13.8 13.8
</TABLE>
- ----------
(1) The weighted average life of the Class F Certificates is determined by
(i) multiplying the amount of each principal distribution thereon by the
number of years from the date of issuance of the Class F Certificates 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 Class F Certificates.
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<PAGE>
SERVICING OF THE MORTGAGE LOANS
GENERAL
The Servicer and the Special Servicer, either directly or through
sub-servicers, will be required to service and administer the Mortgage Loans
with the higher of the following standards of care (the "Servicing Standard"):
(a) in the same manner in which and with the same care, skill, prudence
and diligence with which the Servicer or the Special Servicer, as the case
may be, services and administers similar Mortgage Loans for other
third-party portfolios, giving due consideration to customary and usual
standards of practice of prudent institutional commercial mortgage lenders
servicing their own Mortgage Loans and to the maximization of the net
present value of the Mortgage Loans; and
(b) the care, skill, prudence and diligence the Servicer or the Special
Servicer, as the case may be, uses for loans which it owns and which are
substantially the same as the Mortgage Loans, giving due consideration to
the maximization of the net present value of the Mortgage Loans.
Each of the Servicer and the Special Servicer is required to adhere to the
Servicing Standard without regard to any conflict of interest that it may have,
any fees or other compensation to which it is entitled and any relationship it
may have with any borrower, and without regard to the different payment
priorities among the Classes of Certificates. Each of the Servicer and the
Special Servicer may become the owner or pledgee of Certificates with the same
rights as each would have if it were not the Servicer or a Special Servicer, as
the case may be. Any such interest of the Servicer or the Special Servicer in
the Certificates will not be taken into account when evaluating whether actions
of the Servicer or the Special Servicer are consistent with their respective
obligations in accordance with the Servicing Standard, regardless of whether
such actions may have the effect of benefiting the Class or Classes of
Certificates owned by the Servicer or the Special Servicer. In addition, the
Servicer or the Special Servicer may, under certain limited circumstances, lend
money on an unsecured basis, accept deposits from, and otherwise generally
engage in any kind of business or dealings with, any borrower as though the
Servicer or the Special Servicer were not a party to the transactions
contemplated hereby.
Each of the Servicer and the Special Servicer is permitted to enter into a
sub-servicing agreement with a sub-servicer (a "Sub-Servicer"), and any such
Sub-Servicer will receive a fee for the services specified in such
sub-servicing agreement. However, the Servicer or the Special Servicer, as the
case may be, will remain liable for its servicing obligations under the Pooling
and Servicing Agreement. The Servicer or the Special Servicer, as the case may
be, will be required to pay any servicing compensation due to any Sub-Servicer
out of its own funds.
The Servicer may resign from the obligations and duties imposed on it
under the Pooling and Servicing Agreement, upon 30 days notice to the Trustee,
provided that (a) a successor servicer is available and willing to assume the
obligations of the Servicer on substantially the same terms and conditions, and
for not more than equivalent compensation; (b) the Servicer bears all costs
associated with its resignation and the transfer of servicing; and (c) the
Rating Agencies have confirmed in writing that such servicing transfer will not
result in a withdrawal or downgrade of the then current ratings on the
Certificates. Furthermore, the Servicer may resign as Servicer if it determines
that the Servicer's duties 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. If the Servicer ceases to serve as such and shall not have
been replaced by a qualified successor, the Trustee will assume the Servicer's
duties and obligations under the Pooling and Servicing Agreement. If the
Special Servicer shall cease to serve as such and a qualified successor shall
not have been engaged, the Servicer will assume the Special Servicer's duties
and obligations and, if the Servicer fails to so assume such duties and
responsibilities, the Trustee will assume the duties and obligations of the
Special Servicer. The relationship of each of the Servicer and the Special
Servicer to the Trustee is intended to be that of an independent contractor and
not that of a joint venturer, partner or agent.
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<PAGE>
The Servicer will have no responsibility for the performance by the
Special Servicer of its duties under the Pooling and Servicing Agreement, and
the Special Servicer will have no responsibility for the performance by the
Servicer of its duties under the Pooling and Servicing Agreement.
The Servicer initially will be responsible for the servicing and
administration of the entire Mortgage Pool. However, the Special Servicer will
be responsible for servicing and administering:
(i) any Mortgage Loan as to which a Balloon Payment is past due, and the
Servicer has determined that payment is unlikely to be made on or before
the second Due Date succeeding the date the Balloon Payment was due, or any
other payment is more than 60 days past due or has not been made on or
before the second Due Date following the date such payment was due;
(ii) any Mortgage Loan as to which, to the Servicer's knowledge, the
borrower has consented to the appointment of a receiver or conservator in
any insolvency or similar proceeding of or relating to such borrower or to
all or substantially all of its property, or the borrower has become the
subject of a decree or order issued under a bankruptcy, insolvency or
similar law and such decree or order shall have remained undischarged or
unstayed for a period of 60 days;
(iii) any Mortgage Loan as to which the Servicer shall have received
notice of the foreclosure or proposed foreclosure of any other lien on the
Mortgaged Property;
(iv) any Mortgage Loan as to which the Servicer has knowledge of a
default (other than a failure by the related borrower to pay principal or
interest) which in the judgment of the Servicer materially and adversely
affects the interests of the Certificateholders and which has occurred and
remains unremedied for the applicable grace period specified in such
Mortgage Loan (or, if no grace period is specified, 60 days);
(v) any Mortgage Loan as to which the borrower admits in writing its
inability to pay its debts generally as they become due, files a petition
to take advantage of any applicable insolvency or reorganization statute,
makes an assignment for the benefit of its creditors or voluntarily
suspends payment of its obligations; and
(vi) any Mortgage Loan as to which, in the judgment of the Servicer, a
default has occurred or in the judgment of the Servicer is imminent or is
likely to occur within 60 days (any of the foregoing events, a "Servicing
Transfer Event," and any Mortgage Loan as to which any of the foregoing
events has occurred, a "Specially Serviced Mortgage Loan").
In the event of any of the foregoing with respect to any Mortgage Loan,
the Servicer will be required to transfer its principal servicing
responsibilities with respect thereto to the Special Servicer in accordance
with certain procedures set forth in the Pooling and Servicing Agreement.
Notwithstanding such transfer, the Servicer will continue to receive payments
on such Mortgage Loan (including amounts collected by the Special Servicer), to
make certain calculations with respect to such Mortgage Loan, and to make
remittances to the Paying Agent and prepare certain reports to the Trustee and
the Paying Agent with respect to such Mortgage Loan. If title to the related
Mortgaged Property is acquired by the Trust Fund (upon acquisition, an "REO
Property"), whether through foreclosure, deed-in-lieu of foreclosure or
otherwise, the Special Servicer will be responsible for the operation and
management thereof. Mortgage Loans serviced by the Special Servicer are
referred to herein as "Specially Serviced Mortgage Loans."
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "Rehabilitated Mortgage Loan" as to which the Servicer will
re-assume all servicing responsibilities) when (i) three consecutive Scheduled
Payments have been made (in the case of any such Mortgage Loan that was
modified, based on the modified terms), (ii) no other Servicing Transfer Event
has occurred and is continuing with respect to such Mortgage Loan and (iii) the
Trust Fund has been reimbursed for all costs incurred as a result of the
occurrence of the Servicing Transfer Event or such amounts have been forgiven.
The Servicer and the Special Servicer will, in general, each be required
to pay all ordinary expenses incurred by it in connection with its servicing
activities under the Pooling and Servicing Agreement and will not be entitled
to reimbursement therefor except as expressly provided in the Pooling and
Servicing Agreement. See "Description Of The Certificates--Advances--Servicing
Advances" in this prospectus supplement.
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<PAGE>
THE SERVICER
Wells Fargo will be responsible for servicing the Mortgage Loans as
Servicer. Wells Fargo provides a full range of banking services to individual,
agribusiness, real estate, commercial and small business customers. The
Servicer is an affiliate of the Paying Agent.
Founded in 1852, Wells Fargo & Company is the holding company for Wells
Fargo. For the years ended December 31, 1998 and 1997, Wells Fargo & Company
reported, on a consolidated basis, total assets of $202.5 billion and $185.7
billion, respectively, and total capital (Tier 1 and 2) of $10.9 billion and
$11.2 billion, respectively. For the years ended December 31, 1998 and 1997,
respectively, Wells Fargo & Company reported, on a consolidated basis, net
income of $1,950 million and $2,499 million, respectively.
On November 2, 1998, the former Wells Fargo & Company merged with WFC
Holdings Corporation, a wholly-owned subsidiary of Norwest Corporation. In
connection with such merger, Norwest Corporation changed its name to Wells
Fargo & Company. Such merger was accounted for as a pooling of interests. The
total assets, total capital and net income indicated above for Wells Fargo &
Company reflect the consolidated assets, capital and income of such merged
companies for the periods set forth above.
As of December 31, 1998, Wells Fargo and its subsidiaries serviced
approximately $25.9 billion of multifamily and commercial mortgage loans,
including approximately $5.4 billion for third parties.
The information set forth herein concerning Wells Fargo has been provided
by Wells Fargo. Accordingly, the Depositor makes no representations or warranty
as to the accuracy or completeness of such information. Wells Fargo has been
approved as a servicer by all nationally recognized statistical rating
organizations.
SERVICER EVENTS OF DEFAULT
An "Event of Default" with respect to the Servicer under the Pooling and
Servicing Agreement will include any one of the following events:
(i) any failure by the Servicer to remit to the Paying Agent any payment
required to be remitted by the Servicer under the terms of the Pooling and
Servicing Agreement, including any required Advances;
(ii) any failure on the part of the Servicer duly to observe or perform
in any material respect any other of the duties, covenants or agreements on
the part of the Servicer contained in the Pooling and Servicing Agreement
which continues unremedied for a period of 30 days after the date on which
notice shall have been given by the Depositor or the Trustee; provided,
however, that if the Servicer certifies to the Trustee and the Depositor
that the Servicer is in good faith attempting to remedy such failure, such
cure period will be extended to the extent necessary to permit the Servicer
to cure such failure; provided, further that such cure period may not
exceed 90 days;
(iii) any breach of the representations and warranties of the Servicer in
the Pooling and Servicing Agreement that materially and adversely affects
the interest of any holder of any Class of Certificates and that continues
unremedied for a period of 30 days after notice shall have been given to
the Servicer by the Depositor or the Trustee, provided, however, that if
the Servicer certifies to the Trustee and the Depositor that the Servicer
is in good faith attempting to remedy such breach, such cure period will be
extended to the extent necessary to permit the Servicer to cure such
breach; provided, further that such cure period may not exceed 90 days; or
(iv) the Trustee shall have received written notice from either Rating
Agency that the continuation of the Servicer or the Special Servicer in
such capacity would result in the downgrade, qualification or withdrawal of
any rating then assigned by that Rating Agency to any Class of
Certificates; or
(v) certain events of insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings and certain actions by or on
behalf of the Servicer indicating its insolvency or inability to pay its
obligations.
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<PAGE>
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default described in clauses (ii), (iii) or (iv) above has
occurred, the obligations and responsibilities of the Servicer under the
Pooling and Servicing Agreement will terminate on the date which is 60 days
following the date on which the Trustee or Depositor gives written notice to
the Servicer that the Servicer is terminated. If an Event of Default described
in clauses (i) or (v) above has occurred, the obligations and responsibilities
of the Servicer under the Pooling and Servicing Agreement will terminate
immediately upon the date on which the Trustee or the Depositor gives written
notice to the Servicer that the Servicer is terminated. After any Event of
Default, the Trustee may elect to terminate the Servicer by providing such
notice. On such date, all authority, power and rights of the Servicer under the
Pooling and Servicing Agreement, whether with respect to the Mortgage Loans or
otherwise, shall terminate; provided that in no event shall the termination of
the Servicer be effective until a successor servicer shall have succeeded the
Servicer as successor servicer, notified the Servicer of such designation, and
such successor servicer shall have assumed the Servicer's obligations and
responsibilities with respect to the Mortgage Loans, as set forth in an
agreement substantially in the form of the Pooling and Servicing Agreement. The
Trustee may not succeed the Servicer as servicer until and unless it has
satisfied certain provisions specified in the Pooling and Servicing Agreement.
However, if the Servicer is terminated as a result of an Event of Default
described in clause (v) of the definition thereof, the Trustee shall act as
successor servicer immediately and shall use its best efforts to either satisfy
the conditions specified in the Pooling and Servicing Agreement or transfer the
duties of the Servicer to a successor servicer who has satisfied such
conditions.
THE SPECIAL SERVICER
The initial Special Servicer will be GMAC Commercial Mortgage Corporation
(the "Special Servicer"). The Special Servicer will oversee the resolution of
Specially Serviced Mortgage Loans, act as disposition manager of REO Properties
acquired on behalf of the Trust Fund through foreclosure or deed in lieu of
foreclosure, maintain insurance with respect to REO Properties and provide
monthly reports to the Servicer, the Trustee and the Paying Agent. As of March
31, 1999, the Special Servicer was responsible for performing certain special
servicing functions with respect to commercial and multifamily loans with an
aggregate principal balance of approximately $30 billion. It is anticipated
that the Special Servicer or an affiliate of the Special Servicer will purchase
all or a significant portion of certain Classes of the Subordinate Certificates
on or about the Closing Date. The Special Servicer's principal offices are
located at 650 Dresher Road, Horsham, Pennsylvania 19044.
The information set forth herein concerning the Special Servicer has been
provided by the Special Servicer. Accordingly, the Depositor makes no
representations or warranty as to the accuracy or completeness of such
information.
TERMINATION OF THE SPECIAL SERVICER
The Trustee may terminate the Special Servicer due to (i) any failure by
the Special Servicer to remit to the Paying Agent or the Servicer when due any
amount required to be so remitted under the terms of the Pooling and Servicing
Agreement; (ii) any failure on the part of the Special Servicer duly to observe
or perform in any material respect any other of the covenants or agreements on
the part of the Special Servicer contained in the Pooling and Servicing
Agreement which continues unremedied for a period of 90 days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Special Servicer by the Depositor or the Trustee;
provided, however, that to the extent that the Special Servicer certifies to
the Trustee and the Depositor that the Special Servicer is in good faith
attempting to remedy such failure and the Certificateholders shall not be
materially and adversely affected thereby, such cure period will be extended
for up to an additional 60 days; (iii) any breach by the Special Servicer of
the representations and warranties contained in the Pooling and Servicing
Agreement that materially and adversely affects the interests of the holders of
any Class of Certificates and that continues unremedied for a period of 30 days
after the date on which notice of such breach, requiring the same to be
remedied, shall have been given to the Special Servicer by the Depositor or the
Trustee, provided, however, that to the extent that the Special Servicer is in
good faith attempting
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to remedy such breach and the Certificateholders shall not be materially and
adversely affected thereby, such cure period may be extended for up to an
additional 60 days; (iv) the Trustee shall have received written notice from
either Rating Agency that the continuation of the Servicer or the Special
Servicer in such capacity would result in the downgrade, qualification or
withdrawal of any rating then assigned by that Rating Agency to any Class of
Certificates; (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 for
the appointment of a conservator, receiver, liquidator, trustee or similar
official in any bankruptcy, 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 entered against the Special
Servicer and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days; (vi) the Special Servicer shall consent to
the appointment of a conservator, receiver, liquidator, trustee or similar
official in any bankruptcy, insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Special
Servicer or of or relating to all or substantially all of its property; or
(vii) the Special Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend payment of its
obligations, or take any corporate action in furtherance of the foregoing. In
addition to the above events of termination, upon the direction of the
Operating Adviser, subject to the satisfaction of certain conditions, the
Trustee will remove the Special Servicer from its duties as Special Servicer at
any time upon the appointment and acceptance of such appointment by a successor
Special Servicer appointed by the Operating Adviser. The Operating Adviser will
have the right to appoint any successor Special Servicer provided that, prior
to the effectiveness of any such appointment the Trustee shall have received a
letter from each Rating Agency to the effect that such appointment would not
result in a downgrade or withdrawal in any rating then assigned to any Class of
Certificates.
THE OPERATING ADVISER
An operating adviser (the "Operating Adviser") appointed by the holders of
a majority of the Controlling Class will have the right to receive notification
from the Special Servicer in regard to certain actions. The Special Servicer
will be required to notify the Operating Adviser of, among other things, (i)
any proposed modification of a Money Term of a Mortgage Loan other than an
extension of the original maturity date for two years or less, (ii) any
foreclosure or comparable conversion of the ownership of a Mortgaged Property,
(iii) any proposed sale of a Specially Serviced Mortgage Loan (other than in
connection with the termination of the Trust Fund as described in this
prospectus supplement under "Description of the Certificates--Optional
Termination"), (iv) any proposal to bring an REO Property into compliance with
applicable environmental laws, and (v) any acceptance of substitute or
additional collateral for a Mortgage Loan. In addition, subject to the
satisfaction of certain conditions, the Operating Adviser will have the right
to direct the Trustee to remove the Special Servicer at any time upon the
appointment and acceptance of such appointment by a successor Special Servicer
appointed by the Operating Adviser; provided that, prior to the effectiveness
of any such appointment the Trustee shall have received a letter from each
Rating Agency to the effect that such appointment would not result in a
downgrade or withdrawal in any rating then assigned to any Class of
Certificates.
The "Controlling Class" will be the most subordinate Class of Subordinate
Certificates outstanding at any time of determination; provided, however, that
if the aggregate Certificate Balance of such Class of Certificates is less than
25% of the initial aggregate Certificate Balance of such Class, the Controlling
Class shall be the next most subordinate Class of Certificates. Appraisal
Reductions will not affect the Certificate Balances of any Class for purposes
of determining the Controlling Class.
At any time, the holders of a majority of the Controlling Class may direct
the Trustee in writing to hold an election for an Operating Adviser, which
election will be held commencing as soon as practicable thereafter or upon (i)
the resignation or removal of the person acting as Operating Adviser or (ii)
upon a determination by the Trustee, based upon a written notice from the
Certificate Registrar, that the Controlling Class has changed. After such
receipt or determination, the Trustee is required to call a meeting of the
holders of the Controlling Class (which may be held by telephone) in the manner
specified
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in the Pooling and Servicing Agreement. The meeting will be held in accordance
with the procedures specified in the Pooling and Servicing Agreement. At the
meeting, each such holder will be entitled to nominate one person to act as
Operating Adviser.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
Servicer Compensation. The Servicer will be entitled to receive each month
a servicing fee (the "Servicing Fee") equal to 0.05% per annum (the "Servicing
Fee Rate") applicable to such month (determined in the same manner as the
applicable Mortgage Rate is determined for each Mortgage Loan for such month)
applied to the outstanding Scheduled Principal Balance of each Mortgage Loan
(including REO Properties) as compensation for servicing the Mortgage Loans.
The Servicer will be entitled to retain as additional servicing compensation
all investment income earned on amounts on deposit in the Certificate Account,
and (in each case to the extent not payable to the Special Servicer or any
Sub-Servicer as provided in the Pooling and Servicing Agreement or any
sub-servicing agreement) late payment charges, assumption fees, modification
fees, extension fees, defeasance fees, partial defeasance fees and default
interest payable at a rate above the related Mortgage Rate. However, the amount
of the related Servicing Fee (but not the fee payable to the Trustee or, in
general, the portion of the Servicing Fee payable to Sub-Servicers) will be
reduced (to not less than zero) on each Distribution Date by the amount (if
any) of Compensating Interest paid by the Servicer on such Distribution Date.
Any Net Aggregate Prepayment Interest Shortfall will be allocated as set forth
under "Description of the Certificates--Distributions--Prepayment Interest
Shortfalls and Prepayment Interest Excesses" in this prospectus supplement. If
Prepayment Interest Excesses for all Mortgage Loans other than Specially
Serviced Mortgage Loans exceed Prepayment Interest Shortfalls for such Mortgage
Loans as of any Distribution Date, such excess amount will be payable to the
Servicer as additional servicing compensation.
Special Servicer Compensation. The Special Servicer will be entitled to
receive (i) a special servicing fee (the "Special Servicing Fee") equal to, in
any month, the portion of a rate equal to 0.25% per annum applicable to such
month (determined in the same manner as the applicable Mortgage Rate is
determined for each Specially Serviced Mortgage Loan for such month) of the
outstanding Scheduled Principal Balance of each Specially Serviced Mortgage
Loan; (ii) a fee (the "Workout Fee"), payable with respect to any Rehabilitated
Mortgage Loan, equal to the product of (x) 1.0% and (y) the amount of each
collection of interest and principal received on such Mortgage Loan for so long
as it remains a Rehabilitated Mortgage Loan; and (iii) a fee (the "Liquidation
Fee") equal to the product of (x) 1.0% and (y) the related Liquidation Proceeds
(collectively, such fees payable to the Special Servicer, the "Special Servicer
Compensation"). The Workout Fee with respect to any Rehabilitated 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. The
Special Servicer is also permitted to retain, in general, certain assumption
fees, modification fees and extension fees collected on Specially Serviced
Mortgage Loans, certain borrower-paid fees, investment income earned on amounts
on deposit in any accounts maintained for REO Property collections, and other
charges specified in the Pooling and Servicing Agreement. The Special Servicing
Fee, the Liquidation Fee and the Workout Fee will be obligations of the Trust
Fund and will represent Expense Losses. The Special Servicer Compensation will
be payable in addition to the Servicing Fee payable to the Servicer. The
Special Servicer will be entitled to 100% of any fees collected in connection
with the assumption of Specially Serviced Mortgage Loans. The Special Servicer
is entitled to 50% of any other assumption fees. The amount of the Special
Servicing Fee (but not the fee payable to the Trustee) will be reduced (to not
less than zero) on each Distribution Date by the amount (if any) of
Compensating Interest required to be paid by the Special Servicer on such
Distribution Date. If Prepayment Interest Excesses for all Specially Serviced
Mortgage Loans exceed Prepayment Interest Shortfalls for such Mortgage Loans as
of any Distribution Date, such excess amount will be payable to the Special
Servicer as additional servicing compensation. The Special Servicer will be
entitled to approve assumptions with respect to all Specially Serviced Mortgage
Loans and Mortgage Loans which are not Specially Serviced, but contain
"due-on-sale" provisions or require the consent of the lender.
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As described in this prospectus supplement under "--The Operating
Adviser," the Operating Adviser will have the right to receive notification of
certain actions of the Special Servicer, subject to the limitations described
herein.
MODIFICATIONS, WAIVER AND AMENDMENTS
Subject to any restrictions applicable to REMICs, and to certain
limitations imposed by the Pooling and Servicing Agreement, the Servicer may
amend any term, other than a Money Term, of a Mortgage Loan that is not a
Specially Serviced Mortgage Loan and may extend the maturity date of any
Balloon Loan (other than a Specially Serviced Mortgage Loan) to a date not more
than 60 days beyond the original maturity date. A "Money Term" means with
respect to any Mortgage Loan, the maturity date, Mortgage Rate, principal
balance, amortization term or payment frequency thereof or any provision
thereof requiring the payment of a Prepayment Premium or Yield Maintenance
Charge payable in connection with a Principal Prepayment (but shall not include
late fees or default interest provisions).
Subject to any restrictions applicable to REMICs, the Special Servicer
will be permitted to enter into a modification, waiver or amendment of the
terms of any Specially Serviced Mortgage Loan, including any modification,
waiver or amendment to:
(i) reduce the amounts owing under any Specially Serviced Mortgage Loan
by forgiving principal, accrued interest and/or any Prepayment Premium or
Yield Maintenance Charge;
(ii) reduce the amount of the Scheduled Payment on any Specially Serviced
Mortgage Loan, including by way of a reduction in the related Mortgage
Rate;
(iii) forebear in the enforcement of any right granted under any Mortgage
Note or Mortgage relating to a Specially Serviced Mortgage Loan;
(iv) extend the maturity date of any Specially Serviced Mortgage Loan;
and/or
(v) accept a Principal Prepayment during any Lockout Period;
provided in each case that (x) the related borrower is in default with respect
to the Specially Serviced Mortgage Loan or, in the reasonable judgment of the
Special Servicer, such default is reasonably foreseeable and (y) in the
reasonable judgment of the Special Servicer, such modification, waiver or
amendment would increase the recovery to Certificateholders on a net present
value basis, as demonstrated in writing to the Trustee and the Paying Agent.
In no event, however, will the Special Servicer be permitted to:
(i) extend the maturity date of a Specially Serviced Mortgage Loan beyond
a date that is two years prior to the Rated Final Distribution Date;
(ii) extend the maturity date of a Specially Serviced Mortgage Loan and
provide for an interest rate during such extension period below the then
prevailing interest rate for comparable loans, as determined by the Special
Servicer (such limitation of extensions made at a below market rate shall
not limit the ability of the Special Servicer to extend the maturity date
of any Specially Serviced Mortgage Loan at an interest rate at or in excess
of the prevailing rate for comparable loans at the time of such
modification);
(iii) if the Specially Serviced Mortgage Loan is secured by a ground
lease, extend the maturity date of such Specially Serviced Mortgage Loan
beyond a date which is ten (10) years prior to the expiration of the term
of such ground lease;
(iv) reduce the related Net Mortgage Rate to less than the lesser of (A)
the original Net Mortgage Rate and (B) the highest Pass-Through Rate on any
class of Certificates (other than the Class X Certificates); or
(v) defer interest due on any Specially Serviced Mortgage Loan in excess
of 10% of the Scheduled Principal Balance of such Specially Serviced
Mortgage Loan or defer the collection of interest on any Specially Serviced
Mortgage Loan without accruing interest on such deferred interest at a rate
at least equal to the related Mortgage Rate.
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Notwithstanding the foregoing, if a Mortgage Loan is a Balloon Loan whose
borrower failed to make the Balloon Payment at scheduled maturity, and such
Balloon Loan is not a Specially Serviced Mortgage Loan (other than by reason of
failure to make the Balloon Payment) and has not been delinquent in the
preceding 12 months (other than with respect to the Balloon Payment), then in
addition to the other alternatives specified above, the Special Servicer may
agree to up to three one-year extensions of the maturity of the Mortgage Loan,
in each case at the existing Mortgage Rate.
Modifications that forgive principal or interest of a Mortgage Loan will
result in Realized Losses on such Mortgage Loan and such Realized Losses will
be allocated among the various Classes of Certificates in the manner described
under "Description of the Certificates--Distributions--Subordination;
Allocation of Losses, Shortfalls and Expenses" in this prospectus supplement.
The modification of a Mortgage Loan may tend to reduce prepayments by
avoiding liquidations and therefore may extend the weighted average life of the
Certificates beyond that which might otherwise be the case. See "Yield,
Prepayment and Maturity Considerations" in this prospectus supplement.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
The Special Servicer may, with notification to the Operating Adviser,
offer to sell for cash to any person, for an amount equal to the Purchase
Price, any REO Property or any Mortgage Loan that is in default or as to which
the Special Servicer has made a determination that default is imminent. The
Special Servicer is required to give the Operating Adviser, the Trustee and the
Paying Agent not less than five days' prior written notice of its intention to
sell any such defaulted Mortgage Loan or REO Property, to offer such defaulted
Mortgage Loan or REO Property for sale in a fair auction or other manner as is
consistent with the Servicing Standard, and to accept the highest cash bid
received in such auction or other procedure from any person other than an
interested person (as described in the Pooling and Servicing Agreement) for any
defaulted Mortgage Loan or REO Property in an amount, except as otherwise
provided in the Pooling and Servicing Agreement in the case of REO Property, at
least equal to the Purchase Price.
In the absence of any bid in the amount of the Purchase Price, the Special
Servicer may accept the highest cash bid, if the Special Servicer determines,
consistent with the Servicing Standard and with notification to the Operating
Adviser, that such sale at such price is in the best interest of
Certificateholders; provided that the Special Servicer may not accept such bid
if made by the Trustee in its individual capacity, any of the Trustee's
affiliates, or any interested person (as described in the Pooling and Servicing
Agreement), except in limited circumstances described in the Pooling and
Servicing Agreement, including the ability of the Special Servicer to purchase
a defaulted Mortgage Loan or REO Property only if it is the highest bidder and
at least three offers are received from independent third parties.
FORECLOSURES
The Special Servicer may at any time, with notification to the Operating
Adviser and in accordance with the Pooling and Servicing Agreement, institute
foreclosure proceedings, exercise any power of sale contained in any Mortgage,
accept a deed in lieu of foreclosure or otherwise acquire title to a Mortgaged
Property by operation of law or otherwise, if such action is consistent with
the Servicing Standard and a default on the related Mortgage Loan has occurred
but subject, in all cases, to certain limitations concerning environmental
matters and, in certain cases, the receipt of an opinion of counsel relating to
certain REMIC requirements.
If any Mortgaged Property is acquired as described in the preceding
paragraph, the Special Servicer is required to sell the REO Property within
three years after the end of the year in which it was acquired, or any
applicable extension period, unless the Special Servicer has previously
delivered to the Trustee an opinion of counsel to the effect that the holding
of the REO Property by the Trust Fund subsequent to three years after the end
of the year in which it was acquired, or to the expiration of such extension
period, will not result in the failure of such REO Property to qualify as
"foreclosure property" under the REMIC provisions of the Code. In addition, the
Special Servicer is required to use its best efforts to sell any REO Property
prior to the Rated Final Distribution Date.
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In general, the Special Servicer will be obligated to, or may contract
with a third party to, operate and manage any Mortgaged Property acquired as
REO Property in a manner that would, to the extent commercially feasible,
maximize the Trust Fund's net after-tax proceeds from such property. After the
Special Servicer reviews the operation of such property and consults with the
Trustee to determine the Trust Fund's federal income tax reporting position
with respect to income it is anticipated that the Trust Fund would derive from
such property, the Special Servicer could determine that it would not be
commercially feasible to manage and operate such property in a manner that
would avoid the imposition of a tax on "net income from foreclosure property"
within the meaning of the REMIC provisions of the Code 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 Fund receives from
an REO Property is subject to a tax on (i) "net income from foreclosure
property", such income would be subject to federal tax at the highest marginal
corporate tax rate (currently 35%) and (ii) "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, but is particularly an issue as to an REO
Property operated as a hotel or skilled health care facility. 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, although it appears unlikely, at the 100% rate
applicable to "prohibited transactions." Any REO Tax imposed on the Trust
Fund's income from an REO Property would reduce the amount available for
distribution to Certificateholders. Prospective investors 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.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Upon the issuance of the Offered Certificates, O'Melveny & Myers LLP,
counsel to the Depositor, will deliver its opinion that, assuming (i) the
making of appropriate elections, (ii) compliance with the provisions of the
Pooling and Servicing Agreement and (iii) compliance with applicable changes in
the Code, including the REMIC Provisions, for federal income tax purposes, the
Trust Fund will qualify as three separate real estate mortgage investment
conduits (each a "REMIC") within the meaning of Sections 860A through 860G (the
"REMIC Provisions") of the Code, and (i) the Class A-1, Class A-2, Class X,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class I, Class
J, Class K, Class L and Class M Certificates will evidence the "regular
interests" in a REMIC and (ii) each of the Class R-I, Class R-II and Class
R-III Certificates will be the sole class of "residual interests" in one of the
three REMICs, respectively, within the meaning of the REMIC Provisions in
effect on the date hereof. The Offered Certificates are "REMIC Regular
Certificates" as defined in the prospectus.
Because they represent regular interests in a REMIC, each class of Offered
Certificates generally will be treated as newly originated debt instruments for
federal income tax purposes. Certificateholders will be required to include in
income all interest on such Certificates in accordance with the accrual method
of accounting, regardless of the Certificateholder's usual method of
accounting. It is anticipated that the Class E and Class F Certificates will be
issued with OID for federal income tax purposes in an amount equal to the
excess of the initial Certificate Balances thereof over their respective issue
prices equal to the excess of the issue price thereof over their respective
initial Certificate Balances. It is also anticipated that the Class A-1, Class
A-2, Class B and Class C Certificates will be issued at a premium. The
prepayment assumption that will be used in determining the rate of accrual of
OID and that may be used to amortize 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 prepay at a rate equal to a CPR of 0%;
provided, however, that it is further assumed that each ARD Loan prepays on its
Anticipated Repayment Date (the "Prepayment Assumption"). No representation is
made that the Mortgage Loans will prepay at that rate or at any other rate. See
"Certain Federal Income Tax Consequences--Federal Income Tax Consequences for
REMIC Certificates--Taxation of REMIC Regular Certificates--Original Issue
Discount" and "--Premium" in the prospectus.
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Yield Maintenance Charges and Prepayment Premiums actually collected will
be distributed among the holders of the respective classes of Certificates as
described herein under "Description of the Certificates--Allocation of Yield
Maintenance Charges" and "--Allocation of Prepayment Premiums". It is not
entirely clear under the Code when the amount of Yield Maintenance Charges or
Prepayment Premiums so allocated should be taxed to the Certificateholder, but
it is not expected, for federal income tax purposes, that Yield Maintenance
Charges or Prepayment Premiums will be treated as giving rise to any income to
the Certificateholder prior to the Servicer's actual receipt thereof. It
appears that Yield Maintenance Charges and Prepayment Premiums, if any, will be
treated as ordinary income rather than capital gain. However, that result is
not entirely clear and Certificateholders should consult their own tax advisers
concerning the treatment of Yield Maintenance Charges and Prepayment Premiums.
The Offered Certificates will be treated as "real estate assets" within
the meaning of Section 856(c)(5)(A) of the Code, and interest (including OID,
if any) on the Offered Certificates will be interest described in Section
856(c)(3)(B) of the Code. Moreover, the Offered Certificates will be "qualified
mortgages" within the meaning of Section 860G(a)(3) of the Code. The Offered
Certificates will be treated as "loans . . . secured by an interest in real
property which is . . . residential real property" within the meaning of
Section 7701(a)(19)(C)(v) of the Code to the extent such loans are secured by
multifamily properties and manufactured housing, respectively. Mortgage Loans
secured by multifamily properties represented approximately 23.4% of the
Initial Pool Balance; and the Mortgage Loans secured by manufactured housing
represented approximately 6.8% of the Initial Pool Balance. See "Certain
Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates--Status of REMIC Certificates" in the prospectus.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, See "Certain Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation
of REMIC Regular Certificates" in the prospectus.
METHOD OF DISTRIBUTION
The Depositor has entered into an underwriting agreement ("Underwriting
Agreement") with Bear, Stearns & Co. Inc., an affiliate of one of the Mortgage
Loan Sellers and the Depositor, Morgan Stanley & Co. Incorporated and Norwest
Investment Services, Inc. (each, an "Underwriter" and collectively, the
"Underwriters"). Subject to the terms and conditions set forth in the
Underwriting Agreement between the Depositor and the Underwriters, the Offered
Certificates will be purchased from the Depositor by the Underwriters upon
issuance, in the percentages of the respective aggregate Certificate Balance of
each Class of Offered Certificates set forth below.
<TABLE>
<CAPTION>
UNDERWRITER CLASS A-1 CLASS A-2 CLASS B CLASS C CLASS D CLASS E CLASS F
- -------------------------------------------- ----------- ----------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. ................... 70% 70% 100% 100% 100% 100% 100%
Morgan Stanley
& Co. Incorporated ........................ 25% 25% 0% 0% 0% 0% 0%
Norwest Investment Services, Inc. .......... 5% 5% 0% 0% 0% 0% 0%
Total ..................................... 100% 100% 100% 100% 100% 100% 100%
</TABLE>
The Depositor has been advised by the Underwriters that it proposes to
offer the Offered Certificates to the public from time to time in one or more
negotiated transactions, or otherwise, at varying prices to be determined at
the time of sale. Proceeds to the Depositor from the sale of Offered
Certificates, before deducting expenses payable by the Depositor, estimated to
be approximately $ , will be % of the initial aggregate Certificate
Balance of the Offered Certificates, plus accrued interest on the Offered
Certificates from the Cut-Off Date. The Underwriters may effect such
transactions by selling Offered Certificates to or through dealers, and such
dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Underwriters. In connection with the
purchase and sale of the Offered Certificates offered hereby, the Underwriters
may be deemed to have received compensation from the Depositor in the form of
underwriting discounts.
There can be no assurance that a secondary market for the Offered
Certificates will develop or, if it does develop, that it will continue. The
Underwriters expect to make, but are not obligated to make, a
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secondary market in the Offered Certificates. The primary source of ongoing
information available to investors concerning the Offered Certificates will be
the monthly statements discussed in the prospectus under "Description of the
Certificates--Reports to Certificateholders," which will include information as
to the outstanding principal balance of the Offered Certificates and the status
of the applicable form of credit enhancement. Except as described herein under
"Description of the Certificates--Reports to Certificateholders; Certain
Available Information," there can be no assurance that any additional
information regarding the Offered Certificates will be available through any
other source. In addition, the Depositor is not aware of any source through
which price information about the Offered Certificates will be generally
available on an ongoing basis. The limited nature of such information regarding
the Offered Certificates may adversely affect the liquidity of the Offered
Certificates, even if a secondary market for the Offered Certificates becomes
available.
If and to the extent required by applicable law or regulation, this
prospectus supplement and the prospectus will be used by the Underwriters in
connection with offers and sales related to market-making transactions in the
Offered Certificates with respect to which the Underwriter acts as principal.
The Underwriters may also act as agent in such transactions. Sales may be made
at negotiated prices determined at the time of sale.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor and the
Underwriters by O'Melveny & Myers LLP. Certain legal matters will be passed
upon for Wells Fargo Bank, National Association by Orrick, Herrington &
Sutcliffe LLP.
RATINGS
It is a condition to issuance that the Offered Certificates be rated not
lower than the following ratings by the Rating Agencies:
<TABLE>
<CAPTION>
CLASS MOODY'S DCR
- -------------- --------- -----
<S> <C> <C>
A-1 .......... Aaa AAA
A-2 .......... Aaa AAA
B ............ Aa2 AA
C ............ A2 A
D ............ A3 A-
E ............ Baa2 BBB
F ............ Baa3 BBB-
</TABLE>
A securities rating on mortgage pass-through certificates addresses the
likelihood of the timely payment of interest on the Certificates and ultimate
payment of principal thereof by the Rated Final Distribution Date. The rating
takes 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 required
under the certificates. The ratings on the Offered Certificates do not,
however, constitute a statement regarding the likelihood or frequency of
prepayments (whether voluntary or involuntary) on the Mortgage Loans. In
addition, a rating does not address the likelihood or frequency of voluntary or
mandatory prepayments of Mortgage Loans, payment of Excess Interest, or whether
and to what extent payments of Yield Maintenance Charges will be received or
the corresponding effect on yield to investors.
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
Depositor to do so may be lower than the rating assigned thereto by Moody's or
DCR.
The ratings of the Certificates do not represent any assessment of (i) the
likelihood or frequency of principal prepayments, voluntary or involuntary, on
the Mortgage Loans, (ii) the degree to which such
S-97
<PAGE>
prepayments might differ from those originally anticipated, (iii) whether and
to what extent Prepayment Premiums, Yield Maintenance Charges or default
interest will be received or Net Aggregate Prepayment Interest Shortfalls or
Net Aggregate Balloon Interest Shortfalls will be realized. A security rating
does not represent any assessment of the yield to maturity that investors may
experience. In general, the ratings thus address credit risk and not prepayment
risk.
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.
LEGAL INVESTMENT CONSIDERATIONS
The Class A Certificates and Class B Certificates will constitute
"mortgage related securities" within the meaning of the Secondary Mortgage
Market Enhancement Act of 1984 ("SMMEA").
The Depositor makes no representation 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 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.
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, separate accounts and insurance company
general accounts in which such plans, annuities, accounts or arrangements are
invested, that is subject to the fiduciary responsibility rules of ERISA, or
Section 4975 of the Code (an "ERISA Plan") or which is a governmental plan, as
defined in Section 3(32) of ERISA, subject to any federal, state or local law
("Similar Law") which is, to a material extent, similar to the foregoing
provisions of ERISA or the Code (collectively, with an ERISA Plan, a "Plan")
should review with its legal advisors whether the purchase or holding of
Offered Certificates could give rise to a transaction that is prohibited or is
not otherwise permitted either under ERISA, the Code and Similar Law and
whether there exists any statutory or administrative exemption applicable
thereto. Moreover, each Plan fiduciary should determine whether an investment
in the Offered Certificates is appropriate for the Plan, taking into account
the overall investment policy of the Plan and the composition of the Plan's
investment portfolio.
The U.S. Department of Labor has issued to the Underwriters an individual
prohibited transaction exemption, Prohibited Transaction Exemption 90-33, 55
Fed. Reg. 21,461 (May 24, 1990), as amended by Prohibited Transaction Exemption
97-34, 62 Fed. Reg. 39,021 (July 21, 1997) (the "Exemption"), which generally
exempts from the application of the prohibited transaction provisions of
Section 406 of ERISA, and the excise taxes imposed 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
Class A Certificates, underwritten by the Underwriters, provided that certain
conditions set forth in the Exemption are satisfied.
The Exemption sets forth six general conditions that must be satisfied for
a transaction involving the purchase, sale and holding of the Class A
Certificates to be eligible for exemptive relief thereunder. First, the
acquisition of such Certificates 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 interests evidenced by such
Certificates must not be subordinated to the rights and interests evidenced by
the other certificates of the same trust. Third, such Certificates at the time
of acquisition by the Plan must be rated in one of the three highest generic
rating categories by at least one of Moody's, DCR, Standard & Poor's Ratings
Group ("S&P") and Fitch IBCA, Inc. ("Fitch"). Fourth, the Trustee cannot be an
affiliate of any
S-98
<PAGE>
other member of the "Restricted Group", which consists of the Underwriters, the
Depositor, the Trustee, the Servicer, the Special Servicer, any sub-servicer
and any mortgagor with respect to Mortgage Loans constituting more than 5% of
the aggregate unamortized principal balance of the Mortgage Loans as of the
date of initial issuance of the Senior Certificates and any affiliate of any
such member. Fifth, the sum of all payments made to and retained by the
Underwriters must represent not more than reasonable compensation for
underwriting such Certificates, the sum of all payments made to and retained by
the Depositor pursuant to the assignment of the Mortgage Loans to the Trust
Fund must represent not more than the fair market value of such obligations and
the sum of all payments made to and retained by the Servicer, the Special
Servicer and any sub-servicer must represent not more than reasonable
compensation for such person's services under the Pooling and Servicing
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 Securities and Exchange Commission
under the Securities Act of 1933, as amended.
Because the Class A 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 the issuance of the Class A
Certificates that they be rated not lower than "Aaa" by Moody's and "AAA" by
DCR. As of the Closing Date, the fourth general condition set forth above will
be satisfied with respect to the Class A Certificates. A fiduciary of a Plan
contemplating purchasing a Class A Certificate in the secondary market must
make its own determination that, at the time of such purchase such Certificates
continue to satisfy the third and fourth general conditions set forth above. A
fiduciary of a Plan contemplating purchasing a Class A Certificate, whether in
the initial issuance of such Certificates or in the secondary market, must make
its own determination that the first, fifth and sixth general conditions set
forth above will be satisfied with respect to such Certificate.
The Exemption also requires that the Trust Fund 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 in such other
investment pools must have been rated in one of the three highest categories of
DCR, Moody's, Fitch or S&P for at least one year prior to the Plan's
acquisition of such Certificates; and (iii) certificates 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 such Certificates.
If the general conditions of the Exemption are satisfied, the Exemption
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 Class
A Certificates in the initial issuance of Certificates between the Depositor or
an Underwriter and a Plan when the Depositor, an Underwriter, the Trustee, the
Servicer, the Special Servicer, a sub-servicer or a borrower is a Party in
Interest with respect to the investing Plan, (ii) the direct or indirect
acquisition or disposition in the secondary market of the Class A Certificates
by a Plan and (iii) the holding of such 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" or 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.
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of
the Code in connection with (1) the direct or indirect sale, exchange or
transfer of Class A Certificates in the initial issuance of Certificates
between the Depositor or an Underwriter 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 Loans or (b) an
affiliate of such a person, (2) the direct or indirect acquisition or
disposition in the secondary market of Class A Certificates by a Plan and (3)
the holding of Class A Certificates by a Plan.
S-99
<PAGE>
Further, if certain specific conditions of the Exemption are satisfied,
the Exemption may provide an exemption from the restrictions imposed by
Sections 406(a), 406(b) and 407(a) of ERISA, and the 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.
Before purchasing a Class A Certificate or Certificate, a fiduciary of a
Plan should itself confirm that (i) the Class A Certificates constitute
"certificates" for purposes of the Exemption and (ii) the specific and general
conditions and the other requirements set forth in the Exemption would be
satisfied. In addition to making its own determination as to the availability
of the exemptive relief provided in the Exemption, the Plan fiduciary should
consider the availability of any other prohibited transaction exemption,
including with respect to governmental plans, any exemptive relief afforded
under Similar Laws. See "ERISA Considerations" in the prospectus. A purchaser
of a Class A 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.
Because the characteristics of the Subordinate Offered Certificates do not
meet the requirements of the Exemption, the purchase or holding of such
Certificates by a Plan may result in prohibited transactions or the imposition
of excise taxes or civil penalties. In no event may any transfer of a
Subordinate Offered Certificate or any interest therein be made to a Plan or to
any person who is directly or indirectly purchasing such Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless the purchase and holding of such Certificate or
interest therein is exempt from the prohibited transaction provisions of
Section 406 of ERISA and the related excise tax provisions of Section 4975 of
the Code under Prohibited Transaction Class Exemption 95-60, which provides an
exemption from the prohibited transaction rules for certain transactions
involving an insurance company general account. Any such Plan or person to whom
a transfer of any such Certificate or interest therein is made shall be deemed
to have represented to the Depositor, the Servicer, the Special Servicer, the
Trustee, the Underwriters, any sub-servicer and any borrower with respect to
the Mortgage Loans that the purchase and holding of such Certificate or
interest therein is so exempt on the basis of Prohibited Transaction Class
Exemption 95-60. See "ERISA Considerations" in the prospectus.
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 Certificates to a Plan is in no respect a representation by
the Depositor or Underwriter that this investment meets all relevant legal
requirements with respect to investments by Plans generally or any particular
Plan, or that this investment is appropriate for Plans generally or any
particular Plan.
S-100
<PAGE>
INDEX OF SIGNIFICANT DEFINITIONS
<TABLE>
<S> <C>
A
ADA ....................................... S-37
Advance Rate .............................. S-74
Advances .................................. S-9, S-74
Annual Report ............................. S-77
Anticipated Repayment Date ................ S-14, S-39
ARD Loan .................................. S-39
Authenticating Agent ...................... S-79
B
Balloon Payments .......................... S-28
Bear Stearns Funding ...................... S-55
C
CEDEL ..................................... S-3, S-61
Certificate Owner ......................... S-61
Certificate Registrar ..................... S-79
Certificateholders ........................ S-60
Certificates .............................. S-60
Class A Certificates ...................... S-60
Closing Date .............................. S-60
Corporate Trust Office .................... S-79
D
DCR ....................................... S-1
Definitive Certificate .................... S-61
Depositor ................................. S-3
Distribution Date ......................... S-5, S-62
Distribution Date Statement ............... S-76
Document Defect ........................... S-58
DTC ....................................... S-3, S-61
DTC Systems ............................... S-61
Due Date .................................. S-13
E
Environmental Report ...................... S-56
ERISA Plan ................................ S-98
Euroclear ................................. S-3, S-61
Exemption ................................. S-98
Expected Final Distribution Dates ......... S-5
F
Fee Interest .............................. S-57
FIRREA .................................... S-54
Fitch ..................................... S-98
Form 8-K .................................. S-42
G
Ground Lease .............................. S-57
I
ICPM ...................................... B-2
Initial Rate .............................. S-39
Insurance Proceeds ........................ S-69
Interest Only Certificates ................ S-60
</TABLE>
S-101
<PAGE>
<TABLE>
<S> <C>
Interest Reserve Amount ............................ S-63
Interest Reserve Loans ............................. S-63
L
LaSalle ............................................ S-79
Liquidation Fee .................................... S-92
Loan A ............................................. S-36
Loan B ............................................. S-36
Lock Box Accounts .................................. S-58
Lock Box Loans ..................................... S-58
Lockout Period ..................................... S-34
M
Material Breach .................................... S-58
Material Document Defect ........................... S-58
Maturity Date ...................................... S-14
Mortgage ........................................... S-38
Mortgage Loan Purchase and Sale Agreement .......... S-4
Mortgage Loan Purchase and Sale Agreements ......... S-55
Mortgage Loan Seller ............................... S-55
Mortgage Loans ..................................... S-3
Mortgage Note ...................................... S-38
Mortgage Pool ...................................... S-12
Mortgaged Property ................................. S-38
N
Norwest Bank ....................................... S-79
Notional Amount .................................... S-1
NRA ................................................ B-1
NWAC Rate .......................................... S-2
O
Offered Certificates ............................... S-3, S-60
Operating Adviser .................................. S-91
P
B-4, B-6, B-8,
Parent ............................................. B-10, B-12
Partial Release Mortgaged Properties ............... S-41
Participants ....................................... S-61
Paying Agent ....................................... S-79
P&I Advance ........................................ S-10, S-73
Plan ............................................... S-98
PML ................................................ S-55
Pooling and Servicing Agreement .................... S-60
Prepayment Assumption .............................. S-95
Prepayment Premium ................................. S-34
Prepayment Premium Period .......................... S-34
Prepayment Premiums ................................ S-9
Principal Balance Certificates ..................... S-60
Principal Prepayments .............................. S-69
Private Certificates ............................... S-3, S-60
Purchase Price ..................................... S-58
Q
Qualifying Substitute Mortgage Loan ................ S-58
</TABLE>
S-102
<PAGE>
<TABLE>
<S> <C>
R
Rated Final Distribution Date ............ S-5
Rehabilitated Mortgage Loan .............. S-88
REMIC .................................... S-95
REMIC Provisions ......................... S-95
REMIC Regular Certificates ............... S-60
REO Income ............................... S-69
REO Property ............................. S-60, S-88
REO Tax .................................. S-95
Residual Certificates .................... S-60
Revised Rate ............................. S-39
S
Scheduled Payments ....................... S-13
Senior Certificates ...................... S-60
Servicing Fee ............................ S-92
Servicing Fee Rate ....................... S-92
Servicing Standard ....................... S-87
Servicing Transfer Event ................. S-88
Similar Law .............................. S-98
SMMEA .................................... S-21, S-98
S&P ...................................... S-98
Special Servicer ......................... S-90
Special Servicer Compensation ............ S-92
Special Servicer Reports ................. S-77
Special Servicing Fee .................... S-92
Specially Serviced Mortgage Loan ......... S-88
Subordinate Certificates ................. S-60
Substitute Property ...................... B-2
Substituted Property ..................... B-2
T
Title Policy ............................. S-56
Trigger Event ............................ B-2
Trust Fund ............................... S-60
Trustee Fee .............................. S-79
U
Underwriter .............................. S-96
Underwriters ............................. S-96
Underwriting Agreement ................... S-96
Unpaid Interest .......................... S-67
W
Wells Fargo .............................. S-55
Workout Fee .............................. S-92
Y
Yield Maintenance Charge ................. S-34, S-40
Yield Maintenance Charges ................ S-9
Yield Maintenance Period ................. S-34
Yield Rate ............................... S-40
Z
Zoning Laws .............................. S-36
</TABLE>
S-103
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
LOAN CHARACTERISTICS
ANNEX A
<TABLE>
<CAPTION>
MORTGAGE
TAB LOAN
LOAN NUMBER # SELLER LOAN NAME PROPERTY NAME
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
25489 1 BSFI Inland Portfolio
25489A Springboro Plaza
25489B Park Center Plaza
25489C Fairview Heights Plaza
25489D Staples
25489E Riverplace Center
25489F Two Rivers Plaza
25489G Circuit City
25489H Hollywood Video
25489I Rose Plaza
25489J Loehmann's Plaza
25489K Baytowne Shoppes & Square
25489L Plymouth Collections Center
25489M Orland Greens
25489N CarMax Group, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
851445 2 WFBNA St. Charles 18 Cine St. Charles 18 Cine
851443 WFBNA Des Peres 14 Cine Des Peres 14 Cine
851444 WFBNA O'Fallon 15 Cine O'Fallon 15 Cine
851446 WFBNA St. Clair 10 Cine St. Clair 10 Cine
851447 WFBNA Halls Ferry 14 Cine Halls Ferry 14 Cine
- -------------------------------------------------------------------------------------------------------------------------------
851499 3 WFBNA Pleasanton Office Portfolio Pleasanton Office Portfolio
18041 4 BSFI 225 Broadway 225 Broadway
851550 5 WFBNA CompuCom Systems Headquarters CompuCom Systems Headquarters
851563 6 WFBNA King Street Metro Place - Phase I King Street Metro Place - Phase I
851476 7 WFBNA 800 West El Camino Real 800 West El Camino Real
- -------------------------------------------------------------------------------------------------------------------------------
9122 8 BSFI Torrey Reserve North Court Torrey Reserve North Court
16465 BSFI 3720 Arroyo Sorrento Road 3720 Arroyo Sorrento Road
851087 9 WFBNA AMC Theatres AMC Theatres
25764 10 BSFI Brinkley House Apartments Brinkley House Apartments
25557 11 BSFI SUN SUITES
25557A Sun Suites of Stockbridge
25557B Sun Suites of Suwanee
25557C Sun Suites of Gwinnett
25557D Sun Suites of Cumming
25557E Sun Suites of Town Center
25557F Sun Suites of Smyrna
25557G Sun Suites of Douglasville
- -------------------------------------------------------------------------------------------------------------------------------
17660 12 BSFI Plymouth Square Shopping Center Plymouth Square Shopping Center
851580 13 WFBNA Northgate Lakes Apartments Northgate Lakes Apartments
851500 14 WFBNA The Landmark Business & Financial Center The Landmark Business & Financial Center
25387 15 BSFI VAGABOND PORTFOLIO
25387A Executive Inn
25387B Vagabond Inn - Redondo Beach
- -------------------------------------------------------------------------------------------------------------------------------
18066 BSFI Vagabond Inn Hayward Vagabond Inn Hayward
851439 16 WFBNA South Tech Business Park South Tech Business Park
851465 17 WFBNA Summit North Shopping Center Summit North Shopping Center
851802 18 WFBNA Plaza De Campana Plaza De Campana
851367 19 WFBNA Ocean Bluffs Mobilehome Park Ocean Bluffs Mobilehome Park
- -------------------------------------------------------------------------------------------------------------------------------
851072 20 WFBNA The Pavilion Center The Pavilion Center
18137 21 BSFI Glenn Dale Business Center Glenn Dale Business Center
18332 22 BSFI Albertson's Marketplace Albertson's Marketplace
851460 23 WFBNA Piatti's Restaurant & Shelter Bay Piatti's Restaurant & Shelter Bay
Office Complex Office Complex
5502 24 BSFI 205 Place Shopping Center 205 Place Shopping Center
- -------------------------------------------------------------------------------------------------------------------------------
17877 25 BSFI Ruxton Tower Ruxton Tower
851498 26 WFBNA First & Stewart Building First & Stewart Building
25069 27 BSFI Lochwood Portfolio Lochwood Portfolio
851400 28 WFBNA Regency Premier Apartments Regency Premier Apartments
851578 29 WFBNA Royal Village Apartments - Gainesville Royal Village Apartments - Gainesville
- -------------------------------------------------------------------------------------------------------------------------------
851454 30 WFBNA Rock Avenue Business Park Rock Avenue Business Park
851317 31 WFBNA The Bay Club Hotel & Marina The Bay Club Hotel & Marina
850937 32 WFBNA PADI Building PADI Building
851455 33 WFBNA Schlumberger Building Schlumberger Building
17154 34 BSFI 521-527 & 529-535 West 20th Street 521-527 & 529-535 West 20th Street
- -------------------------------------------------------------------------------------------------------------------------------
18173 35 BSFI Miracle Mile Mobile Home Park Miracle Mile Mobile Home Park
12130 36 BSFI 38 East 30th Street 38 East 30th Street
851384 37 WFBNA Crossroads Office Center Crossroads Office Center
25118 38 BSFI Quebec House Apartments Quebec House Apartments
25959 39 BSFI Mayfair House Apartments Mayfair House Apartments
- -------------------------------------------------------------------------------------------------------------------------------
851419 40 WFBNA LAWRENCE PROPERTIES
851419A Lawrence Office Building Lawrence Office Building
851419B Tryon Hills Industrial Center Tryon Hills Industrial Center
851419C The Lawrence Center The Lawrence Center
851488 41 WFBNA Corinthian Apartments Corinthian Apartments
- -------------------------------------------------------------------------------------------------------------------------------
851303 42 WFBNA West Covina Apartments West Covina Apartments
26031 43 BSFI San Jacinto Court Shopping Center San Jacinto Court Shopping Center
851579 44 WFBNA Royal Lexington Apartments Royal Lexington Apartments
851468 45 WFBNA 470 Spear Street 470 Spear Street
851404 46 WFBNA Waterford Center Waterford Center
- -------------------------------------------------------------------------------------------------------------------------------
851403 47 WFBNA Santa Barbara Plaza Santa Barbara Plaza
850995 48 WFBNA The Cypress Building The Cypress Building
25714 49 BSFI Interpointe Shopping Center Interpointe Shopping Center
851306 50 WFBNA Spring Woods Apartments Spring Woods Apartments
851370 51 WFBNA 2302 Trade Zone Boulevard 2302 Trade Zone Boulevard
- -------------------------------------------------------------------------------------------------------------------------------
25271 52 BSFI Crystal Tree Apartments Crystal Tree Apartments
851459 53 WFBNA LifeCare Specialty Hospital LifeCare Specialty Hospital
851469 54 WFBNA Willows Apartments Willows Apartments
851425 55 WFBNA Culver Plaza Culver Plaza
17583 56 BSFI State Tower Building State Tower Building
- -------------------------------------------------------------------------------------------------------------------------------
5504 57 BSFI Talbert Center Talbert Center
851338 58 WFBNA Acorn Paper Products Acorn Paper Products
17875 59 BSFI St. Jude's Health Complex St. Jude's Health Complex
25312 60 BSFI Parkland Green Apartments Parkland Green Apartments
851435 61 WFBNA 710 Sansome Street 710 Sansome Street
- -------------------------------------------------------------------------------------------------------------------------------
851438 62 WFBNA 17112 Armstrong Avenue 17112 Armstrong Avenue
25609 63 BSFI THE GROWTH COMPANIES PORTFOLIO
25609A 46 Auburn Street
25609B 12-14, 16-18 Winter Street
25609C 130 Lexington Street
- -------------------------------------------------------------------------------------------------------------------------------
851548 64 WFBNA Corporate Express Corporate Express
851245 65 WFBNA 27712 Avenue Mentry 27712 Avenue Mentry
851354 66 WFBNA Equitable Center Equitable Center
851485 67 WFBNA Spanish Oaks Apts Spanish Oaks Apts
851280 68 WFBNA Huston Park Apartments Huston Park Apartments
851279 69 WFBNA Morrison Park Apartments Morrison Park Apartments
851433 70 WFBNA Pacific Sunrise Apartments Pacific Sunrise Apartments
- -------------------------------------------------------------------------------------------------------------------------------
17718 71 BSFI Homewood Suites Homewood Suites
25423 72 BSFI Holiday Inn Express Holiday Inn Express
11134 73 BSFI Hilltop Medical Center Hilltop Medical Center
25675 74 BSFI Snowden's Ridge Apartments Snowden's Ridge Apartments
851399 75 WFBNA Saticoy Gardens Saticoy Gardens
- -------------------------------------------------------------------------------------------------------------------------------
851582 76 WFBNA Royal Village Apartments - Tallahassee Royal Village Apartments - Tallahassee
851428 77 WFBNA Feit Electric Building Feit Electric Building
851327 78 WFBNA TCI Call Center TCI Call Center
25165 79 BSFI Trumbull Medical Arts Center Trumbull Medical Arts Center
851411 80 WFBNA Dublin Allsafe Dublin Allsafe
- -------------------------------------------------------------------------------------------------------------------------------
851388 81 WFBNA Metro Business Center Metro Business Center
851560 82 WFBNA Gateway Center Gateway Center
12052 83 BSFI Crondall Corner Crondall Corner
18113 84 BSFI Best Western - Lake Norman Best Western - Lake Norman
851406 85 WFBNA Ashley Plaza Shopping Center Ashley Plaza Shopping Center
- -------------------------------------------------------------------------------------------------------------------------------
25577 86 BSFI 270 St. Paul Building 270 St. Paul Building
851385 87 WFBNA Valley Office Center Valley Office Center
16416 88 BSFI Woodlane Square Shopping Center Woodlane Square Shopping Center
25589 89 BSFI The Craft House Apartments The Craft House Apartments
851577 90 WFBNA Royal Oaks Apartments Royal Oaks Apartments
- -------------------------------------------------------------------------------------------------------------------------------
26174 91 BSFI Parkvale Medical Office Parkvale Medical Office
851243 92 WFBNA 12685 Van Nuys Boulevard 12685 Van Nuys Boulevard
851415 93 WFBNA Hannum Industrial Park Hannum Industrial Park
12101 94 BSFI Keyser Oaks Center Keyser Oaks Center
851347 95 WFBNA Sunrise Village Apartments Sunrise Village Apartments
- -------------------------------------------------------------------------------------------------------------------------------
16398 96 BSFI Gary's Plaza Shopping Center Gary's Plaza Shopping Center
25451 97 BSFI Diho Plaza Diho Plaza
851586 98 WFBNA Santan Fiesta Santan Fiesta
851219 99 WFBNA The Village Apartments The Village Apartments
851386 100 WFBNA Sobol Apartments Sobol Apartments
- -------------------------------------------------------------------------------------------------------------------------------
8643 101 BSFI 2607 Rhawn St. & 8040 Roosevelt Blvd. 2607 Rhawn St. & 8040 Roosevelt Blvd.
25195 102 BSFI 598 Broadway 598 Broadway
25559 103 BSFI Harborwood West Apartments Harborwood West Apartments
851246 104 WFBNA Los Alamitos Professional Medical Building Los Alamitos Professional Medical Building
851337 105 WFBNA Rollingwood Duplex Homes Rollingwood Duplex Homes
- -------------------------------------------------------------------------------------------------------------------------------
851378 106 WFBNA Hermco Center, I, II Hermco Center, I, II
851369 107 WFBNA Central Computer Building Central Computer Building
12099 108 BSFI Forest Plaza Forest Plaza
851479 109 WFBNA 8800 Promenade Professional Bldg. 8800 Promenade Professional Bldg.
851365 110 WFBNA 2228 Oakland Road 2228 Oakland Road
- -------------------------------------------------------------------------------------------------------------------------------
851525 111 WFBNA Redi Packaging Warehouse Redi Packaging Warehouse
851581 112 WFBNA Royal Pavilion Apartments Royal Pavilion Apartments
851528 113 WFBNA Rancho Las Palmas Apartments Rancho Las Palmas Apartments
851305 114 WFBNA Marilla Sundance Apartments Marilla Sundance Apartments
9419 115 BSFI Southland Plaza Southland Plaza
- -------------------------------------------------------------------------------------------------------------------------------
18346 116 BSFI Piney Orchard Market Place Piney Orchard Market Place
851244 117 WFBNA 49-51 Strathearn & 50 Moreland 49-51 Strathearn & 50 Moreland
851381 118 WFBNA Mountain View Apartments Mountain View Apartments
9675 119 BSFI 211 63rd Street 211 63rd Street
851267 120 WFBNA MCKINNEY PORTFOLIO
851267A Stonegate Stonegate
851267B Village Green Apartments Village Green Apartments
- -------------------------------------------------------------------------------------------------------------------------------
851503 121 WFBNA Kelsey Apartments Kelsey Apartments
851387 122 WFBNA Luke Avenue Business Park Luke Avenue Business Park
851507 123 WFBNA Southwood Terrace Southwood Terrace
851467 124 WFBNA Factual Data Office Building Factual Data Office Building
851342 125 WFBNA Artesia Senior Center Artesia Senior Center
- -------------------------------------------------------------------------------------------------------------------------------
851420 126 WFBNA 1405 San Fernando Blvd. 1405 San Fernando Blvd.
851430 127 WFBNA Apache Junction - Bashas Apache Junction - Bashas
25117 128 BSFI Village Walk Shopping Center Village Walk Shopping Center
25352 129 BSFI Shakespeare & Sherwood Apartments Shakespeare & Sherwood Apartments
851340 130 WFBNA Ramona Senior Center Ramona Senior Center
- -------------------------------------------------------------------------------------------------------------------------------
16958 131 BSFI Redwood Studios Redwood Studios
851424 132 WFBNA Santa Clara Self Storage Santa Clara Self Storage
851333 133 WFBNA Anchor Business Park Anchor Business Park
851464 134 WFBNA 900 & 916 Western Avenue 900 & 916 Western Avenue
11505 135 BSFI Waverly Elementary School Waverly Elementary School
- -------------------------------------------------------------------------------------------------------------------------------
851481 136 WFBNA 8914-8918 Santa Monica Blvd. 8914-8918 Santa Monica Blvd.
851806 137 WFBNA Treehouse Apartments Treehouse Apartments
851472 138 WFBNA Temescal Plaza Shopping Center Temescal Plaza Shopping Center
26032 139 BSFI Ashford Court Shopping Center Ashford Court Shopping Center
851408 140 WFBNA The Clarion - Del Mar Inn The Clarion - Del Mar Inn
- -------------------------------------------------------------------------------------------------------------------------------
851371 141 WFBNA 400 Emerson Street 400 Emerson Street
17553 142 BSFI Gaithersburg Storehouse Gaithersburg Storehouse
851450 143 WFBNA Oxnard Plaza Apartments Oxnard Plaza Apartments
25144 144 BSFI Pecan Park Place Pecan Park Place
851423 145 WFBNA Handicraft Building Handicraft Building
- -------------------------------------------------------------------------------------------------------------------------------
851426 146 WFBNA Riviera Center Riviera Center
25485 147 BSFI Regent Square Apartments Regent Square Apartments
25508 148 BSFI Eckerd's Eckerd's Drug Store
851200 149 WFBNA 21601 Devonshire Street 21601 Devonshire Street
- -------------------------------------------------------------------------------------------------------------------------------
851192 150 WFBNA FRIENDSWOOD/POSTWOOD PORTFOLIO
851192A Friendswood Village Shopping Center Friendswood Village Shopping Center
851192B Postwood Plaza Shopping Center Postwood Plaza Shopping Center
25445 151 BSFI Southgate Mini Storage Southgate Mini Storage
851395 152 WFBNA Chadron Apartments Chadron Apartments
17962 153 BSFI Willow Park Apartments Willow Park Apartments
- -------------------------------------------------------------------------------------------------------------------------------
851285 154 WFBNA Willow Glen Apartments Willow Glen Apartments
851328 155 WFBNA Maralisa Apartments Maralisa Apartments
851508 156 WFBNA Quail Meadows Apartments Quail Meadows Apartments
851808 157 WFBNA Pioneer Village Apartments Pioneer Village Apartments
851409 158 WFBNA Hayward Allsafe Mini Storage Hayward Allsafe Mini Storage
- -------------------------------------------------------------------------------------------------------------------------------
851312 159 WFBNA Dolphin & Crane Buildings Dolphin & Crane Buildings
851478 160 WFBNA Meadowbrook Mobile Home Community Meadowbrook Mobile Home Community
851809 161 WFBNA University Square University Square
851452 162 WFBNA 6052 Industrial Way 6052 Industrial Way
851352 163 WFBNA The 400 Center The 400 Center
- -------------------------------------------------------------------------------------------------------------------------------
851393 164 WFBNA Windfaire Apartments Windfaire Apartments
851530 165 WFBNA Piedmont Pointe Office Park Piedmont Pointe Office Park
851336 166 WFBNA 400 University Avenue 400 University Avenue
851565 167 WFBNA Office Depot Dell Range Pavilion Office Depot Dell Range Pavilion
851348 168 WFBNA Patricia Place Apartments Patricia Place Apartments
- -------------------------------------------------------------------------------------------------------------------------------
851401 169 WFBNA Kingswood Apartments Kingswood Apartments
851310 170 WFBNA Part of Liberty Village Part of Liberty Village
851555 171 WFBNA Mikohn Gaming Warehouse Mikohn Gaming Warehouse
851264 172 WFBNA View Point Apartments View Point Apartments
851364 173 WFBNA Covington Pointe Apartments Covington Pointe Apartments
- -------------------------------------------------------------------------------------------------------------------------------
851278 174 WFBNA Arroyo Square Apartments Arroyo Square Apartments
25078 175 BSFI Sunrise Shopping Center Sunrise Shopping Center
851361 176 WFBNA Stratford Square Stratford Square
851484 177 WFBNA Lazy Pet Products Lazy Pet Products
851330 178 WFBNA Town & Country Plaza Town & Country Plaza
- -------------------------------------------------------------------------------------------------------------------------------
851282 179 WFBNA Melrose Place Melrose Place
16953 180 BSFI Glencoe Building Glencoe Building
851493 181 WFBNA Pepper Grove Business Center Pepper Grove Business Center
851383 182 WFBNA 1211 Newell Avenue 1211 Newell Avenue
17923 183 BSFI All American Mini Storage All American Mini Storage
- -------------------------------------------------------------------------------------------------------------------------------
851390 184 WFBNA Taylor Plaza Shopping Center Taylor Plaza Shopping Center
851353 185 WFBNA 25-75 N. Santa Anita Avenue 25-75 N. Santa Anita Avenue
851501 186 WFBNA America's Budget Storage, Canton MI America's Budget Storage, Canton MI
851487 187 WFBNA Ballantyne Apartments Ballantyne Apartments
851463 188 WFBNA Lockridge Street Industrial Lockridge Street Industrial
- -------------------------------------------------------------------------------------------------------------------------------
851394 189 WFBNA Crenshaw Townhouse Crenshaw Townhouse
851416 190 WFBNA La Cienega/Jefferson Industrial Park La Cienega/Jefferson Industrial Park
851334 191 WFBNA Security Building/White Building Security Building/White Building
851449 192 WFBNA C&C MHC C&C MHC
851556 193 WFBNA Smoky Hill Village Phase II Smoky Hill Village Phase II
- -------------------------------------------------------------------------------------------------------------------------------
851236 194 WFBNA Arbor Plaza Arbor Plaza
851323 195 WFBNA Scherzinger Lane Apartments Scherzinger Lane Apartments
851396 196 WFBNA Vassar Terrace Apartments Vassar Terrace Apartments
851242 197 WFBNA 12701 Van Nuys Blvd. 12701 Van Nuys Blvd.
851329 198 WFBNA Saturn Industrial Center Saturn Industrial Center
- -------------------------------------------------------------------------------------------------------------------------------
851441 199 WFBNA 1600 Dell Avenue 1600 Dell Avenue
25479 200 BSFI 7 East 47th Street 7 East 47th Street
851494 201 WFBNA Valley View Business Park Valley View Business Park
851349 202 WFBNA Eastwood Oaks Apartments Eastwood Oaks Apartments
851526 203 WFBNA Fountain Garden Apartments Fountain Garden Apartments
- -------------------------------------------------------------------------------------------------------------------------------
17961 204 BSFI Hidden Valley Apartments Hidden Valley Apartments
851569 205 WFBNA Wakefield Hall Wakefield Hall
851539 206 WFBNA Bromley Apartments Bromley Apartments
851520 207 WFBNA Superstition Springs Mini Storage Superstition Springs Mini Storage
851453 208 WFBNA Oakmont Medical Building Oakmont Medical Building
- -------------------------------------------------------------------------------------------------------------------------------
851486 209 WFBNA North Mollison North Mollison
851477 210 WFBNA Financial Center Financial Center
851248 211 WFBNA 1371 Beverly Glen Apartments 1371 Beverly Glen Apartments
851283 212 WFBNA Tradewinds Apartments Tradewinds Apartments
851392 213 WFBNA 411 North Marshall Ave. 411 North Marshall Ave.
- -------------------------------------------------------------------------------------------------------------------------------
851344 214 WFBNA Carpenter's Village Shopping Center Carpenter's Village Shopping Center
851405 215 WFBNA City Center Shopping Center City Center Shopping Center
851299 216 WFBNA Grand & McFadden Business Park Grand & McFadden Business Park
851377 217 WFBNA Davidson Industrial Park Davidson Industrial Park
851356 218 WFBNA Woodward Business Park Woodward Business Park
- -------------------------------------------------------------------------------------------------------------------------------
851307 219 WFBNA Irvine-FedEx Building Irvine-FedEx Building
17927 220 BSFI Barnegat Mini-Storage Barnegat Mini-Storage
851456 221 WFBNA Port St. Johns Apartments Port St. Johns Apartments
851373 222 WFBNA 10 South Knoll & 36 Tiburon 10 South Knoll & 36 Tiburon
851434 223 WFBNA Emerald Coast Shopping Center Emerald Coast Shopping Center
- -------------------------------------------------------------------------------------------------------------------------------
851343 224 WFBNA Halltree Apartments Halltree Apartments
851391 225 WFBNA Lamplighters Senior Citizens Inns Lamplighters Senior Citizens Inns
851398 226 WFBNA Lemoli Terrace Lemoli Terrace
851372 227 WFBNA Arctic Business Park I Arctic Business Park I
851261 228 WFBNA Fountains Shopping Center Fountains Shopping Center
- -------------------------------------------------------------------------------------------------------------------------------
851322 229 WFBNA 1150 W. Avenue J 1150 W. Avenue J
25742 230 BSFI Northfield Estates Northfield Estates
851418 231 WFBNA 622 Contra Costa Boulevard 622 Contra Costa Boulevard
851335 232 WFBNA 4034 S. Pacific Avenue 4034 S. Pacific Avenue
851260 233 WFBNA Technology Park Technology Park
- -------------------------------------------------------------------------------------------------------------------------------
25024 234 BSFI 417-423 West Broadway 417-423 West Broadway
851341 235 WFBNA Bellflower Senior Center Bellflower Senior Center
851355 236 WFBNA 3301 & 3333 Sunrise Blvd. 3301 & 3333 Sunrise Blvd.
851457 237 WFBNA Manteca Self Store-It Manteca Self Store-It
851286 238 WFBNA The Springs The Springs
- -------------------------------------------------------------------------------------------------------------------------------
851389 239 WFBNA 510 & 550 Parrott Street 510 & 550 Parrott Street
851250 240 WFBNA Redlands Apartments Redlands Apartments
851195 241 WFBNA Alta Vista Country Club Alta Vista Country Club
851265 242 WFBNA 31240 La Baya Drive 31240 La Baya Drive
851358 243 WFBNA Country Club Village MHP Country Club Village MHP
- -------------------------------------------------------------------------------------------------------------------------------
851203 244 WFBNA Rancho Dominquez Industrial Building Rancho Dominquez Industrial Building
851421 245 WFBNA East Hill Apartments East Hill Apartments
851292 246 WFBNA 1685 Plymouth 1685 Plymouth
850952 247 WFBNA Los Angeles Times Building Los Angeles Times Building
851129 248 WFBNA Milano North Milano North
- -------------------------------------------------------------------------------------------------------------------------------
851351 249 WFBNA Universal Reprographics Universal Reprographics
851363 250 WFBNA West Loop at 18th St. Shopping Center West Loop at 18th St. Shopping Center
851429 251 WFBNA El Malke Apartments El Malke Apartments
851362 252 WFBNA 1275-81 8th Street 1275-81 8th Street
851258 253 WFBNA The Design Center at Colorado Springs The Design Center at Colorado Springs
- -------------------------------------------------------------------------------------------------------------------------------
851266 254 WFBNA Lamar Plaza Apartments Lamar Plaza Apartments
851263 255 WFBNA Mountain View Plaza Mountain View Plaza
851272 256 WFBNA Camino Palmero Apartments Camino Palmero Apartments
851174 257 WFBNA Century Park Plaza Office Building Century Park Plaza Office Building
851442 258 WFBNA 570 East La Cadena 570 East La Cadena
- -------------------------------------------------------------------------------------------------------------------------------
851256 259 WFBNA Johnson Warehouse - Colorado Springs Johnson Warehouse - Colorado Springs
851359 260 WFBNA Stockton-Walgreens Stockton-Walgreens
851252 261 WFBNA Rogers Business Center Rogers Business Center
851273 262 WFBNA 12959 Oxnard Street 12959 Oxnard Street
851288 263 WFBNA Northdale Commons Apartments Northdale Commons Apartments
- -------------------------------------------------------------------------------------------------------------------------------
851308 264 WFBNA GI Joe's at Poplar Square SC GI Joe's at Poplar Square SC
851296 265 WFBNA Silver Springs Apartments Silver Springs Apartments
11101 266 BSFI 310 West C Street 310 West C Street
851284 267 WFBNA The Tuscany Apartments The Tuscany Apartments
851275 268 WFBNA United West Group Building United West Group Building
- -------------------------------------------------------------------------------------------------------------------------------
851171 269 WFBNA Milestone Too Shopping Center Milestone Too Shopping Center
851382 270 WFBNA Hydra Re-load Hydra Re-load
851360 271 WFBNA Marshall Avenue Industrial Marshall Avenue Industrial
851451 272 WFBNA 1001 Shannon Court 1001 Shannon Court
851374 273 WFBNA Sumner Estates Mobile Home Park Sumner Estates Mobile Home Park
- -------------------------------------------------------------------------------------------------------------------------------
851238 274 WFBNA Mountain View Plaza Mountain View Plaza
851122 275 WFBNA 305 Forest Ave 305 Forest Ave
851402 276 WFBNA Grandview School Grandview School
851319 277 WFBNA Bahia Vista Apartments Bahia Vista Apartments
851357 278 WFBNA Davidson Warehouse Davidson Warehouse
851320 279 WFBNA Grant Place Apartments Grant Place Apartments
===============================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUMULATIVE
% OF % OF
INITIAL INITIAL GROSS
POOL POOL NUMBER OF MORTGAGE
LOAN NUMBER ORIGINAL BALANCE CUT-OFF BALANCE BALANCE BALANCE PROPERTIES RATE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
25489 $ 57,450,000.00 57,450,000.00 5.32% 5.32% 14 6.8650%
25489A 1
25489B 1
25489C 1
25489D 1
25489E 1
25489F 1
25489G 1
25489H 1
25489I 1
25489J 1
25489K 1
25489L 1
25489M 1
25489N 1
- ---------------------------------------------------------------------------------------------------------------
851445 10,500,000.00 10,394,590.07 0.96% 8.24% 1 8.2550%
851443 8,700,000.00 8,606,059.60 0.80% 1 8.2550%
851444 6,800,000.00 6,731,734.51 0.62% 1 8.2550%
851446 3,000,000.00 2,969,882.91 0.27% 1 8.2550%
851447 3,000,000.00 2,853,464.12 0.26% 1 7.7350%
- ---------------------------------------------------------------------------------------------------------------
851499 25,800,000.00 25,701,453.22 2.38% 10.61% 1 7.4250%
18041 25,500,000.00 25,466,456.83 2.36% 12.97% 1 7.3900%
851550 23,000,000.00 22,921,816.40 2.12% 15.09% 1 7.2150%
851563 22,400,000.00 22,366,917.31 2.07% 17.16% 1 6.9200%
851476 19,500,000.00 19,356,533.81 1.79% 18.95% 1 6.9700%
- ---------------------------------------------------------------------------------------------------------------
9122 18,300,000.00 18,286,567.59 1.69% 20.73% 1 7.5550%
16465 950,000.00 949,302.69 0.09% 1 7.5550%
851087 18,900,000.00 18,489,569.26 1.71% 22.44% 1 7.3700%
25764 16,000,000.00 15,986,768.04 1.48% 23.92% 1 6.9550%
25557 15,640,000.00 15,640,000.00 1.45% 25.37% 7 8.8600%
25557A 1
25557B 1
25557C 1
25557D 1
25557E 1
25557F 1
25557G 1
- ---------------------------------------------------------------------------------------------------------------
17660 15,300,000.00 15,280,176.76 1.41% 26.78% 1 7.4500%
851580 12,825,000.00 12,825,000.00 1.19% 27.97% 1 7.0000%
851500 12,000,000.00 11,945,284.50 1.11% 29.08% 1 7.2400%
25387 9,340,000.00 9,331,592.45 0.86% 30.15% 2 8.9450%
25387A 1
25387B 1
- ---------------------------------------------------------------------------------------------------------------
18066 2,300,000.00 2,281,285.13 0.21% 1 8.4600%
851439 11,500,000.00 11,417,571.21 1.06% 31.21% 1 6.9100%
851465 10,550,000.00 10,481,120.24 0.97% 32.18% 1 6.7200%
851802 10,000,000.00 9,926,042.95 0.92% 33.09% 1 7.2500%
851367 9,975,000.00 9,858,208.85 0.91% 34.01% 1 6.5100%
- ---------------------------------------------------------------------------------------------------------------
851072 9,500,000.00 9,395,534.37 0.87% 34.88% 1 7.5240%
18137 9,000,000.00 8,989,428.78 0.83% 35.71% 1 7.8300%
18332 8,700,000.00 8,677,025.73 0.80% 36.51% 1 7.4000%
851460 8,650,000.00 8,607,643.95 0.80% 37.31% 1 6.9000%
5502 7,850,000.00 7,839,854.99 0.73% 38.03% 1 7.4600%
- ---------------------------------------------------------------------------------------------------------------
17877 7,650,000.00 7,650,000.00 0.71% 38.74% 1 6.8250%
851498 7,500,000.00 7,467,155.91 0.69% 39.43% 1 7.4300%
25069 7,470,000.00 7,461,880.42 0.69% 40.12% 1 8.1200%
851400 7,200,000.00 7,155,524.95 0.66% 40.78% 1 6.7100%
851578 7,050,000.00 7,050,000.00 0.65% 41.44% 1 6.8700%
- ---------------------------------------------------------------------------------------------------------------
851454 7,075,000.00 7,034,252.56 0.65% 42.09% 1 7.5200%
851317 6,950,000.00 6,843,468.89 0.63% 42.72% 1 6.9750%
850937 7,000,000.00 6,806,976.18 0.63% 43.35% 1 7.3600%
851455 6,600,000.00 6,550,560.16 0.61% 43.96% 1 6.8600%
17154 6,500,000.00 6,490,945.63 0.60% 44.56% 1 7.1600%
- ---------------------------------------------------------------------------------------------------------------
18173 6,500,000.00 6,485,527.78 0.60% 45.16% 1 7.1300%
12130 6,400,000.00 6,352,555.92 0.59% 45.75% 1 6.7100%
851384 6,250,000.00 6,164,014.80 0.57% 46.32% 1 6.7200%
25118 6,000,000.00 6,000,000.00 0.56% 46.87% 1 7.0200%
25959 6,000,000.00 5,995,038.02 0.55% 47.43% 1 6.9550%
- ---------------------------------------------------------------------------------------------------------------
851419 5,650,000.00 5,609,243.55 0.52% 47.94% 3 7.0900%
851419A 1
851419B 1
851419C 1
851488 5,600,000.00 5,570,123.09 0.52% 48.46% 1 8.0000%
- ---------------------------------------------------------------------------------------------------------------
851303 5,600,000.00 5,564,199.62 0.51% 48.97% 1 6.9300%
26031 5,550,000.00 5,550,000.00 0.51% 49.49% 1 8.6150%
851579 5,525,000.00 5,525,000.00 0.51% 50.00% 1 6.8600%
851468 5,500,000.00 5,460,716.31 0.51% 50.51% 1 7.1500%
851404 5,500,000.00 5,452,621.95 0.50% 51.01% 1 5.9900%
- ---------------------------------------------------------------------------------------------------------------
851403 5,400,000.00 5,380,359.10 0.50% 51.51% 1 8.2200%
850995 5,400,000.00 5,328,185.10 0.49% 52.00% 1 7.4050%
25714 5,200,000.00 5,196,262.78 0.48% 52.48% 1 7.6600%
851306 5,140,000.00 5,095,939.98 0.47% 52.95% 1 6.3400%
851370 5,100,000.00 5,076,750.20 0.47% 53.42% 1 7.5600%
- ---------------------------------------------------------------------------------------------------------------
25271 5,000,000.00 5,000,000.00 0.46% 53.89% 1 7.4600%
851459 5,000,000.00 4,961,681.72 0.46% 54.34% 1 6.7200%
851469 5,000,000.00 4,960,992.42 0.46% 54.80% 1 6.6100%
851425 5,000,000.00 4,956,269.84 0.46% 55.26% 1 6.7600%
17583 4,950,000.00 4,947,290.54 0.46% 55.72% 1 8.9900%
- ---------------------------------------------------------------------------------------------------------------
5504 4,950,000.00 4,943,602.83 0.46% 56.18% 1 7.4600%
851338 5,000,000.00 4,934,344.99 0.46% 56.63% 1 7.3400%
17875 4,875,000.00 4,855,796.63 0.45% 57.08% 1 7.4500%
25312 4,800,000.00 4,796,646.22 0.44% 57.53% 1 7.8000%
851435 4,800,000.00 4,775,350.77 0.44% 57.97% 1 6.6700%
- ---------------------------------------------------------------------------------------------------------------
851438 4,788,000.00 4,748,485.77 0.44% 58.41% 1 6.2600%
25609 4,775,000.00 4,775,000.00 0.44% 58.85% 3 7.4500%
25609A 1
25609B 1
25609C 1
- ---------------------------------------------------------------------------------------------------------------
851548 4,745,000.00 4,734,936.06 0.44% 59.29% 1 7.3900%
851245 4,500,000.00 4,446,766.78 0.41% 59.70% 1 6.7450%
851354 4,500,000.00 4,396,742.07 0.41% 60.11% 1 6.7100%
851485 4,400,000.00 4,362,415.50 0.40% 60.51% 1 6.9000%
851280 2,200,000.00 2,162,137.06 0.20% 60.91% 1 7.2300%
851279 2,200,000.00 2,162,137.06 0.20% 0.00% 1 7.2300%
851433 4,300,000.00 4,254,978.73 0.39% 61.30% 1 6.5300%
- ---------------------------------------------------------------------------------------------------------------
17718 4,250,000.00 4,236,423.75 0.39% 61.70% 1 8.7300%
25423 4,100,000.00 4,100,000.00 0.38% 62.08% 1 8.7200%
11134 4,100,000.00 4,092,679.96 0.38% 62.45% 1 8.0400%
25675 4,000,000.00 3,996,980.53 0.37% 62.82% 1 7.4150%
851399 3,975,000.00 3,950,729.19 0.37% 63.19% 1 6.7700%
- ---------------------------------------------------------------------------------------------------------------
851582 3,875,000.00 3,875,000.00 0.36% 63.55% 1 6.8300%
851428 3,900,000.00 3,860,431.79 0.36% 63.91% 1 6.0700%
851327 3,900,000.00 3,838,135.44 0.36% 64.26% 1 6.7000%
25165 3,800,000.00 3,795,723.63 0.35% 64.61% 1 7.5800%
851411 3,800,000.00 3,766,033.03 0.35% 64.96% 1 6.6300%
- ---------------------------------------------------------------------------------------------------------------
851388 3,800,000.00 3,764,227.21 0.35% 65.31% 1 6.5600%
851560 3,750,000.00 3,747,288.59 0.35% 65.66% 1 7.6300%
12052 3,750,000.00 3,745,478.48 0.35% 66.00% 1 7.7300%
18113 3,700,000.00 3,690,814.53 0.34% 66.34% 1 8.9200%
851406 3,600,000.00 3,585,948.95 0.33% 66.68% 1 7.8600%
- ---------------------------------------------------------------------------------------------------------------
25577 3,500,000.00 3,500,000.00 0.32% 67.00% 1 8.2400%
851385 3,525,000.00 3,477,381.44 0.32% 67.32% 1 6.8650%
16416 3,450,000.00 3,444,785.64 0.32% 67.64% 1 8.7050%
25589 3,435,000.00 3,432,587.81 0.32% 67.96% 1 7.7750%
851577 3,425,000.00 3,425,000.00 0.32% 68.27% 1 7.1300%
- ---------------------------------------------------------------------------------------------------------------
26174 3,300,000.00 3,296,274.35 0.31% 68.58% 1 7.5600%
851243 3,245,000.00 3,204,064.47 0.30% 68.88% 1 6.0600%
851415 3,235,000.00 3,203,788.82 0.30% 69.17% 1 6.4000%
12101 3,200,000.00 3,190,821.90 0.30% 69.47% 1 8.0850%
851347 3,200,000.00 3,177,304.28 0.29% 69.76% 1 6.4400%
- ---------------------------------------------------------------------------------------------------------------
16398 3,140,000.00 3,136,619.30 0.29% 70.05% 1 8.1550%
25451 3,125,000.00 3,121,687.28 0.29% 70.34% 1 7.9500%
851586 3,100,000.00 3,100,000.00 0.29% 70.63% 1 7.7900%
851219 3,100,000.00 3,074,252.78 0.28% 70.91% 1 6.2200%
851386 3,050,000.00 3,012,103.74 0.28% 71.19% 1 7.5200%
- ---------------------------------------------------------------------------------------------------------------
8643 3,000,000.00 2,997,324.11 0.28% 71.47% 1 9.0000%
25195 3,000,000.00 3,000,000.00 0.28% 71.75% 1 7.8000%
25559 3,000,000.00 3,000,000.00 0.28% 72.02% 1 7.5300%
851246 3,000,000.00 2,978,978.79 0.28% 72.30% 1 6.9650%
851337 3,000,000.00 2,925,221.71 0.27% 72.57% 1 6.4400%
- ---------------------------------------------------------------------------------------------------------------
851378 3,000,000.00 2,923,426.97 0.27% 72.84% 1 6.9300%
851369 3,000,000.00 2,918,778.65 0.27% 73.11% 1 6.2500%
12099 2,925,000.00 2,923,125.28 0.27% 73.38% 1 8.2250%
851479 2,950,000.00 2,903,970.28 0.27% 73.65% 1 7.2700%
851365 2,900,000.00 2,881,844.00 0.27% 73.92% 1 6.3500%
- ---------------------------------------------------------------------------------------------------------------
851525 2,900,000.00 2,874,709.76 0.27% 74.18% 1 7.7300%
851581 2,875,000.00 2,875,000.00 0.27% 74.45% 1 6.9200%
851528 2,850,000.00 2,838,061.30 0.26% 74.71% 1 7.4900%
851305 2,850,000.00 2,815,670.99 0.26% 74.97% 1 6.3400%
9419 2,850,000.00 2,811,961.60 0.26% 75.23% 1 7.3850%
- ---------------------------------------------------------------------------------------------------------------
18346 2,800,000.00 2,798,019.80 0.26% 75.49% 1 7.7400%
851244 2,775,000.00 2,740,504.35 0.25% 75.74% 1 7.1250%
851381 2,800,000.00 2,724,100.70 0.25% 76.00% 1 6.3900%
9675 2,725,000.00 2,720,493.82 0.25% 76.25% 1 8.6550%
851267 2,710,000.00 2,689,667.36 0.25% 76.50% 2 6.6550%
851267A 1
851267B 1
- ---------------------------------------------------------------------------------------------------------------
851503 2,690,000.00 2,684,294.63 0.25% 76.74% 1 7.3900%
851387 2,700,000.00 2,674,464.98 0.25% 76.99% 1 6.5300%
851507 2,700,000.00 2,649,800.12 0.25% 77.24% 1 7.2500%
851467 2,650,000.00 2,621,777.99 0.24% 77.48% 1 7.6100%
851342 2,640,000.00 2,601,969.33 0.24% 77.72% 1 6.5600%
- ---------------------------------------------------------------------------------------------------------------
851420 2,625,000.00 2,593,579.53 0.24% 77.96% 1 5.7000%
851430 2,600,000.00 2,569,286.09 0.24% 78.20% 1 7.5800%
25117 2,500,000.00 2,498,196.02 0.23% 78.43% 1 7.6400%
25352 2,500,000.00 2,498,082.47 0.23% 78.66% 1 7.3350%
851340 2,528,000.00 2,491,582.80 0.23% 78.89% 1 6.5600%
- ---------------------------------------------------------------------------------------------------------------
16958 2,500,000.00 2,493,554.59 0.23% 79.12% 1 7.4950%
851424 2,500,000.00 2,484,805.93 0.23% 79.35% 1 6.4900%
851333 2,500,000.00 2,483,643.45 0.23% 79.58% 1 6.1400%
851464 2,500,000.00 2,481,303.32 0.23% 79.81% 1 6.8700%
11505 2,500,000.00 2,471,050.70 0.23% 80.04% 1 8.0600%
- ---------------------------------------------------------------------------------------------------------------
851481 2,500,000.00 2,453,350.18 0.23% 80.27% 1 7.3400%
851806 2,500,000.00 2,451,004.84 0.23% 80.49% 1 6.8000%
851472 2,475,000.00 2,435,143.99 0.23% 80.72% 1 6.9000%
26032 2,390,000.00 2,388,558.08 0.22% 80.94% 1 8.5200%
851408 2,400,000.00 2,381,962.54 0.22% 81.16% 1 7.0000%
- ---------------------------------------------------------------------------------------------------------------
851371 2,400,000.00 2,373,909.62 0.22% 81.38% 1 6.3000%
17553 2,350,000.00 2,336,206.16 0.22% 81.60% 1 7.4000%
851450 2,320,000.00 2,306,808.42 0.21% 81.81% 1 6.8000%
25144 2,300,000.00 2,297,620.60 0.21% 82.02% 1 8.1000%
851423 2,300,000.00 2,293,296.98 0.21% 82.23% 1 8.0700%
- ---------------------------------------------------------------------------------------------------------------
851426 2,220,000.00 2,207,862.96 0.20% 82.44% 1 6.9800%
25485 2,200,000.00 2,197,453.73 0.20% 82.64% 1 7.4050%
25508 2,200,000.00 2,197,675.41 0.20% 82.85% 1 7.9700%
851200 2,210,000.00 2,193,361.66 0.20% 83.05% 1 7.1700%
- ---------------------------------------------------------------------------------------------------------------
851192 2,250,000.00 2,185,363.00 0.20% 83.25% 2 7.1400%
851192A 1
851192B 1
25445 2,150,000.00 2,150,000.00 0.20% 83.45% 1 7.9700%
851395 2,137,500.00 2,124,448.73 0.20% 83.65% 1 6.7700%
17962 2,100,000.00 2,098,361.80 0.19% 83.84% 1 7.2500%
- ---------------------------------------------------------------------------------------------------------------
851285 2,100,000.00 2,083,954.25 0.19% 84.03% 1 6.0800%
851328 2,100,000.00 2,083,349.15 0.19% 84.23% 1 6.9350%
851508 2,050,000.00 2,037,967.06 0.19% 84.41% 1 7.4000%
851808 2,100,000.00 2,032,344.84 0.19% 84.60% 1 6.8500%
851409 2,040,000.00 2,021,765.09 0.19% 84.79% 1 6.6300%
- ---------------------------------------------------------------------------------------------------------------
851312 2,030,000.00 2,005,849.44 0.19% 84.98% 1 6.7200%
851478 2,000,000.00 1,990,994.19 0.18% 85.16% 1 7.8400%
851809 2,000,000.00 1,990,373.63 0.18% 85.34% 1 8.2000%
851452 2,000,000.00 1,982,742.08 0.18% 85.53% 1 6.8400%
851352 2,000,000.00 1,981,395.28 0.18% 85.71% 1 6.3900%
- ---------------------------------------------------------------------------------------------------------------
851393 1,970,000.00 1,957,971.47 0.18% 85.89% 1 6.7700%
851530 1,950,000.00 1,944,174.47 0.18% 86.07% 1 7.9350%
851336 1,942,500.00 1,909,432.51 0.18% 86.25% 1 7.0300%
851565 1,900,000.00 1,898,110.00 0.18% 86.42% 1 8.3400%
851348 1,900,000.00 1,878,417.97 0.17% 86.60% 1 6.6900%
- ---------------------------------------------------------------------------------------------------------------
851401 1,900,000.00 1,872,862.60 0.17% 86.77% 1 6.4200%
851310 1,900,000.00 1,867,725.09 0.17% 86.94% 1 7.3400%
851555 1,792,500.00 1,790,656.17 0.17% 87.11% 1 8.1350%
851264 1,800,000.00 1,778,160.62 0.16% 87.27% 1 6.5800%
851364 1,800,000.00 1,770,249.48 0.16% 87.44% 1 6.5500%
- ---------------------------------------------------------------------------------------------------------------
851278 1,800,000.00 1,767,356.47 0.16% 87.60% 1 5.7500%
25078 1,750,000.00 1,748,207.21 0.16% 87.76% 1 8.1600%
851361 1,760,000.00 1,744,761.70 0.16% 87.92% 1 6.8200%
851484 1,750,000.00 1,738,538.94 0.16% 88.09% 1 6.7000%
851330 1,750,000.00 1,729,647.33 0.16% 88.25% 1 6.5500%
- ---------------------------------------------------------------------------------------------------------------
851282 1,725,000.00 1,711,354.61 0.16% 88.40% 1 5.9100%
16953 1,700,000.00 1,695,510.77 0.16% 88.56% 1 7.4000%
851493 1,700,000.00 1,689,433.76 0.16% 88.72% 1 7.0300%
851383 1,700,000.00 1,684,625.77 0.16% 88.87% 1 6.5600%
17923 1,675,000.00 1,671,944.74 0.15% 89.03% 1 8.1700%
- ---------------------------------------------------------------------------------------------------------------
851390 1,700,000.00 1,665,130.41 0.15% 89.18% 1 6.2200%
851353 1,675,000.00 1,654,350.95 0.15% 89.33% 1 6.2000%
851501 1,650,000.00 1,644,366.44 0.15% 89.49% 1 7.1900%
851487 1,650,000.00 1,643,732.88 0.15% 89.64% 1 8.0000%
851463 1,650,000.00 1,636,317.62 0.15% 89.79% 1 6.2300%
- ---------------------------------------------------------------------------------------------------------------
851394 1,645,000.00 1,635,431.82 0.15% 89.94% 1 7.0200%
851416 1,650,000.00 1,634,032.04 0.15% 90.09% 1 6.3800%
851334 1,650,000.00 1,629,490.78 0.15% 90.24% 1 6.1500%
851449 1,610,000.00 1,602,639.95 0.15% 90.39% 1 7.0200%
851556 1,600,000.00 1,598,998.35 0.15% 90.54% 1 8.3400%
- ---------------------------------------------------------------------------------------------------------------
851236 1,612,500.00 1,587,079.69 0.15% 90.69% 1 6.7500%
851323 1,600,000.00 1,578,771.98 0.15% 90.83% 1 5.7500%
851396 1,575,000.00 1,565,838.96 0.14% 90.98% 1 7.0200%
851242 1,590,000.00 1,559,997.96 0.14% 91.12% 1 6.2100%
851329 1,580,000.00 1,560,650.39 0.14% 91.27% 1 6.2400%
- ---------------------------------------------------------------------------------------------------------------
851441 1,600,000.00 1,542,715.20 0.14% 91.41% 1 6.5700%
25479 1,550,000.00 1,548,936.53 0.14% 91.55% 1 7.8900%
851494 1,550,000.00 1,544,537.25 0.14% 91.70% 1 7.3500%
851349 1,550,000.00 1,537,634.47 0.14% 91.84% 1 7.3000%
851526 1,510,000.00 1,506,791.32 0.14% 91.98% 1 7.3800%
- ---------------------------------------------------------------------------------------------------------------
17961 1,500,000.00 1,498,829.86 0.14% 92.12% 1 7.2500%
851569 1,500,000.00 1,500,000.00 0.14% 92.25% 1 7.8400%
851539 1,500,000.00 1,495,019.93 0.14% 92.39% 1 7.7000%
851520 1,500,000.00 1,495,238.42 0.14% 92.53% 1 7.6000%
851453 1,500,000.00 1,493,289.81 0.14% 92.67% 1 7.3300%
- ---------------------------------------------------------------------------------------------------------------
851486 1,500,000.00 1,491,997.27 0.14% 92.81% 1 8.0000%
851477 1,500,000.00 1,489,036.34 0.14% 92.95% 1 7.0100%
851248 1,500,000.00 1,487,643.10 0.14% 93.08% 1 7.1100%
851283 1,500,000.00 1,486,726.55 0.14% 93.22% 1 6.4250%
851392 1,500,000.00 1,484,269.12 0.14% 93.36% 1 6.5200%
- ---------------------------------------------------------------------------------------------------------------
851344 1,500,000.00 1,484,141.55 0.14% 93.50% 1 7.1100%
851405 1,500,000.00 1,482,538.69 0.14% 93.63% 1 8.0200%
851299 1,500,000.00 1,461,310.36 0.14% 93.77% 1 6.8100%
851377 1,500,000.00 1,457,618.33 0.13% 93.90% 1 5.7500%
851356 1,447,000.00 1,428,170.72 0.13% 94.03% 1 7.1600%
- ---------------------------------------------------------------------------------------------------------------
851307 1,500,000.00 1,417,443.97 0.13% 94.17% 1 6.3500%
17927 1,400,000.00 1,396,064.59 0.13% 94.30% 1 8.2650%
851456 1,424,850.00 1,392,401.96 0.13% 94.42% 1 6.6500%
851373 1,400,000.00 1,391,688.87 0.13% 94.55% 1 6.6000%
851434 1,400,000.00 1,388,480.52 0.13% 94.68% 1 7.1200%
- ---------------------------------------------------------------------------------------------------------------
851343 1,400,000.00 1,383,908.40 0.13% 94.81% 1 6.6200%
851391 1,412,000.00 1,376,935.83 0.13% 94.94% 1 5.6500%
851398 1,365,000.00 1,357,060.46 0.13% 95.06% 1 7.0200%
851372 1,375,000.00 1,354,511.50 0.13% 95.19% 1 7.2000%
851261 1,360,000.00 1,346,162.62 0.12% 95.31% 1 7.9700%
- ---------------------------------------------------------------------------------------------------------------
851322 1,380,000.00 1,326,858.89 0.12% 95.44% 1 5.9600%
25742 1,300,000.00 1,298,565.03 0.12% 95.56% 1 7.7000%
851418 1,300,000.00 1,288,668.36 0.12% 95.67% 1 6.7800%
851335 1,300,000.00 1,277,230.11 0.12% 95.79% 1 5.8900%
851260 1,300,000.00 1,276,190.41 0.12% 95.91% 1 6.4500%
- ---------------------------------------------------------------------------------------------------------------
25024 1,255,000.00 1,253,783.98 0.12% 96.03% 1 8.5000%
851341 1,264,000.00 1,245,791.37 0.12% 96.14% 1 6.5600%
851355 1,225,000.00 1,214,816.67 0.11% 96.25% 1 7.0600%
851457 1,200,000.00 1,191,513.63 0.11% 96.36% 1 7.2100%
851286 1,200,000.00 1,189,002.58 0.11% 96.47% 1 5.7100%
- ---------------------------------------------------------------------------------------------------------------
851389 1,200,000.00 1,168,750.52 0.11% 96.58% 1 6.7000%
851250 1,150,000.00 1,139,960.78 0.11% 96.69% 1 6.8100%
851195 1,150,000.00 1,134,631.12 0.10% 96.79% 1 6.6550%
851265 1,120,000.00 1,106,267.39 0.10% 96.90% 1 6.9100%
851358 1,100,000.00 1,092,025.75 0.10% 97.00% 1 6.3350%
- ---------------------------------------------------------------------------------------------------------------
851203 1,100,000.00 1,091,846.54 0.10% 97.10% 1 7.2400%
851421 1,100,000.00 1,089,918.77 0.10% 97.20% 1 6.4800%
851292 1,100,000.00 1,087,313.98 0.10% 97.30% 1 6.6000%
850952 1,100,000.00 1,085,817.46 0.10% 97.40% 1 6.6100%
851129 1,100,000.00 1,073,369.88 0.10% 97.50% 1 6.8500%
- ---------------------------------------------------------------------------------------------------------------
851351 1,075,000.00 1,061,746.37 0.10% 97.60% 1 7.5800%
851363 1,070,000.00 1,049,008.05 0.10% 97.69% 1 6.7500%
851429 1,050,000.00 1,043,374.91 0.10% 97.79% 1 7.8900%
851362 1,030,000.00 1,022,289.93 0.09% 97.89% 1 6.1800%
851258 1,020,000.00 1,004,414.10 0.09% 97.98% 1 7.0000%
- ---------------------------------------------------------------------------------------------------------------
851266 1,000,000.00 992,071.54 0.09% 98.07% 1 6.4000%
851263 1,000,000.00 991,224.29 0.09% 98.16% 1 7.5800%
851272 1,000,000.00 991,236.60 0.09% 98.25% 1 6.7900%
851174 1,000,000.00 989,492.15 0.09% 98.35% 1 7.2500%
851442 1,000,000.00 987,687.03 0.09% 98.44% 1 7.5900%
- ---------------------------------------------------------------------------------------------------------------
851256 1,010,000.00 984,344.13 0.09% 98.53% 1 6.9850%
851359 1,000,000.00 983,218.60 0.09% 98.62% 1 6.4200%
851252 1,000,000.00 973,094.96 0.09% 98.71% 1 6.4800%
851273 1,000,000.00 967,839.34 0.09% 98.80% 1 6.8700%
851288 955,000.00 944,067.75 0.09% 98.89% 1 5.9800%
- ---------------------------------------------------------------------------------------------------------------
851308 970,000.00 940,789.45 0.09% 98.97% 1 6.3600%
851296 920,000.00 912,420.25 0.08% 99.06% 1 6.2200%
11101 900,000.00 892,961.41 0.08% 99.14% 1 8.0500%
851284 850,000.00 843,097.07 0.08% 99.22% 1 5.7800%
851275 850,000.00 824,605.13 0.08% 99.29% 1 6.6700%
- ---------------------------------------------------------------------------------------------------------------
851171 825,000.00 819,258.03 0.08% 99.37% 1 6.5300%
851382 820,000.00 805,828.81 0.07% 99.44% 1 7.3200%
851360 800,000.00 791,373.71 0.07% 99.52% 1 6.3500%
851451 785,000.00 778,317.24 0.07% 99.59% 1 6.9200%
851374 750,000.00 743,912.12 0.07% 99.66% 1 6.2900%
- ---------------------------------------------------------------------------------------------------------------
851238 750,000.00 736,195.03 0.07% 99.73% 1 6.4100%
851122 750,000.00 730,630.54 0.07% 99.79% 1 6.9700%
851402 700,000.00 675,272.51 0.06% 99.86% 1 6.8200%
851319 660,000.00 648,439.86 0.06% 99.92% 1 5.8900%
851357 650,000.00 633,365.66 0.06% 99.98% 1 6.9000%
851320 270,000.00 266,698.97 0.02% 100.00% 1 6.5300%
===============================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATED
ORIGINAL REMAINING
INTEREST SERVICING NET TERM TO TERM TO ORIGINAL INTEREST
ACCRUAL FEE MORTGAGE MATURITY MATURITY AMORTIZATION ONLY
LOAN NUMBER METHOD RATE RATE (MOS.) (MOS.) (MOS.) MONTHS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
25489 30/360 0.053% 6.8120% 60 59 0 60
25489A
25489B
25489C
25489D
25489E
25489F
25489G
25489H
25489I
25489J
25489K
25489L
25489M
25489N
- --------------------------------------------------------------------------------------------------------------
851445 30/360 0.053% 8.2020% 240 234 240 0
851443 30/360 0.053% 8.2020% 236 234 235 0
851444 30/360 0.053% 8.2020% 240 234 240 0
851446 30/360 0.053% 8.2020% 240 234 240 0
851447 30/360 0.053% 7.6820% 116 114 116 0
- --------------------------------------------------------------------------------------------------------------
851499 Actual/360 0.053% 7.3720% 84 79 360 0
18041 Actual/360 0.053% 7.3370% 120 118 360 0
851550 Actual/360 0.053% 7.1620% 120 117 300 0
851563 Actual/360 0.053% 6.8670% 120 118 360 0
851476 Actual/360 0.053% 6.9170% 120 114 300 0
- --------------------------------------------------------------------------------------------------------------
9122 Actual/360 0.053% 7.5020% 120 119 360 0
16465 Actual/360 0.053% 7.5020% 120 119 360 0
851087 Actual/360 0.053% 7.3170% 240 228 240 0
25764 Actual/360 0.053% 6.9020% 120 119 360 0
25557 ACTUAL/360 0.053% 8.8070% 120 120 300 0
25557A
25557B
25557C
25557D
25557E
25557F
25557G
- --------------------------------------------------------------------------------------------------------------
17660 Actual/360 0.053% 7.3970% 120 118 360 0
851580 Actual/360 0.053% 6.9470% 120 120 300 0
851500 Actual/360 0.053% 7.1870% 84 78 360 0
25387 ACTUAL/360 0.053% 8.8920% 120 119 300 0
25387A
25387B
- --------------------------------------------------------------------------------------------------------------
18066 Actual/360 0.053% 8.4070% 120 115 240 0
851439 Actual/360 0.053% 6.8570% 120 113 324 0
851465 Actual/360 0.053% 6.6670% 120 115 300 0
851802 Actual/360 0.053% 7.1970% 120 110 360 0
851367 Actual/360 0.053% 6.4570% 180 171 300 0
- --------------------------------------------------------------------------------------------------------------
851072 Actual/360 0.053% 7.4710% 115 107 324 0
18137 Actual/360 0.053% 7.7770% 120 118 360 0
18332 Actual/360 0.053% 7.3470% 120 116 360 0
851460 Actual/360 0.053% 6.8470% 120 114 360 0
5502 Actual/360 0.053% 7.4070% 120 118 360 0
- --------------------------------------------------------------------------------------------------------------
17877 Actual/360 0.053% 6.7720% 120 116 0 120
851498 Actual/360 0.053% 7.3770% 84 78 360 0
25069 Actual/360 0.053% 8.0670% 120 118 360 0
851400 30/360 0.053% 6.6570% 120 113 360 0
851578 Actual/360 0.053% 6.8170% 120 120 301 0
- --------------------------------------------------------------------------------------------------------------
851454 Actual/360 0.053% 7.4670% 120 115 300 0
851317 Actual/360 0.053% 6.9220% 180 172 240 0
850937 Actual/360 0.053% 7.3070% 180 171 180 0
851455 Actual/360 0.053% 6.8070% 84 78 300 0
17154 Actual/360 0.053% 7.1070% 120 118 360 0
- --------------------------------------------------------------------------------------------------------------
18173 Actual/360 0.053% 7.0770% 120 118 300 0
12130 Actual/360 0.053% 6.6570% 120 111 360 0
851384 Actual/360 0.053% 6.6670% 240 233 240 0
25118 30/360 0.053% 6.9670% 60 59 0 60
25959 Actual/360 0.053% 6.9020% 120 119 360 0
- --------------------------------------------------------------------------------------------------------------
851419 ACTUAL/360 0.053% 7.0370% 240 234 300 0
851419A
851419B
851419C
851488 Actual/360 0.053% 7.9470% 120 115 300 0
- --------------------------------------------------------------------------------------------------------------
851303 Actual/360 0.053% 6.8770% 120 112 360 0
26031 Actual/360 0.053% 8.5620% 120 120 360 0
851579 Actual/360 0.053% 6.8070% 120 120 300 0
851468 Actual/360 0.053% 7.0970% 120 114 300 0
851404 Actual/360 0.053% 5.9370% 120 114 300 0
- --------------------------------------------------------------------------------------------------------------
851403 Actual/360 0.053% 8.1670% 120 116 300 0
850995 Actual/360 0.053% 7.3520% 120 108 300 0
25714 Actual/360 0.053% 7.6070% 120 119 360 0
851306 30/360 0.053% 6.2870% 120 111 360 0
851370 30/360 0.053% 7.5070% 120 116 300 0
- --------------------------------------------------------------------------------------------------------------
25271 Actual/360 0.053% 7.4070% 120 120 300 0
851459 Actual/360 0.053% 6.6670% 120 114 300 0
851469 Actual/360 0.053% 6.5570% 120 114 300 0
851425 Actual/360 0.053% 6.7070% 120 113 300 0
17583 Actual/360 0.053% 8.9370% 120 119 360 0
- --------------------------------------------------------------------------------------------------------------
5504 Actual/360 0.053% 7.4070% 120 118 360 0
851338 30/360 0.053% 7.2870% 240 233 240 0
17875 Actual/360 0.053% 7.3970% 120 117 276 0
25312 Actual/360 0.053% 7.7470% 120 119 360 0
851435 Actual/360 0.053% 6.6170% 120 114 360 0
- --------------------------------------------------------------------------------------------------------------
851438 Actual/360 0.053% 6.2070% 120 114 300 0
25609 ACTUAL/360 0.053% 7.3970% 120 120 360 0
25609A
25609B
25609C
- --------------------------------------------------------------------------------------------------------------
851548 Actual/360 0.053% 7.3370% 120 118 300 0
851245 30/360 0.053% 6.6920% 144 135 300 0
851354 30/360 0.053% 6.6570% 144 139 144 0
851485 Actual/360 0.053% 6.8470% 120 113 300 0
851280 30/360 0.053% 7.1770% 240 231 240 0
851279 30/360 0.053% 7.1770% 240 231 240 0
851433 Actual/360 0.053% 6.4770% 120 112 300 0
- --------------------------------------------------------------------------------------------------------------
17718 Actual/360 0.053% 8.6770% 120 117 276 0
25423 Actual/360 0.053% 8.6670% 120 120 300 0
11134 Actual/360 0.053% 7.9870% 120 117 360 0
25675 Actual/360 0.053% 7.3620% 120 119 360 0
851399 30/360 0.053% 6.7170% 120 113 360 0
- --------------------------------------------------------------------------------------------------------------
851582 Actual/360 0.053% 6.7770% 120 120 300 0
851428 30/360 0.053% 6.0170% 120 113 300 0
851327 Actual/360 0.053% 6.6470% 180 172 240 0
25165 Actual/360 0.053% 7.5270% 120 119 300 0
851411 Actual/360 0.053% 6.5770% 180 173 300 0
- --------------------------------------------------------------------------------------------------------------
851388 30/360 0.053% 6.5070% 120 113 300 0
851560 Actual/360 0.053% 7.5770% 120 119 360 0
12052 Actual/360 0.053% 7.6770% 120 118 360 0
18113 Actual/360 0.053% 8.8670% 120 117 300 0
851406 Actual/360 0.053% 7.8070% 120 116 300 0
- --------------------------------------------------------------------------------------------------------------
25577 Actual/360 0.053% 8.1870% 120 120 360 0
851385 Actual/360 0.053% 6.8120% 240 233 240 0
16416 Actual/360 0.053% 8.6520% 120 117 360 0
25589 Actual/360 0.053% 7.7220% 120 119 360 0
851577 Actual/360 0.053% 7.0770% 120 120 300 0
- --------------------------------------------------------------------------------------------------------------
26174 Actual/360 0.053% 7.5070% 120 119 300 0
851243 Actual/360 0.053% 6.0070% 120 111 300 0
851415 30/360 0.053% 6.3470% 120 113 300 0
12101 Actual/360 0.053% 8.0320% 180 179 180 0
851347 Actual/360 0.053% 6.3870% 120 112 360 0
- --------------------------------------------------------------------------------------------------------------
16398 Actual/360 0.053% 8.1020% 120 118 360 0
25451 Actual/360 0.053% 7.8970% 120 119 300 0
851586 Actual/360 0.053% 7.7370% 120 120 359 0
851219 Actual/360 0.053% 6.1670% 120 114 300 0
851386 Actual/360 0.053% 7.4670% 240 233 240 0
- --------------------------------------------------------------------------------------------------------------
8643 Actual/360 0.053% 8.9470% 120 119 300 0
25195 Actual/360 0.053% 7.7470% 180 180 300 0
25559 Actual/360 0.053% 7.4770% 120 120 360 0
851246 Actual/360 0.053% 6.9120% 180 171 360 0
851337 30/360 0.053% 6.3870% 204 195 204 0
- --------------------------------------------------------------------------------------------------------------
851378 Actual/360 0.053% 6.8770% 180 172 180 0
851369 Actual/360 0.053% 6.1970% 180 172 180 0
12099 Actual/360 0.053% 8.1720% 120 119 360 0
851479 Actual/360 0.053% 7.2170% 180 175 180 0
851365 Actual/360 0.053% 6.2970% 120 113 360 0
- --------------------------------------------------------------------------------------------------------------
851525 Actual/360 0.053% 7.6770% 180 177 180 0
851581 Actual/360 0.053% 6.8670% 120 120 300 0
851528 Actual/360 0.053% 7.4370% 120 116 300 0
851305 Actual/360 0.053% 6.2870% 120 111 300 0
9419 Actual/360 0.053% 7.3320% 120 108 300 0
- --------------------------------------------------------------------------------------------------------------
18346 Actual/360 0.053% 7.6870% 120 119 360 0
851244 30/360 0.053% 7.0720% 120 110 300 0
851381 30/360 0.053% 6.3370% 180 172 180 0
9675 Actual/360 0.053% 8.6020% 120 118 300 0
851267 ACTUAL/360 0.053% 6.6020% 120 111 360 0
851267A
851267B
- --------------------------------------------------------------------------------------------------------------
851503 Actual/360 0.053% 7.3370% 120 118 300 0
851387 30/360 0.053% 6.4770% 120 113 300 0
851507 Actual/360 0.053% 7.1970% 180 174 180 0
851467 Actual/360 0.053% 7.5570% 240 234 240 0
851342 30/360 0.053% 6.5070% 240 233 240 0
- --------------------------------------------------------------------------------------------------------------
851420 Actual/360 0.053% 5.6470% 120 112 300 0
851430 Actual/360 0.053% 7.5270% 228 222 228 0
25117 Actual/360 0.053% 7.5870% 120 119 360 0
25352 Actual/360 0.053% 7.2820% 120 119 360 0
851340 30/360 0.053% 6.5070% 240 233 240 0
- --------------------------------------------------------------------------------------------------------------
16958 Actual/360 0.053% 7.4420% 120 116 360 0
851424 Actual/360 0.053% 6.4370% 120 113 360 0
851333 Actual/360 0.053% 6.0870% 120 113 360 0
851464 Actual/360 0.053% 6.8170% 120 114 300 0
11505 Actual/360 0.053% 8.0070% 120 113 240 0
- --------------------------------------------------------------------------------------------------------------
851481 30/360 0.053% 7.2870% 180 174 180 0
851806 Actual/360 0.053% 6.7470% 120 110 240 0
851472 Actual/360 0.053% 6.8470% 180 175 180 0
26032 Actual/360 0.053% 8.4670% 120 119 360 0
851408 30/360 0.053% 6.9470% 120 114 300 0
- --------------------------------------------------------------------------------------------------------------
851371 Actual/360 0.053% 6.2470% 120 112 300 0
17553 Actual/360 0.053% 7.3470% 120 115 300 0
851450 Actual/360 0.053% 6.7470% 120 113 360 0
25144 Actual/360 0.053% 8.0470% 180 179 300 0
851423 Actual/360 0.053% 8.0170% 120 117 300 0
- --------------------------------------------------------------------------------------------------------------
851426 Actual/360 0.053% 6.9270% 180 173 360 0
25485 Actual/360 0.053% 7.3520% 120 119 300 0
25508 Actual/360 0.053% 7.9170% 120 119 300 0
851200 Actual/360 0.053% 7.1170% 180 170 360 0
- --------------------------------------------------------------------------------------------------------------
851192 30/360 0.053% 7.0870% 180 171 180 0
851192A
851192B
25445 Actual/360 0.053% 7.9170% 120 120 300 0
851395 30/360 0.053% 6.7170% 120 113 360 0
17962 Actual/360 0.053% 7.1970% 120 119 360 0
- --------------------------------------------------------------------------------------------------------------
851285 Actual/360 0.053% 6.0270% 120 112 360 0
851328 Actual/360 0.053% 6.8820% 120 110 360 0
851508 Actual/360 0.053% 7.3470% 120 115 300 0
851808 Actual/360 0.053% 6.7970% 120 110 180 0
851409 Actual/360 0.053% 6.5770% 180 173 300 0
- --------------------------------------------------------------------------------------------------------------
851312 Actual/360 0.053% 6.6670% 120 114 240 0
851478 Actual/360 0.053% 7.7870% 120 113 360 0
851809 Actual/360 0.053% 8.1470% 120 112 360 0
851452 Actual/360 0.053% 6.7870% 120 113 300 0
851352 Actual/360 0.053% 6.3370% 120 113 300 0
- --------------------------------------------------------------------------------------------------------------
851393 30/360 0.053% 6.7170% 120 113 360 0
851530 Actual/360 0.053% 7.8820% 120 117 300 0
851336 Actual/360 0.053% 6.9770% 240 231 240 0
851565 Actual/360 0.053% 8.2870% 120 119 300 0
851348 Actual/360 0.053% 6.6370% 180 171 300 0
- --------------------------------------------------------------------------------------------------------------
851401 Actual/360 0.053% 6.3670% 121 114 240 0
851310 30/360 0.053% 7.2870% 240 231 240 0
851555 Actual/360 0.053% 8.0820% 120 119 300 0
851264 30/360 0.053% 6.5270% 120 111 300 0
851364 30/360 0.053% 6.4970% 241 233 240 0
- --------------------------------------------------------------------------------------------------------------
851278 30/360 0.053% 5.6970% 120 112 240 0
25078 Actual/360 0.053% 8.1070% 120 119 300 0
851361 Actual/360 0.053% 6.7670% 120 113 300 0
851484 Actual/360 0.053% 6.6470% 120 115 300 0
851330 Actual/360 0.053% 6.4970% 120 111 300 0
- --------------------------------------------------------------------------------------------------------------
851282 Actual/360 0.053% 5.8570% 120 112 360 0
16953 Actual/360 0.053% 7.3470% 120 116 360 0
851493 30/360 0.053% 6.9770% 120 115 300 0
851383 Actual/360 0.053% 6.5070% 120 113 300 0
17923 Actual/360 0.053% 8.1170% 120 118 300 0
- --------------------------------------------------------------------------------------------------------------
851390 30/360 0.053% 6.1670% 180 174 180 0
851353 Actual/360 0.053% 6.1470% 120 111 300 0
851501 Actual/360 0.053% 7.1370% 120 117 300 0
851487 Actual/360 0.053% 7.9470% 120 116 300 0
851463 Actual/360 0.053% 6.1770% 120 114 300 0
- --------------------------------------------------------------------------------------------------------------
851394 30/360 0.053% 6.9670% 120 113 360 0
851416 30/360 0.053% 6.3270% 120 113 300 0
851334 Actual/360 0.053% 6.0970% 120 111 300 0
851449 Actual/360 0.053% 6.9670% 120 116 300 0
851556 Actual/360 0.053% 8.2870% 120 119 360 0
- --------------------------------------------------------------------------------------------------------------
851236 Actual/360 0.053% 6.6970% 180 172 240 0
851323 Actual/360 0.053% 5.6970% 120 111 300 0
851396 30/360 0.053% 6.9670% 120 113 360 0
851242 Actual/360 0.053% 6.1570% 120 111 240 0
851329 Actual/360 0.053% 6.1870% 120 111 300 0
- --------------------------------------------------------------------------------------------------------------
851441 Actual/360 0.053% 6.5170% 120 114 120 0
25479 Actual/360 0.053% 7.8370% 120 119 360 0
851494 30/360 0.053% 7.2970% 120 117 300 0
851349 Actual/360 0.053% 7.2470% 180 173 300 0
851526 Actual/360 0.053% 7.3270% 120 118 300 0
- --------------------------------------------------------------------------------------------------------------
17961 Actual/360 0.053% 7.1970% 120 119 360 0
851569 Actual/360 0.053% 7.7870% 120 120 300 0
851539 Actual/360 0.053% 7.6470% 240 238 240 0
851520 Actual/360 0.053% 7.5470% 120 117 300 0
851453 Actual/360 0.053% 7.2770% 120 114 360 0
- --------------------------------------------------------------------------------------------------------------
851486 Actual/360 0.053% 7.9470% 120 115 300 0
851477 Actual/360 0.053% 6.9570% 120 114 300 0
851248 30/360 0.053% 7.0570% 180 170 360 0
851283 Actual/360 0.053% 6.3720% 120 110 360 0
851392 Actual/360 0.053% 6.4670% 180 172 300 0
- --------------------------------------------------------------------------------------------------------------
851344 Actual/360 0.053% 7.0570% 120 111 300 0
851405 Actual/360 0.053% 7.9670% 240 233 240 0
851299 Actual/360 0.053% 6.7570% 180 172 180 0
851377 Actual/360 0.053% 5.6970% 180 172 180 0
851356 Actual/360 0.053% 7.1070% 240 233 240 0
- --------------------------------------------------------------------------------------------------------------
851307 30/360 0.053% 6.2970% 120 111 120 0
17927 Actual/360 0.053% 8.2120% 120 117 300 0
851456 Actual/360 0.053% 6.5970% 180 173 180 0
851373 Actual/360 0.053% 6.5470% 120 113 360 0
851434 Actual/360 0.053% 7.0670% 180 173 300 0
- --------------------------------------------------------------------------------------------------------------
851343 Actual/360 0.053% 6.5670% 120 111 300 0
851391 Actual/360 0.053% 5.5970% 180 173 180 0
851398 30/360 0.053% 6.9670% 120 113 360 0
851372 Actual/360 0.053% 7.1470% 240 232 240 0
851261 Actual/360 0.053% 7.9170% 240 234 240 0
- --------------------------------------------------------------------------------------------------------------
851322 Actual/360 0.053% 5.9070% 120 112 144 0
25742 Actual/360 0.053% 7.6470% 120 119 300 0
851418 Actual/360 0.053% 6.7270% 84 77 300 0
851335 Actual/360 0.053% 5.8370% 120 112 240 0
851260 Actual/360 0.053% 6.3970% 120 111 240 0
- --------------------------------------------------------------------------------------------------------------
25024 Actual/360 0.053% 8.4470% 120 119 300 0
851341 30/360 0.053% 6.5070% 240 233 240 0
851355 Actual/360 0.053% 7.0070% 120 113 300 0
851457 Actual/360 0.053% 7.1570% 120 114 300 0
851286 Actual/360 0.053% 5.6570% 120 111 360 0
- --------------------------------------------------------------------------------------------------------------
851389 Actual/360 0.053% 6.6470% 180 172 180 0
851250 30/360 0.053% 6.7570% 180 170 360 0
851195 30/360 0.053% 6.6020% 120 110 300 0
851265 Actual/360 0.053% 6.8570% 120 110 300 0
851358 Actual/360 0.053% 6.2820% 120 112 360 0
- --------------------------------------------------------------------------------------------------------------
851203 Actual/360 0.053% 7.1870% 180 170 360 0
851421 Actual/360 0.053% 6.4270% 120 113 300 0
851292 Actual/360 0.053% 6.5470% 120 111 300 0
850952 Actual/360 0.053% 6.5570% 120 110 300 0
851129 30/360 0.053% 6.7970% 120 108 240 0
- --------------------------------------------------------------------------------------------------------------
851351 Actual/360 0.053% 7.5270% 120 113 240 0
851363 30/360 0.053% 6.6970% 180 174 180 0
851429 Actual/360 0.053% 7.8370% 120 114 300 0
851362 Actual/360 0.053% 6.1270% 120 112 360 0
851258 Actual/360 0.053% 6.9470% 121 113 240 0
- --------------------------------------------------------------------------------------------------------------
851266 Actual/360 0.053% 6.3470% 120 111 360 0
851263 Actual/360 0.053% 7.5270% 120 112 300 0
851272 30/360 0.053% 6.7370% 180 170 360 0
851174 Actual/360 0.053% 7.1970% 120 109 324 0
851442 Actual/360 0.053% 7.5370% 240 233 240 0
- --------------------------------------------------------------------------------------------------------------
851256 Actual/360 0.053% 6.9320% 180 172 180 0
851359 30/360 0.053% 6.3670% 240 232 240 0
851252 30/360 0.053% 6.4270% 180 172 180 0
851273 Actual/360 0.053% 6.8170% 120 110 180 0
851288 Actual/360 0.053% 5.9270% 120 112 300 0
- --------------------------------------------------------------------------------------------------------------
851308 Actual/360 0.053% 6.3070% 180 171 180 0
851296 Actual/360 0.053% 6.1670% 120 111 360 0
11101 Actual/360 0.053% 7.9970% 180 167 360 0
851284 Actual/360 0.053% 5.7270% 120 112 360 0
851275 30/360 0.053% 6.6170% 180 171 180 0
- --------------------------------------------------------------------------------------------------------------
851171 Actual/360 0.053% 6.4770% 120 112 360 0
851382 Actual/360 0.053% 7.2670% 204 197 204 0
851360 Actual/360 0.053% 6.2970% 120 112 300 0
851451 Actual/360 0.053% 6.8670% 120 113 300 0
851374 Actual/360 0.053% 6.2370% 120 111 360 0
- --------------------------------------------------------------------------------------------------------------
851238 Actual/360 0.053% 6.3570% 120 111 240 0
851122 30/360 0.053% 6.9170% 180 172 180 0
851402 Actual/360 0.053% 6.7670% 120 114 120 0
851319 Actual/360 0.053% 5.8370% 120 112 240 0
851357 Actual/360 0.053% 6.8470% 180 172 180 0
851320 30/360 0.053% 6.4770% 120 111 300 0
==============================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1998/T-12
FIRST 1997 NET NET
PAYMENT MATURITY ANNUAL IO OPERATING OPERATING
LOAN NUMBER DATE DATE P&I PAYMENT INCOME (a) INCOME (a)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
25489 07/01/99 06/01/04 $ 3,943,942.50 $ 328,661.88
25489A
25489B 947,216 833,250
25489C
25489D
25489E
25489F 634,847 620,954
25489G
25489H
25489I
25489J 1,260,115 1,286,416
25489K 1,174,794 1,160,994
25489L
25489M
25489N
- ------------------------------------------------------------------------------------------------------
851445 02/01/99 01/01/19 1,073,998.20 1,556,929.00
851443 06/01/99 01/01/19 890,744.16 1,202,940.00
851444 02/01/99 01/01/19 695,541.72 1,034,213.00
851446 02/01/99 01/01/19 306,856.56 571,991.00
851447 06/01/99 01/01/09 427,594.20 749,900.60
- ------------------------------------------------------------------------------------------------------
851499 03/01/99 02/01/06 2,148,890.40 3,898,717.00
18041 06/01/99 05/01/09 2,116,595.10 3,276,021 4,532,414
851550 05/01/99 04/01/09 1,988,727.72 3,530,457.00
851563 06/01/99 05/01/09 1,773,914.40 2,764,954.00
851476 02/01/99 01/01/09 1,649,387.64 2,109,910.00 1,991,113.00
- ------------------------------------------------------------------------------------------------------
9122 07/01/99 06/01/09 1,543,753.96
16465 07/01/99 06/01/09 80,140.23
851087 08/01/98 07/01/18 1,809,099.36 2,508,971.00
25764 07/01/99 06/01/09 1,271,583.47 2,296,805 2,532,043
25557 08/01/99 07/01/09 1,557,050.08
25557A 586,446 584,650
25557B 604,376 623,572
25557C 486,438 498,647
25557D 565,716 547,529
25557E 320,727 308,252
25557F 567,119 594,118
25557G 222,402 226,906
- ------------------------------------------------------------------------------------------------------
17660 06/01/99 05/01/09 1,277,477.68 1,709,389 2,000,191
851580 08/01/99 07/01/09 1,087,733.16 388,101.00 1,337,163.00
851500 02/01/99 01/01/06 981,357.24 1,381,887.00 1,522,109.00
25387 07/01/99 06/01/09 936,353.59
25387A 1,502,950 1,762,949
25387B 238,695 226,312
- ------------------------------------------------------------------------------------------------------
18066 03/01/99 02/01/09 238,820.93 488,875 518,320
851439 01/01/99 12/01/08 941,102.88 1,680,173.00 1,379,253.00
851465 03/01/99 02/01/09 872,297.16 1,590,331.00 1,674,661.00
851802 10/01/98 09/01/08 818,611.56 1,022,740.00 1,084,124.00
851367 11/01/98 10/01/13 808,971.12 1,145,702.00 1,170,468.00
- ------------------------------------------------------------------------------------------------------
851072 12/01/98 06/01/08 820,447.92 962,623.00 1,092,451.00
18137 06/01/99 05/01/09 779,704.28 395,326 962,710
18332 04/01/99 03/01/09 722,844.51 836,862 887,290
851460 02/01/99 01/01/09 683,626.92 1,229,272.00 1,374,199.00
5502 06/01/99 05/01/09 656,081.85 1,166,374 1,201,921
- ------------------------------------------------------------------------------------------------------
17877 04/01/99 03/01/09 529,364.06 44,113.67 1,046,633 1,225,137
851498 02/01/99 01/01/06 624,984.72 1,052,602.00 1,010,124.00
25069 06/01/99 05/01/09 665,260.72 822,376 928,497
851400 01/01/99 12/01/08 558,093.48 727,541.00 848,043.00
851578 08/01/99 07/01/09 589,864.32 953,949.00 1,210,291.00
- ------------------------------------------------------------------------------------------------------
851454 03/01/99 02/01/09 628,508.40 1.000000E-4 1,085,517.00
851317 12/01/98 11/01/13 645,348.36 1,460,268.00 1,591,686.00
850937 11/01/98 10/01/13 772,022.64 894,569.00
851455 02/01/99 01/01/06 552,715.68 817,724.40 817,137.80
17154 06/01/99 05/01/09 527,344.36 676,228 1,296,938
- ------------------------------------------------------------------------------------------------------
18173 06/01/99 05/01/09 557,773.19 1,177,466 1,280,566
12130 11/01/98 10/01/08 496,083.03 - 1,233,839
851384 01/01/99 12/01/18 568,936.08 879,099.00 1,046,704.00
25118 07/01/99 06/01/04 421,200.00 35,100.00 3,546,217 3,641,471
25959 07/01/99 06/01/09 476,843.80 1,095,692 1,110,306
- ------------------------------------------------------------------------------------------------------
851419 02/01/99 01/01/19 483,095.88 916,311.00 960,842.00
851419A 692,060.00 718,318.00
851419B 178,058.00 189,022.00
851419C 46,193.00 53,502.00
851488 03/01/99 02/01/09 518,660.52 573,851.00 746,669.00
- ------------------------------------------------------------------------------------------------------
851303 12/01/98 11/01/08 443,928.60 620,677.00 628,451.00
26031 08/01/99 07/01/09 517,534.19
851579 08/01/99 07/01/09 462,690.12 923,467.00 940,523.00
851468 02/01/99 01/01/09 472,808.64 782,371.00 720,906.90
851404 02/01/99 01/01/09 424,835.64 604,151.00 857,988.00
- ------------------------------------------------------------------------------------------------------
851403 04/01/99 03/01/09 509,617.32 853,331.00 818,281.00
850995 08/01/98 07/01/08 474,869.28 677,060.00 628,133.00
25714 07/01/99 06/01/09 443,166.67
851306 11/01/98 10/01/08 383,392.08 680,512.00 659,680.00
851370 04/01/99 03/01/09 454,653.72 241,544.60 696,791.60
- ------------------------------------------------------------------------------------------------------
25271 08/01/99 07/01/09 441,834.78 729,259 740,528
851459 02/01/99 01/01/09 413,411.04 586,120.00 703,539.00
851469 02/01/99 01/01/09 409,258.08 902,784.00 931,771.00
851425 01/01/99 12/01/08 414,925.92 832,290.70
17583 07/01/99 06/01/09 477,518.49 863,891 756,312
- ------------------------------------------------------------------------------------------------------
5504 06/01/99 05/01/09 413,707.66 719,442 740,568
851338 01/01/99 12/01/18 477,502.92 500,700.00 649,609.00
17875 05/01/99 04/01/09 443,555.89 -
25312 07/01/99 06/01/09 414,645.41 512,923 542,934
851435 02/01/99 01/01/09 370,534.56 629,266.00 638,120.00
- ------------------------------------------------------------------------------------------------------
851438 02/01/99 01/01/09 379,374.96 646,998.10
25609 08/01/99 07/01/09 398,689.93
25609A 7,068
25609B 228,681 236,852
25609C 369,000 395,190
- ------------------------------------------------------------------------------------------------------
851548 06/01/99 05/01/09 416,715.96
851245 11/01/98 10/01/10 372,921.72 621,327.00
851354 03/01/99 02/01/11 547,013.04 1,137,844.00 1,095,539.00
851485 01/01/99 12/01/08 369,817.92 756,046.00 667,896.00
851280 11/01/98 10/01/18 208,339.44 279,672.00
851279 11/01/98 10/01/18 208,339.44 269,654.00
851433 12/01/98 11/01/08 349,374.84 650,287.00 713,727.00
- ------------------------------------------------------------------------------------------------------
17718 05/01/99 04/01/09 429,054.56 340,453 791,063
25423 08/01/99 07/01/09 403,492.35 713,252 738,975
11134 05/01/99 04/01/09 362,385.04 507,147 520,491
25675 07/01/99 06/01/09 332,833.62 508,597 527,736
851399 01/01/99 12/01/08 310,015.68 489,336.00 510,033.00
- ------------------------------------------------------------------------------------------------------
851582 08/01/99 07/01/09 323,626.80 635,900.00 697,233.00
851428 01/01/99 12/01/08 303,538.80 729,553.00
851327 12/01/98 11/01/13 354,460.56 508,243.70
25165 07/01/99 06/01/09 339,356.43 717,805 693,026
851411 01/01/99 12/01/13 311,608.92 730,773.80 770,452.60
- ------------------------------------------------------------------------------------------------------
851388 01/01/99 12/01/08 309,606.36 435,088.60 497,169.30
851560 07/01/99 06/01/09 318,661.92 677,039.00 704,845.00
12052 06/01/99 05/01/09 321,763.80
18113 05/01/99 04/01/09 370,173.85 942,243 945,532
851406 04/01/99 03/01/09 329,428.08 580,235.00 576,610.00
- ------------------------------------------------------------------------------------------------------
25577 08/01/99 07/01/09 315,236.76
851385 01/01/99 12/01/18 324,532.44 398,619.90 568,118.20
16416 05/01/99 04/01/09 324,364.30 437,972 444,988
25589 07/01/99 06/01/09 296,017.56 318,644 370,060
851577 08/01/99 07/01/09 293,903.64 499,475.00 504,877.00
- ------------------------------------------------------------------------------------------------------
26174 07/01/99 06/01/09 294,187.75 546,029 511,673
851243 11/01/98 10/01/08 252,321.12 310,501.00 487,385.00
851415 01/01/99 12/01/08 259,694.88 310,526.00 411,466.80
12101 07/01/99 06/01/14 368,857.19 760,144 712,050
851347 12/01/98 11/01/08 241,200.84 460,173.00 452,692.00
- ------------------------------------------------------------------------------------------------------
16398 06/01/99 05/01/09 280,564.72 517,053 505,871
25451 07/01/99 06/01/09 288,190.09 402,768 406,129
851586 08/01/99 07/01/09 267,791.88 402,142.00
851219 02/01/99 01/01/09 244,707.60 486,284.00 514,218.00
851386 01/01/99 12/01/18 295,294.92 410,776.00 473,139.00
- ------------------------------------------------------------------------------------------------------
8643 07/01/99 06/01/09 302,110.69 490,394 536,023
25195 08/01/99 07/01/14 273,101.17 544,775 506,570
25559 08/01/99 07/01/09 252,457.17 314,469 347,590
851246 11/01/98 10/01/13 238,663.32 394,767.00
851337 11/01/98 10/01/15 290,783.16 519,687.00 550,142.00
- ------------------------------------------------------------------------------------------------------
851378 12/01/98 11/01/13 322,170.96 440,755.00 442,721.00
851369 12/01/98 11/01/13 308,672.28 600,778.00 610,669.00
12099 07/01/99 06/01/09 263,077.94 285,834 380,106
851479 03/01/99 02/01/14 323,552.64 435,816.00 504,635.00
851365 01/01/99 12/01/08 216,538.08 277,912.00
- ------------------------------------------------------------------------------------------------------
851525 05/01/99 04/01/14 327,165.48 523,123.00
851581 08/01/99 07/01/09 242,081.04 468,203.00 465,975.00
851528 04/01/99 03/01/09 252,512.64 321,582.00 355,645.00
851305 11/01/98 10/01/08 227,513.28 347,034.40 384,022.90
9419 08/01/98 07/01/08 250,182.29 401,560 377,036
- ------------------------------------------------------------------------------------------------------
18346 07/01/99 06/01/09 240,482.37
851244 10/01/98 09/01/08 238,019.52 383,984.00 401,737.80
851381 12/01/98 11/01/13 290,664.00 503,804.00 534,846.00
9675 06/01/99 05/01/09 266,733.61
851267 11/01/98 10/01/08 208,874.64 329,946.00 388,196.00
851267A 251,345.00 297,674.00
851267B 78,601.00 90,522.00
- ------------------------------------------------------------------------------------------------------
851503 06/01/99 05/01/09 236,241.48 308,279.00 352,744.00
851387 01/01/99 12/01/08 219,374.88 363,558.70 409,368.90
851507 02/01/99 01/01/14 295,707.60 427,934.00 506,807.00
851467 02/01/99 01/01/19 258,321.84 378,665.00
851342 01/01/99 12/01/18 237,318.00 515,387.00 511,993.50
- ------------------------------------------------------------------------------------------------------
851420 12/01/98 11/01/08 197,217.84 335,707.00
851430 02/01/99 01/01/18 258,620.16 316,991.00
25117 07/01/99 06/01/09 212,647.77 386,026 324,593
25352 07/01/99 06/01/09 206,385.32 385,908 401,354
851340 01/01/99 12/01/18 227,249.88 525,202.00 509,143.80
- ------------------------------------------------------------------------------------------------------
16958 04/01/99 03/01/09 209,661.65
851424 01/01/99 12/01/08 189,423.12 1,207,088.00 1,245,193.00
851333 01/01/99 12/01/08 182,574.24 723,990.00 806,916.00
851464 02/01/99 01/01/09 209,552.40 450,763.60 456,041.00
11505 01/01/99 12/01/08 252,053.42 445,886 516,191
- ------------------------------------------------------------------------------------------------------
851481 02/01/99 01/01/14 275,383.08 707,158.00 691,819.00
851806 10/01/98 09/01/08 229,001.88 376,727.00 359,912.00
851472 03/01/99 02/01/14 265,294.32 241,685.80 325,564.20
26032 07/01/99 06/01/09 220,931.03 154,692
851408 02/01/99 01/01/09 203,552.40 821,736.00 891,812.00
- ------------------------------------------------------------------------------------------------------
851371 12/01/98 11/01/08 190,875.84 262,315.00 302,443.00
17553 03/01/99 02/01/09 206,564.68 333,005 378,366
851450 01/01/99 12/01/08 181,495.92 316,763.00 317,069.00
25144 07/01/99 06/01/14 214,852.86
851423 05/01/99 04/01/09 214,302.72 250,188.00 289,640.00
- ------------------------------------------------------------------------------------------------------
851426 01/01/99 12/01/13 176,878.92 309,267.00
25485 07/01/99 06/01/09 193,465.25 290,486
25508 07/01/99 06/01/09 203,235.10
851200 10/01/98 09/01/13 179,476.32 274,224.00
- ------------------------------------------------------------------------------------------------------
851192 11/01/98 10/01/13 244,801.80 449,043.00 499,320.20
851192A 214,408.00 259,373.30
851192B 234,635.00 239,946.90
25445 08/01/99 07/01/09 198,616.12 361,633 383,495
851395 01/01/99 12/01/08 166,706.52 310,729.00 301,119.00
17962 07/01/99 06/01/09 171,908.42 575,142 827,359
- ------------------------------------------------------------------------------------------------------
851285 12/01/98 11/01/08 152,385.24 409,906.00 437,394.00
851328 10/01/98 09/01/08 166,557.60 405,121.00
851508 03/01/99 02/01/09 180,194.76 298,100.00 255,406.00
851808 10/01/98 09/01/08 224,396.64 430,260.00 433,531.00
851409 01/01/99 12/01/13 167,284.80 423,327.00 443,633.60
- ------------------------------------------------------------------------------------------------------
851312 02/01/99 01/01/09 184,790.40 324,316.00
851478 01/01/99 12/01/08 173,433.96 254,941.00 259,281.00
851809 12/01/98 11/01/08 179,461.08 228,962.00 244,757.00
851452 01/01/99 12/01/08 167,185.20 117,267.00
851352 01/01/99 12/01/08 160,404.00 351,188.40 422,839.00
- ------------------------------------------------------------------------------------------------------
851393 01/01/99 12/01/08 153,642.96 255,525.00 304,801.00
851530 05/01/99 04/01/09 179,598.60 319,878.00
851336 11/01/98 10/01/18 181,142.16 303,051.00 332,113.00
851565 07/01/99 06/01/09 181,140.00 234,355.00
851348 11/01/98 10/01/13 156,665.04 298,792.00
- ------------------------------------------------------------------------------------------------------
851401 01/01/99 01/01/09 168,918.60 281,720.00 317,575.00
851310 11/01/98 10/01/18 181,451.04 312,078.00 326,788.90
851555 07/01/99 06/01/09 167,945.88 250,325.00
851264 11/01/98 10/01/08 146,926.32 254,598.00 294,846.00
851364 12/01/98 12/01/18 161,680.20 272,664.00 352,658.70
- ------------------------------------------------------------------------------------------------------
851278 12/01/98 11/01/08 151,650.00 459,288.00 486,397.00
25078 07/01/99 06/01/09 164,313.51 272,408 234,996
851361 01/01/99 12/01/08 146,855.40 249,793.80 273,594.90
851484 03/01/99 02/01/09 144,429.12 328,289.00 331,444.00
851330 11/01/98 10/01/08 142,450.32 275,464.20 289,500.00
- ------------------------------------------------------------------------------------------------------
851282 12/01/98 11/01/08 122,911.80 472,968.00 456,620.00
16953 04/01/99 03/01/09 141,245.48
851493 03/01/99 02/01/09 144,573.60 264,643.00 314,065.00
851383 01/01/99 12/01/08 138,508.08 253,423.00 290,388.10
17923 06/01/99 05/01/09 157,405.42 237,104 234,343
- ------------------------------------------------------------------------------------------------------
851390 02/01/99 01/01/14 174,580.92 226,624.00 336,124.10
851353 11/01/98 10/01/08 131,973.00 310,756.00 319,055.00
851501 05/01/99 04/01/09 142,351.32 264,372.00 270,092.00
851487 04/01/99 03/01/09 152,819.64 228,582.00 242,502.00
851463 02/01/99 01/01/09 130,369.92 212,345.00 255,942.60
- ------------------------------------------------------------------------------------------------------
851394 01/01/99 12/01/08 131,595.96 214,190.00 216,295.00
851416 01/01/99 12/01/08 132,210.12 268,909.00 275,971.20
851334 11/01/98 10/01/08 129,393.36 277,007.00 285,941.00
851449 04/01/99 03/01/09 136,796.40 227,449.00 220,580.00
851556 07/01/99 06/01/09 145,459.80 218,468.00
- ------------------------------------------------------------------------------------------------------
851236 12/01/98 11/01/13 147,130.44 234,399.00 277,025.00
851323 11/01/98 10/01/08 120,788.40 290,994.00 308,289.00
851396 01/01/99 12/01/08 125,996.16 204,226.00 200,223.00
851242 11/01/98 10/01/08 139,016.64 300,920.00 242,174.00
851329 11/01/98 10/01/08 124,956.12 213,508.00 248,530.00
- ------------------------------------------------------------------------------------------------------
851441 02/01/99 01/01/09 218,696.52 272,441.00 354,515.00
25479 07/01/99 06/01/09 135,056.61 225,353 247,203
851494 05/01/99 04/01/09 135,642.72 291,763.00 324,688.00
851349 01/01/99 12/01/13 135,041.88 232,797.00 265,699.00
851526 06/01/99 05/01/09 132,494.04 192,650.00 197,237.00
- ------------------------------------------------------------------------------------------------------
17961 07/01/99 06/01/09 122,791.73 410,827 433,179
851569 08/01/99 07/01/09 137,024.52 201,920.00 254,445.00
851539 06/01/99 05/01/19 147,216.00 215,380.00 214,848.00
851520 05/01/99 04/01/09 134,191.44 121,144.00 258,829.00
851453 02/01/99 01/01/09 123,769.92 207,375.00
- ------------------------------------------------------------------------------------------------------
851486 03/01/99 02/01/09 138,926.88 191,497.00 238,873.00
851477 02/01/99 01/01/09 127,335.12 342,840.00 329,121.00
851248 10/01/98 09/01/13 121,087.20 205,819.00 184,036.00
851283 10/01/98 09/01/08 112,885.92 287,408.00 286,736.00
851392 12/01/98 11/01/13 121,762.32 255,031.50 263,175.10
- ------------------------------------------------------------------------------------------------------
851344 11/01/98 10/01/08 128,486.16 252,707.00 271,558.00
851405 01/01/99 12/01/18 150,783.36 276,690.00 312,804.30
851299 12/01/98 11/01/13 159,883.08 249,213.00 273,405.30
851377 12/01/98 11/01/13 149,473.80 265,855.80 270,145.80
851356 01/01/99 12/01/18 136,295.64 201,681.00
- ------------------------------------------------------------------------------------------------------
851307 11/01/98 10/01/08 203,015.28 578,160.00 549,545.50
17927 05/01/99 04/01/09 132,628.06 129,239 105,182
851456 01/01/99 12/01/13 150,357.24 181,880.00 195,552.00
851373 01/01/99 12/01/08 107,294.64 260,205.00 241,156.60
851434 01/01/99 12/01/13 120,028.08 279,890.00
- ------------------------------------------------------------------------------------------------------
851343 11/01/98 10/01/08 114,697.80 159,808.00 196,896.00
851391 01/01/99 12/01/13 139,799.04 440,122.00 504,183.00
851398 01/01/99 12/01/08 109,196.64 35,285.00 152,615.00
851372 12/01/98 11/01/18 129,912.60 229,469.50 225,331.60
851261 02/01/99 01/01/19 136,202.52 242,164.00 284,645.00
- ------------------------------------------------------------------------------------------------------
851322 12/01/98 11/01/08 161,258.16 187,376.00
25742 07/01/99 06/01/09 117,319.67 186,636 201,427
851418 01/01/99 12/01/05 108,077.88 202,625.00
851335 12/01/98 11/01/08 110,775.48 267,699.00 276,943.00
851260 11/01/98 10/01/08 115,850.64 182,346.00
- ------------------------------------------------------------------------------------------------------
25024 07/01/99 06/01/09 121,267.20 174,482 195,476
851341 01/01/99 12/01/18 113,625.00 286,489.00 288,176.90
851355 01/01/99 12/01/08 104,459.88 163,362.40 190,902.50
851457 02/01/99 01/01/09 103,713.36 204,551.10 211,102.00
851286 11/01/98 10/01/08 83,668.92 258,531.00 314,705.00
- ------------------------------------------------------------------------------------------------------
851389 12/01/98 11/01/13 127,028.16 206,325.20 173,108.40
851250 10/01/98 09/01/13 90,057.60 211,418.00 236,807.00
851195 10/01/98 09/01/08 94,519.56 1,463,585.00 1,673,388.00
851265 10/01/98 09/01/08 94,220.88 149,596.00
851358 12/01/98 11/01/08 82,005.84 161,093.00 168,953.10
- ------------------------------------------------------------------------------------------------------
851203 10/01/98 09/01/13 89,957.76 160,859.20
851421 01/01/99 12/01/08 88,962.48 241,452.00 338,200.00
851292 11/01/98 10/01/08 89,953.92 116,691.00 154,198.00
850952 10/01/98 09/01/08 90,036.72 142,794.00 135,721.00
851129 08/01/98 07/01/08 101,154.36 197,963.00 198,508.00
- ------------------------------------------------------------------------------------------------------
851351 01/01/99 12/01/08 104,553.48 139,530.00
851363 02/01/99 01/01/14 113,622.36 238,250.00 253,639.00
851429 02/01/99 01/01/09 96,332.52 119,034.00 185,569.00
851362 12/01/98 11/01/08 75,540.84 157,991.00 199,065.80
851258 12/01/98 12/01/08 94,896.60 130,820.00
- ------------------------------------------------------------------------------------------------------
851266 11/01/98 10/01/08 75,060.72 133,836.00 147,118.80
851263 12/01/98 11/01/08 89,304.36 143,524.00 143,614.50
851272 10/01/98 09/01/13 78,151.08 392,278.00 361,692.00
851174 09/01/98 08/01/08 84,503.28 139,764.00 140,340.00
851442 01/01/99 12/01/18 97,332.60 161,489.00 166,955.00
- ------------------------------------------------------------------------------------------------------
851256 12/01/98 11/01/13 108,836.40 120,693.00 128,400.00
851359 12/01/98 11/01/18 88,904.52 286,160.00
851252 12/01/98 11/01/13 104,400.96 210,007.60
851273 10/01/98 09/01/08 106,989.12 200,551.00 215,008.00
851288 12/01/98 11/01/08 73,696.92 122,080.90 132,966.80
- ------------------------------------------------------------------------------------------------------
851308 11/01/98 10/01/13 100,503.24 345,096.00 345,096.00
851296 11/01/98 10/01/08 67,759.92 109,288.00
11101 07/01/98 06/01/13 79,623.34 98,901
851284 12/01/98 11/01/08 59,718.96 154,677.00 194,414.00
851275 11/01/98 10/01/13 89,808.96 66,734.60 130,922.00
- ------------------------------------------------------------------------------------------------------
851171 12/01/98 11/01/08 62,770.20 120,499.00
851382 01/01/99 12/01/15 84,446.28 132,247.00 133,737.50
851360 12/01/98 11/01/08 63,922.92 116,324.40 109,457.30
851451 01/01/99 12/01/08 66,098.64 130,568.00 158,355.00
851374 11/01/98 10/01/08 55,648.92 85,243.00 109,782.00
- ------------------------------------------------------------------------------------------------------
851238 11/01/98 10/01/08 66,625.56 190,490.00 206,301.00
851122 12/01/98 11/01/13 80,743.68 155,450.60 168,662.80
851402 02/01/99 01/01/09 96,753.60 238,955.00 237,741.00
851319 12/01/98 11/01/08 56,239.92 135,648.00 138,851.00
851357 12/01/98 11/01/13 69,673.20 179,026.00 201,250.00
851320 11/01/98 10/01/08 21,937.44 43,313.00
======================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DEBT
UNDERWRITTEN SERVICE
NET OPERATING UNDERWRITTEN COVERAGE APPRAISED CUT-OFF
LOAN NUMBER INCOME NET CASH FLOW LOCKBOX RATIO VALUE LTV
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
25489 Springing 2.48 122,570,000.00 46.87%
25489A 813,765 778,273 Springing 9,500,000.00
25489B 1,322,905 1,186,869 Springing 15,600,000.00
25489C 1,045,876 961,787 Springing 11,400,000.00
25489D 265,501 261,894 Springing 2,725,000.00
25489E 528,442 501,413 Springing 6,200,000.00
25489F 583,591 557,153 Springing 6,850,000.00
25489G 269,241 260,444 Springing 3,200,000.00
25489H 127,965 122,886 Springing 1,400,000.00
25489I 344,234 329,704 Springing 4,200,000.00
25489J 1,234,191 1,159,290 Springing 13,570,000.00
25489K 1,163,341 1,088,603 Springing 12,500,000.00
25489L 663,556 636,312 Springing 6,825,000.00
25489M 456,537 421,061 Springing 5,600,000.00
25489N 1,574,714 1,515,849 Springing 23,000,000.00
- -----------------------------------------------------------------------------------------------------
851445 1,502,450.65 1,482,290.65 In Place 1.38 16,500,000.00 63.00%
851443 1,182,992.00 1,162,244.00 In Place 1.30 12,500,000.00 68.85%
851444 991,992.14 981,612.14 In Place 1.41 11,500,000.00 58.54%
851446 551,973.75 537,957.75 In Place 1.75 5,900,000.00 50.34%
851447 600,623.00 586,931.00 In Place 1.37 6,400,000.00 44.59%
- -----------------------------------------------------------------------------------------------------
851499 3,329,999.75 2,943,244.55 1.37 42,850,000.00 59.98%
18041 4,444,135 3,494,584 1.65 50,000,000.00 50.93%
851550 3,284,654.81 3,090,785.61 In Place 1.55 36,000,000.00 63.67%
851563 2,719,743.08 2,543,078.08 1.43 33,400,000.00 66.97%
851476 3,290,969.47 3,121,133.87 1.89 34,100,000.00 56.76%
- -----------------------------------------------------------------------------------------------------
9122 2,374,855 2,300,468 1.49 28,400,000.00 64.39%
16465 120,461 115,115 1.44 1,375,000.00 69.04%
851087 2,357,284.77 2,357,284.77 1.30 26,550,000.00 69.64%
25764 2,390,855 2,232,105 1.76 27,000,000.00 59.21%
25557 SPRINGING 1.56 24,428,000.00 64.02%
25557A 465,226 411,550 Springing 4,110,000.00
25557B 504,283 448,278 Springing 4,478,000.00
25557C 434,124 378,683 Springing 3,790,000.00
25557D 459,118 405,150 Springing 4,100,000.00
25557E 266,488 225,972 Springing 2,300,000.00
25557F 458,010 404,143 Springing 4,050,000.00
25557G 180,854 148,079 Springing 1,600,000.00
- -----------------------------------------------------------------------------------------------------
17660 2,017,591 1,896,476 Springing 1.48 22,500,000.00 67.91%
851580 1,900,654.00 1,842,454.00 1.69 19,800,000.00 64.77%
851500 1,973,130.09 1,561,274.34 1.59 21,000,000.00 56.88%
25387 SPRINGING 1.51 13,850,000.00 67.38%
25387A 1,381,878 1,252,029 Springing 12,000,000.00
25387B 192,964 162,978 Springing 1,850,000.00
- -----------------------------------------------------------------------------------------------------
18066 477,492 410,541 Springing 1.72 4,100,000.00 55.64%
851439 1,571,179.00 1,445,635.00 1.54 18,000,000.00 63.43%
851465 1,614,664.10 1,536,613.78 1.76 16,500,000.00 63.52%
851802 1,168,923.00 1,065,659.45 1.30 13,750,000.00 72.19%
851367 1,169,484.00 1,142,584.00 1.41 13,300,000.00 74.12%
- -----------------------------------------------------------------------------------------------------
851072 1,240,750.56 1,159,380.31 1.41 13,200,000.00 71.15%
18137 1,189,832 1,098,409 1.41 12,600,000.00 71.34%
18332 1,036,138 1,000,726 1.38 11,600,000.00 74.80%
851460 1,345,915.06 1,213,081.06 1.77 13,600,000.00 63.29%
5502 1,115,115 1,046,835 1.60 13,200,000.00 59.39%
- -----------------------------------------------------------------------------------------------------
17877 1,192,690 1,140,190 2.15 20,500,000.00 37.32%
851498 1,111,163.00 997,709.00 1.60 13,200,000.00 56.57%
25069 958,300 848,300 1.28 11,700,000.00 63.78%
851400 886,254.48 814,504.48 1.46 9,600,000.00 74.54%
851578 1,137,687.00 1,101,687.00 1.87 11,300,000.00 62.39%
- -----------------------------------------------------------------------------------------------------
851454 933,819.20 887,046.50 1.41 9,850,000.00 71.41%
851317 1,186,668.92 1,046,804.92 1.62 10,800,000.00 63.37%
850937 868,423.23 800,726.93 1.04 10,000,000.00 68.07%
851455 806,585.19 748,789.54 1.35 9,100,000.00 71.98%
17154 1,091,882 964,482 1.83 13,300,000.00 48.80%
- -----------------------------------------------------------------------------------------------------
18173 1,128,681 1,081,581 1.94 11,700,000.00 55.43%
12130 996,322 843,466 1.70 12,000,000.00 52.94%
851384 1,090,357.33 1,009,656.08 1.77 11,200,000.00 55.04%
25118 3,314,273 3,102,523 7.37 34,000,000.00 17.65%
25959 997,662 945,662 1.98 11,600,000.00 51.68%
- -----------------------------------------------------------------------------------------------------
851419 770,905.84 692,104.39 1.43 7,965,000.00 70.42%
851419A 558,625.60 505,499.35 5,600,000.00
851419B 167,298.02 146,178.02 1,900,000.00
851419C 44,982.22 40,427.02 465,000.00
851488 735,976.12 696,076.12 1.34 7,750,000.00 71.87%
- -----------------------------------------------------------------------------------------------------
851303 679,072.99 620,272.99 1.40 7,700,000.00 72.26%
26031 689,113 650,125 1.26 7,750,000.00 71.61%
851579 900,303.00 864,595.00 1.87 9,700,000.00 56.96%
851468 786,334.48 724,468.23 1.53 8,800,000.00 62.05%
851404 788,566.68 714,372.63 1.68 8,400,000.00 64.91%
- -----------------------------------------------------------------------------------------------------
851403 793,955.91 687,264.66 1.35 7,515,000.00 71.59%
850995 724,149.00 677,506.50 1.43 8,100,000.00 65.78%
25714 646,703 614,094 1.39 6,546,000.00 79.38%
851306 663,283.00 615,283.00 1.60 7,200,000.00 70.78%
851370 688,901.00 627,943.64 1.38 6,800,000.00 74.66%
- -----------------------------------------------------------------------------------------------------
25271 740,714 671,714 1.52 9,600,000.00 52.08%
851459 797,723.00 691,205.50 1.67 7,180,000.00 69.10%
851469 896,485.32 855,685.32 2.09 11,000,000.00 45.10%
851425 800,792.89 772,851.99 1.86 8,100,000.00 61.19%
17583 845,866 650,382 1.36 8,000,000.00 61.84%
- -----------------------------------------------------------------------------------------------------
5504 690,534 656,441 1.59 8,200,000.00 60.29%
851338 648,445.20 596,424.55 1.25 7,750,000.00 63.67%
17875 699,708 657,191 1.48 8,200,000.00 59.22%
25312 573,112 542,112 1.31 6,000,000.00 79.94%
851435 610,563.67 582,626.17 1.57 6,750,000.00 70.75%
- -----------------------------------------------------------------------------------------------------
851438 646,992.92 602,910.42 1.59 6,840,000.00 69.42%
25609 1.53 6,925,000.00 68.95%
25609A 95,585 91,363 1,000,000.00
25609B 195,456 190,640 2,225,000.00
25609C 344,437 326,242 3,700,000.00
- -----------------------------------------------------------------------------------------------------
851548 650,877.50 610,483.88 1.46 7,300,000.00 64.92%
851245 611,822.00 586,767.97 1.57 6,800,000.00 65.39%
851354 1,057,240.62 905,875.62 1.66 10,500,000.00 41.87%
851485 690,576.00 614,976.00 1.66 8,250,000.00 52.88%
851280 264,524.54 256,324.54 1.23 2,750,000.00 78.62%
851279 256,850.16 247,625.16 1.19 2,850,000.00 75.86%
851433 556,798.00 538,948.00 1.54 7,000,000.00 60.79%
- -----------------------------------------------------------------------------------------------------
17718 755,020 670,784 1.56 6,700,000.00 63.23%
25423 690,395 604,570 1.50 5,900,000.00 69.49%
11134 568,459 501,757 1.38 6,000,000.00 68.21%
25675 472,155 450,405 1.35 5,350,000.00 74.71%
851399 532,402.95 505,902.95 1.63 5,300,000.00 74.54%
- -----------------------------------------------------------------------------------------------------
851582 662,147.00 639,647.00 1.98 7,200,000.00 53.82%
851428 718,770.00 652,124.55 2.15 6,810,000.00 56.69%
851327 491,591.77 451,091.77 1.27 5,200,000.00 73.81%
25165 696,153 600,659 1.77 7,175,000.00 52.90%
851411 749,088.08 735,208.58 2.36 6,283,191.00 59.94%
- -----------------------------------------------------------------------------------------------------
851388 492,421.02 424,117.92 1.37 6,000,000.00 62.74%
851560 692,741.00 677,855.00 2.13 9,200,000.00 40.73%
12052 490,706 459,614 1.43 5,300,000.00 70.67%
18113 662,983 588,178 1.59 5,700,000.00 64.75%
851406 520,965.35 459,448.15 1.39 5,000,000.00 71.72%
- -----------------------------------------------------------------------------------------------------
25577 440,485 425,277 1.35 5,300,000.00 66.04%
851385 515,789.48 477,475.73 1.47 5,500,000.00 63.23%
16416 467,468 433,413 1.34 4,900,000.00 70.30%
25589 399,002 383,115 1.29 4,300,000.00 79.83%
851577 483,719.00 449,523.00 1.53 4,700,000.00 72.87%
- -----------------------------------------------------------------------------------------------------
26174 502,498 446,778 1.52 4,850,000.00 67.96%
851243 460,893.67 439,045.94 1.74 4,740,000.00 67.60%
851415 421,047.13 398,751.13 1.54 4,480,000.00 71.51%
12101 735,479 657,284 1.78 9,100,000.00 35.06%
851347 431,939.62 398,275.62 1.65 4,425,000.00 71.80%
- -----------------------------------------------------------------------------------------------------
16398 448,216 407,505 1.45 4,900,000.00 64.01%
25451 416,837 390,363 1.35 4,300,000.00 72.60%
851586 376,633.00 363,346.00 1.36 4,385,000.00 70.70%
851219 427,483.00 396,483.00 1.62 5,200,000.00 59.12%
851386 456,525.00 422,225.00 1.43 4,100,000.00 73.47%
- -----------------------------------------------------------------------------------------------------
8643 516,698 404,436 1.34 4,700,000.00 63.77%
25195 493,481 450,563 1.65 6,800,000.00 44.12%
25559 405,276 366,576 1.45 4,850,000.00 61.86%
851246 476,865.38 403,851.63 1.69 4,950,000.00 60.18%
851337 549,643.91 521,443.91 1.79 6,010,000.00 48.67%
- -----------------------------------------------------------------------------------------------------
851378 448,430.00 381,919.20 1.19 4,800,000.00 60.90%
851369 501,757.32 459,308.57 1.49 5,425,000.00 53.80%
12099 359,350 331,817 1.26 4,400,000.00 66.43%
851479 460,594.74 398,254.74 1.23 5,400,000.00 53.78%
851365 413,282.80 388,238.30 1.79 4,160,000.00 69.28%
- -----------------------------------------------------------------------------------------------------
851525 500,376.00 407,626.00 1.25 4,970,000.00 58.02%
851581 450,586.00 419,026.00 1.73 4,600,000.00 62.50%
851528 368,146.00 345,896.00 1.37 3,910,000.00 72.58%
851305 388,965.30 360,765.30 1.59 4,300,000.00 65.48%
9419 384,048 355,298 1.42 3,800,000.00 74.00%
- -----------------------------------------------------------------------------------------------------
18346 380,902 363,111 1.51 4,000,000.00 69.95%
851244 380,694.66 357,312.66 1.50 4,550,000.00 60.23%
851381 499,032.09 454,632.09 1.56 5,230,000.00 52.09%
9675 385,562 357,753 Springing 1.34 4,100,000.00 66.35%
851267 362,708.17 335,624.17 1.61 3,530,000.00 76.19%
851267A 288,502.17 268,918.17 2,680,000.00
851267B 74,206.00 66,706.00 850,000.00
- -----------------------------------------------------------------------------------------------------
851503 326,625.00 314,025.00 1.33 3,800,000.00 70.64%
851387 420,651.88 372,767.13 1.70 3,600,000.00 74.29%
851507 479,339.00 425,789.00 1.44 4,000,000.00 66.25%
851467 368,372.13 329,868.93 1.28 3,500,000.00 74.91%
851342 418,458.71 393,458.71 1.66 5,070,000.00 51.32%
- -----------------------------------------------------------------------------------------------------
851420 358,431.00 322,335.00 1.63 3,700,000.00 70.10%
851430 307,481.08 299,394.58 1.16 3,500,000.00 73.41%
25117 365,875 334,388 1.57 4,100,000.00 60.93%
25352 424,888 398,888 1.93 5,800,000.00 43.07%
851340 438,578.60 413,578.60 1.82 5,250,000.00 47.46%
- -----------------------------------------------------------------------------------------------------
16958 368,337 329,230 Springing 1.57 4,250,000.00 58.67%
851424 1,180,485.53 1,163,583.53 6.14 9,100,000.00 27.31%
851333 771,888.13 723,832.13 3.96 9,250,000.00 26.85%
851464 392,790.99 363,070.39 1.73 3,725,000.00 66.61%
11505 380,557 350,631 Springing 1.39 4,750,000.00 52.02%
- -----------------------------------------------------------------------------------------------------
851481 523,146.68 498,766.68 1.81 4,890,000.00 50.17%
851806 339,016.00 297,616.00 1.30 3,760,000.00 65.19%
851472 368,229.28 358,403.68 1.35 5,960,000.00 40.86%
26032 293,696 278,018 1.26 3,275,000.00 72.93%
851408 674,784.00 605,569.00 2.98 7,820,000.00 30.46%
- -----------------------------------------------------------------------------------------------------
851371 291,083.00 279,790.00 1.47 4,000,000.00 59.35%
17553 394,042 379,282 1.84 4,100,000.00 56.98%
851450 298,059.76 278,059.76 1.53 2,950,000.00 78.20%
25144 324,825 298,505 1.39 3,550,000.00 64.72%
851423 320,459.00 274,891.96 1.28 3,400,000.00 67.45%
- -----------------------------------------------------------------------------------------------------
851426 311,960.96 293,272.96 1.66 3,200,000.00 69.00%
25485 296,846 285,463 1.48 3,350,000.00 65.60%
25508 302,252 286,854 1.41 3,690,000.00 59.56%
851200 286,300.73 221,738.77 1.24 3,000,000.00 73.11%
- -----------------------------------------------------------------------------------------------------
851192 467,728.03 413,515.58 1.69 4,505,000.00 48.51%
851192A 264,814.73 238,279.28 2,330,000.00
851192B 202,913.30 175,236.30 2,175,000.00
25445 344,572 334,405 1.68 4,200,000.00 51.19%
851395 301,396.75 286,396.75 1.72 2,850,000.00 74.54%
17962 842,231 764,231 4.45 10,100,000.00 20.78%
- -----------------------------------------------------------------------------------------------------
851285 432,420.52 389,412.52 2.56 3,350,000.00 62.21%
851328 306,782.06 296,782.06 1.78 3,570,000.00 58.36%
851508 250,073.81 238,873.81 1.33 3,100,000.00 65.74%
851808 365,507.00 338,507.00 1.51 4,100,000.00 49.57%
851409 450,093.50 437,175.50 2.61 4,700,000.00 43.02%
- -----------------------------------------------------------------------------------------------------
851312 311,794.16 269,207.74 1.46 2,900,000.00 69.17%
851478 242,985.04 237,235.04 1.37 3,211,000.00 62.01%
851809 244,189.48 216,714.48 1.21 2,700,000.00 73.72%
851452 266,503.46 242,003.96 1.45 3,093,000.00 64.10%
851352 364,759.55 322,849.55 2.01 3,200,000.00 61.92%
- -----------------------------------------------------------------------------------------------------
851393 295,824.19 284,736.19 1.85 3,000,000.00 65.27%
851530 305,929.00 256,474.00 1.43 3,070,000.00 63.33%
851336 242,150.22 222,081.42 1.23 2,590,000.00 73.72%
851565 220,912.00 216,446.00 1.19 2,600,000.00 73.00%
851348 246,421.28 228,421.28 1.46 2,750,000.00 68.31%
- -----------------------------------------------------------------------------------------------------
851401 304,016.84 286,016.84 1.69 3,700,000.00 50.62%
851310 312,610.80 298,440.80 1.64 2,540,000.00 73.53%
851555 248,727.00 230,345.50 1.37 2,390,000.00 74.92%
851264 264,126.96 244,126.96 1.66 2,760,000.00 64.43%
851364 302,689.05 262,569.05 1.62 3,380,000.00 52.37%
- -----------------------------------------------------------------------------------------------------
851278 433,728.88 388,228.88 2.56 4,640,000.00 38.09%
25078 302,871 231,068 1.41 2,590,000.00 67.50%
851361 247,803.33 238,348.83 1.62 2,800,000.00 62.31%
851484 284,413.86 265,187.76 1.84 3,900,000.00 44.58%
851330 304,304.00 279,736.60 1.96 2,900,000.00 59.64%
- -----------------------------------------------------------------------------------------------------
851282 452,775.97 414,363.97 3.37 4,750,000.00 36.03%
16953 281,934 258,259 Springing 1.83 2,650,000.00 63.98%
851493 282,958.00 235,561.93 1.63 2,950,000.00 57.27%
851383 251,657.14 222,946.14 1.61 3,200,000.00 52.64%
17923 227,091 217,398 1.38 2,700,000.00 61.92%
- -----------------------------------------------------------------------------------------------------
851390 320,215.00 262,863.00 1.51 3,100,000.00 53.71%
851353 257,005.02 227,747.52 1.73 2,800,000.00 59.08%
851501 266,954.00 264,054.00 1.85 2,900,000.00 56.77%
851487 222,262.00 204,262.00 1.34 2,300,000.00 71.47%
851463 230,606.62 211,806.62 1.62 2,200,000.00 74.38%
- -----------------------------------------------------------------------------------------------------
851394 209,988.48 201,238.48 1.53 2,270,000.00 72.05%
851416 254,479.69 242,515.29 1.83 2,930,000.00 55.77%
851334 279,897.96 226,167.09 1.75 2,300,000.00 70.85%
851449 208,626.00 202,476.00 1.48 2,150,000.00 74.54%
851556 208,024.00 198,682.00 1.37 2,300,000.00 69.52%
- -----------------------------------------------------------------------------------------------------
851236 223,144.01 213,965.61 1.45 2,150,000.00 73.82%
851323 309,362.49 293,862.49 2.43 3,050,000.00 51.76%
851396 202,002.56 192,678.56 1.53 2,275,000.00 68.83%
851242 204,137.33 168,137.33 1.21 2,900,000.00 53.79%
851329 218,164.52 201,346.92 1.61 2,450,000.00 63.70%
- -----------------------------------------------------------------------------------------------------
851441 305,426.89 292,136.09 1.34 2,900,000.00 53.20%
25479 196,801 187,586 1.39 2,400,000.00 64.54%
851494 310,123.00 288,373.70 2.13 2,700,000.00 57.21%
851349 202,491.48 193,241.48 1.43 2,075,000.00 74.10%
851526 193,116.00 176,616.00 1.33 2,670,000.00 56.43%
- -----------------------------------------------------------------------------------------------------
17961 424,635 390,135 3.18 4,550,000.00 32.94%
851569 241,815.00 210,315.00 1.53 2,000,000.00 75.00%
851539 236,021.00 214,021.00 1.45 1,980,000.00 75.51%
851520 245,314.00 234,478.00 1.75 3,200,000.00 46.73%
851453 192,730.04 180,476.04 1.46 2,250,000.00 66.37%
- -----------------------------------------------------------------------------------------------------
851486 201,256.00 183,556.00 1.32 2,100,000.00 71.05%
851477 293,119.56 253,821.89 1.99 3,500,000.00 42.54%
851248 185,984.79 178,484.79 1.47 2,800,000.00 53.13%
851283 271,917.83 247,641.83 2.19 2,900,000.00 51.27%
851392 242,384.00 225,699.60 1.85 2,450,000.00 60.58%
- -----------------------------------------------------------------------------------------------------
851344 261,245.00 241,023.50 1.88 2,800,000.00 53.01%
851405 264,941.24 251,128.09 1.67 2,700,000.00 54.91%
851299 241,302.15 221,550.15 1.39 2,395,000.00 61.02%
851377 271,053.44 245,030.84 1.64 2,800,000.00 52.06%
851356 197,477.50 175,931.25 1.29 2,050,000.00 69.67%
- -----------------------------------------------------------------------------------------------------
851307 499,156.16 482,524.16 2.38 5,335,000.00 26.57%
17927 257,153 246,694 1.86 3,230,000.00 43.22%
851456 187,881.16 172,881.16 1.15 2,065,000.00 67.43%
851373 239,205.73 223,778.23 2.09 2,700,000.00 51.54%
851434 268,894.24 220,148.44 1.83 3,000,000.00 46.28%
- -----------------------------------------------------------------------------------------------------
851343 179,363.33 169,363.33 1.48 2,225,000.00 62.20%
851391 523,317.00 478,317.00 3.42 7,480,000.00 18.41%
851398 157,846.84 145,846.84 1.34 1,820,000.00 74.56%
851372 228,263.20 205,271.80 1.58 2,150,000.00 63.00%
851261 239,620.71 217,908.76 1.60 2,000,000.00 67.31%
- -----------------------------------------------------------------------------------------------------
851322 299,649.29 277,557.29 1.72 2,300,000.00 57.69%
25742 186,857 173,357 1.48 1,800,000.00 72.14%
851418 186,106.12 180,612.97 1.67 2,200,000.00 58.58%
851335 218,213.08 206,513.08 1.86 2,350,000.00 54.35%
851260 179,517.60 157,917.60 1.36 2,050,000.00 62.25%
- -----------------------------------------------------------------------------------------------------
25024 209,841 187,021 1.54 2,300,000.00 54.51%
851341 229,768.01 217,268.01 1.91 2,490,000.00 50.03%
851355 192,251.68 154,675.18 1.48 2,020,000.00 60.14%
851457 195,898.07 187,910.07 1.81 1,850,000.00 64.41%
851286 304,188.60 288,588.60 3.45 2,950,000.00 40.31%
- -----------------------------------------------------------------------------------------------------
851389 245,127.46 223,067.76 1.76 2,400,000.00 48.70%
851250 205,338.38 195,738.38 2.17 2,380,000.00 47.90%
851195 1,673,388.00 1,538,053.00 16.27 14,000,000.00 8.10%
851265 138,826.95 129,575.35 1.38 1,620,000.00 68.29%
851358 148,791.00 146,291.00 1.78 1,500,000.00 72.80%
- -----------------------------------------------------------------------------------------------------
851203 137,799.68 115,698.78 1.29 1,750,000.00 62.39%
851421 268,219.79 244,219.79 2.75 3,060,000.00 35.62%
851292 154,562.34 142,957.34 1.59 1,650,000.00 65.90%
850952 147,028.83 138,005.32 1.53 1,500,000.00 72.39%
851129 182,476.27 170,176.27 1.68 1,775,000.00 60.47%
- -----------------------------------------------------------------------------------------------------
851351 146,965.92 135,423.22 1.30 1,580,000.00 67.20%
851363 225,014.53 213,938.03 1.88 1,785,000.00 58.77%
851429 163,905.00 146,945.00 1.53 1,440,000.00 72.46%
851362 165,804.06 158,604.06 2.10 2,200,000.00 46.47%
851258 124,773.86 119,205.11 1.26 1,430,000.00 70.24%
- -----------------------------------------------------------------------------------------------------
851266 125,456.00 113,456.00 1.51 1,375,000.00 72.15%
851263 123,960.01 115,356.61 1.29 1,460,000.00 67.89%
851272 333,055.40 313,105.40 4.01 4,100,000.00 24.18%
851174 135,113.66 123,783.26 1.46 1,400,000.00 70.68%
851442 143,203.33 131,203.33 1.35 1,360,000.00 72.62%
- -----------------------------------------------------------------------------------------------------
851256 175,027.39 162,231.39 1.49 1,610,000.00 61.14%
851359 277,575.20 272,013.20 3.06 3,300,000.00 29.79%
851252 163,657.00 146,725.00 1.41 1,750,000.00 55.61%
851273 163,167.37 153,267.37 1.43 1,880,000.00 51.48%
851288 135,464.25 128,384.25 1.74 1,350,000.00 69.93%
- -----------------------------------------------------------------------------------------------------
851308 310,835.96 291,715.96 2.90 3,460,000.00 27.19%
851296 101,261.48 97,511.48 1.44 1,250,000.00 72.99%
11101 140,790 136,344 1.71 1,700,000.00 52.53%
851284 193,147.07 185,118.07 3.10 2,100,000.00 40.15%
851275 125,732.12 115,986.67 1.29 1,290,000.00 63.92%
- -----------------------------------------------------------------------------------------------------
851171 109,961.60 104,981.80 1.67 1,150,000.00 71.24%
851382 123,631.72 111,535.72 1.32 1,270,000.00 63.45%
851360 108,171.28 100,251.28 1.57 1,155,000.00 68.52%
851451 126,380.00 112,462.50 1.70 1,500,000.00 51.89%
851374 103,690.36 101,990.36 1.83 1,140,000.00 65.26%
- -----------------------------------------------------------------------------------------------------
851238 201,193.25 184,608.50 2.77 1,710,000.00 43.05%
851122 154,105.39 151,228.49 1.87 1,380,000.00 52.94%
851402 217,997.36 199,397.54 2.06 2,000,000.00 33.76%
851319 109,533.56 104,433.56 1.86 1,200,000.00 54.04%
851357 171,798.00 149,654.00 2.15 1,575,000.00 40.21%
851320 38,555.00 31,643.00 1.44 470,000.00 56.74%
=====================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EFFECTIVE CALL FREE
LOCKOUT EFFECTIVE PROTECTION PREPAY
MATURITY PERIOD LOCKOUT CALL END WINDOW
LOAN NUMBER LTV (MOS.) END DATE PROTECTION DATE (MOS.)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
25489 46.87% 59 04/30/04 Defeasance 04/30/04 1
25489A
25489B
25489C
25489D
25489E
25489F
25489G
25489H
25489I
25489J
25489K
25489L
25489M
25489N
- -------------------------------------------------------------------------------------------------------------------
851445 0.00% 234 07/31/18 Defeasance 07/31/18 6
851443 0.00% 234 07/31/18 Defeasance 07/31/18 6
851444 0.00% 234 07/31/18 Defeasance 07/31/18 6
851446 0.00% 234 07/31/18 Defeasance 07/31/18 6
851447 0.00% 114 07/31/08 Defeasance 07/31/08 6
- -------------------------------------------------------------------------------------------------------------------
851499 55.80% 78 08/31/05 Defeasance 08/31/05 6
18041 44.95% 117 01/31/09 Defeasance 01/31/09 3
851550 51.46% 114 10/31/08 Defeasance 10/31/08 6
851563 58.39% 114 11/30/08 Defeasance 11/30/08 6
851476 45.70% 114 07/31/08 Defeasance 07/31/08 6
- -------------------------------------------------------------------------------------------------------------------
9122 57.02% 120 05/31/09 Defeasance 05/31/09 0
16465 61.14% 120 05/31/09 Defeasance 05/31/09 0
851087 2.63% 234 01/31/18 Defeasance 01/31/18 6
25764 51.63% 119 04/30/09 Defeasance 04/30/09 1
25557 54.09% 120 06/30/09 DEFEASANCE 06/30/09 0
25557A
25557B
25557C
25557D
25557E
25557F
25557G
- -------------------------------------------------------------------------------------------------------------------
17660 60.03% 117 01/31/09 Defeasance 01/31/09 3
851580 51.84% 117 04/30/09 Defeasance 04/30/09 3
851500 52.80% 78 07/31/05 Defeasance 07/31/05 6
25387 57.09% 120 05/31/09 DEFEASANCE 05/31/09 0
25387A
25387B
- -------------------------------------------------------------------------------------------------------------------
18066 40.17% 120 01/31/09 Defeasance 01/31/09 0
851439 53.08% 114 06/30/08 Defeasance 06/30/08 6
851465 50.69% 114 08/31/08 Defeasance 08/31/08 6
851802 63.84% 48 09/30/02 > 1% or YM 06/30/08 3
851367 46.19% 174 04/30/13 Defeasance 04/30/13 6
- -------------------------------------------------------------------------------------------------------------------
851072 61.20% 114 12/31/07 Defeasance 12/31/07 6
18137 63.65% 120 04/30/09 Defeasance 04/30/09 0
18332 66.12% 120 02/28/09 Defeasance 02/28/09 0
851460 55.32% 114 07/31/08 Defeasance 07/31/08 6
5502 52.51% 120 04/30/09 Defeasance 04/30/09 0
- -------------------------------------------------------------------------------------------------------------------
17877 37.32% 120 02/28/09 Defeasance 02/28/09 0
851498 52.67% 78 07/31/05 Defeasance 07/31/05 6
25069 57.29% 120 04/30/09 Defeasance 04/30/09 0
851400 63.91% 114 06/30/08 Defeasance 06/30/08 6
851578 49.86% 117 04/30/09 Defeasance 04/30/09 3
- -------------------------------------------------------------------------------------------------------------------
851454 58.36% 114 08/31/08 Defeasance 08/31/08 6
851317 26.54% 174 05/31/13 Defeasance 05/31/13 6
850937 1.41% 36 09/30/01 > 1% or YM 04/30/13 6
851455 63.31% 78 07/31/05 Defeasance 07/31/05 6
17154 42.82% 120 04/30/09 Defeasance 04/30/09 0
- -------------------------------------------------------------------------------------------------------------------
18173 44.64% 120 04/30/09 Defeasance 04/30/09 0
12130 46.16% 120 09/30/08 Defeasance 09/30/08 0
851384 1.66% 234 06/30/18 Defeasance 06/30/18 6
25118 17.65% 57 02/29/04 Defeasance 02/29/04 3
25959 45.07% 119 04/30/09 Defeasance 04/30/09 1
- -------------------------------------------------------------------------------------------------------------------
851419 28.12% 234 07/31/18 DEFEASANCE 07/31/18 6
851419A
851419B
851419C
851488 59.54% 114 08/31/08 Defeasance 08/31/08 6
- -------------------------------------------------------------------------------------------------------------------
851303 63.31% 114 05/31/08 Defeasance 05/31/08 6
26031 65.00% 120 06/30/09 Defeasance 06/30/09 0
851579 45.38% 117 04/30/09 Defeasance 04/30/09 3
851468 50.22% 114 07/31/08 Defeasance 07/31/08 6
851404 50.69% 114 07/31/08 Defeasance 07/31/08 6
- -------------------------------------------------------------------------------------------------------------------
851403 59.64% 36 09/30/08 Defeasance 09/30/08 6
850995 54.02% 114 01/31/08 Defeasance 01/31/08 6
25714 70.48% 120 05/31/09 Defeasance 05/31/09 0
851306 60.28% 114 04/30/08 Defeasance 04/30/08 6
851370 59.88% 114 09/30/08 Defeasance 09/30/08 6
- -------------------------------------------------------------------------------------------------------------------
25271 42.27% 120 06/30/09 Defeasance 06/30/09 0
851459 55.21% 36 12/31/01 Defeasance / > 1% or YM 07/31/08 6
851469 35.91% 114 07/31/08 Defeasance 07/31/08 6
851425 49.01% 36 11/30/01 Declining Penalty 06/30/08 6
17583 56.62% 117 02/28/09 Defeasance 02/28/09 3
- -------------------------------------------------------------------------------------------------------------------
5504 53.30% 120 04/30/09 Defeasance 04/30/09 0
851338 0.00% 234 06/30/18 Defeasance 06/30/18 6
17875 45.85% 120 03/31/09 Defeasance 03/31/09 0
25312 71.23% 120 05/31/09 Defeasance 05/31/09 0
851435 61.47% 36 12/31/01 Defeasance / > 1% or YM 07/31/08 6
- -------------------------------------------------------------------------------------------------------------------
851438 54.68% 114 07/31/08 Defeasance 07/31/08 6
25609 60.87% 120 06/30/09 DEFEASANCE 06/30/09 0
25609A
25609B
25609C
- -------------------------------------------------------------------------------------------------------------------
851548 52.65% 114 12/31/08 Defeasance 12/31/08 6
851245 47.39% Declining Penalty 10/31/07 36
851354 0.00% 138 08/31/10 Defeasance 08/31/10 6
851485 42.53% 116 08/31/08 Defeasance 08/31/08 4
851280 0.00% 234 04/30/18 Defeasance 04/30/18 6
851279 0.00% 234 04/30/18 Defeasance 04/30/18 6
851433 48.41% 114 05/31/08 Defeasance 05/31/08 6
- -------------------------------------------------------------------------------------------------------------------
17718 50.89% 120 03/31/09 Defeasance 03/31/09 0
25423 58.48% 120 06/30/09 Defeasance 06/30/09 0
11134 61.19% 120 03/31/09 Defeasance 03/31/09 0
25675 65.93% 120 05/31/09 Defeasance 05/31/09 0
851399 64.01% 114 06/30/08 Defeasance 06/30/08 6
- -------------------------------------------------------------------------------------------------------------------
851582 42.84% 117 04/30/09 Defeasance 04/30/09 3
851428 43.82% 114 06/30/08 Defeasance 06/30/08 6
851327 30.39% 174 05/31/13 Defeasance 05/31/13 6
25165 43.14% 120 05/31/09 Defeasance 05/31/09 0
851411 37.49% 174 06/30/13 Defeasance 06/30/13 6
- -------------------------------------------------------------------------------------------------------------------
851388 49.18% 114 06/30/08 Defeasance 06/30/08 6
851560 36.14% 114 12/31/08 Defeasance 12/31/08 6
12052 62.90% 120 04/30/09 Defeasance 04/30/09 0
18113 54.92% 120 03/31/09 Defeasance 03/31/09 0
851406 59.14% 114 09/30/08 Defeasance 09/30/08 6
- -------------------------------------------------------------------------------------------------------------------
25577 59.42% 120 06/30/09 Defeasance 06/30/09 0
851385 1.99% 234 06/30/18 Defeasance 06/30/18 6
16416 64.02% 120 03/31/09 Defeasance 03/31/09 0
25589 71.08% 120 05/31/09 Defeasance 05/31/09 0
851577 58.55% 117 04/30/09 Defeasance 04/30/09 3
- -------------------------------------------------------------------------------------------------------------------
26174 55.38% 120 05/31/09 Defeasance 05/31/09 0
851243 53.13% 114 04/30/08 Defeasance 04/30/08 6
851415 55.81% 114 06/30/08 Defeasance 06/30/08 6
12101 0.86% 180 05/31/14 Defeasance 05/31/14 0
851347 62.11% 114 05/31/08 Defeasance 05/31/08 6
- -------------------------------------------------------------------------------------------------------------------
16398 57.55% 120 04/30/09 Defeasance 04/30/09 0
25451 59.84% 120 05/31/09 Defeasance 05/31/09 0
851586 62.85% 117 04/30/09 Defeasance 04/30/09 3
851219 46.50% 36 12/31/01 Defeasance / > 1% or YM 07/31/08 6
851386 2.81% 234 06/30/18 Defeasance 06/30/18 6
- -------------------------------------------------------------------------------------------------------------------
8643 54.11% 120 05/31/09 Defeasance 05/31/09 0
25195 29.13% 180 06/30/14 Defeasance 06/30/14 0
25559 54.71% 114 12/31/08 Defeasance 12/31/08 6
851246 46.30% 174 04/30/13 Defeasance 04/30/13 6
851337 0.00% 198 04/30/15 Defeasance 04/30/15 6
- -------------------------------------------------------------------------------------------------------------------
851378 1.11% 174 05/31/13 Defeasance 05/31/13 6
851369 0.81% 174 05/31/13 Defeasance 05/31/13 6
12099 59.79% 120 05/31/09 Defeasance 05/31/09 0
851479 1.03% 36 01/31/02 Defeasance / > 1% or YM 08/31/13 6
851365 59.73% 114 06/30/08 Defeasance 06/30/08 6
- -------------------------------------------------------------------------------------------------------------------
851525 1.32% 60 03/31/04 Defeasance / > 1% or YM 10/31/13 6
851581 49.89% 117 04/30/09 Defeasance 04/30/09 3
851528 59.22% 114 09/30/08 Defeasance 09/30/08 6
851305 51.92% 36 09/30/01 Defeasance / > 1% or YM 04/30/08 6
9419 60.73% 120 06/30/08 Defeasance 06/30/08 0
- -------------------------------------------------------------------------------------------------------------------
18346 62.23% 120 05/31/09 Defeasance 05/31/09 0
851244 48.13% Declining Penalty 09/30/07 12
851381 0.00% 174 05/31/13 Defeasance 05/31/13 6
9675 55.84% 120 04/30/09 Defeasance 04/30/09 0
851267 66.33% 114 04/30/08 DEFEASANCE 04/30/08 6
851267A
851267B
- -------------------------------------------------------------------------------------------------------------------
851503 57.34% 114 11/30/08 Defeasance 11/30/08 6
851387 58.18% 114 06/30/08 Defeasance 06/30/08 6
851507 1.33% 174 07/31/13 Defeasance 07/31/13 6
851467 2.90% 234 07/31/18 Defeasance 07/31/18 6
851342 0.00% 234 06/30/18 Defeasance 06/30/18 6
- -------------------------------------------------------------------------------------------------------------------
851420 54.38% 36 10/31/01 Defeasance / > 1% or YM 05/31/08 6
851430 2.52% 222 07/31/17 Defeasance 07/31/17 6
25117 54.07% 120 05/31/09 Defeasance 05/31/09 0
25352 37.93% 120 05/31/09 Defeasance 05/31/09 0
851340 0.00% 234 06/30/18 Defeasance 06/30/18 6
- -------------------------------------------------------------------------------------------------------------------
16958 51.99% 120 02/28/09 Defeasance 02/28/09 0
851424 23.63% 114 06/30/08 Defeasance 06/30/08 6
851333 23.02% Declining Penalty 12/31/07 12
851464 53.46% 114 07/31/08 Defeasance 07/31/08 6
11505 37.20% 119 10/31/08 Defeasance 10/31/08 1
- -------------------------------------------------------------------------------------------------------------------
851481 0.00% 174 07/31/13 Defeasance 07/31/13 6
851806 44.93% 117 06/30/08 Defeasance 06/30/08 3
851472 0.71% 174 08/31/13 Defeasance 08/31/13 6
26032 66.08% 120 05/31/09 Defeasance 05/31/09 0
851408 24.13% 114 07/31/08 Defeasance 07/31/08 6
- -------------------------------------------------------------------------------------------------------------------
851371 46.93% 36 10/31/01 Defeasance / > 1% or YM 05/31/08 6
17553 46.40% 119 12/31/08 Defeasance 12/31/08 1
851450 68.23% 114 06/30/08 Defeasance 06/30/08 6
25144 43.42% 180 05/31/14 Defeasance 05/31/14 0
851423 55.89% 114 10/31/08 Defeasance 10/31/08 6
- -------------------------------------------------------------------------------------------------------------------
851426 53.03% 174 06/30/13 Defeasance 06/30/13 6
25485 53.21% 120 05/31/09 Defeasance 05/31/09 0
25508 49.12% 120 05/31/09 Defeasance 05/31/09 0
851200 56.79% 36 08/31/01 Defeasance / > 1% or YM 04/30/13 6
- -------------------------------------------------------------------------------------------------------------------
851192 0.00% 60 09/30/03 > 1% OR YM / DECLINING PENALTY 04/30/13 6
851192A
851192B
25445 42.18% 120 06/30/09 Defeasance 06/30/09 0
851395 64.01% 114 06/30/08 Defeasance 06/30/08 6
17962 18.26% 120 05/31/09 Defeasance 05/31/09 0
- -------------------------------------------------------------------------------------------------------------------
851285 53.29% 24 10/31/00 Defeasance / > 1% or YM 05/31/08 6
851328 51.21% 36 08/31/01 Defeasance / > 1% or YM 03/31/08 6
851508 53.54% 60 02/29/04 > 1% or YM 07/31/08 7
851808 23.69% 116 05/31/08 Defeasance 05/31/08 4
851409 26.91% 174 06/30/13 Defeasance 06/30/13 6
- -------------------------------------------------------------------------------------------------------------------
851312 47.15% 114 07/31/08 Defeasance 07/31/08 6
851478 55.50% 36 11/30/01 Defeasance / > 1% or YM 06/30/08 6
851809 66.56% 116 07/31/08 Defeasance 07/31/08 4
851452 51.47% 114 06/30/08 Defeasance 06/30/08 6
851352 49.04% 114 06/30/08 Defeasance 06/30/08 6
- -------------------------------------------------------------------------------------------------------------------
851393 56.04% 114 06/30/08 Defeasance 06/30/08 6
851530 52.28% 36 03/31/02 Defeasance / > 1% or YM 10/31/08 6
851336 2.46% 234 04/30/18 Defeasance 04/30/18 6
851565 60.84% 114 12/31/08 Defeasance 12/31/08 6
851348 42.97% 174 04/30/13 Defeasance 04/30/13 6
- -------------------------------------------------------------------------------------------------------------------
851401 34.02% 115 07/31/08 Defeasance 07/31/08 6
851310 0.00% 234 04/30/18 Defeasance 04/30/18 6
851555 62.08% 36 04/30/02 Defeasance / > 1% or YM 12/31/08 6
851264 50.67% 114 04/30/08 Defeasance 04/30/08 6
851364 0.00% 235 06/30/18 Defeasance 06/30/18 6
- -------------------------------------------------------------------------------------------------------------------
851278 24.81% 114 05/31/08 Defeasance 05/31/08 6
25078 55.97% 120 05/31/09 Defeasance 05/31/09 0
851361 50.00% 114 06/30/08 Defeasance 06/30/08 6
851484 35.55% 36 01/31/02 Defeasance / > 1% or YM 08/31/08 6
851330 47.59% 36 09/30/01 Defeasance / > 1% or YM 04/30/08 6
- -------------------------------------------------------------------------------------------------------------------
851282 30.72% 24 10/31/00 Defeasance / > 1% or YM 05/31/08 6
16953 56.56% 120 02/28/09 Defeasance 02/28/09 0
851493 45.35% 114 08/31/08 Defeasance 08/31/08 6
851383 41.91% 36 11/30/01 > 1% or YM 06/30/08 6
17923 51.41% 117 01/31/09 Defeasance 01/31/09 3
- -------------------------------------------------------------------------------------------------------------------
851390 0.00% 174 07/31/13 Defeasance 07/31/13 6
851353 46.64% 36 09/30/01 Defeasance / > 1% or YM 04/30/08 6
851501 45.80% 114 10/31/08 Defeasance 10/31/08 6
851487 59.17% 114 09/30/08 Defeasance 09/30/08 6
851463 58.52% 114 07/31/08 Defeasance 07/31/08 6
- -------------------------------------------------------------------------------------------------------------------
851394 62.21% 114 06/30/08 Defeasance 06/30/08 6
851416 43.35% 115 06/30/08 Defeasance 06/30/08 6
851334 55.84% 114 04/30/08 Defeasance 04/30/08 6
851449 59.97% 114 09/30/08 Defeasance 09/30/08 6
851556 62.73% 114 12/31/08 Defeasance 12/31/08 6
- -------------------------------------------------------------------------------------------------------------------
851236 30.49% 174 05/31/13 Defeasance 05/31/13 6
851323 40.28% 36 10/31/01 Defeasance / > 1% or YM 04/30/08 6
851396 59.44% 114 06/30/08 Defeasance 06/30/08 6
851242 36.24% 114 04/30/08 Defeasance 04/30/08 6
851329 50.35% 114 04/30/08 Defeasance 04/30/08 6
- -------------------------------------------------------------------------------------------------------------------
851441 0.45% 36 12/31/01 Defeasance / > 1% or YM 07/31/08 6
25479 57.63% 120 05/31/09 Defeasance 05/31/09 0
851494 45.58% 114 10/31/08 Defeasance 10/31/08 6
851349 48.00% 60 10/31/03 Defeasance / > 1% or YM 06/30/13 6
851526 45.79% 114 11/30/08 Defeasance 11/30/08 6
- -------------------------------------------------------------------------------------------------------------------
17961 28.95% 120 05/31/09 Defeasance 05/31/09 0
851569 61.13% 36 05/31/02 Defeasance / YM 01/31/09 6
851539 3.11% 234 11/30/18 Defeasance 11/30/18 6
851520 38.20% 36 03/31/02 Defeasance / > 1% or YM 10/31/08 6
851453 58.64% 114 07/31/08 Defeasance 07/31/08 6
- -------------------------------------------------------------------------------------------------------------------
851486 58.86% 114 08/31/08 Defeasance 08/31/08 6
851477 34.29% 36 12/31/01 Defeasance / > 1% or YM 07/31/08 6
851248 39.82% 36 08/31/01 Defeasance / > 1% or YM 03/31/13 6
851283 44.41% 24 07/31/01 Defeasance / > 1% or YM 03/31/08 6
851392 37.72% 174 05/31/13 Defeasance 05/31/13 6
- -------------------------------------------------------------------------------------------------------------------
851344 43.01% 36 09/30/01 Defeasance / > 1% or YM 04/30/08 6
851405 2.43% 234 06/30/18 Defeasance 06/30/18 6
851299 1.07% 174 05/31/13 Defeasance 05/31/13 6
851377 0.68% 36 10/31/01 Defeasance / > 1% or YM 05/31/13 6
851356 2.40% 234 06/30/18 Defeasance 06/30/18 6
- -------------------------------------------------------------------------------------------------------------------
851307 0.00% 36 09/30/01 Declining Penalty 04/30/08 6
17927 36.01% 120 03/31/09 Defeasance 03/31/09 0
851456 1.15% 36 11/30/01 Defeasance / > 1% or YM 06/30/13 6
851373 44.74% 36 11/30/01 Defeasance / > 1% or YM 06/30/08 6
851434 29.70% 174 06/30/13 Defeasance 06/30/13 6
- -------------------------------------------------------------------------------------------------------------------
851343 49.74% 114 04/30/08 Defeasance 04/30/08 6
851391 0.24% 60 11/30/03 Defeasance / > 1% or YM 06/30/13 6
851398 64.39% 114 06/30/08 Defeasance 06/30/08 6
851372 2.18% 48 10/31/02 Defeasance / > 1% or YM 05/31/18 6
851261 2.89% 60 12/31/03 Defeasance / > 1% or YM 07/31/18 6
- -------------------------------------------------------------------------------------------------------------------
851322 13.67% 36 10/31/01 Defeasance / > 1% or YM 05/31/08 6
25742 59.03% 120 05/31/09 Defeasance 05/31/09 0
851418 51.50% 36 12/31/01 Defeasance / > 1% or YM 06/30/05 6
851335 36.11% 36 10/31/01 Defeasance / > 1% or YM 05/31/08 6
851260 42.30% 114 04/30/08 Defeasance 04/30/08 6
- -------------------------------------------------------------------------------------------------------------------
25024 45.63% 120 05/31/09 Defeasance 05/31/09 0
851341 0.00% 234 06/30/18 Defeasance 06/30/18 6
851355 48.61% 36 11/30/01 Defeasance / > 1% or YM 06/30/08 6
851457 52.22% 36 12/31/01 Defeasance / > 1% or YM 07/31/08 6
851286 34.20% 24 07/31/01 Defeasance / > 1% or YM 04/30/08 6
- -------------------------------------------------------------------------------------------------------------------
851389 0.83% 60 10/31/03 Defeasance / > 1% or YM 05/31/13 6
851250 35.50% 36 08/31/01 Defeasance / > 1% or YM 03/31/13 6
851195 6.40% 114 03/31/08 Defeasance 03/31/08 6
851265 55.15% 36 08/31/01 Defeasance / > 1% or YM 03/31/08 6
851358 62.80% 36 10/31/01 Defeasance / > 1% or YM 05/31/08 6
- -------------------------------------------------------------------------------------------------------------------
851203 48.61% 36 08/31/01 Defeasance / > 1% or YM 03/31/13 6
851421 28.29% 36 11/30/01 Defeasance / > 1% or YM 06/30/08 6
851292 52.66% 36 09/30/01 Defeasance / > 1% or YM 04/30/08 6
850952 57.94% 114 03/31/08 Defeasance 03/31/08 6
851129 41.18% 114 01/31/08 Defeasance 01/31/08 6
- -------------------------------------------------------------------------------------------------------------------
851351 47.29% 114 06/30/08 Defeasance 06/30/08 6
851363 0.00% 174 07/31/13 Defeasance 07/31/13 6
851429 59.91% 36 12/31/01 Defeasance / > 1% or YM 07/31/08 6
851362 39.91% 36 10/31/01 Defeasance / > 1% or YM 05/31/08 6
851258 48.28% 115 06/30/08 Defeasance 06/30/08 6
- -------------------------------------------------------------------------------------------------------------------
851266 62.40% 114 04/30/08 Defeasance 04/30/08 6
851263 55.76% 114 05/31/08 Defeasance 05/31/08 6
851272 17.91% 36 08/31/01 Defeasance / > 1% or YM 03/31/13 6
851174 59.94% 114 02/29/08 Defeasance 02/29/08 6
851442 2.84% 84 11/30/05 Defeasance / > 1% or YM 06/30/18 6
- -------------------------------------------------------------------------------------------------------------------
851256 1.13% 174 05/31/13 Defeasance 05/31/13 6
851359 0.81% 36 10/31/01 Defeasance / > 1% or YM 05/31/18 6
851252 0.00% 174 05/31/13 Defeasance 05/31/13 6
851273 24.63% 36 08/31/01 Defeasance / > 1% or YM 03/31/08 6
851288 54.74% 114 05/31/08 Defeasance 05/31/08 6
- -------------------------------------------------------------------------------------------------------------------
851308 0.43% 36 09/30/01 Defeasance / > 1% or YM 04/30/13 6
851296 62.83% 36 09/30/01 > 1% or YM 04/30/08 6
11101 42.42% 177 02/28/13 Defeasance 02/28/13 3
851284 34.10% 24 07/31/01 Defeasance / > 1% or YM 05/31/08 6
851275 0.00% 174 04/30/13 Defeasance 04/30/13 6
- -------------------------------------------------------------------------------------------------------------------
851171 61.77% 114 05/31/08 Defeasance 05/31/08 6
851382 1.64% 60 11/30/03 Defeasance / > 1% or YM 06/30/15 6
851360 54.26% 114 05/31/08 Defeasance 05/31/08 6
851451 41.76% 114 06/30/08 Defeasance 06/30/08 6
851374 56.27% 36 09/30/01 Defeasance / > 1% or YM 04/30/08 6
- -------------------------------------------------------------------------------------------------------------------
851238 29.21% 114 04/30/08 Defeasance 04/30/08 6
851122 0.00% 84 10/31/05 > 1% or YM 05/31/13 6
851402 0.30% 114 07/31/08 Defeasance 07/31/08 6
851319 35.90% 36 10/31/01 Defeasance / > 1% or YM 05/31/08 6
851357 0.72% 174 05/31/13 Defeasance 05/31/13 6
851320 44.57% 114 04/30/08 Defeasance 04/30/08 6
===================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOAN NUMBER ADDRESS CITY STATE ZIP CODE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
25489
25489A 675-725 West Central Avenue Springboro OH 45066
25489B 15910-16088 S. Harlem Avenue Tinley Park IL 60477
25489C 49-79 Ludwig Drive Fairview Heights IL 62208
25489D 1722-1724 South West Avenue Freeport IL 61032
25489E 152-180 West Logan Noblesville IN 46060
25489F 1108-1128 & 1158 W. Boughton Road Bolingbrook IL 60440
25489G 3123 South Airport Rd West Traverse City MI 49684
25489H 1738 165th Street Hammond IN 46320
25489I 7330 W. North Avenue Elmwood IL 24304
25489J 17105-17165 West Bluemound Road Brookfield WI 53005
25489K 907 W. Marketview Drive Champaign IL 61822
25489L 4130 Berkshire Lane Plymouth MN 55446
25489M 15006-80 La Grange Road Orland Park IL 60462-3233
25489N 250 East Golf Road Schaumburg IL 60173
- -----------------------------------------------------------------------------------------------------------------------------------
851445 1830 First Capitol Drive-South St. Charles MO 63303
851443 12701 Manchester Road Des Peres MO 63131
851444 1320 Central Park Drive O'Fallon IL 62269
851446 50 Ludwig Drive Fairview Heights IL 62208
851447 2845 Target Drive St. Louis MO 63136
- -----------------------------------------------------------------------------------------------------------------------------------
851499 5758, 5794, 5850, 5925, 5956-5964 W. Las Positas Pleasanton CA 94588
18041 225 Broadway New York NY 10007
851550 7171 Forest Lane Dallas TX 75230
851563 1737 King St. Alexandria VA 22314
851476 800 El Camino Real West Mountain View CA 94040
- -----------------------------------------------------------------------------------------------------------------------------------
9122 11622-11682 El Camino Real San Diego CA 92130
16465 3720 Arroyo Sorrento Road San Diego CA 92130
851087 10655 Westminster Blvd. Westminster CO 80030
25764 3051 Brinkley Rd Oxon Hill MD 20748
25557
25557A 2235 Mt. Zion Parkway Morrow GA 30260
25557B 95 Gwinco Boulevard Suwanee GA 30024
25557C 3720 Steve Reynolds Boulevard Duluth GA 30096
25557D 555 Lake Center Parkway Cumming GA 30040
25557E 3174 Barrett Lakes Parkway Kennesaw GA 30144
25557F 3000 Highlands Parkway Smyrna GA 30082
25557G 8462 South Cherokee Boulevard Douglasville GA 30134
- -----------------------------------------------------------------------------------------------------------------------------------
17660 Ridge Pike/Butler Pike Plymouth Meeting PA 19428
851580 1310-1389 Northgate Circle Oviedo FL 32765
851500 1750 Howe Avenue Sacramento CA 95825
25387
25387A 2030 Arden Way Sacramento CA 95825
25387B 6126 S. Pacific Coast Hwy Redondo Beach CA 90277
- -----------------------------------------------------------------------------------------------------------------------------------
18066 20455 Hesperian Boulevard Hayward CA 94541
851439 4305, 4315, 4325, 4335, 4345 S. Industrial and
432 Adelbaron Street Las Vegas NV 89103
851465 2214, 2220, 2230 Mall Dr. East Waterford Township MI 48328
851802 3205-3329 East Bell Road Phoenix AZ 85032
851367 3340 Del Sol Blvd. San Diego CA 92154
- -----------------------------------------------------------------------------------------------------------------------------------
851072 1900-1996 Hacienda Drive Vista CA 92083
18137 7100 Holladay Tyler Road Glenn Dale MD 20769
18332 6501 Spring Street Long Beach CA 90808
851460 625-655 Redwood Hwy Mill Valley CA 94941
5502 9710-9738 S.E. Washington Street Portland OR 97216
- -----------------------------------------------------------------------------------------------------------------------------------
17877 50 West 72nd Street New York NY 10023
851498 101 Stewart Street Seattle WA 98101
25069 5880 Ridgewood Road Jackson MS 39211
851400 8525 Tobias Avenue Panorama City CA 91402
851578 710 SW Depot Avenue Gainesville FL 32601
- -----------------------------------------------------------------------------------------------------------------------------------
851454 920 Rock Ave. San Jose CA 95131
851317 2131 Shelter Island Drive San Diego CA 92106
850937 30151 Tomas Street Rancho Santa Margarita CA 92688
851455 85 West Moreland Road Simi Valley CA 93065
17154 521-527 & 529-535 West 20th Street New York NY 10011
- -----------------------------------------------------------------------------------------------------------------------------------
18173 3642 Boulder Highway Las Vegas NV 89121
12130 38 East 30th Street New York NY 10016
851384 700 E. El Camino Real Mountain View CA 94022
25118 2800-2801 Quebec Street, N.W. Washington DC 20008
25959 2930 Cherry Street Fairfax VA 22042
- -----------------------------------------------------------------------------------------------------------------------------------
851419
851419A 1135 Kildaire Farm Road Cary NC 27511
851419B 3221 Durham Drive Raleigh NC 27603
851419C 527 East Chatham Street Cary NC 27511
851488 4981 Catoctin Drive San Diego CA 92115
- -----------------------------------------------------------------------------------------------------------------------------------
851303 1513 West San Bernardino West Covina CA 91790
26031 5019 Garth Road Baytown TX 77521
851579 217 Virginia Avenue Lexington KY 40508
851468 444 & 470 Spear Street San Francisco CA 94105
851404 9003-9113 Research Boulevard Austin TX 78755
- -----------------------------------------------------------------------------------------------------------------------------------
851403 2589, 2665, 2719 Air Fresno Dr. & 2590, 2666, 2720 Fresno CA 93727
850995 19200 Stevens Creek Boulevard Cupertino CA 95014
25714 2100 South & 300 West Salt Lake City UT 84115-2513
851306 4600 W. Vegas Drive Las Vegas NV 89108
851370 2302 Trade Zone Boulevard San Jose CA 95131
- -----------------------------------------------------------------------------------------------------------------------------------
25271 1050-1150 E. Henderson Fresno CA 93706
851459 6161 Harry Hines Blvd. Dallas TX 75235
851469 1959 Lake Boulevard Davis CA 95616
851425 9901-19 Washington Boulevard, 3855-67 Hughes Ave. Culver City CA 90232
17583 109 South Warren Street Syracuse NY 13202
- -----------------------------------------------------------------------------------------------------------------------------------
5504 12230-12400 Southeast Sunnyside Road Clackamas OR 97015
851338 3686 East Olympic Boulevard Los Angeles CA 90023
17875 433 & 459 W. Bastanchury Rd. Fullerton CA 92835
25312 15000 West Cleveland Ave New Berlin WI 53151
851435 710 Sansome Street San Francisco CA 94111
- -----------------------------------------------------------------------------------------------------------------------------------
851438 17112 Armstrong Ave. Irvine CA 92614
25609
25609A 46 Auburn Street Auburn MA 01501
25609B 12-14, 16-18 Winter Street Boston MA 02108
25609C 130 Lexington Street Waltham MA 02452
- -----------------------------------------------------------------------------------------------------------------------------------
851548 1133 Popular Creek Road Henderson NC 27536
851245 27712 Avenue Mentry Valencia CA 91355
851354 530 Center Street NE Salem OR 97301
851485 2301 Valley View Blvd. Las Vegas NV 89102
851280 10933 Huston Street North Hollywood CA 91601
851279 10932 Morrison Street North Hollywood CA 91601
851433 4612 22nd Avenue N.E. Seattle WA 98105
- -----------------------------------------------------------------------------------------------------------------------------------
17718 2250 Center Street Chattanooga TN 37421
25423 2080 West North Temple Salt Lake City UT 84116
11134 2970 Hilltop Mall Road Richmond CA 94806
25675 2105-A Harlequin Terrace Silver Spring MD 20904
851399 14955 Saticoy Street Van Nuys CA 91405
- -----------------------------------------------------------------------------------------------------------------------------------
851582 1835 West Call Street Tallahassee FL 32304
851428 4901 Gregg Road Pico Rivera CA 90660
851327 1323 - 34th Avenue East Fife WA 98424
25165 15 Corporate Drive Trumbull CT 06611
851411 6250 Sierra Lane Dublin CA 94568
- -----------------------------------------------------------------------------------------------------------------------------------
851388 10801 North 24th Avenue Phoenix AZ 85029
851560 45 Village Square Snowmass Village CO 81615
12052 11299 Owings Mills Boulevard Owings Mill MD 21117
18113 19608 Liverpool Parkway Cornelius NC 28031
851406 201 North Berkeley Boulevard Goldsboro NC 27534
- -----------------------------------------------------------------------------------------------------------------------------------
25577 270 St. Paul Denver CO 80206
851385 828 South Bascom Avenue San Jose CA 95128
16416 798 Woodlane Road Mount Holly NJ 80606
25589 51-55 N. Third Street Philadelphia PA 19106-4517
851577 540-541 Bryan Street Tallahassee FL 32304
- -----------------------------------------------------------------------------------------------------------------------------------
26174 4616 N. 51st Avenue Phoenix AZ 85031
851243 12685 Van Nuys Blvd. Pacoima CA 91331
851415 5750, 5760, 5770 Hannum Avenue Culver City CA 90230
12101 Keyser Avenue & Oak Avenue Scranton PA 18504
851347 3993 Iowa Avenue Riverside CA 92507
- -----------------------------------------------------------------------------------------------------------------------------------
16398 553 South Broad Street Lansdale PA 19446
25451 9250 Bellaire Boulevard Houston TX 77036
851586 265-285 North Federal Street Chandler AZ 85225
851219 11474 Central Ave Chino CA 91710
851386 222 Melwood Street, 229 N. Craig, 135-137 N. Craig Pittsburgh PA 15213
- -----------------------------------------------------------------------------------------------------------------------------------
8643 2607 Rhawn St. & 8040 Roosevelt Blvd. Philadelphia PA 19152
25195 598 Broadway New York NY 10012-3351
25559 6100 Soudview Drive Gig Harbor WA 98335
851246 10861 Cherry Street Los Alamitos CA 90720
851337 9300 Ridgeside Lane Orangevale CA 95662
- -----------------------------------------------------------------------------------------------------------------------------------
851378 3400, 3340-3360, 3446-3464 Arden Road Hayward CA 94545
851369 3777 Stevens Creek Boulevard Santa Clara CA 95051
12099 143-195 Forest Ave. Palo Alto CA 94301
851479 8800 S.E. Sunnyside Road Clackamas OR 97015
851365 2228 Old Oakland Road San Jose CA 95131
- -----------------------------------------------------------------------------------------------------------------------------------
851525 6002 Donoho Houston TX 77033
851581 1700-1702 W. Call Street Tallahassee FL 32304
851528 202-208 W. San Ysidro Blvd. San Ysidro CA 92173
851305 9648 Marilla Drive Lakeside CA 92040
9419 3200 West Park Avenue Houma LA 70364
- -----------------------------------------------------------------------------------------------------------------------------------
18346 8671-8779 Piney Orchard Parkway Odenton MD 21113
851244 49-51 Strathearn Pl. & 50 Moreland Rd. Simi Valley CA 93065
851381 1201 & 1301 Scott Avenue Clovis CA 93612
9675 211 63rd Street Brooklyn NY 11220
851267
851267A 2521 Wolford McKinney TX 75070
851267B 760 Edmonds Lane Lewisville TX 75067
- -----------------------------------------------------------------------------------------------------------------------------------
851503 4233 - 9th Avenue NE Seattle WA 98105
851387 5214 West Luke Avenue, 5205-5237 West Montebello Ave.,
5622 North 52nd Ave. Glendale AZ 85301
851507 504, 520, 612 James Avenue Mankato MN 56001
851467 5200 Hahns Peak Drive Loveland CO 80538
851342 10427 Artesia Boulevard Bellflower CA 90706
- -----------------------------------------------------------------------------------------------------------------------------------
851420 1405 San Fernando Blvd. Burbank CA 91504
851430 1477 W. Apache Trail Apache Junction AZ 95219
25117 770 Boston Post Road Guilford CT 06437
25352 490-500 Sherwood Place Stratford CT 06615
851340 9843 Ramona Street Bellflower CA 90706
- -----------------------------------------------------------------------------------------------------------------------------------
16958 4077-81 Redwood Drive Marina Del Rey CA 90292
851424 1700 De la Cruz Santa Clara CA 95032
851333 2088-2193 Anchor Court Thousand Oaks (Newbury Park) CA 91320
851464 900 & 916 Western Avenue Glendale CA 91201
11505 1150 East New York Ave. Brooklyn NY 11212
- -----------------------------------------------------------------------------------------------------------------------------------
851481 8914-8918 Santa Monica Blvd. West Hollywood CA 90069
851806 800 North LBJ San Marcos TX 78666
851472 5055-5095 Telegraph Avenue Oakland CA 94609
26032 12719-12797 Westheimer Road Houston TX 77077
851408 720 Camino Del Mar Del Mar CA 92014
- -----------------------------------------------------------------------------------------------------------------------------------
851371 400 Emerson Street Palo Alto CA 94301
17553 1 Metropolitan Grove Road Gaithersburg MD 20878
851450 11313 Oxnard Street North Hollywood CA 91606
25144 1864 FM 359 BS Richmond TX 77469
851423 337-341 E. Liberty Street Ann Arbor MI 48104
- -----------------------------------------------------------------------------------------------------------------------------------
851426 1815 Via El Prado Redondo Beach CA 90277
25485 1 North Randall Avenue Madison WI 53715
25508 25 Seminary Street Auburn NY 13021
851200 21601 Devonshire Street Chatsworth CA 91311
- -----------------------------------------------------------------------------------------------------------------------------------
851192
851192A 607 S. Friendswood Drive Friendswood TX 77546
851192B 5639-85 Treaschwig Spring TX 77373
25445 1025 Golden Gate Drive Napa CA 94558
851395 13622 Chadron Avenue Hawthorne CA 90250
17962 6200-6651 67th Avenue North Brooklyn Park MN 55429
- -----------------------------------------------------------------------------------------------------------------------------------
851285 1301 Sycamore School Road Fort Worth TX 76134
851328 6112-6175 Water Lily Commons Livermore CA 94550
851508 6415 Longley Lane Reno NV 89511
851808 1913, 1935 & 2005 Perlich Avenue Redwing MN 55066
851409 15 Cannery Court Hayward CA 94544
- -----------------------------------------------------------------------------------------------------------------------------------
851312 2929-2935 East Apache Tulsa OK 74110
851478 1220 Bennett Way Templeton CA 93465
851809 7006 University Avenue Lubbock TX 79413
851452 6052 Industrial Way Livermore CA 94550
851352 400 Lake Cook Road Deerfield IL 60015
- -----------------------------------------------------------------------------------------------------------------------------------
851393 11055 Otsego Street North Hollywood CA 91601
851530 1874 Piedmont Road Atlanta GA 30324
851336 400 University Avenue Sacramento CA 95825
851565 1225 Dell Range Boulevard Cheyenne WY 82009
851348 4750-4754 16th Avenue NE Seattle WA 98052
- -----------------------------------------------------------------------------------------------------------------------------------
851401 1720, 1754, 1768 West 1300 North Salt Lake City UT 28205
851310 13738, 13782, 13790 Bear Valley Rd. Victorville CA 92392
851555 3665 W. Diablo Drive Las Vegas NV 85118
851264 10334 Oasis San Antonio TX 78216
851364 5125 Fairmont Abilene TX 79605
- -----------------------------------------------------------------------------------------------------------------------------------
851278 2431 College Hills Boulevard San Angelo TX 76904
25078 100-265 Sunrise Center Road Zanesville OH 43701
851361 1438 Camino del Mar Del Mar CA 92014
851484 540 W. Lambert Avenue Brea CA 92821
851330 1535-1609 Vassar Street Reno NV 89502
- -----------------------------------------------------------------------------------------------------------------------------------
851282 6511-B Melrose Trail Austin TX 78727
16953 4061-4063 Glencoe Avenue Marina Del Rey CA 90292
851493 1609 S. Grove Avenue/1240-60 East Locust Ontario CA 91761
851383 1211 Newell Avenue Walnut Creek CA 94596
17923 711 South Mills Avenue Claremont CA 91711
- -----------------------------------------------------------------------------------------------------------------------------------
851390 3102-3214 North Main Taylor TX 76574
851353 25-75 N. Santa Anita Avenue Arcadia CA 91006
851501 40671 Joy Road Canton MI 48187
851487 542/548 Ballantyne El Cajon CA 92020
851463 3959 & 3979 Lockridge Street San Diego CA 92101
- -----------------------------------------------------------------------------------------------------------------------------------
851394 1327 & 1329 Crenshaw Boulevard Los Angeles CA 90019
851416 3341-3363 S. La Cienega Place and
5801-05 West Jef Los Angeles CA 90016
851334 203 & 209 East Fourth Avenue Olympia WA 98501
851449 9555 Struthers Road New Middletown OH 44442
851556 5616 South Gibralter Way Aurora CO 80015
- -----------------------------------------------------------------------------------------------------------------------------------
851236 23784 West Road Brownstown Township MI 48183
851323 17740 Scherzinger Lane Canyon Country CA 91351
851396 7000 Vassar Avenue Canoga Park CA 91303
851242 12701 Van Nuys Blvd. Pacoima CA 91331
851329 2751 - 2791 Saturn Street Brea CA 92821
- -----------------------------------------------------------------------------------------------------------------------------------
851441 1600 Dell Avenue Campbell CA 95008
25479 7 East 47th Street New York NY 10017
851494 3021 South Valley View Las Vegas NV 89102
851349 25-289 Tom Polk Circle Chico CA 95973
851526 3165, 3175 E. Fountain Blvd. Colorado Springs CO 80910
- -----------------------------------------------------------------------------------------------------------------------------------
17961 531-561 Westview Drive Hastings MN 55033
851569 2101 New Hampshire Ave NW Washington DC 20009
851539 1525 E. 2nd Street Granbury TX 76048
851520 5510 East Southern Avenue Mesa AZ 85206
851453 6575 Oakmont Drive Santa Rosa CA 95409
- -----------------------------------------------------------------------------------------------------------------------------------
851486 1294 N. Mollison Avenue El Cajon CA 92021
851477 1615 Bonanza Street Walnut Creek CA 94596
851248 1371 S. Beverly Glen Blvd Los Angeles CA 90024
851283 8802 Tradewind Drive Windcrest TX 78239
851392 411, 425, 435 North Marshall Avenue El Cajon CA 92020
- -----------------------------------------------------------------------------------------------------------------------------------
851344 2814 Sepulveda Blvd. Torrance CA 90505
851405 444 East Williams Street Carson City NV 89701
851299 1101 S. Grand Ave. / 1415 E. McFadden Ave. Santa Ana CA 92075
851377 6325, 6335, 6345, 6355, 6365 Marindustry Drive San Diego CA 92121
851356 7580 North Ingram Avenue Fresno CA 93711
- -----------------------------------------------------------------------------------------------------------------------------------
851307 18651 Von Karman Drive Irvine CA 92612
17927 85 South Main Street Barnegat NJ 08005
851456 9249-9259 N. Fortune Ct. Portland OR 97203
851373 10 South Knoll Lane & 36 Tiburon Blvd. Mill Valley CA 94941
851434 15003 Emerald Coast Parkway Destin FL 32541
- -----------------------------------------------------------------------------------------------------------------------------------
851343 22921 30th Avenue South Des Moines WA 98198
851391 2055 Range Avenue Santa Rosa CA 95401
851398 14030 Lemoli Avenue Hawthorne CA 90250
851372 4101 Arctic Boulevard, 600 & 700 West 41st Ave Anchorage AK 99503
851261 6218 66th Street Pinellas Park FL 34665
- -----------------------------------------------------------------------------------------------------------------------------------
851322 1150 W. Avenue J Lancaster CA 93534
25742 710-740 North State Highway 3 Northfield MN 55057
851418 622 Contra Costa Blvd. Pleasant Hill CA 94523
851335 4034 S. Pacific Avenue San Pedro CA 90731
851260 18450 Technology Drive Morgan Hill CA 95037
- -----------------------------------------------------------------------------------------------------------------------------------
25024 417-423 West Broadway Boston MA 02127
851341 9919 Ramona Street Bellflower CA 90706
851355 3301 & 3333 Sunrise Blvd. Rancho Cordova CA 95742
851457 1735 E. Yosemite Avenue Manteca CA 95336
851286 4716 Duval Road Austin TX 78727
- -----------------------------------------------------------------------------------------------------------------------------------
851389 510 & 550 Parrott Street San Jose CA 95112
851250 8110 Redlands Street Playa del Rey CA 90293
851195 777 E. Alta Vista Street Placentia CA 92870
851265 31240 La Baya Drive Westlake Village CA 91362
851358 400 Mona Lane Henderson NV 89015
- -----------------------------------------------------------------------------------------------------------------------------------
851203 3064 East Maria Street Rancho Dominguez CA 90220
851421 1710 Harrison Avenue SE Port Orchard WA 98366
851292 1685 Plymouth Mountain View CA 94043
850952 6710 Variel Avenue Canoga Park CA 91303
851129 23022 Samuel Street Torrance CA 90505
- -----------------------------------------------------------------------------------------------------------------------------------
851351 16781 Milliken Avenue Irvine CA 92606
851363 1692 thru 1724 West Loop North Houston TX 77008
851429 11301 53rd Street Temple Terrace FL 33617
851362 1275-81 8th Street San Francisco CA 94122
851258 5045 List Drive Colorado Springs CO 80919
- -----------------------------------------------------------------------------------------------------------------------------------
851266 500 W. Lamar McKinney TX 75069
851263 1121 Valley Boulevard, Ste. A-I Tehachapi CA 93561
851272 1725 Camino Palmero Los Angeles CA 90046
851174 287 Century Circle Louisville CO 80027
851442 570 East La Cadena Riverside CA 92501
- -----------------------------------------------------------------------------------------------------------------------------------
851256 4225 North Sinton Road Colorado Springs CO 80907
851359 5114, 5210, 5228 N. El Dorado Street Stockton CA 95207
851252 20401 County Road 81 Rogers MN 55374
851273 12959 Oxnard Street Van Nuys CA 91606
851288 2803-2828 and 11718-11734 Crooked Lake Blvd. Coon Rapids MN 55433
- -----------------------------------------------------------------------------------------------------------------------------------
851308 2370 Poplar Drive Medford OR 97504
851296 7077-7107 North Antioch Ave. Fresno CA 93722
11101 300-310 West C Street San Diego CA 92101
851284 1301 West Lynn Austin TX 78703
851275 14980 North 78th Way Scottsdale AZ 85260
- -----------------------------------------------------------------------------------------------------------------------------------
851171 4833 South Front Street Castle Rock CO 80104
851382 1497 Tanforan Ave Woodland CA 95776
851360 1027, 1035 North Marshall Avenue El Cajon CA 92020
851451 1001 Shannon Court Livermore CA 94550
851374 5200 N.E. 92nd Avenue Portland OR 97220
- -----------------------------------------------------------------------------------------------------------------------------------
851238 9812-9832 N. 7th St. Phoenix AZ 85020
851122 305 Forest Avenue Laguna Beach CA 92651
851402 2870 South Connor Street Salt Lake City UT 84109
851319 674 W. 27th Street San Pedro CA 90731
851357 1613 Capital Circle NE Tallahassee FL 32308
851320 3518 Grant Avenue San Antonio TX 78218
===================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUT-OFF
BALANCE
YEAR NUMBER PER CUT-OFF
BUILT/ SQUARE OF SQUARE BALANCE
LOAN NUMBER PROPERTY TYPE RENOVATED FEET UNITS FOOT PER UNIT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
25489 Retail
25489A Retail, Anchored 1992 154,034
25489B Retail, Anchored 1988 193,179
25489C Retail, Anchored 1991 167,491
25489D Retail, Big Box 1998 24,049
25489E Retail, Anchored 1992 74,414
25489F Retail, Anchored 1994 57,900
25489G Retail, Big Box 1998 21,337
25489H Retail, Unanchored 1998 7,488
25489I Retail, Unanchored 1997 24,304
25489J Retail, Unanchored 1985 107,952
25489K Retail, Anchored 1992-1995 118,842
25489L Retail, Unanchored 1998 45,415
25489M Retail, Anchored 1994 45,031
25489N Retail, Big Box 1998 93,333
- -----------------------------------------------------------------------------------------------------------------------
851445 Theater 1987 / 1997 93,031 111.73
851443 Theater 1972 / 1997 74,103 116.14
851444 Theater 1996 52,871 127.32
851446 Theater 1986 38,735 76.67
851447 Theater 1978 / 1988 53,129 53.71
- -----------------------------------------------------------------------------------------------------------------------
851499 Office 1983 322,296 79.74
18041 Office Continuous Renovations 445,373 57.18
851550 Office 1973 / 1997 242,336 94.59
851563 Mixed Use 1998 141,332 158.26
851476 Office 1987 / 1998 117,128 165.26
- -----------------------------------------------------------------------------------------------------------------------
9122 Office 1998-1999 130,641 139.98
16465 Office 1998 7,666 123.83
851087 Theater 1998 90,000 205.44
25764 Multifamily 1987-1992 635 25,176.01
25557 HOSPITALITY, EXTENDED STAY
25557A Hospitality, Extended Stay 1996 127 -
25557B Hospitality, Extended Stay 1997 127 -
25557C Hospitality, Extended Stay 1996 102 -
25557D Hospitality, Extended Stay 1997 127 -
25557E Hospitality, Extended Stay 1997 107 -
25557F Hospitality, Extended Stay 1997 125 -
25557G Hospitality, Extended Stay 1994 75 -
- -----------------------------------------------------------------------------------------------------------------------
17660 Retail, Anchored 1989-1990 239,095 63.91
851580 Multifamily 1996 194 66,108.25
851500 Office 1985 183,047 65.26
25387 HOSPITALITY, LIMITED SERVICE
25387A Hospitality, Limited Service 1992-1998 190 -
25387B Hospitality, Limited Service 1962 40 -
- -----------------------------------------------------------------------------------------------------------------------
18066 Hospitality, Limited Service 1996-1998 99 23,043.28
851439 Industrial/Warehouse 1970 208,665 54.72
851465 Retail, Anchored 1994 189,724 55.24
851802 Retail, Unanchored 1986 158,867 62.48
851367 Mobile Home Park 1977 269 36,647.62
- -----------------------------------------------------------------------------------------------------------------------
851072 Retail, Unanchored 1989 125,185 75.05
18137 Industrial/Warehouse 1996-1998 315,191 28.52
18332 Retail, Anchored 1993 81,629 106.30
851460 Office 1978 / 1995 59,025 145.83
5502 Retail, Unanchored 1990 63,365 123.73
- -----------------------------------------------------------------------------------------------------------------------
17877 Multifamily 1984 210 36,428.57
851498 Office 1987 90,763 82.27
25069 Multifamily 1998, 1999 430,400 440 17.34 16,958.82
851400 Multifamily 1985 287 24,932.14
851578 Multifamily 1996 120 58,750.00
- -----------------------------------------------------------------------------------------------------------------------
851454 Industrial/Warehouse 1998 71,958 97.75
851317 Hospitality, Full Service 1985 105 65,175.89
850937 Industrial/Warehouse 1998 96,709 70.39
851455 Industrial/Warehouse 1985 / 1995 105,083 62.34
17154 Industrial/Warehouse 1990 / 1997 204,000 31.82
- -----------------------------------------------------------------------------------------------------------------------
18173 Mobile Home Park 1970 471 13,769.70
12130 Office 1996 84,250 75.40
851384 Office 1986 46,115 133.67
25118 Multifamily Ongoing 847 7,083.83
25959 Multifamily 1988 209,650 208 28.60 28,822.30
- -----------------------------------------------------------------------------------------------------------------------
851419 MULTIPLE PROPERTY TYPE
851419A Office 1988 42,501
851419B Industrial/Warehouse 1986 52,800
851419C Industrial/Warehouse 1986 7,008
851488 Multifamily 1968 133 41,880.62
- -----------------------------------------------------------------------------------------------------------------------
851303 Multifamily 1959 196 28,388.77
26031 Retail, Unanchored 1999 56,100 98.93
851579 Multifamily 1994 96 57,552.08
851468 Office 1939 / 1989 49,493 110.33
851404 Mixed Use 1967 78,099 69.82
- -----------------------------------------------------------------------------------------------------------------------
851403 Industrial/Warehouse 1989 112,307 47.91
850995 Office 1982 37,314 142.79
25714 Retail, Big Box 1996 49,533 104.91
851306 Multifamily 1987 192 26,541.35
851370 Industrial/Warehouse 1979 / 1997 64,800 78.34
- -----------------------------------------------------------------------------------------------------------------------
25271 Multifamily 1976-1979 276 18,115.94
851459 Medical Office 1974 85,214 58.23
851469 Multifamily 1985 / 1994 160 31,006.20
851425 Retail, Unanchored 1988 42,986 115.30
17583 Office 1990- present 167,372 29.56
- -----------------------------------------------------------------------------------------------------------------------
5504 Retail, Unanchored 1992 35,560 139.02
851338 Industrial/Warehouse 1952 / 1997 189,166 26.08
17875 Medical Office 1985 41,851 116.03
25312 Multifamily Ongoing 125,920 124 38.09 38,682.63
851435 Office 1907 / 1989 22,350 213.66
- -----------------------------------------------------------------------------------------------------------------------
851438 Industrial/Warehouse 1969 / 1996 80,150 59.24
25609 RETAIL, UNANCHORED
25609A Retail, Unanchored 1998 5,447
25609B Retail, Unanchored 1996, 1997 9,592
25609C Retail, Unanchored 1995 24,235
- -----------------------------------------------------------------------------------------------------------------------
851548 Industrial/Warehouse 1998 196,850 24.05
851245 Industrial/Warehouse 1988 108,931 40.82
851354 Office 1975 / 1995 121,092 36.31
851485 Multifamily 1976 216 20,196.37
851280 Multifamily 1989 41 52,735.05
851279 Multifamily 1986 41 52,735.05
851433 Multifamily 1991 50 85,099.57
- -----------------------------------------------------------------------------------------------------------------------
17718 Hospitality, Extended Stay 1996-1997 76 55,742.42
25423 Hospitality, Limited Service 1996 93 44,086.02
11134 Medical Office 1986 36,636 111.71
25675 Multifamily 1980 87 45,942.30
851399 Multifamily 1986 106 37,271.03
- -----------------------------------------------------------------------------------------------------------------------
851582 Multifamily 1993 75 51,666.67
851428 Industrial/Warehouse 1969 296,202 13.03
851327 Industrial/Warehouse 1982 / 1998 54,000 71.08
25165 Office 1985 51,996 73.00
851411 Ministorage 1993 92,530 40.70
- -----------------------------------------------------------------------------------------------------------------------
851388 Industrial/Warehouse 1977 113,838 33.07
851560 Retail, Unanchored 1988 22,219 168.65
12052 Retail, Unanchored 1998 39,695 94.36
18113 Hospitality, Limited Service Continuous upgrades 80 46,135.18
851406 Retail, Anchored 1977 153,793 23.32
- -----------------------------------------------------------------------------------------------------------------------
25577 Office 1999 20,784 168.40
851385 Office 1988 30,651 113.45
16416 Retail, Unanchored 1990 45,007 76.54
25589 Multifamily 1985 3,250 55 1,056.18 62,410.69
851577 Multifamily 1990 83 41,265.06
- -----------------------------------------------------------------------------------------------------------------------
26174 Medical Office 1980 41,656 79.13
851243 Industrial/Warehouse 1984 97,101 33.00
851415 Industrial/Warehouse 1978 / 1998 44,592 71.85
12101 Retail, Anchored 1996 158,981 20.07
851347 Multifamily 1986 128 24,822.69
- -----------------------------------------------------------------------------------------------------------------------
16398 Retail, Shadow/Weak Anchored 1988 54,013 58.07
25451 Retail, Shadow/Weak Anchored 1982 39,100 79.84
851586 Retail, Big Box 1998 33,988 91.21
851219 Multifamily 1987 124 24,792.36
851386 Multifamily 1948 / 1996 98 30,735.75
- -----------------------------------------------------------------------------------------------------------------------
8643 Office 1996 78,649 38.11
25195 Mixed Use Continuously 75,600 39.68
25559 Multifamily 1977 129 23,255.81
851246 Medical Office 1983 43,255 68.87
851337 Multifamily 1977 94 31,119.38
- -----------------------------------------------------------------------------------------------------------------------
851378 Industrial/Warehouse 1978 / 1998 102,324 28.57
851369 Office 1961 / 1987 33,959 85.95
12099 Office 14,814 8 197.32 365,390.66
851479 Office 1982 / 1996 49,872 58.23
851365 Industrial/Warehouse 1984 38,530 74.79
- -----------------------------------------------------------------------------------------------------------------------
851525 Industrial/Warehouse 1966 265,000 10.85
851581 Multifamily 1991 60 47,916.67
851528 Multifamily 1988 89 31,888.33
851305 Multifamily 1985 94 29,953.95
9419 Retail, Anchored 1983 58,172 48.34
- -----------------------------------------------------------------------------------------------------------------------
18346 Retail, Anchored 1998 52,781 53.01
851244 Industrial/Warehouse 1979 77,940 35.16
851381 Multifamily 1979 153 17,804.58
9675 Industrial/Warehouse 1998 89,200 30.50
851267 MULTIFAMILY
851267A Multifamily 1984 68 30,294.12
851267B Multifamily 1974 30 21,666.67
- -----------------------------------------------------------------------------------------------------------------------
851503 Multifamily 1986 / 1996 37 72,548.50
851387 Industrial/Warehouse 1982 119,711 22.34
851507 Multifamily 1971 / 1994 153 17,318.96
851467 Office 1998 32,086 81.71
851342 Multifamily 1987 100 26,019.69
- -----------------------------------------------------------------------------------------------------------------------
851420 Office 1982 / 1998 30,080 86.22
851430 Retail, Anchored 1994 / 1998 53,910 47.66
25117 Retail, Unanchored 1983 55,601 19 44.93 131,484.00
25352 Multifamily 1969 102,780 104 24.31 24,020.02
851340 Multifamily 1986 100 24,915.83
- -----------------------------------------------------------------------------------------------------------------------
16958 Office 1998 28,175 88.50
851424 Ministorage 1978 112,678 22.05
851333 Industrial/Warehouse 1978 120,140 20.67
851464 Industrial/Warehouse 1978 / 1997 45,724 54.27
11505 Other 1994 83,360 29.64
- -----------------------------------------------------------------------------------------------------------------------
851481 Mixed Use 1987 19,504 125.79
851806 Multifamily 1973 138 17,760.90
851472 Retail, Anchored 1996 24,564 99.13
26032 Retail, Unanchored 1998 24,600 97.10
851408 Hospitality, Limited Service 1971 / 1998 81 29,406.94
- -----------------------------------------------------------------------------------------------------------------------
851371 Office 1996 9,034 262.78
17553 Ministorage 1984 53,800 710 43.42 3,290.43
851450 Multifamily 1984 80 28,835.11
25144 Retail, Shadow/Weak Anchored 1999 27,566 83.35
851423 Office 1925 / 1997 38,616 59.39
- -----------------------------------------------------------------------------------------------------------------------
851426 Office 1960 / 1998 14,950 147.68
25485 Multifamily 1998 30,438 15 72.19 146,496.92
25508 Retail, Big Box 1959 38,900 56.50
851200 Office 1980 40,862 53.68
- -----------------------------------------------------------------------------------------------------------------------
851192 RETAIL
851192A Retail, Shadow/Weak Anchored 1986 40,823 19.60
851192B Retail, Unanchored 1985 42,580 34.05
25445 Ministorage 1983 67,780 654 31.72 3,287.46
851395 Multifamily 1989 60 35,407.48
17962 Multifamily 312 6,725.52
- -----------------------------------------------------------------------------------------------------------------------
851285 Multifamily 1985 168 12,404.49
851328 Multifamily 1998 50 41,666.98
851508 Multifamily 1988 56 36,392.27
851808 Multifamily 1989 108 18,818.01
851409 Ministorage 1996 86,120 23.48
- -----------------------------------------------------------------------------------------------------------------------
851312 Industrial/Warehouse 1960 / 1998 189,273 10.60
851478 Mobile Home Park 1988 115 17,312.99
851809 Retail, Unanchored 1984 40,404 49.26
851452 Industrial/Warehouse 1997 48,999 40.46
851352 Office 1971 / 1997 33,528 59.10
- -----------------------------------------------------------------------------------------------------------------------
851393 Multifamily 1990 48 40,791.07
851530 Office 1971 / 1995 39,564 49.14
851336 Office 1980 / 1994 16,274 117.33
851565 Retail, Big Box 1998 29,774 63.75
851348 Multifamily 1997 60 31,306.97
- -----------------------------------------------------------------------------------------------------------------------
851401 Multifamily 1984 72 26,011.98
851310 Retail, Shadow/Weak Anchored 1992 21,800 85.68
851555 Industrial/Warehouse 1984 45,954 38.97
851264 Multifamily 1968 100 17,781.61
851364 Multifamily 1982 136 13,016.54
- -----------------------------------------------------------------------------------------------------------------------
851278 Multifamily 1978 182 9,710.75
25078 Retail, Anchored 1974 - 1980 130,070 13.44
851361 Retail, Unanchored 1950 / 1990 13,507 129.17
851484 Industrial/Warehouse 1971 / 1994 67,460 25.77
851330 Retail, Unanchored 1973 / 1984 37,796 45.76
- -----------------------------------------------------------------------------------------------------------------------
851282 Multifamily 1985 132 12,964.81
16953 Office 1998 15,975 106.14
851493 Industrial/Warehouse 1987 83,151 20.32
851383 Office 1974 / 1997 22,969 73.34
17923 Ministorage 1987 64,620 685 25.87 2,440.80
- -----------------------------------------------------------------------------------------------------------------------
851390 Retail, Shadow/Weak Anchored 1981 / 1996 88,234 18.87
851353 Medical Office 1957 23,406 70.68
851501 Ministorage 1988 / 1998 59,200 27.78
851487 Multifamily 1973 / 1997 60 27,395.55
851463 Industrial/Warehouse 1979 47,000 34.82
- -----------------------------------------------------------------------------------------------------------------------
851394 Multifamily 1990 35 46,726.62
851416 Industrial/Warehouse 1950 / 1959 29,911 54.63
851334 Office 1908 33,793 48.22
851449 Mobile Home Park 1990 123 13,029.59
851556 Retail, Shadow/Weak Anchored 1999 14,372 111.26
- -----------------------------------------------------------------------------------------------------------------------
851236 Retail, Anchored 1994 22,946 69.17
851323 Multifamily 1987 62 25,464.06
851396 Multifamily 1989 37 42,319.97
851242 Industrial/Warehouse 1962 / 1980 90,000 17.33
851329 Industrial/Warehouse 1979 42,044 37.12
- -----------------------------------------------------------------------------------------------------------------------
851441 Industrial/Warehouse 1974 33,227 46.43
25479 Office 1996 12,550 123.42
851494 Industrial/Warehouse 1987 43,498 35.51
851349 Multifamily 1983 37 41,557.69
851526 Multifamily 1967 / 1998 55 27,396.21
- -----------------------------------------------------------------------------------------------------------------------
17961 Multifamily Ongoing 138 10,861.09
851569 Multifamily 1926 103 14,563.11
851539 Multifamily 1984 88 16,988.86
851520 Ministorage 1996 71,514 20.91
851453 Medical Office 1997 9,785 152.61
- -----------------------------------------------------------------------------------------------------------------------
851486 Multifamily 1973 59 25,288.09
851477 Office 1967 24,109 61.76
851248 Multifamily 1960 25 59,505.72
851283 Multifamily 1983 84 17,699.13
851392 Industrial/Warehouse 1988 41,711 35.58
- -----------------------------------------------------------------------------------------------------------------------
851344 Retail, Unanchored 1979 31,110 47.71
851405 Retail, Unanchored 1993 21,251 69.76
851299 Industrial/Warehouse 1972 49,380 29.59
851377 Industrial/Warehouse 1989 47,314 30.81
851356 Office 1998 17,237 82.85
- -----------------------------------------------------------------------------------------------------------------------
851307 Industrial/Warehouse 1966 73,920 19.18
17927 Ministorage 69,725 519 20.02 2,689.91
851456 Multifamily 1969 50 27,848.04
851373 Office 1968 / 1985 12,342 112.76
851434 Retail, Shadow/Weak Anchored 1989 / 1998 71,685 19.37
- -----------------------------------------------------------------------------------------------------------------------
851343 Multifamily 1988 40 34,597.71
851391 Multifamily 1973 / 1995 150 9,179.57
851398 Multifamily 1975 48 28,272.09
851372 Industrial/Warehouse 1977 35,372 38.29
851261 Retail, Unanchored 1984 33,403 40.30
- -----------------------------------------------------------------------------------------------------------------------
851322 Office 1965 / 1998 18,410 72.07
25742 Multifamily 1996-1998 54 24,047.50
851418 Retail, Unanchored 1997 8,451 152.49
851335 Multifamily 1963 / 1998 36 35,478.61
851260 Industrial/Warehouse 1998 18,000 70.90
- -----------------------------------------------------------------------------------------------------------------------
25024 Office 1980's 43,399 28.89
851341 Multifamily 1988 50 24,915.83
851355 Industrial/Warehouse 1985 57,810 21.01
851457 Ministorage 1985 53,250 22.38
851286 Multifamily 1982 60 19,816.71
- -----------------------------------------------------------------------------------------------------------------------
851389 Industrial/Warehouse 1979 / 1998 33,938 34.44
851250 Multifamily 1961 32 35,623.77
851195 Hospitality, Resort 1961 / 1978 18 63,035.06
851265 Industrial/Warehouse 1972, 1985 23,129 47.83
851358 Mobile Home Park 1989 50 21,840.51
- -----------------------------------------------------------------------------------------------------------------------
851203 Industrial/Warehouse 1970 47,009 23.23
851421 Multifamily 1977 / 1998 96 11,353.32
851292 Office 1984 9,284 117.12
850952 Industrial/Warehouse 1967 / 1996 22,548 48.16
851129 Multifamily 1963 41 26,179.75
- -----------------------------------------------------------------------------------------------------------------------
851351 Industrial/Warehouse 1976 17,758 59.79
851363 Retail, Unanchored 1979 24,614 42.62
851429 Multifamily 1974 64 16,302.73
851362 Multifamily 1926 / 1998 24 42,595.41
851258 Industrial/Warehouse 1998 20,250 49.60
- -----------------------------------------------------------------------------------------------------------------------
851266 Multifamily 1966 40 24,801.79
851263 Retail, Shadow/Weak Anchored 1986 13,236 74.89
851272 Multifamily 1974 57 17,390.12
851174 Office 1998 9,442 104.80
851442 Industrial/Warehouse 1988 30,000 32.92
- -----------------------------------------------------------------------------------------------------------------------
851256 Industrial/Warehouse 1968 36,560 26.92
851359 Retail, Anchored 1998 13,905 70.71
851252 Industrial/Warehouse 1997 42,330 22.99
851273 Multifamily 1970 / 1996 33 29,328.46
851288 Multifamily 1968 20 47,203.39
- -----------------------------------------------------------------------------------------------------------------------
851308 Retail, Anchored 1986 47,800 19.68
851296 Multifamily 1997 15 60,828.02
11101 Other 1970 10,000 89.30
851284 Multifamily 1985 31 27,196.68
851275 Industrial/Warehouse 1987 14,993 55.00
- -----------------------------------------------------------------------------------------------------------------------
851171 Retail, Shadow/Weak Anchored 1998 7,114 115.16
851382 Industrial/Warehouse 1978 / 1998 53,760 14.99
851360 Industrial/Warehouse 1981 19,800 39.97
851451 Industrial/Warehouse 1987 27,835 27.96
851374 Mobile Home Park 1996 34 21,879.77
- -----------------------------------------------------------------------------------------------------------------------
851238 Retail, Unanchored 1985 25,515 28.85
851122 Retail, Unanchored 1950 4,426 165.08
851402 Retail, Specialty 1960 / 1997 44,337 15.23
851319 Multifamily 1964 / 1996 17 38,143.52
851357 Industrial/Warehouse 1973 / 1980 55,360 11.44
851320 Multifamily 1985 24 11,112.46
=======================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANNUAL
REPLACEMENT ANNUAL
RESERVES REPLACEMENT
OCCUPANCY PER SQUARE RESERVES
LOAN NUMBER OCCUPANCY DATE FOOT (b) PER UNIT (b) LARGEST TENANT
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
25489
25489A 100.0% 03/17/99 Kmart
25489B 83.5% 04/01/99 Cub Foods
25489C 78.3% 01/05/99 1/2 Price Store
25489D 100.0% 04/01/99 Staples
25489E 95.8% 03/17/99 Kroger
25489F 100.0% 01/05/99 Marshall's
25489G 100.0% 03/23/99 Circuit City
25489H 100.0% 04/01/99 Hollywood Video
25489I 100.0% 04/01/99 Binny's Beverage Depot
25489J 100.0% 03/01/99 Harry W. Schwartz Book
25489K 97.0% 03/05/99 Staples
25489L 100.0% 04/01/99 Golf Galaxy
25489M 100.0% 06/30/99 MacFrugal's
25489N 100.0% 04/01/99 Carmax
- -------------------------------------------------------------------------------------------------------------------
851445 100.0% 12/28/98 0.22 St. Charles Cine'
851443 100.0% 12/28/98 0.28 Des Peres Cine
851444 100.0% 12/28/98 0.20 O'Fallon Cine
851446 100.0% 12/28/98 0.36 St. Clair Cine
851447 100.0% 12/28/98 0.26 Halls Ferry Cine
- -------------------------------------------------------------------------------------------------------------------
851499 100.0% 03/15/99 0.10 Vanstar Corporation
18041 94.5% 04/19/99 0.25 Medical & Health Research Assoc.
851550 100.0% 03/24/99 CompuCom Systems Inc.
851563 93.8% 01/26/99 Burns, Doane, Swecker & Mathis
851476 100.0% 02/13/99 0.25 Sagent Technology Inc.
- -------------------------------------------------------------------------------------------------------------------
9122 100.0% 03/24/99 - University of Phoenix
16465 100.0% 03/24/99 - ABC's Children's Center
851087 100.0% 02/18/99 American Multi-Cinema, Inc.
25764 96.9% 02/26/99
25557
25557A 91.3% 03/31/99 413.11
25557B 90.9% 03/31/99 430.92
25557C 81.1% 03/31/99 530.92
25557D 86.1% 03/31/99 415.17
25557E 85.3% 03/31/99 370.05
25557F 95.1% 03/31/99 421.11
25557G 93.2% 03/31/99 367.63
- -------------------------------------------------------------------------------------------------------------------
17660 90.3% 01/04/99 0.15 Super Fresh
851580 99.4% 03/24/99 300.00
851500 89.4% 02/09/99 0.25 Liberty Mutual Insurance Company
25387
25387A 81.2% 12/31/98 683.42
25387B 79.1% 12/31/98 749.65
- -------------------------------------------------------------------------------------------------------------------
18066 68.6% 09/30/98 541.03 Carrows Restaurant (pad lease)
851439 95.4% 03/19/99 Atlandia Design (Mirage)
851465 100.0% 12/31/98 0.18 K-Mart (Builders Square)
851802 96.9% 01/29/99 AMC Theaters
851367 99.6% 02/01/99 100.00
- -------------------------------------------------------------------------------------------------------------------
851072 85.6% 02/23/99 Gold's Gym
18137 100.0% 01/21/99 0.10 Home Depot
18332 100.0% 01/01/99 0.16 Albertson's (ground lease)
851460 98.1% 01/31/99 0.25 Piatti Rest./Office
5502 100.0% 04/15/99 0.22 Portland Teacher's Credit Union
- -------------------------------------------------------------------------------------------------------------------
17877 98.6% 12/31/98 Beach Bum
851498 100.0% 12/01/98 0.27 Hewlett Packard
25069 88.0% 01/31/99 0.26 250.03
851400 95.5% 02/09/99 237.00
851578 100.0% 03/15/99 300.00
- -------------------------------------------------------------------------------------------------------------------
851454 100.0% 11/01/98 Hokkins Systemation
851317 81.4% 12/31/98
850937 100.0% 03/03/99 Padi
851455 100.0% 02/10/99 Schlumberger
17154 100.0% 01/03/99 0.20 Crosier Fine Arts
- -------------------------------------------------------------------------------------------------------------------
18173 99.4% 01/01/99 -
12130 93.0% 07/28/98 - Color by Pergament
851384 100.0% 01/28/99 Reasoning Systems, Inc.
25118 98.2% 04/08/99
25959 98.1% 04/15/99
- -------------------------------------------------------------------------------------------------------------------
851419
851419A 93.2% 01/01/99 Centura Bank
851419B 100.0% 01/09/99 Wrights Build. Spec.
851419C 84.3% 01/09/99 SFI Electronic
851488 98.0% 11/30/98
- -------------------------------------------------------------------------------------------------------------------
851303 94.9% 06/30/98
26031 92.0% 04/28/99 0.15 HealthFit 1
851579 99.2% 02/26/99 300.00
851468 100.0% 10/31/98 Otis Elevator
851404 95.2% 01/30/99 World Gym (Excel Fitness)
- -------------------------------------------------------------------------------------------------------------------
851403 94.8% 01/29/99 Small Business Admin.
850995 82.2% 12/31/98 AMP Inc.
25714 100.0% 04/19/99 0.15 Office Depot
851306 95.0% 12/31/98
851370 100.0% 02/10/99 SMT Centre
- -------------------------------------------------------------------------------------------------------------------
25271 99.6% 02/24/99 250.00
851459 100.0% 09/23/98 LifeCare Management
851469 99.4% 11/24/98 255.00
851425 94.3% 02/12/99 0.15 Mann Theatres (Cinamerica Theatres)
17583 74.8% 03/01/99 0.26 NYS DOT
- -------------------------------------------------------------------------------------------------------------------
5504 93.0% 04/15/99 0.22 Sister of Providence
851338 100.0% 02/10/99 Oak Paper Products
17875 100.0% 11/25/98 0.20 St. Jude Heritage Foundation
25312 95.2% 03/17/99 0.25 250.00
851435 100.0% 02/23/99 Keker & Van Nest
- -------------------------------------------------------------------------------------------------------------------
851438 100.0% 09/17/98 0.15 OLEC Corp.
25609
25609A 100.0% 04/21/99 0.15 Hollywood Video
25609B 100.0% 04/21/99 0.15 Sunglss Hut
25609C 100.0% 04/21/99 0.15 Auto Zone
- -------------------------------------------------------------------------------------------------------------------
851548 100.0% 02/02/99 Corporate Express
851245 100.0% 01/18/99 Forrest Machining
851354 93.3% 11/01/98 0.25 Social Security Admin.
851485 99.5% 12/31/98
851280 100.0% 02/01/99
851279 97.7% 02/01/99
851433 100.0% 09/15/98
- -------------------------------------------------------------------------------------------------------------------
17718 68.4% 12/29/98 1,108.00
25423 78.0% 03/31/99 922.85
11134 92.0% 03/01/99 0.28 MedPartners Mulikin
25675 100.0% 04/15/99 250.00
851399 98.1% 09/30/98 250.00
- -------------------------------------------------------------------------------------------------------------------
851582 99.7% 03/17/99 300.00
851428 100.0% 02/01/99 Feit Electric
851327 100.0% 11/30/98 0.20 Cable TV of Puget Sound
25165 97.2% 04/07/99 0.20 Bridgeport Radiology
851411 94.6% 10/27/98 0.15
- -------------------------------------------------------------------------------------------------------------------
851388 100.0% 01/18/99 P&K Fulfillment
851560 100.0% 03/02/99 0.17 La Boheme
12052 94.0% 03/08/99 0.15 Senior Connections
18113 76.6% 12/31/98 937.50
851406 100.0% 02/01/99 K-Mart
- -------------------------------------------------------------------------------------------------------------------
25577 100.0% 04/14/99 0.15 Andrisen Morton
851385 100.0% 02/08/99 County of Santa Clara
16416 100.0% 03/22/99 0.15 Kiddie Academy
25589 97.0% 03/25/99 4.38 258.87
851577 96.0% 03/17/99 300.00
- -------------------------------------------------------------------------------------------------------------------
26174 96.0% 04/01/99 0.20 Valley Radiologists
851243 100.0% 02/10/99 Truth Hardware
851415 100.0% 11/01/98 Primary Color Systems Corp.
12101 80.9% 04/20/99 0.15 Bon Ton
851347 96.9% 09/30/98
- -------------------------------------------------------------------------------------------------------------------
16398 100.0% 03/01/99 0.15 Drug Emporium
25451 88.8% 05/01/99 0.15 Diho Market
851586 100.0% 04/08/99 0.15 Michaels Stores, Inc.
851219 96.8% 06/30/98
851386 99.0% 09/30/98 -
- -------------------------------------------------------------------------------------------------------------------
8643 88.7% 04/01/99 0.20 ATI Resources
25195 100.0% 06/30/99 0.25 Duane Reade
25559 94.6% 03/31/99 300.00
851246 97.7% 01/28/99 National Healthcare FCU
851337 100.0% 08/25/98 1,219.15
- -------------------------------------------------------------------------------------------------------------------
851378 100.0% 02/01/99 Genesis Hi-Tech Co.
851369 100.0% 03/02/99 Central Computing
12099 100.0% 11/18/98 - - ZOOM Marketing
851479 95.7% 04/27/99 Columbia College
851365 100.0% 11/11/98 Computer Cabinet Corporation
- -------------------------------------------------------------------------------------------------------------------
851525 100.0% 03/01/99 Redi Packaging
851581 97.6% 03/17/99 300.00
851528 98.9% 12/21/98
851305 97.9% 02/01/99
9419 100.0% 02/25/99 0.15 Delchamps
- -------------------------------------------------------------------------------------------------------------------
18346 91.6% 04/19/99 0.18 Food Lion
851244 100.0% 01/18/99 0.15 Hydro Systems
851381 96.7% 08/31/98 290.20
9675 100.0% 03/01/99 0.15 Aspen Ford
851267
851267A 97.1% 07/31/98
851267B 100.0% 07/08/98
- -------------------------------------------------------------------------------------------------------------------
851503 100.0% 10/01/98 340.00
851387 98.8% 01/04/99 Valmark Manufacturing
851507 100.0% 03/09/99 350.00
851467 96.5% 10/06/98 0.20 Lender's Resource, Inc.
851342 100.0% 02/02/99
- -------------------------------------------------------------------------------------------------------------------
851420 100.0% 07/21/98 Gateway Title
851430 100.0% 11/02/98 Bashas Inc., dba Food City
25117 96.5% 03/08/99 0.19 550.84 Connecticutt Electric
25352 100.0% 03/03/99 0.25 250.00
851340 100.0% 02/02/99
- -------------------------------------------------------------------------------------------------------------------
16958 100.0% 12/08/98 0.15 Digital Facades
851424 96.7% 11/03/98
851333 100.0% 01/22/99 Smtek
851464 100.0% 02/11/99 Brown,Bunyan,Moon&More
11505 100.0% 05/01/99 0.15 N. Y. School of Construction Auth.
- -------------------------------------------------------------------------------------------------------------------
851481 100.0% 01/28/99 Koontz Hardware
851806 97.8% 03/18/99 200.00
851472 97.0% 10/20/98 Walgreens
26032 100.0% 04/28/99 0.15 VIP Kids/Oakwood School
851408 79.4% 11/24/98
- -------------------------------------------------------------------------------------------------------------------
851371 100.0% 02/25/99 Cupertino National Bank & Trust
17553 82.3% 10/31/98 0.27 20.79
851450 100.0% 10/01/98 275.00
25144 93.8% 03/21/99 0.15 Silver Screen Video
851423 95.1% 10/01/98 0.25 Instant Interiors
- -------------------------------------------------------------------------------------------------------------------
851426 100.0% 02/05/99 0.23 Pacific Cellsite Co.
25485 92.4% 05/01/99 0.19 385.29 Mailboxes, Etc.
25508 100.0% 05/05/99 Eckerd's Drug
851200 84.2% 01/01/99 EMKI
- -------------------------------------------------------------------------------------------------------------------
851192
851192A 95.4% 01/01/99 Sherwin Williams
851192B 73.8% 01/01/99 Eckerd Drugs
25445 99.0% 03/01/99 0.15 15.55
851395 100.0% 09/30/98 250.00
17962 96.5% 02/01/99
- -------------------------------------------------------------------------------------------------------------------
851285 97.6% 11/24/98
851328 100.0% 02/03/99
851508 94.8% 12/22/98 214.00
851808 100.0% 03/17/99 200.00
851409 90.1% 01/06/99 0.15
- -------------------------------------------------------------------------------------------------------------------
851312 100.0% 01/10/99 Dolphin Manufact
851478 100.0% 11/20/98
851809 85.9% 03/12/99 Poka Lambro
851452 84.1% 02/05/99 Bonner Metal Processing
851352 100.0% 12/31/98 0.25 Directory Service Bureau
- -------------------------------------------------------------------------------------------------------------------
851393 100.0% 09/30/98
851530 96.2% 02/28/99 Zero Properties (1)
851336 100.0% 09/18/98 Schuering Zimmerman & Scully, LLP
851565 100.0% 02/25/99 Office Depot, Inc.
851348 100.0% 12/31/98
- -------------------------------------------------------------------------------------------------------------------
851401 100.0% 10/06/98 200.00
851310 95.9% 01/07/99 Weller
851555 100.0% 04/06/99 Casino Excitement, Inc.
851264 97.0% 09/09/98
851364 99.0% 01/13/99
- -------------------------------------------------------------------------------------------------------------------
851278 97.3% 02/02/99
25078 90.3% 04/01/99 0.20 Muskingham County Senior Center
851361 100.0% 01/31/99 JJ Maguires
851484 100.0% 10/01/98 Southern California Foam, Inc.
851330 91.4% 01/01/99 Oak Furniture Outlet
- -------------------------------------------------------------------------------------------------------------------
851282 96.2% 11/24/98
16953 100.0% 12/08/98 0.16 Tickets.com
851493 87.3% 11/24/98 DGS/Telecomm.
851383 100.0% 02/16/99 McNamara, Houston Dodge etal
17923 93.7% 12/31/98 0.15 14.15
- -------------------------------------------------------------------------------------------------------------------
851390 89.6% 12/10/98 Bealls (Specialized Retailers, Inc.)
851353 100.0% 09/29/98 Jack D. Schulman, DDS
851501 95.8% 11/30/98 0.05
851487 100.0% 12/01/98
851463 100.0% 11/23/98 Lava Industries
- -------------------------------------------------------------------------------------------------------------------
851394 100.0% 09/30/98
851416 100.0% 11/20/98 PIC Security Systems, Inc.
851334 96.6% 09/30/98 Bennett & Cassol
851449 99.2% 02/01/99 50.00
851556 100.0% 02/19/99 Wolf Camera, Inc.
- -------------------------------------------------------------------------------------------------------------------
851236 100.0% 12/31/98 Arbor Drugs
851323 93.7% 02/23/99
851396 97.4% 09/30/98
851242 71.7% 03/12/99 Express Furniture
851329 100.0% 09/01/98 Brea Auto Body
- -------------------------------------------------------------------------------------------------------------------
851441 100.0% 10/30/98 Ashland Chemical
25479 100.0% 04/01/99 0.15 Potsticker II, Inc
851494 95.3% 02/25/99 Lazer Graphixs, Inc.
851349 100.0% 10/02/98
851526 92.7% 01/25/99
- -------------------------------------------------------------------------------------------------------------------
17961 100.0% 02/01/99
851569 98.1% 04/07/99
851539 98.9% 12/31/98
851520 81.7% 02/28/99
851453 100.0% 09/24/98 Santa Rosa Memorial Hospital
- -------------------------------------------------------------------------------------------------------------------
851486 100.0% 11/30/98
851477 100.0% 12/01/98 Bonanza Street Books
851248 100.0% 12/14/98
851283 92.9% 11/24/98
851392 100.0% 01/01/99 Hydro-Scape Products
- -------------------------------------------------------------------------------------------------------------------
851344 100.0% 12/31/98 The Carpenter
851405 100.0% 09/01/98 Video Maniacs
851299 100.0% 02/03/99 All-American Balloon
851377 100.0% 02/01/99 Champion Silk Screening
851356 100.0% 01/07/99 LNB Associates
- -------------------------------------------------------------------------------------------------------------------
851307 100.0% 02/25/99 Federal Express
17927 95.2% 12/31/98 0.15 20.15
851456 94.0% 04/26/99
851373 100.0% 10/13/98 Coldwell/Banker
851434 100.0% 09/25/98 Beall's Outlet Store
- -------------------------------------------------------------------------------------------------------------------
851343 100.0% 07/27/98
851391 97.0% 02/28/99
851398 97.9% 09/30/98
851372 95.8% 01/29/99 Alaska Tire Co.
851261 95.8% 10/01/98 Video Street, Inc.
- -------------------------------------------------------------------------------------------------------------------
851322 100.0% 10/01/98 County of Los Angeles
25742 96.3% 03/12/99 250.00
851418 100.0% 12/09/98 Kinko's
851335 100.0% 09/30/98
851260 100.0% 02/11/99 Redlake Imaging
- -------------------------------------------------------------------------------------------------------------------
25024 100.0% 02/05/99 0.20 Almont Manufacturing
851341 100.0% 02/02/99
851355 100.0% 10/25/98 Britton & Britton
851457 92.7% 10/25/98
851286 95.0% 11/24/98
- -------------------------------------------------------------------------------------------------------------------
851389 100.0% 10/06/98 Ceitronics
851250 100.0% 02/17/99
851195 02/14/99
851265 100.0% 02/08/99 United Green Mark, Inc.
851358 100.0% 12/31/98
- -------------------------------------------------------------------------------------------------------------------
851203 100.0% 01/25/99 Empress Food, Inc.
851421 97.9% 11/09/98
851292 100.0% 01/19/99 Advanced Rotocraft
850952 100.0% 12/14/98 LA Times Bldg
851129 100.0% 12/11/98
- -------------------------------------------------------------------------------------------------------------------
851351 100.0% 11/23/98 Universal Reprographics
851363 87.8% 02/05/99 Barney's Pool Hall
851429 98.4% 09/01/98
851362 95.8% 12/31/98
851258 100.0% 09/21/98 The Design Center
- -------------------------------------------------------------------------------------------------------------------
851266 97.0% 08/31/98
851263 100.0% 02/01/99 Video City
851272 100.0% 12/14/98
851174 100.0% 10/15/98 Lamm, Freeman & Butler, L.L.C.
851442 100.0% 11/19/98 California Design Wood Products, Inc.
- -------------------------------------------------------------------------------------------------------------------
851256 100.0% 09/16/98 Johnson Storage & Moving
851359 100.0% 11/30/98 Walgreens
851252 100.0% 01/01/99 Packaging Research, Inc.
851273 100.0% 02/19/99
851288 95.0% 02/02/99 300.00
- -------------------------------------------------------------------------------------------------------------------
851308 100.0% 02/03/99 GI Joe's Inc.
851296 100.0% 02/17/99
11101 100.0% 04/01/99 - 5 Star Parking-San Diego
851284 96.7% 11/24/98
851275 100.0% 09/28/98 United West Group
- -------------------------------------------------------------------------------------------------------------------
851171 100.0% 09/03/98 Fitness Partners, LLC
851382 100.0% 09/01/98 Hydra Re-load Inc.
851360 100.0% 02/09/99 Smart & Final, Inc.
851451 100.0% 02/05/99 Remco
851374 100.0% 01/19/99
- -------------------------------------------------------------------------------------------------------------------
851238 91.5% 01/25/99 Le Peep Rest.
851122 100.0% 09/01/98 Village Art Gallery
851402 100.0% 03/03/99 State of Utah
851319 100.0% 09/30/98
851357 100.0% 06/30/98 Big 10 Tires
851320 100.0% 06/01/98
===================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2ND
LARGEST LARGEST 2ND
TENANT LARGEST TENANT LARGEST
SQUARE TENANT SQUARE TENANT
LOAN NUMBER FEET EXPIRATION 2ND LARGEST TENANT FEET EXPIRATION
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
25489
25489A 91,266 06/30/17 Kroger 56,634 09/30/17
25489B 61,000 08/31/08 Bally's Total Fitness 24,480 04/30/09
25489C 60,137 12/31/09 The Sports Authority 40,588 07/31/16
25489D 24,049 11/01/13
25489E 50,000 01/31/12 Fashion Bug 10,800 01/31/05
25489F 30,600 01/31/10 Toy Works 11,400 01/31/05
25489G 21,337 11/30/20
25489H 7,488 03/31/13
25489I 18,640 08/01/07 Panera Bread 3,465 03/01/09
25489J 15,178 12/01/05 Loehmann's 15,000 12/01/05
25489K 20,300 09/30/10 Petsmart 20,020 01/31/11
25489L 17,748 07/31/13 Paper Warehouse 9,216 02/28/98
25489M 15,305 01/31/06 Walgreen Co. 12,048 09/30/21
25489N 93,333 01/31/21
- ------------------------------------------------------------------------------------------------------------------
851445 93,031 01/31/19
851443 56,103 01/31/19 Des Peres Cine 18,000 01/31/19
851444 52,871 01/31/19
851446 38,735 01/31/19
851447 53,129 01/31/09
- ------------------------------------------------------------------------------------------------------------------
851499 89,086 05/14/06 Pacific Bell Communications 82,944 04/30/02
18041 28,526 07/01/00 Shapiro, Beilly Rosenberg 15,362 12/01/07
851550 242,336 03/31/19
851563 97,231 10/31/13 Dean Witter 11,980 12/31/08
851476 34,244 10/06/03 Pharsight Corp. 16,000 09/25/03
- ------------------------------------------------------------------------------------------------------------------
9122 38,063 04/30/06 McDonald's 19,958 08/31/08
16465 7,666 09/30/08
851087 90,000 03/14/18
25764
25557
25557A
25557B
25557C
25557D
25557E
25557F
25557G
- ------------------------------------------------------------------------------------------------------------------
17660 32,032 05/31/01 Marshall's 29,692 01/31/01
851580
851500 34,110 02/15/03 Landmark Healthcare, Inc. 32,340 12/31/00
25387
25387A
25387B
- ------------------------------------------------------------------------------------------------------------------
18066 3,900 07/08/08 JT's Fuel & Service (pad lease) 2,000 06/30/14
851439 35,800 09/30/99 Aaron Rents 30,576 03/31/02
851465 109,800 06/30/19 Best Buy 46,892 01/31/10
851802 26,878 12/31/05 Pink E's 13,976 02/28/02
851367
- ------------------------------------------------------------------------------------------------------------------
851072 24,049 08/31/03 Dow Stereo 13,271 03/31/99
18137 258,371 04/30/06 Imtek Assoc. Pkg. 30,620 07/31/07
18332 44,957 09/30/13 Ace Hardware 7,073 01/10/04
851460 8,500 06/01/00 Tuttle and Company 7,953 11/30/01
5502 6,750 04/30/00 Newport Bay Restaurant 6,100 03/31/10
- ------------------------------------------------------------------------------------------------------------------
17877 2,500 07/31/01 Kosher Dreams 1,800 06/30/03
851498 8,139 05/31/03 Hewlett Packard 8,139 05/31/23
25069
851400
851578
- ------------------------------------------------------------------------------------------------------------------
851454 50,371 10/31/13 ARM Computer 21,587 10/31/13
851317 01/00/00
850937 96,709 08/31/13
851455 105,083 01/14/04
17154 95,000 05/31/05 Ricco Moresca 9,500 10/31/02
- ------------------------------------------------------------------------------------------------------------------
18173
12130 36,000 06/01/06 Health Services for Women 29,000 12/31/00
851384 19,097 07/14/02 NTT America, Inc. 7,588 01/31/01
25118
25959
- ------------------------------------------------------------------------------------------------------------------
851419
851419A 5,060 11/30/00 Evergreen of Cary 4,072 01/31/00
851419B 13,800 05/31/00 State of NC 9,000 01/31/00
851419C 1,800 01/31/00 Warren Springsteel 1,800 12/31/00
851488
- ------------------------------------------------------------------------------------------------------------------
851303
26031 18,100 07/31/08 Hoffbrau Steak House 5,964 09/30/08
851579
851468 13,507 10/31/01 Headland Digital Media, Inc. 10,564 04/14/00
851404 25,268 06/30/02 Duke Engineering (Intera) 24,759 04/30/07
- ------------------------------------------------------------------------------------------------------------------
851403 37,259 01/03/06 Bureau of Reclamation 12,360 09/11/99
850995 13,054 02/28/01 REMAX Group 9,270 09/30/04
25714 49,533 01/01/11
851306
851370 64,800 12/31/03
- ------------------------------------------------------------------------------------------------------------------
25271
851459 46,987 12/31/04 LifeCare Management 38,227 12/31/04
851469
851425 26,490 02/14/11 Fairlight 4,150 06/30/00
17583 11,500 09/30/03 NYS Office of Real Property Services 10,229 07/31/02
- ------------------------------------------------------------------------------------------------------------------
5504 10,330 08/31/09 Washington Mutual 4,500 06/30/06
851338 189,166 08/31/18
17875 41,851 12/31/08
25312
851435 22,350 10/31/04
- ------------------------------------------------------------------------------------------------------------------
851438 80,150 10/31/13
25609
25609A 5,447 07/23/08
25609B 5,416 01/30/11 Sweet Factory 4,176 11/30/07
25609C 10,670 12/04/05 Pet Supplies Plus 7,500 10/12/05
- ------------------------------------------------------------------------------------------------------------------
851548 196,850 12/31/13
851245 55,619 03/31/08 Magnetic Products, Inc. 53,312 M-T-M
851354 15,091 12/31/03 Oregon Youth Auth. 13,650 02/28/01
851485
851280
851279
851433
- ------------------------------------------------------------------------------------------------------------------
17718
25423
11134 9,162 12/31/06 Occupational Medicine 6,621 07/31/00
25675
851399
- ------------------------------------------------------------------------------------------------------------------
851582
851428 296,202 08/03/03
851327 54,000 07/31/13
25165 10,105 03/31/04 Rehabilitation Center of Fairfield County 7,568 04/14/03
851411
- ------------------------------------------------------------------------------------------------------------------
851388 13,537 07/28/99 Speedie & Assoc. 11,240 08/31/99
851560 3,443 10/30/02 SM General Store 2,504 10/31/08
12052 10,125 08/31/03 Circa Capital 4,590 10/31/03
18113
851406 91,653 06/30/02 Winn Dixie 37,390 07/31/12
- ------------------------------------------------------------------------------------------------------------------
25577 6,897 02/28/09 Campbell Bohn & Leffert LLC 6,835 04/30/04
851385 10,069 06/30/01 County of Santa Clara 5,529 06/30/00
16416 6,300 05/31/01 ACE Hardware 5,000 08/31/01
25589
851577
- ------------------------------------------------------------------------------------------------------------------
26174 8,344 07/01/06 Canyon Orthopedics 7,170 07/01/00
851243 97,101 09/14/07
851415 30,291 08/31/02 Roloke Company 7,301 08/31/02
12101 57,600 09/30/00 Gerritys 21,131 12/31/05
851347 01/00/00
- ------------------------------------------------------------------------------------------------------------------
16398 31,775 05/28/04 State Liquor Store 3,500 01/31/02
25451 14,000 01/31/10 Chinese Cafe 2,800 12/31/00
851586 24,824 04/28/14 Pier 1 Imports (U.S.), Inc. 9,423 04/24/09
851219
851386
- ------------------------------------------------------------------------------------------------------------------
8643 6,923 06/30/04 Federated Day Care Services, Inc 5,609 05/31/02
25195 12,000 06/30/08 Channel Communications 6,000 12/31/01
25559
851246 7,077 05/30/06 Pacific Eyenet, Inc. 5,830 10/31/01
851337
- ------------------------------------------------------------------------------------------------------------------
851378 40,000 03/31/02 Mission Tool & Mfg. Inc. 26,904 12/31/03
851369 8,558 12/31/13 Central Computing 7,460 12/31/13
12099 4,337 01/31/05 Garlock & Company 2,291 09/30/99
851479 10,760 09/30/00 Greater NW Mortgage 4,741 06/01/04
851365 38,530 12/31/12
- ------------------------------------------------------------------------------------------------------------------
851525 265,000 02/28/14
851581
851528
851305
9419 33,381 09/30/03 Rod Hill Ent., Inc. 8,400 11/14/99
- ------------------------------------------------------------------------------------------------------------------
18346 37,981 03/16/19 Blockbuster 3,200 04/30/04
851244 36,960 07/31/02 Reset, Inc. 19,200 6/31/99
851381
9675 41,924 03/31/12 Saturn of Bay Ridge 29,436 03/31/12
851267
851267A
851267B
- ------------------------------------------------------------------------------------------------------------------
851503
851387 8,049 02/28/99 Jack Black Company 4,112 M-T-M
851507
851467 15,879 03/31/18 McWhinney Mgmt. Co. 4,908 03/31/08
851342
- ------------------------------------------------------------------------------------------------------------------
851420 20,685 08/31/03 State of California 9,395 07/31/02
851430 53,910 02/28/18
25117 3,482 01/31/04 Selby Antique & Bed 3,300 01/31/04
25352
851340
- ------------------------------------------------------------------------------------------------------------------
16958 17,032 04/30/03 Yipinet 7,871 07/31/04
851424
851333 44,027 05/31/00 Centro Vision 18,432 11/30/99
851464 23,124 03/01/00 Brown,Bunyan,Moon&More 22,600 03/01/00
11505 83,360 08/31/09
- ------------------------------------------------------------------------------------------------------------------
851481 7,693 01/31/08 Greg McClatchy & Vince Arcaro 6,400 12/31/01
851806
851472 14,370 11/01/16 DNA Fitness 4,283 05/31/03
26032 15,000 07/13/07 Edgar's Bar & Grill 3,000 09/16/02
851408
- ------------------------------------------------------------------------------------------------------------------
851371 9,034 01/01/08
17553
851450
25144 3,985 03/30/04 Unique Progressive Child Dev. School 3,626 06/08/02
851423 10,945 03/31/02 Kaplan Test Centers 7,008 05/31/00
- ------------------------------------------------------------------------------------------------------------------
851426 2,960 08/14/03 Jewlers 2,450 07/31/08
25485 1,586 08/31/02
25508 38,900 10/31/09
851200 3,966 07/01/02 R&D Transport 2,791 07/01/99
- ------------------------------------------------------------------------------------------------------------------
851192
851192A 6,004 03/01/03 Unity Church Love/Life 4,484 03/01/00
851192B 8,640 05/23/06 Movie Gallery 6,000 05/01/99
25445
851395
17962
- ------------------------------------------------------------------------------------------------------------------
851285
851328
851508
851808
851409
- ------------------------------------------------------------------------------------------------------------------
851312 96,000 08/31/09 John Crane Lemco Inc. 76,475 02/28/08
851478
851809 5,143 12/31/02 Fortune Cookie 2,932 09/30/04
851452 12,399 11/15/08 Canac 9,000 05/31/03
851352 3,593 07/31/99 Rodbro Galliani DDS, Ltd. 2,874 05/31/08
- ------------------------------------------------------------------------------------------------------------------
851393
851530 5,000 09/30/01 Pasmanick Properties 2,376 04/30/03
851336 16,274 10/31/18
851565 29,774 12/31/13
851348
- ------------------------------------------------------------------------------------------------------------------
851401
851310 2,400 01/31/00 Wu 1,980 02/28/01
851555 45,954 04/30/14
851264
851364
- ------------------------------------------------------------------------------------------------------------------
851278
25078 39,000 08/31/03 Bluegrass Theatres 17,500 08/31/03
851361 3,371 12/31/99 Acme Bar and Grill 1,400 08/31/04
851484 67,460 07/31/08
851330 8,030 06/30/03 LaPinata 7,456 06/30/02
- ------------------------------------------------------------------------------------------------------------------
851282
16953 11,882 07/03/03 Action Design and Production 4,093 08/14/01
851493 10,634 06/30/01 Excel & M., Inc. 8,204 11/30/99
851383 17,906 12/31/02 Pascuzzo & Graves 1,604 02/28/03
17923
- ------------------------------------------------------------------------------------------------------------------
851390 15,700 01/31/07 Laboratory Tops 10,770 06/30/02
851353 4,074 12/31/04 Thomas Collins, DDS 1,669 11/01/99
851501
851487
851463 27,000 07/31/03 Circle Foods Inc. 20,000 09/30/13
- ------------------------------------------------------------------------------------------------------------------
851394
851416 4,107 09/14/00 PIC Security Systems, Inc. 3,777 09/14/00
851334 2,500 08/31/98 Goller 1,350 02/28/01
851449
851556 2,489 12/31/03 H&R Block 1,795 04/30/02
- ------------------------------------------------------------------------------------------------------------------
851236 10,706 09/30/14 Active Video 7,200 08/31/04
851323
851396
851242 20,000 12/31/01 Collections '85 Inc. 17,500 02/14/99
851329 6,377 02/28/99 Brea Auto Body 2,686 02/28/99
- ------------------------------------------------------------------------------------------------------------------
851441 11,900 06/30/99 All Ford Parts 11,050 07/31/99
25479 2,200 02/28/99 Uezu Corporation 2,125 02/28/11
851494 5,070 01/14/01 Alternative Office 4,360 08/31/01
851349
851526
- ------------------------------------------------------------------------------------------------------------------
17961
851569
851539
851520
851453 9,785 05/30/07
- ------------------------------------------------------------------------------------------------------------------
851486
851477 4,900 08/31/01 Direct Media 3,828 04/30/00
851248
851283
851392 16,211 12/31/04 Aros Manufacturing 16,000 08/31/03
- ------------------------------------------------------------------------------------------------------------------
851344 16,000 08/31/18 Red Cross 3,645 07/31/00
851405 6,113 03/19/03 Tito's Restaurant 4,408 04/01/03
851299 6,418 05/31/00 American Alarm 5,328 11/30/99
851377 7,569 03/31/03 Advanced Cryo Magnetics 7,466 09/30/00
851356 4,603 03/31/04 Carollo Engineers 4,546 01/31/04
- ------------------------------------------------------------------------------------------------------------------
851307 73,920 01/31/03
17927
851456
851373 4,600 06/30/01 First American Title 3,492 06/30/03
851434 49,656 04/30/08 Books-A-Million 22,029 06/30/06
- ------------------------------------------------------------------------------------------------------------------
851343
851391
851398
851372 2,200 01/31/00 Alaska Slim Trim 1,264 03/31/99
851261 8,768 12/31/01 Hospice of Florida 7,258 03/01/02
- ------------------------------------------------------------------------------------------------------------------
851322 18,410 08/04/08
25742
851418 6,451 04/15/08 Coffee Cavern 2,000 11/15/03
851335
851260 10,500 01/31/03 Boole & Babbage, Inc. 7,500 05/31/01
- ------------------------------------------------------------------------------------------------------------------
25024 14,318 01/31/04 CVS 10,086 01/31/03
851341 01/00/00
851355 7,950 03/01/00 Patio Warehouse 7,040 03/01/01
851457
851286
- ------------------------------------------------------------------------------------------------------------------
851389 16,956 01/31/03 Golden Tile & Marble 5,652 06/30/00
851250
851195
851265 23,129 06/30/08
851358
- ------------------------------------------------------------------------------------------------------------------
851203 47,009 12/31/02
851421
851292 4,782 02/28/00 Adamo Associates 2,888 04/30/02
850952 22,548 11/30/06
851129
- ------------------------------------------------------------------------------------------------------------------
851351 17,758 12/07/07
851363 7,500 09/30/01 Whataburger, Inc 3,110 12/20/03
851429
851362
851258 20,250 09/30/13
- ------------------------------------------------------------------------------------------------------------------
851266
851263 4,800 08/31/99 Frame of Mind Gifts 2,436 10/31/99
851272
851174 3,121 05/16/07 Connoly, Halloran & Lofstedt, P.C. 2,200 11/30/02
851442 4,500 04/30/00 All Star Glass 3,000 06/30/99
- ------------------------------------------------------------------------------------------------------------------
851256 24,760 08/30/14 American Wandell 11,800 08/30/14
851359 13,905 05/14/18
851252 20,245 06/30/07 OSI Environmental, Inc. 8,885 12/31/01
851273
851288
- ------------------------------------------------------------------------------------------------------------------
851308 47,800 10/14/09
851296
11101 10,000 02/28/08
851284
851275 14,993 05/31/18
- ------------------------------------------------------------------------------------------------------------------
851171 1,931 07/31/03 Phong Li's Inc. 1,580 08/31/03
851382 53,760 07/30/03
851360 12,000 02/28/05 Alpine Europarts, Inc. 7,800 07/09/99
851451 11,210 08/31/00 Petras Airworks/ALCO 6,337 07/31/99
851374
- ------------------------------------------------------------------------------------------------------------------
851238 4,200 12/31/99 Dynamic Chiropractic 3,060 11/30/01
851122 2,736 07/31/00 Laura Cruciano 1,027 02/28/03
851402 44,337 06/30/04
851319
851357 14,160 12/31/01 B-L Network 14,050 10/31/99
851320
==================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CROSS-
CROSS- COLLATERAL RELEASE
LOAN NUMBER COLLATERALIZED DESCRIPTION PROVISIONS RELEASE PROVISION TERMS (c)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
25489 Yes Multiple Properties
25489A Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489B Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489C Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489D Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489E Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489F Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489G Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489H Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489I Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489J Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489K Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489L Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489M Multiple Properties Yes 125% Defeasance; 2.21x DSCR
25489N Multiple Properties Yes 125% Defeasance; 2.21x DSCR
- ------------------------------------------------------------------------------------------------------------------------------------
851445 Yes Multiple Properties Yes 125% Defease Releas. Excess collat. is releasable
w/out curtail/substitution
851443 Yes Multiple Properties Yes 125% Defease Releas. Excess collat. is releasable
w/out curtail/substitution
851444 Yes Multiple Properties Yes 125% Defease Releas. Excess collat. is releasable
w/out curtail/substitution
851446 Yes Multiple Properties Yes 110% Defease Releas. Excess collat. is releasable
w/out curtail/substitution
851447 Yes Multiple Properties Yes 110% Defease Releas. Excess collat. is releasable
w/out curtail/substitution
- ------------------------------------------------------------------------------------------------------------------------------------
851499 Yes 110% Defeasance Release of multiple adjacent properties
18041
851550 Yes Excess collateral is releasable w/out curtailment or
substitution
851563
851476
- ------------------------------------------------------------------------------------------------------------------------------------
9122 Yes Loan #16465 Yes 125% Defeasance; 1.40x DSCR; 75%LTV; $250,000 LC
16465 Yes Loan #9122 Yes 125% Defeasance: 1.40x DSCR; 75%LTV
851087
25764
25557 YES MULTIPLE PROPERTIES
25557A Multiple Properties Yes 130% Defeasance; 1.65x DSCR
25557B Multiple Properties Yes 130% Defeasance; 1.65x DSCR
25557C Multiple Properties Yes 130% Defeasance; 1.65x DSCR
25557D Multiple Properties Yes 130% Defeasance; 1.65x DSCR
25557E Multiple Properties Yes 130% Defeasance; 1.65x DSCR
25557F Multiple Properties Yes 130% Defeasance; 1.65x DSCR
25557G Multiple Properties Yes 130% Defeasance; 1.65x DSCR
- ------------------------------------------------------------------------------------------------------------------------------------
17660
851580
851500
25387 YES MULTIPLE PROPERTIES AND LOAN #18066
25387A Multiple Properties and Loan #18066 Yes 125% Defeasance; 1.60x DSCR; 70% LTV
25387B Multiple Properties and Loan #18066 Yes 125% Defeasance; 1.54x DSCR; 70% LTV
- ------------------------------------------------------------------------------------------------------------------------------------
18066 Yes Loan #25387 Yes 125% Defeasance; 1.70x DSCR; 70% LTV
851439
851465
851802
851367
- ------------------------------------------------------------------------------------------------------------------------------------
851072
18137
18332
851460
5502
- ------------------------------------------------------------------------------------------------------------------------------------
17877
851498
25069
851400
851578
- ------------------------------------------------------------------------------------------------------------------------------------
851454
851317
850937
851455
17154
- ------------------------------------------------------------------------------------------------------------------------------------
18173
12130
851384
25118
25959
- ------------------------------------------------------------------------------------------------------------------------------------
851419 YES MULTIPLE PROPERTIES
851419A Multiple Properties
851419B Multiple Properties
851419C Multiple Properties
851488
- ------------------------------------------------------------------------------------------------------------------------------------
851303
26031
851579
851468
851404
- ------------------------------------------------------------------------------------------------------------------------------------
851403
850995
25714
851306
851370
- ------------------------------------------------------------------------------------------------------------------------------------
25271
851459
851469
851425
17583
- ------------------------------------------------------------------------------------------------------------------------------------
5504
851338
17875
25312
851435
- ------------------------------------------------------------------------------------------------------------------------------------
851438
25609 YES MULTIPLE PROPERTIES
25609A Multiple Properties Yes 125% Defeasance; 1.42x DSCR; 75% LTV
25609B Multiple Properties Yes 125% Defeasance; 1.42x DSCR; 75% LTV
25609C Multiple Properties Yes 125% Defeasance; 1.42x DSCR; 75% LTV
- ------------------------------------------------------------------------------------------------------------------------------------
851548
851245
851354
851485
851280 Yes Multiple Properties
851279 Yes Multiple Properties
851433
- ------------------------------------------------------------------------------------------------------------------------------------
17718
25423
11134
25675
851399
- ------------------------------------------------------------------------------------------------------------------------------------
851582
851428
851327
25165
851411
- ------------------------------------------------------------------------------------------------------------------------------------
851388
851560
12052
18113
851406
- ------------------------------------------------------------------------------------------------------------------------------------
25577
851385
16416
25589
851577
- ------------------------------------------------------------------------------------------------------------------------------------
26174
851243
851415
12101
851347
- ------------------------------------------------------------------------------------------------------------------------------------
16398
25451
851586
851219
851386
- ------------------------------------------------------------------------------------------------------------------------------------
8643
25195
25559
851246
851337
- ------------------------------------------------------------------------------------------------------------------------------------
851378
851369
12099
851479
851365
- ------------------------------------------------------------------------------------------------------------------------------------
851525
851581
851528
851305
9419
- ------------------------------------------------------------------------------------------------------------------------------------
18346
851244
851381
9675
851267 YES MULTIPLE PROPERTIES
851267A Multiple Properties
851267B Multiple Properties
- ------------------------------------------------------------------------------------------------------------------------------------
851503
851387
851507
851467
851342
- ------------------------------------------------------------------------------------------------------------------------------------
851420
851430
25117
25352
851340
- ------------------------------------------------------------------------------------------------------------------------------------
16958
851424
851333
851464
11505
- ------------------------------------------------------------------------------------------------------------------------------------
851481
851806
851472
26032
851408
- ------------------------------------------------------------------------------------------------------------------------------------
851371
17553
851450
25144
851423
- ------------------------------------------------------------------------------------------------------------------------------------
851426
25485
25508
851200
- ------------------------------------------------------------------------------------------------------------------------------------
851192 YES MULTIPLE PROPERTIES
851192A Multiple Properties Yes 125% YM Release; 1.90x DSCR; 50% LTV; 5 yr. consecutive
90% Occupancy
851192B Multiple Properties Yes 115% YM Release; 1.36x DSCR; Not in first 5 years
25445
851395
17962
- ------------------------------------------------------------------------------------------------------------------------------------
851285
851328
851508
851808
851409
- ------------------------------------------------------------------------------------------------------------------------------------
851312
851478
851809
851452
851352
- ------------------------------------------------------------------------------------------------------------------------------------
851393
851530
851336
851565
851348
- ------------------------------------------------------------------------------------------------------------------------------------
851401
851310
851555
851264
851364
- ------------------------------------------------------------------------------------------------------------------------------------
851278
25078
851361
851484
851330
- ------------------------------------------------------------------------------------------------------------------------------------
851282
16953
851493
851383
17923
- ------------------------------------------------------------------------------------------------------------------------------------
851390
851353
851501
851487
851463
- ------------------------------------------------------------------------------------------------------------------------------------
851394
851416
851334
851449
851556
- ------------------------------------------------------------------------------------------------------------------------------------
851236
851323
851396
851242
851329
- ------------------------------------------------------------------------------------------------------------------------------------
851441
25479
851494
851349
851526
- ------------------------------------------------------------------------------------------------------------------------------------
17961
851569
851539
851520
851453
- ------------------------------------------------------------------------------------------------------------------------------------
851486
851477
851248
851283
851392
- ------------------------------------------------------------------------------------------------------------------------------------
851344
851405
851299
851377
851356
- ------------------------------------------------------------------------------------------------------------------------------------
851307
17927
851456
851373
851434
- ------------------------------------------------------------------------------------------------------------------------------------
851343
851391
851398
851372
851261
- ------------------------------------------------------------------------------------------------------------------------------------
851322
25742
851418
851335
851260
- ------------------------------------------------------------------------------------------------------------------------------------
25024
851341
851355
851457
851286
- ------------------------------------------------------------------------------------------------------------------------------------
851389
851250
851195
851265
851358
- ------------------------------------------------------------------------------------------------------------------------------------
851203
851421
851292
850952
851129
- ------------------------------------------------------------------------------------------------------------------------------------
851351
851363
851429
851362
851258
- ------------------------------------------------------------------------------------------------------------------------------------
851266
851263
851272
851174
851442
- ------------------------------------------------------------------------------------------------------------------------------------
851256
851359
851252
851273
851288
- ------------------------------------------------------------------------------------------------------------------------------------
851308
851296
11101
851284
851275
- ------------------------------------------------------------------------------------------------------------------------------------
851171
851382
851360
851451
851374
- ------------------------------------------------------------------------------------------------------------------------------------
851238
851122
851402
851319
851357
851320
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX INSURANCE REPLACEMENT
LOAN NUMBER ESCROW ESCROW ESCROW SPRINGING ESCROW DESCRIPTION
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
25489
25489A Yes No No Insurance & Replacement Reserves
25489B Yes No No Insurance & Replacement Reserves
25489C Yes No No Insurance & Replacement Reserves
25489D No No No Taxes, Insurance & Replacement Reserves
25489E Yes No No Insurance & Replacement Reserves
25489F Yes No No Insurance & Replacement Reserves
25489G No No No Taxes, Insurance & Replacement Reserves
25489H Yes No No Insurance & Replacement Reserves
25489I Yes No No Insurance & Replacement Reserves
25489J Yes No No Insurance & Replacement Reserves
25489K Yes No No Insurance & Replacement Reserves
25489L Yes No No Insurance & Replacement Reserves
25489M Yes No No Insurance & Replacement Reserves
25489N No No No Taxes, Insurance & Replacement Reserves
- ---------------------------------------------------------------------------------------------------
851445 No No Yes
851443 No No Yes
851444 No No Yes
851446 No No Yes
851447 No No Yes
- ---------------------------------------------------------------------------------------------------
851499 No No Yes
18041 Yes Yes Yes
851550 No No No
851563 Yes No No
851476 Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
9122 Yes No Yes Insurance
16465 Yes No Yes Insurance
851087 No No No
25764 Yes Yes No Replacement Reserves
25557
25557A Yes Yes Yes
25557B Yes Yes Yes
25557C Yes Yes Yes
25557D Yes Yes Yes
25557E Yes Yes Yes
25557F Yes Yes Yes
25557G Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
17660 Yes No Yes Insurance
851580 Yes No Yes
851500 Yes No Yes
25387
25387A Yes No Yes Insurance
25387B Yes No Yes Insurance
- ---------------------------------------------------------------------------------------------------
18066 No No Yes Taxes & Insurance
851439 Yes Yes Yes
851465 Yes No Yes
851802 Yes Yes Yes
851367 Yes No Yes
- ---------------------------------------------------------------------------------------------------
851072 Yes No No
18137 Yes Yes Yes
18332 Yes No Yes Insurance
851460 Yes No Yes
5502 Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
17877 No No No Taxes, Insurance & Replacement Reserves
851498 Yes No Yes
25069 Yes Yes Yes
851400 Yes No Yes
851578 Yes No Yes
- ---------------------------------------------------------------------------------------------------
851454 No No No
851317 Yes Yes Yes
850937 Yes No No
851455 No No No
17154 No No Yes Taxes & Insurance
- ---------------------------------------------------------------------------------------------------
18173 Yes Yes Yes
12130 Yes No No Insurance & Replacement Reserves
851384 Yes No No
25118 No No No Taxes, Insurance & Replacement Reserves
25959 Yes Yes No Replacement Reserve
- ---------------------------------------------------------------------------------------------------
851419
851419A Yes Yes No
851419B Yes Yes No
851419C Yes Yes No
851488 Yes No No
- ---------------------------------------------------------------------------------------------------
851303 No No No
26031 Yes Yes Yes
851579 Yes No Yes
851468 Yes No No
851404 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851403 Yes No No
850995 Yes No No
25714 Yes Yes Yes
851306 Yes No Yes
851370 Yes Yes No
- ---------------------------------------------------------------------------------------------------
25271 Yes Yes Yes
851459 Yes Yes No
851469 Yes No Yes
851425 Yes Yes Yes
17583 Yes No Yes Insurance
- ---------------------------------------------------------------------------------------------------
5504 Yes Yes Yes
851338 No No No
17875 No No Yes Taxes & Insurance
25312 Yes Yes Yes
851435 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851438 Yes No Yes
25609
25609A Yes Yes Yes
25609B Yes Yes Yes
25609C Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
851548 No No No
851245 Yes No No
851354 Yes No Yes
851485 Yes Yes Yes
851280 Yes Yes No
851279 Yes Yes No
851433 Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
17718 Yes Yes Yes
25423 Yes Yes Yes
11134 Yes Yes Yes
25675 Yes Yes Yes
851399 Yes No Yes
- ---------------------------------------------------------------------------------------------------
851582 Yes No Yes
851428 Yes No No
851327 Yes No Yes
25165 Yes Yes Yes
851411 Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
851388 Yes No No
851560 Yes No Yes
12052 Yes Yes Yes
18113 Yes Yes Yes
851406 Yes No No
- ---------------------------------------------------------------------------------------------------
25577 Yes Yes Yes
851385 Yes No No
16416 Yes Yes Yes
25589 Yes Yes Yes
851577 Yes No Yes
- ---------------------------------------------------------------------------------------------------
26174 Yes Yes Yes
851243 Yes No No
851415 Yes No No
12101 Yes No Yes Insurance
851347 Yes Yes No
- ---------------------------------------------------------------------------------------------------
16398 Yes Yes Yes
25451 Yes Yes Yes
851586 Yes Yes Yes
851219 Yes Yes No
851386 Yes No Yes
- ---------------------------------------------------------------------------------------------------
8643 Yes Yes Yes
25195 Yes Yes Yes
25559 Yes Yes Yes
851246 No No No
851337 Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
851378 Yes No No
851369 Yes No No
12099 Yes No Yes Insurance
851479 No No No
851365 No No No
- ---------------------------------------------------------------------------------------------------
851525 No No No
851581 Yes No Yes
851528 Yes No No
851305 Yes No No
9419 Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
18346 Yes Yes Yes
851244 Yes No Yes
851381 Yes No Yes
9675 Yes Yes Yes
851267
851267A Yes No No
851267B Yes No No
- ---------------------------------------------------------------------------------------------------
851503 Yes Yes Yes
851387 Yes No No
851507 Yes Yes Yes
851467 Yes No Yes
851342 Yes No No
- ---------------------------------------------------------------------------------------------------
851420 No No No
851430 Yes No No
25117 Yes No Yes Insurance
25352 Yes Yes Yes
851340 Yes No No
- ---------------------------------------------------------------------------------------------------
16958 Yes Yes Yes
851424 No No No
851333 No No No
851464 Yes No Yes
11505 No Yes Yes Taxes
- ---------------------------------------------------------------------------------------------------
851481 Yes No No
851806 Yes Yes Yes
851472 Yes No No
26032 Yes Yes Yes
851408 Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
851371 Yes Yes No
17553 Yes Yes Yes
851450 Yes No Yes
25144 Yes Yes Yes
851423 Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
851426 Yes Yes Yes
25485 Yes Yes Yes
25508 No No No Taxes, Insurance & Replacement Reserves
851200 No No No
- ---------------------------------------------------------------------------------------------------
851192
851192A Yes Yes No
851192B Yes Yes No
25445 Yes Yes Yes
851395 Yes No Yes
17962 Yes Yes No Replacement Reserve
- ---------------------------------------------------------------------------------------------------
851285 No No No
851328 Yes Yes No
851508 Yes Yes Yes
851808 Yes Yes Yes
851409 Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
851312 Yes No No
851478 Yes Yes No
851809 Yes Yes No
851452 No No No
851352 Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
851393 Yes No No
851530 Yes Yes No
851336 Yes No No
851565 No No No
851348 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851401 Yes No Yes
851310 Yes No No
851555 No No No
851264 Yes Yes No
851364 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851278 Yes No No
25078 Yes No Yes Insurance
851361 Yes Yes No
851484 Yes Yes No
851330 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851282 No No No
16953 Yes Yes Yes
851493 Yes No No
851383 Yes No No
17923 Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
851390 Yes Yes No
851353 Yes Yes No
851501 Yes Yes Yes
851487 Yes No No
851463 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851394 Yes No No
851416 Yes No Yes
851334 Yes Yes No
851449 Yes Yes Yes
851556 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851236 Yes Yes No
851323 Yes No No
851396 Yes No No
851242 Yes No No
851329 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851441 Yes Yes No
25479 Yes Yes Yes
851494 Yes No No
851349 Yes Yes No
851526 Yes Yes No
- ---------------------------------------------------------------------------------------------------
17961 Yes Yes No Replacement Reserves
851569 Yes Yes Yes
851539 Yes Yes No
851520 Yes Yes No
851453 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851486 Yes No No
851477 Yes Yes No
851248 Yes Yes No
851283 No No No
851392 Yes No No
- ---------------------------------------------------------------------------------------------------
851344 Yes Yes No
851405 Yes Yes No
851299 Yes No No
851377 Yes No No
851356 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851307 Yes No No
17927 Yes Yes Yes
851456 No No No
851373 Yes No No
851434 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851343 Yes Yes No
851391 Yes Yes No
851398 Yes No No
851372 Yes No No
851261 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851322 No No No
25742 Yes Yes Yes
851418 Yes Yes No
851335 Yes Yes No
851260 Yes Yes No
- ---------------------------------------------------------------------------------------------------
25024 Yes No Yes Insurance & Water Rents
851341 Yes No No
851355 Yes Yes No
851457 No No No
851286 No No No
- ---------------------------------------------------------------------------------------------------
851389 Yes No No
851250 Yes Yes No
851195 No No No
851265 No No No
851358 Yes No No
- ---------------------------------------------------------------------------------------------------
851203 No No No
851421 Yes No No
851292 Yes Yes No
850952 No No No
851129 Yes No No
- ---------------------------------------------------------------------------------------------------
851351 Yes No No
851363 Yes Yes No
851429 Yes Yes Yes
851362 Yes No No
851258 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851266 Yes Yes No
851263 Yes Yes No
851272 Yes Yes No
851174 Yes Yes No
851442 Yes No No
- ---------------------------------------------------------------------------------------------------
851256 Yes No No
851359 Yes No No
851252 Yes No No
851273 Yes Yes No
851288 Yes Yes Yes
- ---------------------------------------------------------------------------------------------------
851308 No No No
851296 Yes Yes No
11101 No No No Taxes, Insurance & Replacement Reserves
851284 No No No
851275 Yes Yes No
- ---------------------------------------------------------------------------------------------------
851171 Yes Yes No
851382 Yes Yes No
851360 Yes No No
851451 No No No
851374 Yes No No
- ---------------------------------------------------------------------------------------------------
851238 Yes Yes No
851122 Yes Yes No
851402 Yes No No
851319 Yes Yes No
851357 Yes Yes Yes
851320 Yes Yes No
===================================================================================================
</TABLE>
(a) 1998/T-12 Net Operating Income may reflect the property's historical
operating performance over the most recent twelve month period for which
operating statements are available. 1997 Net Operating Income reflects
the property's historical operating performance for a previous twelve
month period which, in most cases, is equivalent to calendar year 1997.
(b) In certain limited cases, the Annual Replacement Reserves per Square Foot
or Unit may represent a single initial deposit made by the borrower at
the closing of the related Mortgage Loan.
(c) Loan numbers 851443,851444,851445 cannot be released unless both loan
number 851446 and loan number 851447 have been previously released.
Note: For purposes of this annex, certain crossed collateralized mortgage loans
have been grouped together where appropriate. In all such cases, each
group of loans has been assigned a single tab number.
Note: In the case of certain groups of cross-collateralized mortgage loans, the
Debt Service Coverage Ratio indicated for each related loan herein
represents the blended Debt Service Coverage Ratio for all loans in the
related loan group.
Note: As used above, "BSFI" represents Bear, Stearns Funding, Inc.; "WFBNA"
represents Wells Fargo Bank, National Association.
<PAGE>
ANNEX B
LOAN NO. 25489 -- INLAND PORTFOLIO
OVERVIEW
This Mortgage Loan is a first mortgage loan secured, on a
cross-collateralized and cross-defaulted basis, by 14 retail properties
situated in Illinois, Minnesota, Wisconsin, Michigan and Indiana. The loan was
originated by Bear Stearns on May 10, 1999.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $57,450,000 PROPERTY TYPE: RETAIL
GROSS MORTGAGE RATE: 6.865% LOCATION: VARIOUS
INTEREST ACCRUAL METHOD: 30/360 YEAR BUILT/RENOVATED: VARIOUS
FIRST PAYMENT DATE: 7/1/99 SQUARE FEET: 1,134,769
MATURITY DATE: 6/1/04 CUT-OFF DATE BALANCE/SQ.FT. $50.63
ORIGINAL AMORTIZATION: 0 MONTHS
ANNUAL DEBT SERVICE: $3,943,943 OCCUPANCY: VARIOUS
LOCKOUT END DATE: 4/30/04 OCCUPANCY DATE: VARIOUS
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 4/30/04 APPRAISED VALUE: $122,570,000
ESCROWS CUT-OFF DATE LTV: 46.87%
REAL ESTATE TAXES: YES BALLOON LTV: 46.87%
INSURANCE: NO
REPLACEMENT RESERVES: NO UNDERWRITTEN CASH FLOW: $9,781,538
DSCR: 2.48X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTIES
The properties securing the loan include the following:
<TABLE>
<CAPTION>
LOAN NO. PROPERTY NAME LOCATION PROPERTY TYPE SQ. FT.
- ---------- ----------------------------- ---------------------- ------------------- ------------
<S> <C> <C> <C> <C>
25489A Springboro Plaza Springboro, OH Anchored Retail 154,034
25489B Park Center Plaza Tinley Park, IL Anchored Retail 193,179
25489C Fairview Heights Plaza Fairview Heights, IL Anchored Retail 167,491
25489D Staples Freeport, IL Big Box Retail 24,049
25489E Riverplace Center Noblesville, IN Anchored Retail 74,414
25489F Two Rivers Plaza Bolingbrook, IL Anchored Retail 57,900
25489G Circuit City Travers City, MI Big Box Retail 21,337
25489H Hollywood Video Hammond, IN Unanchored Retail 7,488
25489I Rose Plaza Elmwood, IL Unanchored Retail 24,204
25489J Loehmann's Plaza Brookfield, WI Unanchored Retail 107,952
25489K Baytowne Shoppes & Square Champaign, IL Anchored Retail 118,842
25489L Plymouth Collections Center Plymouth, MN Unanchored Retail 45,415
25489M Orland Greens Orland Park, IL Anchored Retail 45,031
25489N CarMax Schaumburg, IL Big Box Retail 93,333
-------
Total 1,134,769
</TABLE>
Major tenants at the properties include Circuit City (1 Circuit City lease
and 1 CarMax lease totaling 10.1% of Net Rentable Area ("NRA")), Kroger (2
leases totaling 9.4% of NRA), Kmart (1 lease and the guaranty of a Sports
Authority lease, totaling 8.0% of NRA), and Cub Foods (1 lease representing
5.4% of NRA).
B-1
<PAGE>
THE BORROWER
The borrowing entity is Inland Real Estate BSC I LLC, a sole member
Delaware limited liability company. The sole member of the LLC is Inland Real
Estate BSC I Corporation, a Delaware corporation. Both the borrower and the
managing member are single purpose entities which do not engage in any business
unrelated to the Mortgaged Property, do not have any assets other than the
Mortgaged Property or ownership interest in the borrower, as the case may be,
or any indebtedness other than the Mortgage Loan. Additionally, both the
borrowing entity's and the sole member's organizational documents require an
independent director and the unanimous vote of directors of the sole member of
the borrower in connection with the filing of a petition in bankruptcy. The
lender received an opinion from borrower's counsel that, among other things,
the assets of the borrower shall not be consolidated with the assets of any
party considered having a principal interest in the borrower in the event of a
bankruptcy or insolvency of such party.
MANAGEMENT
The Properties are managed by Inland Commercial Property Management, Inc.
("ICPM"), a wholly owned affiliate of the borrower.
ESCROWS
The borrower is required to fund monthly escrow deposits in amount
sufficient to pay real estate taxes when due for all properties except for
properties 25489D, 25489G and 25489N, where the tenant is required to pay real
estate taxes directly.
CASH MANAGEMENT PROCEDURES
If the DSCR on the loan falls below 1.60x for any trailing twelve month
period during the term (a "Trigger Event"), the borrower will be required to
cause all rents and proceeds with respect the properties to be deposited into a
cash management account under the sole dominion and control of the lender. All
funds in the cash management account will be applied monthly to the payment of
debt service and required reserves; all amounts in excess of debt service and
required reserves will be remitted to the borrower on a monthly basis. If the
DSCR remains above 1.60x for a trailing twelve-month period, lender shall
release borrower of the cash management account requirements until the
reoccurrence of a Trigger Event, provided that borrower shall be permitted to
cure no more than two Trigger Events during the term of the loan.
RELEASE PROVISIONS
Borrower may release an individual property from the loan provided (i) the
borrower provides defeasance collateral equal to 125% of the allocated loan
amount for the property being released, and (ii) the debt service coverage
ratio for the remaining properties after the release is no less than the
greater of 2.21x or the debt service coverage ratio for the Mortgage Loan for
the previous 12 month period. Lender has the unilateral right to uncross the
properties at any time.
PROPERTY SUBSTITUTIONS
The borrower has the right to obtain a release of an individual property
(the "Substituted Property") by substituting another shopping center property
(the "Substitute Property") subject to the following conditions, which are not
all inclusive: (i) the appraised value of the Substitute Property is not less
than the appraised value of the Substituted Property, (ii) the DSCR for the
Mortgage Loan after the substitution is not less than the greater of the DSCR
at Closing and the DSCR immediately prior to the substitution, (iii) the lender
has received acceptable survey, title, evidence of insurance, environmental
report(s), physical conditions report and security documents, (iv) the lender
has received a certification of borrower together with supporting documentation
that the Substitute Property is a shopping center property that is comparable
to the Substituted Property, and (v) the lender has received confirmation
B-2
<PAGE>
from the Rating Agencies that the substitution will not result in a withdrawal,
qualification or downgrade of the respective Certificate Ratings in effect
immediately prior to such substitution. The borrower will be responsible for
all costs associated with any substitution and lender's approval thereof.
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the properties without
the prior written consent of lender.
See Loan No. 25489 in the Mortgage Loan Schedule.
B-3
<PAGE>
LOAN NO. 851445 -- ST. CHARLES 18 CINE
OVERVIEW
This Mortgage Loan is secured by a first mortgage on an 18-screen
multiplex movie theater located in St. Charles, MO. The Mortgage Loan is
cross-collateralized and cross-defaulted with Loan No. 851443 -- Des Peres 14
Cine, Loan No. 851444 -- O'Fallon 15 Cine, Loan No. 851446 -- St. Clair 10 Cine
and Loan No. 851447 -- Halls Ferry 14 Cine. On a combined basis, the overall
debt service coverage ratio is 1.40x and the overall loan to value ratio is
60.6%. The Mortgage Loan was originated by Wells Fargo on December 31, 1998.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $10,394,590 PROPERTY TYPE: THEATER
GROSS MORTGAGE RATE: 8.255% LOCATION: ST. CHARLES, MO
INTEREST ACCRUAL METHOD: 30/360 YEAR BUILT/RENOVATED: 1987/1997
FIRST PAYMENT DATE: 2/1/99 SQUARE FEET: 93,031
MATURITY DATE: 1/1/19 CUT-OFF DATE BALANCE/SCREEN: $577,477
ORIGINAL AMORTIZATION: 240 MONTHS
ANNUAL DEBT SERVICE: $1,073,998 OCCUPANCY: 100%
LOCKOUT END DATE: 7/31/18 OCCUPANCY DATE: 12/28/98
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 7/31/18 APPRAISED VALUE: $16,500,000
ESCROWS CUT-OFF DATE LTV: 63.00%
REAL ESTATE TAXES: NO BALLOON LTV: 0%
INSURANCE: NO
REPLACEMENT RESERVES: YES UNDERWRITTEN CASH FLOW: $1,482,291
DSCR: 1.40X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
St. Charles 18 Cine is a 93,031 square foot, 18-screen single story
multiplex theater which shows first run titles. It was originally developed as
an 8 screen theater in 1987 and was expanded by 10 screens in 1997. The
property seats 3,731 and includes a state of the art concessions area and a
large entertainment center. It also includes additional land upon which the
theater can expand. The property is 100% leased to St. Charles Cine' under a
lease expiring January 2019.
THE BORROWER
The borrowing entity is St. Charles Cine, LLC, a Missouri limited
liability company with St. Charles Manager, Inc., a Missouri corporation, as
the managing member. Both the borrower and the managing member are single
purpose entities which do not engage in any business unrelated to the Mortgaged
Property, do not have any assets other than the Mortgaged Property or any
indebtedness other than the Mortgage Loan. Additionally, the borrowing entity's
organizational documents require an independent director and the unanimous vote
of directors and/or members of the borrower in connection with the filing of a
petition in bankruptcy. The lender received an opinion from borrower's counsel
that, among other things, the assets of the borrower or managing member shall
not be consolidated with the assets of Ronnie's Enterprises, Inc., a Missouri
corporation ("Parent"), in the event of a bankruptcy or insolvency of Parent.
MANAGEMENT
The property is managed by Wehrenberg Theaters, Inc. which is the lessee
and a wholly-owned affiliate of the borrower.
ESCROWS
The borrower is required to fund $1,680 monthly to fund an escrow for
future capital expenditures.
B-4
<PAGE>
RELEASE PROVISIONS
The Mortgage Loan is cross-collateralized and cross-defaulted with Loan
No. 851443 -- Des Peres 14 Cine, Loan No. 851444 -- O'Fallon 15 Cine, Loan No.
851446 -- St. Clair 10 Cine and Loan No. 851447 -- Halls Ferry 14 Cine. The
borrower has the right to uncross the loan subject to (i) payment of a release
price equal to 125% of the then outstanding balance of the note, (ii) the
remaining collateral must have a debt service coverage greater than or equal to
1.35x assuming a 10% debt constant, (iii) the blended loan to value ratio for
the remaining collateral must be no greater than 70%, and (iv) the property
cannot be released unless Halls Ferry 14 Cine and St. Clair 10 Cine have been
released according to the terms of their loan documents.
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of lender.
See Loan No. 851445 in the Mortgage Loan Schedule.
B-5
<PAGE>
LOAN NO. 851443 -- DES PERES 14 CINE
OVERVIEW
This Mortgage Loan is secured by a first mortgage on a 14-screen multiplex
movie theater located in Des Peres, MO. The Mortgage Loan is
cross-collateralized and cross-defaulted with Loan No. 851445 -- St Charles 18
Cine, Loan No. 851444 -- O'Fallon 15 Cine, Loan No. 851446 -- St. Clair 10 Cine
and Loan No. 851447 -- Halls Ferry 14 Cine. On a combined basis, the overall
debt service coverage ratio is 1.40x and the overall loan to value ratio is
60.6%. The Mortgage Loan was originated by Wells Fargo on December 31, 1998.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $8,606,060 PROPERTY TYPE: THEATER
GROSS MORTGAGE RATE: 8.255% LOCATION: DES PERES, MO
INTEREST ACCRUAL METHOD: 30/360 YEAR BUILT/RENOVATED: 1972/1997
FIRST PAYMENT DATE: 2/1/99 SQUARE FEET: 74,103
MATURITY DATE: 1/1/19 CUT-OFF DATE BALANCE/SCREEN: $614,719
ORIGINAL AMORTIZATION: 240 MONTHS
ANNUAL DEBT SERVICE: $890,744 OCCUPANCY: 100.0%
LOCKOUT END DATE: 7/31/18 OCCUPANCY DATE: 12/28/98
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 7/31/18 APPRAISED VALUE: $12,500,000
ESCROWS CUT-OFF DATE LTV: 68.85%
REAL ESTATE TAXES: NO BALLOON LTV: 0%
INSURANCE: NO
REPLACEMENT RESERVES: YES UNDERWRITTEN CASH FLOW: $1,162,244
DSCR: 1.30X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
Des Peres 14 Cine is a 74,103 square foot, 14-screen two-story multiplex
theater which shows first run titles. 8 of the theaters have stadium seating.
Of the total building area, 56,103 square feet is theater space and 18,000
square feet is office and storage. The property seats 2,336 and includes a
concessions area and game room. The property is 100% leased to Des Peres Cine
under two separate leases expiring January 2019.
THE BORROWER
The borrowing entity is Des Peres Cine, LLC, a Missouri limited liability
company with Des Peres Manager, Inc., a Missouri corporation, as the managing
member. Both the borrower and the managing member are single purpose entities
which do not engage in any business unrelated to the Mortgaged Property, do not
have any assets other than the Mortgaged Property or any indebtedness other
than the Mortgage Loan. Additionally, the borrowing entity's organizational
documents require an independent director and the unanimous vote of directors
and/or members of the borrower in connection with the filing of a petition in
bankruptcy. The lender received an opinion from borrower's counsel that, among
other things, the assets of the borrower or managing member shall not be
consolidated with the assets of Ronnie's Enterprises, Inc., a Missouri
corporation ("Parent"), in the event of a bankruptcy or insolvency of Parent.
MANAGEMENT
The property is managed by Wehrenberg Theaters, Inc. which is the lessee
and a wholly-owned affiliate of the borrower.
ESCROWS
The borrower is required to fund $1,729 monthly to fund an escrow for
future capital expenditures.
B-6
<PAGE>
RELEASE PROVISIONS
The Mortgage Loan is cross-collateralized and cross-defaulted with Loan
No. 851445 -- St. Charles 18 Cine, Loan No. 851444 -- O'Fallon 15 Cine, Loan
No. 851446 -- St. Clair 10 Cine and Loan No. 851447 -- Halls Ferry 14 Cine. The
borrower has the right to uncross the loan subject to (i) payment of a release
price equal to 125% of the then outstanding balance of the note, (ii) the
remaining collateral must have a debt service coverage greater than or equal to
1.35x assuming a 10% debt constant, (iii) the blended loan to value ratio for
the remaining collateral must be no greater than 70%, and (iv) the property
cannot be released unless Halls Ferry 14 Cine and St. Clair 10 Cine have been
released according to the terms of their loans documents.
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of lender.
See Loan No. 851443 in the Mortgage Loan Schedule.
B-7
<PAGE>
LOAN NO. 851444 -- O'FALLON 15 CINE
OVERVIEW
This Mortgage Loan is secured by a first mortgage on a 15-screen multiplex
movie theater located in O'Fallon, IL. The Mortgage Loan is
cross-collateralized and cross-defaulted with Loan No. 851445 -- St Charles 18
Cine, Loan No. 851443 -- Des Peres 14 Cine, Loan No. 851446 -- St. Clair 10
Cine and Loan No. 851447 -- Halls Ferry 14 Cine. On a combined basis, the
overall debt service coverage ratio is 1.40x and the overall loan to value
ratio is 60.6%. The Mortgage Loan was originated by Wells Fargo on December 31,
1998.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $6,731,735 PROPERTY TYPE: THEATER
GROSS MORTGAGE RATE: 8.255% LOCATION: O'FALLON, IL
INTEREST ACCRUAL METHOD: 30/360 YEAR BUILT/RENOVATED: 1996
FIRST PAYMENT DATE: 2/1/99 SQUARE FEET: 52,871
MATURITY DATE: 1/1/19 CUT-OFF DATE BALANCE/SCREEN: $448,782
ORIGINAL AMORTIZATION: 240 MONTHS
ANNUAL DEBT SERVICE: $695,542 OCCUPANCY: 100.0%
LOCKOUT END DATE: 7/31/18 OCCUPANCY DATE: 12/28/98
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 7/31/18 APPRAISED VALUE: $11,500,000
ESCROWS CUT-OFF DATE LTV: 58.54%
REAL ESTATE TAXES: NO BALLOON LTV: 0%
INSURANCE: NO
REPLACEMENT RESERVES: YES UNDERWRITTEN CASH FLOW: $981,612
DSCR: 1.40X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
O'Fallon 15 Cine is a 52,871 square foot, 15-screen two-story multiplex
theater which shows first run titles. 7 of the theaters have stadium seating.
It also includes additional land upon which the theater can expand. The
property is 100% leased to O'Fallon Cine under a lease expiring January 2019.
THE BORROWER
The borrowing entity is O'Fallon Cine, LLC, a Missouri limited liability
company with O'Fallon, IL Manager, Inc., a Missouri corporation as the managing
member. Both the borrower and the managing member are single purpose entities
which do not engage in any business unrelated to the Mortgaged Property, do not
have any assets other than the Mortgaged Property or any indebtedness other
than the Mortgage Loan. Additionally, the borrowing entity's organizational
documents require an independent director and the unanimous vote of directors
and/or members of the borrower in connection with the filing of a petition in
bankruptcy. The lender received an opinion from borrower's counsel that, among
other things, the assets of the borrower or managing member shall not be
consolidated with the assets of Ronnie's Enterprises, Inc., a Missouri
corporation ("Parent"), in the event of a bankruptcy or insolvency of Parent.
MANAGEMENT
The Property is managed by Wehrenberg Theaters, Inc. which is the lessee
and a wholly-owned affiliate of the borrower.
ESCROWS
The borrower is required to fund $865 monthly to fund an escrow for future
capital expenditures.
B-8
<PAGE>
RELEASE PROVISIONS
The Mortgage Loan is cross-collateralized and cross-defaulted with Loan
No. 851445 -- St. Charles 18 Cine, Loan No. 851443 -- Des Peres 14 Cine, Loan
No. 851446 -- St. Clair 10 Cine and Loan No. 851447 -- Halls Ferry 14 Cine. The
borrower has the right to uncross the loan subject to (i) payment of a release
price equal to 125% of the then outstanding balance of the note, (ii) the
remaining collateral must have a debt service coverage greater than or equal to
1.35x assuming a 10% debt constant, (iii) the blended loan to value ratio for
the remaining collateral must be no greater than 70%, and (iv) the property
cannot be released unless Halls Ferry 14 Cine and St. Clair 10 Cine have been
released according to the terms of their loans documents.
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of lender.
See Loan No. 851444 in the Mortgage Loan Schedule.
B-9
<PAGE>
LOAN NO. 851446 -- ST. CLAIR 10 CINE
OVERVIEW
This Mortgage Loan is secured by a first mortgage on a 10-screen multiplex
movie theater located in Fairview Heights, IL. The Mortgage Loan is
cross-collateralized and cross-defaulted with Loan No. 851445 -- St Charles 18
Cine, Loan No. 851443 -- Des Peres 14 Cine, Loan No. 851444 -- O'Fallon 15 Cine
and Loan No. 851447 -- Halls Ferry 14 Cine. On a combined basis, the overall
debt service coverage ratio is 1.40x and the overall loan to value ratio is
60.6%. The Mortgage Loan was originated by Wells Fargo on December 31, 1998.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $2,969,883 PROPERTY TYPE: THEATER
GROSS MORTGAGE RATE: 8.255% LOCATION: FAIRVIEW HEIGHTS, IL
INTEREST ACCRUAL METHOD: 30/360 YEAR BUILT/RENOVATED: 1986
FIRST PAYMENT DATE: 2/1/99 SQUARE FEET: 38,735
MATURITY DATE: 1/1/19 CUT-OFF DATE BALANCE/SCREEN: $296,988
ORIGINAL AMORTIZATION: 240 MONTHS
ANNUAL DEBT SERVICE: $306,857 OCCUPANCY: 100.0%
LOCKOUT END DATE: 7/31/18 OCCUPANCY DATE: 12/28/98
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 7/31/18 APPRAISED VALUE: $5,900,000
ESCROWS CUT-OFF DATE LTV: 50.34%
REAL ESTATE TAXES: NO BALLOON LTV: 0%
INSURANCE: NO
REPLACEMENT RESERVES: YES UNDERWRITTEN CASH FLOW: $537,958
DSCR: 1.40X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
St. Clair 10 Cine is a 38,735 square foot, 10-screen single-story
multiplex theater which shows first run titles. The theaters seat 2,198 and
includes a state of the art concessions area and a large entertainment center.
The property is 100% leased to St. Clair Cine under a lease expiring January
2019.
THE BORROWER
The borrowing entity is St. Clair Cine, LLC, a Missouri limited liability
company with St. Clair Manager, Inc., a Missouri corporation, as the managing
member. Both the borrower and the managing member are single purpose entities
which do not engage in any business unrelated to the Mortgaged Property, do not
have any assets other than the Mortgaged Property or any indebtedness other
than the Mortgage Loan. Additionally, the borrowing entity's organizational
documents require an independent director and the unanimous vote of directors
and/or members of the borrower in connection with the filing of a petition in
bankruptcy. The lender received an opinion from borrower's counsel that, among
other things, the assets of the borrower or managing member shall not be
consolidated with the assets of Ronnie's Enterprises, Inc., a Missouri
corporation ("Parent"), in the event of a bankruptcy or insolvency of Parent.
MANAGEMENT
The property is managed by Wehrenberg Theaters, Inc. which is the lessee
and a wholly-owned affiliate of the borrower.
ESCROWS
The borrower is required to fund $1,168 monthly to fund an escrow for
future capital expenditures.
B-10
<PAGE>
RELEASE PROVISIONS
The Mortgage Loan is cross-collateralized and cross-defaulted with Loan
No. 851445 -- St. Charles 18 Cine, Loan No. 851443 -- Des Peres 14 Cine, Loan
No. 851444 -- O'Fallon 15 Cine and Loan No. 851447 -- Halls Ferry 14 Cine. The
borrower has the right to uncross the loan subject to (i) payment of a release
price equal to 110% of the then outstanding balance of the note, (ii) the
remaining collateral must have a debt service coverage greater than or equal to
1.35x assuming a 10% debt constant, and (iii) the blended loan to value ratio
for the remaining collateral must be no greater than 70%.
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of lender.
See Loan No. 851446 in the Mortgage Loan Schedule.
B-11
<PAGE>
LOAN NO. 851447 -- HALLS FERRY 14 CINE
OVERVIEW
This Mortgage Loan is secured by a first mortgage on a 14-screen multiplex
movie theater located in St. Louis, MO. The Mortgage Loan is
cross-collateralized and cross-defaulted with Loan No. 851445 -- St Charles 18
Cine, Loan No. 851443 -- Des Peres 14 Cine, Loan No. 851444 -- O'Fallon 15 Cine
and Loan No. 851446 -- St. Clair 10 Cine. On a combined basis, the overall debt
service coverage ratio is 1.40x and the overall loan to value ratio is 60.6%.
The Mortgage Loan was originated by Wells Fargo on December 31, 1998.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $2,853,464 PROPERTY TYPE: THEATER
GROSS MORTGAGE RATE: 7.735% LOCATION: ST. LOUIS, MO
INTEREST ACCRUAL METHOD: 30/360 YEAR BUILT/RENOVATED: 1978/1988
FIRST PAYMENT DATE: 6/1/99 SQUARE FEET: 53,129
MATURITY DATE: 1/1/09 CUT-OFF DATE BALANCE/SCREEN: $203,819
ORIGINAL AMORTIZATION: 116 MONTHS
ANNUAL DEBT SERVICE: $427,594 OCCUPANCY: 100%
LOCKOUT END DATE: 7/31/08 OCCUPANCY DATE: 12/28/98
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 7/31/08 APPRAISED VALUE: $6,400,000
ESCROWS CUT-OFF DATE LTV: 45.59%
REAL ESTATE TAXES: NO BALLOON LTV: 0%
INSURANCE: NO
REPLACEMENT RESERVES: YES UNDERWRITTEN CASH FLOW: $586,931
DSCR: 1.40X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
Halls Ferry 14 Cine is a 53,129 square foot, 14-screen single-story
multiplex theater which shows first run titles. It was originally developed as
an 8 screen theater in 1978 and was expanded by 6 screens in 1988. The property
seats 2,986 and includes a main concessions stand and a game room. It is 100%
leased to Halls Ferry Cine under a lease expiring January, 2009.
THE BORROWER
The borrowing entity is Halls Ferry Cine, LLC, a Missouri limited
liability company with Halls Ferry Manager, Inc., a Missouri corporation, as
the managing member. Both the borrower and the managing member are single
purpose entities which do not engage in any business unrelated to the Mortgaged
Property, do not have any assets other than the Mortgaged Property or any
indebtedness other than the Mortgage Loan. Additionally, the borrowing entity's
organizational documents require an independent director and the unanimous vote
of directors and/or members of the borrower in connection with the filing of a
petition in bankruptcy. The lender received an opinion from borrower's counsel
that, among other things, the assets of the borrower or managing member shall
not be consolidated with the assets of Ronnie's Enterprises, Inc., a Missouri
corporation ("Parent"), in the event of a bankruptcy or insolvency of Parent.
MANAGEMENT
The property is managed by Wehrenberg Theaters, Inc. which is the lessee
and a wholly-owned affiliate of the borrower.
ESCROWS
The borrower is required to fund $1,141 monthly to fund an escrow for
future capital expenditures.
B-12
<PAGE>
RELEASE PROVISIONS
The Mortgage Loan is cross-collateralized and cross-defaulted with Loan
No. 851445 -- St. Charles 18 Cine, Loan No. 851443 -- Des Peres 14 Cine, Loan
No. 851444 -- O'Fallon 15 Cine and Loan No. 851446 -- St. Clair 10 Cine. The
borrower has the right to uncross the loan subject to (i) payment of a release
price equal to 110% of the then outstanding balance of the note, (ii) the
remaining collateral must have a debt service coverage greater than or equal to
1.35x assuming a 10% debt constant, and (iii) the blended loan to value ratio
for the remaining collateral must be no greater than 70%.
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of lender.
See Loan No. 851447 in the Mortgage Loan Schedule.
B-13
<PAGE>
LOAN NO. 18041 -- 225 BROADWAY
OVERVIEW
This Mortgage Loan is secured by first mortgage on 225 Broadway, a 445,373
square foot office building located in the City Hall submarket of downtown
Manhattan. The loan was originated by Bear Stearns on April 23, 1999.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $25,701,453 PROPERTY TYPE: OFFICE
GROSS MORTGAGE RATE: 7.39% LOCATION: NEW YORK, NY
INTEREST ACCRUAL METHOD: ACTUAL/360 YEAR BUILT/RENOVATED: 1925/CONTINUOUS
FIRST PAYMENT DATE: 6/1/99 SQUARE FEET: 445,373
MATURITY DATE: 5/1/09 CUT-OFF DATE BALANCE/SQ.FT.: $57.18
ORIGINAL AMORTIZATION: 360 MONTHS
ANNUAL DEBT SERVICE: $2,116,595 OCCUPANCY: 94.5%
LOCKOUT END DATE: 1/31/09 OCCUPANCY DATE: 4/19/99
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 1/31/09 APPRAISED VALUE: $50,000,000
ESCROWS CUT-OFF DATE LTV: 50.93%
REAL ESTATE TAXES: YES BALLOON LTV: 44.95%
INSURANCE: YES
REPLACEMENT RESERVES: YES UNDERWRITTEN CASH FLOW: $3,494,584
DSCR: 1.65X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
The property is a 44-story Class B office building situated at the
southwest corner of Barclay Street and Broadway, immediately southwest of City
Hall Park, in the City Hall submarket of downtown Manhattan. The majority of
the building's approximately 140 tenants are small and medium sized law firms
that work with the neighboring city and federal offices as well as utilize the
state, federal and city courts. No tenant represents more than 4.2% of total
NRA
There are only four tenants that represent more than 3% of NRA, including
the YMCA Retirement Fund (18,600 square feet) under a lease expiring September
1999, NY County Defender Services (15,362 square feet) under a lease expiring
June 2007, Shapiro, Beilly & Rosenberg (15,362 square feet) under a lease
expiring December 2007 and Medical & Health Research Associates (14,360 square
feet) under a lease expiring July 2000.
THE BORROWER
The borrowing entity is 225 Broadway Company, L.P. a New York limited
partnership whose general partner is 225 Broadway SPE LLC, a New York limited
liability company. Both the borrower and the general partner are single purpose
entities which do not engage in any business unrelated to the Mortgaged
Property, do not have any assets other than the Mortgaged Property or any
indebtedness other than the Mortgage Loan. Additionally, the borrowing entity's
organizational documents require an independent director and the unanimous vote
of directors and/or members of the borrower in connection with the filing of a
petition in bankruptcy. The lender received an opinion from borrower's counsel
that, among other things, the assets of the borrower shall not be consolidated
with the assets of any party considered having a principal interest in the
borrower in the event of a bankruptcy or insolvency of such party.
MANAGEMENT
The property is managed by Braun Management, Inc., which is affiliated
with the borrower.
B-14
<PAGE>
ESCROWS
The borrower is required to fund monthly escrow deposits in amounts
sufficient to pay real estate taxes and insurance premiums when due. The
borrower is also required to fund $9,279 monthly to fund an escrow for future
capital expenditures. At closing, a reserve was established in the amount of
$28,370 which represents the estimated cost to satisfy certain minor building
code and other violations at the property.
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of lender.
See Loan No. 18041 in the Mortgage Loan Schedule.
B-15
<PAGE>
LOAN NO. 851499 -- PLEASANTON OFFICE PORTFOLIO LOAN
OVERVIEW
This Mortgage Loan is a first mortgage loan secured, on a
cross-collateralized and cross-defaulted basis, by 6 office properties situated
in the Hacienda Business Park in Pleasanton, CA. The loan was originated by
Wells Fargo on January 19, 1999.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $25,701,453 PROPERTY TYPE: OFFICE
GROSS MORTGAGE RATE: 7.425% LOCATION: PLEASANTON, CA
INTEREST ACCRUAL METHOD: ACTUAL/360 YEAR BUILT/RENOVATED: 1983
FIRST PAYMENT DATE: 3/1/99 SQUARE FEET: 322,296
MATURITY DATE: 2/1/06 CUT-OFF DATE BALANCE/SQ.FT.: $79.74
ORIGINAL AMORTIZATION: 360 MONTHS
ANNUAL DEBT SERVICE: $2,148,890 OCCUPANCY: 100.0%
LOCKOUT END DATE: 8/31/05 OCCUPANCY DATE: 3/15/99
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 8/31/05 APPRAISED VALUE: $42,850,000
ESCROWS CUT-OFF DATE LTV: 59.98%
REAL ESTATE TAXES: NO BALLOON LTV: 55.80%
INSURANCE: NO
REPLACEMENT RESERVES: YES UNDERWRITTEN CASH FLOW: $2,943,245
DSCR: 1.37X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTIES
The Properties consists of 6 buildings situated on 4 parcels; all
buildings were developed in the mid 1980s and are described as follows:
<TABLE>
<CAPTION>
PROPERTY NAME DESCRIPTION SQ. FT.
- --------------- ------------------ ----------
<S> <C> <C>
Amador I 1 story office 45,525
Amador III 1 story office 82,944
Arroyo Center 1-2 story office 104,741
Rinconada 1-2 story office 89,086
-------
Total 322,296
</TABLE>
The Properties are part of the Hacienda Business Park, a major business
park with 5.7 million square feet of office and R&D space located between San
Francisco and the Silicon Valley.
Major tenants at the properties include Vanstar Corporation (89,086 square
feet) under a lease expiring May 2006, Pacific Bell Communication (82,944
square feet) under a lease expiring April 2002, Hexcel Corp. (55,241 square
feet) under a lease expiring September 2002, Topcon America Corp (49,500 square
feet) under a lease expiring June, 2004, and Lucent Technologies (45,525 square
feet) under a lease expiring October, 2004.
THE BORROWER
The borrowing entity is Las Positas L.L.C., a Delaware limited liability
company with two members. The managing member of the borrower is G and I II Las
Positas L.L.C., a Delaware limited liability company, with G and I II
Investment Las Positas Corp, a Delaware corporation as its managing member. The
other member of the borrower is Skyline RE, a California limited partnership.
Both the borrower and its managing member are single purpose entities which do
not engage in any business unrelated to the Mortgaged Property, do not have any
assets other than the Mortgaged Property or any indebtedness other than the
Mortgage Loan. Additionally, the managing member of the borrower is required to
have an
B-16
<PAGE>
independent director and a unanimous vote of directors in connection with the
filing of the petition of bankruptcy. The lender has received from the
borrower's counsel that, among other things, the assets of the borrower, the
managing member of the borrower, and the managing member of the managing member
shall not be consolidated with the assets of DRA Growth and Income Fund II,
LLC, a Delaware limited liability company, in the event of a bankruptcy or
insolvency of such party, the assets of borrower shall not be consolidated with
the assets of the managing member of the borrower in the event of a bankruptcy
or insolvency of such party, and the assets of the borrower or the managing
member of the borrower shall not be consolidated with the assets of G and I II
Investment Las Positas Corp, a Delaware corporation, in the event of a
bankruptcy or insolvency of such party.
MANAGEMENT
The property is managed by DRA Advisers which is affiliated with the
borrower.
ESCROWS
The borrower is required to fund $2,686 monthly to fund an escrow for
future capital expenditures. Additionally, an escrow of $130,000, representing
125% of all major investment requirements estimated within the next three
years, was funded at closing.
RELEASE PROVISIONS
The borrower has the right to uncross the properties subject to (i)
payment of a release price equal to 110% of the then outstanding balance of the
related note, (ii) the remaining collateral must have a debt service coverage
greater than or equal to 1.45x assuming a 8.60% debt constant, and (iii) the
blended loan to value ratio for the remaining collateral must be no greater
than 60%.
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of lender.
See Loan No. 851499 in the Mortgage Loan Schedule.
B-17
<PAGE>
LOAN NO. 851550 -- COMPUCOM SYSTEMS HEADQUARTERS
OVERVIEW
This Mortgage Loan is secured by a 242,336 square foot Class B+ office
development, located in suburban Dallas, TX and 100% occupied by CompuCom
Systems Inc. The loan was originated by Wells Fargo on March 31, 1999.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $22,921,816 PROPERTY TYPE: OFFICE
GROSS MORTGAGE RATE: 7.215% LOCATION: DALLAS, TX
INTEREST ACCRUAL METHOD: ACTUAL/360 YEAR BUILT/RENOVATED: 1973/1997
FIRST PAYMENT DATE: 5/1/99 SQUARE FEET: 242,336
MATURITY DATE: 4/1/09 CUT-OFF DATE BALANCE/SQ.FT.: $94.59
ORIGINAL AMORTIZATION: 300 MONTHS
ANNUAL DEBT SERVICE: $1,988,728 OCCUPANCY: 100.0%
LOCKOUT END DATE: 10/31/08 OCCUPANCY DATE: 3/24/99
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 10/31/08 APPRAISED VALUE: $36,000,000
ESCROWS CUT-OFF DATE LTV: 63.67%
REAL ESTATE TAXES: NO BALLOON LTV: 51.46%
INSURANCE: NO
REPLACEMENT RESERVES: NO UNDERWRITTEN CASH FLOW: $3,090,786
DSCR: 1.55X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
The property is known as the CompuCom Corporate Headquarters. It consists
of two buildings originally developed in 1973 and substantially renovated in
1997 after being purchased by an affiliate of the tenant. The Property is
located in the Lake Forest area of suburban Dallas. The two buildings include
Building A, an 8-story, elevator-served building containing 153,259 square feet
and finished with a combination of open plan office and executive offices, and
Building B, a 3-story, elevator served building containing 89,077 square feet
used primarily for offices. The property is 100% leased to CompuCom Systems
Inc. under a lease expiring March 2019.
THE BORROWER
The borrowing entity is Delaware COMP LLC, a Delaware limited liability
company with COMP (TX) Q.R.S. 11-42, Inc., a Delaware corporation, as the
managing member, and Carey Institutional Properties, Inc. as a sole stockholder
of the managing member. Both the borrower and the managing member are single
purpose entities which do not engage in any business unrelated to the Mortgaged
Property, do not have any assets other than the Mortgaged Property or any
indebtedness other than the Mortgage Loan. Additionally, the managing member's
organizational documents require an independent director and the unanimous vote
of directors and/or members of the borrower in connection with the filing of a
petition in bankruptcy. The lender received an opinion from borrower's counsel
that, among other things, the assets of the borrower shall not be consolidated
with the assets of Comp (TX) QRS 14-15, Inc. and Comp (TX) QRS 12-47, Inc. and
Comp (TX) QRS 11-42, Inc. in the event of a bankruptcy or insolvency of such
parties. And, the assets of the managing member shall not be consolidated with
the assets of Carey Institutional Properties, Inc. in the event of the
bankruptcy or insolvency of such party.
MANAGEMENT
The property is managed by Carey Management LLC which is an affiliate of
the borrower, however the tenant is responsible for all operating expenses and
maintenance of the buildings. According to the Deed of Trust, there was no
management agreement in place at loan closing.
B-18
<PAGE>
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of the lender.
See Loan No. 851550 in the Mortgage Loan Schedule.
B-19
<PAGE>
LOAN NO. 851563 -- KING STREET METRO PLACE -- PHASE I
OVERVIEW
This Mortgage Loan is secured by a 141,332 square foot office building in
Alexandria, VA. The loan was originated by Wells Fargo in April 16, 1999.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $22,366,917 PROPERTY TYPE: MIXED USE
GROSS MORTGAGE RATE: 6.92% LOCATION: ALEXANDRIA, VA
INTEREST ACCRUAL METHOD: ACTUAL/360 YEAR BUILT/RENOVATED: 1998
FIRST PAYMENT DATE: 6/1/99 SQUARE FEET: 141,332
MATURITY DATE: 5/1/09 CUT-OFF DATE BALANCE/SQ.FT.: $158.39
ORIGINAL AMORTIZATION: 360 MONTHS
ANNUAL DEBT SERVICE: $1,773,914 OCCUPANCY: 93.8%
LOCKOUT END DATE: 11/30/08 OCCUPANCY DATE: 1/26/99
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 11/30/08 APPRAISED VALUE: $33,400,000
ESCROWS CUT-OFF DATE LTV: 66.97%
REAL ESTATE TAXES: YES BALLOON LTV: 58.39%
INSURANCE: NO
REPLACEMENT RESERVES: NO UNDERWRITTEN CASH FLOW: $2,543,078
DSCR: 1.43X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
Phase I of King Street Metro Place is a 6-story, elevator-served office
building situated adjacent to the King Street Metro station in the Old Town
section of Alexandria, VA. The property is part of a mixed-use development
which includes Fairfield Suites time-share, a full-service Hilton hotel and a
577-space underground parking garage. The building was developed in 1998. Major
tenants in the building include Burns, Doane, Swicker & Mathis (97,231 square
feet) under a lease expiring October 2013, Dean Witter (11,980 square feet)
under a lease expiring December 2008, and The Raven Group (10,465 square feet)
under a lease expiring November 2003.
THE BORROWER
The borrowing entity is King Street LLC, a Virginia limited liability
company with King Street Office Inc. as its managing member. Both the borrower
and the managing member are single purpose entities which do not engage in any
business unrelated to the Mortgaged Property, do not have any assets other than
the Mortgaged Property or any indebtedness other than the Mortgage Loan. The
lender received an opinion from borrower's counsel that, among other things,
the assets of the borrower shall not be consolidated with the assets of any
other affiliate (including King Street I LLC, King Street Office Inc., or H/P
Commercial Services Inc.) in the event of a bankruptcy or insolvency of such
parties.
MANAGEMENT
The property is managed by The Peterson Co, which is affiliated with the
borrowing entity.
ESCROWS
The borrower is required to fund monthly escrow deposits in an amount
sufficient to pay real estate taxes when due.
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of the lender.
See Loan No. 851563 in the Mortgage Loan Schedule.
B-20
<PAGE>
LOAN NO. 851476 -- 800 WEST EL CAMINO REAL
OVERVIEW
This Mortgage Loan is secured by a 117,128 square foot office building
situated in Mountain View, CA. The loan was originated by Wells Fargo on
December 30, 1998.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $19,356,534 PROPERTY TYPE: OFFICE
GROSS MORTGAGE RATE: 6.97% LOCATION: MOUNTAIN VIEW, CA
INTEREST ACCRUAL METHOD: ACTUAL/360 YEAR BUILT/RENOVATED: 1987/1998
FIRST PAYMENT DATE: 2/1/99 SQUARE FEET: 117,128
MATURITY DATE: 1/1/09 CUT-OFF DATE BALANCE/SQ.FT.: $165.47
ORIGINAL AMORTIZATION: 300 MONTHS
ANNUAL DEBT SERVICE: $1,649,388 OCCUPANCY: 100.0%
LOCKOUT END DATE: 7/31/08 OCCUPANCY DATE: 2/13/99
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 7/31/08 APPRAISED VALUE: $34,100,000
ESCROWS CUT-OFF DATE LTV: 56.76%
REAL ESTATE TAXES: YES BALLOON LTV: 45.70%
INSURANCE: YES
REPLACEMENT RESERVES: YES UNDERWRITTEN CASH FLOW: $3,121,134
DSCR: 1.89X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
The property includes two three and four-story office buildings with open
plazas and courtyards over a two-story 369 space subterranean garage. The
buildings, originally developed in 1987, were designed by the firm of Skidmore
Owings and Merrill and were substantially renovated and retenanted in 1998. The
property is located in the Central Business District of Mountain View, CA.
Major tenants include Sagent Technology Inc. (34,244 square feet) under a lease
expiring October 2003, Pharsight Corp. (16,000 square feet) under a lease
expiring September 2003, HQ Business Centers (15,233 square feet) under a lease
expiring May 2008, Edelman PR (14,791 square feet) under a lease expiring
September 2004, Blue Pumpkin Software, Inc. (10,840 square feet) under a lease
expiring November 2001, and ADC Telecommunications (10,416 square feet) under a
lease expiring December 2003.
THE BORROWER
The borrowing entity is Asset Growth Partners, a California limited
partnership with El Camino Equity Manager as the general partner. Both the
borrower and the general partner are single purpose entities which do not
engage in any business unrelated to the Mortgaged Property, do not have any
assets other than the Mortgaged Property or any indebtedness other than the
Mortgage Loan. The lender received an opinion from borrower's counsel that,
among other things, the assets of the borrower shall not be consolidated with
the assets of the limited partners (including Rees Properties Inc., El Camino
Equity Partners, LLC, Asset Growth Partners, a California limited partnership)
or the general partner in the event of a bankruptcy or insolvency of such
parties.
MANAGEMENT
The property is managed by Rees Properties, Inc., which is affiliated with
the borrower.
ESCROWS
The borrower is required to fund monthly escrow deposits in amounts
sufficient to pay real estate taxes and insurance premiums when due. The
borrower is also required to fund $2,440 monthly to fund an escrow for future
capital expenditures. Additionally, the borrower is required to fund $8,333
monthly, during the first six years of the loan term, into an escrow for
potential re-tenanting costs.
B-21
<PAGE>
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of lender.
See Loan No. 851476 in the Mortgage Loan Schedule.
B-22
<PAGE>
LOAN NO. 9122. -- TORREY RESERVE NORTH COURT
This Mortgage Loan is secured by a first mortgage lien on Torrey Reserve
North Court, 2 office buildings totaling 130,641 square feet and located in the
Torrey Reserve office park in the Del Mar Heights area of San Diego, CA. This
loan is cross-collateralized and cross-defaulted with Loan No. 16465 -- 3720
Arroyo Sorrento Road. On a combined basis, the overall debt service coverage
ratio is 1.49x and the overall loan to value ratio is 64.6%. This loan was
originated by Bear Stearns May 26, 1999.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $18,286,568 PROPERTY TYPE: OFFICE
GROSS MORTGAGE RATE: 7.555% LOCATION: SAN DIEGO, CA
INTEREST ACCRUAL METHOD: ACTUAL/360 YEAR BUILT/RENOVATED: 1998-1999
FIRST PAYMENT DATE: 7/1/99 SQUARE FEET: 130,641
MATURITY DATE: 6/1/09 CUT-OFF DATE BALANCE/SQ.FT.: $139.98
ORIGINAL AMORTIZATION: 360 MONTHS
ANNUAL DEBT SERVICE: $1,543,754 OCCUPANCY: 100.0%
LOCKOUT END DATE: 5/31/09 OCCUPANCY DATE: 3/24/99
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 5/31/09 APPRAISED VALUE: $28,400,000
ESCROWS CUT-OFF DATE LTV: 64.39%
REAL ESTATE TAXES: YES BALLOON LTV: 57.02%
INSURANCE: NO
REPLACEMENT RESERVES: YES UNDERWRITTEN CASH FLOW: $2,300,468
DSCR: 1.49X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
Torrey Reserve North Court consists of two separate buildings, a four
story, elevator-served office building with 75,117 square feet, and a three
story, elevator served office building with 55,312 square feet. Both buildings
are limestone and glass clad structures which are considered Class A within
their market. Major tenants include the University of Phoenix (38,063 square
feet) under a lease expiring April, 2006, McDonald's Corporation (19,958 square
feet) under a lease expiring August 2008, California Bank and Trust (19,211
square feet) under a lease expiring April, 2004 and Lockheed Martin (7,955
square feet) under a lease expiring December, 2003.
THE BORROWER
The borrowing entity is Pacific North Court Holdings, L.P. a California
limited partnership with Pacific North Court Assets, Inc., a California
corporation as its managing general partner. Both the borrower and the general
partner are single purpose entities which do not engage in any business
unrelated to the Mortgaged Property, do not have any assets other than the
Mortgaged Property or any indebtedness other than the Mortgage Loan.
Additionally, the lender received an opinion from borrower's counsel that,
among other things, the assets of the borrower shall not be consolidated with
the assets of any party considered having a principal interest in the borrower
in the event of a bankruptcy or insolvency of such party.
MANAGEMENT
The property is managed by American Assets, Inc. which is affiliated with
the borrower.
ESCROWS
The borrower is required to fund monthly escrow deposits in an amount
sufficient to pay real estate taxes when due. The borrower is also required to
pay $1,087 monthly to fund an escrow for future capital expenditures. In the
event borrower fails to provide lender with evidence satisfactory to lender of
payment of property insurance premiums in accordance with the loan documents,
borrower will be
B-23
<PAGE>
required to fund an escrow for insurance premiums from and after such failure.
There is a reserve in the amount of $26,000 which is being held by lender as
additional security for the completion of certain punchlist items relating to
tenant improvements for California Bank & Trust.
RELEASE PROVISIONS
This Mortgage Loan is cross-collateralized and cross-defaulted with Loan
#16465 -- 3720 Arroyo Sorrento Road. Lender has the right to unilaterally
uncross the loans. The borrower has the right to uncross the loans subject to
(1) maintenance of a minimum DSCR greater than or equal to 1.40x for each of
the remaining property, (2) maintenance of a maximum loan to value ratio of 75%
for the property, (3) continued compliance with the Single Purpose Entity
requirements, and (4) no event of default having occurred prior to such
release, and (5) satisfaction of the conditions described in Loan No. 16465.
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of the lender.
See Loan No. 9122 in the Mortgage Loan Schedule.
B-24
<PAGE>
LOAN NO. 16465 -- 3720 ARROYO SORRENTO ROAD
This Mortgage Loan is secured by a first mortgage lien on a single story
commercial building with 7,666 square feet and located in the Torrey Reserve
office park in the Del Mar Heights area of San Diego, CA. This loan is
cross-collateralized and cross-defaulted with Loan No 9122 -- Torrey Reserve
North Court. This loan was originated by Bear Stearns May 26, 1999.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $949,303 PROPERTY TYPE: OFFICE
GROSS MORTGAGE RATE: 7.555% LOCATION: SAN DIEGO, CA
INTEREST ACCRUAL METHOD: ACTUAL/360 YEAR BUILT/RENOVATED: 1998
FIRST PAYMENT DATE: 7/1/99 SQUARE FEET: 7,666
MATURITY DATE: 6/1/09 CUT-OFF DATE BALANCE/SQ.FT.: $123.83
ORIGINAL AMORTIZATION: 360 MONTHS
ANNUAL DEBT SERVICE: $80,140 OCCUPANCY: 100.0%
LOCKOUT END DATE: 5/31/09 OCCUPANCY DATE: 3/24/99
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 5/31/09 APPRAISED VALUE: $1,375,000
ESCROWS CUT-OFF DATE LTV: 69.04%
REAL ESTATE TAXES: YES BALLOON LTV: 61.14%
INSURANCE: NO
REPLACEMENT RESERVES: YES UNDERWRITTEN CASH FLOW: $115,115
DSCR: 1.44X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
3720 Arroyo Sorrento Road is a single story commercial building which is
leased to ABC Children's Center under a lease which expires in September, 2008.
THE BORROWER
The borrowing entity is Pacific Torrey Daycare Holdings, L.P. a California
limited partnership with Pacific Torrey Daycare Assets, Inc., a California
corporation as its managing general partner. Both the borrower and the general
partner are single purpose entities which do not engage in any business
unrelated to the Mortgaged Property, do not have any assets other than the
Mortgaged Property or any indebtedness other than the Mortgage Loan.
Additionally, the lender received an opinion from borrower's counsel that,
among other things, the assets of the borrower shall not be consolidated with
the assets of any party considered having a principal interest in the borrower
in the event of a bankruptcy or insolvency of such party.
MANAGEMENT
The property is managed by American Assets, Inc. which is affiliated with
the borrower.
ESCROWS
The borrower is required to fund monthly escrow deposits in an amount
sufficient to pay real estate taxes when due. The borrower is also required to
fund $64 monthly to fund an escrow for future capital expenditures. In the
event borrower fails to provide lender with evidence satisfactory to lender of
payment of property insurance premiums in accordance with the loan documents,
borrower will be required to fund an escrow for insurance premiums from and
after such failure.
RELEASE PROVISIONS
This Mortgage Loan is cross-collateralized and cross-defaulted with Loan
No. 9122 -- Torrey Reserve North Court. Lender has the right to unilaterally
uncross the loans. The borrower has the right to uncross the loans subject to
(1) maintenance of a minimum DSCR, at the time of the release, greater than or
equal
B-25
<PAGE>
to 1.40x for each of the remaining property, (2) maintenance of a maximum loan
to value ratio of 75% for the remaining properties, (3) establishment of a
$250,000 lease rollover reserve for the 3720 Arroyo Sorrento Road property for
vacancy loss, tenant improvements and leasing commissions, (4) continued
compliance with the Single Purpose Entity requirements, and (5) no event of
default having occurred prior to such release and (6) satisfaction of the
conditions described in the summary of Loan No. 9122.
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of the lender.
See Loan No. 16465 in the Mortgage Loan Schedule.
B-26
<PAGE>
LOAN NO. 851087 -- AMC THEATERS
OVERVIEW
This Mortgage Loan is secured by a 24-screen megaplex AMC Theater situated
in Westminster, CO. The loan was originated by Wells Fargo on June 11, 1998.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $18,489,569 PROPERTY TYPE: THEATER
WESTMINSTER,
GROSS MORTGAGE RATE: 7.37% LOCATION: CO
INTEREST ACCRUAL METHOD: ACTUAL/360 YEAR BUILT/RENOVATED: 1998
FIRST PAYMENT DATE: 8/1/98 SQUARE FEET: 90,000
MATURITY DATE: 7/1/18 CUT-OFF DATE BALANCE/SCREEN: $770,399
ORIGINAL AMORTIZATION: 240 MONTHS
ANNUAL DEBT SERVICE: $1,809,099 OCCUPANCY: 100.0%
LOCKOUT END DATE: 1/31/18 OCCUPANCY DATE: 2/18/99
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 1/31/18 APPRAISED VALUE: $26,550,000
ESCROWS CUT-OFF DATE LTV: 69.64%
REAL ESTATE TAXES: NO BALLOON LTV: 2.63%
INSURANCE: NO
REPLACEMENT RESERVES: NO UNDERWRITTEN CASH FLOW: $2,357,285
DSCR: 1.30X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
The property is a recently constructed 24-screen, state-of-the-art
megaplex AMC Theater with 5,100 stadium-style seats. It is located in
Westminster, CO, approximately 12 miles southeast of the city of Boulder, CO.
The property is 100% leased to American Multi-Cinema, Inc. under a lease
expiring March 2018.
THE BORROWER
The borrowing entity is Excel Westminster AMC, Inc., a Delaware
corporation. The borrower is a single purpose entity which does not engage in
any business unrelated to the Mortgaged Property, does not have any assets
other than the Mortgaged Property or any indebtedness other than the Mortgage
Loan. Additionally, the borrowing entity's organizational documents require an
independent director and the unanimous vote of directors and/or members of the
borrower in connection with the filing of a petition in bankruptcy. The lender
received an opinion from borrower's counsel that, among other things, the
assets of the borrower shall not be consolidated with the assets of Excel
Legacy Corporation or any other entity in the event of a bankruptcy or
insolvency of such parties.
MANAGEMENT
The property is managed by Excel Realty Trust, Inc.
ADDITIONAL DEBT
The borrower may not encumber or otherwise transfer the property without
the prior written consent of lender.
See Loan No. 851087 in the Mortgage Loan Schedule.
B-27
<PAGE>
LOAN NO. 25764 -- BRINKLEY HOUSE APARTMENTS
OVERVIEW
This Mortgage loan is secured by a 635 unit garden apartment complex
located in Oxon Hill, MD. The loan was originated by Bear Stearns on May 18,
1999.
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $15,986,768 PROPERTY TYPE: MULTIFAMILY
GROSS MORTGAGE RATE: 6.955% LOCATION: OXON HILL, MD
INTEREST ACCRUAL METHOD: ACTUAL/360 YEAR BUILT/RENOVATED: 1987-1992
FIRST PAYMENT DATE: 7/1/99 # UNITS: 635
MATURITY DATE: 6/1/09 CUT-OFF DATE BALANCE/UNIT: $25,176
ORIGINAL AMORTIZATION: 360 MONTHS
ANNUAL DEBT SERVICE: $1,271,583 OCCUPANCY: 96.9%
LOCKOUT END DATE: 4/30/09 OCCUPANCY DATE: 2/26/99
CALL PROTECTION: DEFEASANCE
CALL PROTECTION END DATE: 4/30/09 APPRAISED VALUE: $27,000,000
ESCROWS CUT-OFF DATE LTV: 59.21%
REAL ESTATE TAXES: YES BALLOON LTV: 51.63%
INSURANCE: YES
REPLACEMENT RESERVES: NO UNDERWRITTEN CASH FLOW: $2,232,105
DSCR: 1.76X
- -------------------------------------------------------------------------------------------
</TABLE>
THE PROPERTY
Brinkley House Apartments consists of 106 3-story brick apartment
buildings with a total of 635 units. The property is located in Oxon Hill, MD
in the Washington, DC MSA. The property's amenities include a swimming pool and
children's playgrounds. Each unit includes a full modern kitchen including a
dishwasher, washing machine and dryer.
THE BORROWER
The borrowing entity is Brinkley Associates LLP, a Maryland limited
liability partnership with Calvin Cafritz and Maurice Lipnick as managing
partners. The borrower is a single purpose entity which does not engage in any
business unrelated to the Mortgaged Property, does not have any assets other
than the Mortgaged Property or any indebtedness other than the Mortgage Loan.
MANAGEMENT
The property is managed by the Cafritz Company which is affiliated with
the borrower.
ESCROWS
The borrower is required to fund monthly escrow deposits in an amount
sufficient to pay real estate taxes and insurance premiums when due. In the
event lender, it its sole discretion, determines that the property is not being
properly maintained, the borrower will be required to fund an escrow for future
capital expenditures in the amount of $13,229 per month.
ADDITIONAL DEBT
The borrower is permitted to incur additional debt of no more than
$800,000 provided that (i) the documentation is acceptable to lender, (ii) the
additional debt is not secured by the property, (iii) the additional debt is
not transferable without lender's consent, and (iv) the holder of the
additional debt cannot demand payment on the additional debt at any time that
the Mortgage Loan is outstanding.
See Loan No. 25764 in the Mortgage Loan Summary.
B-28
<PAGE>
ANNEX C
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
TABLE OF CONTENTS
This report has been compiled from information provided to Norwest by various
third parties, which may include the Servicer, Special Servicer and others.
Norwest has not independently confirmed the accuracy of information received
from these third parties and assumes no duty to do so. Norwest expressly
disclaims any responsibility for the accuracy or completeness of information
furnished by third parties.
DISTRIBUTION DATE STATEMENT
Contact:
Phone Number:
Wells Fargo Bank, National Association
555 Montgomery Street, 17th Floor
San Francisco, CA 94111
Matilde Sanchez
(415) 222-2364
SERVICER
Contact:
Phone Number:
GMAC Commercial Mortgage Corporation
650 Dresher Road
Horsham, PA 10944-8015
Coral I. Horstmeyer
(215) 328-1790
SPECIAL SERVICER
Contact:
Phone Number:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
General Information Number
(212) 272-2000
UNDERWRITER
STATEMENT SECTIONS PAGE( S)
Certificate Distribution Detail 2
Certificate Factor Detail 3
Reconciliation Detail 4
Other Required Information 5
Ratings Detail 6
Current Mortgage Loan and Property Stratification Tables 7 - 9
Mortgage Loan Detail 10
Principal Prepayment Detail 11
Historical Detail 12
Delinquency Loan Detail 13
Specially Serviced Loan Detail 14 - 15
Modified Loan Detail 16
Liquidated Loan Detail 17
Page 1 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
C-1
<PAGE>
SERIES 1999-WF2 NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
CERTIFICATE DISTRIBUTION DETAIL
(1) Calculated by taking (A) the sum of the ending certificate balance of all
classes less (B) the sum of (i) the ending certificate balance of the designated
class and (ii) the ending certificate balance of all classes which are not
subordinate to the designated class and dividing the result by (A).
Realized Loss /CUSIP Original
Balance
Beginning
Balance Balance
Principal
Distribution
Ending Interest PASS-Through
Rate
Total
Distribution Distribution
Current
Subordination
Level (1)
Prepayment
Penalties Additional Trust Fund Expenses
Class
Totals
Class CUSIP
Original
Amount
Beginning Ending Interest Pass-Through
Rate
Total
Distribution Distribution Notional
Amount
Notional Notional
Amount
Prepayment
Penalties
Page 2 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
C-2
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
CERTIFICATE FACTOR DETAIL
CUSIP Beginning
Balance Balance
Principal
Distribution
Ending Interest
Distribution
Prepayment
Penalties Fund Expenses
Realized Loss /
Additional Trust Class
Class CUSIP
Beginning
Amount
Ending Interest
Distribution Notional Notional
Amount
Prepayment
Penalties
Page 3 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
C-3
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
RECONCILIATION DETAIL
P & I Advances Outstanding
Servicing Advances Outstanding
Current Period Accrued Servicing Fees
Less Delinquent Servicing Fees
Less Reductions to Servicing Fees
Plus Servicing Fees for Delinquent Payments Received
Plus Adjustments for Prior Servicing Calculation
Total Servicing Fees Collected
CERTIFICATE INTEREST RECONCILIATION
SERVICING FEE BREAKDOWNS ADVANCE SUMMARY
Reimbursement for Interest on Advances
paid from general collections
Class
Distributable
Certificate Interest
Adjustment
Net Aggregate
Prepayment
Interest Shortfall
Accrued
Certificate
Interest
Trust Fund
Expenses
Additional Interest
Distribution
Distributable
Certificate
Interest
Distributable
Certificate Interest
Remaining Unpaid
Total
Page 4 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
C-4
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
OTHER REQUIRED INFORMATION
Available Distribution Amount
Aggregate Number of Outstanding Mortgage Loans
Special Servicing Fee paid
Trustee Fee paid
Servicing Fee paid
Appraisal Reduction Amount
Principal Distribution Amount
(a) Principal portion of Scheduled Payments
and any Assumed Scheduled Payments
(b) Principal Prepayments
(c) Principal Portion of Balloon Payments
(d) Liquidation , Condemnation, Purchase,
and Insurance Proceeds and REO Income
Expense Losses (Additional Trust Fund Expenses)
(i) Special Servicing and Liquidation Fees
(ii) Advance Interest
(iii) Indemnifaction Expenses
(iv) Taxes Imposed on the Trust
(v) Amount of any Advance not Recovered
upon a Final Recovery Determination
Aggregate Scheduled Principal Balance of the Mortgage Loans
Aggregate Unpaid Principal Balance of the Mortgage Loans
Total Servicing and Special Servicing Fee paid
Received on a Mortgage Loan
Appraisal
Amount
Loan
Number
Date Appraisal
Reduction Reduction
Effected
NONE
Total
Page 5 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
C-5
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
RATINGS DETAIL
Current Ratings (1) Original Ratings
DCR Moody's Fitch
Class CUSIP
DCR Fitch Moody's S & P S & P
Page 6 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
Duff & Phelps Credit Rating Co.
55 East Monroe Street
Chicago, Illinois 60603
(312) 368-3100
Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
(212) 908-0500
Moody's Investors Service
99 Church Street
New York, New York 10007
(212) 553-0300
Standard & Poor's Rating Services
26 Broadway
New York, New York 10004
(212) 208-8000
- - Designates that the class was not rated by the above agency at the time of
original issuance.
- - Designates that the above rating agency did not rate any classes in this
transaction at the time of original issuance.
- - Data not available this period.
1) For any class not rated at the time of original issuance by any particular
rating agency, no request has been made subsequent to issuance to obtain rating
information, if any, from such rating agency. The current ratings were obtained
directly from the applicable rating agency within 30 days of the payment date
listed above. The ratings may have changed since they were obtained. Because the
ratings may have changed, you may want to obtain current ratings directly from
the rating agencies.
NR
X
N/A
C-6
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
See footnotes on last page of this section.
# of
Loans
Scheduled % of
SCHEDULED BALANCE
WAM WAC Weighted
Balance
Scheduled
Balance Bal.
Agg. Avg DSCR (1) (2)
Totals
# of
Props.
Scheduled % of
STATE
WAM WAC Weighted
Balance State
Bal.
Agg. Avg DSCR (1)
(3)
(2)
Totals
Page 7 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
C-7
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
See footnotes on last page of this section.
# of
Loans
Scheduled % of
NOTE RATE
WAM WAC Weighted
Balance
Note
Rate Bal.
Agg. Avg DSCR (1) (2)
Totals
# of
Loans
Scheduled % of
SEASONING
WAM WAC Weighted
Balance Seasoning
Bal.
Agg. Avg DSCR (1) (2)
Totals
# of
Loans
Scheduled % of
DEBT SERVICE COVERAGE RATIO
WAM WAC Weighted
Balance
Debt Service
Coverage Ratio Bal.
Agg. Avg DSCR (1) (2)
Totals
# of Scheduled % of
PROPERTY TYPE
WAM WAC Weighted
Balance
Property
Type Bal.
Agg. Avg DSCR (1) Props.
(3)
(2)
Totals
Page 8 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
C-8
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date, if
applicable, and the maturity date.
Note: (i) "Scheduled Balance" has the meaning assigned thereto in the CSSA
Standard Information Package.
(3) Data in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date Balance of the related
mortgage loan as disclosed in the offering document.
(1) Debt Service Coverage Ratios are updated periodically as new NOI figures
become available from borrowers on an asset level. In all cases the most current
DSCR provided by the Servicer is used. To the extent that no DSCR is provided by
the Servicer, information from the offering document is used. The Trustee makes
no representations as to the accuracy of the data provided by the borrower for
this calculation.
# of
Loans
Scheduled % of
ANTICIPATED REMAINING TERM (ARD AND BALLOON LOANS)
WAM WAC Weighted
Balance Bal.
Agg. Avg DSCR (1) Term (2)
Anticipated Remaining
(2)
Totals
# of
Loans
Scheduled % of
REMAINING STATED TERM (FULLY AMORTIZING LOANS)
WAM WAC Weighted
Balance
Remaining Stated
Term Bal.
Agg. Avg DSCR (1) (2)
Totals
# of
Loans
Scheduled % of
REMAINING AMORTIZATION TERM (ARD AND BALLOON LOANS)
WAM WAC Weighted
Balance
Remaining Amortization
Term Bal.
Agg. Avg DSCR (1) (2)
Totals
# of
Loans
Scheduled % of
AGE OF MOST RECENT NOI
WAM WAC Weighted
Balance
Age of Most
Recent NOI Bal.
Agg. Avg DSCR (1) (2)
Totals
Page 9 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
C-9
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
MORTGAGE LOAN DETAIL
Loan ODCR Property
Type (1) City State Principal
Payment
Gross
Coupon
Maturity
Date
Neg.
Amort
(Y/N)
Beginning
Scheduled
Balance
Paid
Thru
Date Date
Appraisal
Reduction
Res.
Strat.
(2)
Interest
Payment
Ending
Scheduled
Balance Amount
Appraisal
Reduction
Mod.
Code Number
Anticipated
Date (3)
Repayment
TOTALS
- - Self Storage
Page 10 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
- - Multi-Family
- - Retail
- - Health Care
- - Industrial
- - Warehouse
- - Mobile Home Park
- - Office
- - Mixed Use
- - Other
MF
RT
HC
IN
WH
OF
<PAGE>
MU
LO
SS
OT
MH
(1) Property Type Code (2) Resolution Strategy Code
- - Modification
- - Foreclosure
- - Bankruptcy
- - Extension
- - Note Sale
- - DPO
- - REO
- - Resolved
- - Pending Return
- - Deed In Lieu Of
to Master Servicer
Foreclosure
1
2
3
4
5
6
7
8
9
10
(3) Modification Code
- - Maturity Date Extension 1
2
3
4
- - Amortization Change
- - Principal Write-Off
- - Combination
- - Lodging
C-10
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
PRINCIPAL PREPAYMENT DETAIL
Loan Number Offering Document Principal Prepayment Amount
Cross-Reference Payoff Amount Curtailment Amount
Totals
Prepayment Penalties
Prepayment Premium Yield Maintenance Premium
Page 11 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
C-11
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
HISTORICAL DETAIL
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
Distribution
Date
Delinquencies
30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications Curtailments
Payoff Prepayments Rate and Maturities
Next Weighted Avg.
# Balance #Amount # Balance # Balance # Balance # Balance # Balance # Amount
Coupon Remit WAM
Page 12 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
C-12
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
DELINQUENCY LOAN DETAIL
Loan Number
Offering # of Paid Through Current Outstanding
Mortgage
Resolution
Transfer Date
Foreclosure
Advances
Outstanding
Bankruptcy Date REO Months
Delinq. Advances
P & I
Advances **
P & I
Loan (1)
Status of
Strategy
Code (2)
Document
Cross-Reference Date
Servicing
Date Servicing
Advances Date
Current
Servicing
Totals
Page 13 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
(2) Resolution Strategy Code
- - Modification
- - Foreclosure
- - Bankruptcy
- - Extension
- - Note Sale
- - DPO
- - REO
- - Resolved
- - Pending Return
- - Deed In Lieu Of
to Master Servicer
Foreclosure
1
2
3
4
5
6
7
8
9
10
(1) Status of Mortgage Loan
- - Payment Not Received
<PAGE>
- - Late Payment But Less
- - Current
- - One Month Delinquent
- - Two Months Delinquent
- - Three Or More Months Delinquent
- - Assumed Scheduled Payment
- - Foreclosure
- - REO
A
B
0
1
2
3
4
7
9
(Performing Matured Balloon)
But Still in Grace Period
Than 1 Month Delinquent
** Outstanding P & I Advances include the current period advance
C-13
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
SPECIALLY SERVICED LOAN DETAIL - PART 1
Distribution Loan Resolution Scheduled
Type (2) State Interest Net NOI DSCR Note Maturity Remaining
Date Number
Servicing
Transfer
Date
Strategy
Code (1) Balance
Property
Rate
Actual
Balance Operating
Income Date Date Date Amortization
Term
Offering
Document
Cross-Reference
Page 14 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
(1) Resolution Strategy Code
- - Modification
- - Foreclosure
- - Bankruptcy
- - Extension
- - Note Sale
- - DPO
- - REO
- - Resolved
- - Pending Return
- - Deed In Lieu Of
to Master Servicer
Foreclosure
1
2
3
4
5
6
7
8
9
10
- - Multi-Family
- - Retail
- - Health Care
- - Industrial
- - Warehouse
- - Mobile Home Park
- - Office
- - Mixed Use
- - Lodging
- - Self Storage
<PAGE>
- - Other
MF
RT
HC
IN
WH
OF
MU
LO
SS
OT
MH
(2) Property Type Code
C-14
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
SPECIALLY SERVICED LOAN DETAIL - PART 2
Date
Loan Site Appraisal
Value Comment Appraisal
Date Phase 1 Date Inspection
Date
Distribution Other REO
Property Revenue
Offering
Document
Cross-Reference Number
Resolution
Strategy
Code (1)
Page 15 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
(1) Resolution Strategy Code
- - Modification
- - Foreclosure
- - Bankruptcy
- - Extension
- - Note Sale
- - DPO
- - REO
- - Resolved
- - Pending Return
- - Deed In Lieu Of
to Master Servicer
Foreclosure
1
2
3
4
5
6
7
8
9
10
C-15
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
MODIFIED LOAN DETAIL
Loan Modification Date Modification Description Pre-Modification
Balance
Offering
Document
Cross-Reference Number
Total
Page 16 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
C-16
<PAGE>
NORWEST BANK MINNESOTA, N. A.
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-WF2
Leslie Gaskill
(212) 515-5254
Reports Available on the World Wide Web
@ www. ctslink. com/cmbs
PAYMENT DATE: 07/15/1999
RECORD DATE: 06/29/1999
CORPORATE TRUST SERVICES
For Additional Information, please contact
LIQUIDATED LOAN DETAIL
Loan Final Recovery Appraisal Appraisal Gross Net Net Proceeds Realized Gross
Proceeds
Aggregate Repurchased
Determination
Date
Actual
Balance as a % of
Actual Balance
Liquidation
Expenses *
Liquidation
Proceeds
as a % of
Actual Balance
by Seller
(Y/N)
Offering
Document
Cross-Reference Number Date Value Proceeds Loss
Current Total
Cumulative Total
Page 17 of 17 Copyright 1997, Norwest Bank Minnesota, N. A.
* Aggregate liquidation expenses also include outstanding P & I advances and
unpaid fees (servicing, trustee, etc.).
C-17
<PAGE>
- ----------------------------------------------------------------------------
WELLS FARGO - OPERATING STATEMENT REVIEW
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------- [WELLS FARGO LOGO]
LOAN #
INVESTOR # BSCMS 1999 WF2 -------------------
PROPERTY TYPE COMPLETED
CITY / STATE REVIEWED
----------------------------------- -------------------
-------------- --------------- --------------- --------------
# OF MONTHS 12 12 12 12
ANNUALIZED (Y/N) No No No
-------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
12/31/XX 12/31/XY 12/31/XZ AT ISSUE
-------------- --------------- --------------- --------------
GROSS RENTS
-------------- --------------- --------------- --------------
REIMBURSEMENTS
-------------- --------------- --------------- --------------
TOTAL INCOME 0 0
-------------- --------------- --------------- --------------
VACANCY
-------------- --------------- --------------- --------------
DISCOUNTS/CONCESSIONS
-------------- --------------- --------------- --------------
OTHER INCOME
-------------- --------------- --------------- --------------
EFFECTIVE GROSS INCOME 0 0 0 0
-------------- --------------- --------------- --------------
-------------- --------------- --------------- --------------
PROPERTY TAXES
-------------- --------------- --------------- --------------
INSURANCE
-------------- --------------- --------------- --------------
UTILITIES
-------------- --------------- --------------- --------------
MANAGEMENT
-------------- --------------- --------------- --------------
MAINT & REPAIRS
-------------- --------------- --------------- --------------
SALARIES & ADMIN
-------------- --------------- --------------- --------------
ADVERTISING
-------------- --------------- --------------- --------------
GROUND LEASE
-------------- --------------- --------------- --------------
OTHER
-------------- --------------- --------------- --------------
TOTAL OPER EXPENSES 0 0 0 0
-------------- --------------- --------------- --------------
NOI 0 0 0 0
-------------- --------------- --------------- --------------
-------------- --------------- --------------- --------------
CAPITAL RESERVES
-------------- --------------- --------------- --------------
TI / LC RESERVES
-------------- --------------- --------------- --------------
OTHER
-------------- --------------- --------------- --------------
NOI 0 0 0 0
-------------- --------------- --------------- --------------
DEBT SERVICE
-------------- --------------- --------------- --------------
DSCR
-------------- --------------- --------------- --------------
-------------- --------------- --------------- --------------
OCCUPANCY
-------------- --------------- --------------- --------------
AS OF
-------------- --------------- --------------- --------------
COMMENTS
- -------------------------------------------------------------------------------------------------------------------
INFORMATION CONTAINED HEREIN HAS BEEN FURNISHED BY BORROWERS, PROPERTY MANAGERS,
OR OTHER OUTSIDE PARTIES, AND THEREFORE NO ASSURANCES ARE MADE BY WELLS FARGO
BANK AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
C-18
<PAGE>
<TABLE>
[WELLS FARGO LOGO] BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES, INC. Determination Date:
Commercial Mortgage Pass-Through Certificates Due Date:
Series 1999 - WF2
ANNUAL REPORT SUMMARY
- ------------------------------------------------------------------------------------------------------------------------------------
Loan Identification Loan Information
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Paid Current Sched. Rem. Rem. Fix or
Tab Loan Prop. To Scheduled At Issue Orig. Monthly Amort. Term to Maturity Var.
Ref No. Type City State Date Balance Balance Date Pmt. Term Maturity Date Rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
- ------------------------------------------------------------------------------------------------------------------------------------
6
7
8
9
10
- ------------------------------------------------------------------------------------------------------------------------------------
11
12
13
14
15
- ------------------------------------------------------------------------------------------------------------------------------------
16
17
18
19
20
- ------------------------------------------------------------------------------------------------------------------------------------
21
22
23
24
25
- ------------------------------------------------------------------------------------------------------------------------------------
------------------------
0 0
------------------------
Totals
- --------------------------------------------------------------------------
Loan Identification Appraisal Information
- --------------------------------------------------------------------------
<CAPTION>
Latest
Current NRSF Latest Appr. Current At
Tab Coupon Year or # of Appr. Value LTV Issue
Ref Rate Built Units Date ($000) LTV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
- --------------------------------------------------------------------------
6
7
8
9
10
- --------------------------------------------------------------------------
11
12
13
14
15
- --------------------------------------------------------------------------
16
17
18
19
20
- --------------------------------------------------------------------------
21
22
23
24
25
- --------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Information contained herein has been furnished by borrowers, property managers, or other outside parties and
therefore no assurances are made by Wells Fargo Bank as to the accuracy or completeness of such information.
-------------------------------------------------------------------------------------------------------------
</TABLE>
C-19
<PAGE>
<TABLE>
[WELLS FARGO LOGO] BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES, INC. Determination Date:
Commercial Mortgage Pass-Through Certificates Due Date:
Series 1999 - WF2
ANNUAL REPORT SUMMARY
- -----------------------------------------------------------------------------------------------------------------------------------
Loan
Identification Prop. Inspection Property Financials
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Overall Date of Latest At Issue EGI % Latest At Issue NOI %
Last Cond- Latest Annual Annual Chg Annual Annual Chg
Tab Loan Inspect. -ition Op. EGI EGI from NOI NOI from
Ref No. Date Stmt. ($000) ($000) Issue ($000) ($000) Issue
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
- -----------------------------------------------------------------------------------------------------------------------------------
6
7
8
9
10
- -----------------------------------------------------------------------------------------------------------------------------------
11
12
13
14
15
- -----------------------------------------------------------------------------------------------------------------------------------
16
17
18
19
20
- -----------------------------------------------------------------------------------------------------------------------------------
21
22
23
24
25
- -----------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------
0.0 0.0 0.0 0.0 0.0 0.0
---------------------------------------------------------------------
Totals Totals
- --------------------------------------------------------------------------
Loan Identification
Occupancy and Debt Coverage
- --------------------------------------------------------------------------
<CAPTION>
DSCR %
Latest At Latest At Issue Chg
Tab Occupancy Latest Issue DSCR DSCR from
Ref Date Occ. Occ. Issue
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
- --------------------------------------------------------------------------
6
7
8
9
10
- --------------------------------------------------------------------------
11
12
13
14
15
- --------------------------------------------------------------------------
16
17
18
19
20
- --------------------------------------------------------------------------
21
22
23
24
25
- --------------------------------------------------------------------------
-----------------------------
0.0 0.0 0.0
-----------------------------
Weighted Average
-------------------------------------------------------------------------------------------------------------
Information contained herein has been furnished by borrowers, property managers, or other outside parties and
therefore no assurances are made by Wells Fargo Bank as to the accuracy or completeness of such information.
-------------------------------------------------------------------------------------------------------------
</TABLE>
C-20
<PAGE>
ANNEX D
SCHEDULE OF INTEREST RESERVE LOANS
<TABLE>
<CAPTION>
GROSS INTEREST
LOAN CUT-OFF DATE MORTGAGE ACCRUAL SERVICING
COUNT NUMBER LOAN NAME BALANCE RATE METHOD FEE RATE
- ------- -------- ----------- -------------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
D-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROSPECTUS
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
(DEPOSITOR)
--------------------
The commercial 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 (each a
"Series"). The Offered Certificates of any 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 various types of multifamily or commercial mortgage loans (the
"Mortgage Loans"), mortgage-backed securities ("MBS") that evidence interests
in, or that are secured by pledges of, one or more of the following types of
real property (each, a "Mortgaged Property"): (i) residential properties
consisting of multiple rental or cooperatively-owned dwelling units and mobile
home parks; (ii) commercial properties consisting of office buildings, retail
facilities related to the sale of goods and products and facilities related to
providing entertainment, recreation or personal services, hotels and motels,
casinos, health care-related facilities, recreational vehicle parks, warehouse
facilities, mini-warehouse facilities, self-storage facilities, industrial
facilities, parking lots, auto parks, golf courses, arenas and restaurants (or
cooperatively owned units therein); and (iii) mixed use properties (that is,
any combination of the foregoing) and unimproved land. Multifamily properties
(consisting of multiple rental or cooperatively owned dwellings), office
properties and retail properties will represent security for a material
concentration of the Mortgage Loans (and the mortgage loans underlying the MBS
included in a particular Trust Fund) constituting the Trust Fund for any
Series, based on principal balance at the time such Series is issued.
--------------------
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 described in this
Prospectus, or any combination thereof (with respect to any Series,
collectively, "Credit Support"), and interest rate exchange agreements,
interest rate cap or floor agreements or currency exchange agreements described
in this Prospectus, 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".
The Depositor does not intend to list any of the Offered Certificates on
any securities exchange and has not made any other arrangement for secondary
trading of the Offered Certificates. There will have been no public market for
the Certificates of any series prior to the offering thereof. No assurance can
be given that such a market will develop as a result of such an offering. See
"Risk Factors".
(cover continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 17 OF THIS PROSPECTUS FOR CERTAIN
FACTORS TO BE CONSIDERED IN PURCHASING THE OFFERED CERTIFICATES.
--------------------
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, which may include
Bear, Stearns & Co. Inc., an affiliate of the Depositor, as more fully
described under "Method of Distribution" and in the related Prospectus
Supplement.
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.
The date of this Prospectus is August 18, 1998
<PAGE>
(cover continued)
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".
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 Depositor 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 Collateral or Trust Fund, as the case may be,
or a designated portion thereof as a "real estate mortgage investment conduit"
(each, a "REMIC") for federal income tax purposes. If applicable, the
Prospectus Supplement for a Series of Securities will specify which Class or
Classes of such Series will be considered to be regular interests in the
related REMIC and which Class or Classes will be designated as the residual
interest in the related REMIC. See "Certain Federal Income Tax Consequences".
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
2
<PAGE>
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) whether one or
more REMIC elections will be made and the designation of the "regular
interests" and "residual interests" in each REMIC to be created; (viii) the
initial percentage ownership interest in the related Trust Fund to be evidenced
by each class of Certificates of such series; (ix) information concerning the
trustee (as to any series, the "Trustee") of the related Trust Fund; (x) if the
related Trust Fund includes Mortgage Loans, information concerning the master
servicer (as to any series, the "Master Servicer") and any special servicer (as
to any series, the "Special Servicer") of such Mortgage Loans; (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 Depositor 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
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its
Regional Offices located as follows: Chicago Regional Office, 500 West Madison,
14th Floor, Chicago, Illinois 60661; and New York Regional Office, Seven World
Trade Center, New York, New York 10048. The Commission also maintains a World
Wide Web site which provides on-line access to reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission at the address "http://www.sec.gov."
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 Master Servicer or Trustee for each series 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 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 such 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 Depositor 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.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Depositor with respect to a Trust Fund pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange
3
<PAGE>
Act, prior to the termination of an offering of Offered Certificates evidencing
interests therein. The Depositor 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
Depositor should be directed in writing to its principal executive offices at
245 Park Avenue, New York, New York 10167, Attention: James G. Reichek, or by
telephone at 212-272-2000. The Depositor has determined that its financial
statements will not be material to the offering of any Offered Certificates.
4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT .................................................................... 2
AVAILABLE INFORMATION .................................................................... 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE ........................................ 3
SUMMARY OF PROSPECTUS .................................................................... 9
RISK FACTORS ............................................................................. 17
Secondary Market ....................................................................... 17
Limited Assets ......................................................................... 17
Prepayments; Average Life of Certificates; Yields ...................................... 18
Limited Nature of Ratings .............................................................. 19
Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans--General ..... 19
Risks Particular to Multifamily Rental Properties ..................................... 21
Risks Particular to Cooperatively-Owned Apartment Buildings. .......................... 21
Risks Particular to Retail Properties ................................................. 21
Balloon Payments; Borrower Default ..................................................... 22
Credit Support Limitations ............................................................. 22
Leases and Rents ....................................................................... 23
Environmental Risks .................................................................... 23
Special Hazard Losses .................................................................. 24
ERISA Considerations ................................................................... 24
Certain Federal Tax Considerations Regarding Residual Certificates ..................... 24
Certain Federal Tax Considerations Regarding Original Issue Discount ................... 25
Book-Entry Registration ................................................................ 25
Delinquent Mortgage Loans .............................................................. 25
DESCRIPTION OF THE TRUST FUNDS ........................................................... 25
General ................................................................................ 25
Mortgage Loans ......................................................................... 26
General .............................................................................. 26
Mortgage Loans Secured by Multifamily Rental Properties .............................. 26
Mortgage Loans Secured by Cooperatively-Owned Apartment Buildings .................... 27
Mortgage Loans Secured by Retail Properties .......................................... 28
Default and Loss Considerations with Respect to the Mortgage Loans ................... 28
Payment Provisions of the Mortgage Loans ............................................. 30
Mortgage Loan Information in Prospectus Supplements .................................. 30
MBS .................................................................................... 31
Certificate Accounts ................................................................... 32
Credit Support ......................................................................... 32
Cash Flow Agreements ................................................................... 32
YIELD AND MATURITY CONSIDERATIONS ........................................................ 32
General ................................................................................ 32
Pass-Through Rate ...................................................................... 32
Payment Delays ......................................................................... 33
Certain Shortfalls in Collections of Interest .......................................... 33
Yield and Prepayment Considerations .................................................... 33
Weighted Average Life and Maturity ..................................................... 35
Controlled Amortization Classes and Companion Classes .................................. 36
Other Factors Affecting Yield, Weighted Average Life and Maturity ...................... 36
Balloon Payments; Extensions of Maturity ............................................. 36
Negative Amortization ................................................................ 37
Foreclosures and Payment Plans ....................................................... 37
Losses and Shortfalls on the Mortgage Assets ......................................... 37
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Additional Certificate Amortization ............................................... 38
Optional Early Termination ........................................................ 38
THE DEPOSITOR ......................................................................... 38
USE OF PROCEEDS ....................................................................... 39
DESCRIPTION OF THE CERTIFICATES ....................................................... 39
General ............................................................................. 39
Distributions ....................................................................... 39
Distributions of Interest on the Certificates ....................................... 40
Distributions of Principal on the Certificates ...................................... 41
Distributions on the Certificates in Respect of Prepayment Premiums or in Respect
of Equity Participations ........................................................... 41
Allocation of Losses and Shortfalls ................................................. 42
Advances in Respect of Delinquencies ................................................ 42
Reports to Certificateholders ....................................................... 43
Voting Rights ....................................................................... 44
Termination ......................................................................... 44
Book-Entry Registration and Definitive Certificates ................................. 45
DESCRIPTION OF THE POOLING AGREEMENTS ................................................. 47
General ............................................................................. 47
Assignment of Mortgage Loans; Repurchases ........................................... 47
Representations and Warranties; Repurchases ......................................... 48
Collection and Other Servicing Procedures ........................................... 49
Sub-Servicers ....................................................................... 49
Special Servicers ................................................................... 50
Certificate Account ................................................................. 50
General ........................................................................... 50
Deposits .......................................................................... 50
Withdrawals ....................................................................... 51
Modifications, Waivers and Amendments of Mortgage Loans ............................. 53
Realization Upon Defaulted Mortgage Loans ........................................... 53
Hazard Insurance Policies ........................................................... 55
Due-on-Sale and Due-on-Encumbrance Provisions ....................................... 56
Servicing Compensation and Payment of Expenses ...................................... 56
Evidence as to Compliance ........................................................... 56
Certain Matters Regarding the Master Servicer and the Depositor ..................... 57
Events of Default ................................................................... 58
Rights Upon Event of Default ........................................................ 58
Amendment ........................................................................... 59
List of Certificateholders .......................................................... 59
The Trustee ......................................................................... 59
Duties of the Trustee ............................................................... 60
Certain Matters Regarding the Trustee ............................................... 60
Resignation and Removal of the Trustee .............................................. 60
DESCRIPTION OF CREDIT SUPPORT ......................................................... 61
General ............................................................................. 61
Subordinate Certificates ............................................................ 61
Cross-Support Provisions ............................................................ 61
Insurance or Guarantees with Respect to Mortgage Loans .............................. 62
Letter of Credit .................................................................... 62
Certificate Insurance and Surety Bonds .............................................. 62
Reserve Funds ....................................................................... 62
Credit Support with Respect to MBS .................................................. 63
</TABLE>
6
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<TABLE>
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CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS .................................. 63
General ................................................................ 63
Types of Mortgage Instruments .......................................... 63
Leases and Rents ....................................................... 64
Personalty ............................................................. 64
Foreclosure ............................................................ 64
General .............................................................. 64
Foreclosure procedures vary from state to state ...................... 64
Judicial Foreclosure ................................................. 64
Equitable Limitations on Enforceability of Certain Provisions ........ 65
Non-Judicial Foreclosure/Power of Sale ............................... 65
Public Sale .......................................................... 65
Rights of Redemption ................................................. 66
Anti-Deficiency Legislation .......................................... 67
Leasehold Risks ........................................................ 67
Cooperative Shares ..................................................... 68
Bankruptcy Laws ........................................................ 68
Environmental Risks .................................................... 71
Due-on-Sale and Due-on-Encumbrance Provisions .......................... 72
Subordinate Financing .................................................. 72
Default Interest and Limitations on Prepayments ........................ 73
Adjustable Rate Loans .................................................. 73
Applicability of Usury Laws ............................................ 73
Soldiers' and Sailors' Civil Relief Act of 1940 ........................ 73
Type of Mortgaged Property ............................................. 74
Americans with Disabilities Act ........................................ 74
Forfeitures in Drug and RICO Proceedings ............................... 74
CERTAIN FEDERAL INCOME TAX CONSEQUENCES .................................. 76
Federal Income Tax Consequences for REMIC Certificates ................. 76
General .............................................................. 76
Status of REMIC Certificates ......................................... 76
Qualification as a REMIC ............................................. 77
Taxation of Regular Certificates ....................................... 79
General .............................................................. 79
Original Issue Discount .............................................. 79
Acquisition Premium .................................................. 81
Variable Rate Regular Certificates ................................... 81
Deferred Interest .................................................... 83
Market Discount ...................................................... 83
Premium .............................................................. 84
Election to Treat All Interest Under the Constant Yield Method ....... 84
Sale or Exchange of Regular Certificates ............................. 84
Treatment of Losses .................................................. 85
Taxation of Residual Certificates ...................................... 86
Taxation of REMIC Income ............................................. 86
Basis and Losses ..................................................... 87
Treatment of Certain Items of REMIC Income and Expense ............... 87
Original Issue Discount and Premium .................................. 87
Deferred Interest .................................................... 88
Market Discount ...................................................... 88
Premium .............................................................. 88
Limitations on Offset or Exemption of REMIC Income ................... 88
</TABLE>
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<TABLE>
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<S> <C>
Tax-Related Restrictions on Transfer of Residual Certificates .................. 89
Disqualified Organizations ..................................................... 89
Noneconomic Residual Interests ................................................. 90
Foreign Investors .............................................................. 91
Sale or Exchange of a Residual Certificate ..................................... 91
Mark to Market Regulations ..................................................... 92
Taxes That May Be Imposed on the REMIC Pool ...................................... 92
Prohibited Transactions ........................................................ 92
Contributions to the REMIC Pool After the Startup Day .......................... 92
Net Income from Foreclosure Property ........................................... 93
Liquidation of the REMIC Pool .................................................... 93
Administrative Matters ........................................................... 93
Limitations on Deduction of Certain Expenses ..................................... 93
Taxation of Certain Foreign Investors ............................................ 94
Regular Certificates ........................................................... 94
Residual Certificates .......................................................... 94
Backup Withholding ............................................................... 95
Reporting Requirements ........................................................... 95
Federal Income Tax Consequences For Certificates as to Which No REMIC Election
Is Made ......................................................................... 96
Standard Certificates .......................................................... 96
General ....................................................................... 96
Tax Status .................................................................... 96
Premium and Discount ........................................................... 97
Premium ....................................................................... 97
Original Issue Discount ....................................................... 97
Market Discount ............................................................... 97
Recharacterization of Servicing Fees. .......................................... 97
Sale or Exchange of Standard Certificates ..................................... 98
Stripped Certificates ............................................................ 98
General ........................................................................ 98
Status of Stripped Certificates ................................................ 100
Taxation of Stripped Certificates .............................................. 100
Original Issue Discount ........................................................ 100
Sale or Exchange of Stripped Certificates ...................................... 100
Purchase of More Than One Class of Stripped Certificates ....................... 101
Possible Alternative Characterizations ......................................... 101
Federal Income Tax Consequences for FASIT Certificates ........................... 101
Reporting Requirements and Backup Withholding .................................... 102
Taxation of Certain Foreign Investors ............................................ 102
STATE AND OTHER TAX CONSIDERATIONS ................................................. 102
ERISA CONSIDERATIONS ............................................................... 102
General .......................................................................... 102
Plan Asset Regulations ........................................................... 103
Administrative Exemptions ........................................................ 104
Unrelated Business Taxable Income; Residual Certificates ......................... 104
LEGAL INVESTMENT ................................................................... 104
METHOD OF DISTRIBUTION ............................................................. 106
LEGAL MATTERS ...................................................................... 107
FINANCIAL INFORMATION .............................................................. 107
RATING ............................................................................. 108
INDEX OF PRINCIPAL DEFINITIONS ..................................................... 109
</TABLE>
8
<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").
DEPOSITOR................... Bear Stearns Commercial Mortgage Securities
Inc., a Delaware corporation. See "The
Depositor".
MASTER SERVICER............. The master servicer (the "Master Servicer"), if
any, for a series of Certificates will be named
in the related Prospectus Supplement. The Master
Servicer for any series of Certificates may be an
affiliate of the Depositor or a Special Servicer.
See "Description of the Pooling
Agreements--Collection and Other Servicing
Procedures".
SPECIAL SERVICER............ One or more special servicers (each, a "Special
Servicer"), if any, for a series of Certificates
will be named, or the circumstances under which a
Special Servicer will be appointed will be
described, in the related Prospectus Supplement.
A Special Servicer for any series of Certificates
may be an affiliate of the Depositor or the
Master Servicer. See "Description of the Pooling
Agreements--Special Servicers".
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".
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 loans or participations therein, together
with installment sales contracts, or any
combination thereof (collectively, the "Mortgage
Loans") secured by liens on, or security
interests in, (i) residential properties
consisting of five or more rental or
cooperatively-owned dwelling units or by shares
allocable to a number of such units and
proprietary leases appurtenant thereto (the
"Multifamily Properties") or and mobile home
parks, (ii) commercial properties consisting of
office buildings, retail facilities related to
the sale of goods and products and facilities
related to providing entertainment, recreation or
personal services, hotels and motels, casinos,
health care-related facilities, recreational
vehicle parks, warehouse facilities,
mini-warehouse facilities, self-storage
facilities, industrial facilities, parking lots,
auto parks, golf courses,
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<PAGE>
arenas and restaurants (or cooperatively owned
units therein) and (iii) mixed use properties
(that is, any combination of the foregoing) and
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 Depositor 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. 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 no accrual of interest or 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, (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 or partially amortizing or
non-amortizing, with a balloon payment due on
its stated maturity date, (iv) may prohibit over
its term or for a certain period prepayments
and/or require payment of a premium or a yield
maintenance penalty in connection with certain
prepayments and (v) may provide for payments of
principal, interest or both, on due dates that
occur monthly, quarterly, semi-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 a principal
balance at origination of not less than $25,000
and 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 Depositor;
however, some or all of the Mortgage Loans in
any Trust Fund may have been originated by an
affiliate of the Depositor. 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) private 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
Governmental 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
10
<PAGE>
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".
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 described herein
and in such 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 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
described in this Prospectus, or a combination
thereof (any such coverage with respect to the
Certificates of any series, "Credit Support").
The amount and types of any Credit Support, 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
interest rate exchange agreements, interest rate
cap or floor agreements, or currency exchange
agreements, which agreements are 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
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<PAGE>
Prospectus Supplement for the related series. In
addition, the related Prospectus Supplement will
contain certain information that pertains to the
obligor or counterparty 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, among other things: (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 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; (vi) provide for
distributions of principal thereof to be made,
subject to available funds, based on a specified
principal payment schedule or other methodology;
or (vii) provide for distribution based on
collections on the Mortgage Assets in the
related Trust Fund attributable to prepayment
premiums, yield maintenance penalties or equity
participations.
Each class of Certificates, other than certain
classes of Stripped Interest Certificates and
certain classes of Residual Certificates (as
defined herein), will have a stated principal
amount (a "Certificate Balance"); and each class
of Certificates, other than certain classes of
Stripped Principal Certificates and certain
classes of Residual Certificates, will accrue
interest on its Certificate Balance or, in the
case of certain classes of Stripped Interest
Certificates, on a notional amount (a "Notional
Amount"), based on a fixed, variable or
adjustable interest rate (a "Pass-Through
Rate"). The related Prospectus Supplement will
specify the Certificate Balance and/or Notional
Amount and the Pass-Through Rate (or, in the
case of a variable or
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<PAGE>
adjustable Pass-Through Rate, the method for
determining such rate), as applicable, for each
class of Offered Certificates.
The Certificates will not be guaranteed or
insured by the Depositor or any of its
affiliates, by any governmental agency or
instrumentality or by any other person or
entity, unless otherwise provided in the related
Prospectus Supplement. See "Risk
Factors--Limited Assets" 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 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".
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 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 Certificates of a series 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 each Prospectus Supplement,
distributions of principal with respect to the
related series of Certificates will be made on
each Distribution Date to the holders of the
class or classes of Certificates of such
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<PAGE>
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 certain
limitations, 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
Offered 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, a 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 maybe 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 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
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<PAGE>
there purchase 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 Certificates of such
class in fully registered, definitive form
("Definitive Certificates"), except under the
limited circumstances described herein. See "Risk
Factors--Book-Entry Registration" and
"Description of the Certificates-- Book-Entry
Registration and Definitive Certificates".
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES............... The federal income tax consequences to
Certificateholders will vary depending on whether
one or more elections are made to treat the Trust
Fund or specified portions thereof as one or more
"real estate mortgage investment conduits" (each,
a "REMIC") under the provisions of the Internal
Revenue Code of 1986, as amended (the "Code").
The Prospectus Supplement for each series of
Certificates will specify whether one or more
such elections will be made. See "Certain Federal
Income Tax Consequences".
ERISA CONSIDERATIONS........ Fiduciaries of employee benefit plans and
certain other retirement plans and arrangements,
including individual retirement accounts,
individual retirement annuities, Keogh plans, and
collective investment funds and insurance company
general 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 and holding of Offered
Certificates could give rise to a transaction
that is prohibited or is not otherwise
permissible under either ERISA or Section 4975 of
the Code. See "ERISA Considerations" herein and
in the related Prospectus Supplement.
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<PAGE>
LEGAL INVESTMENT............ The Offered Certificates will constitute
"mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of
1984, as amended ("SMMEA") 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 risk 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.
SECONDARY MARKET
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 with respect to any series of
Offered Certificates or class thereof, the market value of such Certificates
will be affected by several factors, including the perceived liquidity 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 Depositor 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
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 Depositor or any of its
affiliates, by any governmental agency or instrumentality or by any other
person or entity; 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
17
<PAGE>
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 and to the extent 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, all or a portion of 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.
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 in a Trust
Fund may affect the average life of one or more classes of Certificates of the
related series, 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, legal and other factors. For example, if prevailing interest rates
fall significantly below the Mortgage Rates borne by the Mortgage Loans
included in a Trust Fund, then, subject to, among other things, the particular
terms of the Mortgage Loans (e.g., provisions that prohibit voluntary
prepayments during specified periods or impose penalties in connection
therewith) and the ability of borrowers to get new financing, principal
prepayments on such Mortgage Loans 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, then principal
prepayments on such Mortgage Loans are likely to be lower than if prevailing
interest rates remain at or below the rates borne by those Mortgage Loans.
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
increases the likelihood 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 increases the
likelihood 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, which 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
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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 disproportionately large,
as compared to the amount of principal, as with certain classes of Stripped
Interest Certificates, a holder might fail to recover 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.
LIMITED NATURE OF 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 recover 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. See "Description
of Credit Support" and "Rating".
FACTORS AFFECTING DELINQUENCY, FORECLOSURE AND LOSS OF THE MORTGAGE
LOANS--GENERAL
General. A description of risks associated with investments in mortgage
loans is included herein under "Certain Legal Aspects of Mortgage Loans".
Mortgage loans made on the security of multifamily
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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 an owner-occupied single-family
property. See "Description of the Trust Funds--Mortgage Loans". The ability of
a borrower to 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 or a small number of significant tenants.
Accordingly, a decline in the financial condition of the borrower or a
significant 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 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; and other factors beyond the control of the Master
Servicer. In the case of Mortgage Loans that represent participation interests
in a mortgage loan, the Trustee's or the Master Servicer's enforcement rights
may be limited in the event of default by the related borrower.
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 that 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.
The ability of a borrower to repay a Mortgage Loan secured by shares allocable
to one or more cooperative dwelling units may be dependent upon the ability of
the dwelling units to generate sufficient rental income, which may be subject
to rent control or stabilization laws, to cover both debt service on the loan
as well as maintenance charges to the cooperative. Further, a Mortgage Loan
secured by cooperative shares is subordinate to the mortgage, if any, on the
cooperative apartment building.
Other multifamily and commercial properties located in the areas of the
Mortgaged Properties and of the same types as the Mortgaged Properties compete
with the Mortgaged Properties to attract residents and customers. The leasing
of real estate is highly competitive. The principal means of competition are
price, location and the nature and condition of the facility to be leased. A
borrower under a Mortgage Loan competes with all lessors and developers of
comparable types of real estate in the area in which the Mortgaged Property is
located. Such lessors or developers could have lower rentals, lower operating
costs, more favorable locations or better facilities. While a borrower under a
Mortgaged Property may renovate, refurbish or expand the Mortgaged Property to
maintain it and remain competitive, such renovation, refurbishment or expansion
may itself entail significant risk. Increased competition could adversely
affect income from and market value of the Mortgaged Properties. In addition,
the business conducted at each Mortgaged Property may face competition from
other industries and industry segments.
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 any such Mortgage Loan, 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. See "Certain Legal Aspects of Mortgage Loans--Foreclosure".
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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.
Risks Particular to Multifamily Rental Properties. Adverse economic
conditions, either local, regional or national, may limit the amount of rent
that can be charged for rental units, may adversely affect tenants' ability to
pay rent and may result in a reduction in timely rent payments or a reduction
in occupancy levels without a corresponding decrease in expenses. Occupancy and
rent levels may also be affected by construction of additional housing units,
local military base closings, company relocations and closings and national and
local politics, including current or future rent stabilization and rent control
laws and agreements. Multifamily apartment units are typically leased on a
short-term basis, and consequently, the occupancy rate of a multifamily rental
property may be subject to rapid decline, including for some of the foregoing
reasons. In addition, the level of mortgage interest rates may encourage
tenants in multifamily rental properties to purchase single-family housing
rather than continue to lease housing or the characteristics of a neighborhood
may change over time or in relation to newer developments. Further, the cost of
operating a multifamily rental property may increase, including the cost of
utilities and the costs of required capital expenditures. Also, multifamily
rental properties may be subject to rent control laws which could impact the
future cash flows of such properties.
Certain multifamily rental properties are eligible to receive low-income
housing tax credits pursuant to Section 42 of the Code ("Section 42
Properties"). However, rent limitations associated therewith may adversely
affect the ability of the applicable borrowers to increase rents to maintain
such Mortgaged Properties in proper condition during periods of rapid inflation
or declining market value of such Mortgaged Properties. In addition, the income
restrictions on tenants imposed by Section 42 of the Code may reduce the number
of eligible tenants in such Mortgaged Properties and result in a reduction in
occupancy rates applicable thereto. Furthermore, some eligible tenants may not
find any differences in rents between the Section 42 Properties and other
multifamily rental properties in the same area to be a sufficient economic
incentive to reside at a Section 42 Property, which may have fewer amenities or
otherwise be less attractive as a residence. All of these conditions and events
may increase the possibility that a borrower may be unable to meet its
obligations under its Mortgage Loan.
Risks Particular to Cooperatively-Owned Apartment Buildings. Generally, a
tenant-shareholder of a cooperative corporation must make a monthly maintenance
payment to the cooperative corporation that owns the subject apartment building
representing such tenant-shareholder's pro rata share of the corporation's
payments in respect of the Mortgage Loan secured by, and all real property
taxes, maintenance expenses and other capital and ordinary expenses with
respect to, such property, less any other income that the cooperative
corporation may realize. Adverse economic conditions, either local regional or
national, may adversely affect tenant-shareholders' ability to make required
maintenance payments, either because such adverse economic conditions have
impaired the individual financial conditions of such tenant-shareholders or
their ability to sub-let the subject apartments. To the extent that a large
number of tenant-shareholders in a cooperatively-owned apartment building rely
on sub-letting their apartments to make maintenance payments, the lender on any
mortgage loan secured by such building will be subject to all the risks that it
would have in connection with lending on the security of a multifamily rental
property. See "--Risks Particular to Multifamily Rental Properties" above. In
addition, if in connection with any cooperative conversion of an apartment
building, the sponsor holds the shares allocated to a large number of the
apartment units, any lender secured by a mortgage on such building will be
subject to a risk associated with such sponsor's creditworthiness.
Risks Particular to Retail Properties. In addition to risks generally
associated with real estate, Mortgage Loans secured by 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, video shopping
networks and selling through the Internet, which reduce the need for retail
space by retail companies), the quality and management philosophy of
management, the
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attractiveness of the properties and the surrounding neighborhood to tenants
and their customers, the public perception of the safety of customers (at
shopping malls and shopping centers, for example) and the need to make major
repairs or improvements to satisfy the needs of major tenants.
Retail properties may be adversely affected if an anchor or other
significant tenant ceases operations at such locations (which may occur on
account of a 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 shopping center play an important part in
generating customer traffic and making the 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 ceases
operations at such property.
BALLOON PAYMENTS; BORROWER DEFAULT
Certain of the Mortgage Loans included in a Trust Fund may be
non-amortizing or only partially amortizing 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
multifamily or commercial, as the case may be, real properties generally.
Neither the Depositor 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 or a Special Servicer will be permitted (within prescribed
limits) to extend and modify Mortgage Loans that are in default or as to which
a payment default is imminent. While the Master Servicer or a Special Servicer
generally will be required to determine that any such extension or modification
is reasonably likely to produce a greater recovery, taking into account the
time value of money, than liquidation, there can be no assurance that any such
extension or modification 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 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 an instrument 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.
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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 based on an assumed level of
defaults, delinquencies and losses on the underlying Mortgage Assets and
certain other factors. 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 Ratings", "Description of the Certificates" and
"Description of Credit Support".
LEASES AND RENTS
Each Mortgage Loan included in any Trust Fund secured by Mortgaged
Property that is subject to leases 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".
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 various federal, state and local laws, ordinances
and regulations, an owner or operator of real estate may be liable for the
costs of removal or remediation of hazardous substances or toxic substances on,
in or beneath such property. Such liability may be imposed without regard to
whether the owner knew of, or was responsible for, the presence of such
hazardous or toxic substances. The cost of any required remediation and the
owner or operator's liability therefor as to any property is generally not
limited under such laws, ordinances and regulations and could exceed the value
of the mortgaged property and the aggregate assets of the owner or operator. In
addition, as to the owners or operators of mortgaged properties that generate
hazardous substances that are disposed of at "off-site" locations, such owners
or operators may be held strictly, jointly and severally liable if there are
releases or threatened releases of hazardous substances at the off-site
locations where such person's hazardous substances were disposed.
Although the federal Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended ("CERCLA"), provides an exemption from the
definition of "owner" for lenders whose primary indicia of ownership in a
particular property is the holding of a security interest, lenders may forfeit,
as a result of their actions with respect to particular borrowers, their
secured creditor exemption and be deemed an owner or operator of property such
that they are liable for remediation costs. See "Certain Legal Aspects of
Mortgage Loans--Environmental Risks" herein. 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
the Master Servicer, acting on behalf of the Trust Fund, may not acquire title
to a Mortgaged Property or assume control of its operation unless the Master
Servicer, based upon a report prepared by a person who regularly conducts
environmental audits, 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". There can be no assurance that any such
requirements of a Pooling Agreement will effectively insulate the related Trust
Fund from potential liability for a materially adverse environmental condition
at a Mortgaged Property.
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SPECIAL HAZARD LOSSES
Unless otherwise specified in a Prospectus Supplement, the Master Servicer
for the related Trust Fund will be required to cause the borrower on each
Mortgage Loan in such Trust Fund 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, the Master 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 certain other kinds of risks. 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. In addition, certain other
retirement plans and arrangements, including individual retirement accounts and
Keogh plans, are subject to Section 4975 of the Code. Due to the complexity of
regulations that govern such plans, prospective investors that are subject to
ERISA or Section 4975 of the Code are urged to consult their own counsel
regarding the consequences under ERISA or the Code of acquisition, ownership
and disposition of the Offered Certificates of any series. See "ERISA
Considerations".
CERTAIN FEDERAL TAX CONSIDERATIONS REGARDING RESIDUAL CERTIFICATES
Holders of 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 in "Certain Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates".
Accordingly, under certain circumstances, holders of Offered Certificates that
constitute Residual Certificates may have taxable income and tax liabilities
arising from such investment during a taxable year in excess of the cash
received during such period. The requirement that holders of 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, even though
holders of Residual Certificates have received full payment of their stated
interest and principal. A portion (or, in certain circumstances, all) of such
Certificateholder's share of the REMIC taxable income may 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. Individual holders of
Residual Certificates may be limited in their ability to deduct servicing fees
and other expenses of the REMIC. In addition, Residual Certificates are subject
to certain restrictions on transfer. Because of the special tax treatment of
Residual Certificates, the taxable income arising in a given year on a Residual
Certificate will not be equal to the taxable income associated with investment
in a corporate bond or stripped instrument having similar cash flow
characteristics and pre-tax yield. Therefore, the after-tax yield on the
Residual Certificate may be significantly less than that of a corporate bond or
stripped instrument having similar cash flow characteristics.
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CERTAIN FEDERAL TAX CONSIDERATIONS REGARDING ORIGINAL ISSUE DISCOUNT
Accrual Certificates will be, and certain of the other Classes of
Certificates of a series may be, issued with "original issue discount" for
federal income tax purposes, which generally will result in recognition of some
taxable income in advance of the receipt of cash attributable to such income.
See "Certain Federal Income Tax Consequences--Federal Income Tax Consequences
for REMIC Certificates--Taxation of Regular Certificates".
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".
DELINQUENT 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
(i.e. beyond any applicable grace period); provided, however, that such
delinquent Mortgage Loans may only constitute up to, but not including, 20% (by
principal balance) of the Trust Fund. If so specified in the related Prospectus
Supplement, the servicing of such Mortgage Loans may be performed by a Special
Servicer. When a Mortgage Loan has a loan-to-value ratio of 100% or more, the
related borrower will have no equity in the related Mortgaged Property. In such
cases, the related borrower may not have an incentive to continue to perform
under the subject Mortgage Loan. In addition, 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 and all mortgage loans senior thereto. In such cases, the related
borrower will be required to pay a portion of such items from sources other
than cash flow from the related Mortgaged Property. If the related borrower
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. Credit Support provided with respect to a
particular Series of Certificates may not cover all losses related to
delinquent Mortgage Loans and, 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) various types of
multifamily or commercial mortgage loans or participations therein (the
"Mortgage Loans"), (ii) pass-through certificates or other mortgage-backed
securities ("MBS") that evidence interests in, or that are secured by pledges
of, one or
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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 Bear Stearns Commercial Mortgage Securities
Inc. (the "Depositor"). Each Mortgage Asset will be selected by the Depositor
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 Depositor. The Mortgage
Assets will not be guaranteed or insured by the Depositor 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 or other
evidences of indebtedness (the "Mortgage Notes") secured by liens on fee or
leasehold estates in properties (the "Mortgaged Properties") consisting of (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") and mobile home parks, (ii)
commercial properties consisting of office buildings, retail facilities related
to the sale of goods and products and facilities related to providing
entertainment, recreation or personal services, hotels and motels, casinos,
health care-related facilities, recreational vehicle parks, warehouse
facilities, mini-warehouse facilities, self-storage facilities, industrial
facilities, parking lots, auto parks, golf courses, arenas and restaurants (or
cooperatively owned units therein) and (iii) mixed use properties (that is, any
combination of the foregoing) and unimproved land (the "Commercial
Properties"). The Multifamily Properties may include mixed commercial and
residential structures, apartment buildings owned by private cooperative
housing corporations ("Cooperatives"), and shares of the Cooperative allocable
to one or more dwelling units occupied by non-owner tenants or to vacant units.
Such liens may be created by mortgages, deeds of trust and similar security
instruments (the "Mortgages"). Each Mortgage will create a first priority or
junior 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 two years. Unless otherwise specified in the related
Prospectus Supplement, each Mortgage Loan will have been originated by a person
(the "Originator") other than the Depositor; however, the Originator may be or
may have been an affiliate of the Depositor.
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, some of the Mortgage Loans included in the Trust
Fund for a particular Series of Certificates may be 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.
Mortgage Loans Secured by Multifamily Rental Properties. Significant
factors determining the value and successful operation of a multifamily rental
property are the location of the property, the number of competing residential
developments in the local market (such as apartment buildings, manufactured
housing communities and site-built single family homes), the physical
attributes of the multifamily building (such as its age and appearance) and
state and local regulations affecting such property. In addition, the
successful operation of an apartment building will depend upon other factors
such as its reputation, the ability of management to provide adequate
maintenance and insurance, and the types of services it provides.
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Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statutes for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection.
For example, there are provisions that limit the basis on which a landlord may
terminate a tenancy or increase its rent or prohibit a landlord from
terminating a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment
buildings. These ordinances may limit rent increases to fixed percentages, to
percentages of increases in the consumer price index, to increases set or
approved by a governmental agency, or to increases determined through mediation
or binding arbitration. In many cases, the rent control laws do not provide for
decontrol of rental rates upon vacancy of individual units. Any limitations on
a borrower's ability to raise property rents may impair such borrower's ability
to repay its Mortgage Loan from its net operating income or the proceeds of a
sale or refinancing of the related Mortgaged Property.
Adverse economic conditions, either local, regional or national, may limit
the amount of rent that can be charged, may adversely affect tenants' ability
to pay rent 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,
company relocations and closings and national and local politics, including
current or future rent stabilization and rent control laws and agreements.
Multifamily apartment units are typically leased on a short-term basis, and
consequently, the occupancy rate of a multifamily rental property may be
subject to rapid decline, including for some of the foregoing reasons. In
addition, the level of mortgage interest rates may encourage tenants to
purchase single-family housing rather than continue to lease housing. The
location and construction quality of a particular building may affect the
occupancy level as well as the rents that may be charged for individual units.
The characteristics of a neighborhood may change over time or in relation to
newer developments.
Mortgage Loans Secured by Cooperatively-Owned Apartment Buildings. A
cooperative apartment building and the land under the building are owned or
leased by a non-profit cooperative corporation. The cooperative corporation is
in turn owned by tenant-shareholders who, through ownership of stock, shares or
membership certificates in the corporation, receive proprietary leases or
occupancy agreements which confer exclusive rights to occupy specific
apartments or units. Generally, a tenant-shareholder of a cooperative
corporation must make a monthly maintenance payment to the corporation
representing such tenant-shareholder's pro rata share of the corporation's
payments in respect of any mortgage loan secured by, and all real property
taxes, maintenance expenses and other capital and ordinary expenses with
respect to, the real property owned by such cooperative corporation, less any
other income that the cooperative corporation may realize. Such payments to the
cooperative corporation are in addition to any payments of principal and
interest the tenant-shareholder must make on any loans of the
tenant-shareholder secured by its shares in the corporation.
A cooperative corporation is directly responsible for building management
and payment of real estate taxes and hazard and liability insurance premiums. A
cooperative corporation's ability to meet debt service obligations on a
mortgage loan secured by the real property owned by such corporation, as well
as all other operating expenses of such property, is dependent primarily upon
the receipt of maintenance payments from the tenant-shareholders, together with
any rental income from units or commercial space that the cooperative
corporation might control. Unanticipated expenditures may in some cases have to
be paid by special assessments on the tenant-shareholders. A cooperative
corporation's ability to pay the amount of any balloon payment due at the
maturity of a mortgage loan secured by the real property owned by such
cooperative corporation depends primarily on its ability to refinance the
mortgage loan. Neither the Depositor nor any other person will have any
obligation to provide refinancing for any of the Mortgage Loans.
In a typical cooperative conversion plan, the owner of a rental apartment
building contracts to sell the building to a newly formed cooperative
corporation. Shares are allocated to each apartment unit by
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the owner or sponsor, and the current tenants have a certain period to
subscribe at prices discounted from the prices to be offered to the public
after such period. As part of the consideration for the sale, the owner or
sponsor receives all the unsold shares of the cooperative corporation. The
sponsor usually also controls the corporation's board of directors and
management for a limited period of time.
Each purchaser of shares in the cooperative corporation generally enters
into a long-term proprietary lease which provides the shareholder with the
right to occupy a particular apartment unit. However, many cooperative
conversion plans are "non-eviction" plans. Under a non-eviction plan, a tenant
at the time of conversion who chooses not to purchase shares is entitled to
reside in the unit as a subtenant from the owner of the shares allocated to
such apartment unit. Any applicable rent control or rent stabilization laws
would continue to be applicable to such subtenancy, and the subtenant may be
entitled to renew its lease for an indefinite number of times, with continued
protection from rent increases above those permitted by any applicable rent
control and rent stabilization laws. The shareholder is responsible for the
maintenance payments to the cooperative without regard to its receipt or
non-receipt of rent from the subtenant, which may be lower than maintenance
payments on the unit. Newly-formed cooperative corporations typically have the
greatest concentration of non-tenant shareholders.
Mortgage Loans Secured by Retail Properties. Retail properties generally
derive all or a substantial percentage of their income from lease payments from
commercial tenants. Income from and the market value of retail properties is
dependent on various factors including, but not limited to, the ability to
lease space in such properties, the ability of tenants to meet their lease
obligations, the possibility of a significant tenant becoming bankrupt or
insolvent, as well as fundamental aspects of real estate such as location and
market demographics.
The correlation between the success of tenant businesses and property
value is more direct with respect to retail properties than other types of
commercial property because a significant component of the total rent paid by
retail tenants is often tied to a percentage of gross sales. Declines in tenant
sales will cause a corresponding decline in percentage rents and may cause such
tenants to become unable to pay their rent or other occupancy costs. The
default by a tenant under its lease could result in delays and costs in
enforcing the lessor's rights. Repayment of the related Mortgage Loans will be
affected by the expiration of space leases and the ability of the respective
borrowers to renew or relet the space on comparable terms. Even if vacated
space is successfully relet, the costs associated with reletting, including
tenant improvements, leasing commissions and free rent, could be substantial
and could reduce cash flow from the retail properties. The correlation between
the success of tenant businesses and property value is increased when the
property is a single tenant property.
Whether a shopping center is "anchored" or "unanchored" is also an
important distinction. Anchor tenants in shopping centers traditionally have
been a major factor in the public's perception of a shopping center. The anchor
tenants at a shopping center play an important part in generating customer
traffic and making a center a desirable location for other tenants of the
center. The failure of an anchor tenant to renew its leases, the termination of
an anchor tenant's lease, the bankruptcy or economic decline of an anchor
tenant, or the cessation of the business of an anchor tenant (notwithstanding
any continued payment of rent) can have a material negative effect on the
economic performance of a shopping center. Furthermore, the correlation between
the success of tenant businesses and property value is increased when the
property is a single tenant property.
Unlike certain other types of commercial properties, retail properties
also face competition from sources outside a given real estate market.
Catalogue retailers, home shopping networks, telemarketing, selling through the
Internet, and outlet centers all compete with more traditional retail
properties for consumer dollars. Continued growth of these alternative retail
outlets (which are often characterized by lower operating costs) could
adversely affect the retail properties.
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
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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.
Lenders typically look to the Debt Service Coverage Ratio of a loan
secured by income-producing property as an important factor in evaluating 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, with respect to a Mortgage Loan secured by a Cooperative apartment
building, maintenance payments from tenant-stockholders of a Cooperative) may
be affected by the condition of the applicable real estate market and/or the
economy of the area in which the Mortgaged Property is located or the industry
that it services. In addition, properties typically leased, occupied or used on
a short-term basis, such as certain healthcare-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 plants. Commercial Properties may be owner-occupied or
leased to a small number of tenants. Thus, the Net Operating Income of such a
Mortgaged Property may depend substantially on the financial condition of the
borrower or a 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
factor in evaluating 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 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 (a) the greater the
incentive of the borrower to perform under the terms of the related Mortgage
Loan (in order to protect such equity) and (b) 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
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will likely continue to fluctuate from time to time based upon changes in
economic conditions, the real estate market and other factors described herein.
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 and discount 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 Depositor 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 can be no
assurance that all of such 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--Risks Associated with
Certain Mortgage Loans and Mortgaged 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 (i) have had
individual principal balances at origination of not less than $25,000, (ii)
have had original terms to maturity of not more than 40 years and (iii) 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 no accrual of interest or 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, (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 or partially
amortizing or non- amortizing, with a balloon payment due on its stated
maturity date, and (iv) may prohibit over its term or for a certain period
prepayments (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 certain
prepayments, 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 appreciation of the related Mortgaged Property, or profits realized from the
operation or disposition of such Mortgaged Property or the benefit, if any,
resulting from the refinancing of the Mortgage Loan (any such provision, 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 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 in
the related Trust Fund, 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 Depositor, 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
earliest and latest 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 original Loan-to-Value Ratios
of the Mortgage Loans, or the range thereof, and the weighted average original
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Loan-to-Value Ratio of the Mortgage Loans, (vi) the Mortgage Rates borne by the
Mortgage Loans, or 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 also
contain certain information available to the Depositor that pertains to the
provisions of leases and the nature of tenants of the Mortgaged Properties. If
the Depositor 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, unless otherwise
specified in the related Prospectus Supplement, 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.
Any MBS will have been issued pursuant to a participation and servicing
agreement, 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 Issuer, 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 be a function of the characteristics of the
underlying mortgage loans and other factors 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 Depositor
and appropriate under the circumstances, such other information in respect of
the underlying mortgage loans
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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 described herein and in such
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 Prospectus Supplement for a series of Certificates,
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 such series in the form of subordination of one or more other
classes of Certificates of such series or by one or more other types of credit
support arrangements, such as letters of credit, insurance policies,
guarantees, surety bonds or reserve funds, among others, or a combination
thereof (any such coverage with respect to the Certificates of any series,
"Credit Support"). The amount and types of Credit Support, 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 Certificates. See "Risk Factors--Credit Support
Limitations" and "Description of Credit Support".
CASH FLOW AGREEMENTS
If so provided in the Prospectus Supplement for a series of Certificates,
the related Trust Fund may include guaranteed investment contracts pursuant to
which moneys held in the funds and accounts established for such series will be
invested at a specified rate. The Trust Fund may also include interest rate
exchange agreements, interest rate cap or floor agreements, or currency
exchange agreements, which agreements are designed to reduce the effects of
interest 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 or
counterparty, will be described in the Prospectus Supplement for a series of
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 an 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 of the
related series.
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
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Trust Fund. The Prospectus Supplement with respect to any series of
Certificates will specify the Pass-Through Rate for each class of Offered
Certificates of such series 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 on the amount of such prepayment
only through the date of such prepayment, instead of through 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 Prospectus Supplement for a series of Certificates, 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
the related 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 or other specified person, be
distributed to the holders of the Certificates of such series 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 each series of Certificates will describe the manner
in which any such Prepayment Interest Shortfalls will be allocated among the
classes of such Certificates. If so specified in the Prospectus Supplement for
a series of Certificates, the Master Servicer for such series will be required
to apply some or all of its servicing compensation for the corresponding period
to offset the amount of any such Prepayment Interest 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, may 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.
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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
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 principal payments.
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 Certificates
of any series to receive distributions in respect of 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 to provide information that will enable investors to
predict, yields or prepayment rates.
The Depositor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience
of a group of multifamily or commercial mortgage loans. However, the extent of
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.
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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
a different index, margin or rate cap or floor 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
Depositor 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 at rates corresponding to various percentages of CPR or SPA, or
at such other rates specified in such Prospectus Supplement. Such tables
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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, which will entitle the holders thereof to receive principal
distributions according to a specified principal payment schedule, which
schedule is supported by creating priorities, as and to the extent described in
the related Prospectus Supplement, to receive 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 on
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 payments 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
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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 or a Special Servicer, to the extent and under the
circumstances set forth herein and in the related Prospectus Supplement, may be
authorized to modify Mortgage Loans 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 provides for the payment of
interest calculated at a rate lower than the rate at which interest accrues
thereon 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 may 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 that would bear the
effects of a slower rate of amortization on such Mortgage Loans) may increase
as a result of such feature.
Negative amortization also may occur in respect of an ARM Loan that limits
the amount by which its scheduled payment may adjust in response to a change in
its Mortgage Rate, provides that its scheduled payment will adjust less
frequently than its Mortgage Rate or provides for constant scheduled payments
notwithstanding adjustments to its Mortgage Rate. Conversely, during a period
of declining interest rates, the scheduled payment on such a Mortgage Loan 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
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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 be effected by a reduction in the entitlements to interest and/or
Certificate Balances of one or more such classes of Certificates, or by
establishing a priority of payments among such classes of Certificates.
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 during specified periods 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 accrued on the 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.
THE DEPOSITOR
Bear Stearns Commercial Mortgage Securities Inc., the Depositor, is a
Delaware corporation organized on April 20, 1987. It has remained inactive
until the filing of the Registration Statement of which this Prospectus is a
part. The primary business of the Depositor is to acquire Mortgage Assets and
sell interests therein or bonds secured thereby. It is an affiliate of Bear,
Stearns & Co. Inc. The Depositor maintains its principal office at 245 Park
Avenue, New York, New York 10167. Its telephone number is (212) 272-2000. The
Depositor does not have, nor is it expected in the future to have, any
significant assets.
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USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates of any
series will be applied by the Depositor to the purchase of Trust Assets or will
be used by the Depositor for general corporate purposes. The Depositor 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 Depositor, 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, among other things: (i) provide for the
accrual of interest thereon at a fixed, variable or adjustable rate; (ii) 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; (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; (vii) provide for distributions
of principal thereof to be made, subject to available funds, based on a
specified principal payment schedule or other methodology; or (viii) provide
for distributions based on collections on the Mortgage Assets in the related
Trust Fund attributable to Prepayment Premiums and Equity Participations.
Each class of Offered Certificates of a series will be issued in minimum
denominations corresponding to the principal balances or, in case of certain
classes of Stripped Interest Certificates or 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. See "Risk
Factors--Limited Liquidity" 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 holders of Certificates
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.
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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 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. 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
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 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 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, all or a portion of the Master Servicer's
servicing compensation) that are applied to offset the amount of such
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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 ON THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Interest Certificates and certain classes of 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, will be further reduced 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 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
Offered 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.
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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 be effected by a reduction in the entitlements to interest and/or
Certificate Balances of one or more such classes of Certificates, or by
establishing a priority 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, a 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 the Master
Servicer, a Special Servicer or the Trustee if, in the good faith judgment of
the Master Servicer, a Special Servicer or the 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 the Master Servicer, a Special Servicer or the
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.
If advances have been made by the 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 the 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 will 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.
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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, the 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) if the related Trust Fund includes Mortgage Loans, the aggregate
amount of advances included in such distribution;
(vi) if the related Trust Fund includes Mortgage Loans, the amount of
servicing compensation received by the related Master Servicer (and, if
payable directly out of the related Trust Fund, by any Special Servicer and
any Sub-Servicer) and such other customary information as the reporting
party deems necessary or desirable, or that a Certificateholder reasonably
requests, to enable Certificateholders to prepare their tax returns;
(vii) information regarding the aggregate principal balance of the
related Mortgage Assets on or about such Distribution Date;
(viii) if the related Trust Fund includes Mortgage Loans, information
regarding the number and aggregate principal balance of such Mortgage Loans
that are delinquent in varying degrees (including specific identification
of Mortgage Loans that are more than 60 days delinquent or in foreclosure);
(ix) if the related Trust Fund includes Mortgage Loans, information
regarding the aggregate amount of losses incurred and principal prepayments
made with respect to such Mortgage Loans during the related Prepayment
Period (that is, the specified period, generally equal in length to the
time period between Distribution Dates, during which prepayments and other
unscheduled collections on the Mortgage Loans in the related Trust Fund
must be received in order to be distributed on a particular Distribution
Date);
(x) 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;
(xi) 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 and, if determinable, for the next
succeeding Distribution Date;
(xii) 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;
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(xiii) 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
(xiv) to the extent not otherwise reflected through the information
furnished pursuant to subclauses (x) and (xiii) above, the amount of Credit
Support being afforded by any classes of Subordinate Certificates.
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 Certificates may describe additional information to be included in reports
to the holders of the Offered Certificates of such series.
Within a reasonable period of time after the end of each calendar year,
the Master Servicer or Trustee for a series of Certificates, 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 of such series 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. Such obligation will be deemed to have been
satisfied to the extent that substantially comparable information is provided
pursuant to any requirements of the Code as are from time to time in force.
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. 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 the 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
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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 designated 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 Prospectus Supplement for a series of Certificates,
one or more classes of the Offered Certificates of such 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.
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.
To facilitate subsequent transfer, all Offered Certificates deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Offered Certificates with DTC and their registration
with Cede & Co. effect no change in beneficial ownership. 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
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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 Depositor or any
Trustee or Master 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 Depositor 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 as Definitive
Certificates to Certificate Owners or their nominees, rather than to DTC or its
nominee, only if (i) the Depositor advises the Trustee in writing that DTC is
no longer willing or able to discharge properly its responsibilities as
depository with respect to such Certificates and the Depositor is unable to
locate a qualified successor or (ii) the Depositor, 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 for the related series
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.
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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 Depositor, the Trustee, the Master
Servicer and, in some cases, a Special Servicer appointed as of the date of the
Pooling Agreement. However, a Pooling Agreement may 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 the Master 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, an affiliate of the
Depositor, or the Mortgage Asset Seller or an affiliate thereof, may perform
the functions of Master Servicer or Special Servicer. 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 Master Servicer or a Special Servicer
for the related series will not be allocated Voting Rights.
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 Depositor 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 Bear
Stearns Commercial Mortgage Securities Inc., 245 Park Avenue, New York, New
York 10167, Attention: James G. Reichek.
ASSIGNMENT OF MORTGAGE LOANS; REPURCHASES
At the time of issuance of any series of Certificates, the Depositor 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 Depositor 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 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
Depositor 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
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a certified copy thereof) with evidence of recording indicated thereon and an
assignment of the Mortgage to the Trustee in recordable form. Unless otherwise
provided in the Prospectus Supplement for a series of Certificates, the related
Pooling Agreement will require that the Depositor or another party thereto
promptly cause each such assignment of Mortgage to be recorded in the
appropriate public office for real property records.
The Trustee (or a custodian appointed by the Trustee) for a series of
Certificates 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 such 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 Certificateholders of the related
series, the Trustee (or such custodian) will be required to notify the Master
Servicer and the Depositor, 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 neither the
Depositor nor, unless it is the Mortgage Asset Seller, the Master Servicer 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, unless otherwise specified
in the related Prospectus Supplement, 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 Prospectus Supplement for a series of
Certificates, the Depositor 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 (the 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 Depositor or an affiliate of the
Depositor, the Master Servicer, a Special Servicer or another person acceptable
to the Depositor. The Warranting Party, if other than the Mortgage Asset
Seller, will be identified in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will provide that the Master 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 Certificateholders of the
related series. If such Warranting Party cannot cure such breach within a
specified period following the date on which it was notified of such
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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 neither the Depositor nor the Master Servicer, in either
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 Depositor
will not include any Mortgage Loan in the Trust Fund for any series of
Certificates if anything has come to the Depositor'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 for any Trust Fund, directly or through Sub-Servicers,
will be required to make reasonable efforts to collect all scheduled payments
under the Mortgage Loans in such Trust Fund, and will 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 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 for any Trust Fund, directly or through Sub-Servicers,
will also 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, if required under the related Pooling
Agreement, 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; negotiating
modifications; conducting property inspections on a periodic or other basis;
managing (or overseeing the management of) 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. 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
The Master 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 will remain obligated under the
related Pooling Agreement. A Sub-Servicer for any series of Certificates may be
an affiliate of the Depositor or Master Servicer. Unless otherwise provided in
the related Prospectus Supplement, each sub-servicing agreement between the
Master Servicer and a Sub-Servicer (a "Sub-Servicing Agreement") will provide
that, if for any reason the Master Servicer is no longer acting in such
capacity, the Trustee or any successor Master Servicer may assume the Master
Servicer's rights and obligations under such Sub-Servicing Agreement. The
Master Servicer will be required to monitor the performance of
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Sub-Servicers retained by it and will 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, the Master
Servicer will be solely liable for all fees owed by it to any Sub-Servicer,
irrespective of whether the Master Servicer's compensation pursuant to the
related Pooling Agreement is sufficient to pay such fees. Each Sub-Servicer
will be reimbursed by the Master Servicer that retained it for certain
expenditures which it makes, generally to the same extent the Master Servicer
would be reimbursed under a Pooling Agreement. See "--Certificate Account" and
"--Servicing Compensation and Payment of Expenses".
SPECIAL SERVICERS
To the extent so specified in the related Prospectus Supplement, one or
more special servicers (each, a "Special Servicer") may be a party to the
related Pooling Agreement or may be appointed by the Master Servicer or another
specified party. A Special Servicer for any series of Certificates may be an
affiliate of the Depositor or the Master Servicer. A Special Servicer may be
entitled to any of the rights, and subject to any of the obligations, described
herein in respect of the Master Servicer including the ability to appoint
subservicers to the extent specified in the related Prospectus Supplement. The
related Prospectus Supplement will describe the rights, obligations and
compensation of any Special Servicer for a particular Series of Certificates.
The Master Servicer will be liable for the performance of a Special Servicer
only if, and to the extent, set forth in the related Prospectus Supplement.
CERTIFICATE ACCOUNT
General. The Master Servicer, the Trustee and/or a Special Servicer 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 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, Trustee or
Special Servicer (if any) 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 Depositor, 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 (if
any) or serviced by either on behalf of others.
Deposits. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, the Master Servicer, Trustee or
Special Servicer 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 Trustee or any Special Servicer 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;
(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 or any Special Servicer as its servicing
compensation or as compensation to the Trustee;
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(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 or in connection with the full or partial
condemnation of a 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, if applicable, a Special Servicer) and/or the terms and conditions of
the related Mortgage) (collectively, "Insurance and 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 Depositor, 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 a Special Servicer, any
payments on account of modification or assumption fees, late payment
charges, Prepayment Premiums or Equity Participations with respect to 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 or the
Trustee in connection with losses realized on investments for the benefit
of the Master 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, the Master Servicer,
Trustee or Special Servicer 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 Trustee or a Special Servicer any
servicing fees not previously retained thereby, such payment to be made out
of payments on the particular Mortgage Loans as to which such fees were
earned;
(iii) to reimburse the Master Servicer, a Special Servicer, the Trustee
or any other specified person for any unreimbursed amounts advanced by it
as described under "Description of the
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Certificates--Advances in Respect of Delinquencies", such reimbursement to
be made out of amounts received that were identified and applied by the
Master Servicer or a 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
instrument of Credit Support with respect to such Mortgage Loans;
(iv) to reimburse the Master Servicer, the Trustee or a 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 and Insurance and
Condemnation 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 instrument of Credit Support with respect to
such Mortgage Loans and properties;
(v) to reimburse the Master Servicer, a Special Servicer, the Trustee or
other specified person 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 that, in the good faith judgment of the Master Servicer,
Special Servicer, Trustee or other specified person, 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, a Special Servicer, the Trustee or any other
specified person interest accrued on the advances described in clause (iii)
above made by it and 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
Depositor, 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 and the Depositor";
(ix) if and to the extent described in the related Prospectus Supplement,
to pay the fees of Trustee;
(x) 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";
(xi) if and to the extent described in the related Prospectus Supplement,
to pay the fees of any provider of Credit Support;
(xii) if and to the extent described in the related Prospectus
Supplement, to reimburse prior draws on any instrument of Credit Support;
(xiii) to pay the Master Servicer, a 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;
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(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 "Certain Federal Income Tax Consequences--Federal
Income Tax Consequences for REMIC Certificates--Taxes That May Be Imposed
on the REMIC Pool";
(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.
MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS
The Master 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, unless otherwise set forth in the related
Prospectus Supplement, 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,
materially impair the security for the Mortgage Loan or reduce the likelihood
of timely payment of amounts due thereon and (iii) will not adversely affect
the coverage under any applicable instrument of Credit Support. Unless
otherwise provided in the related Prospectus Supplement, the Master Servicer
also may agree to any other modification, waiver or amendment 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, taking
into account the time value of money, than would liquidation and (iii) such
modification, waiver or amendment will not adversely affect the coverage under
any applicable instrument of Credit Support.
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, the Special Servicer for a
series of Certificates will be required to monitor any Mortgage Loan in the
related Trust Fund that is in default, evaluate whether the causes of the
default can be 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".
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A Pooling Agreement may grant to the Master Servicer, a 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, taking into account the time
value of money, 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 Depositor or any
affiliate of either 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, the
Special Servicer may not, however, 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 Mortgaged 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, taking into account the time value of
money, 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, taking into account the
time value of money, 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 one or more
REMIC elections have been made, the Special Servicer, on behalf of the Trust
Fund, will be required to sell the Mortgaged Property within two years of
acquisition, unless (i) the Internal Revenue Service grants an extension of
time to sell such property or (ii) the Trustee receives an opinion of
independent counsel to the effect that the holding of the property by the Trust
Fund for more than two years after its acquisition 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
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.
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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 in connection with such Mortgage
Loan, the Trust Fund will realize a loss in the amount of such shortfall. The
Special 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 restore fully the
damaged property, the Special Servicer will not be required to expend its own
funds to effect such restoration unless (and 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 for its expenses
and (ii) that such expenses will be recoverable by it from related Insurance
and Condemnation Proceeds or Liquidation Proceeds.
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will require the Master Servicer 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 the
Master 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 the Master 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 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 may satisfy its obligation to cause each borrower to maintain such a
hazard insurance policy by maintaining a blanket policy insuring against hazard
losses on all of the Mortgage Loans in a Trust Fund. If such blanket policy
contains a deductible clause, the Master Servicer will be required, in the
event of a casualty covered by such blanket policy, to deposit in the related
Certificate Account all sums that would have been deposited therein but for
such deductible clause.
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 certain other kinds of
risks. 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
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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 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 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, the
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 and
any Special Servicer's compensation with respect to a Series of Certificates
will come from payments or other collections on or with respect to Specially
Serviced Mortgage Loans and REO Properties. Because that compensation is
generally based on a percentage of the principal balance of each such Mortgage
Loan outstanding from time to time, it will decrease in accordance with the
amortization of the Mortgage Loans. The Prospectus Supplement with respect to a
series of Certificates may provide that, as additional compensation, the Master
Servicer may 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 Certificate
Account. Any Sub-Servicer will receive a portion of the Master Servicer's
compensation as its sub-servicing compensation.
In addition to amounts payable to any Sub-Servicer, the Master 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, and the fees of any Special
Servicer, may be required to be borne by the Trust Fund.
If and to the extent provided in the related Prospectus Supplement, the
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, on or before a specified date in each year, the
Master Servicer to cause a firm of independent public accountants to furnish to
the Trustee a statement to the effect that, on the basis of the examination by
such firm conducted substantially in compliance with either the Uniform Single
Audit Program for Mortgage Bankers or the Audit Program for Mortgages serviced
for FHLMC, the servicing by or on behalf of the Master Servicer of mortgage
loans under pooling and servicing agreements substantially
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similar to each other (which may include such Pooling Agreement) was conducted
through the preceding calendar year or other specified twelve month period in
compliance with the terms of such agreements except for any significant
exceptions or errors in records that, in the opinion of the firm, either the
Audit Program for Mortgages serviced for FHLMC, or paragraph 4 of the Uniform
Single Audit Program for Mortgage Bankers, requires it to report.
Each Pooling Agreement will also require, on or before a specified date in
each year, the Master Servicer to furnish to the Trustee a statement signed by
one or more officers of the Master Servicer to the effect that the Master
Servicer has fulfilled its material obligations under such Pooling Agreement
throughout the preceding calendar year or other specified twelve month period.
CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE DEPOSITOR
The entity serving as Master Servicer under a Pooling Agreement may be an
affiliate of the Depositor and may have other normal business relationships
with the Depositor or the Depositor's affiliates. Unless otherwise specified in
the Prospectus Supplement for a series of Certificates, the related Pooling
Agreement will permit the Master Servicer 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 a successor servicer has assumed the Master Servicer's
obligations and duties under the Pooling Agreement. Unless otherwise specified
in the related Prospectus Supplement, the Master 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, any
Special Servicer, the Depositor or any director, officer, employee or agent of
either 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 Depositor or any such person will be protected
against any breach of a representation, warranty or covenant made in such
Pooling Agreement, or against any expense or liability that such person is
specifically required to bear pursuant to the terms of such Pooling Agreement,
or 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 Depositor
and any director, officer, employee or agent of either 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 (i)
that such person is specifically required to bear pursuant to the terms of such
agreement, or is incidental to the performance of obligations and duties
thereunder and is not otherwise reimbursable pursuant to such Pooling
Agreement; (ii) incurred in connection with any breach of a representation,
warranty or covenant made in such Pooling Agreement; (iii) incurred by reason
of 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; or (iv) incurred in connection with any violation
of any state or federal securities law. In addition, each Pooling Agreement
will provide that neither the Master Servicer nor the Depositor 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 and the Depositor will be permitted, in the exercise of
its discretion, to undertake any such action that it may deem necessary or
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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 or the Depositor, as the case may be, will be entitled to
charge the related Certificate Account therefor.
Any person into which the Master Servicer or the Depositor may be merged
or consolidated, or any person resulting from any merger or consolidation to
which the Master Servicer or the Depositor is a party, or any person succeeding
to the business of the Master Servicer or the Depositor, will be the successor
of the Master Servicer or the Depositor, as the case may be, under the related
Pooling Agreement.
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 the
Trustee or the Depositor, or to the Master Servicer, the Depositor and the
Trustee 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 Master 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 by the
Trustee or the Depositor, or to the Master Servicer, the Depositor and the
Trustee 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 (iii) certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings in respect of or
relating to the Master Servicer and certain actions by or on behalf of the
Master Servicer indicating its insolvency or inability to pay its obligations.
Material variations 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.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default occurs with respect to the Master Servicer under a
Pooling Agreement, then, in each and every such case, so long as the Event of
Default remains unremedied, the Depositor 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 Master Servicer as master
servicer under the Pooling Agreement, whereupon the Trustee will succeed to all
of the responsibilities, duties and liabilities of the Master Servicer under
the Pooling Agreement (except that if the Master Servicer is required to make
advances thereunder regarding delinquent Mortgage Loans, but the Trustee is
prohibited by law from obligating itself to do so, 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 loan servicing 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 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
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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 the related 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; 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 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 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 one or more REMIC elections are to be or
have 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 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
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Trustee may have typical banking relationships with the Depositor and its
affiliates and with any Master Servicer or Special Servicer and its affiliates.
If and to the extent specified under the related Pooling Agreement, certain
functions of the Trustee may be performed by a fiscal agent under certain
circumstances.
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 the Master
Servicer for such series of any funds paid to the Master Servicer or any
Special Servicer in respect of the Certificates or the underlying Mortgage
Loans, or any funds deposited into or withdrawn from the Certificate Account or
any other account for such series by or on behalf of the Master Servicer or any
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 that constitutes a specific liability imposed on the
Trustee pursuant to the related Pooling Agreement, or 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, or as may arise from a breach of any representation, warranty or
covenant of the Trustee made therein.
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.
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 Depositor. Upon receiving such notice of resignation, the Depositor (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 Depositor 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 51% (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.
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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 letters of credit, overcollateralization,
the subordination of one or more classes of Certificates, insurance policies,
surety bonds, guarantees or reserve funds, or any combination of the foregoing.
If so provided in the related Prospectus Supplement, any instrument 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 an instrument 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 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 method 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.
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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 deemed by the
Depositor to be 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.
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
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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 instrument 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. 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 grantor (the borrower) conveys title to the real property to
the grantee (the 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 related note. The mortgagee's authority
under a mortgage, the trustee'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, as amended) and, in some deed
of trust transactions, the directions of the beneficiary.
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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 revenues are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the revenues 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 revenues
and must file continuation statements, generally every five years, to maintain
perfection of such security interest. Even if the lender's security interest in
room revenues is perfected under the UCC, it may be required to commence a
foreclosure action or otherwise take possession of the property in order to
collect the room revenues following a default. 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.
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 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. Moreover, as discussed below,
even a non-collusive, regularly conducted foreclosure sale may be challenged as
a fraudulent conveyance, regardless of the parties' intent, if a court
determines that the sale was for less than fair consideration and such sale
occurred while the borrower was insolvent and within a specified period prior
to the borrower's filing for bankruptcy protection.
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 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.
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Equitable Limitations on Enforceability of Certain Provisions. 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
that of the lenders 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.
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 value of
such property at the time of sale, due to, among other things, redemption
rights which may exist and the possibility of physical deterioration of the
property during the foreclosure proceedings. Potential buyers may 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 and other decisions that have followed
its reasoning. The court in Durrett held that even a non-collusive, regularly
conducted foreclosure sale was a fraudulent transfer under the federal
Bankruptcy Code, as amended from time to time (11 U.S.C.) and, therefore, could
be rescinded in favor of the bankrupt's estate, if (i) the foreclosure sale was
held while the debtor was insolvent 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 in
respect of the Bankruptcy Code was 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 which has 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 lesser of fair market value and
the underlying debt and accrued and unpaid interest plus the expenses of
foreclosure. Generally, state law controls the amount of foreclosure costs and
expenses which may be recovered by a lender. Thereafter, subject to the
mortgagor's
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right in some states to remain in possession during a redemption period, if
applicable, the lender will become the owner of the property and have both the
benefits and burdens of ownership of the mortgaged property. For example, the
lender will have the obligation to pay debt service on any senior mortgages, to
pay taxes, obtain casualty insurance and to make such repairs at its own
expense as are necessary to render the property suitable for sale. Frequently,
the lender employs a third party management company to manage and operate the
property. 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 costs of management and operation of those
mortgaged properties which are hotels, motels or nursing or convalescent homes
or hospitals may be particularly significant because of the expertise,
knowledge and, with respect to nursing or convalescent homes or hospitals,
regulatory compliance, required to run such operations and the effect which
foreclosure and a change in ownership may have on the public's and the
industry's (including franchisors') perception of the quality of such
operations. The lender will commonly obtain the services of a real estate
broker and pay the broker's commission in connection with the sale of the
property. Depending upon market conditions, the ultimate proceeds of the sale
of the property may not equal the amount of the mortgage against the property.
Moreover, a lender commonly incurs substantial legal fees and court costs in
acquiring a mortgaged property through contested foreclosure and/or bankruptcy
proceedings. Furthermore, a few states require that any environmental
contamination at certain types of properties be cleaned up before a property
may be resold. In addition, a lender may be responsible under federal or state
law for the cost of cleaning up a mortgaged property that is environmentally
contaminated. See "--Environmental Risks". Generally state law controls the
amount of foreclosure expenses and costs, including attorneys' fees, that may
be recovered by a lender.
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.
The proceeds received by the referee or trustee from a foreclosure sale
are generally applied first to the costs, fees and expenses of sale and then in
satisfaction of the indebtedness secured by the mortgage under which the sale
was conducted. Any proceeds remaining after satisfaction of senior mortgage
debt are generally payable to the holders of junior mortgages and other liens
and claims in order of their priority, whether or not the borrower is in
default. Any additional proceeds are generally payable to the borrower. The
payment of the proceeds to the holders of junior mortgages may occur in the
foreclosure action of the senior mortgage or a subsequent ancillary proceeding
or may require the institution of separate legal proceedings by such holders.
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
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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 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 mortgage 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 upon a lease default, the leasehold mortgagee
would lose its security. This risk may be lessened if the ground lease requires
the lessor to give the leasehold mortgagee notices of lessee defaults and an
opportunity to cure them, permits the leasehold estate to be assigned to and by
the leasehold mortgagee or the purchaser at a foreclosure sale, and contains
certain other protective provisions typically included in a "mortgageable"
ground lease. The ground leases that secure the Mortgage Loans at issue may not
contain some of these protective provisions, and the related mortgages may not
contain the other protections discussed in the next paragraph. Protective
ground lease provisions include the right of the leasehold mortgagee to receive
notices from the ground lessor of any defaults by the borrower under the ground
lease; the right to cure such defaults, with adequate cure periods; if a
default is not susceptible of cure by the leasehold mortgagee, the right to
acquire the leasehold estate through foreclosure or otherwise; the ability of
the ground lease to be assigned to and by the leasehold mortgagee or purchaser
at a foreclosure sale and for the concomitant release of the ground lessee's
liabilities thereunder; and the right of the leasehold mortgagee to enter into
a new ground lease with the ground lessor on the same terms and conditions as
the old ground lease in the event of a termination of the ground lease.
In addition to the foregoing protections, a leasehold mortgagee may
prohibit the ground lessee from treating the ground lease as terminated in the
event of the ground lessor's bankruptcy and rejection of the ground lease in
the lessor's bankruptcy case. As further protection, a leasehold mortgage may
provide for the assignment of the debtor-ground lessee's right to reject the
lease in a ground lessee bankruptcy case, although the enforceability of such a
provision has not been established. Without the protections described in this
and the foregoing paragraph, a leasehold mortgagee may be more likely to lose
the collateral securing its leasehold mortgage. In addition, the terms and
conditions of a leasehold mortgage are subject to the terms and conditions of
the ground lease. Although certain rights given to a ground lessee can be
limited by the terms of a leasehold mortgage, the rights of a ground lessee or
a leasehold mortgagee with respect to, among other things, insurance, casualty
and condemnation proceeds will ordinarily be governed by the provisions of the
ground lease, unless otherwise agreed to by the ground lessee and leasehold
mortgagee.
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COOPERATIVE SHARES
Mortgage Loans may be secured by a security interest on the borrower's
ownership interest in shares, and the proprietary leases appurtenant thereto,
allocable to cooperative dwelling units that may be vacant or occupied by
non-owner tenants. Such loans are subject to certain risks not associated with
mortgage loans secured by a lien on the fee estate of a borrower in real
property. Such a loan typically is subordinate to the mortgage, if any, on the
Cooperative's building which, if foreclosed, could extinguish the equity in the
building and the proprietary leases of the dwelling units derived from
ownership of the shares of the Cooperative. Further, transfer of shares in a
Cooperative are subject to various regulations as well as to restrictions under
the governing documents of the Cooperative, and the shares may be cancelled in
the event that associated maintenance charges due under the related proprietary
leases are not paid. Typically, a recognition agreement between the lender and
the Cooperative provides, among other things, the lender with an opportunity to
cure a default under a proprietary lease.
Under the laws applicable in many states, "foreclosure" on Cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to the shares. Article 9 of the
UCC requires that a sale be conducted in a "commercially reasonable" manner,
which may be dependent upon, among other things, the notice given the debtor
and the method, manner, time, place and terms of the sale. Article 9 of the UCC
provides that the proceeds of the sale will be applied first to pay the costs
and expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally
provides that the lender's right to reimbursement is subject to the right of
the Cooperative to receive sums due under the proprietary leases. If, following
payment to the lender, there are proceeds remaining, the lender must account to
the tenant-stockholder for the surplus. Conversely, if a portion of the
indebtedness remains unpaid, the tenant-stockholder may be responsible for the
deficiency. See "--Anti-Deficiency Legislation".
BANKRUPTCY LAWS
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a secured 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. For example,
the lender's lien may be transferred to other collateral and/or the outstanding
amount of the secured loan may be reduced to the then-current value of the
property (with a corresponding partial reduction of the amount of the 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. The priority of
a mortgage loan may also be subordinated to bankruptcy court-approved
financing. 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.
The bankruptcy court can also reinstate accelerated indebtedness and also,
in effect, invalidate due-on-sale clauses through confirmed Chapter 11 plans of
reorganization. Under Section 363(b) and (f)
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of the Bankruptcy Code, a trustee for a lessor, or a lessor as
debtor-in-possession, may, despite the provisions of the related Mortgage Loan
to the contrary, sell the Mortgaged Property free and clear of all liens, which
liens would then attach to the proceeds of such sale.
The Bankruptcy Code provides 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" and
such term is defined and interpreted under the Bankruptcy Code. It should be
noted, however, that the court may find that the lender has no security
interest in either pre-petition or post-petition revenues if the court finds
that the loan documents do not contain language covering accounts, room rents,
or other forms of personalty necessary for a security interest to attach to
hotel revenues.
Lessee bankruptcies at the Mortgaged Properties could have an adverse
impact on the borrowers' ability to meet their obligations. For example,
Section 365(e) of the Bankruptcy Code provides generally that rights and
obligations under an unexpired lease may not be terminated or modified at any
time after the commencement of a case under the Bankruptcy Code solely because
of a provision in the lease conditioned upon the commencement of a case under
the Bankruptcy Code or certain other similar events. In addition, Section 362
of the Bankruptcy Code operates as an automatic stay of, among other things,
any act to obtain possession of property of or from a debtor's estate, which
may delay the borrower's exercise of such remedies in the event that a lessee
becomes the subject of a proceeding under the Bankruptcy Code.
Section 365(a) of the Bankruptcy Code generally provides that a trustee or
a debtor-in-possession in a case under the Bankruptcy Code has the power to
assume or to reject an executory contract or an unexpired lease of the debtor,
in each case subject to the approval of the bankruptcy court administering such
case. If the trustee or debtor-in-possession rejects an executory contract or
an unexpired lease, such rejection generally constitutes a breach of the
executory contract or unexpired lease immediately before the date of the filing
of the petition. As a consequence, the other party or parties to such executory
contract or unexpired lease, such as the lessor or borrower, as lessor under a
lease, would have only an unsecured claim against the debtor for damages
resulting from such breach, which could adversely affect the security for the
related Mortgage Loan. Moreover, under Section 502(b)(6) of the Bankruptcy
Code, the claim of a lessor for such damages from the termination of a lease of
real property will be limited to the sum of (i) the rent reserved by such
lease, without acceleration, for the greater of one year or 15 percent, not to
exceed three years, of the remaining term of such lease, following the earlier
of the date of the filing of the petition and the date on which such lender
repossessed, or the lessee surrendered, the leased property, and (ii) any
unpaid rent due under such lease, without acceleration, on the earlier of such
dates.
Under Section 365(f) of the Bankruptcy Code, if a trustee or
debtor-in-possession assumes an executory contract or an unexpired lease of the
debtor, the trustee or debtor-in-possession generally may assign such executory
contract or unexpired lease, notwithstanding any provision therein or in
applicable law that prohibits, restricts or conditions such assignment,
provided that the trustee or debtor-in-possession provides "adequate assurance
of future performance" by the assignee. The Bankruptcy Code specifically
provides, however, that adequate assurance of future performance for purposes
of a lease of real property in a shopping center includes adequate assurance of
the source of rent and other consideration due under such lease, and in the
case of an assignment, that the financial condition and operating performance
of the proposed assignee and its guarantors, if any, shall be similar to the
financial condition and operating performance of the debtor and its guarantors,
if any, as of the time the debtor became the lessee under the lease, that any
percentage rent due under such lease will not decline substantially, that the
assumption and assignment of the lease is subject to all the provisions
thereof, including (but not limited to) provisions such as a radius location,
use or exclusivity provision, and will not breach any such provision contained
in any other lease, financing agreement, or master agreement
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relating to such shopping center, and that the assumption or assignment of such
lease will not disrupt the tenant mix or balance in such shopping center. Thus,
an undetermined third party may assume the obligations of the lessee under a
lease in the event of commencement of a proceeding under the Bankruptcy Code
with respect to the lessee.
Under Section 365(h) of the Bankruptcy Code, if a trustee for a lessor as
a debtor-in-possession, rejects an unexpired lease of real property, the lessee
may treat such lease as terminated by such rejection or, in the alternative,
may remain in possession of the leasehold for the balance of such term and for
any renewal or extension of such term that is enforceable by the lessee under
applicable nonbankruptcy law. The Bankruptcy Code provides that if a lessee
elects to remain in possession after such a rejection of a lease, the lessee
may offset against rents reserved under the lease for the balance of the term
after the date of rejection of the lease, and any such renewal or extension
thereof, any damages occurring after such date caused by the nonperformance of
any obligation of the lessor under the lease after such date.
In a bankruptcy or similar proceeding, action may be taken seeking the
recovery as a preferential transfer of any payments made by the mortgagor under
the related Mortgage Loan to the related Trust Fund. Payments on long-term debt
may be protected from recovery as preferences if they are payments in the
ordinary course of business made on debts incurred in the ordinary course of
business. Whether any particular payment would be protected depends upon the
facts specific to a particular transaction. In addition, some court decisions
suggest that even a non-collusive, regularly conducted foreclosure sale could
be challenged in a bankruptcy case as a "fraudulent conveyance," regardless of
the parties' intent, if a bankruptcy court determines that the mortgaged
property has been sold for less than fair consideration while the mortgagor was
insolvent and within one year (or within any longer state statutes of
limitations periods if the trustee in bankruptcy elects to proceed under state
fraudulent conveyance law) of the filing of the bankruptcy.
A trustee in bankruptcy, in some cases, may be entitled to collect its
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the lender. In certain circumstances, a debtor in bankruptcy may
have the power to grant liens senior to the lien of a mortgage, and analogous
state statutes and general principles of equity may also provide a mortgagor
with means to halt a foreclosure proceeding or sale and to force a
restructuring of a mortgage loan on terms a lender would not otherwise accept.
Moreover, the laws of certain states also give priority to certain tax liens
over the lien of a mortgage or deed of trust. Under the Bankruptcy Code, if the
court finds that actions of the mortgagee have been unreasonable, the lien of
the related mortgage may be subordinated to the claims of unsecured creditors.
Pursuant to the federal doctrine of "substantive consolidation" or to the
(predominantly state law) doctrine of "piercing the corporate veil", a
bankruptcy court, in the exercise of its equitable powers, also has the
authority to order that the assets and liabilities of a related entity be
consolidated with those of an entity before it. Thus, property ostensibly the
property of one entity may be determined to be the property of a different
entity in bankruptcy, the automatic stay applicable to the second entity may be
extended to the first and the rights of creditors of the first entity may be
impaired in the fashion set forth above in the discussion of bankruptcy
principles. Depending on facts and circumstances not wholly in existence at the
time a Mortgage Loan is originated or transferred to the related Trust Fund,
the application of any of these doctrines to one or more of the mortgagors in
the context of the bankruptcy of one or more of their affiliates could result
in material impairment of the rights of the Certificateholders.
For each mortgagor that is described as a "special purpose entity",
"single purpose entity" or "bankruptcy-remote entity" in the Prospectus
Supplement, the activities that may be conducted by such mortgagor and its
ability to incur debt are restricted by the applicable Mortgage or the
organizational documents of such mortgagor in such manner as is intended to
make the likelihood of a bankruptcy proceeding being commenced by or against
such mortgagor remote, and such mortgagor has been organized and is designed to
operate in a manner such that its separate existence should be respected
notwithstanding a bankruptcy proceeding in respect of one or more affiliated
entities of such mortgagor. However, the Depositor makes no representation as
to the likelihood of the institution of a bankruptcy proceeding by or in
respect of any mortgagor or the likelihood that the separate existence of any
mortgagor would be respected if there were to be a bankruptcy proceeding in
respect of any affiliated entity of a mortgagor.
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ENVIRONMENTAL RISKS
A lender may be subject to unforeseen environmental risks with respect to
loans secured by real or personal property, such as the Mortgage Loans. Such
environmental risks may give rise to (i) a diminution in value of property
securing a Mortgage Loan or the inability to foreclose against such property or
(ii) in certain circumstances as more fully described below, liability for
clean-up costs or other remedial actions, which liability could exceed the
value of such property or the principal balance of the related Mortgage Loan.
Under the laws of many states, contamination on a property may give rise to a
lien on the property for cleanup costs. In several states, such a lien has
priority over all existing liens (a "superlien"), including those of existing
mortgages; in these states, the lien of the mortgage for any Mortgage Loan may
lose its priority to such a superlien.
Under the federal Comprehensive Response Compensation and Liability Act
("CERCLA"), a lender may be liable either to the government or to private
parties for cleanup costs on a property securing a loan, even if the lender
does not cause or contribute to the contamination. CERCLA imposes strict, as
well as joint and several, liability on several classes of potentially
responsible parties ("PRPs"), including current owners and operators of the
property who did not cause or contribute to the contamination. Many states have
laws similar to CERCLA.
Lenders may be held liable under CERCLA as owners or operators unless they
qualify for the secured creditor exemption to CERCLA. A 1990 decision of the
United States Court of Appeals for the Eleventh Circuit, United States v. Fleet
Factors Corp., 901 F.2d 1550 (11th Cir. 1990), narrowly construed the security
interest exemption under CERCLA to hold lenders liable if they had the capacity
to influence their borrower's management of hazardous waste. In response to the
Fleet Factors case, the Environmental Protection Agency ("EPA") promulgated a
rule in 1992 intended to reduce interpretive uncertainties that surrounded the
scope of the secured lender exemption to liability under CERCLA. The rule,
which the EPA stated would be entitled to deference in CERCLA cost recovery
actions brought against lenders by private parties, clarified the scope of the
secured creditor exemption and identified specific types of actions that, if
taken by a lender, would preclude application of the exemption. In the decision
of Kelley v. EPA, 15 F.3d 1100 (D.C. Cir. 1994), the Court of Appeals for the
District of Columbia vacated the EPA's lender liability rule. On September 30,
1996, President Clinton signed into law the "Asset Conservation, Lender
Liability and Deposit Insurance Protection Act of 1996" (the "Asset
Conservation Act"), which substantially protects lenders and fiduciaries from
liability for the environmental obligations of borrowers and beneficiaries. The
Asset Conservation Act includes amendments to CERCLA and to the underground
storage tank provisions of the Resource Conservation and Recovery Act and
applies to any claim that was not finally adjudicated as of September 30, 1996.
The Act offers substantial protection to lenders by defining the activities in
which a lender can engage and still have the benefit of a secured creditor
exemption. However, the secured creditor exemption is not available to a lender
that participates in management of mortgaged property prior to a foreclosure.
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 be deemed to have
participated in management and 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 all 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.
Environment clean-up costs may be substantial. It is possible that such
costs could become a liability of the related Trust Fund and occasion a loss to
Certificateholders if such remedial costs were incurred.
In a few states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. It is possible that a property
securing a Mortgage Loan could be subject to such transfer restrictions. In
such a case, if the lender becomes the owner upon foreclosure, it may be
required to clean up the contamination before selling the property.
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The cost of remediating hazardous substance contamination at a property
can be substantial. If a lender is or becomes liable, it can bring an action
for contribution against the owner or operator that created the environmental
hazard, but that person 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 the Master Servicer, acting on behalf of the related Trust Fund, may not
acquire title to a Mortgaged Property or take over its operation unless the
Master Servicer, based on 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". There can be no
assurance that any environmental site assessment obtained by the Master
Servicer will detect all possible environmental contamination or conditions or
that the other requirements of the related Pooling Agreement, even if fully
observed by the Master Servicer, will in fact insulate the related Trust Fund
from liability with respect to environmental matters.
Even when a lender is not directly liable for cleanup costs on property
securing loans, if a property securing a loan is contaminated, the value of the
security is likely to be affected. In addition, a lender bears the risk that
unanticipated cleanup costs may jeopardize the borrower's repayment. Neither of
these two issues is likely to pose risks exceeding the amount of unpaid
principal and interest of a particular loan secured by a contaminated property,
particularly if the lender declines to foreclose on a mortgage secured by the
property.
If a lender forecloses on a mortgage secured by a property the operations
of which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Compliance may entail some expense.
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 and thereby lessen the ability of the lender to
recover its investment in a loan upon foreclosure.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
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), the 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
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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.
ADJUSTABLE RATE LOANS
The laws of certain states may provide that mortgage notes relating to
adjustable rate loans are not negotiable instruments under the UCC. In such
event, the related Trust Fund will not be deemed to be a "holder in due course"
within the meaning of the UCC and may take such a mortgage note subject to
certain restrictions on the ability to foreclose and to certain contractual
defenses available to a mortgagor.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, as amended ("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
under the laws of 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
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are called to active duty) after origination of the related Mortgage Loan, no
information can be provided as to the number of 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 any
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 instrument of Credit Support provided in connection with such Certificates.
In addition, the Relief Act imposes limitations that would impair the ability
of the 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. Thus, in the event such a Mortgage
Loan goes into default, there may be delays and losses occasioned by the
inability to realize upon the Mortgaged Property in a timely fashion.
TYPE OF MORTGAGED PROPERTY
The lender may be subject to additional risk depending upon the type and
use of the Mortgaged Property in question. For instance, Mortgaged Properties
which are hospitals, nursing homes or convalescent homes may present special
risks to lenders in large part due to significant governmental regulation of
the operation, maintenance, control and financing of health care institutions.
Mortgages on Mortgaged Properties which are owned by the borrower under a
condominium form of ownership are subject to the declaration, by-laws and other
rules and regulation of the condominium association. Mortgaged Properties which
are hotels or motels may present additional risk to the lender in that: (i)
hotels and motels are typically operated pursuant to franchise, management and
operating agreements which may be terminable by the operator; and (ii) the
transferability of the hotel's operating, liquor and other licenses to the
entity acquiring the hotel either through purchase or foreclosure is subject to
the vagaries of local law requirements. In addition, Mortgaged Properties which
are multifamily properties or cooperatively owned multifamily properties may be
subject to rent control laws, which could impact the future cash flows of such
properties.
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, shopping
centers, hospitals, schools and social service center establishments) must
remove architectural and communication barriers which 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, each 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. In addition to imposing a possible
financial burden on the borrower in its capacity as owner or landlord, the ADA
may also impose such requirements on a foreclosing lender who succeeds to the
interest of the borrower as owner or landlord. Furthermore, 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 "Crime
Control Act"), 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.
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A lender may avoid forfeiture of its interest in the property if it
established 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 of, illegal drug or
RICO activities.
In addition, there may be other state or municipal laws providing for
forfeiture of mortgaged properties.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of
Certificates. The discussion below does not purport to address all federal
income tax consequences that may be applicable to particular categories of
investors, some of which may be subject to special rules. The authorities on
which this discussion is based are subject to change or differing
interpretations, and any such change or interpretation could apply
retroactively. This discussion reflects the applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), as well as regulations
(the "REMIC Regulations") promulgated by the U.S. Department of Treasury (the
"Treasury"). Investors should consult their own tax advisors in determining the
federal, state, local and other tax consequences to them of the purchase,
ownership and disposition of Certificates.
For purposes of this discussion, (i) references to the Mortgage Loans
include references to the mortgage loans underlying MBS included in the
Mortgage Assets and (ii) where the applicable Prospectus Supplement provides
for a fixed retained yield with respect to the Mortgage Loans underlying a
series of Certificates, references to the Mortgage Loans will be deemed to
refer to that portion of the Mortgage Loans held by the Trust Fund which does
not include the Retained Interest. References to a "holder" or
"Certificateholder" in this discussion generally mean the beneficial owner of a
Certificate.
FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES
General. With respect to a particular Series of Certificates, an election
may be made to treat the Trust Fund or one or more segregated pools of assets
therein as one or more REMICs within the meaning of Code Section 860D. A Trust
Fund or a portion thereof as to which a REMIC election will be made will be
referred to as a "REMIC Pool". For purposes of this discussion, Certificates of
a series as to which one or more REMIC elections are made are referred to as
"REMIC Certificates" and will consist of one or more Classes of "Regular
Certificates" and one Class of "Residual Certificates" in the case of each
REMIC Pool. Qualification as a REMIC requires ongoing compliance with certain
conditions. With respect to each series of REMIC Certificates, O'Melveny &
Myers LLP, counsel to the Depositor, has advised the Depositor that in the
firm's opinion, assuming (i) the making of such an election, (ii) compliance
with the Pooling Agreement and (iii) compliance with any changes in the law,
including any amendments to the Code or applicable Treasury regulations
thereunder, each REMIC Pool will qualify as a REMIC. In such case, the Regular
Certificates will be considered to be "regular interests" in the REMIC Pool and
generally will be treated for federal income tax purposes as if they were newly
originated debt instruments, and the Residual Certificates will be considered
to be "residual interests" in the REMIC Pool. The Prospectus Supplement for
each series of Certificates will indicate whether one or more REMIC elections
will be made with respect to the related Trust Fund, in which event references
to "REMIC" or "REMIC Pool" herein shall be deemed to refer to each such REMIC
Pool. If so specified in the applicable Prospectus Supplement, the portion of a
Trust Fund as to which a REMIC election is not made may be treated as either a
financial asset securitization investment trust (a "FASIT") a grantor trust for
federal income tax purposes. See "--Federal Income Tax Consequences for FASIT
Certificates and "--Federal Income Tax Consequences for Certificates as to
Which No REMIC Election Is Made".
Status of REMIC Certificates. REMIC Certificates held by a domestic
building and loan association will constitute "a regular or residual interest
in a REMIC" within the meaning of Code Section 7701(a)(19)(C)(xi), but only in
the same proportion that the assets of the REMIC Pool would be treated as
"loans . . . secured by an interest in real property which is . . . residential
real property" (such as single family or multifamily properties, but not
commercial properties) within the meaning of Code Section 7701(a)(19)(C)(v) or
as other assets described in Code Section 7701(a)(19)(C), and otherwise will
not qualify for such treatment. REMIC Certificates held by a real estate
investment trust will constitute "real estate assets" within the meaning of
Code Section 856(c)(4)(A), and interest on the Regular Certificates and income
with respect to Residual Certificates will be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Code Section 856(c)(3)(B) in the same
proportion that, for both purposes, the assets of the REMIC Pool would be so
treated. If at all times 95% or more of the assets of the REMIC Pool qualify
for each of the foregoing respective treatments, the REMIC Certificates will
qualify for the corresponding status in their entirety.
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For purposes of Code Section 856(c)(4)(A), payments of principal and interest
on the Mortgage Loans that are reinvested pending distribution to holders of
REMIC Certificates qualify for such treatment. Where two REMIC Pools are a part
of a tiered structure they will be treated as one REMIC for purposes of the
tests described above respecting asset ownership of more or less than 95%. In
addition, if the assets of the REMIC include Buy-Down Mortgage Loans, it is
possible that the percentage of such assets constituting "loans . . . secured
by an interest in real property which is . . . residential real property" for
purposes of Code Section 7701(a)(19)(C)(v) may be required to be reduced by the
amount of the related Buy-Down Funds. REMIC Certificates held by a regulated
investment company will not constitute "Government Securities" within the
meaning of Code Section 851(b)(3)(A)(i). REMIC Certificates held certain
financial institutions will constitute an "evidence of indebtedness" within the
meaning of Code Section 582(c)(1). The Small Business Job Protection Act of
1996 (the "SBJPA of 1996") repealed the reserve method for bad debts of
domestic building and loan associations and mutual savings banks, and thus has
eliminated the asset category of "qualifying real property loans" in former
Code Section 593(d) for taxable years beginning after December 31, 1995. The
requirement in the SBJPA of 1996 that such institutions must "recapture" a
portion of their existing bad debt reserves is suspended if a certain portion
of their assets are maintained in "residential loans" under Code Section
7701(a)(19)(C)(v), but only if such loans were made to acquire, construct or
improve the related real property and not for the purpose of refinancing.
However, no effort will be made to identify the portion of the Mortgage Loans
of any Series meeting this requirement, and no representation is made in this
regard.
Qualification as a REMIC. In order for the REMIC Pool to qualify as a
REMIC, there must be ongoing compliance on the part of the REMIC Pool with the
requirements set forth in the Code. The REMIC Pool must fulfill an asset test,
which requires that no more than a de minimis portion of the assets of the
REMIC Pool, as of the close of the third calendar month beginning after the
"Startup Day" (which for purposes of this discussion is the date of issuance of
the REMIC Certificates) and at all times thereafter, may consist of assets
other than "qualified mortgages" and "permitted investments". The REMIC
Regulations provide a safe harbor pursuant to which the de minimis requirement
is met if at all times the aggregate adjusted basis of the nonqualified assets
is less than 1% of the aggregate adjusted basis of all the REMIC Pool's assets.
An entity that fails to meet the safe harbor may nevertheless demonstrate that
it holds no more than a de minimis amount of nonqualified assets. A REMIC also
must provide "reasonable arrangements" to prevent its residual interest from
being held by "disqualified organizations" and must furnish applicable tax
information to transferors or agents that violate this requirement. The Pooling
Agreement for each Series will contain a provision designed to meet this
requirement. See "Taxation of Residual Certificates--Tax-Related Restrictions
on Transfer of Residual Certificates--Disqualified Organizations".
A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC Pool on
the Startup Day in exchange for Regular Certificates or Residual Certificates
or is purchased by the REMIC Pool within a three-month period thereafter
pursuant to a fixed price contract in effect on the Startup Day. Qualified
mortgages include whole mortgage loans, such as the Mortgage Loans,
certificates of beneficial interest in a grantor trust that holds mortgage
loans, including certain of the MBS, regular interests in another REMIC, such
as MBS in a trust as to which a REMIC election has been made, loans secured by
timeshare interests and loans secured by shares held by a tenant stockholder in
a cooperative housing corporation, provided, in general, (i) the fair market
value of the real property securing the mortgage (including buildings and
structural components thereof) is at least 80% of the principal balance of the
related Mortgage Loan or mortgage loan underlying the Mortgage Certificate
either at origination of the relevant loan or as of the Startup Day (an
original loan-to-value ratio of not more than 125% with respect to the real
property securing the mortgage) or (ii) substantially all the proceeds of the
Mortgage Loan or the underlying mortgage loan were used to acquire, improve or
protect an interest in real property that, at the origination date, was the
only security for the Mortgage Loan or underlying mortgage loan. If the
Mortgage Loan has been substantially modified other than in connection with a
default or reasonably foreseeable default, it must meet the loan-to-value test
in (i) of the preceding sentence as of the date of the last such modification
or at closing. A qualified mortgage includes a qualified replacement mortgage,
which is any property that would have been treated as a qualified mortgage if
it were transferred to the REMIC Pool on the Startup Day and that is received
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either (i) in exchange for any qualified mortgage within a three-month period
thereafter or (ii) in exchange for a "defective obligation" within a two-year
period thereafter. A "defective obligation" includes (i) a mortgage in default
or as to which default is reasonably foreseeable, (ii) a mortgage as to which a
customary representation or warranty made at the time of transfer to the REMIC
Pool has been breached, (iii) a mortgage that was fraudulently procured by the
mortgagor, and (iv) a mortgage that was not in fact principally secured by real
property (but only if such mortgage is disposed of within 90 days of
discovery). A Mortgage Loan that is "defective" as described in clause (iv)
that is not sold or, if within two years of the Startup Day, exchanged, within
90 days of discovery, ceases to be a qualified mortgage after such 90-day
period. A qualified mortgage also includes any regular interest in a FASIT
transferred to the REMIC Pool on the Startup Day in exchange for Regular
Certificates or Residual Certificates, or purchased by the REMIC Pool within
three months after the Startup Day pursuant to a fixed price contract in effect
on the Startup Day, provided that at least 95% of the value of the FASIT assets
is at all times attributable to obligations principally secured by interests in
real property and which are transferred to, or purchased by, a REMIC as
provided in this sentence.
Permitted investments include cash flow investments, qualified reserve
assets, and foreclosure property. A cash flow investment is an investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not exceeding 13 months,
until distributed to holders of interests in the REMIC Pool. A qualified
reserve asset is any intangible property (other than a REMIC residual interest)
held for investment that is part of any reasonably required reserve maintained
by the REMIC Pool to provide for payments of expenses of the REMIC Pool or
amounts due on the regular or residual interests in the event of defaults
(including delinquencies) on the qualified mortgages, lower than expected
reinvestment returns, prepayment interest shortfalls and certain other
contingencies. The reserve fund will be disqualified if more than 30% of the
gross income from the assets in such fund for the year is derived from the sale
or other disposition of property held for less than three months, unless
required to prevent a default on the regular interests caused by a default on
one or more qualified mortgages. A reserve fund must be reduced "promptly and
appropriately" as payments on the Mortgage Loans are received. Foreclosure
property is real property acquired by the REMIC Pool in connection with the
default or imminent default of a qualified mortgage and generally held beyond
the close of the third calendar year following the acquisition of the property
by REMIC Pool for not more than two years, with possible extensions granted by
the Internal Revenue Service (the "Service") of up to an additional four years.
In addition to the foregoing requirements, the various interests in a
REMIC Pool also must meet certain requirements. All of the interests in a REMIC
Pool must be either of the following: (i) one or more classes of regular
interests or (ii) a single class of residual interests on which distributions,
if any, are made pro rata. A regular interest is an interest in a REMIC Pool
that is issued on the Startup Day with fixed terms, is designated as a regular
interest, and unconditionally entitles the holder to receive a specified
principal amount (or other similar amount), and provides that interest payments
(or other similar amounts), if any, at or before maturity either are payable
based on a fixed rate or a qualified variable rate, or consist of a specified,
nonvarying portion of the interest payments on qualified mortgages. Such a
specified portion may consist of a fixed number of basis points, a fixed
percentage of the total interest, or a fixed or qualified variable or inverse
variable rate on some or all of the qualified mortgages minus a different fixed
or qualified variable rate. The specified principal amount of a regular
interest that provides for interest payments consisting of a specified,
nonvarying portion of interest payments on qualified mortgages may be zero. A
residual interest is an interest in a REMIC Pool other than a regular interest
that is issued on the Startup Day and that is designated as a residual
interest. An interest in a REMIC Pool may be treated as a regular interest even
if payments of principal with respect to such interest are subordinated to
payments on other regular interests or the residual interest in the REMIC Pool,
and are dependent on the absence of defaults or delinquencies on qualified
mortgages or permitted investments, lower than reasonably expected returns on
permitted investments, unanticipated expenses incurred by the REMIC Pool or
prepayment interest shortfalls. Accordingly, the Regular Certificates of a
series will constitute one or more classes of regular interests, and the
Residual Certificates with respect to that series will constitute a single
class of residual interests on which distributions are made pro rata.
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If an entity, such as the REMIC Pool, fails to comply with one or more of
the ongoing requirements of the Code for REMIC status during any taxable year,
the Code provides that the entity will not be treated as a REMIC for such year
and thereafter. In this event, an entity with multiple classes of ownership
interests may be treated as a separate association taxable as a corporation
under Treasury regulations, and the Regular Certificates may be treated as
equity interests therein. The Code, however, authorizes the Treasury Department
to issue regulations that address situations where failure to meet one or more
of the requirements for REMIC status occurs inadvertently and in good faith,
and disqualification of the REMIC Pool would occur absent regulatory relief.
Investors should be aware, however, that the Conference Committee Report to the
Tax Reform Act of 1986 (the "1986 Act") indicates that the relief may be
accompanied by sanctions, such as the imposition of a corporate tax on all or a
portion of the REMIC Pool's income for the period of time in which the
requirements for REMIC status are not satisfied.
TAXATION OF REGULAR CERTIFICATES
General
In general, interest, original issue discount and market discount on a
Regular Certificate will be treated as ordinary income to a holder of the
Regular Certificate (the "Regular Certificateholder") as they accrue, and
principal payments on a Regular Certificate will be treated as a return of
capital to the extent of the Regular Certificateholder's basis in the Regular
Certificate allocable thereto. Regular Certificateholders must use the accrual
method of accounting with regard to Regular Certificates, regardless of the
method of accounting otherwise used by such Regular Certificateholders.
Original Issue Discount
Accrual Certificates and principal-only Certificates will be, and other
Classes of Regular Certificates may be, issued with "original issue discount"
within the meaning of Code Section 1273(a). Holders of any Class of Regular
Certificates having original issue discount generally must include original
issue discount in ordinary income for federal income tax purposes as it
accrues, in accordance with the constant yield method that takes into account
the compounding of interest, in advance of receipt of the cash attributable to
such income. The following discussion is based in part on temporary and final
Treasury regulations issued on February 2, 1994, as amended on June 14, 1996,
(the "OID Regulations") under Code Sections 1271 through 1273 and 1275 and in
part on the provisions of the 1986 Act. Regular Certificateholders should be
aware, however, that the OID Regulations do not adequately address certain
issues relevant to prepayable securities, such as the Regular Certificates. To
the extent such issues are not addressed in such regulations, the Depositor
intends to apply the methodology described in the Conference Committee Report
to the 1986 Act. No assurance can be provided that the Service will not take a
different position as to those matters not currently addressed by the OID
Regulations. Moreover, the OID Regulations include an anti-abuse rule allowing
the Service to apply or depart from the OID Regulations where necessary or
appropriate to ensure a reasonable tax result in light of the applicable
statutory provisions. A tax result will not be considered unreasonable under
the anti-abuse rule in the absence of a substantial effect on the present value
of a taxpayer's tax liability. Investors are advised to consult their own tax
advisors as to the discussion herein and the appropriate method for reporting
interest and original issue discount with respect to the Regular Certificates.
Each Regular Certificate (except to the extent described below with
respect to a Regular Certificate on which principal is distributed by random
lot ("Random Lot Certificates")) will be treated as a single installment
obligation for purposes of determining the original issue discount includible
in a Regular Certificateholder's income. The total amount of original issue
discount on a Regular Certificate is the excess of the "stated redemption price
at maturity" of the Regular Certificate over its "issue price". The issue price
of a Class of Regular Certificates offered pursuant to this Prospectus
generally is the first price at which a substantial amount of Regular
Certificates of that Class is sold to the public (excluding bond houses,
brokers and underwriters). Although unclear under the OID Regulations, the
Depositor intends to treat the issue price of a Class as to which there is no
substantial sale as of the issue date or that is retained by the Depositor as
the fair market value of that Class as of the issue date. The issue price of a
Regular Certificate also includes the amount paid by an initial Regular
Certificateholder for accrued
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interest that relates to a period prior to the issue date of the Regular
Certificate, unless the Regular Certificateholder elects on its federal income
tax return to exclude such amount from the issue price and to recover it on the
first Distribution Date. The stated redemption price at maturity of a Regular
Certificate always includes the original principal amount of the Regular
Certificate, but generally will not include distributions of stated interest if
such interest distributions constitute "qualified stated interest". Under the
OID Regulations, qualified stated interest generally means interest payable at
a single fixed rate or a qualified variable rate (as described below) provided
that such interest payments are unconditionally payable at intervals of one
year or less during the entire term of the Regular Certificate. Because there
is no penalty or default remedy in the case of nonpayment of interest with
respect to a Regular Certificate, it is possible that no interest on any Class
of Regular Certificates will be treated as qualified stated interest. However,
except as provided in the following three sentences or in the applicable
Prospectus Supplement, because the underlying Mortgage Loans provide for
remedies in the event of default, the Depositor intends to treat interest with
respect to the Regular Certificates as qualified stated interest. Distributions
of interest on an Accrual Certificate, or on other Regular Certificates with
respect to which deferred interest will accrue, will not constitute qualified
stated interest, in which case the stated redemption price at maturity of such
Regular Certificates includes all distributions of interest as well as
principal thereon. Likewise, the Depositor intends to treat an "interest only"
class, or a class on which interest is substantially disproportionate to its
principal amount (a so-called "super-premium" class) as having no qualified
stated interest. Where the interval between the issue date and the first
Distribution Date on a Regular Certificate is shorter than the interval between
subsequent Distribution Dates, the interest attributable to the additional days
will be included in the stated redemption price at maturity.
Under a de minimis rule, original issue discount on a Regular Certificate
will be considered to be zero if such original issue discount is less than
0.25% of the stated redemption price at maturity of the Regular Certificate
multiplied by the weighted average maturity of the Regular Certificate. For
this purpose, the weighted average maturity of the Regular Certificate is
computed as the sum of the amounts determined by multiplying the number of full
years (i.e., rounding down partial years) from the issue date until all
distributions in reduction of are scheduled to be made by a fraction, the
numerator of which is the amount of each distribution included in the stated
redemption price at maturity of the Regular Certificate and the denominator of
which is the stated redemption price at maturity of the Regular Certificate.
The Conference Committee Report to the 1986 Act provides that the schedule of
such distributions should be determined in accordance with the assumed rate of
prepayment of the Mortgage Loans (the "Prepayment Assumption") and the
anticipated reinvestment rate, if any, relating to the Regular Certificates.
The Prepayment Assumption with respect to a Series of Regular Certificates will
be set forth in the related Prospectus Supplement. Holders generally must
report de minimis original issue discount pro rata as principal payments are
received, and such income will be capital gain if the Regular Certificate is
held as a capital asset. However, under the OID Regulations, Regular
Certificateholders may elect to accrue all de minimis original issue discount
as well as market discount and market premium under the constant yield method.
See "Election to Treat All Interest Under the Constant Yield Method".
A Regular Certificateholder generally must include in gross income for any
taxable year the sum of the "daily portions," as defined below, of the original
issue discount on the Regular Certificate accrued during an accrual period for
each day on which it holds the Regular Certificate, including the date of
purchase but excluding the date of disposition. The Depositor will treat the
monthly period ending on the day before each Distribution Date as the accrual
period. With respect to each Regular Certificate, a calculation will be made of
the original issue discount that accrues during each successive full accrual
period (or shorter period from the date of original issue) that ends on the day
before the related Distribution Date on the Regular Certificate. The Conference
Committee Report to the 1986 Act states that the rate of accrual of original
issue discount is intended to be based on the Prepayment Assumption. Other than
as discussed below with respect to a Random Lot Certificate, the original issue
discount accruing in a full accrual period would be the excess, if any, of (i)
the sum of (a) the present value of all of the remaining distributions to be
made on the Regular Certificate as of the end of that accrual period that are
included in the Regular Certificate's stated redemption price at maturity and
(b) the distributions made on the Regular Certificate during the accrual period
that are included in the Regular Certificate's stated redemption price at
maturity, over (ii) the adjusted issue price of the Regular Certificate at the
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beginning of the accrual period. The present value of the remaining
distributions referred to in the preceding sentence is calculated based on (i)
the yield to maturity of the Regular Certificate at the issue date, (ii) events
(including actual prepayments) that have occurred prior to the end of the
accrual period and (iii) the Prepayment Assumption. For these purposes, the
adjusted issue price of a Regular Certificate at the beginning of any accrual
period equals the issue price of the Regular Certificate, increased by the
aggregate amount of original issue discount with respect to the Regular
Certificate that accrued in all prior accrual periods and reduced by the amount
of distributions included in the Regular Certificate's stated redemption price
at maturity that were made on the Regular Certificate in such prior periods.
The original issue discount accruing during any accrual period (as determined
in this paragraph) will then be divided by the number of days in the period to
determine the daily portion of original issue discount for each day in the
period. With respect to an initial accrual period shorter than a full accrual
period, the daily portions of original issue discount must be determined
according to an appropriate allocation under any reasonable method.
Under the method described above, the daily portions of original issue
discount required to be included in income by a Regular Certificateholder
generally will increase to take into account prepayments on the Regular
Certificates as a result of prepayments on the Mortgage Loans that exceed the
Prepayment Assumption, and generally will decrease (but not below zero for any
period) if the prepayments are slower than the Prepayment Assumption. An
increase in prepayments on the Mortgage Loans with respect to a Series of
Regular Certificates can result in both a change in the priority of principal
payments with respect to certain Classes of Regular Certificates and either an
increase or decrease in the daily portions of original issue discount with
respect to such Regular Certificates.
In the case of a Random Lot Certificate, the Depositor intends to
determine the yield to maturity of such Certificate based upon the anticipated
payment characteristics of the Class as a whole under the Prepayment
Assumption. In general, the original issue discount accruing on each Random Lot
Certificate in a full accrual period would be its allocable share of the
original issue discount with respect to the entire Class, as determined in
accordance with the preceding paragraph. However, in the case of a distribution
in retirement of the entire unpaid principal balance of any Random Lot
Certificate (or portion of such unpaid principal balance), (a) the remaining
unaccrued original issue discount allocable to such Certificate (or to such
portion) will accrue at the time of such distribution, and (b) the accrual of
original issue discount allocable to each remaining Certificate of such Class
(or the remaining unpaid principal balance of a partially redeemed Random Lot
Certificate after a distribution of principal has been received) will be
adjusted by reducing the present value of the remaining payments on such Class
and the adjusted issue price of such Class to the extent attributable to the
portion of the unpaid principal balance thereof that was distributed. The
Depositor believes that the foregoing treatment is consistent with the "pro
rata prepayment" rules of the OID Regulations, but with the rate of accrual of
original issue discount determined based on the Prepayment Assumption for the
Class as a whole. Investors are advised to consult their tax advisors as to
this treatment.
Acquisition Premium
A purchaser of a Regular Certificate at a price greater than its adjusted
issue price but less than its stated redemption price at maturity will be
required to include in gross income the daily portions of the original issue
discount on the Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over such adjusted issue
price and the denominator of which is the excess of the remaining stated
redemption price at maturity over the adjusted issue price. Alternatively, such
a subsequent purchaser may elect to treat all such acquisition premium under
the constant yield method, as described below under the heading "Election to
Treat All Interest Under the Constant Yield Method".
Variable Rate Regular Certificates
Regular Certificates may provide for interest based on a variable rate.
Under the OID Regulations, interest is treated as payable at a variable rate
if, generally, (i) the issue price does not exceed the original principal
balance by more than a specified de minimis amount and (ii) the interest
compounds or is payable at least annually at current values of (a) one or more
"qualified floating rates", (b) a single fixed rate and one or more qualified
floating rates, (c) a single "objective rate", or (d) a single fixed rate and
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a single objective rate that is a "qualified inverse floating rate". A floating
rate is a qualified floating rate if variations in the rate can reasonably be
expected to measure contemporaneous variations in the cost of newly borrowed
funds, or where such rate is subject to a fixed multiple that is greater than
0.65, but not more than 1.35. Such rate may also be increased or decreased by a
fixed spread or subject to a fixed cap or floor, or a cap or floor that is not
reasonably expected as of the issue date to affect the yield of the instrument
significantly. Two or more qualified floating rates will be treated as a single
qualified floating rate if all such qualified floating rates can reasonably be
expected to have approximately the same values throughout the terms of the
instrument. This requirement will be conclusively presumed to be satisfied if
the values of all such qualified floating rates are within 0.25% of each other
on the issue date. An objective rate (other than a qualified floating rate) is
a rate that is determined using a single fixed formula and that is based on
objective financial or economic information, provided that such information is
not (i) within the control of the issuer or a related party or (ii) unique to
the circumstances of the issuer or a related party. A qualified inverse
floating rate is an objective rate that is equal to a fixed rate minus a
qualified floating rate that inversely reflects contemporaneous variations in
the cost of newly borrowed funds; an inverse floating rate that is not a
qualified floating rate may nevertheless be an objective rate. A Class of
Regular Certificates may be issued under this Prospectus that does not have a
variable rate under the OID Regulations, for example, a Class that bears
different rates at different times during the period it is outstanding such
that it is considered significantly "front-loaded" or "back-loaded" within the
meaning of the OID Regulations. It is possible that such a Class may be
considered to bear "contingent interest" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to Regular Certificates. However,
if final regulations dealing with contingent interest with respect to Regular
Certificates apply the same principles as the OID Regulations, such regulations
may lead to different timing of income inclusion than would be the case under
the OID Regulations. Furthermore, application of such principles could lead to
the characterization of gain on the sale of contingent interest Regular
Certificates as ordinary income. Investors should consult their tax advisors
regarding the appropriate treatment of any Regular Certificate that does not
pay interest at a fixed rate or variable rate as described in this paragraph.
Under the REMIC Regulations, a Regular Certificate (i) bearing a rate that
qualifies as a variable rate under the OID Regulations that is tied to current
values of a variable rate (or the highest, lowest or average of two or more
variable rates), including a rate based on the average cost of funds of one or
more financial institutions, or a positive or negative multiple of such a rate
(plus or minus a specified number of basis points), or that represents a
weighted average of rates on some or all of the Mortgage Loans which bear
interest at a fixed rate or at a qualifying variable rate under the REMIC
Regulations, including such a rate that is subject to one or more caps or
floors, or (ii) bearing one or more such variable rates for one or more periods
or one or more fixed rates for one or more periods, and a different variable
rate or fixed rate for other periods qualifies as a regular interest in a
REMIC. Accordingly, unless otherwise indicated in the applicable Prospectus
Supplement, the Depositor intends to treat Regular Certificates that qualify as
regular interests under this rule in the same manner as obligations bearing a
variable rate for original issue discount reporting purposes.
The amount of original issue discount with respect to a Regular
Certificate bearing a variable rate of interest will accrue in the manner
described above under "Original Issue Discount" with the yield to maturity and
future payments on such Regular Certificate generally to be determined by
assuming that interest will be payable for the life of the Regular Certificate
based on the initial rate (or, if different, the value of the applicable
variable rate as of the pricing date) for the relevant Class. Unless otherwise
specified in the applicable Prospectus Supplement, the Depositor intends to
treat such variable interest as qualified stated interest, other than variable
interest on an interest-only or super-premium Class, which will be treated as
non-qualified stated interest includible in the stated redemption price at
maturity. Ordinary income reportable for any period will be adjusted based on
subsequent changes in the applicable interest rate index.
Although unclear under the OID Regulations, unless required otherwise by
applicable final regulations, the Depositor intends to treat Regular
Certificates bearing an interest rate that is a weighted average of the net
interest rates on Mortgage Loans or Mortgage Certificates having fixed or
adjustable
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rates, as having qualified stated interest, except to the extent that initial
"teaser" rates cause sufficiently "back-loaded" interest to create more than de
minimis original issue discount. The yield on such Regular Certificates for
purposes of accruing original issue discount will be a hypothetical fixed rate
based on the fixed rates, in the case of fixed rate Mortgage Loans, and initial
"teaser rates" followed by fully indexed rates, in the case of adjustable rate
Mortgage Loans. In the case of adjustable rate Mortgage Loans, the applicable
index used to compute interest on the Mortgage Loans in effect on the pricing
date (or possibly the issue date) will be deemed to be in effect beginning with
the period in which the first weighted average adjustment date occurring after
the issue date occurs. Adjustments will be made in each accrual period either
increasing or decreasing the amount of ordinary income reportable to reflect
the actual Pass-Through Rate on the Regular Certificates.
Deferred Interest
Under the OID Regulations, all interest on a Regular Certificate as to
which there may be Deferred Interest is includible in the stated redemption
price at maturity thereof. Accordingly, any Deferred Interest that accrues with
respect to a Class of Regular Certificates may constitute income to the holders
of such Regular Certificates prior to the time distributions of cash with
respect to such Deferred Interest are made.
Market Discount
A purchaser of a Regular Certificate also may be subject to the market
discount rules of Code Section 1276 through 1278. Under these Code sections and
the principles applied by the OID Regulations in the context of original issue
discount, "market discount" is the amount by which the purchaser's original
basis in the Regular Certificate (i) is exceeded by the then-current principal
amount of the Regular Certificate or (ii) in the case of a Regular Certificate
having original issue discount, is exceeded by the adjusted issue price of such
Regular Certificate at the time of purchase. Such purchaser generally will be
required to recognize ordinary income to the extent of accrued market discount
on such Regular Certificate as distributions includible in the stated
redemption price at maturity thereof are received, in an amount not exceeding
any such distribution. Such market discount would accrue in a manner to be
provided in Treasury regulations and should take into account the Prepayment
Assumption. The Conference Committee Report to the 1986 Act provides that until
such regulations are issued, such market discount would accrue either (i) on
the basis of a constant interest rate or (ii) in the ratio of stated interest
allocable to the relevant period to the sum of the interest for such period
plus the remaining interest as of the end of such period, or in the case of a
Regular Certificate issued with original issue discount, in the ratio of
original issue discount accrued for the relevant period to the sum of the
original issue discount accrued for such period plus the remaining original
issue discount as of the end of such period. Such purchaser also generally will
be required to treat a portion of any gain on a sale or exchange of the Regular
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 as partial distributions
in reduction of the stated redemption price at maturity were received. Such
purchaser will be required to defer deduction of a portion of the excess of the
interest paid or accrued on indebtedness incurred to purchase or carry a
Regular Certificate over the interest distributable thereon. The deferred
portion of such interest expense in any taxable year generally will not exceed
the accrued market discount on the Regular Certificate for such year. Any such
deferred interest expense is, in general, allowed as a deduction not later than
the year in which the related market discount income is recognized or the
Regular Certificate is disposed of. As an alternative to the inclusion of
market discount in income on the foregoing basis, the Regular Certificateholder
may elect to include market discount in income currently as it accrues on all
market discount instruments acquired by such Regular Certificateholder in that
taxable year or thereafter, in which case the interest deferral rule will not
apply. See "Election to Treat All Interest Under the Constant Yield Method"
below regarding an alternative manner in which such election may be deemed to
be made.
Market discount with respect to a Regular Certificate will be considered
to be zero if such market discount is less than 0.25% of the remaining stated
redemption price at maturity of such Regular Certificate multiplied by the
weighted average maturity of the Regular Certificate (determined as
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described above in the third paragraph under "Original Issue Discount")
remaining after the date of purchase. It appears that de minimis market
discount should be reported in a manner similar to de minimis original issue
discount. See "Original Issue Discount" above. Treasury regulations
implementing the market discount rules have not yet been issued, and therefore
investors should consult their own tax advisors regarding the application of
these rules. Investors should also consult Revenue Procedure 92-67 concerning
the elections to include market discount in income currently and to accrue
market discount on the basis of the constant yield method.
Premium
A Regular Certificate purchased at a cost greater than its remaining
stated redemption price at maturity generally is considered to be purchased at
a premium. If the Regular Certificateholder holds such Regular Certificate as a
"capital asset" within the meaning of Code Section 1221, the Regular
Certificateholder may elect under Code Section 171 to amortize such premium
under the constant yield method. The Conference Committee Report to the 1986
Act indicates a Congressional intent that the same rules that will apply to the
accrual of market discount on installment obligations will also apply to
amortizing bond premium under Code Section 171 on installment obligations such
as the Regular Certificates, although it is unclear whether the alternatives to
the constant yield method described above under "Market Discount" are
available. Amortizable bond premium will be treated as an offset to interest
income on a Regular Certificate rather than as a separate deduction item. See
"Election to Treat All Interest Under the Constant Yield Method" below
regarding an alternative manner in which the Code Section 171 election may be
deemed to be made.
Election to Treat All Interest Under the Constant Yield Method
A holder of a debt instrument such as a Regular Certificate may elect to
treat all interest that accrues on the instrument using the constant yield
method, with none of the interest being treated as qualified stated interest.
For purposes of applying the constant yield method to a debt instrument subject
to such an election, (i) "interest" includes stated interest, original issue
discount, de minimis original issue discount, market discount and de minimis
market discount, as adjusted by any amortizable bond premium or acquisition
premium and (ii) the debt instrument is treated as if the instrument were
issued on the holder's acquisition date in the amount of the holder's adjusted
basis immediately after acquisition. It is unclear whether, for this purpose,
the initial Prepayment Assumption would continue to apply or if a new
prepayment assumption as of the date of the holder's acquisition would apply. A
holder generally may make such an election on an instrument by instrument basis
or for a class or group of debt instruments. However, if the holder makes such
an election with respect to a debt instrument with amortizable bond premium or
with market discount, the holder is deemed to have made elections to amortize
bond premium or to report market discount income currently as it accrues under
the constant yield method, respectively, for all debt instruments acquired by
the holder in the same taxable year or thereafter. The election is made on the
holder's federal income tax return for the year in which the debt instrument is
acquired and is irrevocable except with the approval of the Service. Investors
should consult their own tax advisors regarding the advisability of making such
an election.
Sale or Exchange of Regular Certificates
If a Regular Certificateholder sells or exchanges a Regular Certificate,
the Regular Certificateholder will recognize gain or loss equal to the
difference, if any, between the amount received and its adjusted basis in the
Regular Certificate. The adjusted basis of a Regular Certificate generally will
equal the cost of the Regular Certificate to the seller, increased by any
original issue discount or market discount previously included in the seller's
gross income with respect to the Regular Certificate and reduced by amounts
included in the stated redemption price at maturity of the Regular Certificate
that were previously received by the seller, by any amortized premium and by
previously recognized losses.
Except as described above with respect to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a
Regular Certificate realized by an investor who holds the Regular Certificate
as a capital asset will be capital gain or loss and will be long-term or
short-term depending on whether the Regular Certificate has been held for the
long-term capital gain holding period
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(currently more than one year). Such gain will be treated as ordinary income
(i) if a Regular Certificate is held as part of a "conversion transaction" as
defined in Code Section 1258(c), up to the amount of interest that would have
accrued on the Regular Certificateholder's net investment in the conversion
transaction at 120% of the appropriate applicable Federal rate under Code
Section 1274(d) in effect at the time the taxpayer entered into the transaction
minus any amount previously treated as ordinary income with respect to any
prior distribution of property that was held as a part of such transaction,
(ii) in the case of a non-corporate taxpayer, to the extent such taxpayer has
made an election under Code Section 163(d)(4) to have net capital gains taxed
as investment income at ordinary rates, or (iii) to the extent that such gain
does not exceed the excess, if any, of (a) the amount that would have been
includible in the gross income of the holder if its yield on such Regular
Certificate were 110% of the applicable Federal rate as of the date of
purchase, over (b) the amount of income actually includible in the gross income
of such holder with respect to the Regular Certificate. In addition, gain or
loss recognized from the sale of a Regular Certificate by certain banks or
thrift institutions will be treated as ordinary income or loss pursuant to Code
Section 582(c). Capital gains of certain non-corporate taxpayers are subject to
a lower maximum tax rate (28%) than ordinary income of such taxpayers (39.6%),
and still a lower maximum rate (20%) for property held for more than 18 months.
The maximum tax rate for corporations is the same with respect to both ordinary
income and capital gains.
Treatment of Losses
Holders of Regular Certificates will be required to report income with
respect to Regular Certificates on the accrual method of accounting, without
giving effect to delays or reductions in distributions attributable to defaults
or delinquencies on the Mortgage Loans allocable to a particular class of
Regular Certificates, except to the extent it can be established that such
losses are uncollectible. Accordingly, the holder of a Regular Certificate may
have income, or may incur a diminution in cash flow as a result of a default or
delinquency, but may not be able to take a deduction (subject to the discussion
below) for the corresponding loss until a subsequent taxable year. In this
regard, investors are cautioned that while they may generally cease to accrue
interest income if it reasonably appears that the interest will be
uncollectible, the Internal Revenue Service may take the position that original
issue discount must continue to be accrued in spite of its uncollectibility
until the debt instrument is disposed of in a taxable transaction or becomes
worthless in accordance with the rules of Code Section 166. To the extent the
rules of Code Section 166 regarding bad debts are applicable, it appears that
holders of Regular Certificates that are corporations or that otherwise hold
the Regular Certificates in connection with a trade or business should in
general be allowed to deduct as an ordinary loss any such loss sustained during
the taxable year on account of any such Regular Certificates becoming wholly or
partially worthless, and that, in general, holders of Regular Certificates that
are not corporations and do not hold the Regular Certificates in connection
with a trade or business will be allowed to deduct as a short-term capital loss
any loss with respect to principal sustained during the taxable year on account
of a portion of any class or subclass of such Regular Certificates becoming
wholly worthless. Although the matter is not free from doubt, non-corporate
holders of Regular Certificates should be allowed a bad debt deduction at such
time as the principal balance of any class or subclass of such Regular
Certificates is reduced to reflect losses resulting from any liquidated
Mortgage Loans. The Service, however, could take the position that
non-corporate holders will be allowed a bad debt deduction to reflect such
losses only after all Mortgage Loans remaining in the Trust Fund have been
liquidated or such class of Regular Certificates has been otherwise retired.
The Service could also assert that losses on the Regular Certificates are
deductible based on some other method that may defer such deductions for all
holders, such as reducing future cash flow for purposes of computing original
issue discount. This may have the effect of creating "negative" original issue
discount which would be deductible only against future positive original issue
discount or otherwise upon termination of the Class. Holders of Regular
Certificates are urged to consult their own tax advisors regarding the
appropriate timing, amount and character of any loss sustained with respect to
such Regular Certificates. While losses attributable to interest previously
reported as income should be deductible as ordinary losses by both corporate
and non-corporate holders, the Internal Revenue Service may take the position
that losses attributable to accrued original issue discount may only be
deducted as short-term capital losses by non-corporate holders not engaged in a
trade or business. Special loss rules are applicable to banks and thrift
institutions, including rules regarding reserves for bad debts. Such taxpayers
are advised to consult their tax advisors regarding the treatment of losses on
Regular Certificates.
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TAXATION OF RESIDUAL CERTIFICATES
Taxation of REMIC Income
Generally, the "daily portions" of REMIC taxable income or net loss will
be includible as ordinary income or loss in determining the federal taxable
income of holders of Residual Certificates ("Residual Certificateholders"), and
will not be taxed separately to the REMIC Pool. The daily portions of REMIC
taxable income or net loss of a Residual Certificateholder are determined by
allocating the REMIC Pool's taxable income or net loss for each calendar
quarter ratably to each day in such quarter and by allocating such daily
portion among the Residual Certificateholders in proportion to their respective
holdings of Residual Certificates in the REMIC Pool on such day. REMIC taxable
income is generally determined in the same manner as the taxable income of an
individual using the accrual method of accounting, except that (i) the
limitations on deductibility of investment interest expense and expenses for
the production of income do not apply, (ii) all bad loans will be deductible as
business bad debts and (iii) the limitation on the deductibility of interest
and expenses related to tax-exempt income will apply. The REMIC Pool's gross
income includes interest, original issue discount income and market discount
income, if any, on the Mortgage Loans, reduced by amortization of any premium
on the Mortgage Loans, plus income from amortization of issue premium, if any,
on the Regular Certificates, plus income on reinvestment of cash flows and
reserve assets, plus any cancellation of indebtedness income upon allocation of
realized losses to the Regular Certificates. The REMIC Pool's deductions
include interest and original issue discount expense on the Regular
Certificates, servicing fees on the Mortgage Loans, other administrative
expenses of the REMIC Pool and realized losses on the Mortgage Loans. The
requirement that Residual Certificateholders report their pro rata share of
taxable income or net loss of the REMIC Pool will continue until there are no
Certificates of any class of the related series outstanding.
The taxable income recognized by a Residual Certificateholder in any
taxable year will be affected by, among other factors, the relationship between
the timing of recognition of interest and original issue discount or market
discount income or amortization of premium with respect to the Mortgage Loans,
on the one hand, and the timing of deductions for interest (including original
issue discount) on the Regular Certificates or income from amortization of
issue premium on the Regular Certificates, on the other hand. In the event that
an interest in the Mortgage Loans is acquired by the REMIC Pool at a discount,
and one or more of such Mortgage Loans is prepaid, the Residual
Certificateholder may recognize taxable income without being entitled to
receive a corresponding amount of cash because (i) the prepayment may be used
in whole or in part to make distributions in reduction of principal on the
Regular Certificates and (ii) the discount on the Mortgage Loans which is
includible in income may exceed the deduction allowed upon such distributions
on those Regular Certificates on account of any unaccrued original issue
discount relating to those Regular Certificates. When there is more than one
class of Regular Certificates that distribute principal sequentially, this
mismatching of income and deductions is particularly likely to occur in the
early years following issuance of the Regular Certificates when distributions
in reduction of principal are being made in respect of earlier classes of
Regular Certificates to the extent that such classes are not issued with
substantial discount. If taxable income attributable to such a mismatching is
realized, in general, losses would be allowed in later years as distributions
on the later classes of Regular Certificates are made. Taxable income may also
be greater in earlier years than in later years as a result of the fact that
interest expense deductions, expressed as a percentage of the outstanding
principal amount of such a series of Regular Certificates, may increase over
time as distributions in reduction of principal are made on the lower yielding
classes of Regular Certificates, whereas to the extent that the REMIC Pool
includes fixed rate Mortgage Loans, interest income with respect to any given
Mortgage Loan will remain constant over time as a percentage of the outstanding
principal amount of that loan. Consequently, Residual Certificateholders must
have sufficient other sources of cash to pay any federal, state or local income
taxes due as a result of such mismatching or unrelated deductions against which
to offset such income, subject to the discussion of "excess inclusions" below
under "Limitations on Offset or Exemption of REMIC Income". The timing of such
mismatching of income and deductions described in this paragraph, if present
with respect to a series of Certificates, may have a significant adverse effect
upon the Residual Certificateholder's after-tax rate of return. In addition, a
Residual Certificateholder's taxable
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income during certain periods may exceed the income reflected by such Residual
Certificateholder for such periods in accordance with generally accepted
accounting principles. Investors should consult their own accountants
concerning the accounting treatment of their investment in Residual
Certificates.
Basis and Losses
The amount of any net loss of the REMIC Pool that may be taken into
account by the Residual Certificateholder is limited to the adjusted basis of
the Residual Certificate as of the close of the quarter (or time of disposition
of the Residual Certificate if earlier), determined without taking into account
the net loss for the quarter. The initial adjusted basis of a purchaser of a
Residual Certificate is the amount paid for such Residual Certificate. Such
adjusted basis will be increased by the amount of taxable income of the REMIC
Pool reportable by the Residual Certificateholder and will be decreased (but
not below zero), first, by a cash distribution from the REMIC Pool and, second,
by the amount of loss of the REMIC Pool reportable by the Residual
Certificateholder. Any loss that is disallowed on account of this limitation
may be carried over indefinitely with respect to the Residual Certificateholder
as to whom such loss was disallowed and may be used by such Residual
Certificateholder only to offset any income generated by the same REMIC Pool.
A Residual Certificateholder will not be permitted to amortize directly
the cost of its Residual Certificate as an offset to its share of the taxable
income of the related REMIC Pool. However, that taxable income will not include
cash received by the REMIC Pool that represents a recovery of the REMIC Pool's
basis in its assets. Such recovery of basis by the REMIC Pool will have the
effect of amortization of the issue price of the Residual Certificates over
their life. However, in view of the possible acceleration of the income of
Residual Certificateholders described above under "Taxation of REMIC Income",
the period of time over which such issue price is effectively amortized may be
longer than the economic life of the Residual Certificates.
A Residual Certificate may have a negative value if the net present value
of anticipated tax liabilities exceeds the present value of anticipated cash
flows. The REMIC Regulations appear to treat the issue price of such a residual
interest as zero rather than such negative amount for purposes of determining
the REMIC Pool's basis in its assets. The preamble to the REMIC Regulations
states that the Service may provide future guidance on the proper tax treatment
of payments made by a transferor of such a residual interest to induce the
transferee to acquire the interest, and Residual Certificateholders should
consult their own tax advisors in this regard.
Further, to the extent that the initial adjusted basis of a Residual
Certificateholder (other than an original holder) in the Residual Certificate
is greater that the corresponding portion of the REMIC Pool's basis in the
Mortgage Loans, the Residual Certificateholder will not recover a portion of
such basis until termination of the REMIC Pool unless future Treasury
regulations provide for periodic adjustments to the REMIC income otherwise
reportable by such holder. The REMIC Regulations currently in effect do not so
provide. See "Treatment of Certain Items of REMIC Income and Expense--Market
Discount" below regarding the basis of Mortgage Loans to the REMIC Pool and
"Sale or Exchange of a Residual Certificate" below regarding possible treatment
of a loss upon termination of the REMIC Pool as a capital loss.
Treatment of Certain Items of REMIC Income and Expense
Although the Depositor intends to compute REMIC income and expense in
accordance with the Code and applicable regulations, the authorities regarding
the determination of specific items of income and expense are subject to
differing interpretations. The Depositor makes no representation as to the
specific method that it will use for reporting income with respect to the
Mortgage Loans and expenses with respect to the Regular Certificates, and
different methods could result in different timing of reporting of taxable
income or net loss to Residual Certificateholders or differences in capital
gain versus ordinary income.
Original Issue Discount and Premium. Generally, the REMIC Pool's
deductions for original issue discount and income from amortization of issue
premium will be determined in the same manner as
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original issue discount income on Regular Certificates as described above under
"Taxation of Regular Certificates--Original Issue Discount" and "--Variable
Rate Regular Certificates", without regard to the de minimis rule described
therein, and "--Premium".
Deferred Interest. Any Deferred Interest that accrues with respect to any
adjustable rate Mortgage Loans held by the REMIC Pool will constitute income to
the REMIC Pool and will be treated in a manner similar to the Deferred Interest
that accrues with respect to Regular Certificates as described above under
"Taxation of Regular Certificates--Deferred Interest".
Market Discount. The REMIC Pool will have market discount income in
respect of Mortgage Loans if, in general, the basis of the REMIC Pool allocable
to such Mortgage Loans is exceeded by their unpaid principal balances. The
REMIC Pool's basis in such Mortgage Loans is generally the fair market value of
the Mortgage Loans immediately after the transfer thereof to the REMIC Pool.
The REMIC Regulations provide that such basis is equal in the aggregate to the
issue prices of all regular and residual interests in the REMIC Pool (or the
fair market value thereof at the Closing Date, in the case of a retained
Class). In respect of Mortgage Loans that have market discount to which Code
Section 1276 applies, the accrued portion of such market discount would be
recognized currently as an item of ordinary income in a manner similar to
original issue discount. Market discount income generally should accrue in the
manner described above under "Taxation of Regular Certificates--Market
Discount".
Premium. Generally, if the basis of the REMIC Pool in the Mortgage Loans
exceeds the unpaid principal balances thereof, the REMIC Pool will be
considered to have acquired such Mortgage Loans at a premium equal to the
amount of such excess. As stated above, the REMIC Pool's basis in Mortgage
Loans is the fair market value of the Mortgage Loans, based on the aggregate of
the issue prices (or the fair market value of retained Classes) of the regular
and residual interests in the REMIC Pool immediately after the transfer thereof
to the REMIC Pool. In a manner analogous to the discussion above under
"Taxation of Regular Certificates--Premium", a REMIC Pool that holds a Mortgage
Loan as a capital asset under Code Section 1221 may elect under Code Section
171 to amortize premium on whole mortgage loans or mortgage loans underlying
MBS that were originated after September 27, 1985 or MBS that are REMIC regular
interests under the constant yield method. Amortizable bond premium will be
treated as an offset to interest income on the Mortgage Loans, rather than as a
separate deduction item. To the extent that the mortgagors with respect to the
Mortgage Loans are individuals, Code Section 171 will not be available for
premium on Mortgage Loans (including underlying mortgage loans) originated on
or prior to September 27, 1985. Premium with respect to such Mortgage Loans may
be deductible in accordance with a reasonable method regularly employed by the
holder thereof. The allocation of such premium pro rata among principal
payments should be considered a reasonable method; however, the Service may
argue that such premium should be allocated in a different manner, such as
allocating such premium entirely to the final payment of principal.
Limitations on Offset or Exemption of REMIC Income
A portion or all of the REMIC taxable income includible in determining the
federal income tax liability of a Residual Certificateholder will be subject to
special treatment. That portion, referred to as the "excess inclusion", is
equal to the excess of REMIC taxable income for the calendar quarter allocable
to a Residual Certificate over the daily accruals for such quarterly period of
(i) 120% of the long-term applicable Federal rate that would have applied to
the Residual Certificate (if it were a debt instrument) on the Startup Day
under Code Section 1274(d), multiplied by (ii) the adjusted issue price of such
Residual Certificate at the beginning of such quarterly period. For this
purpose, the adjusted issue price of a Residual Certificate at the beginning of
a quarter is the issue price of the Residual Certificate, plus the amount of
such daily accruals of REMIC income described in this paragraph for all prior
quarters, decreased by any distributions made with respect to such Residual
Certificate prior to the beginning of such quarterly period. Accordingly, the
portion of the REMIC Pool's taxable income that will be treated as excess
inclusions will be a larger portion of such income as the adjusted issue price
of the Residual Certificates diminishes.
The portion of a Residual Certificateholder's REMIC taxable income
consisting of the excess inclusions generally may not be offset by other
deductions, including net operating loss carry forwards, on
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such Residual Certificateholder's return. However, net operating loss
carryovers are determined without regard to excess inclusion income. Further,
if the Residual Certificateholder is an organization subject to the tax on
unrelated business income imposed by Code Section 511, the Residual
Certificateholder's excess inclusions will be treated as unrelated business
taxable income of such Residual Certificateholder for purposes of Code Section
511. In addition, REMIC taxable income is subject to 30% withholding tax with
respect to certain persons who are not U.S. Persons (as defined below under
"Tax-Related Restrictions on Transfer of Residual Certificates--Foreign
Investors"), and the portion thereof attributable to excess inclusions is not
eligible for any reduction in the rate of withholding tax (by treaty or
otherwise). See "Taxation of Certain Foreign Investors--Residual Certificates"
below. Finally, if a real estate investment trust or a regulated investment
company owns a Residual Certificate, a portion (allocated under Treasury
regulations yet to be issued) of dividends paid by the real estate investment
trust or a regulated investment company could not be offset by net operating
losses of its shareholders, would constitute unrelated business taxable income
for tax-exempt shareholders, and would be ineligible for reduction of
withholding to certain persons who are not U.S. Persons. The SBJPA of 1996 has
eliminated the special rule permitting Section 593 institutions ("thrift
institutions") to use net operating losses and other allowable deductions to
offset their excess inclusion income from Residual Certificates that have
"significant value" within the meaning of the REMIC Regulations, effective for
taxable years beginning after December 31, 1995, except with respect to
Residual Certificates continuously held by thrift institutions since November
1, 1995.
In addition, the SBJPA of 1996 provides three rules for determining the
effect of excess inclusions on the alternative minimum taxable income of a
Residual Certificateholder. First, alternative minimum taxable income for a
Residual Certificateholder is determined without regard to the special rule,
discussed above, that taxable income cannot be less than excess inclusions.
Second, a Residual Certificateholder's alternative minimum taxable income for a
taxable year cannot be less than the excess inclusions for the year. Third, the
amount of any alternative minimum tax net operating loss deduction must be
computed without regard to any excess inclusions. These rules are effective for
taxable years beginning after December 31, 1996, unless a Residual
Certificateholder elects to have such rules apply only to taxable years
beginning after August 20, 1996.
Tax-Related Restrictions on Transfer of Residual Certificates
Disqualified Organizations. If any legal or beneficial interest in a
Residual Certificate is transferred to a Disqualified Organization (as defined
below) other than in connection with the formation of a REMIC Pool, if the
Disqualified Organization is required, pursuant to a binding contract, to sell
such Residual Certificate, which sale occurs within seven days after the
Startup Days, a tax would be imposed in an amount equal to the product of (i)
the present value of the total anticipated excess inclusions with respect to
such Residual Certificate for periods after the transfer and (ii) the highest
marginal federal income tax rate applicable to corporations. The REMIC
Regulations provide that the anticipated excess inclusions are based on actual
prepayment experience to the date of the transfer and projected payments based
on the Prepayment Assumption. The present value rate equals the applicable
Federal rate under Code Section 1274(d) as of the date of the transfer for a
term ending with the last calendar quarter in which excess inclusions are
expected to accrue. Such a tax generally would be imposed on the transferor of
the Residual Certificate, except that where such transfer is through an agent
(including a broker, nominee or other middleman) for a Disqualified
Organization, the tax would instead be imposed on such agent. However, a
transferor of a 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. The tax also may be waived by the Treasury Department if
the Disqualified Organization promptly disposes of the residual interest and
the transferor pays income tax at the highest corporate rate on the excess
inclusions for the period the Residual Certificate is actually held by the
Disqualified Organization.
In addition, if a "Pass-Through Entity" (as defined below) has excess
inclusion income with respect to a Residual Certificate during a taxable year
and a Disqualified Organization is the record holder of an equity interest in
such entity, then a tax is imposed on such entity equal to the product of (i)
the amount
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of excess inclusions on the Residual Certificate that are allocable to the
interest in the Pass-Through Entity during the period such interest is held by
such Disqualified Organization, and (ii) the highest marginal federal corporate
income tax rate. Such tax would be deductible from the ordinary gross income of
the Pass-Through Entity for the taxable year. The Pass-Through Entity would not
be liable for such tax if it has received an affidavit from such record holder
that it is not a Disqualified Organization or stating such holder's taxpayer
identification number and, during the period such person is the record holder
of the Residual Certificate, the Pass-Through Entity does not have actual
knowledge that such affidavit is false.
For these purposes, (i) "Disqualified Organization" means the United
States, any state or political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of the
foregoing (provided, that such term does not include an instrumentality if all
of its activities are subject to tax and, except in the case of the Federal
Home Loan Mortgage Corporation, a majority of its board of directors is not
selected by any such governmental entity), any cooperative organization
furnishing electric energy or providing telephone service to persons in rural
areas as described in Code Section 1381(a)(2)(C), and any organization (other
than a farmers' cooperative described in Code Section 521) that is exempt from
taxation under the Code unless such organization is subject to the tax on
unrelated business income imposed by Code Section 511, and (ii) "Pass-Through
Entity" means any regulated investment company, real estate investment trust,
common trust fund, partnership, trust or estate and certain corporations
operating on a cooperative basis. Except as may be provided in Treasury
regulations, any person holding an interest in a Pass-Through Entity as a
nominee for another will, with respect to such interest, be treated as a
Pass-Through Entity.
The Pooling Agreement with respect to a series of Certificates will
provide that no legal or beneficial interest in a Residual Certificate may be
transferred unless (i) the proposed transferee provides to the transferor and
the Trustee an affidavit providing its taxpayer identification number and
stating that such transferee is the beneficial owner of the Residual
Certificate, is not a Disqualified Organization and is not purchasing such
Residual Certificates on behalf of a Disqualified Organization (i.e., as a
broker, nominee or middleman thereof), and (ii) the transferor provides a
statement in writing to the Depositor and the Trustee that it has no actual
knowledge that such affidavit is false. Moreover, the Pooling Agreement will
provide that any attempted or purported transfer in violation of these transfer
restrictions will be null and void and will vest no rights in any purported
transferee. Each Residual Certificate with respect to a series will bear a
legend referring to such restrictions on transfer, and each Residual
Certificateholder will be deemed to have agreed, as a condition of ownership
thereof, to any amendments to the related Pooling Agreement required under the
Code or applicable Treasury regulations to effectuate the foregoing
restrictions. Information necessary to compute an applicable excise tax must be
furnished to the Service and to the requesting party within 60 days of the
request, and the Depositor or the Trustee may charge a fee for computing and
providing such information.
Noneconomic Residual Interests. The REMIC Regulations would disregard
certain transfers of Residual Certificates, in which case the transferor would
continue to be treated as the owner of the Residual Certificates and thus would
continue to be subject to tax on its allocable portion of the net income of the
REMIC Pool. Under the REMIC Regulations, a transfer of a "noneconomic residual
interest" (as defined below) to a Residual Certificateholder (other than a
Residual Certificateholder who is not a U.S. Person, as defined below under
"Foreign Investors") is disregarded for all federal income tax purposes if a
significant purpose of the transferor is to impede the assessment or collection
of tax. A residual interest in a REMIC (including a residual interest with a
positive value at issuance) is a "noneconomic residual interest" unless, at the
time of the transfer, (i) the present value of the expected future
distributions on the residual interest at least equals the product of the
present value of the anticipated excess inclusions and the highest corporate
income tax rate in effect for the year in which the transfer occurs, and (ii)
the transferor reasonably expects that the transferee will receive
distributions from the REMIC at or after the time at which taxes accrue on the
anticipated excess inclusions in an amount sufficient to satisfy the accrued
taxes. The anticipated excess inclusions and the present value rate are
determined in the same manner as set forth above under "Disqualified
Organizations". The REMIC Regulations explain that a significant purpose to
impede the assessment or collection of tax exists if the
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transferor, at the time of the transfer, either knew or should have known that
the transferee would be unwilling or unable to pay taxes due on its share of
the taxable income of the REMIC. A safe harbor is provided if (i) the
transferor conducted, at the time of the transfer, a reasonable investigation
of the financial condition of the transferee and found that the transferee
historically had paid its debts as they came due and found no significant
evidence to indicate that the transferee would not continue to pay its debts as
they came due in the future, and (ii) the transferee represents to the
transferor that it understands that, as the holder of the noneconomic residual
interest, the transferee may incur tax liabilities in excess of cash flows
generated by the interest and that the transferee intends to pay taxes
associated with holding the residual interest as they become due. The Pooling
Agreement with respect to each series of Certificates will require the
transferee of a Residual Certificate to certify to the matters in the preceding
sentence as part of the affidavit described above under the heading
"Disqualified Organizations". The transferor must have no actual knowledge or
reason to know that such statements are false.
Foreign Investors. The REMIC Regulations provide that the transfer of a
Residual Certificate that has "tax avoidance potential" to a "foreign person"
will be disregarded for all federal tax purposes. This rule appears intended to
apply to a transferee who is not a "U.S. Person" (as defined below), unless
such transferee's income is effectively connected with the conduct of a trade
or business within the United States or not otherwise subject to a withholding
tax. A Residual Certificate is deemed to have tax avoidance potential unless,
at the time of the transfer, (i) the future value of expected distributions
equals at least 30% of the anticipated excess inclusions after the transfer,
and (ii) the transferor reasonably expects that the transferee will receive
sufficient distributions from the REMIC Pool at or after the time at which the
excess inclusions accrue and prior to the end of the next succeeding taxable
year for the accumulated withholding tax liability to be paid. If the non-U.S.
Person transfers the Residual Certificate back to a U.S. Person, the transfer
will be disregarded and the foreign transferor will continue to be treated as
the owner unless arrangements are made so that the transfer does not have the
effect of allowing the transferor to avoid tax on accrued excess inclusions.
The Prospectus Supplement relating to a series of Certificates may provide
that a Residual Certificate may not be purchased by or transferred to any
person that is not a U.S. Person or may describe the circumstances and
restrictions pursuant to which such a transfer may be made. The term "U.S.
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 State, an estate that is subject to United States federal
income tax regardless of the source of its income or a trust if (A) for taxable
years beginning after December 31, 1996 (or for taxable years ending after
August 20, 1996, if the trustee has made an applicable election), a court
within the United States is able to exercise primary supervision over the
administration of such trust, and one or more United States persons have the
authority to control all substantial decisions of such trust, or (B) for all
other taxable years, such trust is subject to United States federal income tax
regardless of the source of its income (or, to the extent provided in
applicable Treasury Regulations, certain trusts in existence on August 20, 1996
which are eligible to elect to be treated as U.S. Persons).
Sale or Exchange of a Residual Certificate
Upon the sale or exchange of a Residual Certificate, the Residual
Certificateholder will recognize gain or loss equal to the excess, if any, of
the amount realized over the adjusted basis (as described above under "Taxation
of Residual Certificates--Basis and Losses") of such Residual Certificateholder
in such Residual Certificate at the time of the sale or exchange. In addition
to reporting the taxable income of the REMIC Pool, a Residual Certificateholder
will have taxable income to the extent that any cash distribution to it from
the REMIC Pool exceeds such adjusted basis on that Distribution Date. Such
income will be treated as gain from the sale or exchange of the Residual
Certificate. It is possible that the termination of the REMIC Pool may be
treated as a sale or exchange of a Residual Certificateholder's Residual
Certificate, in which case, if the Residual Certificateholder has an adjusted
basis in such Residual Certificateholder's Residual Certificate remaining when
its interest in the REMIC Pool terminates, and if such Residual
Certificateholder holds such Residual Certificate as a capital asset under Code
Section 1221, then such Residual Certificateholder will recognize a capital
loss at that time in the amount of such remaining adjusted basis.
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Any gain on the sale of a Residual Certificate will be treated as ordinary
income (i) if a Residual Certificate is held as part of a "conversion
transaction" as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Residual Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate
in effect at the time the taxpayer entered into the transaction minus any
amount previously treated as ordinary income with respect to any prior
disposition of property that was held as a part of such transaction or (ii) in
the case of a non-corporate taxpayer, to the extent such taxpayer has made an
election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary income rates. In addition, gain or loss
recognized from the sale of a Residual Certificate by certain banks or thrift
institutions will be treated as ordinary income or loss pursuant to Code
Section 582(c).
The Conference Committee Report to the 1986 Act provides that, except as
provided in Treasury regulations yet to be issued, the wash sale rules of Code
Section 1091 will apply to dispositions of Residual Certificates where the
seller of the Residual Certificate, during the period beginning six months
before the sale or disposition of the Residual Certificate and ending six
months after such sale or disposition, acquires (or enters into any other
transaction that results in the application of Section 1091) any residual
interest in any REMIC or any interest in a "taxable mortgage pool" (such as a
non-REMIC owner trust) that is economically comparable to a Residual
Certificate.
Mark-to-Market Regulations
The Service has issued regulations (the "Mark-to-Market Regulations")
under Code Section 475 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 of 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, for purposes of this mark-to-market
requirement, a Residual Certificate is not treated as a security and thus may
not be marked-to-market. The Mark-to-Market Regulations apply to all Residual
Certificates acquired on or after January 4, 1995.
TAXES THAT MAY BE IMPOSED ON THE REMIC POOL
Prohibited Transactions
Income from certain transactions by the REMIC Pool, called prohibited
transactions, will not be part of the calculation of income or loss includible
in the federal income tax returns of Residual Certificateholders, but rather
will be taxed directly to the REMIC Pool at a 100% rate. Prohibited
transactions generally include (i) the disposition of a qualified mortgage
other than pursuant to a (a) substitution within two years of the Startup Day
for a defective (including a defaulted) obligation (or repurchase in lieu of
substitution of a defective (including a defaulted) obligation at any time) or
for any qualified mortgage within three months of the Startup Day, (b)
foreclosure, default or imminent default of a qualified mortgage, (c)
bankruptcy or insolvency of the REMIC Pool or (d) qualified (complete)
liquidation, (ii) the receipt of income from assets that are not the type of
mortgages or investments that the REMIC Pool is permitted to hold, (iii) the
receipt of compensation for services or (iv) the receipt of gain from
disposition of cash flow investments other than pursuant to a qualified
liquidation. Notwithstanding (i) and (iv), it is not a prohibited transaction
to sell REMIC Pool property to prevent a default on Regular Certificates as a
result of a default on qualified mortgages or to facilitate a clean-up call
(generally, an optional termination to save administrative costs when no more
than a small percentage of the Certificates is outstanding). The REMIC
Regulations indicate that the modification of a Mortgage Loan generally will
not be treated as a disposition if it is occasioned by a default or reasonably
foreseeable default, an assumption of the Mortgage Loan, the waiver of a
due-on-sale or due-on-encumbrance clause or the conversion of an interest rate
by a mortgagor pursuant to the terms of a convertible adjustable rate Mortgage
Loan.
Contributions to the REMIC Pool After the Startup Day
In general, the REMIC Pool will be subject to a tax at a 100% rate on the
value of any property contributed to the REMIC Pool after the Startup Day.
Exceptions are provided for cash contributions to the REMIC Pool (i) during the
three months following the Startup Day, (ii) made to a qualified reserve
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fund by a Residual Certificateholder, (iii) in the nature of a guarantee, (iv)
made to facilitate a qualified liquidation or clean-up call and (v) as
otherwise permitted in Treasury regulations yet to be issued.
Net Income from Foreclosure Property
The REMIC Pool will be 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. Generally,
property acquired by deed in lieu of foreclosure would be treated as
"foreclosure property" for a period of two years, with possible extensions of
up to an additional four years. Net income from foreclosure property generally
means gain from the sale of a foreclosure property that is inventory property
and gross income from foreclosure property other than qualifying rents and
other qualifying income for a real estate investment trust.
It is not anticipated that the REMIC Pool will receive income or
contributions subject to tax under the preceding three paragraphs, except as
described in the applicable Prospectus Supplement with respect to net income
from foreclosure property on a commercial or multifamily residential property
that secured a Mortgage Loan. In addition, unless otherwise disclosed in the
applicable Prospectus Supplement, it is not anticipated that any material state
income or franchise tax will be imposed on a REMIC Pool.
LIQUIDATION OF THE REMIC POOL
If a REMIC Pool adopts a plan of complete liquidation, within the meaning
of Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in
the REMIC Pool's final tax return a date on which such adoption is deemed to
occur, and sells all of its assets (other than cash) within a 90-day period
beginning on the date of the adoption of the plan of liquidation, the REMIC
Pool will not be subject to the prohibited transaction rules on the sale of its
assets, provided that the REMIC Pool credits or distributes in liquidation all
of the sale proceeds plus its cash (other than amounts retained to meet claims)
to holders of Regular Certificates and Residual Certificateholders within the
90-day period.
ADMINISTRATIVE MATTERS
The REMIC Pool will be required to maintain its books on a calendar year
basis and to file federal income tax returns for federal income tax purposes in
a manner similar to a partnership. The form for such income tax return is Form
1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return. The
Trustee will be required to sign the REMIC Pool's returns. Treasury regulations
provide that, except where there is a single Residual Certificateholder for an
entire taxable year, the REMIC Pool will be subject to the procedural and
administrative rules of the Code applicable to partnerships, including the
determination by the Service of any adjustments to, among other things, items
of REMIC income, gain, loss, deduction or credit in a unified administrative
proceeding. The Residual Certificateholder owning the largest percentage
interest in the Residual Certificates will be obligated to act as "tax matters
person", as defined in applicable Treasury regulations, with respect to the
REMIC Pool. Each Residual Certificateholder will be deemed, by acceptance of
such Residual Certificates, to have agreed (i) to the appointment of the tax
matters person as provided in the preceding sentence and (ii) to the
irrevocable designation of the Master Servicer as agent for performing the
functions of the tax matters person.
LIMITATIONS ON DEDUCTION OF CERTAIN EXPENSES
An investor who is an individual, estate or trust will be subject to
limitation with respect to certain itemized deductions described in Code
Section 67, to the extent that such itemized deductions, in the aggregate, do
not exceed 2% of the investor's adjusted gross income. In addition, Code
Section 68 provides that itemized deductions otherwise allowable for a taxable
year of an individual taxpayer will be reduced by the lesser of (i) 3% of the
excess, if any, of adjusted gross income over $124,500 for the taxable year
beginning in 1998 ($62,250 in the case of a married individual filing a
separate return) (subject to adjustments for inflation in subsequent years) or
(ii) 80% of the amount of itemized deductions otherwise allowable for such
year. In the case of a REMIC Pool, such deductions may include deductions under
Code Section 212 for the servicing fee and all administrative and other
expenses relating to the REMIC Pool, or any similar expenses allocated to the
REMIC Pool with respect to a regular interest it holds in
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another REMIC. Such investors who hold REMIC Certificates either directly or
indirectly through certain pass-through entities may have their pro rata share
of such expenses allocated to them as additional gross income, but may be
subject to such limitation on deductions. In addition, such expenses are not
deductible at all for purposes of computing the alternative minimum tax, and
may cause such investors to be subject to significant additional tax liability.
Temporary Treasury regulations provide that the additional gross income and
corresponding amount of expenses generally are to be allocated entirely to the
holders of Residual Certificates in the case of a REMIC Pool that would not
qualify as a fixed investment trust in the absence of a REMIC election.
However, such additional gross income and limitation on deductions will apply
to the allocable portion of such expenses to holders of Regular Certificates,
as well as holders of Residual Certificates, where such Regular Certificates
are issued in a manner that is similar to pass-through certificates in a fixed
investment trust. In general, such allocable portion will be determined based
on the ratio that a REMIC Certificateholder's income, determined on a daily
basis, bears to the income of all holders of Regular Certificates and Residual
Certificates with respect to a REMIC Pool. As a result, individuals, estates or
trusts holding REMIC Certificates (either directly or indirectly through a
grantor trust, partnership, S corporation, REMIC, or certain other pass-through
entities described in the foregoing temporary Treasury regulations) may have
taxable income in excess of the interest income at the pass-through rate on
Regular Certificates that are issued in a single Class or otherwise
consistently with fixed investment trust status or in excess of cash
distributions for the related period on Residual Certificates. Unless otherwise
indicated in the applicable Prospectus Supplement, all such expenses will be
allocable to the Residual Certificates.
TAXATION OF CERTAIN FOREIGN INVESTORS
Regular Certificates
Interest, including original issue discount, distributable to Regular
Certificateholders who are non-resident aliens, foreign corporations, or other
Non-U.S. Persons (as defined below), will be considered "portfolio interest"
and, therefore, generally will not be subject to 30% United States withholding
tax, provided that such Non-U.S. Person (i) is not a "10-percent shareholder"
within the meaning of Code Section 871(h)(3)(B) or a controlled foreign
corporation described in Code Section 881(c)(3)(C) and (ii) provides the
Trustee, or the person who would otherwise be required to withhold tax from
such distributions under Code Section 1441 or 1442, with an appropriate
statement, signed under penalties of perjury, identifying the beneficial owner
and stating, among other things, that the beneficial owner of the Regular
Certificate is a Non-U.S. Person. If such statement, or any other required
statement, is not provided, 30% withholding will apply unless reduced or
eliminated pursuant to an applicable tax treaty or unless the interest on the
Regular Certificate is effectively connected with the conduct of a trade or
business within the United States by such Non-U.S. Person. In the latter case,
such Non-U.S. Person will be subject to United States federal income tax at
regular rates. Prepayment Premiums distributable to Regular Certificateholders
who are Non-U.S. Persons may be subject to 30% United States withholding tax.
Investors who are Non-U.S. Persons should consult their own tax advisors
regarding the specific tax consequences to them of owning a Regular
Certificate. The term "Non-U.S. Person" means any person who is not a U.S.
Person.
Residual Certificates
The Conference Committee Report to the 1986 Act indicates that amounts
paid to Residual Certificateholders who are Non-U.S. Persons are treated as
interest for purposes of the 30% (or lower treaty rate) United States
withholding tax. Treasury regulations provide that amounts distributed to
Residual Certificateholders may qualify as "portfolio interest", subject to the
conditions described in "Regular Certificates" above, but only to the extent
that (i) the Mortgage Loans (including mortgage loans underlying MBS) were
issued after July 18, 1984 and (ii) the Trust Fund or segregated pool of assets
therein (as to which a separate REMIC election will be made), to which the
Residual Certificate relates, consists of obligations issued in "registered
form" within the meaning of Code Section 163(f)(1). Generally, whole mortgage
loans will not be, but MBS and regular interests in another REMIC Pool will be,
considered obligations issued in registered form. Furthermore, a Residual
Certificateholder will not be entitled to any exemption from the 30%
withholding tax (or lower treaty rate) to the extent of that portion
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of REMIC taxable income that constitutes an "excess inclusion". See "Taxation
of Residual Certificates--Limitations on Offset or Exemption of REMIC Income".
If the amounts paid to Residual Certificateholders who are Non-U.S. Persons are
effectively connected with the conduct of a trade or business within the United
States by such Non-U.S. Persons, 30% (or lower treaty rate) withholding will
not apply. Instead, the amounts paid to such Non-U.S. Persons will be subject
to United States federal income tax at regular rates. If 30% (or lower treaty
rate) withholding is applicable, such amounts generally will be taken into
account for purposes of withholding only when paid or otherwise distributed (or
when the Residual Certificate is disposed of) under rules similar to
withholding upon disposition of debt instruments that have original issue
discount. See "Tax-Related Restrictions on Transfer of Residual
Certificates--Foreign Investors" above concerning the disregard of certain
transfers having "tax avoidance potential". Investors who are Non-U.S. Persons
should consult their own tax advisors regarding the specific tax consequences
to them of owning Residual Certificates.
BACKUP WITHHOLDING
Distributions made on the Regular Certificates, and proceeds from the sale
of the Regular Certificates to or through certain brokers, may be subject to a
"backup" withholding tax under Code Section 3406 of 31% on "reportable
payments" (including interest distributions, original issue discount, and,
under certain circumstances, principal distributions) unless the Regular
Certificateholder complies with certain reporting and/or certification
procedures, including the provision of its taxpayer identification number to
the Trustee, its agent or the broker who effected the sale of the Regular
Certificate, or such Certificateholder is otherwise an exempt recipient under
applicable provisions of the Code. Any amounts to be withheld from distribution
on the Regular Certificates would be refunded by the Service or allowed as a
credit against the Regular Certificateholder's federal income tax liability.
REPORTING REQUIREMENTS
Reports of accrued interest, original issue discount and information
necessary to compute the accrual of any market discount on the Regular
Certificates will be made annually to the Service and to individuals, estates,
non-exempt and non-charitable trusts, and partnerships who are either holders
of record of Regular Certificates or beneficial owners who own Regular
Certificates through a broker or middleman as nominee. All brokers, nominees
and all other non-exempt holders of record of Regular Certificates (including
corporations, non-calendar year taxpayers, securities or commodities dealers,
real estate investment trusts, investment companies, common trust funds, thrift
institutions and charitable trusts) may request such information for any
calendar quarter by telephone or in writing by contacting the person designated
in Service Publication 938 with respect to a particular Series of Regular
Certificates. Holders through nominees must request such information from the
nominee.
The Service's Form 1066 has an accompanying Schedule Q, Quarterly Notice
to Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation.
Treasury regulations require that Schedule Q be furnished by the REMIC Pool to
each Residual Certificateholder by the end of the month following the close of
each calendar quarter (41 days after the end of a quarter under proposed
Treasury regulations) in which the REMIC Pool is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual
Certificateholders, furnished annually, if applicable, to holders of Regular
Certificates, and filed annually with the Service concerning Code Section 67
expenses (see "Limitations on Deduction of Certain Expenses" above) allocable
to such holders. Furthermore, under such regulations, information must be
furnished quarterly to Residual Certificateholders, furnished annually to
holders of Regular Certificates, and filed annually with the Service concerning
the percentage of the REMIC Pool's assets meeting the qualified asset tests
described above under "Status of REMIC Certificates".
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FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS TO WHICH NO REMIC ELECTION
IS MADE
STANDARD CERTIFICATES
General
In the event that no election is made to treat a Trust Fund (or a
segregated pool of assets therein) with respect to a series of Certificates
that are not designated as "Stripped Certificates", as described below, as a
REMIC (Certificates of such a series hereinafter referred to as "Standard
Certificates"), the Trust Fund will be classified as a grantor trust under
subpart E, Part 1 of subchapter J of the Code and not as an association taxable
as a corporation or a "taxable mortgage pool" within the meaning of Code
Section 7701(i). Where there is no fixed retained yield with respect to the
Mortgage Loans underlying the Standard Certificates, the holder of each such
Standard Certificate (a "Standard Certificateholder") in such series will be
treated as the owner of a pro rata undivided interest in the ordinary income
and corpus portions of the Trust Fund represented by its Standard Certificate
and will be considered the beneficial owner of a pro rata undivided interest in
each of the Mortgage Loans, subject to the discussion below under
"Recharacterization of Servicing Fees". Accordingly, the holder of a Standard
Certificate of a particular series will be required to report on its federal
income tax return its pro rata share of the entire income from the Mortgage
Loans represented by its Standard Certificate, including interest at the coupon
rate on such Mortgage Loans, original issue discount (if any), prepayment fees,
assumption fees, and late payment charges received by the Master Servicer, in
accordance with such Standard Certificateholder's method of accounting. A
Standard Certificateholder generally will be able to deduct its share of the
servicing fee and all administrative and other expenses of the Trust Fund in
accordance with its method of accounting, provided that such amounts are
reasonable compensation for services rendered to that Trust Fund. However,
investors who are individuals, estates or trusts who own Standard Certificates,
either directly or indirectly through certain pass-through entities, will be
subject to limitation with respect to certain itemized deductions described in
Code Section 67, including deductions under Code Section 212 for the servicing
fee and all such administrative and other expenses of the Trust Fund, to the
extent that such deductions, in the aggregate, do not exceed two percent of an
investor's adjusted gross income. In addition, Code Section 68 provides that
itemized deductions otherwise allowable for a taxable year of an individual
taxpayer will be reduced by the lesser of (i) 3% of the excess, if any, of
adjusted gross income over $124,500 for the taxable year beginning in 1998
($62,250 in the case of a married individual filing a separate return) (subject
to adjustments for inflation in subsequent years), or (ii) 80% of the amount of
itemized deductions otherwise allowable for such year. As a result, such
investors holding Standard Certificates, directly or indirectly through a
pass-through entity, may have aggregate taxable income in excess of the
aggregate amount of cash received on such Standard Certificates with respect to
interest at the pass-through rate on such Standard Certificates. In addition,
such expenses are not deductible at all for purposes of computing the
alternative minimum tax, and may cause such investors to be subject to
significant additional tax liability. Moreover, where there is fixed retained
yield with respect to the Mortgage Loans underlying a series of Standard
Certificates or where the servicing fee is in excess of reasonable servicing
compensation, the transaction will be subject to the application of the
"stripped bond" and "stripped coupon" rules of the Code, as described below
under "Stripped Certificates" and "Recharacterization of Servicing Fees",
respectively.
Tax Status
Standard Certificates will have the following status for federal income
tax purposes:
1. A Standard Certificate owned by a "domestic building and loan
association" within the meaning of Code Section 7701(a)(19) will be
considered to represent "loans . . . secured by an interest in real
property which is . . . residential real property" within the meaning of
Code Section 7701(a)(19)(C)(v), provided that the real property securing
the Mortgage Loans represented by that Standard Certificate is of the type
described in such section of the Code.
2. A Standard Certificate owned by a real estate investment trust will be
considered to represent "real estate assets" within the meaning of Code
Section 856(c)(4)(A) to the extent that the assets of the related Trust
Fund consist of qualified assets, and interest income on such assets will
be considered "interest on obligations secured by mortgages on real
property" to such extent within the meaning of Code Section 856(c)(3)(B).
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3. A Standard Certificate owned by a REMIC will be considered to
represent an "obligation . . . which is principally secured by an interest
in real property" within the meaning of Code Section 860G(a)(3)(A) to the
extent that the assets of the related Trust Fund consist of "qualified
mortgages" within the meaning of Code Section 860G(a)(3).
Premium and Discount
Standard Certificateholders are advised to consult with their tax advisors
as to the federal income tax treatment of premium and discount arising either
upon initial acquisition of Standard Certificates or thereafter.
Premium. The treatment of premium incurred upon the purchase of a Standard
Certificate will be determined generally as described above under "Certain
Federal Income Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates--Treatment of Certain Items of REMIC Income and Expense--Premium".
Original Issue Discount. The original issue discount rules will be
applicable to a Standard Certificateholder's interest in those Mortgage Loans
as to which the conditions for the application of those sections are met. Rules
regarding periodic inclusion of original issue discount income are applicable
to mortgages of corporations originated after May 27, 1969, mortgages of
noncorporate mortgagors (other than individuals) originated after July 1, 1982,
and mortgages of individuals originated after March 2, 1984. Under the OID
Regulations, such original issue discount could arise by the charging of points
by the originator of the mortgages in an amount greater than a statutory de
minimis exception, including a payment of points currently deductible by the
borrower under applicable Code provisions or, under certain circumstances, by
the presence of "teaser rates" on the Mortgage Loans.
Original issue discount must generally be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest, in advance of the cash attributable to such
income. Unless indicated otherwise in the applicable Prospectus Supplement, no
prepayment assumption will be assumed for purposes of such accrual. However,
Code Section 1272 provides for a reduction in the amount of original issue
discount includible in the income of a holder of an obligation that acquires
the obligation after its initial issuance at a price greater than the sum of
the original issue price and the previously accrued original issue discount,
less prior payments of principal. Accordingly, if such Mortgage Loans acquired
by a Standard Certificateholder are purchased at a price equal to the then
unpaid principal amount of such Mortgage Loans, no original issue discount
attributable to the difference between the issue price and the original
principal amount of such Mortgage Loans (i.e., points) will be includible by
such holder.
Market Discount. Standard Certificateholders also will be subject to the
market discount rules to the extent that the conditions for application of
those sections are met. Market discount on the Mortgage Loans will be
determined and will be reported as ordinary income generally in the manner
described above under "Certain Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Market Discount", except that
the ratable accrual methods described therein will not apply and it is unclear
whether a Prepayment Assumption would apply. Rather, the holder will accrue
market discount pro rata over the life of the Mortgage Loans, unless the
constant yield method is elected. Unless indicated otherwise in the applicable
Prospectus Supplement, no prepayment assumption will be assumed for purposes of
such accrual.
Recharacterization of Servicing Fees. If the servicing fee paid to the
Master Servicer were deemed to exceed reasonable servicing compensation, the
amount of such excess would represent neither income nor a deduction to
Certificateholders. In this regard, there are no authoritative guidelines for
federal income tax purposes as to either the maximum amount of servicing
compensation that may be considered reasonable in the context of this or
similar transactions or whether, in the case of the Standard Certificate, the
reasonableness of servicing compensation should be determined on a weighted
average or loan-by-loan basis. If a loan-by-loan basis is appropriate, the
likelihood that such amount would exceed reasonable servicing compensation as
to some of the Mortgage Loans would be increased. Service guidance indicates
that a servicing fee in excess of reasonable compensation ("excess servicing")
will cause the Mortgage
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Loans to be treated under the "stripped bond" rules. Such guidance provides
safe harbors for servicing deemed to be reasonable and requires taxpayers to
demonstrate that the value of servicing fees in excess of such amounts is not
greater than the value of the services provided.
Accordingly, if the Service's approach is upheld, a servicer who receives
a servicing fee in excess of such amounts would be viewed as retaining an
ownership interest in a portion of the interest payments on the Mortgage Loans.
Under the rules of Code Section 1286, the separation of ownership of the right
to receive some or all of the interest payments on an obligation from the right
to receive some or all of the principal payments on the obligation would result
in treatment of such Mortgage Loans as "stripped coupons" and "stripped bonds".
Subject to the de minimis rule discussed below under "--Stripped Certificates",
each stripped bond or stripped coupon could be considered for this purpose as a
non-interest bearing obligation issued on the date of issue of the Standard
Certificates, and the original issue discount rules of the Code would apply to
the holder thereof. While Standard Certificateholders would still be treated as
owners of beneficial interests in a grantor trust for federal income tax
purposes, the corpus of such trust could be viewed as excluding the portion of
the Mortgage Loans the ownership of which is attributed to the Master Servicer,
or as including such portion as a second class of equitable interest.
Applicable Treasury regulations treat such an arrangement as a fixed investment
trust, since the multiple classes of trust interests should be treated as
merely facilitating direct investments in the trust assets and the existence of
multiple classes of ownership interests is incidental to that purpose. In
general, such a recharacterization should not have any significant effect upon
the timing or amount of income reported by a Standard Certificateholder, except
that the income reported by a cash method holder may be slightly accelerated.
See "Stripped Certificates" below for a further description of the federal
income tax treatment of stripped bonds and stripped coupons.
Sale or Exchange of Standard Certificates. Upon sale or exchange of a
Standard Certificate, a Standard Certificateholder will recognize gain or loss
equal to the difference between the amount realized on the sale and its
aggregate adjusted basis in the Mortgage Loans and the other assets represented
by the Standard Certificate. In general, the aggregate adjusted basis will
equal the Standard Certificateholder's cost for the Standard Certificate,
increased by the amount of any income previously reported with respect to the
Standard Certificate and decreased by the amount of any losses previously
reported with respect to the Standard Certificate and the amount of any
distributions received thereon. Except as provided above with respect to market
discount on any Mortgage Loans, and except for certain financial institutions
subject to the provisions of Code Section 582(c), any such gain or loss would
be capital gain or loss if the Standard Certificate was held as a capital
asset. However, gain on the sale of a Standard Certificate will be treated as
ordinary income (i) if a Standard Certificate is held as part of a "conversion
transaction" as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Standard Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate
in effect at the time the taxpayer entered into the transaction minus any
amount previously treated as ordinary income with respect to any prior
disposition of property that was held as a part of such transaction or (ii) in
the case of a non-corporate taxpayer, to the extent such taxpayer has made an
election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary income rates. Capital gains of certain
non-corporate taxpayers are subject to a lower maximum tax rate (28%) than
ordinary income of such taxpayers (39.6%) for property held for more than one
year but not more than 18 months, and a still lower maximum rate (20%) for
property held for more than 18 months. The maximum tax rate for corporations is
the same with respect to both ordinary income and capital gains.
STRIPPED CERTIFICATES
General
Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the principal payments on an obligation from ownership
of the right to receive some or all of the interest payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
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coupons" with respect to interest payments. For purposes of this discussion,
Certificates that are subject to those rules will be referred to as "Stripped
Certificates". Stripped Certificates include "Stripped Interest Certificates"
and "Stripped Principal Certificates" (as defined in this Prospectus) as to
which no REMIC election is made.
The Certificates will be subject to those rules if (i) the Depositor or
any of its affiliates retains (for its own account or for purposes of resale),
in the form of fixed retained yield or otherwise, an ownership interest in a
portion of the payments on the Mortgage Loans, (ii) the Master Servicer is
treated as having an ownership interest in the Mortgage Loans to the extent it
is paid (or retains) servicing compensation in an amount greater than
reasonable consideration for servicing the Mortgage Loans (see "Standard
Certificates--Recharacterization of Servicing Fees" above) and (iii)
Certificates are issued in two or more classes or subclasses representing the
right to non-pro-rata percentages of the interest and principal payments on the
Mortgage Loans.
In general, a holder of a Stripped Certificate will be considered to own
"stripped bonds" with respect to its pro rata share of all or a portion of the
principal payments on each Mortgage Loan and/or "stripped coupons" with respect
to its pro rata share of all or a portion of the interest payments on each
Mortgage Loan, including the Stripped Certificate's allocable share of the
servicing fees paid to the Master Servicer, to the extent that such fees
represent reasonable compensation for services rendered. See discussion above
under "Standard Certificates--Recharacterization of Servicing Fees". Although
not free from doubt, for purposes of reporting to Stripped Certificateholders,
the servicing fees will be allocated to the Stripped Certificates in proportion
to the respective entitlements to distributions of each class (or subclass) of
Stripped Certificates for the related period or periods. The holder of a
Stripped Certificate generally will be entitled to a deduction each year in
respect of the servicing fees, as described above under "Standard
Certificates--General", subject to the limitation described therein.
Code Section 1286 treats a stripped bond or a stripped coupon as an
obligation issued at an original issue discount on the date that such stripped
interest is purchased. Although the treatment of Stripped Certificates for
federal income tax purposes is not clear in certain respects at this time,
particularly where such Stripped Certificates are issued with respect to a
Mortgage Pool containing variable-rate Mortgage Loans, the Depositor has been
advised by counsel that (i) the Trust Fund will be treated as a grantor trust
under subpart E, Part 1 of subchapter J of the Code and not as an association
taxable as a corporation or a "taxable mortgage pool" within the meaning of
Code Section 7701(i), and (ii) each Stripped Certificate should be treated as a
single installment obligation for purposes of calculating original issue
discount and gain or loss on disposition. This treatment is based on the
interrelationship of Code Section 1286, Code Sections 1272 through 1275, and
the OID Regulations. While under Code Section 1286 computations with respect to
Stripped Certificates arguably should be made in one of the ways described
below under "Taxation of Stripped Certificates--Possible Alternative
Characterizations," the OID Regulations state, in general, that two or more
debt instruments issued by a single issuer to a single investor in a single
transaction should be treated as a single debt instrument for original issue
discount purposes. The Pooling Agreement requires that the Trustee make and
report all computations described below using this aggregate approach, unless
substantial legal authority requires otherwise.
Furthermore, Treasury regulations issued December 28, 1992, assume that a
Stripped Certificate will be treated as a single debt instrument issued on the
date it is purchased for purposes of calculating any original issue discount
and that the interest component of such a Stripped Certificate would be treated
as qualified stated interest under the OID Regulations. Further pursuant to
these final regulations the purchaser of such a Stripped Certificate will be
required to account for any discount as market discount rather than original
issue discount unless either (i) the initial discount with respect to the
Stripped Certificate was treated as zero under the de minimis rule of Code
Section 1273(a)(3), or (ii) no more than 100 basis points in excess of
reasonable servicing is stripped off the related Mortgage Loans. Any such
market discount would be reportable as described under "Certain Federal Income
Tax Consequences for REMIC Certificates--Taxation of Regular
Certificates--Market Discount," without regard to the de minimis rule therein,
assuming that a prepayment assumption is employed in such computation.
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Status of Stripped Certificates
No specific legal authority exists as to whether the character of the
Stripped Certificates, for federal income tax purposes, will be the same as
that of the Mortgage Loans. Although the issue is not free from doubt, counsel
has advised the Depositor that Stripped Certificates owned by applicable
holders should be considered to represent "real estate assets" within the
meaning of Code Section 856(c)(4)(A), "obligation[s] principally secured by an
interest in real property" within the meaning of Code Section 860G(a)(3)(A),
and "loans . . . secured by an interest in real property which is . . .
residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), and interest (including original issue discount) income
attributable to Stripped Certificates should be considered to represent
"interest on obligations secured by mortgages on real property" within the
meaning of Code Section 856(c)(3)(B), provided that in each case the Mortgage
Loans and interest on such Mortgage Loans qualify for such treatment.
Taxation of Stripped Certificates
Original Issue Discount. Except as described above under "General", each
Stripped Certificate will be considered to have been issued at an original
issue discount for federal income tax purposes. Original issue discount with
respect to a Stripped Certificate must be included in ordinary income as it
accrues, in accordance with a constant interest method that takes into account
the compounding of interest, which may be prior to the receipt of the cash
attributable to such income. Based in part on the OID Regulations and the
amendments to the original issue discount sections of the Code made by the 1986
Act, the amount of original issue discount required to be included in the
income of a holder of a Stripped Certificate (referred to in this discussion as
a "Stripped Certificateholder") in any taxable year likely will be computed
generally as described above under "Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Original Issue Discount" and
"--Variable Rate Regular Certificates". However, with the apparent exception of
a Stripped Certificate qualifying as a market discount obligation, as described
above under "General", the issue price of a Stripped Certificate will be the
purchase price paid by each holder thereof, and the stated redemption price at
maturity will include the aggregate amount of the payments, other than
qualified stated interest to be made on the Stripped Certificate to such
Stripped Certificateholder, presumably under the Prepayment Assumption.
If the Mortgage Loans prepay at a rate either faster or slower than that
under the Prepayment Assumption, a Stripped Certificateholder's recognition of
original issue discount will be either accelerated or decelerated and the
amount of such original issue discount will be either increased or decreased
depending on the relative interests in principal and interest on each Mortgage
Loan represented by such Stripped Certificateholder's Stripped Certificate.
While the matter is not free from doubt, the holder of a Stripped Certificate
should be entitled in the year that it becomes certain (assuming no further
prepayments) that the holder will not recover a portion of its adjusted basis
in such Stripped Certificate to recognize an ordinary loss equal to such
portion of unrecoverable basis.
As an alternative to the method described above, the fact that some or all
of the interest payments with respect to the Stripped Certificates will not be
made if the Mortgage Loans are prepaid could lead to the interpretation that
such interest payments are "contingent" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to prepayable securities such as
the Stripped Certificates. However, if final regulations dealing with
contingent interest with respect to the Stripped Certificates apply the same
principles as the OID Regulations, such regulations may lead to different
timing of income inclusion that would be the case under the OID Regulations.
Furthermore, application of such principles could lead to the characterization
of gain on the sale of contingent interest Stripped Certificates as ordinary
income. Investors should consult their tax advisors regarding the appropriate
tax treatment of Stripped Certificates.
Sale or Exchange of Stripped Certificates. Sale or exchange of a Stripped
Certificate prior to its maturity will result in gain or loss equal to the
difference, if any, between the amount received and the Stripped
Certificateholder's adjusted basis in such Stripped Certificate, as described
above under "Certain Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Sale or
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Exchange of Regular Certificates". To the extent that a subsequent purchaser's
purchase price is exceeded by the remaining payments on the Stripped
Certificates, such subsequent purchaser will be required for federal income tax
purposes to accrue and report such excess as if it were original issue discount
in the manner described above. It is not clear for this purpose whether the
assumed prepayment rate that is to be used in the case of a Stripped
Certificateholder other than an original Stripped Certificateholder should be
the Prepayment Assumption or a new rate based on the circumstances at the date
of subsequent purchase.
Purchase of More Than One Class of Stripped Certificates. Where an
investor purchases more than one class of Stripped Certificates, it is
currently unclear whether for federal income tax purposes such classes of
Stripped Certificates should be treated separately or aggregated for purposes
of the rules described above.
Possible Alternative Characterizations. The characterizations of the
Stripped Certificates discussed above are not the only possible interpretations
of the applicable Code provisions. For example, the Stripped Certificateholder
may be treated as the owner of (i) one installment obligation consisting of
such Stripped Certificate's pro rata share of the payments attributable to
principal on each Mortgage Loan and a second installment obligation consisting
of such Stripped Certificate's pro rata share of the payments attributable to
interest on each Mortgage Loan, (ii) as many stripped bonds or stripped coupons
as there are scheduled payments of principal and/or interest on each Mortgage
Loan or (iii) a separate installment obligation for each Mortgage Loan,
representing the Stripped Certificate's pro rata share of payments of principal
and/or interest to be made with respect thereto. Alternatively, the holder of
one or more classes of Stripped Certificates may be treated as the owner of a
pro rata fractional undivided interest in each Mortgage Loan to the extent that
such Stripped Certificate, or classes of Stripped Certificates in the
aggregate, represent the same pro rata portion of principal and interest on
each such Mortgage Loan, and a stripped bond or stripped coupon (as the case
may be), treated as an installment obligation or contingent payment obligation,
as to the remainder. Final regulations issued on December 28, 1992 regarding
original issue discount on stripped obligations make the foregoing
interpretations less likely to be applicable. The preamble to those regulations
states that they are premised on the assumption that an aggregation approach is
appropriate for determining whether original issue discount on a stripped bond
or stripped coupon is de minimis, and solicits comments on appropriate rules
for aggregating stripped bonds and stripped coupons under Code Section 1286.
Because of these possible varying characterizations of Stripped
Certificates and the resultant differing treatment of income recognition,
Stripped Certificateholders are urged to consult their own tax advisors
regarding the proper treatment of Stripped Certificates for federal income tax
purposes.
FEDERAL INCOME TAX CONSEQUENCES FOR FASIT CERTIFICATES
If and to the extent set forth in the Prospectus Supplement relating to a
particular Series of Certificates, an election may be made to treat the related
Trust Fund or one or more segregated pools of assets therein as one or more
financial asset securitization investment trusts ("FASITs") within the meaning
of Code Section 860L(a). Qualification as a FASIT requires ongoing compliance
with certain conditions. With respect to each series of FASIT Certificates,
O'Melveny & Myers LLP, counsel to the Depositor, will advise the Depositor that
in the firm's opinion, assuming (i) the making of such an election, (ii)
compliance with the Pooling Agreement and (iii) compliance with any changes in
the law, including any amendments to the Code or applicable Treasury
Regulations thereunder, each FASIT Pool will qualify as a FASIT. In such case,
the Regular Certificates will be considered to be "regular interests" in the
FASIT and will be treated for federal income tax purposes as if they were newly
originated debt instruments, and the Residual Certificate will be considered
the "ownership interest" in the FASIT Pool. The Prospectus Supplement for each
series of Certificates will indicate whether one or more FASIT elections will
be made with respect to the related Trust Fund.
FASIT treatment has become available pursuant to recently enacted
legislation, and no Treasury Regulations have as yet been issued detailing the
circumstances under which a FASIT election may be made or the consequences of
such an election. If a FASIT election is made with respect to any Trust Fund or
as to any segregated pool of assets therein, the related Prospectus Supplement
will describe the Federal income tax consequences of such election.
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REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
The Trustee will furnish, within a reasonable time after the end of each
calendar year, to each Standard Certificateholder or Stripped Certificateholder
at any time during such year, such information (prepared on the basis described
above) as the Trustee deems to be necessary or desirable to enable such
Certificateholders to prepare their federal income tax returns. Such
information will include the amount of original issue discount accrued on
Certificates held by persons other than Certificateholders exempted from the
reporting requirements. The amounts required to be reported by the Trustee may
not be equal to the proper amount of original issue discount required to be
reported as taxable income by a Certificateholder, other than an original
Certificateholder that purchased at the issue price. In particular, in the case
of Stripped Certificates, unless provided otherwise in the applicable
Prospectus Supplement, such reporting will be based upon a representative
initial offering price of each class of Stripped Certificates. The Trustee will
also file such original issue discount information with the Service. If a
Certificateholder fails to supply an accurate taxpayer identification number or
if the Secretary of the Treasury determines that a Certificateholder has not
reported all interest and dividend income required to be shown on his federal
income tax return, 31% backup withholding may be required in respect of any
reportable payments, as described above under "Certain Federal Income Tax
Consequences for REMIC Certificates--Backup Withholding".
TAXATION OF CERTAIN FOREIGN INVESTORS
To the extent that a Certificate evidences ownership in Mortgage Loans
that are issued on or before July 18, 1984, interest or original issue discount
paid by the person required to withhold tax under Code Section 1441 or 1442 to
nonresident aliens, foreign corporations, or other Non-U.S. Persons generally
will be subject to 30% United States withholding tax, or such lower rate as may
be provided for interest by an applicable tax treaty. Accrued original issue
discount recognized by the Standard Certificateholder or Stripped
Certificateholder on original issue discount recognized by the Standard
Certificateholder or Stripped Certificateholders on the sale or exchange of
such a Certificate also will be subject to federal income tax at the same rate.
Treasury regulations provide that interest or original issue discount paid
by the Trustee or other withholding agent to a Non-U.S. Person evidencing
ownership interest in Mortgage Loans issued after July 18, 1984 will be
"portfolio interest" and will be treated in the manner, and such persons will
be subject to the same certification requirements, described above under
"Certain Federal Income Tax Consequences for REMIC Certificates--Taxation of
Certain Foreign Investors--Regular Certificates".
STATE AND OTHER TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences", potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of
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 Section 4975 of 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, collective
investment funds, insurance company separate accounts and some insurance
company general accounts in which such plans, accounts or arrangements are
invested (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.
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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. 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. These prohibited transactions generally are set forth
in Section 406 of ERISA and Section 4975 of the Code. Special caution should be
exercised before the assets of a Plan are used to purchase a Certificate if,
with respect to such assets, the Depositor, the Master Servicer, a Special
Servicer or any Sub-Servicer or the Trustee or an affiliate thereof, either:
(a) has discretionary authority or control with respect to the investment of
such assets of such Plan; or (b) has authority or responsibility to give, or
regularly gives, investment advice with respect to such assets of such Plan for
a fee and pursuant to an agreement or understanding that such advice will serve
as a primary basis for investment decisions with respect to such assets and
that such advice will be based on the particular investment needs of the Plan.
Before purchasing any Offered Certificates, a Plan fiduciary should
consult with its counsel and determine whether there exists any prohibition to
such purchase under the requirements of ERISA, whether any prohibited
transaction class exemption or any individual prohibited transaction exemption
(as described below) applies, including whether the appropriate conditions set
forth therein would be met, or whether any statutory prohibited transaction
exemption is applicable, and further should consult the applicable Prospectus
Supplement relating to such Series of Certificates.
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 governmental and church
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.
PLAN ASSET REGULATIONS
A Plan's investment in Offered Certificates may cause the Trust Assets to
be deemed Plan assets. Section 2510.3-101 of the regulations ("Plan Asset
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 not applicable to this
discussion apply, or unless the equity participation in the entity by "benefit
plan investors" (that is, Plans, certain employee benefit plans not subject to
ERISA, and entities whose underlying assets include plan assets) is not
"significant". For this purpose, the Plan Asset Regulations provide, in
general, that participation in an entity, such as a Trust Fund, is
"significant" if, immediately after the most recent acquisition of any equity
interest, 25% or more of any class of equity interests, such as Certificates,
is held by benefit plan investors. Unless restrictions on ownership of and
transfer to Plans apply with respect to a Series of Certificates, there can be
no assurance that benefit plan investors will not own at least 25% of a class
of Certificates.
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 or any Sub-Servicer, may be deemed to be
a Plan "fiduciary" with respect to the investing Plan, and thus subject to the
fiduciary responsibility provisions and prohibited transaction provisions of
ERISA and the Code. In addition, if the Trust Assets constitute Plan assets,
the purchase of Certificates by a Plan, as well as the operation of the Trust
Fund, may constitute or involve one or more prohibited transactions under ERISA
and the Code.
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ADMINISTRATIVE EXEMPTIONS
Several underwriters of mortgage-backed securities have applied for and
obtained from DOL individual prohibited transaction exemptions that apply to
the purchase and holding of mortgage-backed securities which, among other
conditions, are sold in an offering with respect to which such underwriter
serves as the sole or a managing underwriter or as a selling or placement
agent. If such an exemption may be applicable to a Series of Certificates, the
related Prospectus Supplement will refer to such possibility, as well as
provide a summary of the conditions to the exemption's applicability.
UNRELATED BUSINESS TAXABLE INCOME; RESIDUAL CERTIFICATES
The purchase of a Residual Certificate by any employee benefit plan
qualified under Code Section 401(a) and exempt from taxation under Code Section
501(a), including most varieties of ERISA plans, may give rise to "unrelated
business taxable income" as described in Code Sections 511-515 and 860E.
Further, prior to the purchase of Residual Certificates, a prospective
transferee may be required to provide an affidavit to a transferor that it is
not, nor is it purchasing a Residual Certificate on behalf of, a "Disqualified
Organization," which term as defined above includes certain tax-exempt entities
not subject to Code Section 511 including certain governmental plans, as
discussed above under the caption "Certain Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Residual Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates--Disqualified Organizations."
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in prohibited transactions, it is particularly important
that potential investors who are Plan fiduciaries consult with their counsel
regarding the consequences under ERISA of their acquisition and ownership of
Certificates.
The sale of Certificates to an employee benefit plan is in no respect a
representation by the Depositor or the Underwriter 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 constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended
("SMMEA"), only if so specified in the related Prospectus Supplement. The
appropriate characterization of those Certificates not qualifying as "mortgage
related securities" ("Non-SMMEA Certificates") under various legal investment
restriction, and thus the ability of investors subject to these restrictions to
purchase such Certificates, may be subject to significant interpretive
uncertainties. Accordingly, investors whose investment authority is subject to
legal restrictions should consult their own legal advisors to determine whether
and to what extent the Non-SMMEA Certificates constitute legal investments for
them.
Generally, only classes of Offered Certificates that (i) are rated in one
of the two highest rating categories by one or more Rating Agencies, (ii) are
part of a series evidencing interests in a Trust Fund consisting of loans
originated by certain types of Originators as specified in SMMEA and (iii) are
part of a series evidencing interests in a Trust Fund consisting of mortgage
loans each of which is secured by a first lien on (a) a single parcel of real
estate on which is located a residential and/or mixed residential and
commercial structure or (b) one or more parcels of real estate upon which are
located one or more commercial structures will be "mortgage related securities"
for purposes of SMMEA. As "mortgage related securities," such classes will
constitute legal investments, for persons, trusts, corporations, partnerships,
associations, business trusts and business entities (including depository
institutions, insurance companies, trustees and pension funds) created pursuant
to or existing under the laws of the United States or of any state (including
the District of Columbia and Puerto Rico) whose authorized investments are
subject to state regulation, to the same extent that obligations issued by or
guaranteed as to principal and interest by the United States or any agency or
instrumentality thereof constitute legal investments for such entities under
applicable law. Under SMMEA, a number of states enacted legislation on or prior
to
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the October 3, 1991 cut-off for such enactments limiting to various extends the
ability of certain entities (in particular, insurance companies) to invest in
"mortgage related securities," secured by liens on residential, or mixed
residential and commercial properties, in most cases by requiring the affected
investors to rely solely upon existing state law, and not SMMEA. Pursuant to
Section 347 of the Riegle Community Development and Regulatory Improvement Act
of 1994, states are authorized to enact legislation, on or before September 23,
2001, prohibiting or restricting the purchase, holding or investment by state
regulated entities in certificates satisfying the rating and qualified
Originator requirements for "mortgage related securities," but evidencing
interests in a Trust Fund consisting, in whole or in part, of first liens on
one or more parcels of real estate upon which are located one or more
commercial structures. Accordingly, the investors affected by such legislation
will be authorized to invest in Offered Certificates qualifying as "mortgage
related securities" only to the extent provided in such legislation.
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 in "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.
Section 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") has
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 in 12
C.F.R. Section 1.5 concerning "safety and soundness" and retention of credit
information), 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 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 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 Section 703.5(f)-(k), which prohibit federal credit unions
from investing in certain mortgage related securities (including securities such
as certain classes of the Offered Certificates), except under limited
circumstances. Effective January 1, 1998, the NCUA has amended its rules
governing investments by federal credit unions at 12 C.F.R. Part 703; the
revised rules will permit investments in "mortgage related securities" under
certain limited circumstances, but will prohibit investments in stripped
mortgage related securities, residual interests in mortgage related securities,
and commercial mortgage related securities, unless the credit union has obtained
written approval from the NCUA to participate in the "investment pilot program"
described in 12 C.F.R. Section 703.140.
All depository institutions considering an investment in the Offered
Certificates should review the "Supervisory Policy Statement on Securities
Activities" dated January 28, 1992, as revised April 15, 1994 (the "Policy
Statement") of the Federal Financial Institutions Examination Council (the
"FFIEC"). The Policy Statement, which has been adopted by the Board of
Governors of the Federal Reserve System, the OCC, the Federal Depository
Insurance Company and the Office of Thrift Supervision, and by the NCUA (with
certain modifications), prohibits depository institutions from investing in
certain "high-risk mortgage securities" (including securities such as certain
classes of the Offered Certificates), except under limited circumstances, and
sets forth certain investment practices deemed to be unsuitable for regulated
institutions. On September 29, 1997, the FFEIC released for public comment a
proposed "Supervisory Policy Statement on Investment Securities and End-User
Derivatives Activities" (the "1997 Statement"), which would replace the Policy
Statement. As proposed, the 1997 Statement would delete the specific
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"high-risk mortgage securities" tests, and substitute general guidelines which
depository institutions should follow in managing risks (including market,
credit, liquidity, operational (transactional), and legal risks) applicable to
all securities (including mortgage pass-through securities and
mortgage-derivative products) used for investment purposes.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any class of
the Offered Certificates, as certain classes may be deemed unsuitable
investments, or may otherwise be restricted, under such rules, policies or
guidelines (in certain instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," and, with regard to any class of the Offered
Certificates issued in book-entry form, provisions which may restrict or
prohibit investments in securities which are issued in book-entry form.
Except as to the status of certain classes of Offered Certificates as
"mortgage related securities," no representations are made as to the proper
characterization of any class of Offered Certificates for legal investment
purposes, financial institution regulatory purposes, 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 Depositor from such sale.
The Depositor 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 Offered Certificates may be made through a combination of
two or more of these methods. Such methods are as follows:
1. by negotiated firm commitment underwriting and public offering by one
or more underwriters specified in the related Prospectus Supplement;
2. by placements through one or more placement agents specified in the
related Prospectus Supplement primarily with institutional investors and
dealers; and
3. through direct offerings by the Depositor.
If specified in the Prospectus Supplement relating to a Series of Offered
Certificates, the Depositor, any affiliate thereof or any other person or
persons specified therein (including Originators of Mortgage Loans) may
purchase some or all of one or more Classes of Offered Certificates of such
Series from the underwriter or underwriters or such other person or persons
specified in such Prospectus Supplement. Pursuant to this Prospectus and the
related Prospectus Supplement, such purchaser may thereafter from time to time
offer and sell some or all of such Certificates directly, or through one or
more underwriters to be designated at the time of the offering of such
Certificates, or through dealers (whether acting as agent or as principal) or
in such other manner as may be specified in the related Prospectus Supplement.
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Such offering may be restricted in the manner specified in the related
Prospectus Supplement. Such transactions may be effected at market prices
prevailing at the time of sale, at negotiated prices or at fixed prices.
If underwriters are used in a sale of any Offered Certificates (other than
in connection with an underwriting on a best efforts basis), such Certificates
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices to be
determined at the time of sale or at the time of commitment therefor. Such
underwriters may be broker-dealers affiliated with the Depositor whose
identities and relationships to the Depositor will be as set forth in the
related Prospectus Supplement. The managing underwriter or underwriters with
respect to the offer and sale of a particular Series of Offered Certificates
will be set forth in 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.
In connection with the sale of the Offered Certificates, underwriters may
receive compensation from the Depositor or from purchasers of the Offered
Certificates in the form of discounts, concessions or commissions. Underwriters
and dealers participating in the distribution of the Offered Certificates may
be deemed to be underwriters in connection with such Offered Certificates, and
any discounts or commissions received by them from the Depositor and any profit
on the resale of Offered Certificates by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933, as amended (the
"Securities Act").
It is anticipated that the underwriting agreement pertaining to the sale
of any series of Certificates will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all Offered Certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that the Depositor will indemnify the several underwriters, and each
person, if any, who controls any such underwriter within the meaning of Section
15 of the Securities Act, against certain civil liabilities, including
liabilities under the Securities Act, or will contribute to payments required
to be made in respect thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Depositor and purchasers of
Offered Certificates of such series.
The Depositor anticipates that the Offered Certificates offered hereby
will be sold primarily to institutional investors. Purchasers of Offered
Certificates, including dealers, may, depending on the facts and circumstances
of such purchases, be deemed to be "underwriters" within the meaning of the
Securities Act in connection with reoffers and sales by them of Offered
Certificates. Certificateholders should consult with their legal advisors in
this regard prior to any such reoffer or sale.
As to each series of Certificates, only those classes rated in an
investment grade rating category by any Rating Agency will be offered hereby.
Any unrated class may be initially retained by the Depositor, and may be sold
by the Depositor at any time to one or more institutional investors.
If and to the extent required by applicable law or regulation, this
Prospectus will be used by Bear, Stearns & Co. Inc., an affiliate of the
Depositor, in connection with offers and sales related to market-making
transactions in the Offered Certificates previously offered hereunder in
transactions in which Bear, Stearns & Co. Inc. acts as principal. Bear, Stearns
& Co. Inc. may also act as agent in such transactions. Sales may be made at
negotiated prices determined at the time of sale.
LEGAL MATTERS
The validity of the Certificates of each series will be passed upon for
the Depositor by O'Melveny & Myers LLP, New York, New York.
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.
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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.
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INDEX OF SIGNIFICANT DEFINITIONS
<TABLE>
<S> <C>
1986 Act ....................................... 79
1997 Statement ................................. 105
A
Accrual Certificates ........................... 13, 40
Accrued Certificate Interest ................... 40
ADA ............................................ 74
ARM Loans ...................................... 31
Asset Conservation Act ......................... 71
B
Book-Entry Certificates ........................ 15, 39
call risk ...................................... 18, 36
capital asset .................................. 84
C
Cash Flow Agreement ............................ 11, 32
Cash Flow Agreements ........................... 1
CERCLA ......................................... 23, 71
Certificate .................................... 47
Certificate Account ............................ 11, 32, 50
Certificate Balance ............................ 2, 12
Certificate Owner .............................. 15, 45
Certificateholders ............................. 2
Certificates ................................... 9
Code ........................................... 15, 76
commercial mortgage-related securities ......... 105
Commercial Properties .......................... 10, 26
Commission ..................................... 3
Companion Class ................................ 14, 41
Controlled Amortization Class .................. 14, 41
Cooperatives ................................... 26
CPR ............................................ 35
Credit Support ................................. 1, 11, 32
Crime Control Act .............................. 74
Cut-Off Date ................................... 13
D
Debt Service Coverage Ratio .................... 29
defective obligation ........................... 78
Definitive Certificates ........................ 15, 39
Depositor ...................................... 26
Determination Date ............................. 33, 40
Direct Participants ............................ 45
Disqualified Organization ...................... 90
Distribution Date .............................. 13
Distribution Date Statement .................... 43
DOL ............................................ 103
DTC ............................................ 3, 15, 39, 45
Due Dates ...................................... 30
Due Period ..................................... 33
E
EPA ............................................ 71
</TABLE>
109
<PAGE>
<TABLE>
<S> <C>
Equity Participation ................................. 30
ERISA ................................................ 15, 102
Events of Default .................................... 58
excess inclusion ..................................... 24
Exchange Act ......................................... 3
extension risk ....................................... 18, 36
F
FAMC ................................................. 10
FASIT ................................................ 76
FASITs ............................................... 101
FFIEC ................................................ 105
FHLMC ................................................ 10
FNMA ................................................. 10
Foreign Investors .................................... 90
G
Garn Act ............................................. 72
GNMA ................................................. 10
I
Indirect Participants ................................ 45
Insurance and Condemnation Proceeds .................. 51
L
L/C Bank ............................................. 62
Limitations on Deduction of Certain Expenses ......... 95
Liquidation Proceeds ................................. 51
Loan-to-Value Ratio .................................. 29
Lock-out Date ........................................ 30
Lock-out Period ...................................... 30
M
Mark-to-Market Regulations ........................... 92
Master Servicer ...................................... 3, 9
MBS .................................................. 1, 25
MBS Agreement ........................................ 31
MBS Issuer ........................................... 31
MBS Servicer ......................................... 31
MBS Trustee .......................................... 31
Mortgage Asset Pool .................................. 1
Mortgage Asset Seller ................................ 26
Mortgage Assets ...................................... 26
Mortgage Loans ....................................... 1, 9, 25
Mortgage Notes ....................................... 26
Mortgage Rate ........................................ 10, 30
mortgage related securities .......................... 16, 104
mortgage related security ............................ 105
Mortgaged Properties ................................. 26
Mortgaged Property ................................... 1
mortgagee-in-possession .............................. 54
Mortgages ............................................ 26
Multifamily Properties ............................... 9, 26
N
Net Leases ........................................... 29
net of expense ....................................... 29
</TABLE>
110
<PAGE>
<TABLE>
<S> <C>
Net Operating Income ............................. 29
noneconomic residual interest .................... 90
Nonrecoverable Advance ........................... 42
Non-SMMEA Certificates ........................... 104
Non-U.S. Person .................................. 94
Notional Amount .................................. 12, 40
numerous obligors ................................ 105
O
OCC .............................................. 105
Offered Certificates ............................. 1
OID Regulations .................................. 79
operator ......................................... 54
Original Issue Discount .......................... 84
Originator ....................................... 26
P
PAC .............................................. 36
Participants ..................................... 25, 45
Parties in Interest .............................. 103
Pass-Through Entity .............................. 89
Pass-Through Rate ................................ 2, 12
Permitted Investments ............................ 50
Plan Asset Regulations ........................... 103
Plans ............................................ 102
Policy Statement ................................. 105
Pooling Agreement ................................ 12, 47
portfolio interest ............................... 94
prepayment ....................................... 35
Prepayment Assumption ............................ 80
Prepayment Interest Shortfall .................... 33
Prepayment Premium ............................... 30
Prospectus Supplement ............................ 1
PRPs ............................................. 71
R
Random Lot Certificates .......................... 79
Rating Agency .................................... 16
real estate mortgage investment conduit .......... 2
real estate mortgage investment conduits ......... 15
Record Date ...................................... 40
Regular Certificateholder ........................ 79
Regular Certificates ............................. 76
Related Proceeds ................................. 42
Relief Act ....................................... 73
REMIC ............................................ 2, 15
REMIC Certificates ............................... 76
REMIC Pool ....................................... 76
REMIC Regulations ................................ 76
REO Property ..................................... 49
Residual Certificateholders ...................... 86
Residual Certificates ............................ 76
RICO ............................................. 74
</TABLE>
111
<PAGE>
<TABLE>
<S> <C>
S
SBJPA of 1996 ........................... 77
Section 42 Properties ................... 21
Securities Act .......................... 107
Senior Certificates ..................... 12, 39
Series .................................. 1
Service ................................. 78
Servicing Standard ...................... 49
SMMEA ................................... 16, 104
SPA ..................................... 35
Special Servicer ........................ 3, 9, 50
Standard Certificateholder .............. 96
Standard Certificates ................... 96
Stripped Certificateholder .............. 100
Stripped Certificates ................... 96, 98
Stripped Interest Certificates .......... 12, 39
Stripped Principal Certificates ......... 12, 39
Subordinate Certificates ................ 12, 39
Sub-Servicer ............................ 49
Sub-Servicing Agreement ................. 49
superlien ............................... 71
super-premium ........................... 80
T
TAC ..................................... 36
Title V ................................. 73
Treasury ................................ 76
Trust Assets ............................ 2
Trust Fund .............................. 1
Trustee ................................. 3, 9
U
UCC ..................................... 64
U.S. Person ............................. 91
V
Voting Rights ........................... 44
W
Warranting Party ........................ 48
</TABLE>
112
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[PICTURE]
THE LANDMARK BUSINESS & FINANCIAL CENTER Office
Loan No. 851500 Sacramento, CA
[PICTURE]
1275-81 8TH STREET Multifamily
Loan No. 851362 San Francisco, CA
[PICTURE]
205 PLACE SHOPPING CENTER Unanchored Retail
Loan No. 5502 Portland, OR
[PICTURE]
SUN SUITES OF CUMMING Extended Stay Hospitality
Loan No. 25557 Cumming, GA
[PICTURE]
QUEBEC HOUSE APARTMENTS Multifamily
Loan No. 25118 Washington, DC
[PICTURE]
OCEAN BLUFFS MOBILEHOME PARK Mobile Home Park
Loan No. 851367 San Diego, CA
<PAGE>
[PICTURE]
STATE TOWER BUILDING Office
Loan No. 17583 Syracuse, NY
[PICTURE]
HALLTREE APARTMENTS Multifamily
Loan No. 851343 Des Moines, WA
[PICTURE]
305 FOREST AVENUE Unanchored Retail
Loan No. 851122 Laguna Beach, CA
[PICTURE]
SUMMIT NORTH SHOPPING CENTER Anchored Retail
Loan No. 851465 Waterford Township, MI
[PICTURE]
FACTUAL DATA OFFICE BUILDING Office
Loan No. 851467 Loveland, CA
[PICTURE]
UNITED WEST GROUP BUILDING Industrial
Loan No. 851275 Scottsdale, AZ
<PAGE>
This diskette contains one spreadsheet file (the "Spreadsheet File") that
can be put on a user-specified hard drive or network drive. The Spreadsheet
File "BS99WF2.XLS" is a Microsoft Excel,(1) Version 5.0 spreadsheet. The
Spreadsheet File provides, in electronic format, all of the information shown
in Annex A of the Prospectus Supplement dated , 1999 (the "Prospectus
Supplement"). The information contained in this diskette appears elsewhere in
paper form in this Prospectus Supplement and must be considered as part of, and
together with, the information contained elsewhere in this Prospectus
Supplement and the Prospectus. Defined terms used in this diskette but not
otherwise defined therein shall have the respective meanings assigned to them
in the paper portion of the Prospectus Supplement and Prospectus. All of the
information contained in this diskette is subject to the same limitations and
qualifications contained elsewhere in this Prospectus Supplement and the
Prospectus. Prospective investors are strongly urged to read the paper portion
of this Prospectus Supplement and the Prospectus in its entirety prior to
accessing this diskette. If this diskette was not received in a sealed package,
there can be no assurances that it remains in its original format and should
not be relied upon for any purpose. Prospective investors may contact Bear,
Stearns & Co. Inc. at (212) 272-4192 to receive an original copy of the
diskette. As a precautionary measure, scan this diskette for computer viruses
before opening. Upon opening the Microsoft Excel file contained on this
diskette, a legend will be displayed, which should be read carefully.
Open the file as you would normally open any Spreadsheet File in Microsoft
Excel. After the Spreadsheet File is opened, a legend will be displayed. READ
THE LEGEND CAREFULLY. The data in the Spreadsheet File that corresponds to the
information shown in Annex A is in the worksheet labeled "ANNEX A".
- ------------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE DEPOSITOR OR BY THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING 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 SOLICITATIONS IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER
OF SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER 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 ACCOMPANYING PROSPECTUS.
--------------------------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Summary ...................................... S-1
Risk Factors ................................. S-22
Description of the Mortgage Pool ............. S-38
Description of the Certificates .............. S-60
Yield and Maturity Considerations ............ S-80
Servicing of the Mortgage Loans .............. S-87
Certain Federal Income Tax Consequences....... S-95
Method of Distribution ....................... S-96
Legal Matters ................................ S-97
Ratings ...................................... S-97
Legal Investment Considerations .............. S-98
ERISA Considerations ......................... S-98
Index of Significant Definitions ............. S-101
Mortgage Loan Schedule ....................... ANNEX A
Summary of Ten Largest Loans ................. ANNEX B
Forms of Monthly and Annual Reports .......... ANNEX C
Schedule of Interest Reserve Loans ........... ANNEX D
PROSPECTUS
Prospectus Supplement ........................ 2
Available Information ........................ 3
Incorporation of Certain Information by
Reference .................................. 3
Summary of Prospectus ........................ 9
Risk Factors ................................. 17
Description of Trust Funds ................... 25
Yield and Maturity Considerations ............ 32
The Depositor ................................ 38
Use of Proceeds .............................. 39
Description of the Certificates .............. 39
Description of the Pooling Agreements ........ 47
Description of Credit Support ................ 61
Certain Legal Aspects of Mortgage Loans ...... 63
Certain Federal Income Tax Consequences....... 76
State and Other Tax Considerations ........... 102
ERISA Considerations ......................... 102
Legal Investment ............................. 104
Method of Distribution ....................... 106
Legal Matters ................................ 107
Financial Information ........................ 107
Rating ....................................... 108
Index of Principal Terms ..................... 109
</TABLE>
$999,659,000
BEAR STEARNS COMMERCIAL
MORTGAGE SECURITIES INC.
DEPOSITOR
COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 1999-WF2
<TABLE>
<S> <C>
CLASS A-1 CERTIFICATES .......... $338,780,000
CLASS A-2 CERTIFICATES .......... $525,789,000
CLASS B CERTIFICATES ............ $ 43,229,000
CLASS C CERTIFICATES ............ $ 43,229,000
CLASS D CERTIFICATES ............ $ 10,807,000
CLASS E CERTIFICATES ............ $ 27,018,000
CLASS F CERTIFICATES ............ $ 10,807,000
</TABLE>
--------------------------------------------
PROSPECTUS SUPPLEMENT
--------------------------------------------
BEAR, STEARNS & CO. INC.
MORGAN STANLEY DEAN WITTER
NORWEST INVESTMENT
SERVICES, INC.
, 1999
- --------------------------------------------------------------------------------
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