<PAGE>
PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED JANUARY 24, 2000)
APPROXIMATELY $826,089,000
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-WF1
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC., DEPOSITOR
SERIES 2000-WF1 TRUST FUND, ISSUER
WELLS FARGO BANK, NATIONAL ASSOCIATION, SERVICER AND SELLER
BEAR, STEARNS FUNDING, INC., SELLER
MORGAN STANLEY MORTGAGE CAPITAL INC., SELLER
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE S-26 OF
THIS PROSPECTUS SUPPLEMENT AND ON PAGE 8 OF THE ACCOMPANYING PROSPECTUS.
Payments on the mortgage loans backing these securities represent the sole
source of payment on these securities. These securities do not
represent an interest in or an obligation of us or any of our affiliates.
Neither these securities nor the underlying mortgage loans are insured or
guaranteed by any governmental agency or any other person.
THE TRUST FUND:
o The trust fund will primarily consist of a pool of conventional, monthly pay
mortgage loans.
o The mortgage loans are secured by first priority liens on fee simple and/or
leasehold interests in commercial, multifamily and manufactured housing
community properties.
o Multifamily, office, retail, industrial and self-storage properties will
represent security for a material concentration of the mortgage loans
included in the trust fund.
THE CERTIFICATES:
o The offered certificates consist of eight classes of pass-through
certificates described in the table below. The offered certificates are
the only securities offered pursuant to this prospectus supplement and the
accompanying prospectus.
<TABLE>
<CAPTION>
INITIAL CLASS
CERTIFICATE
BALANCE OR INITIAL
NOTIONAL PASS- DESCRIPTION OF ANTICIPATED
AMOUNT THROUGH PASS-THROUGH EXPECTED FINAL RATED FINAL RATINGS(3)
CLASS (+/-5%) RATE(1) RATE DISTRIBUTION DATE(2) DISTRIBUTION DATE(2) DCR FITCH
----- --------- ------- -------------- -------------------- -------------------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Class A-1.... $260,078,000 7.640 % Fixed February 15, 2009 February 15, 2032 AAA AAA
Class A-2.... $454,979,000 7.780 % Fixed February 15, 2010 February 15, 2032 AAA AAA
Class B ..... $ 31,089,000 7.772 % Variable February 15, 2010 February 15, 2032 AA AA
Class C ..... $ 35,531,000 7.892 % Variable February 15, 2010 February 15, 2032 A A
Class D ..... $ 8,882,000 7.902 % Variable February 15, 2010 February 15, 2032 A- A-
Class E ..... $ 26,648,000 7.902 % Variable February 15, 2010 February 15, 2032 BBB BBB
Class F ..... $ 8,882,000 7.902 % Variable February 15, 2010 February 15, 2032 BBB- BBB-
Class X ..... $888,269,752 0.24256% Variable November 15, 2019 February 15, 2032 AAA AAA
</TABLE>
(1) The pass-through rates for the offered certificates will be determined in
accordance with the method described under "Description of the
Certificates--Distributions--Pass-Through Rates" in this prospectus
supplement.
(2) For a description of the method used to determine these dates, see
"Description of the Certificates--Distributions--Expected Final
Distribution Date; Rated Final Distribution Date" in this prospectus
supplement.
(3) See "Ratings" in this prospectus supplement.
---------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE OFFERED CERTIFICATES OR DETERMINED
THAT THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
We expect that Bear Stearns Commercial Mortgage Securities Inc. will sell the
offered certificates to the underwriters listed below on or about February 10,
2000 and that they will sell the offered certificates from time to time in
negotiated transactions or otherwise at varying prices to be determined at the
time of sale. Bear, Stearns & Co. Inc. and Morgan Stanley & Co. Incorporated
will act as co-lead and joint book-running managers.
Underwriters
BEAR, STEARNS & CO. INC. MORGAN STANLEY DEAN WITTER
NORWEST INVESTMENT SERVICES, INC.
February 7, 2000
<PAGE>
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2000-WF1
<TABLE>
<S> <C> <C> <C> <C>
IDAHO MONTANA NEBRASKA NORTH DAKOTA MINNESOTA
1 property 2 properties 1 property 2 properties 2 properties
$ 8,000,000 $ 6,364,565 $ 6,173,896 $ 9,572,882 $ 3,141,512
0.90% of total 0.72% of total 0.70% of total 1.08% of total 0.35% of total
MISSOURI WISCONSIN ILLINOIS MICHIGAN OHIO
1 properties 1 property 1 property 3 properties 2 properties
$ 3,333,119 $ 8,795,170 $ 2,498,456 $ 8,803,118 $ 8,287,789
0.38% of total 0.99% of total 0.28% of total 0.99% of total 0.93% of total
PENNSYLVANIA NEW HAMPSHIRE MASSACHUSETTS RHODE ISLAND CONNECTICUT
8 properties 1 property 2 properties 1 property 4 properties
$ 32,397,081 $ 8,480,137 $10,337,924 $ 901,886 $ 8,812,561
3.65% of total 0.95% of total 1.16% of total 0.10% of total 0.99% of total
NEW JERSEY NEW YORK MARYLAND DELAWARE VIRGINIA
6 properties 14 properties 3 properties 3 properties 3 properties
$ 23,050,167 $64,291,251 $ 8,069,617 $17,375,135 $26,271,958
2.59% of total 7.24% of total 0.91% of total 1.96% of total 2.96% of total
NORTH CAROLINA GEORGIA FLORIDA MISSISSIPPI TEXAS
4 properties 1 property 17 properties 1 property 31 properties
$ 80,918,917 $ 1,926,110 $52,689,302 $ 3,967,393 $88,774,156
9.11% of total 0.22% of total 5.93% of total 0.45% of total 9.99% of total
KANSAS COLORADO NEW MEXICO ARIZONA NEVADA
1 property 5 properties 1 property 2 properties 4 properties
$ 1,247,824 $15,802,211 $ 3,985,712 $ 3,488,259 $23,448,408
0.14% of total 1.78% of total 0.45% of total 0.39% of total 2.64% of total
CALIFORNIA OREGON WASHINGTON
75 properties 3 properties 5 properties
$306,350,869 $10,155,738 $30,556,628
34.49% of total 1.14% of total 3.44% of total
</TABLE>
[ ] Equal to or less than 1.00%
of Initial Pool Balance
[ ] 1.01-5.00%
of Initial Pool Balance
[ ] 5.01-10.00%
of Initial Pool Balance
[ ] Equal to or greater than 10.00%
of Initial Pool Balance
<PAGE>
[Pictures of Certain Mortgaged Properties Included Here]
<PAGE>
[Pictures of Certain Mortgaged Properties Included Here]
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We tell you about the offered certificates in two separate documents that
progressively provide more detail. These documents are:
o the prospectus, which provides general information, some of which may
not apply to a particular series of certificates, including your series;
and
o this prospectus supplement, which describes the specific terms of your
series of certificates.
This prospectus supplement and the prospectus include cross-references to
sections in these materials where you can find further related discussions. The
table of contents in this prospectus supplement and the prospectus identify the
pages where these cross-referenced sections are located.
THE PHOTOGRAPHS OF THE MORTGAGED PROPERTIES INCLUDED IN THIS PROSPECTUS
SUPPLEMENT ARE NOT REPRESENTATIVE OF ALL OF THE MORTGAGED PROPERTIES OR OF ANY
PARTICULAR TYPE OF MORTGAGED PROPERTY.
You can find the definitions of capitalized terms that are used in this
prospectus supplement beginning on page S-118 under the caption "Glossary" and
under the caption "Glossary" beginning on page 114 of the prospectus.
The principal offices of Bear Stearns Commercial Mortgage Securities Inc.
(the "depositor," "we" or "us") are located at 245 Park Avenue, New York,
New York 10167 and its telephone number is (212) 272-2000.
S-3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
CERTIFICATE SUMMARY ........................ S-6
Summary of Subordination Levels............ S-7
SUMMARY OF PROSPECTUS
SUPPLEMENT .............................. S-8
General ................................. S-8
Title of Certificates ................ S-8
Cut-Off Date ......................... S-8
Closing Date ......................... S-8
Distribution Date .................... S-8
Collection Period .................... S-8
Registration of the Offered
Certificates ...................... S-8
Denominations ........................ S-8
Service Providers .................... S-9
The Mortgage Pool ....................... S-9
Characteristics of the Mortgage
Pool .............................. S-9
Release of Mortgaged
Properties ........................ S-15
Mortgage Loan Sellers ................ S-16
The Certificates ........................ S-16
Description of the Certificates ...... S-16
Certificate Balance .................. S-16
Distributions ........................ S-17
Certain Investment
Considerations; Mortgage
Loan Prepayments .................. S-18
Yield Considerations ................. S-19
P&I Advances ......................... S-21
Credit Enhancement ................... S-21
Optional Termination ................. S-22
Information Available to
Certificateholders ................ S-23
Material Federal Income Tax
Consequences ...................... S-23
ERISA Considerations ................. S-23
Rating ............................... S-24
Legal Investment ..................... S-24
RISK FACTORS ............................... S-26
Risk Factors Relating to the
Certificates ......................... S-26
Risk Factors Relating to the
Mortgage Loans ....................... S-32
Forward Looking Statements .............. S-48
DESCRIPTION OF THE
MORTGAGE POOL ........................... S-49
General ................................. S-49
Additional Debt ......................... S-50
The ARD Loans ........................... S-50
The Pari Passu Loan ..................... S-50
Certain Payment Characteristics ......... S-50
Yield Maintenance, Prepayment
and Lockout Provisions ............... S-51
Defeasance .............................. S-52
</TABLE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Releases of Properties Without
Principal Reduction or
Substitution of Collateral ........ S-53
"Due-on-Sale" and
"Due-on-Encumbrance"
Provisions; Assumptions .............. S-53
Delinquent Mortgage Loans ............... S-54
Additional Mortgage Loan
Information .......................... S-54
Ten Largest Mortgage Loans .............. S-64
Underwritten Cash Flow .................. S-64
Escrow Requirements .................. S-65
Assessments of Property Condition S-65
Property Inspection .................. S-65
Appraisals ........................... S-65
Property Condition Assessments........ S-66
Seismic Review Process ............... S-66
The Mortgage Loan Sellers ............... S-66
Representations and Warranties;
Repurchases .......................... S-67
Mortgaged Property Accounts ............. S-70
Lock Box Accounts .................... S-70
Underwriting Standards .................. S-70
Changes in Mortgage Pool
Characteristics ...................... S-71
DESCRIPTION OF THE
CERTIFICATES ............................ S-72
General ................................. S-72
Book-Entry Registration and
Definitive Certificates .............. S-73
Distributions ........................... S-74
Method, Timing and Amount ............ S-74
Available Distribution Amount ........ S-75
Application of Available
Distribution Amount ............... S-75
Pass-Through Rates ................... S-78
Distributable Certificate Interest
Amount ............................ S-79
Prepayment Interest Shortfalls
and Prepayment Interest
Excesses .......................... S-79
Principal Distribution Amount ........ S-80
Allocation of Yield Maintenance
Charges ........................... S-81
Expected Final Distribution
Date; Rated Final Distribution
Date .............................. S-82
Examples of Distributions ............ S-82
Subordination; Allocation of
Losses, Shortfalls and Expenses ...... S-83
Advances ................................ S-85
P&I Advances ......................... S-85
Servicing Advances ................... S-85
Advances on the Pari Pasu Loan S-86
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Nonrecoverable Advances ........... S-86
Appraisal Reductions ................. S-87
Reports to Certificateholders;
Certain Available Information ..... S-88
Distribution Date Statements ...... S-88
Operating Statement Analysis
Reports ........................ S-89
Other Information ................. S-89
Optional Termination; Retirement
of Certificates ................... S-90
Treatment of REO Properties ....... S-90
The Trustee .......................... S-91
The Fiscal Agent ..................... S-91
The Paying Agent, Certificate
Registrar and Authenticating
Agent ............................. S-92
YIELD AND MATURITY
CONSIDERATIONS ....................... S-92
Yield Considerations ................. S-92
General ........................... S-92
Pass-Through Rate ................. S-92
Rate and Timing of Principal
Payments ....................... S-93
Losses and Shortfalls ............. S-93
Certain Relevant Factors .......... S-94
Delay in Payment of
Distributions .................. S-94
Unpaid Distributable Certificate
Interest ....................... S-95
Yield Sensitivity of the Class X
Certificates ...................... S-95
Weighted Average Life ................ S-96
SERVICING OF THE
MORTGAGE LOANS ....................... S-101
General .............................. S-101
</TABLE>
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
The Servicer ......................... S-103
Servicer Events of Default ........... S-104
Rights Upon Event of Default ......... S-104
The Special Servicer ................. S-105
Termination of the Special
Servicer .......................... S-106
The Operating Adviser ................ S-106
Servicing and Other Compensation
and Payment of Expenses ........... S-107
Servicer Compensation ............. S-107
Special Servicer Compensation ..... S-107
Modifications, Waiver and
Amendments ........................ S-108
Realization Upon Defaulted
Mortgage Loans .................... S-109
Foreclosures ......................... S-110
MATERIAL FEDERAL INCOME
TAX CONSEQUENCES ..................... S-110
METHOD OF DISTRIBUTION .................. S-112
LEGAL MATTERS ........................... S-113
RATINGS ................................. S-113
LEGAL INVESTMENT
CONSIDERATIONS ....................... S-114
ERISA CONSIDERATIONS .................... S-114
GLOSSARY ................................ S-118
MORTGAGE LOAN SCHEDULE .................. A-1
SUMMARY OF TEN LARGEST
LOANS ................................ B-1
FORMS OF DISTRIBUTION
DATE STATEMENT AND
OPERATING STATEMENT
ANALYSIS REPORT ...................... C-1
SCHEDULE OF INTEREST
RESERVE LOANS ........................ D-1
</TABLE>
S-5
<PAGE>
CERTIFICATE SUMMARY
<TABLE>
<CAPTION>
INITIAL
AGGREGATE
CERTIFICATE WEIGHTED
BALANCE OR AVERAGE PRINCIPAL OR
NOTIONAL PASS-THROUGH INITIAL LIFE NOTIONAL
RATINGS AMOUNT % OF RATE PASS-THROUGH (APPROX. PRINCIPAL
CLASS DCR(1) FITCH(2) (+/-5%) TOTAL DESCRIPTION RATE YEARS)(6) WINDOW(6)
----- ------ -------- ------- ----- ----------- ---- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Senior Classes
A-1 AAA AAA $ 260,078,000 29.279 Fixed 7.640%(4) 5.6 3/2000- 2/2009
A-2 AAA AAA $ 454,979,000 51.221 Fixed 7.780%(4) 9.6 2/2009- 2/2010
X AAA AAA $ 888,269,752(3) N/A Variable 0.24256%(5) 8.7 3/2000-11/2019
Subordinate Classes
B AA AA $ 31,089,000 3.500 Variable 7.772%(4) 10.0 2/2010- 2/2010
C A A $ 35,531,000 4.000 Variable 7.892%(4) 10.0 2/2010- 2/2010
D A- A- $ 8,882,000 1.000 Variable 7.902%(4) 10.0 2/2010- 2/2010
E BBB BBB $ 26,648,000 3.000 Variable 7.902%(4) 10.0 2/2010- 2/2010
F BBB- BBB- $ 8,882,000 1.000 Variable 7.902%(4) 10.0 2/2010- 2/2010
G Not Offered $ 15,545,000 1.750 Fixed 6.500% 10.3 2/2010- 1/2011
H Not Offered $ 13,324,000 1.500 Fixed 6.500% 10.9 1/2011- 1/2011
I Not Offered $ 6,662,000 0.750 Fixed 6.500% 11.4 1/2011- 1/2012
J Not Offered $ 5,552,000 0.625 Fixed 6.500% 12.3 1/2012-10/2012
K Not Offered $ 8,882,000 1.000 Fixed 6.500% 13.3 10/2012-12/2013
L Not Offered $ 3,331,000 0.375 Fixed 6.500% 14.1 12/2013- 5/2014
M Not Offered $ 8,884,752 1.000 Fixed 6.500% 15.1 5/2014-11/2019
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) Duff & Phelps Credit Rating Co. ("DCR").
(2) Fitch IBCA, Inc. ("Fitch").
(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 equal to the aggregate of the Scheduled Principal Balances,
as defined in this prospectus supplement, of the mortgage loans
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 (as defined in this prospectus
supplement) of the mortgage loans, which will be determined without
taking into account any reductions to the Net Mortgage Rates resulting
from modifications of the Mortgage Loans or otherwise following the
cut-off date. The pass-through rate 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 those classes, and for interest periods relating
to Distribution Dates (as defined in this prospectus supplement) after
March 15, 2000, the pass-through rate of the Class B Certificates will be
the NWAC Rate (as defined in this prospectus supplement) for that
Distribution Date minus 0.130% per annum, the pass-through rate of the
Class C Certificates will be the NWAC Rate for that Distribution Date
minus 0.010% per annum, and the pass-through rate of the Class D, Class E
and Class F Certificates will be a per annum rate equal to the NWAC Rate
for that Distribution Date.
(5) Approximate 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 in this prospectus supplement.
(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" in this
prospectus supplement and assuming that there are no extensions of
maturity dates, delinquencies, losses or prepayments (other than the
prepayment in full of the ARD Loans on their Anticipated Repayment Dates,
each as defined in this prospectus supplement).
S-6
<PAGE>
SUMMARY OF SUBORDINATION LEVELS
Credit support for the certificates, other than the Class M Certificates,
is provided by the sequential payment of interest and principal to those
classes (including reimbursement of losses allocated to those classes) based
(other than with respect to the Class X Certificates) on their alphabetical
designations, and by the subordination of other classes to those classes in
respect of the allocation of losses, shortfalls and other reductions of the
assets of the trust fund (generally in reverse sequential order), as described
more fully in this prospectus supplement. The following chart summarizes the
protection afforded to each class of certificates by the initial principal
amount of other classes, if any, that are subordinate to that class.
<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(+/-5%) DCR FITCH BALANCE(1)
------------------- ------------- ------------- -------------- --- ----- ----------------
<S> <C> <C> <C> <C> <C> <C>
19.500% Class A-1 $260,078,000 AAA AAA 29.279%
19.500% Class A-2 $454,979,000 AAA AAA 51.221%
16.000% Class B $ 31,089,000 AA AA 3.500%
12.000% Class C $ 35,531,000 A A 4.000%
11.000% Class X Class D $ 8,882,000 A- A- 1.000%
8.000% AAA/AAA Class E $ 26,648,000 BBB BBB 3.000%
7.000% Class F $ 8,882,000 BBB- BBB- 1.000%
5.250% $888,269,752 Class G $ 15,545,000 Not Offered 1.750%
3.750% Initial Notional Class H $ 13,324,000 Not Offered 1.500%
3.000% Amount Class I $ 6,662,000 Not Offered 0.750%
2.375% Class J $ 5,552,000 Not Offered 0.625%
1.375% Class K $ 8,882,000 Not Offered 1.000%
1.000% Class L $ 3,331,000 Not Offered 0.375%
N/A Class M $ 8,884,752 Not Offered 1.000%
</TABLE>
- ----------
(1) Initial pool balance means the aggregate of the Scheduled Principal Balances
of the mortgage loans on February 1, 2000.
S-7
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS
SUPPLEMENT. IT DOES NOT CONTAIN ALL OF THE INFORMATION YOU NEED TO CONSIDER IN
MAKING YOUR INVESTMENT DECISIONS. TO UNDERSTAND ALL OF THE TERMS OF THE
OFFERING OF THE OFFERED CERTIFICATES, YOU SHOULD READ THIS ENTIRE DOCUMENT AND
THE ACCOMPANYING PROSPECTUS CAREFULLY.
GENERAL
Title of Certificates....... Bear Stearns Commercial Mortgage Securities
Inc., Commercial Mortgage Pass-Through
Certificates, Series 2000-WF1. The certificates
will be issued in eighteen classes, designated as
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, Class M, Class X,
Class R-I, Class R-II and Class R-III
Certificates. Only the Class A-1, Class A-2,
Class B, Class C, Class D, Class E, Class F and
Class X Certificates are being offered in this
prospectus supplement.
Cut-Off Date................ February 1, 2000.
Closing Date................ On or about February 10, 2000.
Distribution Date........... The 15th day of each month, or if the 15th day
is not a business day then the next succeeding
business day, beginning on March 15, 2000.
Collection Period........... The period beginning with the day after the
determination date in the month preceding the
month of distribution (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 the distribution date occurs.
For each distribution date, the determination
date is the fifth business day prior to that
distribution date.
Registration of the Offered
Certificates............... Each class of offered certificates will be
represented by one or more global certificates
registered in the name of Cede & Co., as nominee
of DTC. You may hold your offered certificates
through (i) DTC in the United States, or (ii)
Clearstream Banking, societe anonyme or The
Euroclear System in Europe. If you are acquiring
an interest in any class of offered certificates
you will not be entitled to receive your
certificate in fully registered, certificated
form, except under the limited circumstances
described under "Description of the
Certificates--Book-Entry Registration and
Definitive Certificates" in the prospectus.
Denominations............... You may hold and trade the Class A-1 and Class
A-2 Certificates only in minimum denominations of
$25,000. You may hold and trade the Class X
Certificates only in minimum denominations of
$1,000,000 (notional amount). The remaining
offered certificates will be offered in minimum
S-8
<PAGE>
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 if the certificate balance of
that class of certificates is less than 25% of
its initial certificate balance, 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.
THE MORTGAGE POOL
Characteristics of the Mortgage
Pool....................... The mortgage pool will consist of conventional,
monthly pay mortgage loans. Each mortgage loan in
the pool is secured by a first mortgage lien on a
fee simple estate and/or a leasehold estate on
one or more commercial, multifamily or
manufactured housing community properties.
For each mortgage loan, ignoring grace periods,
scheduled payments are due on the first day of
each month. We refer to that date as the "due
date."
Most of the mortgage loans provide for monthly
payments of principal based on amortization
schedules significantly longer than the
remaining terms of the mortgage loans in the
pool. Therefore, there may be a substantial
principal amount due and payable on their
respective maturity dates, unless prepaid prior
to those maturity dates.
The following tables, prepared using the
assumptions described in this prospectus
supplement under "Description of the Mortgage
Pool--Additional Mortgage Loan Information," set
forth some of the 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.
S-9
<PAGE>
SUMMARY OF MORTGAGE POOL
<TABLE>
<S> <C>
Initial Pool Balance ....................... $888,269,752
Number of Mortgage Loans ................... 181(1)
Number of Mortgaged Properties ............. 211
Number of Balloon Loans/ARD Loans .......... 158(2)
Balloon Loans/ARD Loans as a Percentage
of the Initial Pool Balance ................ 91.9%
Number of Fully-Amortizing Loans ........... 23
Fully Amortizing Loans as a Percentage of
the Initial Pool Balance ................... 8.1%(3)
Average Cut-Off Date Balance ............... $ 4,907,568
Weighted Average Net Mortgage Rate ......... 7.9023%
Weighted Average Original Term to
Maturity ................................... 120 months(4)
Weighted Average Remaining Term to
Maturity ................................... 115 months
Weighted Average Original Amortization
Term ....................................... 319 months
Weighted Average DSCR as of the Cut-Off
Date ....................................... 1.59x(5)
Weighted Average LTV Ratio as of the
Cut-Off Date ............................... 59.9%(5)
Weighted Average LTV Ratio as of
Maturity ................................... 48.3%(5)
Weighted Average Current Occupancy Rate
for Commercial (excluding Hotels),
Multifamily and Manufactured Housing
Properties ................................. 96.5%
Weighted Average Current Occupancy Rate
for Hotels ................................. 81.4%
</TABLE>
See "Risk Factors" and "Description of the
Mortgage Pool--Additional Mortgage Loan
Information" in this prospectus supplement.
(1) Some 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 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 Nos. 26287 and 9905426 are
"ARD Loans" (as defined in the Glossary to
this prospectus supplement). For purposes
of the tables and descriptions in this
prospectus supplement, each ARD Loan is
treated as a Balloon Loan (as defined in
the Glossary to this prospectus
supplement) with a maturity date on the
same date as its Anticipated Repayment
Date (as defined in the Glossary to this
prospectus supplement).
S-10
<PAGE>
(3) Substantially all 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 those mortgage loans will be
greater than the other scheduled payments
for those mortgage loans.
(4) The "maturity" or "maturity date" of a
mortgage loan, as used in this prospectus
supplement with respect to any mortgage
loan other than the ARD Loans, shall refer
to the stated maturity of the mortgage
loan and, in the case of each ARD Loan,
shall refer to its Anticipated Repayment
Date.
(5) "DSCR" and "LTV Ratio" are calculated as
described in the Glossary to this
prospectus supplement.
GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
AGGREGATE % OF
CUT-OFF INITIAL
NUMBER OF DATE POOL
STATE PROPERTIES BALANCE BALANCE
- --------------------------------- ------------ --------------- -----------
<S> <C> <C> <C>
California (Northern) ......... 33 $182,266,272 20.52%
California (Southern) ......... 42 124,084,597 13.97
Texas ......................... 31 88,774,156 9.99
North Carolina ................ 4 80,918,917 9.11
New York ...................... 14 64,291,251 7.24
Florida ....................... 17 52,689,302 5.93
28 other states ............... 70 295,245,256 33.24
-- ------------ ------
Totals ........................ 211 $888,269,752 100.00%
=== ============ ======
</TABLE>
S-11
<PAGE>
PROPERTY TYPE
<TABLE>
<CAPTION>
AGGREGATE % OF
CUT-OFF INITIAL
NUMBER OF DATE POOL
PROPERTY TYPE PROPERTIES BALANCE BALANCE
- -------------------------------- ------------ --------------- -----------
<S> <C> <C> <C>
Office ....................... 20 $223,173,574 25.12%
Retail ....................... 45 184,076,092 20.72
Multifamily .................. 37 134,375,373 15.13
Industrial/Warehouse ......... 44 125,432,750 14.12
Self-Storage ................. 34 92,965,037 10.47
Hospitality .................. 9 68,543,517 7.72
Manufactured Housing
Community ................... 9 27,501,934 3.10
Mixed Use .................... 9 19,437,067 2.19
Land Subject to
Ground Lease ................ 3 8,690,788 0.98
Marina ....................... 1 4,073,620 0.46
-- ------------ ------
Totals ....................... 211 $888,269,752 100.00%
=== ============ ======
</TABLE>
RANGE OF CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
AGGREGATE % OF
NUMBER CUT-OFF INITIAL
RANGE OF NUMBER OF DATE POOL
CUT-OFF DATE BALANCES OF LOANS PROPERTIES BALANCE BALANCE
- ----------------------------- ---------- ------------ --------------- ----------
<S> <C> <C> <C> <C>
$ 888,571 to $ 999,999 6 6 $ 5,633,023 0.63%
$ 1,000,000 to $ 1,999,999 48 51 76,626,416 8.63
$ 2,000,000 to $ 3,999,999 66 67 191,192,741 21.52
$ 4,000,000 to $ 5,999,999 29 32 140,789,245 15.85
$ 6,000,000 to $ 7,999,999 12 12 80,040,920 9.01
$ 8,000,000 to $ 9,999,999 3 3 25,754,407 2.90
$10,000,000 to $11,999,999 4 4 41,442,203 4.67
$12,000,000 to $13,999,999 2 4 27,659,993 3.11
$14,000,000 to $15,999,999 1 8 15,722,584 1.77
$16,000,000 to $17,999,999 2 2 33,000,000 3.72
$18,000,000 to $19,999,999 2 2 38,451,881 4.33
$20,000,000 to $24,999,999 3 5 61,808,104 6.96
$27,000,000 to $58,500,000 3 15 150,148,233 16.90
-- -- ------------ ------
Totals .................... 181 211 $888,269,752 100.00%
=== === ============ ======
</TABLE>
The average cut-off date balance is $4,907,568.
S-12
<PAGE>
RANGE OF DSCRS AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE % OF
RANGE OF NUMBER CUT-OFF INITIAL
DEBT SERVICE NUMBER OF DATE POOL
COVERAGE RATIOS OF LOANS PROPERTIES BALANCE BALANCE
- -------------------------- ---------- ------------ --------------- ----------
<S> <C> <C> <C> <C>
1.15x to 1.19x ......... 3 3 $ 9,942,577 1.12%
1.20x to 1.24x ......... 4 4 11,533,493 1.30
1.25x to 1.29x ......... 23 24 90,541,323 10.19
1.30x to 1.34x ......... 19 19 67,402,186 7.59
1.35x to 1.39x ......... 12 12 32,413,883 3.65
1.40x to 1.44x ......... 21 37 112,579,939 12.67
1.45x to 1.49x ......... 14 15 55,791,015 6.28
1.50x to 1.59x ......... 25 32 134,716,778 15.17
1.60x to 1.69x ......... 20 20 147,476,503 16.60
1.70x to 1.79x ......... 15 16 125,362,794 14.11
1.80x to 1.89x ......... 3 3 10,401,932 1.17
1.90x to 1.99x ......... 4 6 27,639,589 3.11
2.00x to 2.49x ......... 10 12 45,481,303 5.12
2.50x to 2.99x ......... 4 4 9,907,563 1.12
3.00x to 6.48x ......... 4 4 7,078,874 0.80
-- -- ------------ ------
Totals ................. 181 211 $888,269,752 100.00%
=== === ============ ======
</TABLE>
The weighted average DSCR as of the cut-off date
is approximately 1.59x.
RANGE OF LTV RATIOS AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE % OF
RANGE OF NUMBER CUT-OFF INITIAL
CUT-OFF DATE NUMBER OF DATE POOL
LTV RATIOS OF LOANS PROPERTIES BALANCE BALANCE
- ---------------------------- ---------- ------------ --------------- ----------
<S> <C> <C> <C> <C>
10.89% to 30.00% ......... 2 2 $ 3,414,157 0.38%
30.01% to 40.00% ......... 15 17 43,312,924 4.88
40.01% to 45.00% ......... 6 6 13,766,921 1.55
45.01% to 50.00% ......... 13 15 148,088,071 16.67
50.01% to 55.00% ......... 14 14 73,521,773 8.28
55.01% to 60.00% ......... 26 27 142,582,137 16.05
60.01% to 65.00% ......... 31 40 140,452,214 15.81
65.01% to 70.00% ......... 35 38 119,936,339 13.50
70.01% to 75.00% ......... 32 45 178,179,201 20.06
75.01% to 79.11% ......... 7 7 25,016,015 2.82
-- -- ------------ ------
Totals ................... 181 211 $888,269,752 100.00%
=== === ============ ======
</TABLE>
The weighted average LTV Ratio as of the cut-off
date is approximately 59.89%.
S-13
<PAGE>
RANGE OF REMAINING TERMS TO MATURITY
AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE % OF
NUMBER CUT-OFF INITIAL
RANGE OF NUMBER OF DATE POOL
REMAINING TERMS (MOS.) OF LOANS PROPERTIES BALANCE BALANCE
- ------------------------ ---------- ------------ -------------- ----------
<S> <C> <C> <C> <C>
56 to 70 ........... 4 6 $ 80,671,510 9.08%
71 to 100 ........... 3 3 15,829,597 1.78
101 to 120 ........... 147 173 693,793,086 78.11
121 to 140 ........... 1 1 19,182,572 2.16
161 to 180 ........... 24 26 75,080,852 8.45
181 to 237 ........... 2 2 3,712,134 0.42
--- --- ------------ ------
Totals ............... 181 211 $888,269,752 100.00%
=== === ============ ======
</TABLE>
The weighted average remaining term to maturity
as of the cut-off date is approximately 115
months.
RANGE OF MORTGAGE RATES AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE % OF
NUMBER CUT-OFF INITIAL
RANGE OF NUMBER OF DATE POOL
MORTGAGE RATES OF LOANS PROPERTIES BALANCE BALANCE
- ------------------------------ ---------- ------------ --------------- ----------
<S> <C> <C> <C> <C>
6.1500% to 6.2500% ......... 1 1 $ 3,155,764 0.36%
6.5001% to 6.7500% ......... 1 1 2,958,882 0.33
6.7501% to 7.0000% ......... 3 3 5,981,900 0.67
7.0001% to 7.2500% ......... 7 7 18,552,993 2.09
7.2501% to 7.5000% ......... 20 23 117,626,681 13.24
7.5001% to 7.7500% ......... 19 21 121,558,752 13.68
7.7501% to 8.0000% ......... 37 45 204,707,847 23.05
8.0001% to 8.5000% ......... 73 88 325,375,024 36.63
8.5001% to 9.0000% ......... 17 19 75,041,339 8.45
9.0001% to 9.4550% ......... 3 3 13,310,568 1.50
-- -- ------------ ------
Totals ..................... 181 211 $888,269,752 100.00%
=== === ============ ======
</TABLE>
The weighted average mortgage rate as of the
cut-off date is approximately 7.9581%.
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 .................. 62 $298,646,895 33.62%
Lockout to six (6) months
or less prior to
Maturity Date ......... 101 550,426,885 61.97
YM/Flex to six (6) months
or less prior to
Maturity Date ......... 18 39,195,971 4.41
--- ------------ ------
Totals .................. 181 $888,269,752 100.00%
=== ============ ======
</TABLE>
As used above, "Flex" refers to the borrower's
option to prepay with a YM charge or defease the
related mortgage loan.
As used above, "YM" means yield maintenance.
S-14
<PAGE>
SUMMARY OF INTEREST ACCRUAL METHODS
<TABLE>
<CAPTION>
AGGREGATE % OF
CUT-OFF INITIAL
NUMBER DATE POOL
ACCRUAL METHOD OF LOANS BALANCE BALANCE
- ---------------------- ---------- --------------- -----------
<S> <C> <C> <C>
Actual/360 ......... 171 $859,687,574 96.78%
30/360 ............. 10 28,582,178 3.22
--- ------------ ------
Totals ............. 181 $888,269,752 100.00%
=== ============ ======
</TABLE>
The mortgage loans were originated between July
1998 and January 2000, inclusive.
Release of
Mortgaged Properties........ As of the cut-off date, the mortgage loans permit
the release of the mortgages on the related
mortgaged properties as follows:
o 178 of the mortgage loans, representing
approximately 98.5% of the initial pool
balance, generally permit the related
borrower, at any time commencing
approximately three to five years after the
date of origination, but in no event before
the second anniversary of the issuance of the
certificates, 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.
116 of the mortgage loans, representing
approximately 64.9% of the initial pool
balance, permit the related borrower upon
prepayment of the mortgage loan in full to
obtain the release of the related mortgage on
the mortgaged property during the last one to
six months of its term.
o 9 of the mortgage loans, representing
approximately 6.2% of the initial pool
balance, are cross-collateralized and/or
secured by two or more mortgaged properties
and generally permit the related borrower, at
any time commencing approximately three to
four years after the date of origination, but
in no event before the second anniversary of
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 those mortgaged
properties, subject to, among other
requirements, the satisfaction of a specified
debt service coverage ratio test, and in some
cases a loan to value ratio test, with
respect to the remaining mortgaged property
or properties. These partial releases of
mortgaged property are generally permitted if
the amount of collateral substituted equals
110% to 125% of the principal amount of the
mortgage loan allocated to the mortgaged
property or mortgaged properties being
released.
o 15 of the mortgage loans, representing
approximately 2.9% of the initial pool
balance, provide the borrower the
S-15
<PAGE>
option to either prepay in full the
outstanding principal balance accompanied by
a yield maintenance charge as described in
this prospectus supplement under "Description
of the Mortgage Pool--Yield Maintenance,
Prepayment and Lockout Provisions" or to
defease that mortgage loan as described in
the preceding bullet points.
o 3 of the mortgage loans, representing
approximately 1.9% of the initial pool
balance, generally permit the borrower to
obtain the release from the related mortgage
of specified parcels of real estate
constituting a portion of the applicable
mortgaged property to which no value or cash
flow was ascribed in determining the
underwritten cash flow for that portion of
the mortgaged property.
See "Description of the Mortgage
Pool--Defeasance" in this prospectus supplement.
Mortgage Loan Sellers....... We will purchase 84 of the mortgage loans,
representing 46.8% of the initial pool balance,
from Wells Fargo Bank, National Association, 74
of the mortgage loans, representing 40.9% of the
initial pool balance, from Bear, Stearns Funding,
Inc., and 23 of the mortgage loans, representing
12.3% of the initial pool balance, from Morgan
Stanley Mortgage Capital Inc. Each mortgage loan
seller will make representations and warranties
to us regarding the mortgage loans sold by it. 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.
THE CERTIFICATES
Description of
the Certificates............ The certificates will be issued pursuant to a
pooling and servicing agreement, to be dated as
of the cut-off date, among us, the servicer, the
special servicer, the trustee, the fiscal agent
and the paying agent. The certificates will
represent in the aggregate the entire beneficial
ownership interest in a trust fund consisting of
the mortgage pool and some other assets that are
related to the mortgage loans.
THE CERTIFICATES WILL REPRESENT INTERESTS IN THE
ASSETS OF THE TRUST FUND ONLY. ALL PAYMENTS TO
YOU WILL COME ONLY FROM AMOUNTS RECEIVED IN
CONNECTION WITH THOSE ASSETS.
Certificate Balance......... The aggregate certificate balance of the
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, as defined in this
prospectus supplement, of the mortgage loans as
of the cut-off date, which is also referred to as
the "initial pool balance." Each class of offered
certificates (other than the
S-16
<PAGE>
Class X Certificates) will have the initial
certificate balance set forth on the cover page,
subject to a permitted variance of plus or minus
5%.
The certificate balance of each class of
certificates (other than the Class X, Class R-I,
Class R-II and Class R-III Certificates)
outstanding at any time represents the maximum
amount that the certificateholders are entitled
to receive as distributions allocable to
principal from the cash flow on the mortgage
loans and other assets in the trust fund. The
certificate balance of each of those classes of
certificates will be adjusted from time to time
on each distribution date to reflect any
reductions resulting from the distribution of
principal to that class.
The Class X Certificates are "interest only
certificates," meaning that they do not have a
principal balance and are not entitled to
distributions of principal. In order to
calculate the amount of interest that accrues on
the Class X Certificates while they are
outstanding, the Class X Certificates are deemed
to have a notional amount on which interest
accrues. The notional amount of the Class X
Certificates will equal the aggregate of the
Scheduled Principal Balances of the mortgage
loans measured at the beginning of each period
as to which interest will accrue on the Class X
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 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.
The Scheduled Principal Balance of each mortgage
loan outstanding at any time represents the
principal balance of that mortgage loan
ultimately due and payable to the
certificateholders. The Scheduled Principal
Balance of each mortgage loan initially will
equal the cut-off date balance of that mortgage
loan. On each distribution date the principal
balance of each mortgage loan will be reduced by
any payments or other collections or advances of
principal of that mortgage loan that are
distributed on the certificates on that date and
may be reduced for realized losses on that
mortgage loan.
Distributions............... Distributions of (1) interest accrued on the
certificates, (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
S-17
<PAGE>
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 date set forth
on the cover page, assuming that there are no
prepayments, delinquencies or modifications of
the mortgage loans after the cut-off date.
A. Interest Distributions .. You generally will receive interest
distributions on each distribution date from the
available distribution amount described in this
prospectus supplement under "Description of the
Certificates--Distributions--Available
Distribution Amount," subject to the sequential
payment and subordination features described
below, in amounts up to the interest accrued on
your class of certificates during the preceding
calendar month at the applicable pass-through
rate, together with any previously accrued and
unpaid interest amounts, in each case subject to
reduction in connection with the allocation to
your class of certificates 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 of interest distributable thereto on
that distribution 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.
B. Principal Distributions... In general, each class of certificates, other
than the Class X 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 that distribution date
and the certificate balance of each class with an
earlier alphabetical designation has been reduced
to zero. See "Description of the
Certificates--Distributions--Principal
Distribution Amount" and "--Application of
Available Distribution Amount" in this prospectus
supplement for a more detailed description of the
amount of principal available for distribution on
any distribution date and the priority of
distribution of that principal.
Certain Investment Considerations;
Mortgage Loan Prepayments... The yield on the offered certificates of any
class will depend on, among other things, the
pass-through rate for that class of certificates,
which rate may be limited by the weighted average
net mortgage rate of the mortgage loans.
The yield on any class of offered certificates
that is purchased at a discount or premium will
also be affected by the rate and timing of
distributions in respect of principal on that
class of certificates, which in turn will be
affected by the following:
S-18
<PAGE>
1. the rate and timing of principal payments,
including voluntary and involuntary principal
prepayments, on the mortgage loans;
2. the rate and timing of losses on the mortgage
loans; and
3. the extent to which the items described in
subclauses 1. and 2. are applied on any
distribution date in reduction of the
certificate balance of the class to which the
offered certificate belongs, which will be
dependent, in part, on the nature of those
amounts. See "Description of the
Certificates--Distributions--Application of
Available Distribution Amount" and
"--Distributions--Principal Distribution
Amount" in this prospectus supplement.
The mortgage loans prohibit prepayment for a
specified period of time after origination.
Those mortgage loans that permit prepayment
after the period in which prepayments are
prohibited generally require payment of a yield
maintenance charge calculated pursuant to a
formula, other than during the last one to six
months prior to the maturities for those
mortgage loans. The formulas and percentages for
calculating the yield maintenance charges as
well as the allocation of those amounts among
the classes of offered certificates then
outstanding, are described under "Description of
the Mortgage Pool--Yield Maintenance, Prepayment
and Lockout Provisions" and "Description of the
Certificates--Distributions--Allocation of Yield
Maintenance Charges" in this prospectus
supplement. In deciding whether to purchase any
offered certificates, you should make an
independent decision as to the appropriate
prepayment assumptions to be used.
Yield Considerations........ Yield. If you purchase an offered certificate
at an amount equal to its unpaid certificate
balance, the effective yield to you (assuming
that there are no interest shortfalls and
assuming the full return of your investment
principal) will approximate the pass-through rate
in effect from time to time on that certificate.
If you pay less or more than the unpaid principal
balance of the certificate, then, based on the
assumptions set forth in the preceding sentence,
the effective yield to you will be higher or
lower, respectively, than the pass-through rate
on that certificate, because the related discount
or premium will be amortized over the life of the
certificate.
Any deviation in the actual rate of prepayments
on the mortgage loans from the rate assumed by
you will affect the period of time over which,
or the rate at which, the discount or premium
will be amortized and, consequently, may change
your actual yield from the yield that you
anticipated.
Reinvestment Risk. As stated above, if an
offered certificate is purchased at par,
fluctuations in the rate of distributions of
S-19
<PAGE>
principal will generally not affect the yield to
maturity of that certificate. However, the total
return on any purchaser's investment, including
that of an investor who purchases at par, will
be reduced to the extent that principal
distributions received on its certificate cannot
be reinvested at a rate as high as the
pass-through rate of the certificate. You should
consider the risk that rapid rates of
prepayments on the mortgage loans may coincide
with periods of low prevailing market interest
rates when mortgagors may be expected to prepay
or refinance mortgage loans that carry interest
rates significantly higher than then-current
interest rates for mortgage loans. Consequently,
the amount of principal distributions available
to you for reinvestment at low prevailing
interest rates may be relatively large.
Conversely, slow rates of prepayments on the
mortgage loans may coincide with periods of high
prevailing market interest rates when it is less
likely that mortgagors will elect to prepay or
refinance mortgage loans and, therefore, the
amount of principal distributions available to
you for reinvestment at high prevailing interest
rates may be relatively small.
Weighted Average Life Volatility. One indication
of the effect of varying prepayment rates on a
security is the change in its weighted average
life. The "weighted average life" of an offered
certificate is the average amount of time that
will elapse between the date of issuance of the
certificate and the date on which each dollar in
reduction of the principal balance of the
certificate is distributed to you or, in the
case of the Class X Certificates, the notional
amount thereof is reduced. Slower rates of
prepayment may result in an increase in the
weighted average life of a certificate; faster
rates may result in a decrease in the weighted
average life of a certificate. In general, if
the weighted average life of a certificate
purchased by you at par is extended beyond that
which you initially anticipate, your
certificate's market value may be adversely
affected, even though the yield to maturity on
your certificate is unaffected. The weighted
average lives of the offered certificates, under
various prepayment scenarios, are displayed in
the table appearing under the heading "Yield and
Maturity Considerations--Weighted Average Life"
in this prospectus supplement.
The Class X Certificates are interest-only
certificates and are not entitled to any
distributions of principal. The yield to
maturity of the Class X Certificates will be
especially sensitive to the prepayment,
repurchase and default experience on the
mortgage loans, which may fluctuate
significantly from time to time. A rate of
principal payments that is more rapid than you
expect will have a material adverse effect on
the yield to maturity of your Class X
Certificates. See "Risk Factors--Risk Factors
Relating to the Certificates--The rates of
prepayment and repurchases of the mortgage loans
in the
S-20
<PAGE>
pool may adversely affect the yield on your
investment" and "Yield and Maturity
Considerations--Yield Sensitivity of the Class X
Certificates" in this prospectus supplement.
P&I Advances................ Subject to a determination of recoverability
from collections on the related mortgage loans,
the servicer is required to make advances with
respect to each distribution date in an amount
that is generally equal to the aggregate of:
o all delinquent payments of principal and
interest, net of related servicing fees, on
the mortgage loans, other than delinquent
balloon payments, default interest or
increased interest after an anticipated
repayment date scheduled to be due during the
related due period;
o in the case of each mortgage loan delinquent
in respect of its balloon payment, an amount
equal to the scheduled monthly payment of
principal and interest that would have been
due if that mortgage loan had continued to
amortize in accordance with the amortization
schedule in effect immediately prior to the
due date for its balloon payment, net of
related servicing fees; and
o in the case of each REO property, the
scheduled monthly payment of principal and
interest due on the related mortgage loan
prior on the due date prior to its conversion
to an REO property, net of related servicing
fees, but only to the extent that the amount
is not covered by any net income from the
related REO property included in the
available distribution amount for that
distribution date.
The servicer will be entitled to interest on any
advances made, and specified servicing expenses
incurred, at a rate equal to the "Prime Rate" as
reported in The Wall Street Journal from time to
time and will be paid, contemporaneously with
the reimbursement of the advance or the
servicing expense, out of general collections on
the mortgage pool then on deposit in the
certificate account. See "Description of the
Certificates--Advances--P&I Advances" in this
prospectus supplement and "Description of the
Certificates--Advances in Respect of
Delinquencies" and "Description of the Pooling
and Servicing Agreements--Certificate Account"
in the prospectus.
Credit Enhancement.......... The rights of holders of classes with later
alphabetical designations to receive
distributions of amounts collected or advanced on
the mortgage loans generally will be subordinated
to the rights of holders of classes with earlier
alphabetical class designations. 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. However, the
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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 and the Class A-1 and Class A-2
Certificates generally are paid sequentially
with respect to principal distributions.
We protect more senior classes of certificates
by applying the amount available for
distribution to the certificateholders on each
distribution date in the order described in this
prospectus supplement under "Description of the
Certificates--Distributions--Application of
Available Distribution Amount." This is referred
to as "sequential payment." If the aggregate
certificate balance of the certificates exceeds
the aggregate principal balance of the mortgage
loans, the certificate balances of the
certificates will be reduced in the order
described in this prospectus supplement under
"Description of the Certificates--
Subordination; Allocation of Losses, Shortfalls
and Expenses," without a related distribution of
principal, until the aggregate certificate
balance of the certificates equals the aggregate
principal balance of the mortgage loans. We
protect more senior classes of certificates by
applying those reductions of certificate
balances or shortfalls in respect of the
mortgage loans or other reductions of the assets
of the trust fund to the most subordinated class
of outstanding certificates, as further
described in this prospectus supplement under
"Description of the Certificates--Subordination."
This is referred to as "subordination."
As a result of sequential payment, the
certificate balances of the most senior class of
outstanding certificates with a principal
balance will amortize prior to the classes of
certificates subordinate to that class. This is
expected to result in the subordinate
certificates evidencing an increasing percentage
interest in the trust fund over time and a
corresponding increase in the protection
afforded to each class of outstanding
certificates by the certificates subordinate to
that class. Sequential payment and subordination
are intended to enhance the likelihood of timely
receipt by the holders of the more senior
certificates of the full amount of their
interest entitlement on each distribution date
and the ultimate receipt by them of principal
equal to the entire certificate balance of their
certificates. No other form of credit support
will be available for the benefit of the holders
of the offered certificates.
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, the servicer, the special
servicer, the majority holders of the controlling
class, the operating adviser 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
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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" in
this prospectus supplement and "Description of
the Certificates--Termination" in the
prospectus.
Information Available to
Certificateholders......... On each distribution date commencing in March
2000, 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 to this prospectus supplement. 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 in this
prospectus supplement under "Description of the
Certificates--Reports to Certificateholders;
Certain Available Information--Distribution Date
Statements."
Material Federal Income Tax
Consequences............... You will be required to report income derived
from the offered certificates in accordance with
the accrual method of accounting.
We anticipate that the Class F Certificates will
be issued with original issue discount in an
amount equal to the excess of the initial class
certificate balance thereof (including accrued
interest) over its issue price (including
accrued interest). We also anticipate that the
Class A, Class B and Class C Certificates will
be issued at a premium and that the Class D and
Class E Certificates will be issued with de
minimis original issue discount for federal
income tax purposes. Although not free from
doubt, it is anticipated that the Class X
Certificates will be treated as issued with
original issue discount in an amount equal to
the excess of all distributions of interest
expected to be received thereon over their issue
price, including accrued interest, and we intend
to report income in respect of the Class X
Certificates in this manner. See "Material
Federal Income Tax Consequences" in the
prospectus.
ERISA Considerations........ If you are a fiduciary of any employee benefit
plan or other retirement arrangement subject to
ERISA or Section 4975 of the Internal Revenue
Code, you should review carefully with your legal
advisors whether the purchase or holding of
offered certificates could give rise to a
transaction that is prohibited or is not
otherwise permitted under either ERISA or Section
4975 of the Internal Revenue Code or whether
there exists any statutory or administrative
prohibited transaction exemption applicable to an
investment in the offered certificates.
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Subject to the considerations discussed under
"ERISA Considerations" in this prospectus
supplement and in the prospectus, the Class A-1,
Class A-2 and Class X Certificates may be
acquired by those plans or arrangements.
However, except as described under "ERISA
Considerations" in this prospectus supplement
with respect to insurance company general
accounts, those plans or arrangements may not
acquire certificates of any other class of
offered certificates. In addition, you may not
use the assets of an ERISA plan to acquire those
certificates except as described under "ERISA
Considerations" in this prospectus supplement
and in the prospectus.
For further information about considerations
that are relevant to an investment in the
offered certificates by employee benefit plans
or other retirement arrangements subject to
ERISA or Section 4975 of the Internal Revenue
Code, see "ERISA Considerations" in this
prospectus supplement and in the prospectus.
Rating...................... It is a condition of their issuance that the
offered certificates receive the initial ratings
from Duff & Phelps Credit Rating Co. and Fitch
IBCA, Inc. indicated in the table on the cover of
this prospectus supplement. A security rating on
any class of offered certificates addresses the
likelihood of the timely payment of interest on
that class of certificates and the ultimate
payment of principal thereof by the rated final
distribution date indicated on the cover of this
prospectus supplement.
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. A security rating
does not address the frequency or likelihood of
voluntary or involuntary prepayments of mortgage
loans, the corresponding effect on yield to
investors or the possibility that, as a result
of prepayments, investors in the Class X
Certificates may realize a lower than
anticipated yield or may fail to recover fully
their initial investment. See "Ratings" in this
prospectus supplement and "Risk Factors--Risks
Relating to the Certificates--Ratings on your
certificates do not guarantee that you will
receive payment under the pooling and servicing
agreement" in the prospectus for a further
explanation of the ratings, the limitations and
restrictions on the ratings and the conclusions
that may not be drawn from a rating.
Legal Investment............ The offered certificates will not be "mortgage
related securities" within the meaning of the
Secondary Mortgage Market Enhancement Act of
1984. As a result, the appropriate
characterization of the offered certificates
under various legal investment restrictions, and
thus the ability of
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investors subject to these restrictions to
purchase the offered certificates, may be
subject to significant interpretative
uncertainties.
You should consult your own legal advisors to
determine whether and to what extent the offered
certificates constitute legal investments for
you. See "Legal Investment Considerations" in
this prospectus supplement and "Legal
Investment" in the prospectus.
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<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 8 of the prospectus.
RISK FACTORS RELATING TO THE CERTIFICATES
LACK OF A SECONDARY MARKET FOR THE CERTIFICATES MAY MAKE IT DIFFICULT FOR
YOU TO RESELL YOUR CERTIFICATES AT ALL OR AT AN ATTRACTIVE PRICE. 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. See
"Risk Factors--Risks Relating to the Certificates--Lack of a secondary market
for the certificates may make it difficult for you to resell your certificates
at all or at an attractive price" in the prospectus.
THE CERTIFICATES ARE SUPPORTED BY LIMITED ASSETS. If the distributable
amount is insufficient to make payments on your certificates in accordance with
the priority of payments and the subordination arrangements described in this
prospectus supplement, no other assets will be available to you for payment of
the deficiency.
The distributable amount will come primarily from collections on the
mortgage loans. 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. Accordingly, distributions on the certificates will depend upon
the borrowers' abilities to repay the mortgage loans. Factors that affect a
borrower's ability to repay a mortgage loan include:
o the net cash flow of the related mortgaged property; and
o the market value of the related mortgaged property or the ability of the
related borrower to refinance the mortgaged property at maturity of the
mortgage loan or upon the acceleration of maturity of the mortgage loan
following an event of default.
Delinquencies and defaults on the mortgage loans may significantly delay the
receipt of distributions by you on your certificates, unless advances of
scheduled payments of interest and/or principal are made by the servicer, the
trustee or the fiscal agent to cover delinquent payments or the subordination
of another class of certificates fully offsets the effects of any delinquency
or default. For a more detailed description of factors that may affect the
borrowers' abilities to repay the mortgage loans, see "--Risk Factors Relating
to the Mortgage Loans" below and "Risk Factors--Risks Relating to the Mortgage
Loans" and "Description of the Trust Funds--Mortgage Loans" in the prospectus.
The rate and timing of delinquencies or defaults on the mortgage loans
will affect the following yield and payment characteristics of the
certificates:
o the aggregate amount of distributions on the certificates;
o the yields to maturity of the certificates;
o the rates of principal payments on the certificates; and
o the weighted average lives of the certificates.
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.
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THE YIELD ON YOUR CERTIFICATE WILL DEPEND UPON ITS PASS-THROUGH RATE, THE
PRICE YOU PAY FOR YOUR CERTIFICATE, THE RATE AND TIMING OF COLLECTION AND LOSS
ON THE MORTGAGE LOANS AND THE PAYMENT PRIORITY OF YOUR CERTIFICATES. The yield
on your certificate will be affected by:
o the pass-through rate in effect from time to time for your certificate;
o the price paid for your certificate and, if the price was other than
par, the rate and timing of principal payments (including voluntary and
involuntary principal prepayments, repurchases as a result of breaches of
a seller's representations and warranties and delinquent payments);
o losses and shortfalls on the mortgage loans and some types of expense
losses of the trust fund; and
o the extent to which principal payments are made or losses are allocated
on any distribution date in reduction of the certificate balance or
notional amount of the class to which your certificate belongs or in
reduction of amounts distributable thereon.
WE CANNOT PREDICT THE YIELD ON ANY CLASS OF CERTIFICATES AND DO NOT MAKE
ANY REPRESENTATIONS OR WARRANTIES REGARDING THE YIELD ON ANY CLASS OF
CERTIFICATES. See "Description of the Certificates--
Distributions--Application of Available Distribution Amount" and
"--Distributions--Principal Distribution Amount" and "Yield and Maturity
Considerations--Yield and Prepayment Considerations" in this prospectus
supplement.
THE RATES OF PREPAYMENT AND REPURCHASES OF THE MORTGAGE LOANS IN THE POOL
MAY ADVERSELY AFFECT THE YIELD ON YOUR INVESTMENT. 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,
including 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.
If you purchase your certificates at a discount, you should consider the
risk that a slower than anticipated rate of principal payments on the mortgage
loans in the pool will result in an actual yield that is lower than your
expected yield. Conversely, if you purchase your certificates at a premium, you
should consider the risk that a faster than anticipated rate of principal
payments on the mortgage loans in the pool will result in an actual yield that
is lower than your expected yield. Insofar as your initial investment in any
certificate is repaid, you may not be able to reinvest your initial investment
in an alternative investment with a yield comparable to the yield on your
certificates.
The investment performance of your certificates may vary materially and
adversely from your investment expectations due to voluntary or involuntary
prepayments on the mortgage loans 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 certificates.
The rate at which voluntary prepayments occur on the mortgage loans will
be affected by a variety of factors, including:
o the terms of the mortgage loans;
o the length of any prepayment lockout period;
o the level of prevailing interest rates;
o the availability of mortgage credit;
o any applicable yield maintenance charges;
o the occurrence of casualties or natural disasters; and
o economic, demographic, tax or legal factors.
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<PAGE>
Voluntary prepayments under some of the mortgage loans require payment of a
yield maintenance charge. See "--Enforcement of prepayment restrictions will
generally result in a slower rate of prepayment but may not be effective in all
circumstances to protect the lender's yield" below and "Description of the
Mortgage Pool--Yield Maintenance, Prepayment and Lockout Provisions" in this
prospectus supplement. Nevertheless, we cannot assure you that the related
borrowers will refrain from prepaying their mortgage loans due to the existence
of a yield maintenance charge.
In addition, if a seller repurchases any mortgage loan from the trust fund
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
yield maintenance charge premium will be payable. A repurchase by a seller may,
therefore, adversely affect the yield to maturity on your certificates.
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.
WE CANNOT PREDICT THE ACTUAL RATE OF PREPAYMENT OF PRINCIPAL OF THE
MORTGAGE LOANS IN THE POOL AND MAKE NO REPRESENTATION OR WARRANTY WITH RESPECT
TO THAT RATE OF PREPAYMENT. IN DECIDING WHETHER TO PURCHASE ANY CERTIFICATES,
YOU SHOULD MAKE AN INDEPENDENT DECISION AS TO THE APPROPRIATE PREPAYMENT
ASSUMPTION TO BE USED.
IF YOU PURCHASE CLASS X CERTIFICATES, YOUR YIELD TO MATURITY WILL BE
EXTREMELY SENSITIVE TO THE RATE AND TIMING OF PRINCIPAL PAYMENTS, INCLUDING
PREPAYMENTS, AND PRINCIPAL LOSSES WITH RESPECT TO THE MORTGAGE LOANS. YOU
SHOULD FULLY CONSIDER THE ASSOCIATED RISKS, INCLUDING THE RISK THAT A RAPID
RATE OF PRINCIPAL PAYMENTS AND/OR PRINCIPAL LOSSES ON THE MORTGAGE POOL COULD
RESULT IN FAILURE TO FULLY RECOUP YOUR INITIAL INVESTMENT IN THE CLASS X
CERTIFICATES. FOR ADDITIONAL INFORMATION REGARDING THE YIELD ON CLASS X
CERTIFICATES, YOU SHOULD ALSO REVIEW THE SECTIONS IN THIS PROSPECTUS SUPPLEMENT
TITLED "DESCRIPTION OF THE MORTGAGE POOL," "DESCRIPTION OF THE
CERTIFICATES--DISTRIBUTIONS" AND "--SUBORDINATION; ALLOCATION OF LOSSES,
SHORTFALLS AND EXPENSES" AND "YIELD AND MATURITY CONSIDERATIONS."
ENFORCEMENT OF PREPAYMENT RESTRICTIONS WILL GENERALLY RESULT IN A SLOWER
RATE OF PREPAYMENT BUT MAY NOT BE EFFECTIVE IN ALL CIRCUMSTANCES TO PROTECT THE
LENDER'S YIELD. Each mortgage loan restricts voluntary prepayments in one or
more of the following ways:
o by prohibiting any prepayments for a specified period of time, known as
a lockout period, generally not less than three to five years after the
date of origination of that mortgage loan and often extending throughout
the term of that mortgage loan until a date which is six months or less
prior to its maturity; or
o by requiring that any principal prepayment made during a specified
period of time, known as a yield maintenance period, after the date of
origination of that mortgage loan or, in the case of a mortgage loan also
subject to a lockout period, after the date of expiration of that lockout
period be accompanied by a yield maintenance charge.
The existence of yield maintenance charges generally will result in
prepayments of the mortgage loans in the pool occurring at a slower rate than
would have been the case if the borrowers were not required to pay that
additional amount. However, yield maintenance charges may not be effective in
all circumstances to protect the lender's yield. For example:
o in some circumstances, including without limitation markedly low
interest rate environments, the terms of refinancing or sale may be so
attractive that borrowers will prepay their mortgage loans notwithstanding
the obligation to pay yield maintenance charges;
o yield maintenance charges may be unenforceable under state or federal
law, including federal bankruptcy law, in some cases, particularly if they
are required to be paid following a default; or
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o state or federal laws, including federal bankruptcy law, may limit the
amount that may be collected from a borrower.
We cannot predict the actual rate of prepayment of principal on the
mortgage loans. Even if the requirement to pay a yield maintenance charge
following default is enforceable, the foreclosure proceeds received with
respect to a defaulted mortgage loan may be insufficient to make the required
payment. In addition, a yield maintenance charge or prepayment premium
generally will not be required for prepayments in connection with a casualty or
condemnation. For a description of yield maintenance charges, see "Description
of the Mortgage Pool--Yield Maintenance, Prepayment and Lockout Provisions" in
this prospectus supplement.
CHANGES IN CONCENTRATIONS IN THE TYPES OF PROPERTIES SECURING THE MORTGAGE
LOANS IN THE POOL MAY OCCUR AS A RESULT OF PREPAYMENTS WHICH MAY AFFECT THE
YIELD ON YOUR INVESTMENT. To the extent that any borrower pays down the
principal of a mortgage loan, including payments made at maturity, the
remaining mortgage loans in the pool 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.
THE TRUST MAY BECOME LIABLE FOR THE COSTS OF ENVIRONMENTAL CLEAN-UP. A
"Phase I" 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 some cases, the environmental consultant identified a
condition or circumstance:
o which was remediated or for which an escrow for remediation costs has
been established;
o for which an entity other than the related borrower is responsible
either for remediation or for paying the cost of remediation;
o 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 industry-wide practices; and/or
o for which the related lender or borrower 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 could lead to exposure to lead-based paint and the related
hazards to pregnant women and young children. Property owners may be liable for
tenant injuries from exposure to lead-based paint under federal and state laws
that impose affirmative discovery and remediation obligations on owners of
multifamily housing containing lead-based paint. In those cases where the
environmental assessments revealed the existence of lead-based paint at
multifamily properties and recommended an operations and maintenance program,
the borrowers are obligated to implement operations and maintenance programs.
The pooling and servicing agreement requires the special servicer to
obtain an environmental site assessment of a mortgaged property securing a
defaulted mortgage loan prior to acquiring title to the mortgaged property or
assuming its operation. This restriction may delay enforcement of the security
for the related mortgage note and will interfere with the ability of the
servicer or special servicer to foreclose on a mortgaged property if a
satisfactory environmental site assessment is not obtained or if required
remedial action is not taken. This prohibition is meant to decrease the
likelihood that the trust 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 from liability for an environmental condition.
For additional information regarding environmental risks associated with
mortgaged properties, you should also review the section in this prospectus
supplement titled "Servicing of the Mortgage Loans--Realization Upon Defaulted
Mortgage Loans" and the sections in the prospectus titled "Risk Factors--Risks
Relating to the Mortgage Loans--Owners and operators of a mortgaged property
and mortgage lenders may become liable for the costs of environmental cleanup"
and "Legal Aspects of Mortgage Loans--Environmental Risks."
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A TAX MAY BE IMPOSED ON THE TRUST IF THE TRUST ACQUIRES A MORTGAGED
PROPERTY SUBSEQUENT TO A DEFAULT WHICH WILL REDUCE THE NET PROCEEDS AVAILABLE
TO YOU. If the trust 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 REO property. Any "net income from
foreclosure property" arising from that manner of operation and management,
other than qualifying "rents from real property," as defined in Section 856(d)
of the Internal Revenue Code, will subject the trust to federal and possibly
state or local tax on income derived from that source at the highest marginal
corporate tax rate, currently 35%, and in some cases may subject the trust to a
"prohibited transaction" tax on any net income from foreclosure property at a
rate of 100%. This tax will reduce net proceeds available for distribution to
you and to other certificateholders. The trust generally will be permitted to
receive taxable "net income from foreclosure property" if (a) the special
servicer determines that the net after-tax recovery to the trust from operating
the property would be greater than it would be if the related REO property were
leased to a third party at a fixed rental so as to produce qualifying "rents
from real property," or (b) the property could not reasonably be so leased.
YOU HAVE VERY LIMITED RIGHTS TO PARTICIPATE IN DECISIONS REGARDING THE
TRUST. Your certificates generally do not entitle you to vote, except with
respect to required consents to some types of amendments to the pooling and
servicing agreement and, if the conditions specified in the pooling and
servicing agreement are met, with respect to votes 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
because the pooling and servicing agreement provides that decisions are
generally made by the servicer, the trustee or the special servicer, as
applicable. However, the controlling class will have the right to select the
operating adviser, who in turn will have the right to replace the special
servicer under the circumstances described under "Servicing of the Mortgage
Loans--Termination of the Special Servicer" in this prospectus supplement.
Any decision made by one of those parties in respect of the trust, even
if, as determined by that party in its good faith and reasonable judgment to be
in your best interest, may be contrary to the decision that would have been
made by you and may adversely affect your interests.
IF THE SERVICER AND/OR SPECIAL SERVICER PURCHASE ALL OR A PORTION OF THE
CERTIFICATES, THE SERVICER AND/OR SPECIAL SERVICER MAY BE SUBJECT TO A CONFLICT
OF INTEREST. The servicer, the special servicer or one or more of their
respective affiliates may purchase all or a portion of the certificates. If the
servicer and/or special servicer purchase all or a portion of the certificates,
the servicer and/or special servicer may be subject to a conflict of interest
because it would have an economic interest in the trust that is different from
that of holders of other classes of certificates. However, the pooling and
servicing agreement requires the servicer and the 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 of either.
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 the
circumstances described under "Servicing of the Mortgage Loans--Termination of
the Special Servicer" in this prospectus supplement. At any given time, the
operating adviser will be controlled generally by the holders of the
controlling class, and those 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
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
may acquire some of the most subordinated certificates (including those of the
initial controlling class). Under those circumstances, the special servicer
itself may have interests that conflict with the interests of the other holders
of the certificates. It is anticipated that the special servicer will be the
initial operating adviser.
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For additional information regarding the obligations of the servicer and
special servicer, you should also review the section in this prospectus
supplement titled "Servicing of the Mortgage Loans."
THE UNDERWRITERS MAY BE SUBJECT TO A CONFLICT OF INTEREST. Each
underwriter is an affiliate of a mortgage loan seller and may be subject to
conflicts of interest arising from the related mortgage loan seller's desire to
consummate a sale of its mortgage loans to the trust.
THE PROPERTY MANAGERS MAY BE SUBJECT TO A CONFLICT OF INTEREST.
Substantially all of the property managers for the mortgaged properties (or
their affiliates) manage additional properties, including properties that may
compete with the mortgaged properties. Affiliates of the managers, and some 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 those mortgaged properties.
IF YOU HOLD SUBORDINATE CERTIFICATES, THE SEQUENTIAL PAY AND SUBORDINATION
FEATURES OF THESE CERTIFICATES MAY RESULT IN DELAYS AND REDUCTIONS IN PAYMENTS
TO YOU. 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 the 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, and solely with respect to interest losses, the Class X
Certificates, pro rata, in each case reducing principal and/or interest
otherwise payable thereon. If losses on the mortgage loans exceed the aggregate
certificate balance of the classes of certificates subordinated to a particular
class, that class will suffer a loss equal to the full amount of that excess
(up to the outstanding certificate balance of that 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 those losses
are allocable to your certificates, your actual yield to maturity will be lower
than your assumed yield. Under some extreme scenarios, your yield could be
negative. In general, the earlier a loss borne by your certificates occurs, the
greater the effect on your yield to maturity.
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 certificates or to the
reduction of the related certificate balance in connection with the allocation
of losses, shortfalls or expenses which may remain unreimbursed. Any delay or
reduction described in the preceding sentence will adversely affect the yield
to maturity of one or more classes of certificates. See "Description of the
Certificates--Distributions--Application of Available Distribution Amount" and
"Description of the Certificates--Subordination; Allocation of Losses,
Shortfalls and Expenses" in this prospectus supplement for more information.
COMPENSATION FOR SERVICING ACTIVITIES MAY LEAD TO SHORTFALLS OR LOSSES
BEING ALLOCATED TO ONE OR MORE CLASSES OF CERTIFICATES. To the extent described
under "Servicing of the Mortgage Loans--Servicing and Other Compensation and
Payment of Expenses" in this prospectus supplement, the servicer, the trustee
or the fiscal agent, as applicable, will be entitled to receive interest on
unreimbursed advances of scheduled interest and/or principal and servicing
advances on the mortgage loans. This interest will generally accrue from the
date on which the related advance is made or incurred through the date of
reimbursement. In addition, under some 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.
THE INABILITY OF COMPUTERIZED SYSTEMS TO ACCURATELY PROCESS DATE CHANGES
COULD DISRUPT COLLECTIONS ON THE MORTGAGE LOANS OR DISTRIBUTION OF THOSE
COLLECTIONS TO THE CERTIFICATEHOLDERS. The inability of computerized systems
to accurately process date changes, including the transition from the year 1999
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to the year 2000, may disrupt the collection of payments on the mortgage loans,
the servicing of the mortgage loans and the performance of the related duties
by the servicer, the special servicer, the trustee, the paying agent, The
Depository Trust Company, the borrowers and other third parties. If such a
computer problem arises, the resulting disruptions in the collection or
distribution of receipts on the mortgage loans could materially adversely
affect your investment.
RISK FACTORS RELATING TO THE MORTGAGE LOANS
ALL OF THE MORTGAGE LOANS IN THE POOL ARE NON-RECOURSE LOANS. The mortgage
loans in the pool are not an obligation of, or insured or guaranteed by, any
governmental entity, or private mortgage insurer.
Each mortgage loan in the pool is a non-recourse loan which generally
means that, in the event of a default under the mortgage loan, other than a
default resulting from fraud or other willful misconduct, recourse may be had
only against the specific properties and other assets that have been pledged to
secure the mortgage loan. Consequently, payment on each mortgage loan prior to
maturity is dependent primarily on the income from, and the value of, the
related mortgaged property. Moreover, even if a mortgage loan provides for
recourse to a borrower or its affiliates, there can be no assurance that the
trust ultimately could collect sums due under the mortgage loan. You should
consider all of the mortgage loans in the pool to be non-recourse loans.
OFFICE PROPERTIES HAVE PARTICULAR RISKS. 20 of the mortgaged properties,
for which the related mortgage loans (or allocated principal portion thereof)
constitute 25.1% of the initial pool balance, are office properties. These
types of properties are exposed to certain unique risks. See "Risk
Factors--Risks Relating to the Mortgage Loans--Office properties have
particular risks" in the prospectus.
In addition to risks generally associated with real estate, office
properties are also affected significantly by:
o adverse changes in population and employment growth;
o the quality of the office property's tenants;
o the physical attributes of the building;
o local competitive conditions, including the supply of office space or
the existence or construction of new competitive office buildings;
o the quality and management philosophy of management;
o the attractiveness of the properties to tenants and their customers or
clients;
o the attractiveness of the surrounding neighborhood; and
o the need to make major repairs or improvements to the property to
satisfy the needs of major tenants.
Office properties that are not equipped to accommodate the needs of modern
business may become functionally obsolete and thus non-competitive. In
addition, office properties may be adversely affected by an economic decline in
the businesses operated by their tenants. A decline of this sort may result in
one or more significant tenants ceasing operations at the related locations,
which may occur on account of:
o a tenant's voluntary decision not to renew a lease;
o bankruptcy or insolvency of these tenants; or
o these tenants' general cessation of business activities or for other
reasons.
The risk of an economic decline as described above is greater if revenue
is dependent on a single tenant or if there is a significant concentration of
tenants in a particular business or industry.
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RETAIL PROPERTIES HAVE PARTICULAR RISKS. 45 of the mortgaged properties,
for which the related mortgage loans (or allocated principal portion thereof)
constitute 20.7% of the initial pool balance, are retail properties. These
types of properties are exposed to certain unique risks. See "Risk
Factors--Risks Relating to the Mortgage Loans--Mortgage loans secured by retail
properties may be adversely affected by changes in consumer spending patterns,
alternative forms of retailing and changes in tenants occupying the retail
properties" in the prospectus.
In addition to risks generally associated with real estate, retail
properties are also affected significantly by factors like the following:
o adverse changes in consumer spending patterns;
o local competitive conditions, including the supply of retail space or
the existence or construction of new competitive shopping centers or
shopping malls;
o alternative forms of retailing, which reduce the need for retail space
by retail companies, including
- direct mail,
- television shopping networks, and
- Internet based sales;
o the quality and management philosophy of management;
o the attractiveness of the properties to tenants and their customers;
o the attractiveness of the surrounding neighborhood;
o the public perception of the safety of customers, at shopping malls and
shopping centers, for example; and
o the need to make major repairs or improvements to satisfy the needs of
major tenants.
In some cases, rents on retail properties are linked to a percentage of
gross sales generated by the tenant's business. These arrangements cause the
value of the retail 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 these 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.
Anchor or 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 the related property. Retail properties may be adversely
affected if an anchor or other significant tenant ceases operations at relevant
locations, which may occur on account of:
o a decision not to renew a lease;
o bankruptcy or insolvency of the tenant; or
o the tenant's general cessation of business activities or for other
reasons.
In addition, some tenants at retail properties may be entitled to
terminate their leases if an anchor tenant ceases operations at the related
property.
MULTIFAMILY PROPERTIES HAVE PARTICULAR RISKS. 37 of the mortgaged
properties, for which the related mortgage loans (or allocated principal
portion thereof) constitute 15.1% of the initial pool balance, are multifamily
properties. These types of properties are exposed to certain unique risks. See
"Risk Factors--Risks Relating to the Mortgage Loans--Some risks that affect
occupancy and rent levels of multifamily rental properties such as adverse
economic conditions, construction of additional housing, military base
closings, company relocations and rent control laws may affect the ability of
the borrower to meet its obligations under the mortgage loan" and "--Mortgage
lenders secured by
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cooperatively owned apartment buildings are subject to the risk that
tenant-shareholders of a cooperatively owned apartment building will be unable
to make the required maintenance payments" in the prospectus.
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:
o construction of additional housing units in the surrounding area;
o the reputation of rental property;
o the services provided at the rental property;
o the deterioration of the surrounding neighborhood;
o local military base closings;
o company relocations and closings; or
o 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, for reasons including the foregoing. In addition,
favorable 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, some costs 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 the
related properties.
Some 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 those 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 the affected multifamily properties. Any limitations on a
borrower's ability to raise property rents may impair that 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.
Some multifamily rental properties are eligible to receive low-income
housing tax credits pursuant to Section 42 of the Internal Revenue Code.
However, rent limitations associated therewith may adversely affect the ability
of the applicable borrowers to increase rents to maintain the related mortgaged
properties in proper condition during periods of rapid inflation or declining
market value of the related mortgaged properties. In addition, the income
restrictions on tenants imposed by Section 42 of the Internal Revenue Code may
reduce the number of eligible tenants in the related
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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 multifamily rental properties eligible to receive low-income
housing tax credits pursuant to Section 42 of the Internal Revenue Code and
other multifamily rental properties in the same area to be a sufficient
economic incentive to reside at property eligible to receive tax credits
pursuant to Section 42 of the Internal Revenue Code, 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.
Some multifamily rental properties are believed to have tenants eligible
for rental subsidy payments under federal housing assistance payment programs,
including Section 8 of United States Housing Act of 1937. Under that program,
administered by the Department of Housing and Urban Development, a property
must satisfy 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.
INDUSTRIAL PROPERTIES HAVE PARTICULAR RISKS. 44 of the mortgaged
properties, for which the related mortgage loans (or allocated principal
portion thereof) constitute 14.1% of the initial pool balance, are industrial
properties. These types of properties are exposed to certain unique risks. See
"Description of the Trust Funds--Mortgage Loans--Mortgage Loans Secured by
Industrial Properties" in the prospectus.
Significant factors that affect the value of industrial properties are:
o the quality of tenants;
o building design and adaptability; and
o the location of the property.
Industrial properties may be adversely affected by reduced demand for
industrial space occasioned by a decline in a particular industry segment
and/or by a general slow-down in the economy, and an industrial property that
suited the particular needs of its original tenant may be difficult to relet to
another tenant or may become functionally obsolete relative to newer
properties. Furthermore, industrial properties may be adversely affected by the
availability of labor sources or a change in the proximity of supply sources.
Because industrial properties frequently have a single tenant, any related
property is heavily dependent on the success of the tenant's business.
Aspects of building site, design and adaptability affect the value of an
industrial property. Site characteristics which are valuable to an industrial
property include ceiling heights, column spacing, number of bays and bay
depths, divisibility, floor loading capacities, truck turning radius and
overall functionality and accessibility. Nevertheless, site characteristics of
an industrial property suitable for one tenant may not be appropriate for other
potential tenants, which may make it difficult to relet the property.
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.
Further, industrial properties may be adversely affected by economic declines
in the industry segment of their tenants.
SELF-STORAGE FACILITIES HAVE PARTICULAR RISKS. 34 of the mortgaged
properties, for which the related mortgage loans (or allocated principal
portion thereof) constitute 10.5% of the initial pool balance, are self-storage
facilities. These types of properties are exposed to certain unique risks. See
"Risk Factors--Risks Relating to the Mortgage Loans--Self-storage properties
have particular risks" in the prospectus.
Self-storage properties are vulnerable to competition because they are
relatively quick and inexpensive to construct and break-even occupancy rates
are relatively low. In addition to competition, factors that affect the success
of a self-storage facility include:
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o location and visibility;
o building design;
o proximity to apartment complexes or commercial users;
o trends of apartment tenants in the area moving to single family homes;
o services provided, including security, privacy and accessibility;
o dependence upon business activities ancillary to renting units as a
source of income;
o age and appearance of the improvements; and
o quality of management.
Conversion of a self-storage facility to an alternate use generally would
require substantial capital expenditures because of their particular building
characteristics. If the operations of any of the self-storage mortgaged
properties becomes unprofitable as a result of decreased demand or competition,
or other factors so that the borrower is unable to meet its obligations on the
related mortgage loan, the liquidation value of that mortgaged property may be
substantially reduced because of its limited adaptability to other uses.
User privacy and ease of access to individual storage space may increase
environmental risks, although lease agreements generally prohibit users from
storing hazardous materials in their leased units. The environmental
assessments performed in connection with self-storage mortgaged properties did
not include an inspection of the contents of the self-storage units.
Accordingly, there can be no assurance that all of the units included in the
self-storage mortgaged properties are free from hazardous materials or will
remain so in the future.
HOTEL AND MOTEL PROPERTIES HAVE PARTICULAR RISKS. 9 of the mortgaged
properties, for which the related mortgage loans (or allocated principal
portion thereof) constitute 7.7% of the initial pool balance, are hotels or
motels. These types of properties are exposed to certain unique risks. See
"Risk Factors--Risks Relating to the Mortgage Loans--Hotel and motel properties
have particular risks" in the prospectus.
Hotel and motel properties are subject to operating risks common to the
lodging industry. These risks include, among other things:
o a high level of continuing capital expenditures to keep necessary
furniture, fixtures and equipment updated;
o competition from other hotels and motels;
o increases in operating costs, which increases may not necessarily in the
future be offset by increased room rates; and
o dependence on business and commercial travelers and tourism, increases
in energy costs and other expenses of travel and adverse effects of
general and local economic conditions.
These factors could adversely affect the related borrower's ability to
make payments on the related mortgage loans. Since limited service hotels and
motels are relatively quick and inexpensive to construct, an over-building of
hotels and motels could occur in any given region, which would likely adversely
affect occupancy and daily room rates. Further, because hotel and motel rooms
are generally rented for short periods of time, hotel and motel properties tend
to be more sensitive to adverse economic conditions and competition than many
other commercial properties. 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
revenues of some hotels and motels, particularly those located in regions whose
economies depend upon tourism, may be highly seasonal in nature.
A hotel or motel property may present additional risks as compared to
other commercial property types in that:
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o hotels and motels may be operated pursuant to franchise, management and
operating agreements that may be terminable by the franchisor, the manager
or the operator;
o the transferability of any operating, liquor and other licenses to the
entity acquiring the related hotel or motel, either through purchase or
foreclosure, is subject to local law requirements that typically prohibit
the transfer of those licenses;
o it may be difficult to terminate an ineffective operator of a hotel or
motel property subsequent to a foreclosure of the related property; and
o future occupancy rates may be adversely affected by, among other
factors, any negative perception of a hotel or motel based upon its
historical reputation.
HOTEL AND MOTEL PROPERTIES AFFILIATED WITH A FRANCHISE OR HOTEL MANAGEMENT
COMPANY HAVE PARTICULAR RISKS. 8 of the mortgaged properties, for which the
related mortgage loans (or allocated principal portion thereof) constitute 5.5%
of the initial pool balance, are hotel or motel properties operated as
franchises of national hotel or motel chains or managed by a hotel or motel
management company. The performance of a hotel or motel property operated as a
franchise or by a hotel or motel management company depends in part on:
o the continued existence and financial strength of the franchisor or
hotel or motel management company;
o the public perception of the franchise or hotel or motel chain service
mark; and
o the duration of the franchise license or management agreement.
Hotel and motel properties may be operated pursuant to franchise
agreements. The continuation of franchises is typically subject to specified
operating standards and other terms and conditions. The franchisor periodically
inspects its licensed properties to confirm adherence to its operating
standards. The failure of the hotel or motel property to maintain these
standards or adhere to other terms and conditions could result in the loss or
cancellation of the franchise license. It is possible that the franchisor could
condition the continuation of a franchise license on the completion of capital
improvements or the making of capital expenditures that the related borrower
determines are too expensive or are otherwise unwarranted in light of general
economic conditions or the operating results or prospects of the affected
hotels or motels. In that event, the related borrower may elect to allow the
franchise license to lapse. In any case, if the franchise is terminated, the
related borrower may seek to obtain a suitable replacement franchise or to
operate the related hotel or motel property independently of a franchise
license. The loss of a franchise license could have a material adverse effect
upon the operations or the underlying value of the hotel or motel covered by
the franchise because of the loss of associated name recognition, marketing
support and centralized reservation systems provided by the franchisor.
The transferability of franchise license agreements may be restricted. In
the event of a foreclosure, the trustee (or servicer or special servicer) may
not have the right to use the franchise license without the franchisor's
consent. Conversely, in the case of some mortgage loans, the trustee (or
servicer or special servicer) may be unable to remove a franchisor or a hotel
or motel management company that it desires to replace following a foreclosure.
MANUFACTURED HOUSING COMMUNITY PROPERTIES HAVE PARTICULAR RISKS. 9 of the
mortgaged properties, for which the related mortgage loans (or allocated
principal portion thereof) constitute 3.1% of the initial pool balance, are
parcels of land underlying manufactured housing community properties, together
with certain improvements thereon, in which the tenants rent space for their
individually-owned manufactured homes. These types of properties are exposed to
certain unique risks. See "Risk Factors--Risks Relating to the Mortgage
Loans--Risks Particular to Manufactured Housing Community Properties and
Recreational Vehicle Parks" in the prospectus.
The successful operation of a manufactured housing community will
generally depend upon the number of competing manufactured housing communities
in the local market, as well as upon other factors, including its age,
appearance, reputation, management and the types of facilities and services it
provides.
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Manufactured housing communities also compete against alternative forms of
residential housing, including multifamily rental properties,
cooperatively-owned apartment buildings, condominium complexes and
single-family residential developments.
Manufactured housing community properties are "special purpose" properties
that cannot be readily converted to general residential, retail or office use.
Thus, if the operation of a manufactured housing community becomes unprofitable
due to competition, age of the improvements or other factors such that the
borrower becomes unable to meet its obligations on the related mortgage loan,
the liquidation value of the mortgaged property may be substantially less,
relative to the amount owing on the related mortgage loan, than would be the
case if the mortgaged property were readily adaptable to other uses.
THEATER PROPERTIES HAVE PARTICULAR RISKS. 4 of the mortgaged properties,
for which the related mortgage loans (or allocated principal portion thereof)
constitute 2.9% of the initial pool balance, are theater properties. These
types of properties are exposed to certain unique risks.
Significant factors determining the value of a theater property include:
o the strength and experience of the operator;
o its ability to secure film license agreements for first-run movies; and
o 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 will also impact property
value. These physical attributes include:
o number of screens;
o the size of individual auditoriums within the theater;
o quality and modernity of sound and projection systems; and
o quality and comfort of individual theaters and common areas (including
box office, lobby and concessions area).
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. These competitive distribution
channels include:
o cable and satellite television;
o videotape and videodisk sales and rentals; and
o electronic distribution via the Internet.
REPAYMENT OF THE MORTGAGE LOANS IN THE POOL MAY DEPEND ON THE SUCCESSFUL
OPERATION OF THE MORTGAGED PROPERTIES. The mortgaged properties consist
entirely of income-producing real estate. Lending on the security of commercial
and multifamily properties is generally viewed as riskier than lending on the
security of single-family residential real estate. This is because commercial
and multifamily real estate lending typically involves larger loans than
single-family lending and because repayment is dependent on the successful
operation of the related real estate project, the tenants' businesses and their
creditworthiness.
The ability of a mortgaged property to generate sufficient net operating
income to pay debt service on the related mortgage loan may be adversely
affected by a number of factors, including:
o the age, design and construction quality of the property;
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o perceptions regarding the safety, convenience and attractiveness of the
property;
o the ability to convert an unsuccessful property to an alternative use;
o the proximity and attractiveness of competing properties;
o new construction in the same real estate market as the property;
o the adequacy of the property's management and maintenance;
o an increase in operating expenses for the property;
o an increase in the capital expenditures needed to maintain the property
or make improvements;
o a decline in the financial condition of a major tenant;
o an increase in vacancy rates;
o rent control laws;
o a decline in rental rates as leases are renewed or replaced; and
o number and diversity of tenants.
Other factors that may adversely affect the ability of a mortgaged
property to generate net cash flow are more general in nature, including
without limitation:
o national, regional or local economic conditions, including plant
closings, industry slowdowns, unemployment rates and weakness in
industries;
o local real estate conditions, including without limitation, an
oversupply of similar space;
o demographic factors;
o customer tastes and preferences; and
o retroactive changes in building codes.
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" in this prospectus supplement) 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 and severity 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 net cash flow generated by
a mortgaged property will be influenced by many of the foregoing factors, as
well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o the rate at which new rentals occur;
o the percentage of total property expenses in relation to revenues;
o the ratio of fixed operating expenses to those that vary with revenues;
and
o the level of capital expenditures required to maintain the property and
to maintain or replace tenants.
Mortgaged properties with short-term or less creditworthy sources of
revenue and/or relatively high operating costs, including without limitation
health-care facilities and hotel or motel properties, can be expected to have
more volatile cash flows than mortgaged properties with medium to long-term
leases from creditworthy tenants and/or relatively low operating costs. A
decline in the real estate market will tend to have a more immediate effect on
the net cash flow of those mortgaged
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properties with short-term revenue sources than on mortgaged properties with
more sources of revenue and may lead to higher rates of delinquency or defaults
than would be experienced by those properties with medium to long-term leases
from creditworthy tenants.
THE PROPERTY VALUES OF THE MORTGAGED PROPERTIES MAY BE ADVERSELY AFFECTED
EVEN IF CURRENT OPERATING INCOME IS NOT. While the property values of the
mortgaged properties generally will depend upon the operating income they
generate, various factors may adversely affect the value of the mortgaged
properties without affecting the properties' current net operating income.
These factors include, among others:
o changes in governmental regulations;
o fiscal policy;
o zoning or tax laws;
o potential environmental legislation or liabilities or other legal
liabilities;
o the availability of refinancing;
o changes in interest rate levels;
o convertability of any property to an alternative use;
o the proximity and attractiveness of competing properties; and
o new construction in the same real estate market as any property.
A decrease in the value of a mortgaged property could adversely affect the
liquidation value of that mortgaged property and reduce the amount that can be
realized if an event of default occurs on the related mortgage loan.
MORTGAGE LOANS MAY HAVE BALLOON PAYMENTS WHICH INVOLVE A GREATER RISK TO
THE LENDER BECAUSE THE ABILITY OF THE BORROWER TO MAKE THE BALLOON PAYMENT
DEPENDS UPON ITS ABILITY TO REFINANCE THE LOAN OR SELL THE RELATED MORTGAGED
PROPERTY. 158 of the mortgage loans in the pool, representing approximately
91.9% of the initial pool balance, do not fully amortize over their stated term
to maturity and will have substantial payments of principal due at maturity, or
in the case of the ARD Loans on their Anticipated Repayment Dates, each as
defined in the Glossary to this prospectus supplement, unless previously
prepaid. 4 mortgage loans, representing approximately 14.4% of the initial pool
balance, have an initial interest only period during which time they do not
require the payment of principal.
Loans that require balloon payments involve a greater risk to the lender
than fully amortizing loans because the ability of a borrower to make a balloon
payment will depend on its ability either:
o to refinance the mortgage loan; or
o to sell the related mortgaged property.
The ability of a borrower to accomplish either of these goals will be
affected by all of the factors described in this prospectus supplement
affecting property value and cash flow, as well as a number of other factors at
the time of attempted sale or refinancing, including:
o prevailing economic conditions;
o the level of available mortgage rates;
o the availability of credit for properties of the type being financed at
the time of sale or refinancing; and
o changes in governmental regulations, zoning and tax laws.
In order to maximize recoveries on defaulted mortgage loans, the pooling
and servicing agreement authorizes the servicer or the special servicer to
extend and modify mortgage loans that are in material default or as to which a
payment default, including the failure to make a balloon payment,
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is imminent, subject to the limitations described under "Servicing of the
Mortgage Loans--Modifications, Waivers and Amendments" in this prospectus
supplement. We cannot assure you that any extension or modification will
increase the present value of recoveries in a given case. Any delay in
collection of a balloon payment that would otherwise be distributable in
respect of a class of offered certificates, whether the delay is due to
borrower default or to modification of the related mortgage loan by the
servicer or the special servicer, will likely extend the weighted average life
of that class of offered certificates. For more information, you should also
review "Yield and Maturity Considerations" in this prospectus supplement and in
the prospectus.
THE SUCCESS OF EACH MORTGAGED PROPERTY DEPENDS ON THE PERFORMANCE AND
VIABILITY OF THE PROPERTY MANAGER. Each mortgaged property is managed by a
property manager or by the borrower itself. In many cases the property manager
is an affiliate of the borrower. The successful operation of real estate is
largely dependent on the performance and viability of the property manager. The
property manager is responsible for responding to changes in the local market,
planning and implementing the rental structure, including establishing rental
rates 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 overseeing
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.
We cannot give you any assurance regarding the performance of any property
manager or operator that is currently in place or that may be 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 their respective terms.
THE FILING OF BANKRUPTCY PETITIONS BY OR AGAINST BORROWERS MAY REDUCE OR
DELAY COLLECTIONS ON THE RELATED MORTGAGE LOANS. Under the federal 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:
o grant a debtor time to cure a payment default on a mortgage loan;
o reduce monthly payments due under a mortgage loan;
o change the rate of interest due on a mortgage loan;
o otherwise alter the mortgage loan's repayment schedule; or
o change other terms of the mortgage loan.
Additionally, the borrower's trustee or the borrower, as debtor in
possession, has special powers to avoid, subordinate or disallow debts. In some
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 federal 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 trust fund'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.
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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 some circumstances, the bankruptcy of a
general partner in a partnership may result in the dissolution of that
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 "Legal Aspects of
Mortgage Loans--Bankruptcy Laws," "--Due-on-Sale and Due-on-Encumbrance
Provisions" and "--Subordinate Financing" in the prospectus.
TENANT CONCENTRATION ENTAILS RISK BECAUSE A SINGLE TENANT'S OR A FEW
TENANTS' FINANCIAL CONDITION MAY ADVERSELY AFFECT THE NET CASH FLOW GENERATED
BY THE MORTGAGE POOL AS A WHOLE. In those cases where a mortgaged property is
leased to a single tenant, or is primarily leased to one or a small number of
major tenants, a deterioration in the financial condition or a change in the
plan of operations of that tenant can have a particularly significant effect on
the net cash flow generated by the mortgaged property. If any major tenant
defaults under or fails to renew its lease, the resulting adverse financial
effect on the operation of the mortgaged property will be substantially greater
than would otherwise be the case with respect to a property occupied by a large
number of less significant tenants.
29 of the mortgaged properties, for which the related mortgage loans (or
allocated principal portion thereof) constitute 13.3% of the initial pool
balance, are each leased to a single tenant.
In addition, retail, office or industrial properties also may be adversely
affected if there is a concentration of tenants in a particular business or
industry at any related property and that particular business or industry
declines.
These adverse financial effects could result in insufficient cash flow
received by a borrower with respect to a mortgaged property which could, in
turn, result in the inability of the borrower to make required payments on its
mortgage loan, pay for maintenance and other operating expenses, fund capital
improvements and pay other debtor obligations it may have.
TENANT BANKRUPTCY ENTAILS SPECIAL RISK. The bankruptcy or insolvency of a
major tenant, or a number of smaller tenants, at any particular mortgaged
property may adversely affect the income produced by the particular mortgaged
property.
Under the federal bankruptcy code, a tenant has the option of assuming or
rejecting an 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 unless the tenant has pledged collateral to secure the landlord's claim.
The claim would be limited to the unpaid rent reserved under the lease for the
periods prior to the bankruptcy petition, or earlier surrender of the leased
premises, which are unrelated to the rejection, plus the greater of (i) one
year's rent and (ii) 15% of the remaining reserved rent, not to exceed three
years' rent.
The bankruptcy or insolvency of a tenant could result in a substantial
delay in receipt by the landlord of the amount of its claim, as well as a
substantial delay in the ability of the landlord to relet the tenant's space.
In addition, depending on the assets of the bankrupt tenant, the full amount of
the landlord's claim for breach of the lease may never be ultimately paid.
SOME ADDITIONAL RISKS RELATING TO TENANTS. The mortgaged properties will
be affected by the expiration of leases and the ability of the respective
borrowers to renew the leases or relet the space on comparable terms. Most of
the mortgaged properties are in whole or in part occupied under leases that
expire during the respective terms of the related mortgage loans. Moreover, if
a tenant at any mortgaged property defaults in its lease obligations, or if a
tenant attempts to use a foreclosure by a lender to avoid paying above-market
rental payments notwithstanding its obligation to attorn to the lender, the
borrower may incur substantial costs and experience significant delays
associated with enforcing its rights and protecting its investment, potentially
including costs incurred in renovating and reletting the property.
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We cannot give you any assurance that tenants will renew leases upon
expiration or, in the case of renewal, whether the renewal rent will be equal
to the rent previously paid or, in the case of a commercial tenant, that it
will continue to operate 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 rent any space. 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.
PROPERTIES LEASED TO MULTIPLE TENANTS HAVE PARTICULAR RISKS. 182 mortgaged
properties, for which the related mortgage loans (or allocated principal
portion thereof) constitute 86.7% of the initial pool balance, are 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.
GROUND LEASES HAVE PARTICULAR RISKS. 11 mortgaged properties, for which
the related mortgage loans (or allocated principal portion thereof) constitute
8.8% of the initial pool balance, include leasehold interests under ground
leases in whole or in part.
Mortgage loans secured by leasehold interests under ground leases are
subject to some 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 is terminated upon a lease default, the lender will
lose its security. Generally, the related ground lease requires the lessor to
give the lender notice of lessee defaults and an opportunity to cure them,
permits the leasehold estate to be assigned to the lender or the purchaser at a
foreclosure sale, and contains other protective provisions typically included
in a "mortgageable" ground lease.
Upon the bankruptcy of a landlord or a tenant under a ground lease,
federal bankruptcy law allows the bankrupt entity to elect to continue or
terminate the ground lease. A tenant under a ground lease that has been
rejected by the bankrupt ground lessor has the right to remain in possession of
its leased premises under the rent reserved in the lease for the term,
including renewals, of the ground lease but is not entitled to enforce the
obligation of the ground lessor to provide any services required under the
ground lease. If a bankrupt tenant under a ground lease rejects the related
ground lease, the holder of a mortgage secured by the leasehold interest would
have the right to succeed to the ground lessee's position under the ground
lease only if the ground lessor had specifically granted that right to the
ground lessee. In the event of concurrent bankruptcy proceedings involving the
ground lessor and the ground lessee, the trust fund may be unable to enforce
the bankrupt ground lessee's obligation to refuse to treat a ground lease
rejected by a ground lessor as having been terminated. In those circumstances,
the ground lease could be terminated notwithstanding lender protection
provisions contained in the ground lease or in the mortgage. 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.
GEOGRAPHIC CONCENTRATION OF MORTGAGED PROPERTIES IN A PARTICULAR AREA
INCREASES THE EXPOSURE OF THE MORTGAGE POOL AS A WHOLE TO ADVERSE CONDITIONS IN
THAT AREA. A concentration of mortgaged properties in a particular state,
region or locale increases the exposure of the mortgage pool to adverse
conditions in that state, region or locale that may reduce the mortgaged
property's income and its liquidation value. Adverse conditions may include:
o general economic or demographic conditions in the state, region or
locale or adverse developments affecting an industry that is concentrated
in the state or region;
o real estate market conditions in the state or region;
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o state or local government regulations;
o natural disasters, including earthquakes, floods, tornadoes and
hurricanes, which may not be fully covered by insurance; and
o other factors that are beyond the control of the related borrower.
Some states or geographic regions may be more severely affected by the
above factors than other states or regions, and to the extent that there is a
concentration of mortgaged properties or borrowers in the state or region, the
impact on the trust may be more significant than would be the case if the
properties were more geographically diversified.
Mortgaged properties located in California, Texas, North Carolina, New
York and Florida, respectively, represent security for 75, 31, 4, 14 and 17
mortgaged properties, respectively, constituting approximately 34.5%, 10.0%,
9.1%, 7.2% and 5.9%, respectively, of the initial pool balance.
ABSENCE OR INADEQUACY OF INSURANCE COVERAGE AND THE GEOGRAPHIC
CONCENTRATION OF MORTGAGED PROPERTIES IN AREAS WITH A GREATER RISK OF NATURAL
DISASTERS MAY ADVERSELY AFFECT THE YIELD ON YOUR INVESTMENT. 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 (including earthquakes, hurricanes and floods). Some of these
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 those 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 reconstruction or major repairs or may materially increase their cost.
THE TRUST FUND'S ABILITY TO REALIZE UPON THE MORTGAGE LOANS MAY BE LIMITED
BY THE APPLICATION OF STATE LAWS. 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 those "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 these 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 some circumstances,
guarantors. In some circumstances, the lender may have a receiver appointed.
CONCENTRATIONS IN A MORTGAGE POOL OF LOANS WITH LARGER-THAN-AVERAGE
BALANCES CAN RESULT IN LOSSES THAT ARE MORE SEVERE, RELATIVE TO THE SIZE OF THE
POOL, THAN IF THE MORTGAGE LOAN BALANCES WERE MORE EVENLY DISTRIBUTED. Several
of the mortgage loans in the pool have cut-off date balances that are
substantially higher than the average cut-off date balance of the mortgage
loans, which is approximately $4,907,568.
The largest mortgage loan has a cut-off date balance of approximately
$58,500,000 and represents approximately 6.6% of the initial pool balance.
The ten largest mortgage loans have an aggregate cut-off date balance of
approximately $287,369,562 and represent, in the aggregate, approximately 32.4%
of the initial pool balance. See the table entitled "Ten Largest Mortgage
Loans" under "Description of the Mortgage Pool--Additional Mortgage Loan
Information" in this prospectus supplement and Annex B to this prospectus
supplement.
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IF THERE IS A HIGH CONCENTRATION OF LOANS TO RELATED BORROWERS, THE
FINANCIAL CONDITION OF THESE BORROWERS MAY HAVE A SIGNIFICANT IMPACT ON THE
MORTGAGE POOL. Some groups of mortgage loans in the pool consist of
non-cross-collateralized and non-cross-defaulted mortgage loans that have been
made to the same borrower or to separate borrowers with common principals.
If a mortgage pool has a high concentration of loans to related borrowers,
the financial difficulties of a borrower could have a greater impact on the
mortgage pool than would be the case if the borrower and its affiliates
represented a smaller proportion of the mortgage pool.
Mortgaged properties that are owned by a group of related borrowers are
likely to have common management. To the extent that mortgaged properties owned
by a group of related borrowers have common property 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 of those
properties, 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, including 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 that 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 of scheduled payments of principal and interest and servicing
advances through liquidation unless the servicer determines that those advances
will not be recoverable.
PRINCIPAL PAYMENTS ON ANY OF THE MORTGAGE LOANS MAY INCREASE THE YIELD
RISK ASSOCIATED WITH CHANGES IN CONCENTRATIONS OF THE MORTGAGE LOANS. 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.
MORTGAGE LOANS WITH CROSS-COLLATERALIZATION ARRANGEMENTS MAY BE
SUSCEPTIBLE TO "FRAUDULENT CONVEYANCE" RISK. 4 separate groups of mortgage
loans in the pool with an aggregate cut-off date balance of approximately
$44,525,690, representing approximately 5.0% of the initial pool balance,
provide for some form of cross-collateralization between the mortgage loans in
each group.
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.
The purpose of cross-collateralization arrangements is to reduce the risk
of default or ultimate loss as a result of the inability of a mortgaged
property to generate sufficient net cash flow to pay debt service on the
related mortgage loan. However, cross-collateralization arrangements involving
more than one borrower could be challenged as a fraudulent conveyance by
creditors of an insolvent borrower or its bankruptcy trustee. A challenge
related to fraudulent conveyance could eliminate or reduce the benefits of
cross-collateralization with respect to one or more groups of
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:
o 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 benefit of the other borrower;
and
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o Insolvency. The pledgor or transferor either 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, or intended to or believed
that it would incur debts that would be beyond its ability to pay as they
matured.
A BORROWER MAY BE MAINTAINING OTHER FINANCING THAT COULD REDUCE CASH FLOW
FROM THE RELATED PROPERTY AND INCREASE THE RISK OF BORROWER DEFAULT AND
BANKRUPTCY. Generally, the mortgage loans do not permit borrowers to incur
additional indebtedness secured by the mortgaged properties. All of the
mortgage loans, however, permit the related borrower to incur unsecured
indebtedness in the ordinary course of business. With respect to 4 mortgage
loans, representing approximately 4.2% of the initial pool balance, the related
borrower has incurred additional debt to an affiliate other than debt secured
by the mortgaged property, and which debt is subject to a subordination
agreement in favor of the lender. With respect to 5 mortgage loans,
representing approximately 2.2% of the initial pool balance, the borrower is
permitted to incur additional debt other than debt secured by the mortgaged
property without the consent of the lender. Where subordination agreements in
favor of the lender are required, each lender of existing or future
subordinated secured debt has entered or is required to enter into a
subordination and standstill agreement pursuant to which, among other
provisions, the subordinate lender has agreed to subordinate all payments due
under the related subordinate debt, including assignments of leases and rents,
to the payment obligations under the related mortgage loan, and the subordinate
lender has agreed that it will not take any action to enforce its rights under
the related subordinate mortgage until the related mortgage loan has been paid
in full, even if there is a default under the subordinate debt.
With respect to one mortgage loan, the pari passu loan (mortgage loan
number 25138 on Annex A), representing approximately 0.5% of the initial pool
balance, the related mortgaged property also secures a separate loan, the
related trust fund mortgage loan, with an original principal balance of
$20,900,000. The related trust fund mortgage loan is secured by a first
mortgage lien on the mortgaged property that is pari passu--that is ranks
equally in proportion to its share of the total mortgage debt secured by the
mortgaged property--with the lien of the mortgage securing the pari passu loan.
The related trust fund mortgage loan is an asset of the trust fund that issued
our Commercial Mortgage Pass-Through Certificates, Series 1999-C1, the related
trust fund. The payment and other terms of the related trust fund mortgage loan
are substantially similar to those of the pari passu loan, however, the trustee
of the related trust fund, as holder of the related trust fund mortgage loan,
has the exclusive right to exercise remedies with respect to the pari passu
loan, including without limitation, seeking foreclosure.
The existence of additional debt, even if subordinated, may increase the
riskiness of a mortgage loan for several reasons, including the following:
o Reduced Cash Flow. Additional debt service requirements may reduce cash
available for property maintenance, thereby reducing the value of the
mortgaged property.
o Refinancing. A borrower with additional debt outstanding when a
mortgage loan matures may have more difficulty refinancing the mortgage
loan and, if the mortgage loan requires the borrower to make a significant
payment of principal at maturity, the borrower could be at risk of
defaulting on that payment.
o Bankruptcy Risks. Additional debt increases the risk that the borrower
could become insolvent or subject to bankruptcy or similar proceedings or
might complicate bankruptcy proceedings delaying foreclosure on the
mortgaged property. In addition, if the holder of additional debt becomes
bankrupt or insolvent, the trustee's ability to foreclose on the related
mortgage loan could be delayed. See "Legal Aspects of the Mortgage
Loans--Due-on-Sale and Due-on-Encumbrance Provisions" and "--Subordinate
Financing" in the prospectus.
o Default Under Other Indebtedness. 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
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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.
RECENTLY CONSTRUCTED PROPERTIES DO NOT HAVE OPERATING HISTORIES. 15 of the
mortgaged properties, for which the related mortgage loans (or allocated
principal portion thereof) constitute 7.8% of the initial pool balance, were
constructed after December 31, 1998 and consequently do not have significant
operating histories. There can be no assurance that the businesses operated at
these properties will be successful. There can be no assurance that current
occupancy levels of these properties will be maintained or that full occupancy
will be achieved or maintained. There also can be no assurance that as yet
undiscovered physical or design problems with these properties will not
adversely affect occupancy levels of any of these properties.
THE APPRAISALS OBTAINED IN CONNECTION WITH THE ORIGINATION OR ACQUISITION
OF THE MORTGAGE LOANS MAY NOT ACCURATELY REFLECT THE PRESENT OR FUTURE VALUES
OF THE MORTGAGED PROPERTIES. 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
loan to value ratios referred to in this prospectus supplement. 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. That 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 us
as of the cut-off date is presented for illustrative purposes only in Annex A
and Annex B to this prospectus supplement. See "Description of the Mortgage
Pool--Assessments of Property Condition" in this prospectus supplement.
INSPECTIONS OF THE MORTGAGED PROPERTIES MAY NOT IDENTIFY ALL CONDITIONS
REQUIRING REPAIR OR REPLACEMENT. Except in cases where the mortgaged property
was newly constructed, licensed engineers or consultants inspected
substantially all 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 the related mortgage loan, except for 4 mortgaged properties
representing approximately 3.3% of the initial pool balance.
CHANGES IN ZONING LAWS MAY ADVERSELY AFFECT THE BORROWER'S PROPERTY AND AS
A RESULT ADVERSELY AFFECT THAT BORROWER'S ABILITY TO MEET ITS MORTGAGE LOAN
OBLIGATIONS. Due to changes in applicable building and zoning ordinances and
codes affecting some of the mortgaged properties which may have come into
effect after the construction of improvements on the mortgaged properties and
for other reasons, some of these 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. The changes in the
applicable zoning laws may limit the ability of the borrower to rebuild the
premises "as is" in the event of a substantial casualty loss with respect to
the premises 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.
ABSENCE OF ATTORNMENT PROVISIONS IN SOME TENANT LEASES MAY REDUCE THE
VALUE OF SOME OF THE MORTGAGED PROPERTIES OR THE CASH FLOW GENERATED BY THOSE
MORTGAGED PROPERTIES. 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
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jurisdiction and is leased to one or more desirable tenants under leases that
are subordinate to the mortgage and do not contain attornment provisions, that
mortgaged property could experience a further decline in value if those
tenants' leases were terminated. This is particularly likely if those tenants
were paying above-market rents or could not be replaced.
If a lease is not subordinate to a mortgage, the trust fund 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. Some of the leases included in the trust
fund may not be subordinate to the related mortgage.
COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT MAY IMPOSE ADDITIONAL
COSTS ON A BORROWER AND ADVERSELY AFFECT ITS ABILITY TO MEET ITS MORTGAGE LOAN
OBLIGATIONS. Under the Americans with Disabilities Act of 1990, public
accommodations are required to meet applicable federal requirements related to
access and use by disabled persons. If a mortgaged property does not currently
comply with the Americans with Disabilities Act, the related borrower may be
required to incur significant costs in order to bring the property into
compliance. In addition, noncompliance could result in the imposition of fines
by the federal government or an award or damages to private litigants. These
costs could have an adverse effect on a borrower's ability to pay debt service
on the related mortgage loan.
LITIGATION INVOLVING A BORROWER MAY HAVE AN ADVERSE EFFECT ON ITS ABILITY
TO MEET ITS MORTGAGE LOAN OBLIGATIONS. 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 litigation
will not have a material adverse effect on the performance of the related
mortgaged properties and, thus, the distributions to certificateholders.
FORWARD LOOKING STATEMENTS
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 forward-looking statement or to reflect any change in events, conditions or
circumstances on which any forward-looking statement is based.
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The trust fund will consist primarily of 165 commercial, 37 multifamily
and 9 manufactured housing community mortgaged properties. The initial pool
balance is approximately $888,269,752 as of the Cut-Off Date. Each mortgage
loan is evidenced by one or more promissory notes and secured by one or more
mortgages, deeds of trust or other similar security instruments that
collectively create a first mortgage lien in one of the following properties:
o with respect to 200 mortgaged properties, for which the related
mortgage loans (or allocated principal portion thereof) constitute 91.2%
of the initial pool balance, the property consists of a fee simple estate
(i.e., the borrower owns the land and any improvements that comprise the
mortgaged property or in the case of 3 mortgaged properties, for which
the related mortgage loans (or allocated principal portion thereof)
constitute 1.0% of the initial pool balance, the property is the land but
not the improvements that comprise the mortgaged property);
o with respect to 8 mortgaged properties, for which the related mortgage
loans (or allocated principal portion thereof) constitute 5.6% of the
initial pool balance, the property consists of a leasehold interest
(i.e., the borrower has the interest of a tenant in the land and
improvements that comprise the related mortgaged property); or
o with respect to 3 mortgaged properties, for which the related mortgage
loans (or allocated principal portion thereof) constitute 3.3% of the
initial pool balance, the property consists of (a) a leasehold interest
in land or land and improvements and (b) a fee interest (i.e., the
mortgage loan is secured by a leasehold interest and a fee interest in
the land and improvements).
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 that mortgage loan.
Generally, whenever we refer to "mortgage loans," "mortgaged properties"
and "mortgages," we are only referring to those that relate to the mortgage
loans that are in the mortgage pool unless the context makes clear otherwise.
All percentages of the mortgage loans, or of any specified group of mortgage
loans, referred to in this prospectus supplement without further description
are approximate percentages of the aggregate Cut-Off Date Balance.
The mortgage loans will be acquired by us on the date the certificates are
issued to the underwriters from Wells Fargo Bank, National Association, Bear,
Stearns Funding, Inc. and Morgan Stanley Mortgage Capital Inc., the mortgage
loan sellers, which either originated the mortgage loans or acquired them from
their respective originators. We will assign our interests in the mortgage
loans, without recourse, to the trust fund on the date we acquire the mortgage
loans from the mortgage loan sellers. See "--The Mortgage Loan Sellers" and
"--Representations and Warranties; Repurchases" below and "Description of the
Pooling and Servicing Agreements--Assignment of Mortgage Loans; Repurchases" in
the prospectus.
The mortgage loans are not insured or guaranteed by the mortgage loan
sellers or any of their affiliates, the servicer, the special servicer, any
governmental entity or private mortgage insurer. We have 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, you 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 this 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.
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<PAGE>
The mortgage loans in the pool were originated between July 1998 and
January 2000, inclusive.
ADDITIONAL DEBT
In general, borrowers may incur trade payables in the ordinary course of
business. In limited circumstances, borrowers may incur additional indebtedness
not secured by the borrower's real property to finance equipment and other
assets in the ordinary course of business. In some circumstances borrowers may
incur or have incurred additional unsecured indebtedness other than in the
ordinary course of business, as described in "Risk Factors--Risk Factors
Relating to the Mortgage Loans--A borrower may be maintaining other financing
that could reduce cash flow from the related property and increase the risk of
borrower default and bankruptcy" in this prospectus supplement. Although the
mortgage loans generally do not permit borrowers to incur additional
indebtedness secured by the mortgaged properties, you should note the
exceptions to this rule described in "Risk Factors--Risk Factors Relating to
the Mortgage Loans--A borrower may be maintaining other financing that could
reduce cash flow from the related property and increase the risk of borrower
default and bankruptcy" in this prospectus supplement and "Legal Aspects of
Mortgage Loans--Subordinate Financing" as described in the prospectus.
THE ARD LOANS
Mortgage loan number 26287 and mortgage loan number 9905426, representing
in the aggregate approximately 4.7% of the initial pool balance, each provide
that if the related borrower has not prepaid that mortgage loan in full on or
before its Anticipated Repayment Date, any principal outstanding on that date
thereafter shall amortize more rapidly and accrue interest at the Revised Rate
for that mortgage loan rather than at the Initial Rate. In addition, as
described below under "--Mortgaged Property Accounts--Lock Box Accounts," funds
on deposit in the Lock Box Accounts relating to the ARD Loans in excess of
amounts needed to pay property operating expenses and reserves will be applied
to repayment of the applicable mortgage loan. The Anticipated Repayment Date is
60 months after the first due date for mortgage loan number 26287 and 120
months after the first due date for mortgage loan number 9905426. The Revised
Rate for mortgage loan number 26287 will be equal to the sum of (x) the Initial
Rate, plus (y) 2.0% per annum and the Revised Rate for mortgage loan number
9905426 will be equal to the greater of (i) the sum of (x) the Initial Rate,
and (y) 3.0% per annum, and (ii) the sum of (x) the rate on U.S. Treasury
securities with a term to maturity approximating the period from the
Anticipated Repayment Date to the stated maturity for that mortgage loan at the
Anticipated Repayment Date, and (y) 3.0% per annum.
THE PARI PASSU LOAN
With respect to the Pari Passu Loan, representing approximately 0.5% of
the initial pool balance, the related mortgaged property also secures the
Related Trust Fund Mortgage Loan, which had an original principal balance of
$20,900,000. The Pari Passu Loan and the Related Trust Fund Mortgage Loan are
each secured on a pari passu basis by the Pari Passu Mortgage. The Related
Trust Fund Mortgage Loan is owned by the Related Trust Fund and is not an asset
of the trust fund. The payment and other terms of the Related Trust Fund
Mortgage Loan are substantially similar to those of the Pari Passu Loan,
however, the Related Trust Fund Trustee has the exclusive right to exercise
remedies with respect to the Pari Passu Loan, including without limitation
seeking foreclosure.
CERTAIN PAYMENT CHARACTERISTICS
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 in
connection with those scheduled payments which do not exceed 10 days, except
that 2 mortgage loans, representing approximately 7.5% of the initial pool
balance, provide for a 15 day grace period. Except with respect to 22 mortgage
loans, representing approximately 11.3% of the initial pool balance, 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 the next due date, so that prepayments
are required to
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include one month's interest on the amount prepaid. With respect to 21 of the
mortgage loans described in the preceding sentence, representing approximately
10.7% of the initial pool balance, all prepayments, if any, on the mortgage
loans are required to be made on the due dates for those mortgage loans, with
the exception of prepayments made during a period of generally one to three
months prior to their maturity dates.
All of the mortgage loans bear fixed interest rates.
171 mortgage loans, representing approximately 96.8% of the initial pool
balance, accrue interest on the basis of the actual number of days in a month,
assuming a 360 day year. 10 mortgage loans, representing approximately 3.2% of
the initial pool balance, accrue interest on the basis of a 30-day month,
assuming a 360-day year.
158 mortgage loans, representing approximately 91.9% of the mortgage loans
provide for monthly payments of principal and interest based on amortization
schedules significantly longer than the remaining terms of those mortgage
loans. In addition, the ARD Loans, representing approximately 4.7% of the
initial pool balance, each amortize principal (prior to its Anticipated
Repayment Date) at a rate that will result in a substantial principal payment
being required to be paid on or after its Anticipated Repayment Date and prior
to its stated maturity date. 4 mortgage loans, representing approximately 14.4%
of the initial pool balance, have an initial interest only period during which
time they do not require the payment of principal.
YIELD MAINTENANCE, PREPAYMENT AND LOCKOUT PROVISIONS
Each mortgage loan restricts voluntary prepayments in one or more of the
following ways: (i) by prohibiting any prepayments during a Lockout Period or
(ii) by requiring that any principal prepayment made during a Yield Maintenance
Period be accompanied by a yield maintenance charge.
62 mortgage loans, representing approximately 33.6% of the initial pool
balance, contain provisions that prohibit all voluntary prepayments. Generally,
in lieu of permitting voluntary prepayments, these mortgage loans provide for a
defeasance feature described below under "--Defeasance."
101 mortgage loans, representing approximately 62.0% of the initial pool
balance, prohibit voluntary prepayments until a specified date (generally
between one and six months prior to the maturity date of those mortgage loans).
Generally, in lieu of permitting voluntary prepayments these mortgage loans
provide for a defeasance feature described below under "--Defeasance."
3 mortgage loans, representing approximately 1.5% of the initial pool
balance, contain provisions that prohibit voluntary prepayment for a specified
period of time (generally between three and five 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 the prepayment and (b) a yield maintenance charge. In the
case of 2 of these mortgage loans, representing approximately 1.1% of the
initial pool balance, the related borrower may prepay all or a portion of the
mortgage loan provided that the prepayment is accompanied by a yield
maintenance charge. The borrower is not entitled to obtain the release of the
related mortgaged property upon the partial prepayment of the mortgage loan.
15 mortgage loans, representing approximately 2.9% of the initial pool
balance, contain provisions that prohibit voluntary prepayment for a specified
period of time (generally between three and five 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 the
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 the mortgage loan until a time which is generally
three to six months prior to maturity, and thereafter permit prepayment without
restriction. See "--Defeasance" below.
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Some 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, those charges may not be recoverable in some states in the event of
prepayment or foreclosure. See "Legal Aspects of Mortgage Loans--Default
Interest and Limitations on Prepayments" in the prospectus.
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 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 the prepayment
not occurred to the extent those 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 some 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"). In
the case of one mortgage loan, representing approximately 0.4% of the initial
pool balance, the yield maintenance charge is determined utilizing a discount
rate equal to the Yield Rate calculated as described in the preceding sentence
plus 0.50% per annum.
Yield maintenance charges are distributable as described in this
prospectus supplement under "Description of the Certificates--Distributions--
Allocation of Yield Maintenance Charges."
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 the mortgage loan (due to an increase in the value of the mortgaged property
or amortization of the mortgage loan), 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 that mortgage loan voluntarily and, accordingly, the related borrower
may elect not to prepay that 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. Except for 2 mortgage
loans, representing approximately 1.1% of the initial pool balance, all of the
mortgage loans prohibit voluntary partial prepayments other than in connection
with the release of one or more but less than all of the mortgaged properties
securing the mortgage loan. Notwithstanding the foregoing, as described under
"General--The ARD Loans" above, each ARD Loan will be prepayable in whole or in
part on and after its Anticipated Repayment Date without payment of a yield
maintenance charge or a prepayment premium. 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 or prepayment premium.
DEFEASANCE
178 mortgage loans, representing approximately 98.5% of the initial pool
balance, grant the related borrower the right at any time commencing generally
three to five years after the date of origination, but in all cases not less
than two years after the date of issuance of the certificates, to obtain the
release of the lien of the mortgage on the mortgaged property or mortgaged
properties as applicable, by substituting for the 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 the amounts which would have been payable on each of
those dates under the terms of the related mortgage loan; provided, however,
that, in the case of some of these mortgage loans, defeasance will not be
permitted if it will result in a withdrawal, downgrade or qualification (if
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applicable) of the then current rating on any class of certificates. In the
case of 163 of these mortgage loans, representing approximately 95.6% of the
initial pool balance, collateral substitution is the only method of obtaining a
release of the lien on the mortgaged property prior to the maturity date and
all voluntary prepayments are prohibited during the defeasance period.
9 mortgage loans, representing 6.2% of the initial pool balance, are
cross-collateralized and/or secured by two or more mortgaged properties and
grant the related borrower the right, at any time commencing generally three to
four 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 those 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 those
mortgaged properties (the "Partial Release Mortgaged Properties") by
substituting for the 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 110% (and in some cases
125%) of the amounts payable on each due date under the terms of the related
Mortgage Loan; provided, however, that, in the case of all of these mortgage
loans, a partial release will be permitted only if other criteria, such as debt
service coverage ratio and loan to value ratio tests, are satisfied by the
remaining mortgaged property or properties and provided that the partial
release will not result in a withdrawal, downgrade or qualification (if
applicable) of the then current rating on any class of certificates (as
evidenced by notice to that effect in writing from each rating agency then
rating the certificates).
15 mortgage loans, representing approximately 2.9% of the initial pool
balance, contain provisions that prohibit voluntary prepayment for a specified
period of time (generally between three and five 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 the
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 the mortgage loan until a time which is generally
three to six months prior to maturity, and thereafter permit prepayment without
restriction.
Releases of Properties Without Principal Reduction or Substitution of
Collateral. In the case of 3 mortgage loans, representing approximately 1.9% of
the initial pool balance, the related mortgage loan documents provide for the
release of specified parcels of real estate that secure these mortgage loans
but were not ascribed value or cash flow for purposes of determining the
related Underwritten Cash Flow. This real estate is generally subject to
release without reduction of the principal balance of the related mortgage note
or substitution of additional collateral if zoning and other specified
requirements are satisfied. The parcels that may be released were not
generating cash flow as of the date of origination and their release will not
result in any reduction of the related 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 some of the mortgage loans this
consent must be granted if specified conditions are met. With respect to a
mortgage loan containing a "due-on-sale" clause, the special servicer will be
required either (i) to enforce the due-on-sale clause, or (ii) to waive the
effect of the due-on-sale clause if it believes waiver would be in the best
economic interest of the trust fund. 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 that mortgage loan represents 5% or more
of the aggregate certificate principal balance without first confirming that
the waiver will not result in a withdrawal, downgrade or qualification (if
applicable) of the then current rating on any class of certificates. With
respect to a mortgage loan with a "due-on-encumbrance" clause, the servicer
(with respect to mortgage loans that
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<PAGE>
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; provided that the servicer will not
be permitted to waive a "due-on-encumbrance" clause in connection with the
creation of additional debt secured by the related mortgaged property without
(i) the consent of the special servicer (except that the special servicer will
be deemed to have consented if it does not respond to a written request for
consent within five business days) and (ii) delivery of confirmation by each of
DCR and Fitch that waiver of the "due-on-encumbrance" clause will not result in
a downgrade, withdrawal or qualification (if applicable) of the then current
rating on any class of certificates.
Some of the mortgage loans expressly permit the assignment of the related
mortgaged property to, and assumption of the mortgage loan by, another entity.
In the event the servicer receives a request from a mortgagor to make an
assignment pursuant to these provisions for any of these mortgage loans (other
than a Specially Serviced Mortgage Loan), the servicer shall obtain relevant
information for purposes of evaluating the request. If the servicer recommends
approval of the assignment, the servicer shall provide to the special servicer
a copy of the recommendation and the materials upon which the recommendation is
based. The special servicer shall have the right to grant or withhold consent
to any request for 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 consent, and any decision of the
special servicer to consent to an assignment and assumption is subject to the
Servicing Standard. Failure of the special servicer to notify the servicer in
writing of its determination to grant or withhold consent to an assignment and
assumption 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 that consent.
DELINQUENT MORTGAGE LOANS
As of the Cut-Off Date, no mortgage loan was 30 days or more delinquent in
respect of any monthly payment.
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 us) as a result of
prepayments, delinquencies, incomplete documentation or otherwise, if we deem
or the related mortgage loan seller deems that 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 those
other mortgage loans would materially alter the characteristics of the mortgage
pool as described in this prospectus supplement.
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The following table sets forth information as of the Cut-Off Date with
respect to the types of mortgaged properties.
TYPES OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
AGGREGATE % OF
NUMBER CUT-OFF INITIAL
OF DATE POOL
PROPERTY TYPE PROPERTIES BALANCE BALANCE
- ----------------------------- ------------ --------------- -----------
<S> <C> <C> <C>
Office
Urban ...................... 15 $177,011,303 19.93%
Suburban ................... 5 46,162,271 5.20
-- ------------ ------
Subtotal: ................. 20 $223,173,574 25.12%
Retail
Anchored ................... 18 $100,740,843 11.34%
Unanchored ................. 17 41,369,843 4.66
Theater .................... 4 25,640,000 2.89
Big Box .................... 2 5,266,246 0.59
Shadow/Minor Anchored 1 4,643,428 0.52
Free-Standing .............. 1 3,985,712 0.45
Specialty .................. 2 2,430,021 0.27
-- ------------ ------
Subtotal: ................. 45 $184,076,092 20.72%
Multifamily
Garden ..................... 32 $109,669,171 12.35%
Low-Rise ................... 3 14,174,379 1.60
High-Rise .................. 1 6,783,344 0.76
Mid-Rise ................... 1 3,748,480 0.42
-- ------------ ------
Subtotal: ................. 37 $134,375,373 15.13%
Industrial/Warehouse
Flex Industrial ............ 18 $ 57,953,742 6.52%
Warehouse/Distribution ..... 15 45,622,596 5.14
Light Industrial ........... 11 21,856,412 2.46
-- ------------ ------
Subtotal: ................. 44 $125,432,750 14.12%
Self-storage ................ 34 $ 92,965,037 10.47%
-- ------------ ------
Subtotal: ................. 34 $ 92,965,037 10.47%
Hospitality
Limited Service ............ 6 $ 22,070,368 2.48%
Full Service ............... 1 21,633,104 2.44
Boutique ................... 1 20,000,000 2.25
Extended Stay .............. 1 4,840,045 0.54
-- ------------ ------
Subtotal: ................. 9 $ 68,543,517 7.72%
Manufactured Housing
Community .................. 9 $ 27,501,934 3.10%
-- ------------ ------
Subtotal: ................. 9 $ 27,501,934 3.10%
Mixed Use ................... 9 $ 19,437,067 2.19%
-- ------------ ------
Subtotal .................. 9 $ 19,437,067 2.19%
Land Subject to Ground
Lease ...................... 3 $ 8,690,788 0.98%
-- ------------ ------
Subtotal .................. 3 $ 8,690,788 0.98%
Marina ...................... 1 $ 4,073,620 0.46%
-- ------------ ------
Subtotal .................. 1 $ 4,073,620 0.46%
-- ------------ ------
Totals/Weighted Avg. ....... 211 $888,269,752 100.00%
=== ============ ======
<CAPTION>
WEIGHTED AVERAGES
------------------------------------------------------------------------------------
STATED REMAINING
MORTGAGE REMAINING AMORT. TERM CUT-OFF MATURITY
PROPERTY TYPE RATE TERM (MO.) (MO.) DSCR DATE LTV LTV OCCUPANCY
- ----------------------------- ------------ ------------ ------------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Office
Urban ...................... 7.9515% 101 348 1.67x 52.71% 47.80% 95.5%
Suburban ................... 7.8294% 123 333 1.60x 56.81% 48.42% 97.9%
------ --- --- ---- ----- ----- -----
Subtotal: ................. 7.9262% 106 345 1.66x 53.56% 47.93% 96.0%
Retail
Anchored ................... 8.1184% 113 325 1.44x 64.29% 55.07% 97.3%
Unanchored ................. 8.4038% 131 326 1.38x 66.14% 50.04% 96.4%
Theater .................... 8.4443% 73 313 1.80x 51.36% 47.75% 100.0%
Big Box .................... 7.9077% 115 295 1.77x 53.41% 44.22% 100.0%
Shadow/Minor Anchored 8.3700% 117 357 1.41x 58.78% 53.10% 100.0%
Free-Standing .............. 8.0800% 113 353 1.30x 71.17% 64.03% 100.0%
Specialty .................. 7.7618% 159 220 1.75x 41.87% 8.78% 100.0%
------ --- --- ---- ----- ----- -----
Subtotal: ................. 8.2227% 112 323 1.49x 62.31% 52.14% 97.7%
Multifamily
Garden ..................... 7.5741% 116 327 1.60x 65.19% 53.51% 97.7%
Low-Rise ................... 7.7605% 134 258 1.34x 66.06% 35.87% 93.3%
High-Rise .................. 7.3800% 116 356 1.60x 60.03% 53.01% 97.0%
Mid-Rise ................... 8.2700% 119 359 1.24x 76.50% 68.88% 96.6%
------ --- --- ---- ----- ----- -----
Subtotal: ................. 7.6033% 118 322 1.56x 65.34% 52.05% 97.2%
Industrial/Warehouse
Flex Industrial ............ 7.8775% 141 258 1.45x 62.43% 31.52% 99.0%
Warehouse/Distribution ..... 7.9503% 130 300 1.38x 64.45% 45.65% 98.6%
Light Industrial ........... 7.7749% 124 267 1.59x 59.20% 41.22% 97.9%
------ --- --- ---- ----- ----- -----
Subtotal: ................. 7.8861% 134 274 1.45x 62.60% 38.35% 98.7%
Self-storage ................ 8.0039% 115 294 1.61x 63.78% 52.68% 90.3%
------ --- --- ---- ----- ----- -----
Subtotal: ................. 8.0039% 115 294 1.61x 63.78% 52.68% 90.3%
Hospitality
Limited Service ............ 8.4300% 117 264 1.64x 64.23% 50.04% 75.9%
Full Service ............... 7.4000% 101 281 1.70x 61.81% 51.15% 78.7%
Boutique ................... 8.5800% 120 300 2.12x 48.19% 40.37% 88.0%
Extended Stay .............. 7.9450% 117 237 1.70x 53.78% 38.04% 91.9%
------ --- --- ---- ----- ----- -----
Subtotal: ................. 8.1144% 113 278 1.80x 58.05% 46.72% 81.4%
Manufactured Housing
Community .................. 7.7347% 117 314 1.86x 54.83% 46.15% 97.6%
------ --- --- ---- ----- ----- -----
Subtotal: ................. 7.7347% 117 314 1.86x 54.83% 46.15% 97.6%
Mixed Use ................... 8.1483% 121 313 1.67x 49.91% 38.84% 97.6%
------ --- --- ---- ----- ----- -----
Subtotal .................. 8.1483% 121 313 1.67x 49.91% 38.84% 97.6%
Land Subject to Ground
Lease ...................... 7.9015% 125 344 1.61x 60.10% 49.99% 100.0%
------ --- --- ---- ----- ----- -----
Subtotal .................. 7.9015% 125 344 1.61x 60.10% 49.99% 100.0%
Marina ...................... 8.7200% 112 292 1.50x 59.04% 50.00% 95.7%
------ --- --- ---- ----- ----- -----
Subtotal .................. 8.7200% 112 292 1.50x 59.04% 50.00% 95.7%
------ --- --- ---- ----- ----- -----
Totals/Weighted Avg. ....... 7.9581% 115 315 1.59x 59.89% 48.25% 95.3%
</TABLE>
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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 CUM. % OF
CUT-OFF INITIAL CUT-OFF
NUMBER NUMBER DATE POOL DATE
RANGE OF MORTGAGE RATES OF LOANS OF PROPERTIES BALANCE BALANCE BALANCE
- ------------------------- ---------- --------------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
6.1500% to 6.2500% ...... 1 1 $ 3,155,764 0.36% 0.36%
6.5001% to 6.7500% ...... 1 1 2,958,882 0.33 0.69
6.7501% to 7.0000% ...... 3 3 5,981,900 0.67 1.36
7.0001% to 7.2500% ...... 7 7 18,552,993 2.09 3.45
7.2501% to 7.5000% ...... 20 23 117,626,681 13.24 16.69
7.5001% to 7.7500% ...... 19 21 121,558,752 13.68 30.38
7.7501% to 8.0000% ...... 37 45 204,707,847 23.05 53.42
8.0001% to 8.5000% ...... 73 88 325,375,024 36.63 90.05
8.5001% to 9.0000% ...... 17 19 75,041,339 8.45 98.50
9.0001% to 9.4550% ...... 3 3 13,310,568 1.50 100.00
-- -- ------------ ------ ------
Totals/Weighted Avg. .... 181 211 $888,269,752 100.00% 100.00%
=== === ============ ====== ======
<CAPTION>
WEIGHTED AVERAGES
-------------------------------------------------------------------------
STATED REMAINING CUT-OFF
MORTGAGE REMAINING AMORT. DATE MATURITY
RANGE OF MORTGAGE RATES RATE TERM (MO.) TERM (MO.) DSCR LTV LTV
- ------------------------- ------------ ------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
6.1500% to 6.2500% ...... 6.1500% 105 345 1.69x 57.38% 49.56%
6.5001% to 6.7500% ...... 6.5400% 110 289 2.31x 38.43% 30.64%
6.7501% to 7.0000% ...... 6.8112% 119 280 2.12x 59.76% 40.77%
7.0001% to 7.2500% ...... 7.1675% 127 276 1.83x 55.53% 34.60%
7.2501% to 7.5000% ...... 7.3853% 112 306 1.69x 60.37% 49.98%
7.5001% to 7.7500% ...... 7.6609% 109 298 1.61x 56.73% 40.23%
7.7501% to 8.0000% ...... 7.8827% 119 323 1.61x 57.76% 47.80%
8.0001% to 8.5000% ...... 8.1973% 115 320 1.52x 62.06% 50.85%
8.5001% to 9.0000% ...... 8.6826% 120 318 1.57x 61.55% 51.30%
9.0001% to 9.4550% ...... 9.3254% 118 323 1.37x 66.58% 58.52%
------ --- --- ---- ----- -----
Totals/Weighted Avg. .... 7.9581% 115 315 1.59x 59.89% 48.25%
</TABLE>
S-56
<PAGE>
The following table sets forth the mortgaged properties by state.
MORTGAGED PROPERTIES BY STATE
<TABLE>
<CAPTION>
AGGREGATE % OF
CUT-OFF INITIAL
NUMBER OF DATE POOL
STATE PROPERTIES BALANCE BALANCE
- ------------------------------ ------------ --------------- -----------
<S> <C> <C> <C>
California (Northern) ........ 33 $182,266,272 20.52%
California (Southern) ........ 42 124,084,597 13.97
Texas ........................ 31 88,774,156 9.99
North Carolina ............... 4 80,918,917 9.11
New York ..................... 14 64,291,251 7.24
Florida ...................... 17 52,689,302 5.93
Pennsylvania ................. 8 32,397,081 3.65
Washington ................... 5 30,556,628 3.44
Virginia ..................... 3 26,271,958 2.96
Nevada ....................... 4 23,448,408 2.64
New Jersey ................... 6 23,050,167 2.59
Delaware ..................... 3 17,375,135 1.96
Colorado ..................... 5 15,802,211 1.78
Massachusetts ................ 2 10,337,924 1.16
Oregon ....................... 3 10,155,738 1.14
North Dakota ................. 2 9,572,882 1.08
Connecticut .................. 4 8,812,561 0.99
Michigan ..................... 3 8,803,118 0.99
Wisconsin .................... 1 8,795,170 0.99
New Hampshire ................ 1 8,480,137 0.95
Ohio ......................... 2 8,287,789 0.93
Maryland ..................... 3 8,069,617 0.91
Idaho ........................ 1 8,000,000 0.90
Montana ...................... 2 6,364,565 0.72
Nebraska ..................... 1 6,173,896 0.70
New Mexico ................... 1 3,985,712 0.45
Mississippi .................. 1 3,967,393 0.45
Arizona ...................... 2 3,488,259 0.39
Missouri ..................... 1 3,333,119 0.38
Minnesota .................... 2 3,141,512 0.35
Illinois ..................... 1 2,498,456 0.28
Georgia ...................... 1 1,926,110 0.22
Kansas ....................... 1 1,247,824 0.14
Rhode Island ................. 1 901,886 0.10
-- ------------ ------
Totals/Weighted Avg. ......... 211 $888,269,752 100.00%
=== ============ ======
<CAPTION>
WEIGHTED AVERAGES
------------------------------------------------------------------------
STATED REMAINING
MORTGAGE REMAINING AMORT. CUT-OFF MATURITY
STATE RATE TERM (MO.) TERM (MO.) DSCR DATE LTV LTV
- ------------------------------ ------------ ------------ ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
California (Northern) ........ 7.8727% 126 319 1.60x 55.24% 43.02%
California (Southern) ........ 7.7321% 118 295 1.71x 59.05% 45.39%
Texas ........................ 8.0742% 115 300 1.51x 66.69% 52.57%
North Carolina ............... 7.7535% 78 353 1.54x 62.07% 58.63%
New York ..................... 8.2420% 123 293 1.81x 48.82% 35.26%
Florida ...................... 8.1350% 107 304 1.54x 63.33% 53.95%
Pennsylvania ................. 7.9353% 116 290 1.58x 63.03% 50.50%
Washington ................... 8.1856% 116 350 1.62x 58.43% 52.14%
Virginia ..................... 7.9150% 118 353 1.54x 57.03% 50.52%
Nevada ....................... 8.3632% 119 359 1.49x 61.82% 55.80%
New Jersey ................... 7.8498% 104 319 1.83x 59.10% 50.23%
Delaware ..................... 8.0584% 154 241 1.32x 73.86% 27.01%
Colorado ..................... 8.4540% 122 330 1.39x 64.84% 54.19%
Massachusetts ................ 8.0588% 118 358 1.40x 63.30% 56.74%
Oregon ....................... 7.6487% 144 199 1.36x 58.47% 17.70%
North Dakota ................. 7.5480% 114 294 1.37x 68.99% 56.48%
Connecticut .................. 8.2518% 113 353 1.48x 64.26% 58.04%
Michigan ..................... 7.9020% 112 352 1.47x 64.08% 57.46%
Wisconsin .................... 7.4150% 119 359 1.64x 64.20% 56.63%
New Hampshire ................ 8.5300% 104 355 1.26x 70.67% 65.02%
Ohio ......................... 8.0211% 117 357 1.66x 51.81% 46.43%
Maryland ..................... 7.9929% 116 320 1.96x 50.67% 43.88%
Idaho ........................ 8.1800% 60 300 1.93x 49.69% 46.30%
Montana ...................... 7.3300% 114 294 1.41x 69.56% 56.58%
Nebraska ..................... 7.2150% 116 296 1.47x 65.33% 52.84%
New Mexico ................... 8.0800% 113 353 1.30x 71.17% 64.03%
Mississippi .................. 8.1200% 111 291 1.24x 71.94% 60.02%
Arizona ...................... 7.7272% 151 228 1.33x 55.19% 22.61%
Missouri ..................... 9.4550% 119 299 1.47x 68.02% 58.37%
Minnesota .................... 8.1767% 116 303 1.39x 69.13% 56.83%
Illinois ..................... 8.9200% 118 358 1.31x 73.48% 67.17%
Georgia ...................... 9.0000% 115 355 1.25x 71.34% 65.40%
Kansas ....................... 7.8100% 118 298 1.54x 62.30% 51.17%
Rhode Island ................. 8.3000% 110 290 1.47x 60.13% 50.46%
------ --- --- ---- ----- -----
Totals/Weighted Avg. ......... 7.9581% 115 315 1.59x 59.89% 48.25%
</TABLE>
S-57
<PAGE>
The following tables set forth the original term and the remaining term of
the mortgage loans.
RANGE OF ORIGINAL TERMS IN MONTHS
<TABLE>
<CAPTION>
AGGREGATE % OF
CUT-OFF INITIAL
RANGE OF ORIGINAL TERMS NUMBER OF NUMBER OF DATE POOL
TO MATURITY (MO.) LOANS PROPERTIES BALANCE BALANCE
- ------------------------------ ----------- ------------ -------------- -----------
<S> <C> <C> <C> <C>
60 to 70 ..................... 4 6 $ 80,671,510 9.08%
71 to 100 .................... 3 3 15,829,597 1.78
101 to 120 ................... 140 166 674,542,252 75.94
121 to 140 ................... 8 8 38,433,406 4.33
161 to 180 ................... 24 26 75,080,852 8.45
201 to 240 ................... 2 2 3,712,134 0.42
--- --- ------------ ------
Totals/Weighted Avg. ......... 181 211 $888,269,752 100.00%
=== === ============ ======
<CAPTION>
WEIGHTED AVERAGES
-------------------------------------------------------------------------
STATED REMAINING CUT-OFF
RANGE OF ORIGINAL TERMS MORTGAGE REMAINING AMORT. DATE MATURITY
TO MATURITY (MO.) RATE TERM (MO.) TERM (MO.) DSCR LTV LTV
- ------------------------------ ------------ ------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
60 to 70 ..................... 7.8597% 58 338 1.69x 57.72% 55.80%
71 to 100 .................... 8.3203% 81 357 1.56x 45.53% 42.89%
101 to 120 ................... 7.9995% 116 327 1.58x 61.18% 52.92%
121 to 140 ................... 7.4232% 120 296 1.79x 56.41% 45.28%
161 to 180 ................... 7.8877% 174 181 1.52x 55.20% 3.12%
201 to 240 ................... 8.0008% 235 235 1.43x 66.29% 2.93%
------ --- --- ---- ----- -----
Totals/Weighted Avg. ......... 7.9581% 115 315 1.59x 59.89% 48.25%
</TABLE>
RANGE OF REMAINING TERMS IN MONTHS
<TABLE>
<CAPTION>
AGGREGATE % OF
CUT-OFF INITIAL
RANGE OF NUMBER OF NUMBER OF DATE POOL
REMAINING TERMS (MO.) LOANS PROPERTIES BALANCE BALANCE
- ------------------------------ ----------- ------------ -------------- -----------
<S> <C> <C> <C> <C>
56 to 70 ..................... 4 6 $ 80,671,510 9.08%
71 to 100 .................... 3 3 15,829,597 1.78
101 to 120 ................... 147 173 693,793,086 78.11
121 to 140 ................... 1 1 19,182,572 2.16
161 to 180 ................... 24 26 75,080,852 8.45
181 to 237 ................... 2 2 3,712,134 0.42
--- --- ------------ ------
Totals/Weighted Avg. ......... 181 211 $888,269,752 100.00%
=== === ============ ======
<CAPTION>
WEIGHTED AVERAGES
-------------------------------------------------------------------------
STATED REMAINING CUT-OFF
RANGE OF MORTGAGE REMAINING AMORT. DATE MATURITY
REMAINING TERMS (MO.) RATE TERM (MO.) TERM (MO.) DSCR LTV LTV
- ------------------------------ ------------ ------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
56 to 70 ..................... 7.8597% 58 338 1.69x 57.72% 55.80%
71 to 100 .................... 8.3203% 81 357 1.56x 45.53% 42.89%
101 to 120 ................... 7.9782% 115 326 1.58x 61.09% 52.76%
121 to 140 ................... 7.6140% 131 299 1.68x 54.81% 43.19%
161 to 180 ................... 7.8877% 174 181 1.52x 55.20% 3.12%
181 to 237 ................... 8.0008% 235 235 1.43x 66.29% 2.93%
------ --- --- ---- ----- -----
Totals/Weighted Avg. ......... 7.9581% 115 315 1.59x 59.89% 48.25%
</TABLE>
S-58
<PAGE>
The following table sets forth the range of original amortization periods
of the mortgage loans.
RANGE OF ORIGINAL AMORTIZATION TERMS IN MONTHS
<TABLE>
<CAPTION>
AGGREGATE % OF
CUT-OFF INITIAL
RANGE OF ORIGINAL NUMBER NUMBER OF DATE POOL
AMORTIZATION TERMS (MO.) OF LOANS PROPERTIES BALANCE BALANCE
- ------------------------------ ---------- ------------ -------------- -----------
<S> <C> <C> <C> <C>
121 to 180 ................... 22 22 $ 70,018,080 7.88%
181 to 240 ................... 13 15 40,663,907 4.58
241 to 300 ................... 63 87 315,445,633 35.51
301 to 360 ................... 83 87 462,142,131 52.03
-- -- ------------ ------
Totals/Weighted Avg. ......... 181 211 $888,269,752 100.00%
=== === ============ ======
<CAPTION>
WEIGHTED AVERAGES
-----------------------------------------------------------------------
STATED REMAINING CUT-OFF
RANGE OF ORIGINAL MORTGAGE REMAINING AMORT. DATE MATURITY
AMORTIZATION TERMS (MO.) RATE TERM (MO.) TERM (MO.) DSCR LTV LTV
- ------------------------------ ------------ ------------ ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
121 to 180 ................... 7.8428% 173 174 1.45x 55.13% 1.48%
181 to 240 ................... 7.8434% 135 236 1.63x 55.95% 33.35%
241 to 300 ................... 7.9332% 110 294 1.67x 60.58% 50.46%
301 to 360 ................... 8.0027% 108 357 1.55x 60.49% 55.15%
------ --- --- ---- ----- -----
Totals/Weighted Avg. ......... 7.9581% 115 315 1.59x 59.89% 48.25%
</TABLE>
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
CUT-OFF INITIAL CUT-OFF
SCHEDULED NUMBER NUMBER OF DATE POOL DATE
MATURITY YEAR OF LOANS PROPERTIES BALANCE BALANCE BALANCE
- --------------------- ---------- ------------ -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
2004 ................ 1 1 $ 47,000,000 5.29% 5.29%
2005 ................ 3 5 33,671,510 3.79 9.08
2006 ................ 2 2 13,030,432 1.47 10.55
2007 ................ 1 1 2,799,165 0.32 10.86
2008 ................ 5 6 46,442,670 5.23 16.09
2009 ................ 119 144 453,336,409 51.04 67.13
2010 ................ 23 23 194,014,007 21.84 88.97
2011 ................ 1 1 19,182,572 2.16 91.13
2013 ................ 1 1 1,056,714 0.12 91.25
2014 ................ 22 24 69,524,138 7.83 99.08
2015 ................ 1 1 4,500,000 0.51 99.58
2019 ................ 2 2 3,712,134 0.42 100.00
--- --- ------------ ------ ------
Totals/Weighted Avg. 181 211 $888,269,752 100.00% 100.00%
=== === ============ ====== ======
<CAPTION>
WEIGHTED AVERAGES
-------------------------------------------------------------------------
STATED REMAINING CUT-OFF
SCHEDULED MORTGAGE REMAINING AMORT. DATE MATURITY
MATURITY YEAR RATE TERM (MO.) TERM (MO.) DSCR LTV LTV
- --------------------- ------------ ------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
2004 ................ 7.6960% 56 356 1.61x 59.27% 58.32%
2005 ................ 8.0883% 60 313 1.80x 55.57% 52.27%
2006 ................ 8.1775% 81 357 1.60x 40.65% 38.19%
2007 ................ 8.9850% 83 359 1.35x 68.27% 64.79%
2008 ................ 7.5123% 103 306 1.57x 65.11% 55.57%
2009 ................ 7.9331% 115 318 1.57x 62.58% 53.28%
2010 ................ 8.1953% 120 350 1.63x 56.64% 50.87%
2011 ................ 7.6140% 131 299 1.68x 54.81% 43.19%
2013 ................ 6.9850% 165 165 1.50x 55.91% 1.05%
2014 ................ 7.8767% 174 181 1.53x 55.01% 3.27%
2015 ................ 8.2700% 180 180 1.27x 57.88% 1.42%
2019 ................ 8.0008% 235 235 1.43x 66.29% 2.93%
------ --- --- ---- ----- -----
Totals/Weighted Avg. 7.9581% 115 315 1.59x 59.89% 48.25%
</TABLE>
S-59
<PAGE>
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>
AGGREGATE % OF
CUT-OFF INITIAL
RANGE OF YEARS NUMBER OF DATE POOL
BUILT/RENOVATED PROPERTIES BALANCE BALANCE
- ------------------------------ ------------ --------------- -----------
<S> <C> <C> <C>
1910 to 1919 ................. 2 $ 1,226,183 0.14%
1920 to 1939 ................. 1 1,600,729 0.18
1940 to 1959 ................. 2 7,213,997 0.81
1960 to 1969 ................. 6 14,076,532 1.58
1970 to 1979 ................. 27 75,372,611 8.49
1980 to 1989 ................. 56 203,271,586 22.88
1990 to 1999 ................. 117 585,508,114 65.92
--- ------------ ------
Totals/Weighted Avg. ......... 211 $888,269,752 100.00%
=== ============ ======
<CAPTION>
WEIGHTED AVERAGES
------------------------------------------------------------------------
STATED REMAINING
RANGE OF YEARS MORTGAGE REMAINING AMORT. CUT-OFF MATURITY
BUILT/RENOVATED RATE TERM (MO.) TERM (MO.) DSCR DATE LTV LTV
- ------------------------------ ------------ ------------ ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
1910 to 1919 ................. 7.5300% 115 355 2.21x 39.24% 34.80%
1920 to 1939 ................. 8.0800% 178 178 1.53x 36.38% 0.00%
1940 to 1959 ................. 8.0050% 118 340 2.36x 59.71% 53.20%
1960 to 1969 ................. 8.0085% 127 332 1.75x 65.94% 53.89%
1970 to 1979 ................. 7.8196% 118 310 1.62x 60.40% 46.31%
1980 to 1989 ................. 7.8585% 114 322 1.62x 59.21% 50.01%
1990 to 1999 ................. 8.0094% 115 312 1.56x 60.03% 47.86%
------ --- --- ---- ----- -----
Totals/Weighted Avg. ......... 7.9581% 115 315 1.59x 59.89% 48.25%
</TABLE>
The following tables set forth a range of Debt Service Coverage Ratios for
the mortgage loans as of the Cut-Off Date.
RANGE OF DEBT SERVICE COVERAGE RATIOS AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE % OF
CUT-OFF INITIAL
RANGE OF DEBT NUMBER NUMBER OF DATE POOL
SERVICE COVERAGE RATIOS OF LOANS PROPERTIES BALANCE BALANCE
- ---------------------------- ---------- ------------ --------------- -----------
<S> <C> <C> <C> <C>
1.15x to 1.19x ............. 3 3 $ 9,942,577 1.12%
1.20x to 1.24x ............. 4 4 11,533,493 1.30
1.25x to 1.29x ............. 23 24 90,541,323 10.19
1.30x to 1.34x ............. 19 19 67,402,186 7.59
1.35x to 1.39x ............. 12 12 32,413,883 3.65
1.40x to 1.44x ............. 21 37 112,579,939 12.67
1.45x to 1.49x ............. 14 15 55,791,015 6.28
1.50x to 1.59x ............. 25 32 134,716,778 15.17
1.60x to 1.69x ............. 20 20 147,476,503 16.60
1.70x to 1.79x ............. 15 16 125,362,794 14.11
1.80x to 1.89x ............. 3 3 10,401,932 1.17
1.90x to 1.99x ............. 4 6 27,639,589 3.11
2.00x to 2.49x ............. 10 12 45,481,303 5.12
2.50x to 2.99x ............. 4 4 9,907,563 1.12
3.00x to 6.48x ............. 4 4 7,078,874 0.80
-- -- ------------ ------
Totals/Weighted Avg. ....... 181 211 $888,269,752 100.00%
=== === ============ ======
<CAPTION>
WEIGHTED AVERAGES
-----------------------------------------------------------------------
STATED REMAINING CUT-OFF
RANGE OF DEBT MORTGAGE REMAINING AMORT. DATE MATURITY
SERVICE COVERAGE RATIOS RATE TERM (MO.) TERM (MO.) DSCR LTV LTV
- ---------------------------- ------------ ------------ ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
1.15x to 1.19x ............. 7.6889% 171 171 1.16x 62.99% 0.94%
1.20x to 1.24x ............. 8.3290% 114 314 1.24x 72.71% 62.53%
1.25x to 1.29x ............. 8.1063% 131 301 1.27x 70.07% 47.01%
1.30x to 1.34x ............. 8.2962% 123 321 1.32x 67.32% 54.63%
1.35x to 1.39x ............. 8.2286% 117 317 1.37x 69.21% 56.33%
1.40x to 1.44x ............. 8.0181% 119 305 1.42x 68.52% 55.91%
1.45x to 1.49x ............. 8.1242% 114 337 1.47x 61.45% 52.94%
1.50x to 1.59x ............. 7.9460% 115 327 1.54x 60.55% 51.39%
1.60x to 1.69x ............. 7.6930% 101 321 1.64x 56.96% 47.78%
1.70x to 1.79x ............. 7.8218% 113 327 1.74x 52.03% 44.97%
1.80x to 1.89x ............. 7.7684% 116 293 1.83x 52.81% 42.26%
1.90x to 1.99x ............. 8.1388% 75 299 1.93x 48.45% 43.89%
2.00x to 2.49x ............. 8.0178% 128 281 2.16x 42.40% 30.19%
2.50x to 2.99x ............. 7.2834% 112 326 2.74x 39.37% 33.67%
3.00x to 6.48x ............. 7.4206% 123 306 4.28x 26.02% 21.40%
------ --- --- ---- ----- -----
Totals/Weighted Avg. ....... 7.9581% 115 315 1.59x 59.89% 48.25%
</TABLE>
S-60
<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>
AGGREGATE % OF
RANGE OF CUT-OFF INITIAL
CUT-OFF NUMBER OF NUMBER OF DATE POOL
DATE BALANCES LOANS PROPERTIES BALANCE BALANCE
- ----------------------------- ----------- ------------ --------------- -----------
<S> <C> <C> <C> <C>
$ 888,571 to $ 999,999.. 6 6 $ 5,633,023 0.63%
$ 1,000,000 to $ 1,999,999.. 48 51 76,626,416 8.63
$ 2,000,000 to $ 3,999,999.. 66 67 191,192,741 21.52
$ 4,000,000 to $ 5,999,999.. 29 32 140,789,245 15.85
$ 6,000,000 to $ 7,999,999.. 12 12 80,040,920 9.01
$ 8,000,000 to $ 9,999,999.. 3 3 25,754,407 2.90
$ 10,000,000 to $11,999,999.. 4 4 41,442,203 4.67
$ 12,000,000 to $13,999,999.. 2 4 27,659,993 3.11
$ 14,000,000 to $15,999,999.. 1 8 15,722,584 1.77
$ 16,000,000 to $17,999,999.. 2 2 33,000,000 3.72
$ 18,000,000 to $19,999,999.. 2 2 38,451,881 4.33
$ 20,000,000 to $24,999,999.. 3 5 61,808,104 6.96
$ 27,000,000 to $58,500,000.. 3 15 150,148,233 16.90
-- -- ------------ ------
Totals/Weighted Avg. ........ 181 211 $888,269,752 100.00%
=== === ============ ======
<CAPTION>
WEIGHTED AVERAGES
-------------------------------------------------------------------------
RANGE OF STATED REMAINING CUT-OFF
CUT-OFF MORTGAGE REMAINING AMORT. DATE MATURITY
DATE BALANCES RATE TERM (MO.) TERM (MO.) DSCR LTV LTV
- ----------------------------- ------------ ------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 888,571 to $ 999,999.. 8.3200% 145 254 1.33x 62.10% 32.01%
$ 1,000,000 to $ 1,999,999.. 8.0096% 126 293 1.68x 57.88% 42.17%
$ 2,000,000 to $ 3,999,999.. 7.9332% 120 315 1.63x 60.80% 48.26%
$ 4,000,000 to $ 5,999,999.. 8.0975% 125 297 1.48x 60.85% 45.32%
$ 6,000,000 to $ 7,999,999.. 7.8824% 101 332 1.52x 58.99% 51.98%
$ 8,000,000 to $ 9,999,999.. 7.7509% 109 333 1.48x 68.26% 59.70%
$ 10,000,000 to $11,999,999.. 8.0106% 147 267 1.49x 61.77% 28.83%
$ 12,000,000 to $13,999,999.. 7.7475% 115 325 1.55x 64.70% 55.20%
$ 14,000,000 to $15,999,999.. 7.8100% 118 298 1.54x 62.30% 51.17%
$ 16,000,000 to $17,999,999.. 8.1727% 120 360 1.54x 56.77% 51.75%
$ 18,000,000 to $19,999,999.. 7.7974% 124 328 1.47x 63.24% 53.69%
$ 20,000,000 to $24,999,999.. 8.0364% 94 293 1.91x 53.45% 46.08%
$ 27,000,000 to $58,500,000.. 7.8969% 98 339 1.61x 58.66% 53.26%
------ --- --- ---- ----- -----
Totals/Weighted Avg. ........ 7.9581% 115 315 1.59x 59.89% 48.25%
</TABLE>
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. 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-61
<PAGE>
RANGE OF LOAN TO VALUE RATIOS AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
% OF
NUMBER NUMBER AGGREGATE INITIAL CUM. % OF
RANGE OF CUT-OFF DATE OF OF CUT-OFF DATE POOL CUT-OFF
LTV RATIOS LOANS PROPERTIES BALANCE BALANCE DATE BALANCE
- ------------------------------ -------- ------------ -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
10.89% to 30.00% ............. 2 2 $ 3,414,157 0.38% 0.38%
30.01% to 40.00% ............. 15 17 43,312,924 4.88 5.26
40.01% to 45.00% ............. 6 6 13,766,921 1.55 6.81
45.01% to 50.00% ............. 13 15 148,088,071 16.67 23.48
50.01% to 55.00% ............. 14 14 73,521,773 8.28 31.76
55.01% to 60.00% ............. 26 27 142,582,137 16.05 47.81
60.01% to 65.00% ............. 31 40 140,452,214 15.81 63.62
65.01% to 70.00% ............. 35 38 119,936,339 13.50 77.12
70.01% to 75.00% ............. 32 45 178,179,201 20.06 97.18
75.01% to 79.11% ............. 7 7 25,016,015 2.82 100.00
-- -- ------------ ------ ------
Totals/Weighted Avg. ......... 181 211 $888,269,752 100.00% 100.00%
=== === ============ ====== ======
<CAPTION>
WEIGHTED AVERAGES
----------------------------------------------------------------------------
STATED REMAINING
RANGE OF CUT-OFF DATE MORTGAGE REMAINING AMORT. CUT-OFF DATE MATURITY
LTV RATIOS RATE TERM (MO.) TERM (MO.) DSCR LTV LTV
- ------------------------------ ------------ ------------ ------------ ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
10.89% to 30.00% ............. 7.7213% 138 297 5.29x 17.42% 13.66%
30.01% to 40.00% ............. 7.6521% 123 294 2.23x 35.56% 23.90%
40.01% to 45.00% ............. 8.0448% 124 267 1.82x 41.46% 28.13%
45.01% to 50.00% ............. 7.9840% 115 310 1.80x 48.19% 37.96%
50.01% to 55.00% ............. 7.8368% 122 314 1.68x 53.56% 43.41%
55.01% to 60.00% ............. 7.9256% 99 330 1.56x 58.54% 49.56%
60.01% to 65.00% ............. 7.8636% 121 310 1.52x 62.23% 48.36%
65.01% to 70.00% ............. 8.0264% 119 314 1.44x 67.38% 54.36%
70.01% to 75.00% ............. 8.0688% 116 316 1.36x 72.16% 58.90%
75.01% to 79.11% ............. 8.2777% 117 340 1.33x 77.22% 68.11%
------ --- --- ---- ----- -----
Totals/Weighted Avg. ......... 7.9581% 115 315 1.59x 59.89% 48.25%
</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% ............. 24 24 $ 73,440,404 8.27% 8.27%
10.01% to 20.00% ............. 1 1 2,216,031 0.25 8.52
20.01% to 30.00% ............. 5 7 12,564,490 1.41 9.93
30.01% to 35.00% ............. 15 17 48,957,315 5.51 15.44
35.01% to 40.00% ............. 6 6 17,039,911 1.92 17.36
40.01% to 45.00% ............. 11 11 127,454,806 14.35 31.71
45.01% to 50.00% ............. 18 21 77,760,197 8.75 40.46
50.01% to 55.00% ............. 29 36 162,356,040 18.28 58.74
55.01% to 60.00% ............. 30 33 169,580,222 19.09 77.83
60.01% to 65.00% ............. 22 34 125,549,343 14.13 91.97
65.01% to 70.00% ............. 19 20 69,056,876 7.77 99.74
70.01% to 71.32% ............. 1 1 2,294,116 0.26 100.00
-- -- ------------ ------ ------
Totals/Weighted Avg. ......... 181 211 $888,269,752 100.00% 100.00%
=== === ============ ====== ======
<CAPTION>
WEIGHTED AVERAGES
--------------------------------------------------------------------------
STATED REMAINING
RANGE OF MATURITY MORTGAGE REMAINING AMORT. CUT-OFF DATE MATURITY
LTV RATIOS RATE TERM (MO.) TERM (MO.) DSCR LTV LTV
- ------------------------------ ------------ ------------ ------------ ---------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
0.00% to 10.00% ............. 7.8484% 178 179 1.52x 55.23% 1.25%
10.01% to 20.00% ............. 7.4300% 116 296 4.65x 20.96% 17.06%
20.01% to 30.00% ............. 7.9396% 134 248 2.09x 44.44% 26.56%
30.01% to 35.00% ............. 7.7316% 112 306 2.00x 40.87% 32.85%
35.01% to 40.00% ............. 7.7875% 115 269 1.83x 48.99% 37.56%
40.01% to 45.00% ............. 7.9606% 119 333 1.80x 49.45% 43.09%
45.01% to 50.00% ............. 7.9788% 101 316 1.68x 55.03% 47.57%
50.01% to 55.00% ............. 7.8691% 112 327 1.56x 60.89% 52.88%
55.01% to 60.00% ............. 7.9019% 98 333 1.49x 64.75% 57.76%
60.01% to 65.00% ............. 8.1436% 115 329 1.36x 71.36% 62.04%
65.01% to 70.00% ............. 8.2715% 109 351 1.35x 74.11% 66.98%
70.01% to 71.32% ............. 8.2250% 115 355 1.41x 79.11% 71.32%
------ --- --- ---- ----- -----
Totals/Weighted Avg. ......... 7.9581% 115 315 1.59x 59.89% 48.25%
</TABLE>
S-62
<PAGE>
The following table sets forth the mortgage loans subject to
lockout/prepayment restrictions, expressed as 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)
PERIOD LOCKOUT FLEX 1% OR YM(1)
- ------------------ ---------------------- ------------------ ------------------
$ (MM) % $ (MM) % $ (MM) %
---------- ----------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Current 2/1/00 888.3 100.0% -- 0.0% -- 0.0%
Year 1 2/1/01 878.5 100.0% -- 0.0% -- 0.0%
Year 2 2/1/02 867.7 100.0% -- 0.0% -- 0.0%
Year 3 2/1/03 829.7 97.0% 22.2 2.6% 3.4 0.4%
Year 4 2/1/04 811.9 96.5% 21.8 2.6% 7.9 0.9%
Year 5 2/1/05 713.3 95.2% 23.1 3.1% 12.7 1.7%
Year 6 2/1/06 699.1 95.2% 22.5 3.1% 12.5 1.7%
Year 7 2/1/07 668.9 95.1% 21.8 3.1% 12.3 1.8%
Year 8 2/1/08 652.4 95.2% 21.1 3.1% 12.1 1.8%
Year 9 2/1/09 541.8 86.3% 11.0 1.8% 11.8 1.9%
Year 10 2/1/10 52.0 96.6% 1.8 3.4% -- 0.0%
Year 11 2/1/11 30.7 95.4% 1.5 4.6% -- 0.0%
Year 12 2/1/12 24.4 95.6% 1.1 4.4% -- 0.0%
Year 13 2/1/13 17.7 96.2% 0.7 3.8% -- 0.0%
Year 14 2/1/14 7.6 71.8% 0.3 2.4% -- 0.0%
Year 15 2/1/15 1.6 100.0% -- 0.0% -- 0.0%
Year 16 2/1/16 1.3 100.0% -- 0.0% -- 0.0%
Year 17 2/1/17 1.0 100.0% -- 0.0% -- 0.0%
Year 18 2/1/18 0.7 100.0% -- 0.0% -- 0.0%
Year 19 2/1/19 0.4 100.0% -- 0.0% -- 0.0%
Year 20 2/1/20 0.0 0.0% -- 0.0% -- 0.0%
<CAPTION>
PREPAYABLE
WITHOUT PENALTY TOTALS
------------------ ----------------------------------
% OF % OF
$ (MM) % $ (MM) TOTAL IPB(2)
-------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Current -- 0.0% 888.3 100.0% 100.0%
Year 1 -- 0.0% 878.5 100.0% 98.9%
Year 2 -- 0.0% 867.7 100.0% 97.7%
Year 3 -- 0.0% 855.3 100.0% 96.3%
Year 4 -- 0.0% 841.6 100.0% 94.7%
Year 5 -- 0.0% 749.2 100.0% 84.3%
Year 6 -- 0.0% 734.2 100.0% 82.7%
Year 7 -- 0.0% 703.0 100.0% 79.1%
Year 8 -- 0.0% 685.6 100.0% 77.2%
Year 9 63.2 10.1% 627.8 100.0% 70.7%
Year 10 -- 0.0% 53.9 100.0% 6.1%
Year 11 -- 0.0% 32.1 100.0% 3.6%
Year 12 -- 0.0% 25.5 100.0% 2.9%
Year 13 -- 0.0% 18.4 100.0% 2.1%
Year 14 2.7 25.7% 10.6 100.0% 1.2%
Year 15 -- 0.0% 1.6 100.0% 0.2%
Year 16 -- 0.0% 1.3 100.0% 0.1%
Year 17 -- 0.0% 1.0 100.0% 0.1%
Year 18 -- 0.0% 0.7 100.0% 0.1%
Year 19 -- 0.0% 0.4 100.0% 0.0%
Year 20 -- 0.0% 0.0 0.0% 0.0%
</TABLE>
- -------
(1) As used above, "YM" means yield maintenance charge.
(2) As used above, "IPB" means initial pool balance.
MORTGAGE LOANS BY MORTGAGE LOAN SELLER
<TABLE>
<CAPTION>
% OF
AGGREGATE INITIAL
MORTGAGE NUMBER OF NUMBER OF CUT-OFF DATE POOL
LOAN SELLER LOANS PROPERTIES BALANCE BALANCE
- --------------------------------- ----------- ------------ -------------- -----------
<S> <C> <C> <C> <C>
Wells Fargo Bank, N.A. .......... 84 106 $415,715,489 46.80%
Bear, Stearns Funding, Inc. ..... 74 79 363,558,833 40.93
Morgan Stanley Mortgage
Capital Inc. ................... 23 26 108,995,430 12.27
-- --- ------------ ------
Totals/Weighted Avg. ............ 181 211 $888,269,752 100.00%
=== === ============ ======
<CAPTION>
WEIGHTED AVERAGES
---------------------------------------------------------------------------
STATED REMAINING CUT-OFF
MORTGAGE MORTGAGE REMAINING AMORT. DATE MATURITY
LOAN SELLER RATE TERM (MOS.) TERM (MOS.) DSCR LTV LTV
- --------------------------------- ------------ ------------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Wells Fargo Bank, N.A. .......... 7.8651% 117 306 1.57x 58.86% 45.58%
Bear, Stearns Funding, Inc. ..... 8.0856% 114 323 1.62x 60.17% 49.83%
Morgan Stanley Mortgage
Capital Inc. ................... 7.8878% 113 318 1.54x 62.91% 53.18%
------ --- --- ---- ----- -----
Totals/Weighted Avg. ............ 7.9581% 115 315 1.59x 59.89% 48.25%
====== === === ==== ===== =====
</TABLE>
S-63
<PAGE>
The following table sets forth some of the characteristics of the ten
largest mortgage loans.
TEN LARGEST MORTGAGE LOANS
<TABLE>
<CAPTION>
AGGREGATE
NUMBER OF CUT-OFF DATE % OF INITIAL
PROPERTY NAME PROPERTIES BALANCE POOL BALANCE
- ----------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
650 Townsend ................ 1 $ 58,500,000 6.59%
First Union Capitol
Center ..................... 1 47,000,000 5.29
Private Mini Storage ........ 13 44,648,233 5.03
Holiday Inn-Mission Bay ..... 1 21,633,104 2.44
Entertainment Properties
Trust ...................... 3 20,175,000 2.27
The Mercer Hotel ............ 1 20,000,000 2.25
Seattle Gift & Design
Centres .................... 2 19,961,344 2.25
International Airport
Drive-Charlotte ............ 1 19,269,309 2.17
Orchard Business Center ..... 1 19,182,572 2.16
Circuit City Corporate
Headquarters ............... 1 17,000,000 1.91
-- ------------ -----
Totals/Weighted Avg. ........ 25 $287,369,562 32.35%
== ============ =====
<CAPTION>
WEIGHTED AVERAGES
-------------------------------------------------------------------------
STATED
REMAINING REMAINING CUT-OFF LTV
MORTGAGE TERM AMORT DATE RATIO AT
PROPERTY NAME RATE (MOS.) TERM (MOS.) DSCR LTV RATIO MATURITY
- ----------------------------- ------------ ----------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
650 Townsend ................ 7.8500% 120 360 1.75x 47.56% 43.76%
First Union Capitol
Center ..................... 7.6960% 56 356 1.61x 59.27% 58.32%
Private Mini Storage ........ 8.1700% 115 295 1.42x 72.56% 60.38%
Holiday Inn-Mission Bay ..... 7.4000% 101 281 1.70x 61.81% 51.15%
Entertainment Properties
Trust ...................... 8.1800% 60 300 1.93x 49.69% 46.30%
The Mercer Hotel ............ 8.5800% 120 300 2.12x 48.19% 40.37%
Seattle Gift & Design
Centres .................... 8.1700% 116 356 1.69x 56.05% 50.44%
International Airport
Drive-Charlotte ............ 7.9800% 117 357 1.27x 71.63% 64.14%
Orchard Business Center ..... 7.6140% 131 299 1.68x 54.81% 43.19%
Circuit City Corporate
Headquarters ............... 8.1000% 120 360 1.53x 54.84% 49.15%
------ --- --- ---- ----- -----
Totals/Weighted Avg. ........ 7.9446% 103 330 1.66x 57.74% 51.33%
</TABLE>
Specified in Annex A to this prospectus supplement are additional
characteristics of the mortgage loans set forth on a loan-by-loan basis.
Additional information regarding the related mortgage loans also is contained
in this prospectus supplement under "--Underwritten Cash Flow," "--Assessments
of Property Condition" and "--Representations and Warranties; Repurchases" and
in the prospectus under "Description of the Trust Funds" and "Legal Aspects of
Mortgage Loans".
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 33% of the aggregate
Cut-Off Date Balance and no single mortgage loan represents more than 7% of the
aggregate principal balance of the mortgage loans as of February 1, 2000.
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:
o estimated stabilized operating expenses (such as utilities,
administrative expenses, repairs and maintenance, management fees and
advertising);
o fixed expenses (such as insurance, real estate taxes and, if
applicable, ground lease payments); and
o 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,
material changes in the operating position of the
S-64
<PAGE>
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 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 the
operating statements and operating information and the assumptions applied by
the respective borrowers in preparing the statements and information. In most
cases, borrower supplied "trailing-12 months" income and/or expense information
was utilized. In some cases, partial year operating income data was annualized,
with adjustments for items deemed not appropriate to be annualized. In some
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 mortgaged
properties with newly constructed improvements and, accordingly, there were no
historical operating results or financial statements available with respect to
these mortgaged properties. In these 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. In some cases the mortgage loan sellers require
borrowers to fund escrows for taxes, insurance and future capital expenditures.
In some cases, these escrows are not required prior to a default under the
mortgage loan or upon the occurrence of some other event. Escrows for taxes and
insurance 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. Escrows for future capital expenditures typically entail an initial
deposit and/or monthly deposits determined at the time of origination of the
mortgage loan to be sufficient to pay for anticipated capital expenditures. 168
mortgage loans, representing approximately 93.3% of the initial pool balance,
require escrows for taxes, 134 mortgage loans, representing approximately 65.4%
of the initial pool balance, require escrows for insurance premiums, and 123
mortgage loans, representing approximately 82.4% of the initial pool balance,
require escrows for capital expenditures.
ASSESSMENTS OF PROPERTY CONDITION
Property Inspection. All of the mortgaged properties were inspected by a
member of the related mortgage loan seller's professional staff or, in some
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 for which the
related mortgage loan seller has not established an escrow arrangement that it
deemed adequate to cover this 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 of
these appraisals 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. 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 that person used the same general
approach to and same method of valuing the property. Moreover, the appraisals
sought to establish the amount a typically motivated buyer would pay a
typically motivated seller. This 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 in this prospectus supplement for
illustrative purposes only.
S-65
<PAGE>
Property Condition Assessments. Other than in the case of a mortgage loan
secured by a newly constructed property, in connection with the origination of
each mortgage loan, a professional engineer, licensed architect or qualified
consultant inspected each related mortgaged 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 some 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 loans to be sold by Wells Fargo Bank,
National Association, loan requests secured by properties located in California
were screened using a software system to perform a preliminary PML analysis.
Properties with any one of the following characteristics were subject to a
third party seismic survey performed by an approved seismic engineering firm:
o a property with a preliminary PML over 20% of the estimated replacement
cost of the improvements;
o a loan of more than $10,000,000;
o a property located in an Alquist Priolo Zone (a zone surrounding active
California earthquake faults, as established under California law);
o a property constructed of non-reinforced masonry; or
o 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 loans sold by Bear, Stearns Funding, Inc. and Morgan Stanley
Mortgage Capital Inc., 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. For the loans sold by Bear, Stearns Funding, Inc.,
Bear, Stearns Funding, Inc.'s technical services director, who is not a member
of its underwriting group, has reviewed all seismic reports in conjunction with
the professional consultant who prepared the report.
Generally, any of the mortgage loans as to which the property was
estimated to have a 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 3 mortgaged properties, for which the
related mortgage loans (or allocated principal portion thereof) constitute 8.3%
of the initial pool balance, 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 the closing date for the sale of the certificates to the underwriters,
we will acquire the mortgage loans from Bear, Stearns Funding, Inc., a Delaware
corporation, Wells Fargo Bank, National Association, a national banking
association, and Morgan Stanley Mortgage Capital, Inc., a New York corporation,
each a "mortgage loan seller," pursuant to the relevant mortgage loan purchase
and sale agreements, each dated as of February 1, 2000, between us and the
respective mortgage loan seller.
A description of Wells Fargo Bank, National Association is contained under
"Servicing of the Mortgage Loans--The Servicer" in this prospectus supplement.
Bear, Stearns Funding, Inc. 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. Bear, Stearns Funding, Inc.
originated and underwrote all of the mortgage loans sold by it.
S-66
<PAGE>
Morgan Stanley Mortgage Capital Inc. is a subsidiary of Morgan Stanley &
Co. Incorporated formed as a New York corporation to originate and acquire
loans secured by mortgages on commercial and multifamily real estate. Each of
the mortgage loans sold by Morgan Stanley Mortgage Capital Inc. was originated
by one of the participants in Morgan Stanley Mortgage Capital Inc.'s commercial
and multifamily mortgage loan conduit program, was originated directly by
Morgan Stanley Mortgage Capital Inc. or was purchased in the secondary market.
Morgan Stanley Mortgage Capital Inc. underwrote all of the mortgage loans sold
by it.
The information set forth in this prospectus supplement concerning each
mortgage loan seller has been provided by the respective mortgage loan seller,
and neither we nor the underwriters makes any representation or warranty as to
the accuracy or completeness of that 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 or all of its mortgage loans, as applicable, subject to the exceptions
specified in that mortgage loan purchase and sale agreement, as of the closing
date for the sale of the certificates to the underwriters or as of any other
date specifically provided in the representation and warranty, among other
things, generally to the effect that:
o 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.
o Ownership of Mortgage Loans. Immediately prior to the transfer to the
depositor of the mortgage loans, the mortgage loan seller had good title
to, and was the sole owner of, the mortgage loan, free and clear of any
and all pledges, liens and/or other encumbrances.
o 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.
o Lien; Valid Assignment. The mortgage related to and delivered in
connection with the 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.
o 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 related mortgaged
property.
o 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 the mortgage,
in whole or in material part.
o 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 mortgage loan
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 mortgage loan seller's knowledge, there is no proceeding pending for
the condemnation of all or any material portion of the related mortgaged
property.
o Title Insurance. The mortgaged property is covered by a Title Policy
that insures that the related mortgage is a valid, first priority lien on
the mortgaged property, subject only to certain permitted encumbrances.
S-67
<PAGE>
o No Holdbacks. The proceeds of the mortgage loan have been fully
disbursed and there is no obligation for future advances with respect to
the mortgage loan.
o Environmental Conditions. An Environmental Report has been delivered
to us, and the mortgage loan seller has no knowledge of any material and
adverse environmental condition or circumstance affecting the mortgaged
property that was not disclosed in that report.
o Loan Document Status. Each mortgage note, mortgage and other document
conveyed to the depositor with respect to the mortgage loan that
evidences or secures the 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 mortgage loan seller there is no valid defense,
counterclaim or right of offset or rescission available to the related
borrower with respect to any mortgage note, mortgage or other agreement.
o Insurance. The related 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 and sale agreement.
o Taxes and Assessments. To the mortgage loan seller's knowledge, there
are no delinquent or unpaid taxes that are 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.
o Mortgagor Bankruptcy. The mortgagor is not, to the mortgage loan
seller's knowledge, a debtor in any state or federal bankruptcy or
insolvency proceeding.
o Fee Simple or Leasehold Estate. The related mortgaged property
consists of the related mortgagor's fee simple estate in real estate or,
if the mortgage loan is secured by the interest of a mortgagor as a
lessee under a ground lease of the related mortgaged property, by the
related mortgagor's interest in the ground lease, and with respect to
that ground lease:
-- the ground lease or a memorandum thereof has been or will be duly
recorded and permits the interest of the lessee under the ground lease
to be encumbered by the related mortgage;
-- the lessee's interest in the ground lease is not subject to any liens
or encumbrances superior to, or of equal priority with, the related
mortgage, other than permitted encumbrances;
-- the mortgagor's interest in the ground lease is assignable to the
depositor and its successors and assigns upon notice to, but without
the consent of, the lessor under the ground lease;
-- the ground lease is in full force and effect and, to the knowledge of
the seller, no material default has occurred under the ground lease;
-- the ground lease, or an estoppel letter related thereto, requires the
lessor under the 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 the ground lease is effective
against the holder of the mortgage unless a copy has been delivered to
that holder;
-- 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 the ground lease) to cure any default
under the ground lease, which is curable after the receipt of notice
of any default under the ground lease, before the lessor under the
ground lease may terminate the ground lease; and
-- except as set forth in the schedule of mortgage loans attached to the
related mortgage loan purchase and sale agreement, the 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 mortgage loan.
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o Cross-collateralization. Other than the Pari Passu Loan, no mortgage
loan is cross-collateralized or cross-defaulted with any loan other than
one or more other mortgage loans.
o 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 mortgage loan or in connection with the defeasance
provisions of the related mortgage note and mortgage. With respect to 7
mortgage loans, representing approximately 3.7% of the initial pool
balance, the related mortgage note or mortgage requires the mortgagee to
grant releases of portions of the related mortgaged property upon (a) the
satisfaction of specified legal and underwriting requirements and (b) the
payment of a partial defeasance price set forth in the related mortgage
note or mortgage in connection with the partial substitution of U.S.
Treasury obligations or the payment of yield maintenance consideration in
connection with a partial prepayment of the mortgage loan.
o No Material Default. To the 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 that materially and adversely affects
the value of the mortgage loan and the related mortgaged property.
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, or is defective on its face (any
such omission or other defect a "Document Defect") or of a breach of any of the
representations and warranties set forth in the related mortgage loan purchase
and sale agreement and, in either case, that Document Defect or that 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 that Material Breach or Material
Document Defect within a period of 90 days following the earlier of its receipt
of that notice or its discovery of that Material Breach or Material Document
Defect (as that period may be extended by up to an additional 90 days under the
limited circumstances specified in the related mortgage loan purchase and sale
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 us to the trustee) to (a) repurchase the affected mortgage loan
within that period at a price (the "Purchase Price") equal to the sum of:
o the outstanding principal balance of that mortgage loan as of the date
of purchase;
o all accrued and unpaid interest on that 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
o the amount of any expenses related to that mortgage loan or REO
Property (including unreimbursed Servicing Advances plus accrued and
unpaid interest on related Advances at the Advance Rate, unpaid Special
Servicing Fees and Liquidation Fees),
or (b) at the related mortgage loan seller's option and if within the
three-month period commencing on the closing date for the sale of the
certificates (or within the two-year period thereafter if the related mortgage
loan is a "defective obligation" within the meaning of Section
860G(a)(4)(B)(ii) of the Internal Revenue Code and Treasury Regulation Section
1.860G-2(f)), (i) replace that mortgage loan with a mortgage loan having
specified payment terms comparable to the mortgage loan to be replaced and that
is acceptable to each of DCR and Fitch (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 that date,
whether or not received. If a Material Breach or Material Document Defect would
cause the mortgage loan to be other than a "qualified
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mortgage" (as defined in the Internal Revenue 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 for
the sale of the certificates to the underwriters.
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 that 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 that mortgage loan seller to us, and neither we, the servicer (other
than in its capacity as a mortgage loan seller), 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, we will not include any mortgage loan in the mortgage pool
if anything has come to our attention prior to the closing date for the sale of
the certificates to the underwriters that causes us to believe that the
representations and warranties made by the related mortgage loan seller
regarding that mortgage loan, subject to the exceptions set forth in the
applicable mortgage loan purchase and sale agreement, will not be correct in
all material respects when made. See "Description of the Pooling and Servicing
Agreements--Representations and Warranties; Repurchases" in the prospectus.
MORTGAGED PROPERTY ACCOUNTS
Lock Box Accounts. With respect to 24 mortgage loans, representing
approximately 30.1% 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 and on behalf of the borrower pursuant to the related
loan documents (such mortgage loans, the "Lock Box Loans"). With respect to 7
Lock Box Loans, representing approximately 8.8% of the initial pool balance,
the tenants, the related property manager or the borrower's bank are required
to deposit property operating income directly into the related Lock Box
Account. The terms of 17 Lock Box Loans, representing approximately 21.2% of
the 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 major tenants to renew or extend their respective leases, or the
failure of the related borrower to lease the related premises to new tenants
acceptable to the lender, or the failure of the mortgaged property to meet
specified DSCR requirements. The agreements which govern the Lock Box Accounts
provide that the existing borrower has no withdrawal or transfer rights with
respect thereto except to the extent that funds on deposit in the related Lock
Box Account are released to the borrower in accordance with the applicable
agreements. Pursuant to the terms of the agreements governing the Lock Box
Accounts for the ARD Loans, the funds in the Lock Box Accounts may be released
to the related borrowers prior to the Anticipated Repayment Dates to the extent
that those amounts are in excess of amounts needed to pay debt service and
property operating expenses and reserves. After the Anticipated Repayment
Dates, 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 applicable mortgage loan. The Lock Box Accounts will not be
assets of any REMIC.
UNDERWRITING STANDARDS
All of the mortgage loans were originated or acquired by each mortgage
loan seller generally in accordance with each mortgage loan seller's respective
underwriting guidelines.
The mortgage loans selected for inclusion in the mortgage pool from each
mortgage loan seller's portfolio were not selected on any basis which is
expected to have a material adverse effect on you.
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CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this prospectus supplement of the mortgage pool and the
mortgaged properties is based upon the mortgage pool as expected to be
constituted at the time the offered certificates are issued, as adjusted for
the scheduled principal payments due on or before the Cut-Off Date. Prior to
the issuance of the offered certificates, a mortgage loan may be removed from
the mortgage pool if we deem the removal necessary or appropriate or if it is
prepaid. A limited number of other mortgage loans may be included in the
mortgage pool prior to the issuance of the offered certificates, unless
including the mortgage loans would materially alter the characteristics of the
mortgage pool as described in this prospectus supplement. We believe that the
information set forth in this prospectus supplement will be representative of
the characteristics of the mortgage pool as it will be constituted at the time
the offered certificates are issued, although the range of Mortgage Rates and
maturities and other characteristics of the mortgage loans in the mortgage pool
may vary.
A Current Report on Form 8-K will be available to purchasers of the
offered certificates on or shortly after the initial issuance of the offered
certificates and will be filed, together with the pooling and servicing
agreement, with the Securities and Exchange Commission thereafter. In the event
mortgage loans are removed from or added to the mortgage pool as set forth in
the preceding paragraph, the removal or addition will be noted in the Form 8-K.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The certificates will be issued pursuant to a pooling and servicing
agreement, to be dated as of the Cut-Off Date, among us, the servicer, the
special servicer, the trustee, the fiscal agent and the paying agent, and will
represent in the aggregate the entire beneficial ownership interest in a trust
fund consisting of:
o the mortgage loans and all payments under and proceeds of the mortgage
loans received after the Cut-Off Date, exclusive of payments of principal
and interest due on or before the Cut-Off Date and Principal Prepayments
received prior to the Cut-Off Date;
o any REO Property the trust fund may acquire in respect of a defaulted
mortgage loan;
o the funds or assets as from time to time are deposited in the
certificate account;
o the rights of the mortgagee under all insurance policies with respect to
the mortgage loans; and
o some of our rights under the mortgage loan purchase and sale agreements
relating to mortgage loan document delivery requirements and the
representations and warranties of the mortgage loan sellers regarding the
mortgage loans, including the rights to enforce the obligations of the
mortgage loan sellers to repurchase or substitute Qualifying Substitute
Mortgage Loans for defective mortgage loans.
The certificates will consist of the following eighteen classes: 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, Class M, Class R-I, Class R-II and
Class R-III. The certificates will have the following designations:
<TABLE>
<S> <C>
Class A Certificates ................... Class A-1 and Class A-2 Certificates
Interest Only Certificates ............. Class X Certificates
Senior Certificates .................... Class A and Class X Certificates
Subordinate Certificates ............... 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
REMIC Regular Certificates ............. Senior Certificates and Subordinate Certificates
Residual Certificates .................. Class R-I, Class R-II and Class R-III
Certificates
Private Certificates ................... Class G, Class H, Class I, Class J, Class K, Class
L and Class M Certificates
Principal Balance Certificates ......... 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
</TABLE>
Only the Class A, Class B, Class C, Class D, Class E, Class F and Class X
Certificates are offered hereby. The Private Certificates have not been
registered under the Securities Act of 1933 and are not offered hereby.
Upon initial issuance, the Principal Balance Certificates will have the
following aggregate certificate balances (in each case, subject to a variance
of plus or minus 5%):
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<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 ......... $260,078,000 29.279% 19.5%
Class A-2 ......... $454,979,000 51.221% 19.5%
Class B ........... $ 31,089,000 3.500% 16.0%
Class C ........... $ 35,531,000 4.000% 12.0%
Class D ........... $ 8,882,000 1.000% 11.0%
Class E ........... $ 26,648,000 3.000% 8.0%
Class F ........... $ 8,882,000 1.000% 7.0%
Classes G-M $ 62,180,752 7.000% --
</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 that certificate on that Distribution Date, and will be
further reduced by any Realized Losses allocated to that certificate on that
Distribution Date. See "--Distributions--Application of Available Distribution
Amount" and "----Subordination; Allocation of Losses, Shortfalls and Expenses"
below.
The Interest Only Certificates will not have a certificate balance. That
class of certificates will represent the right to receive distributions of
interest accrued as described in this prospectus supplement on a notional
amount equal to 100% of the aggregate Scheduled Principal Balance of the
mortgage loans outstanding from time to time. The Interest Only Certificates
will have an initial aggregate notional amount of $888,269,752, subject to a
permitted variance of plus or minus 5%. The notional amount of each Interest
Only Certificate is used solely for the purpose of determining the amount of
interest to be distributed on that certificate and does not represent the right
to receive any distributions of principal.
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. You may hold and trade the Class X
Certificates only in minimum denominations of $1,000,000 (notional amount). 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 DTC. We have
been informed by DTC that DTC's nominee initially will be Cede & Co. No
Certificate Owner will be entitled to receive a Definitive Certificate
representing that 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 Participants, and
all references in this prospectus supplement 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 those 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.
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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 Clearstream or Euroclear (in Europe). Transfers within DTC, Clearstream 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 Clearstream or Euroclear,
on the other, will be effected in DTC through Citibank, N.A. or The Chase
Manhattan Bank, the relevant depositaries of Clearstream and Euroclear,
respectively.
Because of time-zone differences, credits of securities received in
Clearstream 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. Those credits or any
transactions in those securities settled during this processing will be
reported to the relevant Euroclear participant or Clearstream customer on that
business day. Cash received in Clearstream or Euroclear as a result of sales of
securities by or through a Clearstream 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 Clearstream or Euroclear cash account only as of
the business day following settlement in DTC.
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 the time, if any, when 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 the 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 in this
prospectus supplement, on the 15th day of each month, or if any such 15th day
is not a business day, on the next succeeding business day, commencing in
March, 2000. Except as otherwise described below, all of these distributions
will be made to the persons in whose names the certificates are registered at
the close of business on the related Record Date (as defined below) and, as to
each of these certificateholders, 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 that certificateholder
will have provided the paying agent with wiring instructions on or before the
related Record Date, or otherwise by check mailed to that certificateholder.
The final distribution on any certificate (determined without regard to any
possible future reimbursement of any Realized Losses previously allocated to
that certificate) will be made in a like manner, but only upon presentation and
surrender of that certificate at the location that will be specified in a
notice of the pendency of that final distribution. Any distribution that is to
be made with respect to a certificate in reimbursement of a Realized Loss
previously allocated to that certificate, which reimbursement is to occur after
the date on which that 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 that
certificate. All distributions made on or with respect to a class of
certificates will be allocated pro rata among the certificates of that class
based on their respective Percentage Interests (as defined below) in that
class.
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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 that Distribution Date. The
"Available Distribution Amount" for any Distribution Date will, in general,
equal the sum of:
1. all amounts on deposit in the Distribution Account (described below) as
of the commencement of business on that Distribution Date, exclusive of
any portion thereof that represents one or more of the following:
o scheduled payments collected but due on a due date subsequent to the
related Collection Period;
o yield maintenance charges (which are separately distributable on the
certificates as hereinafter described);
o 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, the paying agent, the trustee and
the Related Trust Fund Servicer as compensation or in reimbursement of
outstanding Advances);
o amounts deposited in the Certificate Account in error; and
o if that 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;
2. to the extent not already included in clause 1., any P&I Advances made
and any Compensating Interest Payments paid with respect to that
Distribution Date; and
3. if that 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.
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 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 that Distribution Date occurs, to the extent a scheduled payment or P&I
Advance is timely made in respect thereof for that due date (all amounts so
deposited with respect to scheduled payments due in any applicable January and
February, the "Interest Reserve Amount"). In addition, we anticipate that on
the closing date for the sale of the certificates to the underwriters, we will
make a deposit to the Interest Reserve Account with respect to each Interest
Reserve Loan in an amount equal to one day's interest accrued at the related
Net Mortgage Rate. With respect to the Distribution Date occurring in March of
each year, 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
that withdrawn amount is to be included as part of the Available Distribution
Amount for that Distribution Date.
Application of Available Distribution Amount. On each Distribution Date,
except as described under "----Optional Termination; Retirement of
Certificates" 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 that
Distribution Date for the following purposes and in the following order of
priority:
1. to the holders of the Class A-1, Class A-2 and Class X Certificates, the
Distributable Certificate Interest Amount in respect of each of those
classes of certificates for that Distribution Date, pro rata in
proportion to the Distributable Certificate Interest Amount payable in
respect of each of those classes;
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<PAGE>
2. to the holders of the Class A-1 Certificates, the Principal Distribution
Amount for that Distribution Date, until the aggregate certificate
balance of the Class A-1 Certificates has been reduced to zero;
3. 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 that 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;
4. 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 those 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 those
Realized Losses at the applicable pass-through rate;
5. to the holders of the Class B Certificates, the Distributable
Certificate Interest Amount in respect of that class of certificates for
that Distribution Date;
6. 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 that 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;
7. to the holders of the Class B Certificates, to reimburse them for any
Realized Losses previously allocated to that class of certificates, plus
interest on those Realized Losses at the applicable pass-through rate;
8. to the holders of the Class C Certificates, the Distributable
Certificate Interest Amount in respect of that class of certificates for
that Distribution Date;
9. 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 that 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;
10. to the holders of the Class C Certificates, to reimburse them for any
Realized Losses previously allocated to that class of certificates, plus
interest on those Realized Losses at the applicable pass-through rate;
11. to the holders of the Class D Certificates, the Distributable
Certificate Interest Amount in respect of that class of certificates for
that Distribution Date;
12. 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 that 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;
13. to the holders of the Class D Certificates, to reimburse them for any
Realized Losses previously allocated to that class of certificates, plus
interest on those Realized Losses at the applicable pass-through rate;
14. to the holders of the Class E Certificates, the Distributable
Certificate Interest Amount in respect of that class of certificates for
that Distribution Date;
15. 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 that 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;
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<PAGE>
16. to the holders of the Class E Certificates, to reimburse them for any
Realized Losses previously allocated to that class of certificates, plus
interest on those Realized Losses at the applicable pass-through rate;
17. to the holders of the Class F Certificates, the Distributable
Certificate Interest Amount in respect of that class of certificates for
that Distribution Date;
18. 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 that 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;
19. to the holders of the Class F Certificates, to reimburse them for any
Realized Losses previously allocated to that class of certificates, plus
interest on those Realized Losses at the applicable pass-through rate;
and
20. 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 of those classes is reduced to zero; and, second,
to the Class A-1 and Class A-2 Certificates to reimburse them for any Realized
Losses previously allocated to those classes of certificates, pro rata, based
on their respective entitlements to reimbursement, for the unreimbursed amount
of Realized Losses previously allocated to those 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 that Distribution 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 that class of certificates for that 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 that class of
certificates and (b) the aggregate of the remaining Principal
Distribution Amount for that 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 that class of certificates and for which no reimbursement has
previously been paid, plus (b) all unpaid interest on those amounts
accrued at the pass-through rate for that class.
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 on each Distribution Date to the
holders of the Class M Certificates (regardless of whether the certificate
principal balance of the Class M Certificates has
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been reduced to zero) and Excess Liquidation Proceeds will be deposited to the
Reserve Account. 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 the Reserve Account to the special servicer as
additional special servicer compensation.
Pass-Through Rates. 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 7.640% and 7.780% per annum, respectively; provided, however, that each of
those pass-through rates will not exceed the NWAC Rate (as defined below) for
that Distribution Date.
The pass-through rates of the Class B, Class C, Class D, Class E and Class
F Certificates for the initial Distribution Date will be 7.772%, 7.892%,
7.902%, 7.902% and 7.902% per annum, respectively. For interest periods
relating to Distribution Dates after March 15, 2000, the pass-through rate of
the Class B Certificates will be the NWAC Rate for that Distribution Date minus
0.130% per annum, the pass-through rate of the Class C Certificates will be the
NWAC Rate for that Distribution Date minus 0.010% per annum, and the
pass-through rate of the Class D, Class E and Class F Certificates will be a
per annum rate equal to the NWAC Rate for that Distribution Rate.
The pass-through rate 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 6.50% per
annum; provided, however, that this pass-through rate will not exceed the
Weighted Average Net Mortgage Rate (as defined below) for that Distribution
Date.
The pass-through rate applicable to the Class X Certificates for the
initial Distribution Date will initially equal approximately 0.24256% 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
that Distribution Date, over (ii) the weighted average of the pass-through
rates applicable to the respective classes of Principal Balance Certificates
for that Distribution Date, the relevant weighting to be on the basis of the
respective aggregate certificate balances of the Principal Balance Certificates
immediately prior to that Distribution Date. In addition, subject to reduction
by the effect of modifications, waivers or amendments subsequent to the Cut-Off
Date, the Class X Certificates will generally receive on an annual basis with
respect to each Interest Reserve Loan the excess of interest actually accrued
on that loan (other than Excess Interest, if any) over the interest that would
have accrued on that loan at the Mortgage Rate applied on the basis of a 360
day year consisting of twelve 30 day months.
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, weighted on the basis of their respective Scheduled Principal
Balances as of the close of business on the preceding Distribution Date. For
purposes of calculating interest accrued on the certificates, the NWAC Rate
will be applied on the basis of a 360 day year consisting of twelve 30 day
months.
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 that mortgage loan subsequent
to the closing date for the sale of the certificates to the underwriters. When
calculating the pass-through rate and the resulting interest accrual for each
class of certificates for each Distribution Date, the Net Mortgage Rate will be
applied on the basis of a 360 day year consisting of twelve 30 day months
regardless of whether the related mortgage loan is an Interest Reserve Loan.
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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 that class of certificates for that 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 that Distribution Date to reduce the Distributable
Certificate Interest Amount payable in respect of that class in accordance with
the terms of the pooling and servicing agreement and (b) the portion of the
Distributable Certificate Interest Amount for that 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").
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 within 60 days after the
maturity date thereof) during the related Collection Period, and the date that
payment was made occurred prior to the due date for that mortgage loan in that
Collection Period. For any Distribution Date, a Balloon Interest Shortfall will
arise with respect to any Balloon Payment (other than with respect to voluntary
Balloon Payments made with respect to any Specially Serviced Mortgage Loans)
made more than 60 days after its maturity date during the related Collection
Period, and the date that payment was made occurred prior to the due date for
that mortgage loan in that Collection Period. Those shortfalls arise because
the amount of interest (net of the Servicing Fee and Special Servicing Fee, if
applicable, and the Trustee Fee and Excess Interest) that accrues on the amount
of that 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 that mortgage loan or on that Balloon Payment for the 30
days ending on that due date if that Principal Prepayment or Balloon Payment
had not been made prior to that due date (net of the Servicing Fee or the
Special Servicing Fee, as applicable, and the Trustee Fee) over (b) the
aggregate interest that did accrue on that mortgage loan through the date that
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
that Balloon Payment made more than 60 days after its maturity date for the 30
days ending on the related due date if that Balloon Payment had not been made
prior to that 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 that
Balloon Payment through the date that 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 the related mortgage loan
or Balloon Payment, a "Prepayment Interest Excess" will arise since the amount
of interest which accrues on the amount of that 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 that due date to the date that payment was made (net of the
Servicing Fee and Special Servicing Fee, if applicable, and the Trustee Fee and
any Excess Interest), 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 that Balloon Payment will exceed the
amount of interest accruing on a corresponding principal amount of the
certificates. The amount of the Balloon Interest Excess in any such case will
generally equal the interest that accrues on the Balloon Payment from that due
date to the date that payment was made (net of the Servicing Fee and Special
Servicing Fee, if applicable, and the Trustee Fee and any Excess Interest), to
the extent collected.
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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 those 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
that excess. Likewise, to the extent that the aggregate Prepayment Interest
Shortfalls on all Specially Serviced Mortgage Loans that result from voluntary
Principal Prepayments (and not from Liquidation Proceeds or from modifications
to Specially Serviced Mortgage Loans) exceed the aggregate Prepayment Interest
Excesses for those mortgage loans for the Collection Period related to a
Distribution Date, the Special Servicing Fee will be reduced by the amount of
that excess. See "Servicing of the Mortgage Loans----Servicing and Other
Compensation and Payment of Expenses----Servicer Compensation" and "----Special
Servicer Compensation" in this prospectus supplement. Any such reduction of the
Servicing Fee or the Special Servicing Fee to cover those 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 that 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 that class of certificates. See "Servicing of the
Mortgage Loans--Servicing and Other Compensation and Payment of Expenses" in
this prospectus supplement.
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 those mortgage
loans for that 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 those mortgage loans
for that Distribution Date, or to the extent that any Balloon Interest Excesses
on all Balloon Loans exceed the aggregate Balloon Interest Shortfalls for those
Balloon Loans for that 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:
o 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
o 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 in this prospectus supplement) 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 that payment or other collection that
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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 Principal Prepayments, Insurance Proceeds, Liquidation Proceeds and
REO Income.
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 that due date (taking into account any waiver,
modification or amendment of the terms of that mortgage loan subsequent to the
closing date for the sale of the certificates to the underwriters, whether
agreed to by the special servicer or occurring in connection with a bankruptcy
proceeding involving the related borrower).
The Assumed Scheduled Payment deemed due on any Balloon 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 that date if the related Balloon Payment had not come
due, but rather that Balloon 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 that REO Property.
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 of those classes an amount equal to the product of (a) a
fraction, the numerator of which is the amount distributed as principal to that
class on that Distribution Date, and the denominator of which is the total
amount distributed as principal to all classes of certificates on that
Distribution Date, (b) the Base Interest Fraction for the related principal
prepayment and that class of offered certificates and (c) the aggregate amount
of yield maintenance charges collected on that principal prepayment during the
related Collection Period. Any yield maintenance charges collected during the
related Collection Period remaining after those 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 that class of offered certificates and (ii) the Yield Rate
used in calculating the yield maintenance charge with respect to that 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 that principal prepayment;
provided, however, that under no circumstances shall the Base Interest Fraction
be greater than one. If that 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. Any yield maintenance charges distributed to holders of a class
of certificates may not be sufficient to compensate those holders for any loss
in yield attributable to the related Principal Prepayments.
For a description of yield maintenance charges, see "Description of the
Mortgage Pool--Yield Maintenance, Prepayment and Lockout Provisions" in this
prospectus supplement. See also "Legal Aspects of Mortgage Loans--Default
Interest and Limitations on Prepayments" in the prospectus regarding the
enforceability of yield maintenance charges.
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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 that class of certificates would be reduced to zero based on the
assumptions set forth below. That Distribution Date shall in each case be as
follows:
<TABLE>
<CAPTION>
CLASS DESIGNATION EXPECTED FINAL DISTRIBUTION DATE
----------------- --------------------------------
<S> <C>
Class A-1 ............... February 15, 2009
Class A-2 ............... February 15, 2010
Class B ................. February 15, 2010
Class C ................. February 15, 2010
Class D ................. February 15, 2010
Class E ................. February 15, 2010
Class F ................. February 15, 2010
Class X ................. November 15, 2019
</TABLE>
The Expected Final Distribution Dates set forth above were calculated
without regard to any delays in the collection of Balloon Payments and without
regard to a reasonable liquidation time with respect to any mortgage loans that
may become delinquent. Accordingly, in the event of defaults on the mortgage
loans (or in the event the ARD Loans are not prepaid on their Anticipated
Repayment Dates), 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 and assuming the ARD Loans are prepaid on
their Anticipated Repayment Dates. Since the rate of payment (including
prepayments) of the mortgage loans may exceed the scheduled rate of payments,
and could exceed the 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
Assumed 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 February 2000:
<TABLE>
<S> <C> <C>
The close of business on
February 1 (A) Cut-Off Date.
February 29 (B) Record Date for all classes of certificates.
February 1 -- March 8 (C) The Collection Period. The servicer receives
scheduled payments due on March 1 and any
Principal Prepayments made after the Cut-Off Date
and on or prior to March 8.
March 8 (D) Determination Date.
March 14 (E) Servicer remittance date.
March 15 (F) Distribution Date.
</TABLE>
Succeeding monthly periods follow the pattern of (B) through (F) (except
as described below).
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(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 February 1, 2000 (after deducting principal payments due on or
before that date, whether or not received). Principal payments due on or before
that 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 March 8, 2000 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 that Distribution Date.
(F) The paying agent will make distributions to certificateholders on the
15th day of each month or, if that day is not a business day, the next
succeeding business day.
SUBORDINATION; ALLOCATION OF LOSSES, SHORTFALLS AND EXPENSES
As and to the extent described in this prospectus supplement, 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 in this prospectus supplement, 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
those classes of certificates on each Distribution Date, and the ultimate
receipt by those holders of principal equal to, in each case, the entire
certificate balance of that 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 "----Distributions----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-1 Certificates, for so long as they are
outstanding, and then to the Class A-2 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 balances of
those classes 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 first by the
Class A-1 Certificates, for so long as they are outstanding, and then by the
Class A-2 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
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of the Class A Certificates, the herein described successive allocation to the
Subordinate Certificates, in alphabetical order of class designation, in each
case until that class is paid in full, of the entire Principal Distribution
Amount for each Distribution Date will provide a similar benefit to each of
those classes of certificates as regards the relative amount of subordination
afforded thereto by the other classes of certificates with later alphabetical
class designations.
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 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. The Realized Loss, if any, in respect of a liquidated mortgage loan
(or related REO Property) will generally equal the excess, if any, of:
o the outstanding principal balance of that mortgage loan as of the date
of liquidation, together with all accrued and unpaid interest thereon at
the related Mortgage Rate; over
o the aggregate amount of Liquidation Proceeds, if any, recovered in
connection with that liquidation (net of any portion of those liquidation
proceeds that is payable or reimbursable in respect of related
liquidation and other servicing expenses), plus any Expense Losses.
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:
o any interest paid to the servicer, trustee, fiscal agent and/or the
Related Trust Fund Servicer in respect of unreimbursed Advances;
o all Special Servicer Compensation payable to the special servicer from
amounts that are part of the trust fund;
o certain other expenses of the trust fund specified in the pooling and
servicing agreement, including, but not limited to, reimbursements and
indemnification payments to the trustee, the paying agent and related
persons, reimbursements and indemnification payments to us, the servicer,
the special servicer, the Related Trust Fund Servicer, the Related Trust
Fund Special Servicer and related persons, taxes payable from the assets
of the trust fund, the costs and expenses of any tax audits with respect
to the trust fund and 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
o 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 that 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.
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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 that mortgage loan as of the
immediately preceding Determination Date less any Appraisal Reduction in effect
with respect to that mortgage loan and the denominator of which is the
Scheduled Principal Balance of the mortgage loan as of that 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 that 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.
The servicer will be entitled to interest on P&I Advances, which interest
will accrue at a rate equal to 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. This 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 that P&I Advance, and if the trustee fails to make
any required P&I Advance, the fiscal agent is required to make that P&I
Advance.
The Related Trust Fund Servicer is obligated to make P&I Advances on the
Pari Passu Loan as described below under "--Advances on the Pari Passu Loan."
The servicer will be obligated to make a P&I Advance with respect to the Pari
Passu Loan only if it has knowledge, or would have had knowledge if it had
acted in accordance with the Servicing Standard, of any failure of the Related
Trust Fund Servicer to make any P&I Advance on the Pari Passu Loan under the
Related Pooling and Servicing Agreement.
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" 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 some circumstances without regard to the
relationship between the expense and the funds from which it is being paid.
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With respect to mortgage loans other than the Pari Passu Loan, 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:
o insurance premiums;
o real estate taxes and assessments in respect of that REO Property that
may result in the imposition of a lien;
o any ground rents in respect of that REO Property; and
o costs and expenses necessary to maintain, manage or operate that REO
Property.
Notwithstanding the foregoing, the servicer will be obligated to make 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 the
mortgage loan or REO Property for which the Servicing Advances will be made.
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 related recoveries, those
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 that Servicing Advance, and if the
trustee fails to make any required Servicing Advance, the fiscal agent is
required to make that Servicing Advance.
The Related Trust Fund Servicer is obligated to make Servicing Advances on
the Pari Passu Loan as described below under "--Advances on the Pari Passu
Loan." The servicer will be obligated to make a Servicing Advance with respect
to the Pari Passu Loan only if it has knowledge, or would have had knowledge if
it had acted in accordance with the Servicing Standard, of any failure of the
Related Trust Fund Servicer to make any Servicing Advance with respect to the
mortgaged property securing the Pari Passu Loan under the Related Pooling and
Servicing Agreement.
Advances on the Pari Passu Loan. The Pari Passu Loan, as to which there is
pari passu debt, as described above under "Description of the Mortgage
Pool--The Pari Passu Loan," will be serviced by the Related Trust Fund Servicer
and specially serviced by the Related Trust Fund Special Servicer pursuant to
the Related Pooling and Servicing Agreement. Advances will be made with respect
to the Pari Passu Loan by the Related Trust Fund Servicer. Repayment of those
Advances (and any interest accrued thereon) will be from the proceeds of the
Pari Passu Loan prior to the transfer of those proceeds by the Related Trust
Fund Servicer to the servicer. If any previously made Advances are subsequently
determined to be nonrecoverable under the Related Pooling and Servicing
Agreement, the Related Trust Fund Servicer will be repaid, together with
interest at the Advance Rate, from the assets of the trust fund. The Related
Mortgage Loan Servicer's determination of nonrecoverability with respect to
Advances on the Pari Passu Loan will be conclusive and binding upon the
certificateholders and may be relied upon by the trustee, the fiscal agent and
the servicer.
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
that determination, with copies of appraisals or internal valuations, if any,
or other information that supports that 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 that Advance and shall have no
obligation (but will be entitled) to make a separate determination of
recoverability.
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APPRAISAL REDUCTIONS
Not later than the earliest of:
1. the date 120 days after the occurrence of any delinquency in payment
with respect to a mortgage loan if that delinquency remains uncured;
2. 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 the petition or appointment
remains in effect;
3. 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
4. the date 30 days following the date a mortgaged property becomes an REO
Property (each of 1., 2., 3. and 4., 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 2. above, that appraisal will be obtained no later than
60 days after receipt of the notice described in 2. above and an internal
valuation will be obtained no later than 30 days after receipt of that notice.
As a result of that 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 the sum of:
o the Scheduled Principal Balance of that mortgage loan;
o to the extent not previously advanced by the servicer, the trustee or
the fiscal agent, all accrued and unpaid interest on that mortgage loan;
o all related unreimbursed Advances and interest on those Advances at the
Advance Rate (as defined in this prospectus supplement); and
o 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 that item, including, but not limited to maintenance reserves,
replacement reserves and environmental reserves),
over 90% of the value (net of any prior mortgage liens) of the related
mortgaged property or REO Property, as determined by the appraisal or internal
valuation, or with respect to the Pari Passu Loan, the pro rata portion of the
value allocable thereto. 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.
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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" above.
REPORTS TO CERTIFICATEHOLDERS; CERTAIN AVAILABLE INFORMATION
Distribution Date Statements. 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
distribution date statement, in the form of Annex C to this prospectus
supplement setting forth, to the extent applicable:
1. the amount, if any, of the distributions made on that Distribution Date
to the holders of each class of Principal Balance Certificates applied to
reduce the aggregate certificate balance thereof;
2. the amount of the distribution made on that Distribution Date to holders
of each class of REMIC Regular Certificates allocable to (a) interest and
(b) yield maintenance charges;
3. 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 that Distribution Date;
4. 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;
5. 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;
6. 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 that 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 the REO Property by the loan number of
the related mortgage loan;
7. the aggregate certificate balance or notional amount of each class of
REMIC Regular Certificates before and after giving effect to the
distribution made on that Distribution Date;
8. the aggregate amount of Principal Prepayments made during the related
Collection Period;
9. the pass-through rate applicable to each class of REMIC Regular
Certificates for that Distribution Date;
10. the aggregate amount of servicing fees paid to the servicer and the
special servicer;
11. the amount of Unpaid Interest and Realized Losses, if any, incurred
with respect to the mortgage loans;
12. the aggregate amount of Servicing Advances and P&I Advances outstanding
that have been made by the servicer, the Related Trust Fund Servicer, the
trustee and the fiscal agent separately stated;
13. 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 that Distribution Date; and
14. any other information as shall be specified in the pooling and
servicing agreement.
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In the case of information furnished pursuant to items 1., 2. and 11.
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 be required to make available each month, to any
interested party, the foregoing distribution date reports, the CMSA bond file
and the CMSA collateral summary file via its website, initially located at
"www.ctslink.com/cmbs." The distribution date reports will also be required to
be made available via the paying agent's fax on demand service to any
interested party. The paying agent's fax-on-demand service may be accessed by
calling (301) 815-6610. For assistance with the above-mentioned services, you
may call (301) 815-6600.
The paying agent will also be required to make the following CMSA reports
available via its website, to the extent timely received from the servicer
pursuant to the pooling and servicing agreement: the loan setup file, the loan
periodic update file, the property file, the comparative financial status
report, the delinquent loan status report, the historical loan modification
report, the historical liquidation report, the REO status report and the
servicer watch list. The paying agent will be required to make these reports
available each month to any Privileged Person via its website. The comparative
financial status report, the delinquent loan status report, the historical loan
modification report, the historical liquidation report, the REO status report
and the servicer watch list will be substantially in the form included in Annex
C to this prospectus supplement. The paying agent will not be required to make
the property file available until the Distribution Date in April 2000. In
addition, pursuant to the pooling and servicing agreement, the paying agent
will be required to make available to Privileged Persons as a convenience (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. We
may, at any time, direct the paying agent to make any or all of the foregoing
reports available to any interested party. The paying agent will make no
representations or warranties as to the accuracy or completeness of those
documents and will assume no responsibility therefor. In addition, 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, the
paying agent may require registration and the acceptance of a disclaimer. The
paying agent shall not be liable for the dissemination of information in
accordance with the pooling and servicing agreement.
Operating Statement Analysis Reports. On an annual basis, the servicer
will be required to deliver to the trustee and the paying agent, an operating
statement analysis report (in CMSA format) 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 that
information is provided to the servicer) containing the information and
analyses required by the pooling and servicing agreement, including, without
limitation, debt service coverage ratios, to the extent available. This report
will be substantially in the form included in Annex C to this prospectus
supplement. Subject to satisfaction of the conditions described above under
"--Distribution Date Reports," the paying agent will be required to make the
most recent annual report available to Privileged Persons via its website,
initially located at "www.ctslink.com/cmbs."
Other Information. The pooling and servicing agreement generally will
require that the servicer make available, at its offices primarily responsible
for servicing the mortgage loans or at any 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 us, 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):
o the pooling and servicing agreement and any amendments thereto;
o all reports or statements delivered to the paying agent since the
closing date for the sale of the certificates to the underwriters;
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o all officer's certificates delivered to the trustee or the paying agent
since the closing date for the sale of the certificates to the
underwriters;
o all accountants' reports delivered to the trustee or the paying agent
since the closing date for the sale of the certificates to the
underwriters;
o 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;
o 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;
o 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
o 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 these copies. Recipients of this information will
generally be required to acknowledge that the information may be used only in
connection with an evaluation of the certificates by the recipient.
OPTIONAL TERMINATION; RETIREMENT OF CERTIFICATES
We, the servicer, the special servicer, the majority of the holders of the
Controlling Class, the operating adviser 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:
o 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 the purchase occurs; plus
o unreimbursed Advances, with interest thereon at the Advance Rate; plus
o 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
Internal Revenue 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 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 the 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
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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 that REO Property is liquidated.
In connection therewith, operating revenues and other proceeds derived from
that REO Property (exclusive of related operating costs) will be "applied" by
the servicer as principal, interest and other amounts "due" on the related
mortgage loan and, subject to the recoverability determination described under
"--Advances" above and the effect of any Appraisal Reductions described under
"--Appraisal Reductions" above, the servicer will be required to make P&I
Advances in respect of the related mortgage loan, in all cases as if the
related mortgage loan had remained outstanding. References to "mortgage loan"
and "mortgage loans" in the definitions of "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 will act as trustee. LaSalle Bank
National Association 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:
o an institution insured by the FDIC;
o a corporation or national bank, organized and doing business under the
laws of the United States of America or any state thereof, authorized
under those 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
o an institution whose long-term senior unsecured debt (or that of its
fiscal agent, if applicable) is rated not less than "AA" by each of DCR
and Fitch (or any other ratings as each of these rating agencies would
permit without resulting in a withdrawal, downgrade or qualification (if
applicable) of the then current rating on any class of certificates).
The corporate trust office of the trustee responsible for administration
of the trust fund is located at 135 South LaSalle Street, Suite 1625, Chicago,
Illinois 60603, Attention: Asset-Backed Securities Trust Services Group--Bear
Stearns Commercial Mortgage Securities Inc., Commercial Mortgage Pass-Through
Certificates, Series 2000-WF1. See "Description of the Pooling and Servicing
Agreements--The Trustee", "--Duties of the Trustee", "--Regarding the Fees,
Indemnities and Powers of 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 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 June 30, 1999, the fiscal agent had
consolidated assets of approximately $480 billion. In the event that LaSalle
Bank National Association 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.
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THE PAYING AGENT, CERTIFICATE REGISTRAR AND AUTHENTICATING AGENT
Norwest Bank Minnesota, National Association will serve as the paying
agent. In addition, Norwest Bank Minnesota, National Association will serve as
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. Norwest Bank Minnesota, National Association's principal office
is located at Norwest Center, Sixth and Marquette, Minneapolis, Minnesota
55479-0113. Norwest Bank Minnesota, National Association is an affiliate of the
servicer. As compensation for the performance of its duties as paying agent,
certificate registrar and authenticating agent, Norwest Bank Minnesota,
National Association will be paid a portion of the monthly Trustee Fee as set
forth in the pooling and servicing agreement.
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any offered certificate will be affected by:
o the pass-through rate in effect from time to time for that offered
certificate;
o the price paid for that offered certificate and, if the price was other
than par, the rate and timing of principal payments (including voluntary
and involuntary principal prepayments, repurchases as a result of
breaches of a mortgage loan seller's representations and warranties and
delinquent payments);
o losses and shortfalls on the mortgage loans; and
o the extent to which principal payments or losses are applied or losses
are allocated on any Distribution Date in reduction of the certificate
balance or notional amount of the class to which that certificate belongs
or in reduction of amounts distributable thereon. See "Description of the
Certificates--Distributions--Application of Available Distribution
Amount" and "--Distributions--Principal Distribution Amount" in this
prospectus supplement.
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 7.640% and 7.780% per annum, respectively; provided, however, that each of
these pass-through rates will not exceed the Weighted Average Net Mortgage Rate
for that Distribution Date. The initial pass-through rates for the Class B,
Class C, Class D, Class E, and Class F Certificates will be 7.772%, 7.892%,
7.902%, 7.902% and 7.902%, respectively. For interest periods relating to
Distribution Dates after March 15, 2000, the pass-through rate of the Class B
Certificates will be the NWAC Rate for that Distribution Date minus 0.13% per
annum, the pass-through rate of the Class C Certificates will be the NWAC Rate
for that Distribution Date minus 0.010% per annum, and the pass-through rate of
the Class D, Class E and Class F Certificates will be a per annum rate equal to
the NWAC Rate for that Distribution Date. Because the pass-through rates for
the Class B, Class C, Class D, Class E and Class F Certificates will adjust
with the NWAC Rate, the yield on each of those classes of certificates will be
sensitive to changes in the relative composition of the mortgage pool as a
result of scheduled amortization, voluntary prepayments and involuntary
liquidations of the mortgage loans. See "Description of the Mortgage Pool" in
this prospectus supplement and "--Rate and Timing of Principal Payments" below.
Some 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 those 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 those mortgage loans. However, in the 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 that
rate and the Net Mortgage Rate of those
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mortgage loans. Accordingly, the Class A-1 and Class A-2 Certificates also may
be sensitive to changes in the relative composition of the mortgage pool as a
result of scheduled amortization, voluntary prepayments and involuntary
liquidations of the mortgage loans. See "Description of the Mortgage Pool" in
this prospectus supplement and "--Rate and Timing of Principal Payments" below.
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 and repurchases as a
result of breaches of representations and warranties made by the sellers). 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 borrowers under the ARD Loans may have
incentives to prepay those mortgage loan on their related Anticipated Repayment
Dates, there can be no assurance that the borrowers under the ARD Loans will be
able to prepay those mortgage loans on their related Anticipated Repayment
Dates. The failure of the related borrower to prepay an ARD Loan on its
Anticipated Repayment Date will not be an event of default under the terms of
that Mortgage Loan. However, 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.
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 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" in this prospectus supplement and "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 that rate or the rate of
principal prepayments in particular. We are 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
in the mortgage pool.
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 those 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 those certificates. You 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 you 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 you 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 your yield to maturity. As a result, the effect on your yield of principal
payments distributed on offered certificates purchased by you occurring at a
rate higher (or lower) than the rate anticipated by you 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 those 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
S-93
<PAGE>
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 that class of certificates. In the event of the reduction of the
certificate balances of all those classes of certificates to zero, 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).
As more fully described in this prospectus supplement under "Description of the
Certificates--Distributions--Prepayment Interest Shortfalls and Prepayment
Interest Excesses," Net Aggregate Prepayment Interest Shortfalls and Net
Aggregate Balloon Interest Shortfalls will be allocated to each class of
certificates, pro rata, in each case reducing interest otherwise distributable
thereon.
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:
o prevailing interest rates;
o the terms of the mortgage loans (for example, due-on-sale clauses,
Lockout Periods, yield maintenance charges and amortization terms that
require Balloon Payments);
o 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 those areas;
o the quality of management of the mortgaged properties;
o the servicing of the mortgage loans; and
o possible changes in tax laws and other opportunities for investment.
See "Risk Factors" and "Description of the Mortgage Pool" in this prospectus
supplement 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 and/or yield maintenance periods,
although the enforceability of those provisions is, in many states, subject to
certain equitable principles even outside of the bankruptcy context. See
"Description of the Mortgage Pool--Yield Maintenance, Prepayment and Lockout
Provisions" in this prospectus supplement.
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.
We make 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 those 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.
S-94
<PAGE>
Unpaid Distributable Certificate Interest. As described under "Description
of the Certificates-- Distributions--Application of Available Distribution
Amount" in this prospectus supplement, 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 that class, the shortfall will be
distributable to holders of that 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 that class of certificates for so long as it is outstanding.
YIELD SENSITIVITY OF THE CLASS X CERTIFICATES
The table below indicates the sensitivity of the pre-tax corporate bond
equivalent yields to maturity of the Class X Certificates at various prices and
constant prepayment rates. The allocations and calculations do not take account
of any yield maintenance charges. The yields set forth in the table were
calculated by determining the monthly discount rates that, when applied to the
assumed stream of cash flows to be paid on the Class X Certificates, would
cause the discounted present value of that assumed stream of cash flows to
equal the assumed purchase prices plus accrued interest of that class of
certificates and converting those monthly rates to corporate bond equivalent
rates. These calculations do not take into account variations that may occur in
the interest rates at which you may be able to reinvest funds received as
distributions on the Class X Certificates and consequently do not purport to
reflect the return on any investment in that class of certificates when those
reinvestment rates are considered.
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-Scheduled 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 its 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 table has been prepared on the basis of the following
assumptions (collectively, the "Maturity Assumptions"), among others:
o 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 commencing in March, 2000;
o the Mortgage Rate in effect for a mortgage loan as of the Cut-Off Date
will remain in effect until the maturity date of that mortgage loan;
o 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;
o any principal prepayments on the mortgage loans will be received on
their respective due dates after the expiration of any applicable Lockout
and/or Yield Maintenance Period at the respective levels of CPR set forth
in the tables;
o the mortgage loan sellers will not be required to repurchase any
mortgage loan, and no party will exercise its option to purchase all the
mortgage loans and thereby cause an early termination of the trust fund;
o no yield maintenance charges are included in any allocations or
calculations;
S-95
<PAGE>
o no Expense Losses will be incurred;
o any principal prepayments received on the mortgage loans are prepayments
in full;
o the closing date for the sale of the certificates to the underwriters is
February 10, 2000; and
o the ARD Loans prepay on their Anticipated Repayment Dates.
SENSITIVITY TO PRINCIPAL PREPAYMENTS OF THE PRE-TAX YIELDS TO MATURITY OF THE
CLASS X CERTIFICATES
<TABLE>
<CAPTION>
ASSUMED
PURCHASE
PRICE 0% CPR 3%CPR 6% CPR 9%CPR 12% CPR
- ----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1.961% 10.644% 10.643% 10.642% 10.641% 10.640%
1.981% 10.391% 10.390% 10.389% 10.388% 10.387%
2.001% 10.142% 10.141% 10.140% 10.139% 10.138%
</TABLE>
There can be no assurance that the mortgage loans will prepay at any of
the rates shown in the table or at any other particular rate, that the cash
flows on the Class X Certificates will correspond to the cash flows assumed for
purposes of the above table or that the aggregate purchase price of the Class X
Certificates will be as assumed. In addition, it is unlikely that the mortgage
loans will prepay at any of the specified percentages of CPR until maturity or
that all the mortgage loans will so prepay at the same rate. Timing of changes
in the rate of prepayments may significantly affect your actual yield to
maturity, even if the average rate of principal prepayments is consistent with
your expectations. You must make your own decisions as to the appropriate
prepayment assumption to be used in deciding whether to purchase the Class X
Certificates.
THE YIELD TO MATURITY ON THE CLASS X CERTIFICATES WILL BE SENSITIVE TO THE
RATE AND TIMING OF PRINCIPAL PAYMENTS (INCLUDING PREPAYMENTS), PRINCIPAL LOSSES
AND INTEREST RATE DECREASES DUE TO MODIFICATIONS ON THE MORTGAGE LOANS AND TO
OTHER FACTORS SET FORTH IN THIS PROSPECTUS SUPPLEMENT. YOU SHOULD FULLY
CONSIDER THE ASSOCIATED RISKS, INCLUDING THE RISK THAT A RAPID RATE OF
PRINCIPAL PAYMENTS AND/OR PRINCIPAL LOSSES ON THE MORTGAGE POOL COULD RESULT IN
YOUR FAILURE TO FULLY RECOUP YOUR INVESTMENT IN THE CLASS X CERTIFICATES.
WEIGHTED AVERAGE LIFE
The weighted average life of an offered certificate (other than a Class X
Certificate) refers to the average amount of time that will elapse from the
date of its issuance until each dollar allocable to principal of that
certificate is distributed to the investor. The weighted average life of the
Class X Certificates is determined by (i) multiplying the amount of each
reduction in the notional amount of the Class X Certificates by the number of
years from the date of issuance of the Class X Certificates to the related
Distribution Date, (ii) summing the results and (iii) dividing the sum by the
aggregate amount of the reductions in the notional amount of the Class X
Certificates. The weighted average life of any 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, condemnation proceeds, Insurance 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 its 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.
S-96
<PAGE>
The following tables indicate the percentage of the initial certificate
balance of each class of the offered certificates (other than the Class X
Certificates) that would be outstanding after each of the dates shown at
various CPRs and the corresponding weighted average life of each of those
classes of certificates. The tables have been prepared on the basis of the
Maturity Assumptions, among others. To the extent that the mortgage loans have
characteristics that differ from those assumed in preparing the tables set
forth below as well as the weighted average lives and principal or notional
windows set forth under "Certificate Summary" in this prospectus supplement, a
class of offered certificates may mature earlier or later than indicated
therein. 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 and the weighted average lives and principal or
notional windows set forth under "Certificate Summary" in this prospectus
supplement. These variations may occur even if the average prepayment
experience of the mortgage loans were to equal any of the specified CPR
percentages. You are urged to conduct your 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 (other than the Class X Certificates) and
set forth the percentage of the initial certificate balance of that 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
February 15, 2001 ......................... 96 96 96 96 96
February 15, 2002 ......................... 92 92 92 92 92
February 15, 2003 ......................... 87 87 87 87 87
February 15, 2004 ......................... 82 82 82 82 82
February 15, 2005 ......................... 47 47 47 47 47
February 15, 2006 ......................... 41 41 41 41 41
February 15, 2007 ......................... 29 29 29 29 29
February 15, 2008 ......................... 22 22 22 22 22
February 15, 2009 ......................... 0 0 0 0 0
Weighted Average Life (Years)(1) .......... 5.6 5.6 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 the Class A-1 Certificates.
S-97
<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
February 15, 2001 ......................... 100 100 100 100 100
February 15, 2002 ......................... 100 100 100 100 100
February 15, 2003 ......................... 100 100 100 100 100
February 15, 2004 ......................... 100 100 100 100 100
February 15, 2005 ......................... 100 100 100 100 100
February 15, 2006 ......................... 100 100 100 100 100
February 15, 2007 ......................... 100 100 100 100 100
February 15, 2008 ......................... 100 100 100 100 100
February 15, 2009 ......................... 100 100 100 100 100
February 15, 2010 ......................... 0 0 0 0 0
Weighted Average Life (Years)(1) .......... 9.6 9.6 9.6 9.6 9.6
</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 the 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
February 15, 2001 ......................... 100 100 100 100 100
February 15, 2002 ......................... 100 100 100 100 100
February 15, 2003 ......................... 100 100 100 100 100
February 15, 2004 ......................... 100 100 100 100 100
February 15, 2005 ......................... 100 100 100 100 100
February 15, 2006 ......................... 100 100 100 100 100
February 15, 2007 ......................... 100 100 100 100 100
February 15, 2008 ......................... 100 100 100 100 100
February 15, 2009 ......................... 100 100 100 100 100
February 15, 2010 ......................... 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 the Class B Certificates.
S-98
<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
February 15, 2001 ......................... 100 100 100 100 100
February 15, 2002 ......................... 100 100 100 100 100
February 15, 2003 ......................... 100 100 100 100 100
February 15, 2004 ......................... 100 100 100 100 100
February 15, 2005 ......................... 100 100 100 100 100
February 15, 2006 ......................... 100 100 100 100 100
February 15, 2007 ......................... 100 100 100 100 100
February 15, 2008 ......................... 100 100 100 100 100
February 15, 2009 ......................... 100 100 100 100 100
February 15, 2010 ......................... 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 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 the 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
February 15, 2001 ......................... 100 100 100 100 100
February 15, 2002 ......................... 100 100 100 100 100
February 15, 2003 ......................... 100 100 100 100 100
February 15, 2004 ......................... 100 100 100 100 100
February 15, 2005 ......................... 100 100 100 100 100
February 15, 2006 ......................... 100 100 100 100 100
February 15, 2007 ......................... 100 100 100 100 100
February 15, 2008 ......................... 100 100 100 100 100
February 15, 2009 ......................... 100 100 100 100 100
February 15, 2010 ......................... 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 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 the Class D Certificates.
S-99
<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
February 15, 2001 ......................... 100 100 100 100 100
February 15, 2002 ......................... 100 100 100 100 100
February 15, 2003 ......................... 100 100 100 100 100
February 15, 2004 ......................... 100 100 100 100 100
February 15, 2005 ......................... 100 100 100 100 100
February 15, 2006 ......................... 100 100 100 100 100
February 15, 2007 ......................... 100 100 100 100 100
February 15, 2008 ......................... 100 100 100 100 100
February 15, 2009 ......................... 100 100 100 100 100
February 15, 2010 ......................... 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 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 the 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
February 15, 2001 ......................... 100 100 100 100 100
February 15, 2002 ......................... 100 100 100 100 100
February 15, 2003 ......................... 100 100 100 100 100
February 15, 2004 ......................... 100 100 100 100 100
February 15, 2005 ......................... 100 100 100 100 100
February 15, 2006 ......................... 100 100 100 100 100
February 15, 2007 ......................... 100 100 100 100 100
February 15, 2008 ......................... 100 100 100 100 100
February 15, 2009 ......................... 100 100 100 100 100
February 15, 2010 ......................... 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 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
theprincipal balance of the Class F Certificates.
S-100
<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,
subject to the servicing of the Pari Passu Loan by the Related Trust Fund
Servicer and the Related Trust Fund Special Servicer, with the higher of the
following standards of care (the "Servicing Standard"):
o 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; or
o 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 of the following:
o any conflict of interest that it may have;
o any fees or other compensation to which it is entitled and any
relationship it may have with any borrower;
o the different payment priorities among the classes of certificates; and
o its ownership of any certificate.
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 the 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 those 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
some 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, and any such sub-servicer will
receive a fee for the services specified in that 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 or the special 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:
o 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;
o the servicer bears all costs associated with its resignation and the
transfer of servicing; and
o DCR and Fitch have confirmed in writing that the servicing transfer will
not result in a withdrawal, downgrade or qualification (if applicable) of
the then current rating on any class of certificates.
S-101
<PAGE>
Furthermore, the servicer or the special 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.
No such resignation shall become effective until a successor servicer or
special servicer designated by the trustee, with the consent of the depositor,
shall have assumed the servicer's responsibilities and obligations under the
pooling and servicing agreement. 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.
The Pari Passu Loan, as to which there is pari passu debt as described
above under "Description of the Mortgage Pool--The Pari Passu Loan," will be
serviced by the Related Trust Fund Servicer and specially serviced by the
Related Trust Fund Special Servicer pursuant to the Related Pooling and
Servicing Agreement. Generally, Advances will be made with respect to the Pari
Passu Loan by the Related Trust Fund Servicer as described above under
"Description of the Certificates--Advances--
Advances on the Pari Passu Loan." The servicer is obligated to use reasonable
best efforts consistent with the Servicing Standard to monitor the servicing of
the Pari Passu Loan by the Related Trust Fund Servicer and the Related Trust
Fund Special Servicer pursuant to the Related Pooling and Servicing Agreement
and is obligated to enforce the rights of the trust fund (as holder of the Pari
Passu Loan) under the Related Pooling and Servicing Agreement.
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.
Except for the Pari Passu Loan, 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:
o 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 that payment was due;
o any mortgage loan as to which, to the servicer's knowledge, the related
borrower has consented to the appointment of a receiver or conservator in
any insolvency or similar proceeding of or relating to that borrower or
to all or substantially all of its property, or that borrower has become
the subject of a decree or order issued under a bankruptcy, insolvency or
similar law and the decree or order shall have remained undischarged or
unstayed for a period of 60 days;
o 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;
o 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 the
loan documents for that mortgage loan (or, if no grace period is
specified, 60 days);
o any mortgage loan as to which the related 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
o 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").
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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 this transfer, the servicer will continue to receive payments
on the mortgage loan (including amounts collected by the special servicer), to
make required calculations with respect to such mortgage loan, and to make
remittances to the paying agent and prepare required reports to the trustee and
the paying agent with respect to the mortgage loan. If title to the related
mortgaged property is acquired by the trust fund, whether through foreclosure,
deed-in-lieu of foreclosure or otherwise, the special servicer will be
responsible for the operation and management of the related REO Property.
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:
o three consecutive scheduled payments have been made (in the case of any
mortgage loan that was modified, based on the modified terms);
o no other Servicing Transfer Event has occurred and is continuing with
respect to that mortgage loan; and
o the trust fund has been reimbursed for all costs incurred as a result of
the occurrence of the Servicing Transfer Event or those 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.
The servicer and the special servicer and any director, officer, employee
or agent of either of them will be entitled to indemnification from the trust
fund against any loss, liability or expense incurred in connection with any
legal action relating to the pooling and servicing agreement, the mortgage
loans or the certificates other than any loss, liability or expense incurred by
reason of the servicer's or special servicer's willful misfeasance, bad faith
or negligence in the performance of their respective duties thereunder.
Furthermore, the Related Trust Fund Servicer, the Related Trust Fund
Special Servicer and any director, officer, employee or agent of either of them
will be entitled to indemnification by the trust fund against any loss,
liability or and expense incurred in connection with any legal action relating
to the Related Pooling and Servicing Agreement and the pooling and servicing
agreement, and relating to the Pari Passu Loan (but excluding any such losses
allocable to the Related Trust Fund Mortgage Loan) other than any loss,
liability or expense incurred by reason of the Related Trust Fund Servicer's or
the Related Trust Fund Special Servicer's willful misfeasance, bad faith or
negligence in the performance of their respective duties under the Related
Pooling and Servicing Agreement.
THE SERVICER
Wells Fargo Bank, National Association, in its capacity as servicer under
the pooling and servicing agreement, will be responsible for servicing the
mortgage loans (other than the Pari Passu Loan, Specially Serviced Mortgage
Loans and REO Properties). Although the servicer is authorized to employ
agents, including sub-servicers, to directly service the mortgage loans for
which it is responsible, the servicer will remain liable for its servicing
obligations under the pooling and servicing agreement. Wells Fargo Bank,
National Association provides a full range of banking services to individual,
agribusiness, real estate, commercial and small business customers. Wells Fargo
Bank, National Association is an affiliate of the paying agent. See "Servicing
of the Mortgage Loans--General" above.
The servicer's principal servicing offices are located at 555 Montgomery
Street, San Francisco, California 94104.
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As of December 31, 1999, Wells Fargo Bank, National Association was
responsible for servicing approximately 1,888 commercial and multifamily
mortgage loans, totaling approximately $10.84 billion in aggregate outstanding
principal amounts, including loans securitized in mortgage-backed
securitization transactions.
Wells Fargo & Company is the holding company for the servicer. Wells Fargo
& Company files reports with the Securities and Exchange Commission that are
required under the Securities Exchange Act of 1934. Those reports include
information regarding the servicer and may be obtained at the website
maintained by the Securities and Exchange Commission at http://www.sec.gov.
The information set forth in this prospectus supplement concerning the
servicer has been provided by Wells Fargo Bank, National Association.
Accordingly, we make no representations or warranties as to the accuracy or
completeness of that information.
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:
1. 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;
2. 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 us or the trustee;
provided, however, that if the servicer certifies to the trustee and
to us that the servicer is in good faith attempting to remedy that
failure, the cure period will be extended to the extent necessary to
permit the servicer to cure that failure; provided, further that the
cure period may not exceed 90 days;
3. 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 us or the trustee, provided,
however, that if the servicer certifies to the trustee and to us that
the servicer is in good faith attempting to remedy that breach, the
cure period will be extended to the extent necessary to permit the
servicer to cure that breach; provided, further that the cure period
may not exceed 90 days;
4. the trustee shall have received written notice from either DCR or
Fitch that the continuation of the servicer or the special servicer in
that capacity would result in a withdrawal, downgrade or qualification
(if applicable) of the then current rating assigned by that rating
agency to any class of certificates; or
5. events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings and actions by or on behalf of the
servicer indicating its insolvency or inability to pay its
obligations, in each case as specified in the pooling and servicing
agreement.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default described in clauses 2, 3 or 4 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 we or the trustee give written notice to the servicer that the
servicer is terminated. If an Event of Default described in clauses 1 or 5
above has occurred, the obligations and responsibilities of the servicer under
the pooling and servicing agreement will
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terminate immediately upon the date on which we or the trustee give 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 notice to
the servicer of its termination and shall provide notice to the servicer of its
termination if holders of certificates representing more than 25% of the
certificate balance of all certificates so direct the trustee. On the date the
servicer is terminated, 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 its designation,
and the 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 the 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 5. 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 those
conditions.
If the servicer is terminated on the basis of an Event of Default
described in clause 4. of the definition thereof and the terminated servicer
provides the trustee appropriate "request for proposal" materials, then the
trustee will solicit good faith bids for the right to service the mortgage
loans from at least three persons that are qualified to act as servicers under
the pooling and servicing agreement as to whom each of DCR and Fitch has
delivered written confirmation that the appointment of that person as successor
servicer would not result in a withdrawal, downgrade or qualification (if
applicable) of the then current rating on any class of certificates (any such
person so qualified, a "Qualified Bidder"), or, if three Qualified Bidders
cannot be located, then from as many persons as the trustee can determine are
Qualified Bidders. The trustee will select the Qualified Bidder that makes the
highest cash bid or any other Qualified Bidder as the terminated servicer may
direct to act as successor servicer (the "Successful Bidder"). The trustee will
direct the Successful Bidder to enter into the pooling and servicing agreement
as successor servicer pursuant to the terms thereof. Upon the assignment and
acceptance of the servicing rights under the pooling and servicing agreement by
the Successful Bidder, the trustee will remit to the terminated servicer the
amount of the cash bid received from the Successful Bidder (net of
out-of-pocket expenses incurred in connection with obtaining that bid and
transferring servicing). If a Successful Bidder has not entered into the
pooling and servicing agreement as successor servicer within a specified period
of time, the trustee may select another successor to act as servicer under the
pooling and servicing agreement.
THE SPECIAL SERVICER
The initial special servicer will be GMAC Commercial Mortgage Corporation.
GMAC Commercial Mortgage Corporation 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 September 30, 1999,
GMAC Commercial Mortgage Corporation was responsible for performing certain
special servicing functions with respect to commercial and multifamily loans
with an aggregate principal balance of approximately $35 billion. It is
anticipated that GMAC Commercial Mortgage Corporation or one of its affiliates
will purchase all or a significant portion of certain classes of the
Subordinate Certificates on or about the closing date. GMAC Commercial Mortgage
Corporation's principal offices are located at 650 Dresher Road, Horsham,
Pennsylvania 19044.
The information set forth in this prospectus supplement concerning GMAC
Commercial Mortgage Corporation has been provided by GMAC Commercial Mortgage
Corporation. Accordingly, we make no representations or warranty as to the
accuracy or completeness of that information.
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TERMINATION OF THE SPECIAL SERVICER
The trustee may terminate the special servicer due to:
o 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;
o 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 30 days
after the date on which written notice of that failure, requiring the
same to be remedied, shall have been given to the special servicer by the
servicer or the trustee; provided, however, that to the extent that the
special servicer certifies to the trustee and us that the special
servicer is in good faith attempting to remedy that failure and the
certificateholders shall not be materially and adversely affected
thereby, the cure period will be extended for up to an additional 90
days;
o 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 that breach, requiring the same to be
remedied, shall have been given to the special servicer by the servicer
or the trustee;
o the trustee shall have received written notice from either rating agency
that the continuation of the special servicer in that capacity would
result in the withdrawal, downgrade or qualification (if applicable) of
the then current rating assigned by that rating agency to any class of
certificates; or
o events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings and actions by or on behalf of the
special servicer indicating its insolvency or inability to pay its
obligations, in each case as specified in the pooling and servicing
agreement.
In addition to the above events of termination, upon the direction of the
operating adviser, subject to the satisfaction of the conditions specified in
the pooling and servicing agreement, the trustee will remove the special
servicer from its duties as special servicer at any time upon the appointment
and acceptance of that 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 that
appointment the trustee shall have received a letter from each rating agency to
the effect that the appointment of that successor special servicer would not
result in a withdrawal, downgrade or qualification (if applicable) of the then
current rating assigned by that rating agency to any class of certificates.
THE OPERATING ADVISER
An 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 some of its actions. The special servicer will be
required to notify the operating adviser of, among other things:
o 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;
o any foreclosure or comparable conversion of the ownership of a Mortgaged
Property;
o 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; Retirement of the Certificates");
o any proposal to bring an REO Property into compliance with applicable
environmental laws; and
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o any acceptance of substitute or additional collateral for a mortgage
loan.
In addition, subject to the satisfaction of the conditions specified in
the pooling and servicing agreement, 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 that appointment by a successor special servicer
appointed by the operating adviser; provided that, prior to the effectiveness
of that appointment the trustee shall have received a letter from each rating
agency to the effect that the appointment of that successor special servicer
would not result in a withdrawal, downgrade or qualification (if applicable) of
the then current rating assigned by that rating agency to any class of
certificates.
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 receipt of
that direction or upon making that 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 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 holder of the Controlling Class
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 the portion of a specified rate
per annum (the "Servicing Fee Rate") applicable to that month (determined in
the same manner as the applicable Mortgage Rate is determined for each mortgage
loan for that month) applied to the outstanding Scheduled Principal Balance of
each mortgage loan (including REO Properties and the Pari Passu Loan) as
compensation for servicing the mortgage loans. The Pari Passu Loan Servicing
Fee Rate, payable to the Related Trust Fund Servicer in connection with
servicing the Pari Passu Loan and the Related Trust Fund Mortgage Loan pursuant
to the Related Pooling and Servicing Agreement, is 0.057% per annum.
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 that 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 those
mortgage loans as of any Distribution Date, that excess amount will be payable
to the servicer as additional servicing compensation.
Special Servicer Compensation. The special servicer will be entitled to
receive:
o 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 that
month (determined in the same manner as the applicable Mortgage Rate is
determined for each Specially Serviced Mortgage Loan for that month) of
the outstanding Scheduled Principal Balance of each Specially Serviced
Mortgage Loan;
o a fee (the "Workout Fee"), payable with respect to any Rehabilitated
Mortgage Loan (other than the Pari Passu Loan), equal to the product of
(x) 1.0% and (y) the amount of each collection of interest and principal
received on that mortgage loan for so long as it remains a Rehabilitated
Mortgage Loan; and
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o a fee (the "Liquidation Fee") equal to the product of (x) 1.0% and (y)
the related Liquidation Proceeds, other than Liquidation Proceeds
received in connection with the Pari Passu Loan (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 that 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, assumption fees, modification fees and
extension fees collected on Specially Serviced Mortgage Loans, 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 (other than any such fees payable in connection with the Pari
Passu Loan). 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 that Distribution Date. If Prepayment Interest Excesses for
all Specially Serviced Mortgage Loans exceed Prepayment Interest Shortfalls for
those mortgage loans as of any Distribution Date, that 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 (other than the Pari Passu
Loan) which are not specially serviced, but contain "due-on-sale" provisions or
require the consent of the lender.
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
in this prospectus supplement.
MODIFICATIONS, WAIVER AND AMENDMENTS
Subject to any restrictions applicable to REMICs, and to the 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.
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:
o reduce the amounts owing under any Specially Serviced Mortgage Loan by
forgiving principal, accrued interest and/or any prepayment premium or
yield maintenance charge;
o reduce the amount of the scheduled payment on any Specially Serviced
Mortgage Loan, including by way of a reduction in the related Mortgage
Rate;
o forebear in the enforcement of any right granted under any Mortgage Note
or Mortgage relating to a Specially Serviced Mortgage Loan;
o extend the maturity date of any Specially Serviced Mortgage Loan; and/or
o accept a Principal Prepayment during any Lockout Period;
provided in each case that (i) the related borrower is in default with respect
to the Specially Serviced Mortgage Loan or, in the reasonable judgment of the
special servicer, default is reasonably foreseeable, and (ii) in the reasonable
judgment of the special servicer, 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.
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In no event, however, will the special servicer be permitted to:
o extend the maturity date of a Specially Serviced Mortgage Loan beyond a
date that is two years prior to the Rated Final Distribution Date;
o if the Specially Serviced Mortgage Loan is secured by a ground lease,
extend the maturity date of that Specially Serviced Mortgage Loan beyond
a date which is ten (10) years prior to the expiration of the term of
that ground lease;
o reduce the related Net Mortgage Rate to less than the lesser of (i) the
original Net Mortgage Rate and (ii) the highest pass-through rate on any
class of certificates (other than the Class X Certificates); or
o defer interest due on any Specially Serviced Mortgage Loan in excess of
10% of the Scheduled Principal Balance of that Specially Serviced
Mortgage Loan or defer the collection of interest on any Specially
Serviced Mortgage Loan without accruing interest on that deferred
interest at a rate at least equal to the related Mortgage Rate.
Notwithstanding the foregoing, if a mortgage loan is a Balloon Loan whose
borrower failed to make the Balloon Payment at scheduled maturity, and that
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 one or more extensions of the maturity of the mortgage loan in the
aggregate not exceeding three years, in each case at the existing Mortgage
Rate.
Modifications that forgive principal or interest of a mortgage loan will
result in Realized Losses on that mortgage loan and those Realized Losses will
be allocated among the various classes of certificates in the manner described
under "Description of the Certificates----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 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 that 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 the sale at that price is in the best interest of
certificateholders; provided that the special servicer may not accept that 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.
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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 that action is consistent with
the Servicing Standard and a default on the related mortgage loan has occurred
but subject, in all cases, to limitations concerning environmental matters and,
in some cases, the receipt of an opinion of counsel relating to 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 that extension
period, will not result in the failure of that REO Property to qualify as
"foreclosure property" under the REMIC provisions of the Internal Revenue 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.
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 that property. After the
special servicer reviews the operation of that 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
that property, the special servicer could determine that it would not be
commercially feasible to manage and operate that property in a manner that
would avoid the imposition of 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", that income would be subject to federal tax at the
highest marginal corporate tax rate (currently 35%) and (ii) "prohibited
transactions," that 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 that 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. We advise you to consult your
own tax advisors regarding the possible imposition of REO Taxes in connection
with the operation of commercial REO Properties by REMICs.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
Upon the issuance of the offered certificates, Shearman & Sterling, New
York, New York, our special tax counsel, 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 Internal Revenue Code, including the REMIC
Provisions, for federal income tax purposes, the trust fund will qualify as
three separate REMICs within the meaning of Sections 860A through 860G (the
"REMIC Provisions") of the Internal Revenue 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 and Class L Certificates will evidence "regular
interests" in a REMIC, (ii) the Class M Certificates will evidence ownership of
both a "regular interest" in a REMIC and the right to receive the Excess
Interest, if any, on the ARD Loans and (iii) each of the Class R-I, Class R-II
and
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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 those certificates in accordance with the accrual method
of accounting, regardless of a certificateholder's usual method of accounting.
It is anticipated that the Class F and Class X 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
(including accrued interest) or, in the case of the Class X Certificates, the
excess of all distributions of interest expected to be received thereon over
the issue price (including accrued interest). We also anticipate that the Class
A, Class B and Class C Certificates will be issued at a premium and that the
Class D and Class E Certificates will be issued with de minimus OID for federal
income tax purposes. 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 "Material Federal Income Tax Consequences--Federal
Income Tax Consequences for REMIC Certificates--Taxation of
Distributions--REMIC Regular Certificates--Original Issue Discount" and
"--Premium" in the prospectus.
Yield maintenance charges actually collected will be distributed among the
holders of the respective classes of certificates as described under
"Description of the Certificates--Distributions--Allocation of Yield Maintenance
Charges" in this prospectus supplement. It is not entirely clear under the
Internal Revenue Code when the amount of yield maintenance charges so allocated
should be taxed to the certificateholder, but it is not expected, for federal
income tax reporting purposes, that yield maintenance charges 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, 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.
The offered certificates will be treated as "real estate assets" within
the meaning of Section 856(c)(4)(A) of the Internal Revenue Code, and interest
(including OID, if any) on the offered certificates will be interest described
in Section 856(c)(3)(B) of the Internal Revenue Code. Moreover, the offered
certificates will be "qualified mortgages" within the meaning of Section
860G(a)(3) of the Internal Revenue Code. The offered certificates generally
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 Internal Revenue Code to the extent the mortgage loans
are secured by multifamily properties. In the case of the mortgage loans
secured by multifamily properties, however, if the related mortgaged properties
are used in part for nonresidential purposes, each of those mortgage loans will
qualify for the treatment described in the preceding sentence in their entirety
only if the planned residential use with respect to the related mortgaged
property exceeds 80 percent of the mortgaged property's planned use, determined
as of the time the mortgage loan was originated. According to the legislative
history of this provision, Congress intended that this determination be based
on the usable space in the building. You should consult your own tax advisor
regarding whether mortgage loans secured by manufactured housing communities
would also constitute qualifying assets under Section 7701(a)(19)(C)(v) of the
Internal Revenue Code. Mortgage loans secured by multifamily properties
represented approximately 15.13% of the initial pool balance. See "Material
Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates--Status of REMIC Certificates" in the prospectus.
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The Treasury Department has issued new regulations which modify the
withholding and backup withholding rules. The new regulations generally are
effective for payments made after December 31, 2000. You should consult your
tax advisors regarding those regulations.
For further information regarding the federal income tax consequences of
investing in the offered certificates, See "Material Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates" in the prospectus.
METHOD OF DISTRIBUTION
We have entered into an underwriting agreement with Bear, Stearns & Co.
Inc., Morgan Stanley & Co. Incorporated and Norwest Investment Services, Inc.,
the underwriters. Each of the underwriters is an affiliate of a mortgage loan
seller. Subject to the terms and conditions set forth in the underwriting
agreement, the offered certificates will be purchased from us 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 X CLASS B CLASS C CLASS D CLASS E CLASS F
- ----------- ----------- ----------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. .......... 72% 72% 100% 100% 100% 100% 100% 100%
Morgan Stanley & Co.
Incorporated ..................... 23% 23% 0% 0% 0% 0% 0% 0%
Norwest Investment
Services, Inc. ................... 5% 5% 0% 0% 0% 0% 0% 0%
-- -- --- --- --- --- --- ---
Total ........................... 100% 100% 100% 100% 100% 100% 100% 100%
=== === === === === === === ===
</TABLE>
Proceeds to us from the sale of offered certificates, before deducting
expenses payable by us, estimated to be approximately $3,300,000, will be
102.4% of the initial aggregate certificate balance of the offered
certificates, plus accrued interest on the offered certificates from the
Cut-Off Date. We have been advised by the underwriters that they propose 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. The underwriters may effect those transactions by selling
offered certificates to or through dealers, and those 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 us 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 secondary market
in the offered certificates. The primary source of ongoing information
available to you concerning the offered certificates will be the distribution
date 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 under
"Description of the Certificates--Reports to Certificateholders; Certain
Available Information" in this prospectus supplement, there can be no assurance
that any additional information regarding the offered certificates will be
available through any other source. In addition, we are 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 the 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 these transactions. Sales may be made
at negotiated prices determined at the time of sale.
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LEGAL MATTERS
Certain legal matters will be passed upon for us and the underwriters, as
special counsel, and for Wells Fargo Bank, National Association, by Orrick,
Herrington & Sutcliffe LLP, San Francisco, California. Certain legal matters
will be passed upon for us and the underwriters by Shearman & Sterling, New
York, New York.
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 DCR FITCH
- ----- ------ ------
<S> <C> <C>
A-1 .................. AAA AAA
A-2 .................. AAA AAA
B .................... AA AA
C .................... A A
D .................... A- A-
E .................... BBB BBB
F .................... BBB- BBB-
X .................... AAA AAA
</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 that rating would be. A rating assigned to any class
of offered certificates by a rating agency that has not been requested by us to
do so may be lower than the rating assigned thereto by DCR or Fitch.
The ratings of the certificates do not represent any assessment of:
o the likelihood or frequency of principal prepayments, voluntary or
involuntary, on the mortgage loans;
o the degree to which those prepayments might differ from those originally
anticipated;
o whether and to what extent yield maintenance charges, default interest
or Excess Interest will be received; or
o whether and to what extent 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 or the possibility that the holders of
Class X Certificates might not fully recover their investments in the event of
rapid prepayments (voluntary or involuntary). In general, the ratings thus
address credit risk and not prepayment risk.
As described in this prospectus supplement, the amounts payable with
respect to the Class X Certificates consist only of interest. If the entire
pool were to prepay in the initial month, with the result that the holders of
the Class X Certificates receive only a single month's interest and thus suffer
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a nearly complete loss of their investment, all amounts "due" to holders of the
Class X Certificates nevertheless will have been paid, and this result is
consistent with the "AAA" rating received on the Class X Certificates. The
notional amount upon which interest is calculated for the Class X Certificates
is reduced by the allocation of Realized Losses and prepayments, whether
voluntary or involuntary. The rating does not address the timing or magnitude
of reductions of that notional amount, but only the obligation to pay interest
timely on the notional amount as so reduced from time to time. Accordingly, the
ratings of the Class X Certificates should be evaluated independently from
similar ratings on other types of securities.
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 offered certificates will not constitute "mortgage related securities"
within the meaning of the Secondary Mortgage Market Enhancement Act of 1984. As
a result, the appropriate characterization of the offered certificates under
various legal investment restrictions, and thus the ability of investors
subject to these restrictions to purchase the offered certificates, is subject
to significant interpretive uncertainties.
We make 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 and insurance company general and
separate accounts in which any such plans, annuities, accounts or arrangements
are invested, that is subject to Title I of ERISA, or Section 4975 of the
Internal Revenue Code should carefully 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 under either ERISA
or Section 4975 of the Internal Revenue Code or whether there exists any
statutory or administrative exemption applicable to an investment in the
offered certificates. 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 individual prohibited transaction
exemptions to each of the underwriters which generally exempt from the
application of the prohibited transaction provisions of Section 406 of ERISA,
and the excise taxes imposed on the related prohibited transactions pursuant to
Sections 4975(a) and (b) of the Internal Revenue Code, certain transactions,
among others, relating to the servicing and operation of mortgage pools,
including the mortgage pool, and the purchase, sale and holding of mortgage
pass-through certificates, including the Class A and Class X Certificates,
underwritten by an "Underwriter," as defined below, provided that certain
conditions set forth in the individual exemptions are satisfied. For purposes
of this "ERISA Considerations" section, the term "underwriter" shall include:
1. each of the underwriters;
2. any person directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with any of the
underwriters; and
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<PAGE>
3. any member of the underwriting syndicate or selling group of which a
person described in 1. or 2. is a manager or co-manager with respect to
the Class A and Class X Certificates.
The individual exemptions set forth six general conditions which must be
satisfied for a transaction involving the purchase, sale and holding of the
Class A or Class X Certificates to be eligible for exemptive relief under the
exemptions.
o First, the acquisition of those 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.
o Second, the rights and interests evidenced by those certificates must
not be subordinated to the rights and interests evidenced by other
certificates of the same trust.
o Third, those certificates at the time of acquisition by the Plan must be
rated in one of the three highest generic rating categories by Standard &
Poor's Structured Rating Group, Moody's Investors Service, Inc., DCR or
Fitch.
o Fourth, the trustee cannot be an affiliate of any other member of the
"Restricted Group", which consists of:
o any underwriter;
o the depositor;
o the servicer;
o the special servicer;
o the trustee;
o any sub-servicer; and
o 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.
o Fifth, the following additional requirements must be met:
o the sum of all payments made to and retained by the underwriter must
represent not more than reasonable compensation for underwriting the
Senior Certificates;
o the sum of all payments made to and retained by us pursuant to the
assignment of the mortgage loans to the trust fund must represent not
more than the fair market value of the related obligations; and
o 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 that person's services under the pooling
and servicing agreement and reimbursement of that person's reasonable
expenses in connection therewith.
o Sixth, the investing Plan must be an "accredited investor" as defined in
Rule 501(a)(1) of Regulation D of the SEC under the Securities Act of
1933, as amended.
Because the Class A and Class X Certificates are not subordinated to any
other class of certificates, the second general condition set forth above is
satisfied with respect to those certificates. With respect to the third general
condition, it is a condition of the issuance of the Class A and Class X
Certificates that they be rated not lower than "AAA" by each of DCR and Fitch.
As of the closing date, the fourth general condition set forth above will be
satisfied with respect to the Class A and Class X Certificates. A fiduciary of
a Plan contemplating purchasing a Class A or Class X Certificate in the
secondary market must make its own determination that, at the time of the
purchase, those certificates continue to satisfy the third and fourth general
conditions set forth above. A fiduciary of a Plan contemplating purchasing a
Class A or Class X Certificate, whether in the initial issuance of the
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 that certificate.
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The individual exemptions also require that the trust fund meet the
following requirements:
o the trust fund must consist solely of assets of the type that have been
included in other investment pools;
o certificates in the other investment pools must have been rated in one
of the three highest categories of Standard & Poor's Structured Ratings
Group, Moody's Investors Service, Inc., DCR or Fitch for at least one
year prior to the Plan's acquisition of Class A or Class X Certificates;
and
o certificates in the other investment pools must have been purchased by
investors other than Plans for at least one year prior to any Plan's
acquisition of Class A or Class X Certificates.
If the general conditions of the individual exemptions are satisfied, the
individual exemptions may provide an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA (as well as the excise taxes imposed by
Sections 4975(a) and (b) of the Internal Revenue Code by reason of Sections
4975(c)(1) (A) through (D) of the Internal Revenue Code) in connection with:
o the direct or indirect sale, exchange or transfer of Class A or Class X
Certificates in the initial issuance of Certificates between us or an
underwriter and a Plan when we, the underwriter, the trustee, the
servicer, a sub-servicer or a mortgagor is a Party in Interest with
respect to the investing Plan;
o the direct or indirect acquisition or disposition in the secondary
market of the Class A or Class X Certificates by a Plan; and
o the holding of Class A or Class X 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
Class A or Class X Certificate on behalf of an Excluded Plan by any person who
has discretionary authority or renders investment advice with respect to the
assets of the Excluded Plan.
If certain specific conditions of the individual exemption are also
satisfied, the individual exemption may provide an exemption from the
restrictions imposed by Sections 406(b)(1) and (b)(2) of ERISA (as well as the
excise taxes imposed by Sections 4975(a) and (b) of the Internal Revenue Code
by reason of Section 4975(c)(1)(E) of the Internal Revenue Code) in connection
with:
o the direct or indirect sale, exchange or transfer of Class A and Class
X Certificates in the initial issuance of certificates between us 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 the certificates is either a mortgagor with respect to 5% or less of
the fair market value of the mortgage loans or an affiliate of that
person;
o the direct or indirect acquisition or disposition in the secondary
market of Class A or Class X Certificates by a Plan; and
o the holding of Class A or Class X Certificates by a Plan.
Further, if certain specific conditions of the individual exemption are
satisfied, the individual exemption may provide an exemption from the
restrictions imposed by Sections 406(a), 406(b) and 407(a) of ERISA (as well as
the excise taxes imposed by Sections 4975(a) and (b) of the Internal Revenue
Code by reason of Section 4975(c) of the Internal Revenue Code) for
transactions in connection with the servicing, management and operation of the
mortgage pool.
Before purchasing a Class A or Class X Certificate, a fiduciary of a Plan
should itself confirm that the specific and general conditions and the other
requirements set forth in the individual exemptions would be satisfied. In
addition to making its own determination as to the availability of the
exemptive relief provided in the individual exemptions, the Plan fiduciary
should consider the availability of any other individual or class prohibited
transaction exemptions. See "ERISA Considerations" in the
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prospectus. A purchaser of a Class A or Class X 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 individual exemptions, the purchase or holding of
those certificates by a Plan may result in prohibited transactions and the
imposition of excise taxes or civil penalties. As a result, no transfer of a
subordinate offered certificate or any interest in a subordinate offered
certificate may be made to a Plan or to any person who is directly or
indirectly purchasing a subordinate offered certificate or interest in a
subordinate offered certificate on behalf of, as named fiduciary of, as trustee
of, or with assets of a Plan, unless the transfer will be exempt from the
prohibited transaction provisions of Section 406 of ERISA and Section 4975 of
the Internal Revenue Code under Section III of 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 subordinate offered
certificate or interest therein is made shall be deemed to have represented to
us, the servicer, the special servicer, the trustee, the paying agent, the
underwriters, any sub-servicer and any borrower with respect to the mortgage
loans that the purchase and holding of that certificate or interest is exempt
on the basis of Prohibited Transaction Class Exemption 95-60. See "ERISA
Considerations" in the prospectus.
The Small Business Job Protection Act of 1996 added a new Section 401(c)
to ERISA, to define whether assets held by an insurance company general account
constitute plan assets by reason of the insurance company issuing one or more
policies to employee benefit plans. Pursuant to Section 401(c), the Department
of Labor published final regulations on January 5, 2000, but these final
regulations are not generally applicable until July 5, 2001. These regulations
provide guidance for the purpose of determining, in cases where insurance
policies or annuity contracts supported by an insurer's general account are
issued to or for the benefit of a Plan on or before December 31, 1998, which
general account assets constitute Plan assets. Section 401(c) of ERISA
generally provides that, until the date which is 18 months after the
regulations issued by the Department of Labor become final, no person shall be
subject to liability under Part 4 of Title I of ERISA, including the prohibited
transaction provisions of Sections 406 and 407 of ERISA, or Section 4975 of the
Internal Revenue Code on the basis of a claim that the assets of an insurance
company general account constitute plan assets, except as otherwise provided by
the Secretary of Labor in regulations intended to prevent avoidance of the
regulations proposed by the Department of Labor or in an action brought by the
Secretary of Labor for certain breaches of fiduciary duty which would also
constitute a violation of federal or state criminal law. Absent further changes
to the law, any assets of an insurance company general account which support
insurance policies issued to a Plan after December 31, 1998, or issued to Plans
on or before December 31, 1998 for which the insurance company does not comply
with the regulations issued by the Department of Labor 18 months after those
regulations become final may be treated as plan assets. In addition, because
Section 401(c) does not relate to insurance company separate accounts, separate
account assets are treated as plan assets of any Plan invested in the separate
account. Insurance companies contemplating the investment of general account
assets in the offered certificates should consult with their legal counsel with
respect to the applicability of Section 401(c) of ERISA, including the general
account's ability to continue to hold the offered certificates after the date
which is 18 months after the regulations issued by the Department of Labor
become final.
Any Plan fiduciary considering whether to purchase an offered certificate
on behalf of or with assets of a Plan should consult with its counsel regarding
the applicability of the fiduciary responsibility and prohibited transaction
provisions of ERISA and the Internal Revenue Code to the related investment.
The sale of certificates to a Plan is in no respect a representation by us
or the 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.
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GLOSSARY
"Accrued Certificate Interest" means, in respect of each class of REMIC
Regular Certificates for each Distribution Date, the amount of interest for the
calendar month immediately preceding the month in which that Distribution Date
occurs accrued at the applicable pass-through rate on the aggregate certificate
balance or notional amount, as the case may be, of that class of certificates
outstanding immediately prior to that Distribution Date. Accrued Certificate
Interest will be calculated on the basis of a 360-day year consisting of twelve
30-day months.
"Administrative Cost Rate" means, for any mortgage loan in any month, an
amounts equal to the sum of the related Servicing Fee Rate and the Trustee Fee
Rate for that month and, in the case of the Pari Passu Loan, the Pari Passu
Loan Servicing Fee Rate (in each case, expressed as a per annum rate). The
Administrative Cost Rate for each mortgage loan is set forth in Annex A to this
prospectus supplement. 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 that mortgage loan.
"Advance Rate" means the "Prime Rate" as reported in The Wall Street
Journal from time to time.
"Advances" means all Servicing Advances and P&I Advances.
"Anticipated Repayment Date" means, with respect to any ARD Loan, the date
upon which the any principal outstanding thereunder shall begin to accrue
interest at an increased interest rate.
"Appraisal Event" has the meaning set forth under "Description of the
Certificates--Appraisal Reductions" in this prospectus supplement.
"Appraisal Reduction" has the meaning set forth under "Description of the
Certificates--Appraisal Reductions" in this prospectus supplement.
"ARD Loans" means any mortgage loan that calls for the automatic
imposition of rapid amortization features and an interest rate increase
beginning on a date substantially prior to the maturity date for the mortgage
loan such that the borrower is expected to repay the mortgage loan on that
earlier date.
"Assumed Scheduled Payment" means 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.
"Available Distribution Amount" has the meaning set forth under
"Description of the Certificates--Distributions--Available Distribution Amount"
in this prospectus supplement.
"Balloon Interest Excess" has the meaning set forth under "Description of
the Certificates--Distributions--Prepayment Interest Shortfalls and Prepayment
Interest Excesses" in this prospectus supplement.
"Balloon Interest Shortfall" has the meaning set forth under "Description
of the Certificates--Distributions--Prepayment Interest Shortfalls and
Prepayment Interest Excesses" in this prospectus supplement.
"Balloon Loan" is a mortgage loan that does not fully amortize over its
stated term to maturity and has substantial payments of principal due at
maturity unless previously prepaid.
"Balloon Payment" is the principal payment that is due at maturity of a
Balloon Loan, unless previously prepaid.
"Base Interest Fraction" has the meaning set forth under "Description of
the Certificates--Distributions--Allocation of Yield Maintenance Charges" in
this prospectus supplement.
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"Certificate Account" means the account established and maintained by the
servicer in the name of the trustee for the benefit of the holders of the
certificates for the deposit of collections on the mortgage loans.
"Certificate Owner" means any person acquiring an interest in a
certificate.
"Class A Certificates" means, collectively, the Class A-1 and Class A-2
Certificates.
"Clearstream" means Clearstream Banking, societe anonyme.
"CMSA" means the Commercial Mortgage Securities Association.
"Collection Period" means, with respect to any Distribution Date, the
period beginning with the day after the Determination Date in the month
preceding that 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 that Distribution Date occurs.
"Compensating Interest Payment" has the meaning set forth under
"Description of the Certificates--Distributions--Prepayment Interest Shortfalls
and Prepayment Interest Excesses."
"Constant Prepayment Rate" means an assumed constant annual rate of
prepayment each month, expressed as a per annum percentage of the
then-Scheduled Principal Balance of the pool of mortgage loans.
"Controlling Class" means the most subordinate class of Subordinate
Certificates outstanding at any time of determination; provided, however, that
if the aggregate certificate balance of that class of certificates is less than
25% of the initial aggregate certificate balance of that 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.
"CPR" means the Constant Prepayment Rate.
"Cut-Off Date" means February 1, 2000.
"Cut-Off Date Balance" generally means, with respect to any mortgage loan,
its principal balance outstanding as of the Cut-Off Date, after application of
all payments of principal due on or before that date, whether or not received.
"Cut-Off Date LTV" means the LTV Ratio based on the scheduled Cut-Off Date
Balance.
"DCR" means Duff & Phelps Credit Rating Co.
"Debt Service Coverage Ratio" means, for any mortgage loan means, 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.
"DSCR" means Debt Service Coverage Ratio.
"Definitive Certificate" means fully registered physical certificate
representing an interest in a certificate.
"Determination Date" means, with respect to any Distribution Date, the 5th
business day prior to that Distribution Date.
"Distributable Certificate Interest Amount" has the meaning set forth
under "Description of the Certificates--Distributions--Distributable
Certificate Interest Amount" in this prospectus supplement.
"Distribution Account" means the account established and maintained by the
paying agent in the name of the trustee for the benefit of the holders of the
certificates for the deposit of amounts remitted by the servicer in respect to
the mortgage loans prior to distribution to the certificateholders.
"Distribution Date" means the 15th day of each month or, if the 15th day
is not a business day then the next succeeding business day, beginning on March
15, 2000.
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"Document Defect" has the meaning set forth under "Description of the
Mortgage Pool--Representations and Warranties; Repurchases" in this prospectus
supplement.
"DTC" means The Depository Trust Company.
"Environmental Report" means the report based on the environmental site
assessment that was performed with respect to each mortgaged property in
connection with the origination of the related mortgage loan.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Euroclear" means The Euroclear System.
"Event of Default" has the meaning set forth under "Servicing of the
Mortgage Loans--Servicer Events of Default" in this prospectus supplement.
"Excess Interest" means, with respect of any ARD Loan that does not repay
on its Anticipated Repayment Date, the excess, if any, of interest accrued at
the Revised Rate for that ARD Loan over interest accrued at the Initial Rate
for that ARD Loan. Excess Interest on an ARD Loan is not due and payable until
that ARD Loan is paid in full.
"Excess Liquidation Proceeds" are 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 that
mortgage loan on the date those proceeds were received.
"Excluded Plan" means a Plan sponsored by any member of the Restricted
Group.
"Expected Final Distribution Date" has the meaning set forth under
"Description of the Certificates--Distributions--Expected Final Distribution
Date; Rated Final Distribution Date" in this prospectus supplement.
"Expense Losses" has the meaning set forth under "Description of the
Certificates--Subordination; Allocation of Losses, Shortfalls and Expenses" in
this prospectus supplement.
"Fitch" means Fitch IBCA, Inc.
"Initial Rate" means, with respect to any ARD Loan, the Mortgage Rate for
that ARD Loan before the Anticipated Repayment Date for that ARD Loan.
"Insurance Proceeds" means, with respect to any mortgage loan, all amounts
paid by an insurer in connection with that mortgage loan, other than any
amounts required to be paid to the related borrower; provided that, with
respect to the trust fund's interest in the Pari Passu Loan, Insurance Proceeds
mean a any portion of those amounts allocable to the Pari Passu Loan.
"Interest Only Certificates" means the Class X Certificates.
"Interest Reserve Account" means the account, which may be a subaccount of
the Collection Account, established and maintained by the servicer in the name
of the trustee for the benefit of the holders of the certificates for the
deposit of Interest Reserve Amounts.
"Interest Reserve Amount" has the meaning set forth under "Description of
the Certificates--Distributions--Available Distribution Amount" in this
prospectus supplement.
"Interest Reserve Loans" means the mortgage loans identified on Annex D to
this prospectus supplement as Interest Reserve Loans.
"Liquidation Fee" has the meaning set forth under "Servicing of the
Mortgage Loans--Servicing and Other Compensation and Payment of
Expenses--Special Servicer Compensation" in this prospectus supplement.
"Liquidation Proceeds" means 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
S-120
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Advances and interest thereon; provided that, with respect to the sale or
liquidation of the Pari Passu Loan or any REO Property related to the Related
Trust Fund Mortgage Loan and the Pari Passu Loan, Liquidation Proceeds means
any portion of those amounts allocable to the Pari Passu Loan.
"Lock Box Accounts" has the meaning set forth under "Description of the
Mortgage Pool--Mortgaged Property Accounts--Lock Box Accounts" in this
prospectus supplement.
"Lock Box Loans" has the meaning set forth under "Description of the
Mortgage Pool--Mortgaged Property Accounts--Lock Box Accounts" in this
prospectus supplement.
"Lockout Period" means, with respect to any mortgage loan, a specified
period of time, generally two to five years after the date of origination of
that mortgage loan, during which time voluntary prepayments are prohibited.
"LTV Ratio" means, for any mortgage loan as of any date of determination,
a fraction, expressed as a percentage, the numerator of which is the principal
balance of that mortgage loan as of that date (assuming no defaults or
prepayments on that mortgage loan prior to that 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 that mortgage loan.
"Material Breach" has the meaning set forth under "Description of the
Mortgage Pool--Representations and Warranties; Repurchases" in this prospectus
supplement.
"Material Document Defect" has the meaning set forth under "Description of
the Mortgage Pool--Representations and Warranties; Repurchases" in this
prospectus supplement.
"Maturity Assumptions" has the meaning set forth under "Yield and Maturity
Considerations--Yield Sensitivity of the Class X Certificates" in this
propsectus supplement.
"Maturity LTV" means 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).
"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).
"Mortgage Rate" means, with respect to any mortgage loan, the stated
annual rate of interest that accrues on the principal amount of the mortgage
loan.
"Net Aggregate Balloon Interest Shortfall" has the meaning set forth under
"Description of the Certificates--Distributions--Prepayment Interest Shortfalls
and Prepayment Interest Excesses" in this prospectus supplement.
"Net Aggregate Prepayment Interest Shortfall" has the meaning set forth
under "Description of the Certificates--Distributions--Prepayment Interest
Shortfalls and Prepayment Interest Excesses" in this prospectus supplement.
"Net Mortgage Rate" has the meaning set forth under "Description of the
Certificates-- Distributions--Pass-Through Rates" in this prospectus supplement.
"NWAC Rate" has the meaning set forth under "Description of the
Certificates--Distributions-- Pass-Through Rates" in this prospectus supplement.
"Pari Passu Loan" means mortgage loan number 25138 which is secured on a
pari passu basis with the Related Trust Fund Mortgage Loan pursuant to the Pari
Passu Mortgage.
"Pari Passu Loan Servicing Fee Rate" means the "Servicing Fee Rate," as
defined in the Related Pooling and Servicing Agreement, applicable to the Pari
Passu Loan.
"Pari Passu Mortgage" means the mortgage securing the Pari Passu Loan and
the Related Trust Fund Mortgage Loan.
S-121
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"Partial Release Mortgaged Properties" has the meaning set forth under
"Description of the Mortgage Pool--Defeasance" in this prospectus supplement.
"Participants" means DTC's participating organizations.
"Percentage Interest" evidenced by any REMIC Regular Certificate in the
class to which it belongs means 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 that 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 that class.
"P&I Advance" has the meaning set forth under "Description of the
Certificates--Advances-- P&I Advances" in this prospectus supplement.
"Plan" means any plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended, or Section 4975 of the Internal Revenue Code.
"PML" means probable maximum loss.
"Prepayment Assumption" has the meaning set forth under "Material Federal
Income Tax Consequences" in this prospectus supplement.
"Prepayment Interest Excess" has the meaning set forth under "Description
of the Certificates--Distributions--Prepayment Interest Shortfalls and
Prepayment Interest Excesses" in this prospectus supplement.
"Prepayment Interest Shortfall" has the meaning set forth under
"Description of the Certificates--Distributions--Prepayment Interest Shortfalls
and Prepayment Interest Excesses" in this prospectus supplement.
"Prime Rate" means the Prime Rate as reported in The Wall Street Journal
from time to time.
"Principal Balance Certificates" means, collectively, 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.
"Principal Distribution Amount" has the meaning set forth under
"Description of the Certificates--Distributions--Principal Distribution Amount"
in this prospectus supplement.
"Principal Prepayments" means, with respect to the mortgage loans, all
voluntary and involuntary prepayments of principal made thereon prior to their
scheduled due dates.
"Private Certificates" means, collectively, the Class G, Class H, Class I,
Class J, Class K, Class L and Class M Certificates.
"Privileged Person" means (i) any certificateholder, (ii) each of the
parties to the pooling and servicing agreement, (iii) each of DCR and Fitch,
(iv) each of the underwriters, (v) any person identified to the paying agent as
a Certificate Owner or prospective purchaser of a certificate that delivers to
the paying agent an investor certification (which may be in electronic form) in
the form prescribed by the pooling and servicing agreement, and (vi) any other
party designated by the depositor.
"Purchase Price" has the meaning set forth under "Description of the
Mortgage Pool--Representations and Warranties; Repurchases" in this prospectus
supplement.
"Qualified Bidder" has the meaning set forth under "Servicing of the
Mortgage Loans--Rights Upon Event of Default" in this prospectus supplement.
"Qualified Mortgage" has the meaning set forth under "Description of the
Mortgage Pool--Representations and Warranties; Repurchases" in this prospectus
supplement.
"Qualifying Substitute Mortgage Loan" has the meaning set forth under
"Description of the Mortgage Pool--Representations and Warranties; Repurchases"
in this prospectus supplement.
S-122
<PAGE>
"Rated Final Distribution Date" has the meaning set forth under
"Description of the Certificates--Distributions--Expected Final Distribution
Date; Rated Final Distribution Date" in this prospectus supplement.
"Realized Losses" has the meaning set forth under "Description of the
Certificates-- Subordination; Allocation of Losses, Shortfalls and Expenses" in
this prospectus supplement.
"Record Date" means, with respect to each class of offered certificates
for each Distribution Date, the last business day of the calendar month
immediately preceding the month in which that Distribution Date occurs.
"Rehabilitated Mortgage Loan" has the meaning set forth under "Servicing
of the Mortgage Loans--General" in this prospectus supplement.
"Related Pooling and Servicing Agreement" means the pooling and servicing
agreement dated as of February 1, 1999 by and among the depositor, the Related
Trust Fund Fiscal Agent, the Related Trust Fund Servicer, the Related Trust
Fund Special Servicer and the Related Trust Fund Trustee, pursuant to which the
depositor issued its Commercial Mortgage Pass-Through Certificates, Series
1999-C1.
"Related Trust Fund" means the trust fund created in connection with the
issuance of the depositor's Commercial Mortgage Pass-Through Certificates,
Series 1999-C1.
"Related Trust Fund Fiscal Agent" means the fiscal agent under the Related
Pooling and Servicing Agreement. As of the Cut-Off Date, the Related Trust Fund
Fiscal Agent is ABN AMRO Bank N.V.
"Related Trust Fund Mortgage Loan" means the mortgage loan secured by the
Pari Passu Mortgage on a pari passu basis with the Pari Passu Loan. The Related
Trust Fund Mortgage Loan is not an asset of the trust fund. The Related Trust
Fund Mortgage Loan is owned by the Related Trust Fund.
"Related Trust Fund Servicer" means the servicer under the Related Trust
Fund Pooling and Servicing Agreement. As of the Cut-Off Date, the Related Trust
Fund Servicer is GE Capital Loan Services, Inc.
"Related Trust Fund Special Servicer" means the special servicer under the
Related Pooling and Servicing Agreement. As of the Cut-Off Date, the Related
Trust Fund Special Servicer is GE Capital Realty Group, Inc.
"Related Trust Fund Trustee" means the trustee under the Related Pooling
and Servicing Agreement. As of the Cut-Off Date, the Related Trust Fund Trustee
is LaSalle Bank National Association.
"REMIC" means a real estate mortgage investment conduit within the meaning
of Sections 860A through 860G of the Internal Revenue Code.
"REMIC Regular Certificates" means, collectively, the Senior Certificates
and the Subordinate Certificates.
"REO Income" means income received in connection with the operation of an
REO Property, or in the case of REO Income received in connection with the Pari
Passu Loan, the portion thereof allocable to the Pari Passu Loan, in each case
net of the expenses specified in the pooling and servicing agreement or the
Related Pooling and Servicing Agreement, as applicable.
"REO Property" means any mortgaged property (or an interest therein, in
the case of the mortgaged property secured by the Pari Passu Mortgage) acquired
by the trust fund through foreclosure, deed-in-lieu of foreclosure or
otherwise.
"REO Tax" means either a tax on "net income from foreclosure property"
within the meaning of the REMIC provisions of the Internal Revenue Code or a
tax on "prohibited transactions" under Section 860F of the Internal Revenue
Code.
S-123
<PAGE>
"Reserve Account" means the account set up in the name of the trustee by
the paying agent for the deposit of any Excess Liquidation Proceeds.
"Residual Certificates" means, collectively, the Class R-I, Class R-II and
Class R-III Certificates.
"Restricted Group" has the meaning set forth under "ERISA Considerations"
in this prospectus supplement.
"Revised Rate" means, with respect to any ARD Loan, the Mortgage Rate for
that ARD Loan on and after the Anticipated Repayment Date for that ARD Loan.
"Scheduled Principal Balance" means, with respect to any mortgage loan on
any Distribution Date, a principal amount equal to the Cut-Off Date Balance
thereof, reduced (to not less than zero) by (a) any payments or other
collections of principal (or Advances in lieu thereof) on that 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 that
mortgage loan during any preceding Collection Period.
"Senior Certificates" means, collectively, the Class A and Class X
Certificates.
"Servicing Advances" has the meaning set forth under "Description of the
Certificates-- Advances--Servicing Advances" in this prospectus supplement.
"Servicing Fee" has the meaning set forth under "Servicing of the Mortgage
Loans--Servicing and Other Compensation and Payment of Expenses" in this
prospectus supplement.
"Servicing Fee Rate" has the meaning set forth under "Servicing of the
Mortgage Loans--Servicing and Other Compensation and Payment of Expenses" in
this prospectus supplement.
"Servicing Standard" has the meaning set forth under "Servicing of the
Mortgage Loans--General" in this prospectus supplement.
"Servicing Transfer Event" has the meaning set forth under "Servicing of
the Mortgage Loans--General" in this prospectus supplement.
"Specially Serviced Mortgage Loan" means any mortgage loan (other than the
Pari Passu Loan) as to which a Servicing Transfer Event has occurred.
"Special Servicer Compensation" has the meaning set forth under "Servicing
of the Mortgage Loans--Servicing and Other Compensation and Payment of
Expenses--Special Servicer Compensation" in this prospectus supplement.
"Special Servicing Fee" has the meaning set forth under "Servicing of the
Mortgage Loans--Servicing and Other Compensation and Payment of
Expenses--Special Servicer Compensation" in this prospectus supplement.
"Subordinate Certificates" means, collectively, the 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.
"Successful Bidder" has the meaning set forth under "Servicing of the
Mortgage Loans--Rights Upon Event of Default" in this prospectus supplement.
"Title Policy" means, with respect to any mortgaged property, an American
Land Title Association (or an equivalent form of) lender's title insurance
policy or mark-up title insurance commitment (on which the required premium has
been paid) which evidences that title insurance policy.
"Trustee Fee" means a monthly fee as set forth in the pooling and
servicing agreement, which fee will include the paying agent's fee.
"Trustee Fee Rate" means the portion of a rate per annum set forth in the
pooling and servicing agreement applied to the Scheduled Principal Balance of
the mortgage loans each month to calculate the Trustee Fee for that month.
S-124
<PAGE>
"Underwritten Cash Flow" has the meaning set forth under "Description of
the Mortgage Pool--Underwritten Cash Flow" in this prospectus supplement.
"Unpaid Interest" has the meaning set forth under "Description of the
Certificates-- Distributions--Distributable Certificate Interest Amount" in this
prospectus supplement.
"Weighted Average Net Mortgage Rate" has the meaning set forth under
"Description of the Certificates--Distributions--Pass-Through Rates" in this
prospectus supplement.
"Workout Fee" has the meaning set forth under "Servicing of the Mortgage
Loans--Servicing and Other Compensation and Payment of Expenses--Special
Servicer Compensation" in this prospectus supplement.
"Yield Maintenance Period" means, with respect to any mortgage loan, a
specified period of time after the date of origination of that mortgage loan,
or in the case of a mortgage loan also subject to a Lockout Period, after the
expiration of that Lockout Period, during which time voluntary prepayments must
be accompanied by a yield maintenance charge intended to compensate the lender
for foregone interest.
"Yield Rate" has the meaning set forth under "Description of the Mortgage
Pool--Yield Maintenance, Prepayment and Lockout Provisions" in this prospectus
supplement.
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<PAGE>
ANNEX A
<TABLE>
<CAPTION>
MORTGAGE LOAN
LOAN NUMBER COUNT SELLER LOAN NAME
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
310900043 1 WFBNA 650 Townsend Center
310900024 2 WFBNA First Union Capitol Center
310851624 3 WFBNA Private Mini Storage
310851624A
310851624B
310851624C
310851624D
310851624E
310851624F
310851624G
310851624H
310851624I
310851624J
310851624K
310851624L
310851624M
- ---------------------------------------------------------------------------------------------------------------------------
9905426 4 MSMC HOLIDAY INN-MISSION BAY
26287 5 BSFI Entertainment Properties Trust
26287A
26287B
26287C
- ---------------------------------------------------------------------------------------------------------------------------
27657 6 BSFI THE MERCER HOTEL
310900004 7 WFBNA International Airport Center
310900032 8 WFBNA Orchard Business Centre
9905921 9 MSMC Circuit City Corporate Headquarters
310900041 10 WFBNA Vacaville Commons Shopping Center
- ---------------------------------------------------------------------------------------------------------------------------
310900020 11 WFBNA Security Self Storage
310900020A
310900020B
310900020C
310900020D
310900020E
310900020F
310900020G
310900020H
- ---------------------------------------------------------------------------------------------------------------------------
26660 12 BSFI IRET APARTMENT PORTFOLIO
26660A
26660B
26660C
- ---------------------------------------------------------------------------------------------------------------------------
26511 13 BSFI SEATTLE DESIGN CENTER
25503 14 BSFI 97 Commerce Way
27112 15 BSFI Cameron Green Apartments
27874 16 BSFI Bank West Office Building
310900011 17 WFBNA 34801 Campus Drive
- ---------------------------------------------------------------------------------------------------------------------------
27931 18 BSFI American Colony Apartments
9905475 19 MSMC Community Shopping Center
9904248 20 MSMC Best Buy & Kitchen etc @ The Mall of New Hampshire
310851607 21 WFBNA Tracy Corners Shopping Center
27942 22 BSFI Cinnamon Creek Apartments
- ---------------------------------------------------------------------------------------------------------------------------
26334 23 BSFI Wild Oats Marketplace
28027 24 BSFI Tustin French Quarter
26863 25 BSFI Hampton Apartments
27355 26 BSFI One Exchange Place
26597 27 BSFI Fountainview Estates
- ---------------------------------------------------------------------------------------------------------------------------
26569 28 BSFI Stephen Wise Congress House
27018 29 BSFI Seattle Gift Center
26779 30 BSFI Thomasbrook Apartments
310851270 31 WFBNA IDC Petaluma
18079 32 BSFI 36 West 47th Street
- ---------------------------------------------------------------------------------------------------------------------------
27638 33 BSFI Randalls Court Southview
9905484 34 MSMC Richland Meadows Mobile Home Park
27130 35 BSFI Lake Highlands Plaza
27708 36 BSFI Home Depot - Ground Lease
310851529 37 WFBNA King City Apartments
- ---------------------------------------------------------------------------------------------------------------------------
9904270 38 MSMC Castle Park Shopping Center
5250 39 BSFI ISIS Theatre
26724 40 BSFI Comfort Inn
26136 41 BSFI Gun Hill Apartments
26282 42 BSFI The National East Sixth Street Building
- ---------------------------------------------------------------------------------------------------------------------------
310851505 43 WFBNA Casa Grande Apartments
27287 44 BSFI Stop & Stor - Woodhaven
27945 45 BSFI Audubon Gardens
27489 46 BSFI Marriott Residence Inn
25138 47 BSFI Founders Plaza & Tower 14
25138A
25138B
- ---------------------------------------------------------------------------------------------------------------------------
17584 48 BSFI NAHATAN PLACE
26722 49 BSFI Econo Lodge
26120 50 BSFI Roffe Building
26985 51 BSFI Holiday Inn Express-Ft. Lauderdale
27611 52 BSFI Woodbury Town Plaza
- ---------------------------------------------------------------------------------------------------------------------------
310851522 53 WFBNA Loera Industrial Portfolio
310851522A
310851522B
310851522C
- ---------------------------------------------------------------------------------------------------------------------------
310851643 54 WFBNA PACIFIC RIM COMMERCE
9904545 55 MSMC Plaza Del Mar
310851609 56 WFBNA La Mirada Shopping Center
26989 57 BSFI Sierra Village Shopping Center
9905478 58 MSMC Kmart Shopping Plaza
- ---------------------------------------------------------------------------------------------------------------------------
310851557 59 WFBNA Lakeway Marina
310851562 60 WFBNA One Hallidie Plaza
310851622 61 WFBNA 19780 Pacific Gateway Drive
27292 62 BSFI 35 West 35th Street
9904417 63 MSMC Furr's Supermarket
- ---------------------------------------------------------------------------------------------------------------------------
9905472 64 MSMC Meridian Plaza
310900033 65 WFBNA Laguna Greens Shopping Center
25413 66 BSFI GR Corporate Center
25465 67 BSFI El Norte Heights Apartments
27937 68 BSFI Bank Street Court Apartments
- ---------------------------------------------------------------------------------------------------------------------------
27005 69 BSFI Ivy Hall Apartments
310851641 70 WFBNA Talcott Plaza
27397 71 BSFI Lancaster Court Apartments
26766 72 BSFI Northwest Executive Center
26271 73 BSFI Balboa Park Plaza
- ---------------------------------------------------------------------------------------------------------------------------
26600 74 BSFI Coral Springs Surgical Center
26709 75 BSFI South Lander Business Park
310851432 76 WFBNA Olivenhain Self Storage
310851547 77 WFBNA Natrol Industrial Building
310851612 78 WFBNA North County Self Storage
- ---------------------------------------------------------------------------------------------------------------------------
310851598 79 WFBNA Windsor Park Apartments
25895 80 BSFI Mary Avenue Plaza
26367 81 BSFI Holiday Inn Express
26734 82 BSFI La Canada Mobile Home Park
27319 83 BSFI Security Station
- ---------------------------------------------------------------------------------------------------------------------------
310851571 84 WFBNA 1931 Old Middlefield Way
310900012 85 WFBNA Borders Books
310851414 86 WFBNA Springview Village Apartments
310851482 87 WFBNA Hollander Industrial Park
26553 88 BSFI Keystone Apartments
- ---------------------------------------------------------------------------------------------------------------------------
310851633 89 WFBNA Rancho Chula Vista
26494 90 BSFI Center Square
27654 91 BSFI Country Fair Shopping Center
9905404 92 MSMC 1313 Third Avenue
310851495 93 WFBNA La Habra Woods Apartments
- ---------------------------------------------------------------------------------------------------------------------------
310851627 94 WFBNA Manor Oaks Mobile Estate
310851644 95 WFBNA 104 Lee Road
27379 96 BSFI Madison Centre
310851549 97 WFBNA Woodbridge Apartments
310851448 98 WFBNA Bridgeport Woods
- ---------------------------------------------------------------------------------------------------------------------------
25466 99 BSFI San Marcos Racquet Club
25473 100 BSFI Office Depot Shopping Center
310900021 101 WFBNA Meadowbrook Apartments
9905501 102 MSMC Safeland Self Storage
26528 103 BSFI Rite Aid
- ---------------------------------------------------------------------------------------------------------------------------
25454 104 BSFI Huntington Shopping Center
310851521 105 WFBNA Martin Avenue Office Warehouse
310851632 106 WFBNA Bays-Dulles Building
310851489 107 WFBNA A-Storage Place Chula Vista
9905467 108 MSMC U-Stor Delta
- ---------------------------------------------------------------------------------------------------------------------------
9905468 109 MSMC U-Stor Beta
9905451 110 MSMC Edgewater & Plaza Arms
9905451A
9905451B
- ---------------------------------------------------------------------------------------------------------------------------
27165 111 BSFI THE ARRANGEMENT APARTMENTS
310851588 112 WFBNA Redwood Business Park
310851634 113 WFBNA Al's Formal Wear Distribution Center
9904923 114 MSMC Village At Weber Ranch
27064 115 BSFI The Marlborough
- ---------------------------------------------------------------------------------------------------------------------------
310851541 116 WFBNA 1483 Broadway
310851614 117 WFBNA Electric Lightwave Building
26725 118 BSFI Days Inn
25773 119 BSFI Rocky Hill Plaza
310851616 120 WFBNA Plantation Atlantana
- ---------------------------------------------------------------------------------------------------------------------------
27936 121 BSFI Southpointe 79
26023 122 BSFI Best Western
310851631 123 WFBNA Pacific Spectrum One Limited
25339 124 BSFI Colonial Village Shopping Center
27780 125 BSFI Lakeview Square Shopping Center
- ---------------------------------------------------------------------------------------------------------------------------
9905453 126 MSMC Riverpark Apartments
310851533 127 WFBNA Staples-Minot
310851640 128 WFBNA Desert Village Corporate Center
27108 129 BSFI Ye Olde Colony Apartments
310851496 130 WFBNA Westside Business Park
- ---------------------------------------------------------------------------------------------------------------------------
310851576 131 WFBNA Ruffin Road Building
310900031 132 WFBNA Hammer Lane
310900036 133 WFBNA Corsa Self Storage
310851621 134 WFBNA Canoga Park Self Storage
9904324 135 MSMC Green Trails Shopping Plaza
- ---------------------------------------------------------------------------------------------------------------------------
25309 136 BSFI Southpointe Shopping Center
26909 137 BSFI Los Coyotes Shopping Center
310851546 138 WFBNA Imming Office Building
310851572 139 WFBNA Tab Transportation
9905053 140 MSMC Third Ave & Second Ave & 70th St
9905053A
9905053B
9905053C
- ---------------------------------------------------------------------------------------------------------------------------
310851596 141 WFBNA WILCO BUILDING
310851604 142 WFBNA Pottery Barn/William Sonoma
310851517 143 WFBNA Nestle Industrial Park
310851527 144 WFBNA Sail Otay Business Park
26981 145 BSFI Grove Square
- ---------------------------------------------------------------------------------------------------------------------------
26832 146 BSFI River Reach Plaza
9904785 147 MSMC 530 North 3rd Street Office Building
310851587 148 WFBNA The Meadows Apartments
310851611 149 WFBNA Alpine Business Center
310851613 150 WFBNA Poway Road Mini Storage
- ---------------------------------------------------------------------------------------------------------------------------
310851490 151 WFBNA West Collins and South Standard
310851490A
310851490B
25540 152 BSFI HAMPTON MANOR APARTMENTS
- ---------------------------------------------------------------------------------------------------------------------------
310900030 153 WFBNA 243 West 30th Street
310851608 154 WFBNA Crocker's Lockers
310851497 155 WFBNA Chaparral Heights Mobile Home Park
310851558 156 WFBNA La Casa de Flores
310851575 157 WFBNA Napa/Riley/Gaines Properties
- ---------------------------------------------------------------------------------------------------------------------------
310900006 158 WFBNA Brandywyne Apartrments
310900018 159 WFBNA Arizona Republic Distribution Center
310900022 160 WFBNA Placerville Mini-Storage
310900037 161 WFBNA Desert Colony Town Home Apartments
310851601 162 WFBNA 807 Eden Street
- ---------------------------------------------------------------------------------------------------------------------------
310851568 163 WFBNA Trade Center Business Park
310900029 164 WFBNA Kasota Avenue
310900035 165 WFBNA Gin'l Fabrics Industrial
26567 166 BSFI CVS-Groton
9904982 167 MSMC Park Lane I Apartments
- ---------------------------------------------------------------------------------------------------------------------------
25840 168 BSFI Lincoln Center Mobile Home
310851646 169 WFBNA AMD Building
310851625 170 WFBNA 848 Gish Rd
310851257 171 WFBNA Johnson Warehouse-Englewood
310851321 172 WFBNA Off Broadway Industrial Park
- ---------------------------------------------------------------------------------------------------------------------------
9905494 173 MSMC Hampton Place Townhomes
310851600 174 WFBNA 17711-17721 Railroad Street
310851544 175 WFBNA Livermore Industrial
26302 176 BSFI Sears Auto - Ground Lease
310851583 177 WFBNA 1227 & 1227 A Knox Street
- ---------------------------------------------------------------------------------------------------------------------------
310851599 178 WFBNA 554 Easy Street
310851626 179 WFBNA Idle Wheels Mobile Home Park
9905485 180 MSMC Video Junction Retail Center
310900002 181 WFBNA Spring Creek Plaza
===========================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
% OF
ORIGINAL CUT-OFF INITIAL POOL
LOAN NUMBER COUNT PROPERTY NAME BALANCE BALANCE BALANCE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
310900043 1 650 Townsend Center 58,500,000 58,500,000 6.59%
310900024 2 First Union Capitol Center 47,000,000 47,000,000 5.29%
310851624 3 44,850,000 44,648,233 5.03%
310851624A Private Mini Storage La Marque 3,616,201 3,599,933
310851624B Private Mini Storage-Katy 5,437,779 5,413,316
310851624C Private Mini Storage League City 3,858,360 3,841,002
310851624D Private Mini Storage Eastlake 3,509,051 3,493,265
310851624E Private Mini Storage Florida Avenue 3,413,375 3,398,019
310851624F Private Mini Storage Cutten 2,691,575 2,679,466
310851624G Private Mini Storage Fountainview 4,701,329 4,680,179
310851624H Private Mini Storage Clearlake 3,125,303 3,111,243
310851624I Private Mini Storage Voss 4,054,758 4,036,517
310851624J Private Mini Storage Palm Harbor 2,889,681 2,876,681
310851624K Private Mini Storage Jacksonville 2,024,673 2,015,565
310851624L Private Mini Storage Westbelt 3,901,342 3,883,791
310851624M Private Mini Storage Westbelt RV 1,626,573 1,619,256
- ------------------------------------------------------------------------------------------------------------------------------------
9905426 4 HOLIDAY INN-MISSION BAY 22,100,000 21,633,104 2.44%
26287 5 20,175,000 20,175,000 2.27%
26287A Raleigh Grand 16 4,175,000 4,175,000
26287B Boise Stadium 21 8,000,000 8,000,000
26287C Muvico Pompano 18 8,000,000 8,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
27657 6 THE MERCER HOTEL 20,000,000 20,000,000 2.25%
310900004 7 International Airport Center 19,300,000 19,269,309 2.17%
310900032 8 Orchard Business Centre 19,200,000 19,182,572 2.16%
9905921 9 Circuit City Corporate Headquarters 17,000,000 17,000,000 1.91%
310900041 10 Vacaville Commons Shopping Center 16,000,000 16,000,000 1.80%
- ------------------------------------------------------------------------------------------------------------------------------------
310900020 11 15,750,000 15,722,584 1.77%
310900020A Security Self Storage - Arlington 1,330,000 1,327,685
310900020B Security Self Storage - Austin 2,180,000 2,176,205
310900020C Security Self Storage - Dallas 2,460,000 2,455,718
310900020D Security Self Storage - Denver 2,170,000 2,166,223
310900020E Security Self Storage - Houston 2,030,000 2,026,466
310900020F Security Self Storage - Shawnee 1,250,000 1,247,824
310900020G Security Self Storage - Skillman 2,210,000 2,206,153
310900020H Security Self Storage - Westminster 2,120,000 2,116,310
- ------------------------------------------------------------------------------------------------------------------------------------
26660 12 14,000,000 13,911,618 1.57%
26660A Forest Park Apartments 7,595,000 7,547,053
26660B Rim Rock West Apartments 2,625,000 2,608,428
26660C Rocky Meadows 3,780,000 3,756,137
- ------------------------------------------------------------------------------------------------------------------------------------
26511 13 SEATTLE DESIGN CENTER 13,775,000 13,748,376 1.55%
25503 14 97 Commerce Way 10,800,000 10,683,388 1.20%
27112 15 Cameron Green Apartments 10,500,000 10,474,608 1.18%
27874 16 Bank West Office Building 10,250,000 10,250,000 1.15%
310900011 17 34801 Campus Drive 10,150,000 10,034,207 1.13%
- ------------------------------------------------------------------------------------------------------------------------------------
27931 18 American Colony Apartments 8,800,000 8,795,170 0.99%
9905475 19 Community Shopping Center 8,625,000 8,479,101 0.95%
9904248 20 Best Buy & Kitchen etc @ The Mall of New Hampshire 8,500,000 8,480,137 0.95%
310851607 21 Tracy Corners Shopping Center 7,770,000 7,727,680 0.87%
27942 22 Cinnamon Creek Apartments 7,500,000 7,496,510 0.84%
- ------------------------------------------------------------------------------------------------------------------------------------
26334 23 Wild Oats Marketplace 7,150,000 7,146,850 0.80%
28027 24 Tustin French Quarter 6,900,000 6,900,000 0.78%
26863 25 Hampton Apartments 6,800,000 6,783,344 0.76%
27355 26 One Exchange Place 6,800,000 6,789,981 0.76%
26597 27 Fountainview Estates 6,500,000 6,466,944 0.73%
- ------------------------------------------------------------------------------------------------------------------------------------
26569 28 Stephen Wise Congress House 6,250,000 6,240,451 0.70%
27018 29 Seattle Gift Center 6,225,000 6,212,968 0.70%
26779 30 Thomasbrook Apartments 6,200,000 6,173,896 0.70%
310851270 31 IDC Petaluma 6,135,000 6,102,295 0.69%
18079 32 36 West 47th Street 6,000,000 5,881,529 0.66%
- ------------------------------------------------------------------------------------------------------------------------------------
27638 33 Randalls Court Southview 6,000,000 6,000,000 0.68%
9905484 34 Richland Meadows Mobile Home Park 6,000,000 5,965,945 0.67%
27130 35 Lake Highlands Plaza 5,840,000 5,837,573 0.66%
27708 36 Home Depot - Ground Lease 5,700,000 5,694,496 0.64%
310851529 37 King City Apartments 5,700,000 5,549,783 0.62%
- ------------------------------------------------------------------------------------------------------------------------------------
9904270 38 Castle Park Shopping Center 5,500,000 5,428,839 0.61%
5250 39 ISIS Theatre 5,465,000 5,465,000 0.62%
26724 40 Comfort Inn 5,445,000 5,418,805 0.61%
26136 41 Gun Hill Apartments 5,400,000 5,388,929 0.61%
26282 42 The National City East Sixth Street Building 5,300,000 5,289,077 0.60%
- ------------------------------------------------------------------------------------------------------------------------------------
310851505 43 Casa Grande Apartments 5,220,000 5,156,334 0.58%
27287 44 Stop & Stor - Woodhaven 5,000,000 4,986,617 0.56%
27945 45 Audubon Gardens 5,000,000 4,997,965 0.56%
27489 46 Marriott Residence Inn 4,863,000 4,840,045 0.54%
25138 47 5,100,000 4,694,564 0.53%
25138A Tower 14 3,350,000 2,964,988
25138B Founders Plaza 1,750,000 1,729,576
- ------------------------------------------------------------------------------------------------------------------------------------
17584 48 NAHATAN PLACE 4,650,000 4,643,428 0.52%
26722 49 Econo Lodge 4,575,000 4,552,990 0.51%
26120 50 The Roffe Building 4,550,000 4,546,269 0.51%
26985 51 Holiday Inn Express-Ft. Lauderdale 4,525,000 4,512,449 0.51%
27611 52 Woodbury Town Plaza 4,500,000 4,500,000 0.51%
- ------------------------------------------------------------------------------------------------------------------------------------
310851522 53 4,400,000 4,355,376 0.49%
310851522A Loera Industrial Portfolio-East 14th 2,500,000 2,474,646
310851522B Loera Industrial Portfolio-Austin Road 1,000,000 989,858
310851522C Loera Industrial Portfolio-Los Indios 900,000 890,872
- ------------------------------------------------------------------------------------------------------------------------------------
310851643 54 PACIFIC RIM COMMERCE 4,300,000 4,283,055 0.48%
9904545 55 Plaza Del Mar 4,268,000 4,259,724 0.48%
310851609 56 La Mirada Shopping Center 4,200,000 4,139,807 0.47%
26989 57 Sierra Village Shopping Center 4,100,000 4,092,326 0.46%
9905478 58 Kmart Plaza 4,100,000 4,066,578 0.46%
- ------------------------------------------------------------------------------------------------------------------------------------
310851557 59 Lakeway Marina 4,100,000 4,073,620 0.46%
310851562 60 One Hallidie Plaza 4,100,000 4,087,177 0.46%
310851622 61 19780 Pacific Gateway Drive 4,100,000 4,080,944 0.46%
27292 62 35 West 35th Street 4,000,000 3,985,786 0.45%
9904417 63 Furr's Supermarket 4,000,000 3,985,712 0.45%
- ------------------------------------------------------------------------------------------------------------------------------------
9905472 64 Meridian Plaza 4,000,000 3,967,393 0.45%
310900033 65 Laguna Greens Shopping Center 3,800,000 3,796,991 0.43%
25413 66 GR Corporate Center 3,800,000 3,788,130 0.43%
25465 67 El Norte Heights Apartments 3,750,000 3,736,165 0.42%
27937 68 Bank Street Court Apartments 3,750,000 3,748,480 0.42%
- ------------------------------------------------------------------------------------------------------------------------------------
27005 69 Ivy Hall Apartments 3,700,000 3,693,549 0.42%
310851641 70 Talcott Plaza 3,700,000 3,691,169 0.42%
27397 71 Lancaster Court Apartments 3,585,000 3,583,391 0.40%
26766 72 Northwest Executive Center 3,530,000 3,520,745 0.40%
26271 73 Balboa Park Plaza 3,500,000 3,490,876 0.39%
- ------------------------------------------------------------------------------------------------------------------------------------
26600 74 Coral Springs Surgical Center 3,500,000 3,493,967 0.39%
26709 75 South Lander Business Park 3,500,000 3,494,780 0.39%
310851432 76 Olivenhain Self Storage 3,500,000 3,439,727 0.39%
310851547 77 Natrol Industrial Building 3,500,000 3,415,382 0.38%
310851612 78 North County Self Storage 3,500,000 3,481,683 0.39%
- ------------------------------------------------------------------------------------------------------------------------------------
310851598 79 Windsor Park Apartments 3,480,000 3,468,261 0.39%
25895 80 Mary Avenue Plaza 3,425,000 3,418,847 0.38%
26367 81 Holiday Inn Express 3,335,000 3,333,119 0.38%
26734 82 La Canada Mobile Home Park 3,250,000 3,243,271 0.37%
27319 83 Security Station 3,250,000 3,245,190 0.37%
- ------------------------------------------------------------------------------------------------------------------------------------
310851571 84 1931 Old Middlefield Way 3,250,000 3,231,017 0.36%
310900012 85 Borders Books 3,250,000 3,240,416 0.36%
310851414 86 Springview Village Apartments 3,200,000 3,155,764 0.36%
310851482 87 Hollander Industrial Park 3,200,000 3,158,709 0.36%
26553 88 Keystone Apartments 3,100,000 3,089,034 0.35%
- ------------------------------------------------------------------------------------------------------------------------------------
310851633 89 Rancho Chula Vista 3,100,000 3,087,923 0.35%
26494 90 Center Square 3,000,000 2,998,197 0.34%
27654 91 Country Fair Shopping Center 3,000,000 2,998,712 0.34%
9905404 92 1313 Third Avenue 3,000,000 2,997,209 0.34%
310851495 93 La Habra Woods Apartments 3,000,000 2,958,882 0.33%
- ------------------------------------------------------------------------------------------------------------------------------------
310851627 94 Manor Oaks Mobile Estate 3,000,000 2,990,812 0.34%
310851644 95 104 Lee Road 3,000,000 2,994,820 0.34%
27379 96 Madison Centre 2,950,000 2,947,766 0.33%
310851549 97 Woodbridge Apartments 2,870,000 2,787,621 0.31%
310851448 98 Bridgeport Woods 2,820,000 2,775,293 0.31%
- ------------------------------------------------------------------------------------------------------------------------------------
25466 99 San Marcos Racquet Club 2,800,000 2,789,670 0.31%
25473 100 Office Depot Shopping Center 2,800,000 2,799,165 0.32%
310900021 101 Meadowbrook Apartments 2,680,000 2,679,005 0.30%
9905501 102 Safeland Self Storage 2,577,607 2,554,234 0.29%
26528 103 Rite Aid 2,535,000 2,530,813 0.28%
- ------------------------------------------------------------------------------------------------------------------------------------
25454 104 Huntington Shopping Center 2,500,000 2,498,456 0.28%
310851521 105 Martin Avenue Office Warehouse 2,500,000 2,432,087 0.27%
310851632 106 Bays-Dulles Building 2,500,000 2,488,614 0.28%
310851489 107 A-Storage Place Chula Vista 2,450,000 2,431,965 0.27%
9905467 108 U-Stor Delta 2,425,000 2,413,706 0.27%
- ------------------------------------------------------------------------------------------------------------------------------------
9905468 109 U-Stor Beta 2,425,000 2,410,721 0.27%
9905451 110 2,350,000 2,338,465 0.26%
9905451A Edgewater Apartments 1,490,000 1,482,686
9905451B Plaza Arms Apartments 860,000 855,779
- ------------------------------------------------------------------------------------------------------------------------------------
27165 111 THE ARRANGEMENT APARTMENTS 2,300,000 2,294,116 0.26%
310851588 112 Redwood Business Park 2,300,000 2,283,270 0.26%
310851634 113 Al's Formal Wear Distribution Center 2,245,000 2,212,996 0.25%
9904923 114 Village At Weber Ranch 2,240,000 2,219,515 0.25%
27064 115 The Marlborough 2,225,000 2,216,031 0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
310851541 116 1483 Broadway 2,200,000 2,179,258 0.25%
310851614 117 Electric Lightwave Building 2,200,000 2,162,566 0.24%
26725 118 Days Inn 2,198,000 2,187,426 0.25%
25773 119 Rocky Hill Plaza 2,150,000 2,144,853 0.24%
310851616 120 Plantation Atlantana 2,150,000 2,131,199 0.24%
- ------------------------------------------------------------------------------------------------------------------------------------
27936 121 Southpointe 79 2,100,000 2,100,000 0.24%
26023 122 Best Western 2,075,000 2,065,579 0.23%
310851631 123 Pacific Spectrum One Limited 2,065,000 2,035,722 0.23%
25339 124 Colonial Village Shopping Center 2,050,000 2,050,000 0.23%
27780 125 Lakeview Square Shopping Center 2,050,000 2,050,000 0.23%
- ------------------------------------------------------------------------------------------------------------------------------------
9905453 126 Riverpark Apartments 2,050,000 2,032,691 0.23%
310851533 127 Staples-Minot 2,040,000 2,025,829 0.23%
310851640 128 Desert Village Corporate Center 2,020,000 1,990,883 0.22%
27108 129 Ye Olde Colony Apartments 2,000,000 1,991,622 0.22%
310851496 130 Westside Business Park 2,000,000 1,975,843 0.22%
- ------------------------------------------------------------------------------------------------------------------------------------
310851576 131 Ruffin Road Building 2,000,000 1,990,483 0.22%
310900031 132 Hammer Lane 2,000,000 1,999,086 0.23%
310900036 133 Corsa Self Storage 2,000,000 1,996,636 0.22%
310851621 134 A-American Self-Storage 1,990,000 1,979,892 0.22%
9904324 135 Green Trails Shopping Plaza 1,975,000 1,969,395 0.22%
- ------------------------------------------------------------------------------------------------------------------------------------
25309 136 Southpointe Shopping Center 1,930,000 1,926,110 0.22%
26909 137 Los Coyotes Shopping Center 1,900,000 1,896,693 0.21%
310851546 138 Imming Office Building 1,900,000 1,882,156 0.21%
310851572 139 Tab Transportation 1,900,000 1,885,407 0.21%
9905053 140 1,850,000 1,844,259 0.21%
9905053A 1275 Third Avenue 620,000 618,076
9905053B 1559 Second Avenue 615,000 613,091
9905053C 314 East 70th Street 615,000 613,091
- ------------------------------------------------------------------------------------------------------------------------------------
310851596 141 WILCO BUILDING 1,850,000 1,830,661 0.21%
310851604 142 Pottery Barn/William Sonoma 1,850,000 1,816,929 0.20%
310851517 143 San Fernando/Tyburn Industrial 1,800,000 1,791,791 0.20%
310851527 144 Sail Otay Business Park 1,800,000 1,790,405 0.20%
26981 145 Grove Square 1,785,000 1,784,467 0.20%
- ------------------------------------------------------------------------------------------------------------------------------------
26832 146 River Reach Plaza 1,775,000 1,770,286 0.20%
9904785 147 530 North 3rd Street Office Building 1,750,000 1,745,684 0.20%
310851587 148 The Meadows Apartments 1,750,000 1,714,661 0.19%
310851611 149 Alpine Business Center 1,735,000 1,726,644 0.19%
310851613 150 Poway Road Mini Storage 1,700,000 1,691,037 0.19%
- ------------------------------------------------------------------------------------------------------------------------------------
310851490 151 1,650,000 1,633,006 0.18%
310851490A 1601-1649 West Collins Avenue 650,000 643,305
310851490B 2101-2119 South Standard Avenue 1,000,000 989,701
25540 152 HAMPTON MANOR APARTMENTS 1,625,000 1,620,082 0.18%
- ------------------------------------------------------------------------------------------------------------------------------------
310900030 153 243 West 30th Street 1,610,000 1,600,729 0.18%
310851608 154 Crocker's Lockers 1,550,000 1,540,808 0.17%
310851497 155 Chaparral Heights Mobile Home Park 1,500,000 1,485,459 0.17%
310851558 156 La Casa de Flores 1,500,000 1,459,098 0.16%
310851575 157 Napa/Riley/Gaines Properties 1,500,000 1,495,232 0.17%
- ------------------------------------------------------------------------------------------------------------------------------------
310900006 158 Brandywyne Apartrments 1,500,000 1,492,620 0.17%
310900018 159 Arizona Republic Distribution Center 1,500,000 1,497,377 0.17%
310900022 160 Placerville Mini-Storage 1,500,000 1,487,935 0.17%
310900037 161 Desert Colony Town Home Apartments 1,500,000 1,498,679 0.17%
310851601 162 807 Eden Street 1,440,000 1,431,792 0.16%
- ------------------------------------------------------------------------------------------------------------------------------------
310851568 163 Trade Center Business Park 1,400,000 1,389,161 0.16%
310900029 164 Kasota Avenue 1,400,000 1,395,828 0.16%
310900035 165 Gin'l Fabrics Industrial 1,300,000 1,298,880 0.15%
26567 166 CVS-Groton 1,250,000 1,246,963 0.14%
9904982 167 Park Lane 1 Apartments 1,225,000 1,220,783 0.14%
- ------------------------------------------------------------------------------------------------------------------------------------
25840 168 Lincoln Center Mobile Home Park 1,200,000 1,198,125 0.13%
310851646 169 AMD Building 1,200,000 1,190,058 0.13%
310851625 170 848 Gish Rd 1,140,000 1,133,274 0.13%
310851257 171 Johnson Warehouse-Englewood 1,110,000 1,056,714 0.12%
310851321 172 Off Broadway Industrial Park 1,100,000 1,075,880 0.12%
- ------------------------------------------------------------------------------------------------------------------------------------
9905494 173 Hampton Place Townhomes 1,090,000 1,080,348 0.12%
310851600 174 17711-17721 Railroad Street 1,070,000 1,065,097 0.12%
310851544 175 Livermore Industrial 1,050,000 1,041,458 0.12%
26302 176 Sears Auto - Ground Lease 1,000,000 997,206 0.11%
310851583 177 1227 & 1227 A Knox Street 1,000,000 977,412 0.11%
- ------------------------------------------------------------------------------------------------------------------------------------
310851599 178 554 Easy Street 940,000 935,693 0.11%
310851626 179 Idle Wheels Mobile Home Park 935,000 932,255 0.10%
9905485 180 Video Junction Retail Center 910,000 901,886 0.10%
310900002 181 Spring Creek Plaza 900,000 888,571 0.10%
====================================================================================================================================
888,269,752
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATED
CUMULATIVE GROSS INTEREST NET ORIGINAL TERM
% OF INITIAL NUMBER OF MORTGAGE ACCRUAL SERVICING MORTGAGE TO MATURITY
LOAN NUMBER COUNT POOL BALANCE PROPERTIES RATE METHOD FEE RATE RATE (MOS.)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
310900043 1 6.59% 1 7.8500% Actual 360 0.0532% 7.7968% 120
310900024 2 11.88% 1 7.6960% Actual 360 0.0532% 7.6428% 60
310851624 3 16.90% 13 8.1700% Actual 360 0.0532% 8.1168% 120
310851624A 1
310851624B 1
310851624C 1
310851624D 1
310851624E 1
310851624F 1
310851624G 1
310851624H 1
310851624I 1
310851624J 1
310851624K 1
310851624L 1
310851624M 1
- -----------------------------------------------------------------------------------------------------------------------------------
9905426 4 19.34% 1 7.4000% ACTUAL 360 0.0532% 7.3468% 120
26287 5 21.61% 3 8.1800% Actual 360 0.0532% 8.1268% 60
26287A 1
26287B 1
26287C 1
- -----------------------------------------------------------------------------------------------------------------------------------
27657 6 23.86% 1 8.5800% ACTUAL 360 0.0532% 8.5268% 120
310900004 7 26.03% 1 7.9800% Actual 360 0.0532% 7.9268% 120
310900032 8 28.19% 1 7.6140% Actual 360 0.0532% 7.5608% 132
9905921 9 30.10% 1 8.1000% Actual 360 0.1332% 7.9668% 120
310900041 10 31.91% 1 8.2500% Actual 360 0.0532% 8.1968% 120
- -----------------------------------------------------------------------------------------------------------------------------------
310900020 11 33.68% 8 7.8100% Actual 360 0.0532% 7.7568% 120
310900020A 1
310900020B 1
310900020C 1
310900020D 1
310900020E 1
310900020F 1
310900020G 1
310900020H 1
- -----------------------------------------------------------------------------------------------------------------------------------
26660 12 35.24% 3 7.3300% ACTUAL 360 0.0532% 7.2768% 120
26660A 1
26660B 1
26660C 1
- -----------------------------------------------------------------------------------------------------------------------------------
26511 13 36.79% 1 8.1700% ACTUAL 360 0.0532% 8.1168% 120
25503 14 37.99% 1 8.1900% Actual 360 0.0532% 8.1368% 180
27112 15 39.17% 1 7.4250% Actual 360 0.0532% 7.3718% 120
27874 16 40.33% 1 8.7850% Actual 360 0.0532% 8.7318% 120
310900011 17 41.46% 1 7.6400% Actual 360 0.0532% 7.5868% 180
- -----------------------------------------------------------------------------------------------------------------------------------
27931 18 42.45% 1 7.4150% Actual 360 0.0532% 7.3618% 120
9905475 19 43.40% 1 7.3200% Actual 360 0.0532% 7.2668% 120
9904248 20 44.35% 1 8.5300% Actual 360 0.0532% 8.4768% 109
310851607 21 45.22% 1 8.0600% Actual 360 0.0532% 8.0068% 120
27942 22 46.07% 1 7.9000% Actual 360 0.0532% 7.8468% 60
- -----------------------------------------------------------------------------------------------------------------------------------
26334 23 46.87% 1 8.0500% Actual 360 0.0532% 7.9968% 120
28027 24 47.65% 1 8.6200% Actual 360 0.0532% 8.5668% 120
26863 25 48.41% 1 7.3800% Actual 360 0.0532% 7.3268% 120
27355 26 49.18% 1 8.2350% Actual 360 0.0532% 8.1818% 84
26597 27 49.91% 1 7.4300% Actual 360 0.0532% 7.3768% 120
- -----------------------------------------------------------------------------------------------------------------------------------
26569 28 50.61% 1 8.1150% Actual 360 0.0532% 8.0618% 84
27018 29 51.31% 1 8.1700% Actual 360 0.0532% 8.1168% 120
26779 30 52.00% 1 7.2150% Actual 360 0.0532% 7.1618% 120
310851270 31 52.69% 1 7.2650% Actual 360 0.0532% 7.2118% 120
18079 32 53.35% 1 7.8800% Actual 360 0.0532% 7.8268% 180
- -----------------------------------------------------------------------------------------------------------------------------------
27638 33 54.03% 1 8.0150% 30-360 0.0532% 7.9618% 60
9905484 34 54.70% 1 7.9200% Actual 360 0.0532% 7.8668% 120
27130 35 55.36% 1 8.2050% Actual 360 0.0532% 8.1518% 120
27708 36 56.00% 1 7.8050% Actual 360 0.0532% 7.7518% 120
310851529 37 56.62% 1 7.6000% Actual 360 0.0532% 7.5468% 180
- -----------------------------------------------------------------------------------------------------------------------------------
9904270 38 57.23% 1 7.5000% 30-360 0.1332% 7.3668% 120
5250 39 57.85% 1 9.4200% Actual 360 0.0532% 9.3668% 120
26724 40 58.46% 1 7.8150% Actual 360 0.0532% 7.7618% 120
26136 41 59.07% 1 7.9820% Actual 360 0.0532% 7.9288% 120
26282 42 59.66% 1 7.9650% Actual 360 0.0532% 7.9118% 120
- -----------------------------------------------------------------------------------------------------------------------------------
310851505 43 60.24% 1 7.9000% Actual 360 0.0532% 7.8468% 121
27287 44 60.80% 1 8.0950% Actual 360 0.0532% 8.0418% 120
27945 45 61.37% 1 8.2600% Actual 360 0.0532% 8.2068% 120
27489 46 61.91% 1 7.9450% Actual 360 0.0532% 7.8918% 120
25138 47 62.44% 2 7.4550% Actual 360 0.0632% 7.3918% 120
25138A 1
25138B 1
- -----------------------------------------------------------------------------------------------------------------------------------
17584 48 62.96% 1 8.3700% ACTUAL 360 0.0532% 8.3168% 120
26722 49 63.47% 1 7.8150% Actual 360 0.0532% 7.7618% 120
26120 50 63.99% 1 8.2500% Actual 360 0.0532% 8.1968% 120
26985 51 64.49% 1 9.1150% Actual 360 0.0532% 9.0618% 120
27611 52 65.00% 1 8.2700% Actual 360 0.0532% 8.2168% 180
- -----------------------------------------------------------------------------------------------------------------------------------
310851522 53 65.49% 3 8.5400% Actual 360 0.0532% 8.4868% 180
310851522A 1
310851522B 1
310851522C 1
- -----------------------------------------------------------------------------------------------------------------------------------
310851643 54 65.97% 1 7.5400% ACTUAL 360 0.0532% 7.4868% 120
9904545 55 66.45% 1 8.1600% Actual 360 0.0532% 8.1068% 120
310851609 56 66.92% 1 7.7400% Actual 360 0.0532% 7.6868% 180
26989 57 67.38% 1 8.2700% Actual 360 0.0532% 8.2168% 120
9905478 58 67.84% 1 8.1200% Actual 360 0.0532% 8.0668% 120
- -----------------------------------------------------------------------------------------------------------------------------------
310851557 59 68.30% 1 8.7200% Actual 360 0.0532% 8.6668% 120
310851562 60 68.76% 1 8.5000% Actual 360 0.0532% 8.4468% 120
310851622 61 69.22% 1 8.0100% Actual 360 0.0532% 7.9568% 120
27292 62 69.66% 1 8.0300% Actual 360 0.0532% 7.9768% 120
9904417 63 70.11% 1 8.0800% Actual 360 0.1332% 7.9468% 120
- -----------------------------------------------------------------------------------------------------------------------------------
9905472 64 70.56% 1 8.1200% Actual 360 0.0532% 8.0668% 120
310900033 65 70.99% 1 8.1900% Actual 360 0.0532% 8.1368% 120
25413 66 71.41% 1 7.9500% Actual 360 0.0532% 7.8968% 120
25465 67 71.83% 1 7.4900% Actual 360 0.0532% 7.4368% 120
27937 68 72.26% 1 8.2700% Actual 360 0.0532% 8.2168% 120
- -----------------------------------------------------------------------------------------------------------------------------------
27005 69 72.67% 1 7.6600% Actual 360 0.0532% 7.6068% 120
310851641 70 73.09% 1 8.4600% Actual 360 0.0532% 8.4068% 120
27397 71 73.49% 1 8.0000% Actual 360 0.0532% 7.9468% 120
26766 72 73.89% 1 8.1400% Actual 360 0.0532% 8.0868% 120
26271 73 74.28% 1 8.1600% Actual 360 0.0532% 8.1068% 120
- -----------------------------------------------------------------------------------------------------------------------------------
26600 74 74.67% 1 7.7000% Actual 360 0.0532% 7.6468% 120
26709 75 75.07% 1 8.1950% Actual 360 0.0532% 8.1418% 120
310851432 76 75.45% 1 6.7800% Actual 360 0.0532% 6.7268% 123
310851547 77 75.84% 1 7.7500% 30-360 0.0532% 7.6968% 180
310851612 78 76.23% 1 8.2500% Actual 360 0.0532% 8.1968% 120
- -----------------------------------------------------------------------------------------------------------------------------------
310851598 79 76.62% 1 7.8100% Actual 360 0.0532% 7.7568% 120
25895 80 77.01% 1 8.3950% Actual 360 0.0532% 8.3418% 120
26367 81 77.38% 1 9.4550% Actual 360 0.0532% 9.4018% 120
26734 82 77.75% 1 7.9500% Actual 360 0.0532% 7.8968% 120
27319 83 78.11% 1 8.2200% Actual 360 0.0532% 8.1668% 120
- -----------------------------------------------------------------------------------------------------------------------------------
310851571 84 78.48% 1 8.5800% 30-360 0.0532% 8.5268% 120
310900012 85 78.84% 1 7.6250% Actual 360 0.0532% 7.5718% 120
310851414 86 79.20% 1 6.1500% Actual 360 0.0532% 6.0968% 120
310851482 87 79.55% 1 7.5900% Actual 360 0.0532% 7.5368% 121
26553 88 79.90% 1 7.0250% Actual 360 0.0532% 6.9718% 120
- -----------------------------------------------------------------------------------------------------------------------------------
310851633 89 80.25% 1 7.7900% Actual 360 0.0532% 7.7368% 120
26494 90 80.58% 1 8.0800% Actual 360 0.0532% 8.0268% 120
27654 91 80.92% 1 8.1200% Actual 360 0.0532% 8.0668% 120
9905404 92 81.26% 1 7.9100% Actual 360 0.0532% 7.8568% 120
310851495 93 81.59% 1 6.5400% Actual 360 0.0532% 6.4868% 121
- -----------------------------------------------------------------------------------------------------------------------------------
310851627 94 81.93% 1 8.1400% Actual 360 0.0532% 8.0868% 120
310851644 95 82.27% 1 7.8450% Actual 360 0.0532% 7.7918% 120
27379 96 82.60% 1 8.4500% Actual 360 0.0532% 8.3968% 120
310851549 97 82.91% 1 7.1500% 30-360 0.0532% 7.0968% 180
310851448 98 83.22% 1 7.2900% Actual 360 0.0532% 7.2368% 120
- -----------------------------------------------------------------------------------------------------------------------------------
25466 99 83.54% 1 7.4900% Actual 360 0.0532% 7.4368% 120
25473 100 83.85% 1 8.9850% Actual 360 0.0532% 8.9318% 84
310900021 101 84.15% 1 8.4900% Actual 360 0.0532% 8.4368% 120
9905501 102 84.44% 1 8.1800% Actual 360 0.0532% 8.1268% 118
26528 103 84.73% 1 7.8500% Actual 360 0.0532% 7.7968% 120
- -----------------------------------------------------------------------------------------------------------------------------------
25454 104 85.01% 1 8.9200% Actual 360 0.0532% 8.8668% 120
310851521 105 85.28% 1 7.2800% Actual 360 0.0532% 7.2268% 180
310851632 106 85.56% 1 8.1100% Actual 360 0.0532% 8.0568% 120
310851489 107 85.84% 1 7.2700% Actual 360 0.0532% 7.2168% 120
9905467 108 86.11% 1 8.0000% Actual 360 0.0532% 7.9468% 120
- -----------------------------------------------------------------------------------------------------------------------------------
9905468 109 86.38% 1 7.6800% Actual 360 0.0532% 7.6268% 120
9905451 110 86.64% 2 7.9500% Actual 360 0.0532% 7.8968% 120
9905451A 1
9905451B 1
- -----------------------------------------------------------------------------------------------------------------------------------
27165 111 86.90% 1 8.2250% ACTUAL 360 0.0532% 8.1718% 120
310851588 112 87.16% 1 7.3600% Actual 360 0.0532% 7.3068% 120
310851634 113 87.41% 1 7.7950% Actual 360 0.0532% 7.7418% 180
9904923 114 87.66% 1 8.2300% Actual 360 0.1332% 8.0968% 240
27064 115 87.91% 1 7.4300% Actual 360 0.0532% 7.3768% 120
- -----------------------------------------------------------------------------------------------------------------------------------
310851541 116 88.15% 1 7.4000% Actual 360 0.0532% 7.3468% 120
310851614 117 88.40% 1 7.8300% Actual 360 0.0532% 7.7768% 180
26725 118 88.64% 1 7.8150% Actual 360 0.0532% 7.7618% 120
25773 119 88.88% 1 8.4500% Actual 360 0.0532% 8.3968% 120
310851616 120 89.12% 1 7.3100% Actual 360 0.0532% 7.2568% 120
- -----------------------------------------------------------------------------------------------------------------------------------
27936 121 89.36% 1 7.9450% Actual 360 0.0532% 7.8918% 120
26023 122 89.59% 1 8.9000% Actual 360 0.0532% 8.8468% 120
310851631 123 89.82% 1 8.3700% 30-360 0.0532% 8.3168% 180
25339 124 90.05% 1 8.2900% Actual 360 0.0532% 8.2368% 120
27780 125 90.28% 1 8.4600% Actual 360 0.0532% 8.4068% 120
- -----------------------------------------------------------------------------------------------------------------------------------
9905453 126 90.51% 1 7.9500% Actual 360 0.0532% 7.8968% 120
310851533 127 90.74% 1 8.3600% Actual 360 0.0532% 8.3068% 120
310851640 128 90.96% 1 7.6800% Actual 360 0.0532% 7.6268% 180
27108 129 91.19% 1 7.2400% Actual 360 0.0532% 7.1868% 120
310851496 130 91.41% 1 7.2200% Actual 360 0.0532% 7.1668% 121
- -----------------------------------------------------------------------------------------------------------------------------------
310851576 131 91.63% 1 7.6900% Actual 360 0.0532% 7.6368% 120
310900031 132 91.86% 1 7.9500% Actual 360 0.0532% 7.8968% 120
310900036 133 92.08% 1 7.9550% Actual 360 0.0532% 7.9018% 120
310851621 134 92.31% 1 8.3900% Actual 360 0.0532% 8.3368% 120
9904324 135 92.53% 1 8.3900% Actual 360 0.0532% 8.3368% 120
- -----------------------------------------------------------------------------------------------------------------------------------
25309 136 92.75% 1 9.0000% Actual 360 0.0532% 8.9468% 120
26909 137 92.96% 1 8.4900% Actual 360 0.0532% 8.4368% 120
310851546 138 93.17% 1 7.4200% Actual 360 0.0532% 7.3668% 120
310851572 139 93.38% 1 7.8700% Actual 360 0.0532% 7.8168% 120
9905053 140 93.59% 3 7.5300% Actual 360 0.0532% 7.4768% 120
9905053A 1
9905053B 1
9905053C 1
- -----------------------------------------------------------------------------------------------------------------------------------
310851596 141 93.80% 1 8.3400% ACTUAL 360 0.0532% 8.2868% 120
310851604 142 94.00% 1 7.8400% 30-360 0.0532% 7.7868% 180
310851517 143 94.20% 1 8.8800% Actual 360 0.0532% 8.8268% 120
310851527 144 94.40% 1 7.6600% Actual 360 0.0532% 7.6068% 120
26981 145 94.61% 1 8.9850% Actual 360 0.0532% 8.9318% 120
- -----------------------------------------------------------------------------------------------------------------------------------
26832 146 94.80% 1 8.0950% Actual 360 0.0532% 8.0418% 120
9904785 147 95.00% 1 8.3500% Actual 360 0.0532% 8.2968% 120
310851587 148 95.19% 1 7.6500% Actual 360 0.0532% 7.5968% 180
310851611 149 95.39% 1 8.6350% Actual 360 0.0532% 8.5818% 120
310851613 150 95.58% 1 8.2150% Actual 360 0.0532% 8.1618% 120
- -----------------------------------------------------------------------------------------------------------------------------------
310851490 151 95.76% 2 8.0300% Actual 360 0.0532% 7.9768% 120
310851490A 1
310851490B 1
25540 152 95.95% 1 8.1800% ACTUAL 360 0.0532% 8.1268% 120
- -----------------------------------------------------------------------------------------------------------------------------------
310900030 153 96.13% 1 8.0800% 30-360 0.0532% 8.0268% 180
310851608 154 96.30% 1 8.3400% Actual 360 0.0532% 8.2868% 120
310851497 155 96.47% 1 6.7600% Actual 360 0.0532% 6.7068% 121
310851558 156 96.63% 1 7.2400% Actual 360 0.0532% 7.1868% 180
310851575 157 96.80% 1 8.4500% Actual 360 0.0532% 8.3968% 120
- -----------------------------------------------------------------------------------------------------------------------------------
310900006 158 96.97% 1 7.6600% Actual 360 0.0532% 7.6068% 240
310900018 159 97.14% 1 7.7900% Actual 360 0.0532% 7.7368% 120
310900022 160 97.30% 1 8.2950% Actual 360 0.0532% 8.2418% 120
310900037 161 97.47% 1 8.0600% Actual 360 0.0532% 8.0068% 120
310851601 162 97.63% 1 7.8400% Actual 360 0.0532% 7.7868% 120
- -----------------------------------------------------------------------------------------------------------------------------------
310851568 163 97.79% 1 7.8300% Actual 360 0.0532% 7.7768% 120
310900029 164 97.95% 1 7.9600% Actual 360 0.0532% 7.9068% 120
310900035 165 98.09% 1 8.1200% Actual 360 0.0532% 8.0668% 120
26567 166 98.23% 1 8.4000% Actual 360 0.0532% 8.3468% 120
9904982 167 98.37% 1 8.2000% Actual 360 0.0532% 8.1468% 120
- -----------------------------------------------------------------------------------------------------------------------------------
25840 168 98.51% 1 8.2600% Actual 360 0.0532% 8.2068% 180
310851646 169 98.64% 1 8.5900% 30-360 0.0532% 8.5368% 180
310851625 170 98.77% 1 7.6700% Actual 360 0.0532% 7.6168% 120
310851257 171 98.89% 1 6.9850% Actual 360 0.0532% 6.9318% 180
310851321 172 99.01% 1 7.0200% 30-360 0.0532% 6.9668% 126
- -----------------------------------------------------------------------------------------------------------------------------------
9905494 173 99.13% 1 8.7500% Actual 360 0.0532% 8.6968% 120
310851600 174 99.25% 1 8.0800% Actual 360 0.0532% 8.0268% 120
310851544 175 99.37% 1 8.1300% Actual 360 0.0532% 8.0768% 120
26302 176 99.48% 1 8.3550% Actual 360 0.0532% 8.3018% 180
310851583 177 99.59% 1 7.9800% Actual 360 0.0532% 7.9268% 180
- -----------------------------------------------------------------------------------------------------------------------------------
310851599 178 99.69% 1 8.0800% Actual 360 0.0532% 8.0268% 120
310851626 179 99.80% 1 8.2800% Actual 360 0.0532% 8.2268% 120
9905485 180 99.90% 1 8.3000% Actual 360 0.0532% 8.2468% 120
310900002 181 100.00% 1 8.9700% Actual 360 0.0532% 8.9168% 180
===================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REMAINING
TERM TO ORIGINAL INTEREST FIRST
MATURITY AMORTIZATION ONLY PAYMENT MATURITY ANNUAL IO
LOAN NUMBER COUNT (MOS.) (MOS.) MONTHS DATE DATE P&I PAYMENT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
310900043 1 120 360 24 3/1/2000 2/1/2010 5,077,811 395,444
310900024 2 56 360 36 11/1/1999 10/1/2004 4,019,539 311,474
310851624 3 115 300 0 10/1/1999 9/1/2009 4,214,706
310851624A
310851624B
310851624C
310851624D
310851624E
310851624F
310851624G
310851624H
310851624I
310851624J
310851624K
310851624L
310851624M
- ------------------------------------------------------------------------------------------------------------------------------------
9905426 4 101 300 0 8/1/1998 7/1/2008 1,942,587
26287 5 60 300 0 3/1/2000 2/1/2005 1,897,527
26287A
26287B
26287C
- ------------------------------------------------------------------------------------------------------------------------------------
27657 6 120 300 0 3/1/2000 2/1/2010 1,945,501
310900004 7 117 360 0 12/1/1999 11/1/2009 1,696,171
310900032 8 131 300 0 2/1/2000 1/1/2011 1,719,757
9905921 9 120 360 0 3/1/2000 2/1/2010 1,511,125
310900041 10 120 360 24 3/1/2000 2/1/2010 1,442,432 113,667
- ------------------------------------------------------------------------------------------------------------------------------------
310900020 11 118 300 0 1/1/2000 12/1/2009 1,435,024
310900020A
310900020B
310900020C
310900020D
310900020E
310900020F
310900020G
310900020H
- ------------------------------------------------------------------------------------------------------------------------------------
26660 12 114 300 0 9/1/1999 8/1/2009 1,222,988
26660A
26660B
26660C
- ------------------------------------------------------------------------------------------------------------------------------------
26511 13 116 360 0 11/1/1999 10/1/2009 1,232,559
25503 14 176 180 0 11/1/1999 10/1/2014 1,252,782
27112 15 116 360 0 11/1/1999 10/1/2009 874,548
27874 16 120 360 0 3/1/2000 2/1/2010 970,718
310900011 17 176 180 0 11/1/1999 10/1/2014 1,138,813
- ------------------------------------------------------------------------------------------------------------------------------------
27931 18 119 360 0 2/1/2000 1/1/2010 732,234
9905475 19 105 300 0 12/1/1998 11/1/2008 752,779
9904248 20 104 360 0 10/1/1999 10/1/2008 786,461
310851607 21 114 300 0 9/1/1999 8/1/2009 723,351
27942 22 59 360 0 2/1/2000 1/1/2005 654,125
- ------------------------------------------------------------------------------------------------------------------------------------
26334 23 119 360 0 2/1/2000 1/1/2010 632,563
28027 24 120 360 0 3/1/2000 2/1/2010 643,715
26863 25 116 360 0 11/1/1999 10/1/2009 563,869
27355 26 81 360 0 12/1/1999 11/1/2006 612,173
26597 27 117 240 0 12/1/1999 11/1/2009 625,028
- ------------------------------------------------------------------------------------------------------------------------------------
26569 28 81 360 0 12/1/1999 11/1/2006 556,348
27018 29 116 360 0 11/1/1999 10/1/2009 557,001
26779 30 116 300 0 11/1/1999 10/1/2009 536,092
310851270 31 112 360 0 7/1/1999 6/1/2009 502,967
18079 32 173 180 0 8/1/1999 7/1/2014 683,091
- ------------------------------------------------------------------------------------------------------------------------------------
27638 33 59 300 12 2/1/2000 1/1/2005 556,423 40,075
9905484 34 110 360 0 5/1/1999 4/1/2009 524,301
27130 35 119 360 0 2/1/2000 1/1/2010 524,272
27708 36 118 360 0 1/1/2000 12/1/2009 492,628
310851529 37 171 180 0 6/1/1999 5/1/2014 637,970
- ------------------------------------------------------------------------------------------------------------------------------------
9904270 38 109 300 0 4/1/1999 3/1/2009 487,734
5250 39 120 360 0 3/1/2000 2/1/2010 547,608
26724 40 117 240 0 12/1/1999 11/1/2009 539,031
26136 41 116 360 0 11/1/1999 10/1/2009 474,667
26282 42 116 360 0 11/1/1999 10/1/2009 465,123
- ------------------------------------------------------------------------------------------------------------------------------------
310851505 43 109 300 0 3/1/1999 3/1/2009 479,323
27287 44 117 300 0 12/1/1999 11/1/2009 466,872
27945 45 119 360 0 2/1/2000 1/1/2010 451,182
27489 46 117 240 0 12/1/1999 11/1/2009 486,117
25138 47 103 360 0 10/1/1998 9/1/2008 397,232
25138A
25138B
- ------------------------------------------------------------------------------------------------------------------------------------
17584 48 117 360 0 12/1/1999 11/1/2009 423,923
26722 49 117 240 0 12/1/1999 11/1/2009 452,905
26120 50 118 360 0 1/1/2000 12/1/2009 410,192
26985 51 116 300 0 11/1/1999 10/1/2009 459,967
27611 52 180 180 0 3/1/2000 2/1/2015 524,504
- ------------------------------------------------------------------------------------------------------------------------------------
310851522 53 173 240 0 8/1/1999 7/1/2014 459,548
310851522A
310851522B
310851522C
- ------------------------------------------------------------------------------------------------------------------------------------
310851643 54 116 300 0 11/1/1999 10/1/2009 382,663
9904545 55 116 360 0 11/1/1999 10/1/2009 381,533
310851609 56 175 180 0 10/1/1999 9/1/2014 474,114
26989 57 116 360 0 11/1/1999 10/1/2009 370,315
9905478 58 111 300 0 6/1/1999 5/1/2009 383,653
- ------------------------------------------------------------------------------------------------------------------------------------
310851557 59 112 300 0 7/1/1999 6/1/2009 403,492
310851562 60 113 360 0 8/1/1999 7/1/2009 378,305
310851622 61 115 300 0 10/1/1999 9/1/2009 380,060
27292 62 116 300 0 11/1/1999 10/1/2009 371,426
9904417 63 113 360 0 8/1/1999 7/1/2009 354,888
- ------------------------------------------------------------------------------------------------------------------------------------
9905472 64 111 300 0 6/1/1999 5/1/2009 374,296
310900033 65 119 300 0 2/1/2000 1/1/2010 357,707
25413 66 114 360 0 9/1/1999 8/1/2009 333,009
25465 67 114 360 0 9/1/1999 8/1/2009 314,338
27937 68 119 360 0 2/1/2000 1/1/2010 338,703
- ------------------------------------------------------------------------------------------------------------------------------------
27005 69 117 360 0 12/1/1999 11/1/2009 315,330
310851641 70 115 360 0 10/1/1999 9/1/2009 340,140
27397 71 119 360 0 2/1/2000 1/1/2010 315,666
26766 72 115 360 0 10/1/1999 9/1/2009 314,967
26271 73 115 360 0 10/1/1999 9/1/2009 312,879
- ------------------------------------------------------------------------------------------------------------------------------------
26600 74 117 360 0 12/1/1999 11/1/2009 299,443
26709 75 117 360 0 12/1/1999 11/1/2009 313,910
310851432 76 109 300 0 1/1/1999 3/1/2009 290,979
310851547 77 172 180 0 7/1/1999 6/1/2014 395,336
310851612 78 114 300 0 9/1/1999 8/1/2009 331,149
- ------------------------------------------------------------------------------------------------------------------------------------
310851598 79 114 360 0 9/1/1999 8/1/2009 300,907
25895 80 116 360 0 11/1/1999 10/1/2009 312,970
26367 81 119 300 0 2/1/2000 1/1/2010 348,402
26734 82 116 360 0 11/1/1999 10/1/2009 284,810
27319 83 117 360 0 12/1/1999 11/1/2009 292,172
- ------------------------------------------------------------------------------------------------------------------------------------
310851571 84 114 300 0 9/1/1999 8/1/2009 316,144
310900012 85 117 300 0 12/1/1999 11/1/2009 291,385
310851414 86 105 360 0 12/1/1998 11/1/2008 233,944
310851482 87 109 300 0 3/1/1999 3/1/2009 286,024
26553 88 115 360 0 10/1/1999 9/1/2009 248,117
- ------------------------------------------------------------------------------------------------------------------------------------
310851633 89 113 360 0 8/1/1999 7/1/2009 267,534
26494 90 119 330 0 2/1/2000 1/1/2010 272,116
27654 91 119 360 0 2/1/2000 1/1/2010 267,173
9905404 92 118 360 0 1/1/2000 12/1/2009 261,900
310851495 93 110 300 0 4/1/1999 4/1/2009 243,975
- ------------------------------------------------------------------------------------------------------------------------------------
310851627 94 114 360 0 9/1/1999 8/1/2009 267,677
310851644 95 118 300 0 1/1/2000 12/1/2009 274,168
27379 96 118 360 0 1/1/2000 12/1/2009 270,942
310851549 97 171 180 0 6/1/1999 5/1/2014 312,452
310851448 98 111 240 0 6/1/1999 5/1/2009 268,284
- ------------------------------------------------------------------------------------------------------------------------------------
25466 99 114 360 0 9/1/1999 8/1/2009 234,706
25473 100 83 360 0 2/1/2000 1/1/2007 269,991
310900021 101 119 360 0 2/1/2000 1/1/2010 247,055
9905501 102 109 287 0 6/1/1999 3/1/2009 245,833
26528 103 117 360 0 12/1/1999 11/1/2009 220,038
- ------------------------------------------------------------------------------------------------------------------------------------
25454 104 118 360 0 1/1/2000 12/1/2009 239,662
310851521 105 171 180 0 6/1/1999 5/1/2014 274,366
310851632 106 115 300 0 10/1/1999 9/1/2009 233,735
310851489 107 109 360 0 4/1/1999 3/1/2009 200,959
9905467 108 115 300 0 10/1/1999 9/1/2009 224,598
- ------------------------------------------------------------------------------------------------------------------------------------
9905468 109 114 300 0 9/1/1999 8/1/2009 218,465
9905451 110 111 360 0 6/1/1999 5/1/2009 205,939
9905451A
9905451B
- ------------------------------------------------------------------------------------------------------------------------------------
27165 111 115 360 0 10/1/1999 9/1/2009 206,865
310851588 112 113 300 0 8/1/1999 7/1/2009 201,455
310851634 113 175 180 0 10/1/1999 9/1/2014 254,275
9904923 114 234 240 0 9/1/1999 8/1/2019 228,698
27064 115 116 300 0 11/1/1999 10/1/2009 196,097
- ------------------------------------------------------------------------------------------------------------------------------------
310851541 116 111 300 0 6/1/1999 5/1/2009 193,380
310851614 117 174 180 0 9/1/1999 8/1/2014 249,708
26725 118 117 240 0 12/1/1999 11/1/2009 217,592
25773 119 115 360 0 10/1/1999 9/1/2009 197,466
310851616 120 115 240 0 10/1/1999 9/1/2009 204,856
- ------------------------------------------------------------------------------------------------------------------------------------
27936 121 120 300 0 3/1/2000 2/1/2010 193,580
26023 122 114 300 0 9/1/1999 8/1/2009 207,257
310851631 123 175 180 0 10/1/1999 9/1/2014 242,134
25339 124 120 360 0 3/1/2000 2/1/2010 185,504
27780 125 120 360 0 3/1/2000 2/1/2010 188,456
- ------------------------------------------------------------------------------------------------------------------------------------
9905453 126 111 300 0 6/1/1999 5/1/2009 189,053
310851533 127 112 300 0 7/1/1999 6/1/2009 194,815
310851640 128 175 180 0 10/1/1999 9/1/2014 227,194
27108 129 116 300 0 11/1/1999 10/1/2009 173,319
310851496 130 110 300 0 4/1/1999 4/1/2009 173,010
- ------------------------------------------------------------------------------------------------------------------------------------
310851576 131 112 360 0 7/1/1999 6/1/2009 170,945
310900031 132 119 360 0 2/1/2000 1/1/2010 175,268
310900036 133 118 300 0 1/1/2000 12/1/2009 184,521
310851621 134 114 300 0 9/1/1999 8/1/2009 190,521
9904324 135 114 360 0 9/1/1999 8/1/2009 180,388
- ------------------------------------------------------------------------------------------------------------------------------------
25309 136 115 360 0 10/1/1999 9/1/2009 186,351
26909 137 116 360 0 11/1/1999 10/1/2009 175,151
310851546 138 111 300 0 6/1/1999 5/1/2009 167,305
310851572 139 112 300 0 7/1/1999 6/1/2009 174,015
9905053 140 115 360 0 10/1/1999 9/1/2009 155,682
9905053A
9905053B
9905053C
- ------------------------------------------------------------------------------------------------------------------------------------
310851596 141 113 240 0 8/1/1999 7/1/2009 190,415
310851604 142 174 180 0 9/1/1999 8/1/2014 210,109
310851517 143 114 300 0 9/1/1999 8/1/2009 179,495
310851527 144 111 360 0 6/1/1999 5/1/2009 153,404
26981 145 119 360 0 2/1/2000 1/1/2010 172,119
- ------------------------------------------------------------------------------------------------------------------------------------
26832 146 115 360 0 10/1/1999 9/1/2009 157,705
9904785 147 115 360 0 10/1/1999 9/1/2009 159,245
310851587 148 173 180 0 8/1/1999 7/1/2014 196,467
310851611 149 114 300 0 9/1/1999 8/1/2009 169,547
310851613 150 114 300 0 9/1/1999 8/1/2009 160,367
- ------------------------------------------------------------------------------------------------------------------------------------
310851490 151 109 300 0 4/1/1999 3/1/2009 153,213
310851490A
310851490B
25540 152 114 360 0 9/1/1999 8/1/2009 145,538
- ------------------------------------------------------------------------------------------------------------------------------------
310900030 153 178 180 0 1/1/2000 12/1/2014 185,525
310851608 154 113 300 0 8/1/1999 7/1/2009 147,772
310851497 155 109 360 0 3/1/1999 3/1/2009 116,867
310851558 156 171 180 0 6/1/1999 5/1/2014 164,214
310851575 157 113 360 0 8/1/1999 7/1/2009 137,767
- ------------------------------------------------------------------------------------------------------------------------------------
310900006 158 237 240 0 12/1/1999 11/1/2019 146,773
310900018 159 118 300 0 1/1/2000 12/1/2009 136,432
310900022 160 117 180 0 12/1/1999 11/1/2009 175,097
310900037 161 118 360 0 1/1/2000 12/1/2009 132,831
310851601 162 114 300 0 9/1/1999 8/1/2009 131,544
- ------------------------------------------------------------------------------------------------------------------------------------
310851568 163 112 300 0 7/1/1999 6/1/2009 127,779
310900029 164 118 240 0 1/1/2000 12/1/2009 140,104
310900035 165 118 360 0 1/1/2000 12/1/2009 115,775
26567 166 115 360 0 10/1/1999 9/1/2009 114,276
9904982 167 113 360 0 8/1/1999 7/1/2009 109,920
- ------------------------------------------------------------------------------------------------------------------------------------
25840 168 178 300 0 1/1/2000 12/1/2014 113,633
310851646 169 177 180 0 12/1/1999 11/1/2014 142,563
310851625 170 114 300 0 9/1/1999 8/1/2009 102,612
310851257 171 165 180 0 12/1/1998 11/1/2013 119,612
310851321 172 109 300 0 10/1/1998 3/1/2009 93,463
- ------------------------------------------------------------------------------------------------------------------------------------
9905494 173 109 300 0 4/1/1999 3/1/2009 107,536
310851600 174 115 300 0 10/1/1999 9/1/2009 99,783
310851544 175 111 300 0 6/1/1999 5/1/2009 98,336
26302 176 178 240 0 1/1/2000 12/1/2014 103,040
310851583 177 172 180 0 7/1/1999 6/1/2014 114,540
- ------------------------------------------------------------------------------------------------------------------------------------
310851599 178 115 300 0 10/1/1999 9/1/2009 87,660
310851626 179 114 360 0 9/1/1999 8/1/2009 84,529
9905485 180 110 300 0 5/1/1999 4/1/2009 86,464
310900002 181 175 180 0 10/1/1999 9/1/2014 109,348
====================================================================================================================================
115 319
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1998 NET 1999/T-12 UNDERWRITTEN UNDERWRITTEN DEBT SERVICE
OPERATING NET OPERATING NET OPERATING NET CASH COVERAGE
LOAN NUMBER COUNT INCOME (a) INCOME (a) INCOME FLOW LOCKBOX RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
310900043 1 430,206 7,064,944 10,086,058 8,887,940 Springing 1.75
310900024 2 9,527,309 8,839,402 7,189,469 6,467,686 1.61
310851624 3 1.42
310851624A 438,264 496,284 503,651 490,511 In Place
310851624B 697,050 741,282 729,716 719,591 In Place
310851624C 458,534 539,102 521,523 499,717 In Place
310851624D 436,816 481,119 459,371 449,114 In Place
310851624E 399,791 466,811 448,112 438,969 In Place
310851624F 391,589 370,678 388,600 378,502 In Place
310851624G 522,198 645,381 659,565 645,696 In Place
310851624H 447,370 425,697 376,063 365,671 In Place
310851624I 503,716 554,919 543,964 535,925 In Place
310851624J 372,838 396,652 397,740 388,297 In Place
310851624K 273,169 278,374 270,471 260,940 In Place
310851624L 405,075 534,699 547,545 532,073 In Place
310851624M 172,286 308,172 282,019 276,269 In Place
- ------------------------------------------------------------------------------------------------------------------------------------
9905426 4 4,423,490 4,197,255 3,646,500 3,305,962 SPRINGING 1.70
26287 5 1.93
26287A - - 829,350 784,857 In Place
26287B - - 1,584,981 1,471,726 In Place
26287C - - 1,471,790 1,398,594 In Place
- ------------------------------------------------------------------------------------------------------------------------------------
27657 6 4,508,233 6,798,480 4,605,097 4,123,121 SPRINGING 2.12
310900004 7 2,710,080 2,298,984 2,149,307 1.27
310900032 8 3,474,035 3,010,038 2,889,427 1.68
9905921 9 2,478,125 2,478,125 2,657,871 2,311,596 Springing 1.53
310900041 10 2,676,404 2,358,101 2,366,606 2,233,146 1.55
- ------------------------------------------------------------------------------------------------------------------------------------
310900020 11 1.54
310900020A 179,318 199,403 199,184 192,270
310900020B 301,697 331,679 307,603 299,647
310900020C 364,937 396,194 349,636 340,963
310900020D - 341,384 317,407 310,696
310900020E - 359,008 295,008 286,018
310900020F 186,315 199,409 181,750 175,952
310900020G 291,636 328,311 325,510 317,854
310900020H - 341,293 298,442 289,916
- ------------------------------------------------------------------------------------------------------------------------------------
26660 12 1.41
26660A 1,114,493 1,083,271 1,035,459 967,959
26660B 333,766 336,644 322,479 302,979
26660C 495,215 495,215 473,657 449,157
- ------------------------------------------------------------------------------------------------------------------------------------
26511 13 2,032,372 2,282,718 2,412,623 2,084,377 SPRINGING 1.69
25503 14 - - 1,714,920 1,607,366 1.28
27112 15 1,479,260 1,510,351 1,458,938 1,378,938 1.58
27874 16 - 1,039,521 1,535,165 1,439,582 1.48
310900011 17 2,213,556 2,012,427 1,836,177 1.61
- ------------------------------------------------------------------------------------------------------------------------------------
27931 18 1,172,564 1,191,628 1,269,033 1,204,033 1.64
9905475 19 - 1,189,305 1,172,132 1,148,686 1.53
9904248 20 1,053,304 1,040,154 1,016,845 988,749 Springing 1.26
310851607 21 992,758 1,029,286 990,611 937,234 1.30
27942 22 897,193 937,045 1,090,666 1,021,666 1.56
- ------------------------------------------------------------------------------------------------------------------------------------
26334 23 - 1,190,513 1,037,233 974,919 1.54
28027 24 185,517 566,835 919,288 859,703 Springing 1.34
26863 25 953,574 - 937,986 904,236 1.60
27355 26 395,163 - 1,166,708 1,044,777 Springing 1.71
26597 27 828,700 925,122 1,015,966 988,666 1.58
- ------------------------------------------------------------------------------------------------------------------------------------
26569 28 (152,250) - 913,224 823,439 1.48
27018 29 1,161,978 1,154,901 1,156,979 938,696 Springing 1.69
26779 30 875,369 926,046 851,853 785,853 1.47
310851270 31 750,288 687,217 643,974 1.28
18079 32 1,430,574 - 1,577,903 1,420,012 2.08
- ------------------------------------------------------------------------------------------------------------------------------------
27638 33 905,834 915,324 995,456 931,123 1.67
9905484 34 829,747 844,213 778,870 744,661 1.42
27130 35 703,096 - 738,605 693,763 1.32
27708 36 - - 692,037 692,037 1.40
310851529 37 870,596 863,106 785,945 737,195 1.16
- ------------------------------------------------------------------------------------------------------------------------------------
9904270 38 615,185 644,931 687,750 646,082 1.32
5250 39 - - 729,950 709,245 1.30
26724 40 1,453,974 2,816,747 1,111,550 984,103 Springing 1.83
26136 41 515,230 535,445 639,502 611,602 1.29
26282 42 850,690 - 883,243 733,112 1.58
- ------------------------------------------------------------------------------------------------------------------------------------
310851505 43 523,094 738,226 738,863 688,163 1.44
27287 44 124,616 818,975 792,616 779,522 1.67
27945 45 561,810 572,500 649,163 607,163 1.35
27489 46 1,301,556 2,884,573 949,951 824,891 Springing 1.70
25138 47 1.48
25138A 183,501 138,509 218,380 168,524 Springing
25138B 473,174 471,647 478,038 418,502 Springing
- ------------------------------------------------------------------------------------------------------------------------------------
17584 48 671,182 - 645,787 598,449 1.41
26722 49 1,069,225 2,066,042 888,448 785,002 Springing 1.73
26120 50 179,181 539,685 650,642 601,640 1.47
26985 51 552,049 766,288 724,390 639,582 1.39
27611 52 - - 700,123 666,819 1.27
- ------------------------------------------------------------------------------------------------------------------------------------
310851522 53 1.40
310851522A 420,232 456,254 385,517 340,567
310851522B 166,326 172,237 155,329 136,543
310851522C 220,205 222,193 184,404 164,717
- ------------------------------------------------------------------------------------------------------------------------------------
310851643 54 815,664 709,389 651,059 1.70
9904545 55 607,276 515,064 503,308 487,326 1.28
310851609 56 633,742 681,168 682,909 620,908 1.31
26989 57 564,063 - 577,372 526,623 1.42
9905478 58 726,964 759,018 646,748 597,685 1.56
- ------------------------------------------------------------------------------------------------------------------------------------
310851557 59 578,727 738,795 632,621 604,421 1.50
310851562 60 514,221 800,425 774,338 671,823 1.78
310851622 61 515,348 509,258 477,981 1.26
27292 62 - 427,332 784,499 724,190 1.95
9904417 63 - 526,586 505,432 461,999 1.30
- ------------------------------------------------------------------------------------------------------------------------------------
9905472 64 474,734 524,653 509,433 463,182 In Place 1.24
310900033 65 523,176 526,233 651,217 631,317 1.76
25413 66 520,936 555,472 553,212 491,611 1.48
25465 67 517,230 611,846 594,202 567,952 1.81
27937 68 393,691 423,858 437,266 418,428 1.24
- ------------------------------------------------------------------------------------------------------------------------------------
27005 69 476,495 - 482,551 461,301 1.46
310851641 70 389,233 304,422 484,718 456,086 1.34
27397 71 420,778 514,056 482,932 451,182 1.43
26766 72 (104,647) - 514,743 471,621 1.50
26271 73 169,276 266,322 533,356 472,272 1.51
- ------------------------------------------------------------------------------------------------------------------------------------
26600 74 218,707 - 561,832 529,998 1.77
26709 75 506,202 565,704 498,552 470,426 Springing 1.50
310851432 76 273,113 481,879 486,231 475,960 1.64
310851547 77 556,920 489,740 454,229 1.15
310851612 78 462,467 505,806 495,294 1.50
- ------------------------------------------------------------------------------------------------------------------------------------
310851598 79 420,336 437,335 470,463 446,463 1.48
25895 80 414,350 - 454,521 431,642 1.38
26367 81 607,258 415,124 589,024 512,247 In Place 1.47
26734 82 448,111 - 391,436 382,283 1.34
27319 83 513,006 - 456,976 429,067 1.47
- ------------------------------------------------------------------------------------------------------------------------------------
310851571 84 306,996 431,266 462,526 418,870 1.32
310900012 85 628,881 631,235 630,978 615,378 2.11
310851414 86 412,420 424,403 423,906 396,306 1.69
310851482 87 533,479 530,625 441,757 392,573 1.37
26553 88 933,681 916,574 765,142 712,142 2.87
- ------------------------------------------------------------------------------------------------------------------------------------
310851633 89 464,995 501,855 480,102 467,302 1.75
26494 90 - 382,525 355,789 348,554 1.28
27654 91 653,428 628,928 560,481 476,950 1.79
9905404 92 289,613 514,419 634,279 615,975 2.35
310851495 93 605,668 596,930 608,693 563,893 2.31
- ------------------------------------------------------------------------------------------------------------------------------------
310851627 94 419,237 449,947 365,418 358,568 1.34
310851644 95 532,440 467,403 440,621 1.61
27379 96 - - 361,843 355,135 1.31
310851549 97 519,543 542,107 482,595 435,336 1.39
310851448 98 524,015 545,735 517,351 452,937 1.69
- ------------------------------------------------------------------------------------------------------------------------------------
25466 99 388,960 362,347 394,516 373,516 1.59
25473 100 (14,748) - 377,947 363,174 In Place 1.35
310900021 101 300,495 337,086 339,148 310,116 1.26
9905501 102 391,849 475,974 395,140 383,759 1.56
26528 103 - - 309,460 299,377 1.36
- ------------------------------------------------------------------------------------------------------------------------------------
25454 104 311,820 386,825 338,223 315,119 In Place 1.31
310851521 105 660,118 618,886 576,804 2.10
310851632 106 326,679 382,632 375,557 334,181 1.43
310851489 107 469,954 504,404 544,361 521,777 2.60
9905467 108 500,171 435,554 436,196 427,172 1.90
- ------------------------------------------------------------------------------------------------------------------------------------
9905468 109 605,853 585,126 592,770 584,142 2.67
9905451 110 1.25
9905451A 190,626 164,464 176,627 161,627
9905451B 107,218 109,836 105,993 95,993
- ------------------------------------------------------------------------------------------------------------------------------------
27165 111 275,858 304,366 320,649 292,649 1.41
310851588 112 290,061 318,959 333,296 290,234 1.44
310851634 113 335,292 344,522 327,671 1.29
9904923 114 212,153 278,071 326,200 300,802 1.32
27064 115 355,295 - 940,130 912,630 Springing 4.65
- ------------------------------------------------------------------------------------------------------------------------------------
310851541 116 623,742 647,955 621,217 599,250 3.10
310851614 117 112,980 380,508 358,508 1.44
26725 118 552,764 1,560,425 462,820 383,841 Springing 1.76
25773 119 153,178 - 321,817 295,587 1.50
310851616 120 544,216 421,655 431,066 420,366 2.05
- ------------------------------------------------------------------------------------------------------------------------------------
27936 121 - (76,003) 320,159 289,831 1.50
26023 122 562,397 - 398,367 348,045 1.68
310851631 123 358,636 338,275 348,048 301,798 1.25
25339 124 297,555 272,594 293,205 255,628 1.38
27780 125 316,655 - 298,771 273,337 1.45
- ------------------------------------------------------------------------------------------------------------------------------------
9905453 126 250,557 238,732 281,403 255,403 1.35
310851533 127 265,444 247,504 237,884 Springing 1.22
310851640 128 251,085 315,687 287,093 1.26
27108 129 285,620 304,232 305,877 283,877 1.64
310851496 130 548,079 521,929 484,495 2.80
- ------------------------------------------------------------------------------------------------------------------------------------
310851576 131 331,271 359,286 338,391 299,126 1.75
310900031 132 201,062 455,806 416,806 2.38
310900036 133 414,293 437,508 427,472 421,237 2.28
310851621 134 214,750 309,796 308,100 301,077 1.58
9904324 135 278,466 265,789 268,666 243,516 1.35
- ------------------------------------------------------------------------------------------------------------------------------------
25309 136 - - 247,176 233,741 1.25
26909 137 262,671 - 247,633 230,893 1.32
310851546 138 368,158 295,904 276,016 1.65
310851572 139 238,853 235,265 219,065 1.26
9905053 140 2.21
9905053A 119,930 150,252 123,565 118,009
9905053B 140,230 146,315 127,542 124,755
9905053C 108,484 126,875 105,247 100,932
- ------------------------------------------------------------------------------------------------------------------------------------
310851596 141 310,478 326,306 281,121 273,485 1.44
310851604 142 338,589 377,525 346,200 336,450 1.60
310851517 143 236,726 247,160 235,473 222,264 1.24
310851527 144 267,888 292,856 279,521 246,155 1.60
26981 145 221,506 226,693 226,609 219,180 1.27
- ------------------------------------------------------------------------------------------------------------------------------------
26832 146 270,221 279,312 244,444 223,096 1.41
9904785 147 - 261,225 268,256 228,403 1.43
310851587 148 362,848 343,822 323,225 285,425 1.45
310851611 149 285,727 256,572 215,177 1.27
310851613 150 197,142 243,897 237,678 1.48
- ------------------------------------------------------------------------------------------------------------------------------------
310851490 151 1.71
310851490A 83,432 103,998 105,713 90,300
310851490B 182,789 197,409 192,360 171,234
25540 152 213,975 - 199,682 187,682 1.29
- ------------------------------------------------------------------------------------------------------------------------------------
310900030 153 365,397 334,195 283,555 1.53
310851608 154 227,726 212,627 210,601 198,238 1.34
310851497 155 488,050 474,460 436,238 428,638 3.67
310851558 156 254,646 242,934 226,008 211,058 1.29
310851575 157 211,577 223,580 240,434 215,009 1.56
- ------------------------------------------------------------------------------------------------------------------------------------
310900006 158 277,584 267,487 262,049 233,249 1.59
310900018 159 213,129 202,920 194,971 1.43
310900022 160 321,908 380,830 306,377 306,377 1.75
310900037 161 206,627 235,342 196,972 187,972 1.42
310851601 162 248,955 248,555 231,818 215,344 1.64
- ------------------------------------------------------------------------------------------------------------------------------------
310851568 163 263,838 259,511 251,224 209,644 1.64
310900029 164 167,914 191,438 210,834 186,522 1.33
310900035 165 177,939 196,065 177,160 1.53
26567 166 237,994 - 212,926 211,306 1.85
9904982 167 150,968 198,639 169,565 145,065 1.32
- ------------------------------------------------------------------------------------------------------------------------------------
25840 168 845,695 - 751,865 736,615 6.48
310851646 169 191,417 191,412 179,417 1.26
310851625 170 244,148 232,582 166,697 144,063 1.40
310851257 171 114,053 233,142 201,385 179,394 1.50
310851321 172 154,449 157,076 149,381 127,797 1.37
- ------------------------------------------------------------------------------------------------------------------------------------
9905494 173 150,558 193,136 160,928 148,928 1.38
310851600 174 236,312 236,387 218,094 197,218 1.98
310851544 175 146,555 146,639 128,615 1.31
26302 176 - - 128,308 128,308 In Place 1.25
310851583 177 171,489 147,328 135,629 1.18
- ------------------------------------------------------------------------------------------------------------------------------------
310851599 178 165,724 165,777 133,459 126,597 1.44
310851626 179 162,318 156,988 111,271 107,071 1.27
9905485 180 178,552 149,264 137,920 127,260 1.47
310900002 181 168,574 176,699 170,257 153,221 1.40
====================================================================================================================================
1.59
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EFFECTIVE
LOCKOUT EFFECTIVE
APPRAISED CUT-OFF MATURITY PERIOD LOCKOUT
LOAN NUMBER COUNT VALUE LTV LTV (MOS.) END DATE CALL PROTECTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
310900043 1 123,000,000 47.56% 43.76% 117 11/30/2009 Defeasance
310900024 2 79,300,000 59.27% 58.32% 57 7/31/2004 Defeasance
310851624 3 72.56% 60.38% 117 6/30/2009 Defeasance
310851624A 4,810,000 74.84% 62.28%
310851624B 7,140,000 75.82% 63.09%
310851624C 5,030,000 76.36% 63.54%
310851624D 4,790,000 72.93% 60.69%
310851624E 4,360,000 77.94% 64.85%
310851624F 3,740,000 71.64% 59.62%
310851624G 6,600,000 70.91% 59.01%
310851624H 4,270,000 72.86% 60.63%
310851624I 5,700,000 70.82% 58.93%
310851624J 3,900,000 73.76% 61.38%
310851624K 2,890,000 69.74% 58.03%
310851624L 5,950,000 65.27% 54.32%
310851624M 2,350,000 68.90% 57.34%
- ------------------------------------------------------------------------------------------------------------------------------------
9905426 4 35,000,000 61.81% 51.15% 117 3/31/2008 DEFEASANCE
26287 5 49.69% 46.30% 60 1/31/2005 Defeasance
26287A 8,900,000 46.91% 43.71%
26287B 16,700,000 47.90% 44.64%
26287C 15,000,000 53.33% 49.70%
- ------------------------------------------------------------------------------------------------------------------------------------
27657 6 41,500,000 48.19% 40.37% 117 10/31/2009 DEFEASANCE
310900004 7 26,900,000 71.63% 64.14% 117 8/31/2009 Defeasance
310900032 8 35,000,000 54.81% 43.19% 126 7/31/2010 Defeasance
9905921 9 31,000,000 54.84% 49.15% 117 10/31/2009 Defeasance
310900041 10 27,200,000 58.82% 54.50% 116 10/31/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
310900020 11 62.30% 51.17% 117 9/30/2009 Defeasance
310900020A 2,390,000 55.55% 45.63%
310900020B 3,300,000 65.95% 54.16%
310900020C 4,030,000 60.94% 50.05%
310900020D 3,150,000 68.77% 56.48%
310900020E 3,800,000 53.33% 43.80%
310900020F 1,850,000 67.45% 55.40%
310900020G 3,590,000 61.45% 50.47%
310900020H 3,125,000 67.72% 55.62%
- ------------------------------------------------------------------------------------------------------------------------------------
26660 12 69.56% 56.58% 120 7/31/2009 DEFEASANCE
26660A 10,850,000 69.56% 56.58%
26660B 3,750,000 69.56% 56.58%
26660C 5,400,000 69.56% 56.58%
- ------------------------------------------------------------------------------------------------------------------------------------
26511 13 23,000,000 59.78% 53.79% 120 9/30/2009 DEFEASANCE
25503 14 14,800,000 72.19% 1.83% 180 9/30/2014 Defeasance
27112 15 16,900,000 61.98% 54.80% 120 9/30/2009 Defeasance
27874 16 16,200,000 63.27% 57.60% 120 1/31/2010 Defeasance
310900011 17 20,500,000 48.95% 1.08% 177 7/31/2014 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
27931 18 13,700,000 64.20% 56.63% 119 11/30/2009 Defeasance
9905475 19 12,100,000 70.08% 57.58% 117 7/31/2008 Defeasance
9904248 20 12,000,000 70.67% 65.02% 106 6/30/2008 Defeasance
310851607 21 10,800,000 71.55% 59.42% 117 5/31/2009 Defeasance
27942 22 10,500,000 71.40% 68.35% 60 12/31/2004 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
26334 23 12,250,000 58.34% 52.26% 120 12/31/2009 Defeasance
28027 24 9,900,000 69.70% 63.22% 120 1/31/2010 Defeasance
26863 25 11,300,000 60.03% 53.01% 120 9/30/2009 Defeasance
27355 26 14,200,000 47.82% 44.95% 84 10/31/2006 Defeasance
26597 27 13,000,000 49.75% 34.57% 120 10/31/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
26569 28 19,000,000 32.84% 30.82% 83 9/30/2006 Defeasance
27018 29 13,000,000 47.79% 43.01% 120 9/30/2009 Defeasance
26779 30 9,450,000 65.33% 52.84% 120 9/30/2009 Defeasance
310851270 31 8,400,000 72.65% 64.16% 114 12/31/2008 Defeasance
18079 32 16,250,000 36.19% 0.87% 180 6/30/2014 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
27638 33 10,800,000 55.56% 52.27% 60 12/31/2004 Defeasance
9905484 34 8,950,000 66.66% 59.86% 117 12/31/2008 Defeasance
27130 35 8,200,000 71.19% 64.00% 120 12/31/2009 Defeasance
27708 36 8,500,000 66.99% 59.70% 120 11/30/2009 Defeasance
310851529 37 8,765,000 63.32% 1.44% 174 11/30/2013 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
9904270 38 8,350,000 65.02% 52.51% 60 2/29/2004 >1% or Yield Maintenance
5250 39 9,500,000 57.53% 53.08% 120 1/31/2010 Defeasance
26724 40 11,000,000 49.26% 34.69% 120 10/31/2009 Defeasance
26136 41 7,000,000 76.98% 68.98% 120 9/30/2009 Defeasance
26282 42 10,300,000 51.35% 45.99% 117 6/30/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
310851505 43 7,700,000 66.97% 55.52% 115 9/30/2008 Defeasance
27287 44 12,450,000 40.05% 33.20% 120 10/31/2009 Defeasance
27945 45 6,500,000 76.89% 69.22% 120 12/31/2009 Defeasance
27489 46 9,000,000 53.78% 38.04% 120 10/31/2009 Defeasance
25138 47 66.47% 59.28% 119 7/31/2008 Defeasance
25138A 4,162,921 71.22% 63.47%
25138B 2,899,253 59.66% 53.27%
- ------------------------------------------------------------------------------------------------------------------------------------
17584 48 7,900,000 58.78% 53.10% 48 10/31/2003 >1% OR YIELD MAINTENANCE
26722 49 7,000,000 65.04% 45.80% 120 10/31/2009 Defeasance
26120 50 7,400,000 61.44% 55.33% 117 8/31/2009 Defeasance
26985 51 5,900,000 76.48% 65.21% 120 9/30/2009 Defeasance
27611 52 7,775,000 57.88% 1.42% 180 1/31/2015 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
310851522 53 60.49% 27.88% 174 1/31/2014 Defeasance
310851522A 4,100,000 60.36% 27.82%
310851522B 1,500,000 65.99% 30.42%
310851522C 1,600,000 55.68% 25.67%
- ------------------------------------------------------------------------------------------------------------------------------------
310851643 54 8,400,000 50.99% 41.64% 117 7/31/2009 DEFEASANCE
9904545 55 5,800,000 73.44% 66.08% 117 6/30/2009 Defeasance
310851609 56 8,600,000 48.14% 1.08% 177 6/30/2014 Defeasance
26989 57 5,500,000 74.41% 67.11% 120 9/30/2009 Defeasance
9905478 58 6,500,000 62.56% 52.20% 117 1/31/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
310851557 59 6,900,000 59.04% 50.00% 117 3/31/2009 Defeasance
310851562 60 11,300,000 36.17% 32.85% 114 1/31/2009 Defeasance
310851622 61 5,725,000 71.28% 59.05% 117 6/30/2009 Defeasance
27292 62 8,400,000 47.45% 39.30% 120 9/30/2009 Defeasance
9904417 63 5,600,000 71.17% 64.03% 117 3/31/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
9905472 64 5,515,000 71.94% 60.02% 117 1/31/2009 Defeasance
310900033 65 7,030,000 54.01% 44.80% 117 10/31/2009 Defeasance
25413 66 6,200,000 61.10% 54.78% 120 7/31/2009 Defeasance
25465 67 6,500,000 57.48% 50.97% 120 7/31/2009 Defeasance
27937 68 4,900,000 76.50% 68.88% 120 12/31/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
27005 69 4,950,000 74.62% 66.30% 120 10/31/2009 Defeasance
310851641 70 5,400,000 68.35% 61.95% 117 6/30/2009 Defeasance
27397 71 5,200,000 68.91% 61.66% 120 12/31/2009 Defeasance
26766 72 5,350,000 65.81% 59.21% 120 8/31/2009 Defeasance
26271 73 5,740,000 60.82% 54.75% 30 2/28/2002 >1% or T+50 YM
- ------------------------------------------------------------------------------------------------------------------------------------
26600 74 5,810,000 60.14% 53.49% 120 10/31/2009 Defeasance
26709 75 5,640,000 61.96% 55.76% 120 10/31/2009 Defeasance
310851432 76 4,800,000 71.66% 57.40% 117 9/30/2008 Defeasance
310851547 77 5,325,000 64.14% 0.00% 174 12/31/2013 Defeasance
310851612 78 5,400,000 64.48% 53.83% 36 7/31/2002 Flex
- ------------------------------------------------------------------------------------------------------------------------------------
310851598 79 5,020,000 69.09% 61.73% 114 2/28/2009 Defeasance
25895 80 5,210,000 65.62% 59.35% 120 9/30/2009 Defeasance
26367 81 4,900,000 68.02% 58.37% 120 12/31/2009 Defeasance
26734 82 4,335,000 74.82% 66.99% 120 9/30/2009 Defeasance
27319 83 4,750,000 68.32% 61.51% 120 10/31/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
310851571 84 4,700,000 68.75% 56.65% 114 2/28/2009 Defeasance
310900012 85 7,200,000 45.01% 36.80% 117 8/31/2009 Defeasance
310851414 86 5,500,000 57.38% 49.56% 114 5/31/2008 Defeasance
310851482 87 4,900,000 64.46% 53.00% 115 9/30/2008 Defeasance
26553 88 8,800,000 35.10% 30.75% 120 8/31/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
310851633 89 5,800,000 53.24% 47.58% 117 4/30/2009 Defeasance
26494 90 3,800,000 78.90% 68.33% 120 12/31/2009 Defeasance
27654 91 5,700,000 52.61% 47.21% 120 12/31/2009 Defeasance
9905404 92 7,700,000 38.92% 34.78% 117 8/31/2009 Defeasance
310851495 93 7,700,000 38.43% 30.64% 115 10/31/2008 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
310851627 94 4,750,000 62.96% 56.69% 117 5/31/2009 Defeasance
310851644 95 5,625,000 53.24% 43.77% 117 9/30/2009 Defeasance
27379 96 4,100,000 71.90% 65.04% 120 11/30/2009 Defeasance
310851549 97 4,730,000 58.93% 0.00% 174 11/30/2013 Defeasance
310851448 98 5,500,000 50.46% 35.29% 114 11/30/2008 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
25466 99 4,670,000 59.74% 52.97% 120 7/31/2009 Defeasance
25473 100 4,100,000 68.27% 64.79% 84 12/31/2006 Defeasance
310900021 101 3,790,000 70.69% 63.97% 117 10/31/2009 Defeasance
9905501 102 3,820,000 66.86% 54.87% 115 11/30/2008 Defeasance
26528 103 4,200,000 60.26% 53.79% 120 10/31/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
25454 104 3,400,000 73.48% 67.17% 120 11/30/2009 Defeasance
310851521 105 7,505,000 32.41% 0.68% 174 11/30/2013 Defeasance
310851632 106 3,900,000 63.81% 53.01% 117 6/30/2009 Defeasance
310851489 107 4,850,000 50.14% 44.39% 114 9/30/2008 Defeasance
9905467 108 5,800,000 41.62% 34.47% 117 5/31/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
9905468 109 6,700,000 35.98% 29.57% 117 4/30/2009 Defeasance
9905451 110 74.83% 67.21% 117 1/31/2009 Defeasance
9905451A 1,925,000 77.02% 69.18%
9905451B 1,200,000 71.31% 64.05%
- ------------------------------------------------------------------------------------------------------------------------------------
27165 111 2,900,000 79.11% 71.32% 120 8/31/2009 DEFEASANCE
310851588 112 3,960,000 57.66% 47.00% 117 4/30/2009 Defeasance
310851634 113 3,200,000 69.16% 1.57% 177 6/30/2014 Defeasance
9904923 114 3,350,000 66.25% 3.14% 237 4/30/2019 Defeasance
27064 115 10,575,000 20.96% 17.06% 120 9/30/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
310851541 116 6,525,000 33.40% 27.32% 114 11/30/2008 Defeasance
310851614 117 4,180,000 51.74% 1.21% 177 5/31/2014 Defeasance
26725 118 3,300,000 66.29% 46.68% 120 10/31/2009 Defeasance
25773 119 3,500,000 61.28% 55.52% 119 7/31/2009 Defeasance
310851616 120 6,300,000 33.83% 23.49% 117 6/30/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
27936 121 3,100,000 67.74% 55.74% 120 1/31/2010 Defeasance
26023 122 3,100,000 66.63% 56.59% 120 7/31/2009 Defeasance
310851631 123 3,330,000 61.13% 0.00% 177 6/30/2014 Defeasance
25339 124 3,250,000 63.08% 56.79% 114 7/31/2009 Defeasance
27780 125 3,100,000 66.13% 59.77% 120 1/31/2010 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
9905453 126 2,740,000 74.19% 61.62% 117 1/31/2009 Defeasance
310851533 127 3,030,000 66.86% 56.09% 36 5/31/2002 Flex
310851640 128 4,000,000 49.77% 1.10% 177 6/30/2014 Defeasance
27108 129 3,400,000 58.58% 47.42% 120 9/30/2009 Defeasance
310851496 130 5,350,000 36.93% 30.04% 37 3/31/2002 Flex
- ------------------------------------------------------------------------------------------------------------------------------------
310851576 131 3,400,000 58.54% 52.23% 114 12/31/2008 Defeasance
310900031 132 5,725,000 34.92% 31.21% 117 10/31/2009 Defeasance
310900036 133 4,830,000 41.34% 34.09% 117 9/30/2009 Defeasance
310851621 134 3,000,000 66.00% 55.30% 117 5/31/2009 Defeasance
9904324 135 2,700,000 72.94% 66.04% 117 4/30/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
25309 136 2,700,000 71.34% 65.40% 120 8/31/2009 Defeasance
26909 137 2,750,000 68.97% 62.52% 120 9/30/2009 Defeasance
310851546 138 3,350,000 56.18% 45.98% 36 4/30/2002 Flex
310851572 139 2,565,000 73.51% 60.85% 36 5/31/2002 Flex
9905053 140 39.24% 34.80% 117 5/31/2009 Defeasance
9905053A 1,700,000 36.36% 32.25%
9905053B 1,600,000 38.32% 33.99%
9905053C 1,400,000 43.79% 38.84%
- ------------------------------------------------------------------------------------------------------------------------------------
310851596 141 3,275,000 55.90% 40.33% 117 4/30/2009 DEFEASANCE
310851604 142 4,250,000 42.75% 0.00% 36 7/31/2002 Flex
310851517 143 2,450,000 73.13% 62.08% 36 7/31/2002 Flex
310851527 144 2,600,000 68.86% 61.44% 114 11/30/2008 Defeasance
26981 145 2,700,000 66.09% 60.46% 120 12/31/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
26832 146 2,800,000 63.22% 56.83% 118 6/30/2009 Defeasance
9904785 147 2,400,000 72.74% 65.76% 117 5/31/2009 Defeasance
310851587 148 3,100,000 55.31% 1.26% 177 4/30/2014 Defeasance
310851611 149 3,050,000 56.61% 47.75% 114 2/28/2009 Defeasance
310851613 150 2,850,000 59.33% 49.49% 36 7/31/2002 Flex
- ------------------------------------------------------------------------------------------------------------------------------------
310851490 151 57.50% 47.96% 36 2/28/2002 Flex
310851490A 1,140,000 56.43% 47.07%
310851490B 1,700,000 58.22% 48.56%
25540 152 2,300,000 70.44% 63.48% 120 7/31/2009 DEFEASANCE
- ------------------------------------------------------------------------------------------------------------------------------------
310900030 153 4,400,000 36.38% 0.00% 177 9/30/2014 Defeasance
310851608 154 2,170,000 71.00% 59.48% 117 4/30/2009 Defeasance
310851497 155 4,250,000 34.95% 30.51% 37 3/31/2002 Flex
310851558 156 2,600,000 56.12% 1.16% 60 4/30/2004 Flex
310851575 157 2,240,000 66.75% 60.55% 114 1/31/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
310900006 158 2,250,000 66.34% 2.62% 237 8/31/2019 Defeasance
310900018 159 2,400,000 62.39% 51.21% 117 9/30/2009 Defeasance
310900022 160 3,500,000 42.51% 21.07% 117 8/31/2009 Defeasance
310900037 161 2,025,000 74.01% 66.36% 36 11/30/2002 Flex
310851601 162 2,700,000 53.03% 43.77% 117 5/31/2009 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
310851568 163 2,300,000 60.40% 49.94% 114 12/31/2008 Defeasance
310900029 164 2,160,000 64.62% 45.66% 117 9/30/2009 Defeasance
310900035 165 2,200,000 59.04% 53.01% 117 9/30/2009 Defeasance
26567 166 2,300,000 54.22% 49.07% 119 7/31/2009 Defeasance
9904982 167 1,650,000 73.99% 66.75% 114 12/31/2008 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
25840 168 11,000,000 10.89% 7.37% 180 11/30/2014 Defeasance
310851646 169 1,800,000 66.11% 0.00% 177 8/31/2014 Defeasance
310851625 170 2,450,000 46.26% 38.00% 117 5/31/2009 Defeasance
310851257 171 1,890,000 55.91% 1.05% 174 5/31/2013 Defeasance
310851321 172 1,400,000 76.85% 60.63% 42 3/31/2002 Flex
- ------------------------------------------------------------------------------------------------------------------------------------
9905494 173 1,630,000 66.28% 56.33% 117 11/30/2008 Defeasance
310851600 174 2,410,000 44.19% 36.68% 117 6/30/2009 Defeasance
310851544 175 1,570,000 66.33% 55.36% 36 4/30/2002 Flex
26302 176 1,400,000 71.23% 32.18% 180 11/30/2014 Defeasance
310851583 177 1,712,000 57.09% 1.40% 177 3/31/2014 Defeasance
- ------------------------------------------------------------------------------------------------------------------------------------
310851599 178 1,480,000 63.22% 52.48% 117 6/30/2009 Defeasance
310851626 179 1,550,000 60.15% 54.32% 117 5/31/2009 Defeasance
9905485 180 1,500,000 60.13% 50.46% 117 12/31/2008 Defeasance
310900002 181 1,475,000 60.24% 1.81% 60 8/31/2004 Flex
====================================================================================================================================
59.89% 48.25%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CALL FREE PREPAY
PROTECTION WINDOW
LOAN NUMBER COUNT END DATE (MOS.) ADDRESS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
310900043 1 11/30/2009 3 650 Townsend
310900024 2 7/31/2004 3 150 Fayetteville Street Mall
310851624 3 6/30/2009 3
310851624A 4701 Gulf Freeway
310851624B 7825 Katy Freeway
310851624C 2500 West Main Street
310851624D 3182 Curlew Road
310851624E 9505 N. Florida Ave.
310851624F 7022 FM 1960 W.
310851624G 6040 Westpark
310851624H 16250 Old Galveston Rd
310851624I 2305 S. Voss Road
310851624J 30722 US HWY 19
310851624K 7052 103rd Street
310851624L 10515 SW Freeway
310851624M 10650 SW Plaza Court
- -------------------------------------------------------------------------------------------------------------------------------
9905426 4 3/31/2008 3 3737 SPORTS ARENA BOULEVARD
26287 5 1/31/2005 0
26287A 4840 Grove Barton Rd
26287B 7701 Overland Road
26287C 2135 N. Federal Hwy (Route 1)
- -------------------------------------------------------------------------------------------------------------------------------
27657 6 10/31/2009 3 147 MERCER STREET
310900004 7 8/31/2009 3 3100-3401 International Airport Drive , 3100-3140
310900032 8 7/31/2010 6 3101, 3131, 3151 Jay Street
9905921 9 10/31/2009 3 9950 Mayland Drive
310900041 10 10/31/2009 4 2000-3000 Harbison Drive
- -------------------------------------------------------------------------------------------------------------------------------
310900020 11 9/30/2009 3
310900020A 3057 S. Cooper
310900020B 1515 South Lamar
310900020C 3334 Forest Lane
310900020D 2025 South Holly
310900020E 9740 Stroud
310900020F 11015 West 62nd
310900020G 6640 Skillman
310900020H 9150 Pierce
- -------------------------------------------------------------------------------------------------------------------------------
26660 12 7/31/2009 0
26660A 2250 34th Street South
26660B 2220-2260 St. Johns Avenue
26660C 2440-2460 Village Lane
- -------------------------------------------------------------------------------------------------------------------------------
26511 13 9/30/2009 0 5701 6TH AVENUE SOUTH
25503 14 9/30/2014 0 1-97 Commerce Way
27112 15 9/30/2009 0 4512 Emerald Forest Drive
27874 16 1/31/2010 0 2700 West Sahara Avenue
310900011 17 7/31/2014 3 34801 & 34781 Campus Drive
- -------------------------------------------------------------------------------------------------------------------------------
27931 18 11/30/2009 1 3100 W. Layton Ave
9905475 19 7/31/2008 3 50 Racetrack Road
9904248 20 6/30/2008 3 1500 South Willow Street
310851607 21 5/31/2009 3 3001-3325 North Tracy Blvd.
27942 22 12/31/2004 0 9109 Dartbrook Drive
- -------------------------------------------------------------------------------------------------------------------------------
26334 23 12/31/2009 0 7208-7290 W. Lake Mead Boulevard
28027 24 1/31/2010 0 17245-17395 17th Street
26863 25 9/30/2009 0 1425 South Eads Street
27355 26 10/31/2006 0 One Exchange Place
26597 27 10/31/2009 0 8800 Sheldon Road
- -------------------------------------------------------------------------------------------------------------------------------
26569 28 9/30/2006 1 15 East 84th Street
27018 29 9/30/2009 0 6100 4th Avenue South
26779 30 9/30/2009 0 5600 South 56th St.
310851270 31 12/31/2008 6 3925 Cypress Drive
18079 32 6/30/2014 0 36 West 47th Street
- -------------------------------------------------------------------------------------------------------------------------------
27638 33 12/31/2004 0 11021 Fuqua Street
9905484 34 12/31/2008 3 232 Yankee Road
27130 35 12/31/2009 0 9661 Audelia Road
27708 36 11/30/2009 0 Traders Way & 1st Street
310851529 37 11/30/2013 6 12160 SW Imperial Avenue
- -------------------------------------------------------------------------------------------------------------------------------
9904270 38 2/28/2009 0 1315-43 3rd Avenue
5250 39 1/31/2010 0 406 East Hopkins Avenue
26724 40 10/31/2009 0 8051 Peach Street
26136 41 9/30/2009 0 210 Lake Street
26282 42 6/30/2009 3 1965 East Sixth Street
- -------------------------------------------------------------------------------------------------------------------------------
310851505 43 9/30/2008 6 425-455E. Washington Ave. 415 & 425 N. Hickory Str
27287 44 10/31/2009 0 76-02 Woodhaven Boulevard
27945 45 12/31/2009 0 1921 East Van Buren Street
27489 46 10/31/2009 0 8061 Peach Street
25138 47 7/31/2008 1
25138A 21700 Northwestern Highway
25138B 99, 111 Founders Plaza
- -------------------------------------------------------------------------------------------------------------------------------
17584 48 10/31/2009 0 111 LENOX STREET
26722 49 10/31/2009 0 8050 Peach Street
26120 50 8/31/2009 3 808 Howell Street
26985 51 9/30/2009 0 1500 SE 17th Street Causeway
27611 52 1/31/2015 0 8025 Jericho Turnpike
- -------------------------------------------------------------------------------------------------------------------------------
310851522 53 1/31/2014 6
310851522A 5845 East 14th Street
310851522B 4402 Austin Road
310851522C 502 East Military Hwy
- -------------------------------------------------------------------------------------------------------------------------------
310851643 54 7/31/2009 3 9654 SIEMPRE VIVA ROAD AND 9635 HEINRICH HERTZ DR.
9904545 55 6/30/2009 3 1451-1535 N. Federal Highway
310851609 56 6/30/2014 3 12210-12300 La Mirada Blvd. & 15059-15083 Imperial
26989 57 9/30/2009 0 6410, 6420, 6450 N. Blackstone Blvd.
9905478 58 1/31/2009 3 1075 Middle Country Road
- -------------------------------------------------------------------------------------------------------------------------------
310851557 59 3/31/2009 3 103A Lakeway Drive
310851562 60 1/31/2009 6 25 Cyril Magnin Place
310851622 61 6/30/2009 3 19780 Pacific Gateway Drive
27292 62 9/30/2009 0 35-39 West 35th Street
9904417 63 3/31/2009 3 1700 East 20th Street
- -------------------------------------------------------------------------------------------------------------------------------
9905472 64 1/31/2009 3 1801 South Frontage Road
310900033 65 10/31/2009 3 5001-5109 Laquna Blvd
25413 66 7/31/2009 0 3504-3598 Roger B. Chaffee Memorial Blvd
25465 67 7/31/2009 0 145-225 W. El Norte Parkway
27937 68 12/31/2009 0 24-30 Bank Street
- -------------------------------------------------------------------------------------------------------------------------------
27005 69 10/31/2009 0 400 Wollaston Avenue
310851641 70 6/30/2009 3 230 Farmington Avenue
27397 71 12/31/2009 0 6310-12 Sherwood Rd
26766 72 8/31/2009 0 3320 N. Buffalo Drive
26271 73 8/31/2009 0 3033 5th Avenue
- -------------------------------------------------------------------------------------------------------------------------------
26600 74 10/31/2009 0 1725 North University Drive
26709 75 10/31/2009 0 2454 Occidental Avenue South
310851432 76 9/30/2008 6 1605 Olivenhain Road
310851547 77 12/31/2013 6 21411 Prairie Street
310851612 78 2/28/2009 6 3661 Sunset Drive
- -------------------------------------------------------------------------------------------------------------------------------
310851598 79 2/28/2009 6 1531-1611 Adelaide Street
25895 80 9/30/2009 0 415 North Mary Avenue.
26367 81 12/31/2009 0 11130 N.W. Ambassador Drive
26734 82 9/30/2009 0 55 San Juan Grade Road
27319 83 10/31/2009 0 1700-1750 Rolling Road
- -------------------------------------------------------------------------------------------------------------------------------
310851571 84 2/28/2009 6 1931 Old Middlefield Way
310900012 85 8/31/2009 3 330 S. La Cienega Blvd.
310851414 86 5/31/2008 6 5902 Springview Drive
310851482 87 9/30/2008 6 10521-10579 Dale Street
26553 88 8/31/2009 0 2502 Bacon Ranch Road
- -------------------------------------------------------------------------------------------------------------------------------
310851633 89 4/30/2009 3 1011 Beyer Way
26494 90 12/31/2009 0 124-126 Main Street
27654 91 12/31/2009 0 4169 Tuscarawas Street West
9905404 92 8/31/2009 3 1313 Third Avenue
310851495 93 10/31/2008 6 701 West Imperial Highway
- -------------------------------------------------------------------------------------------------------------------------------
310851627 94 5/31/2009 3 700 East Gobby Street
310851644 95 9/30/2009 3 104 Lee Road
27379 96 11/30/2009 0 220-228 Main Street
310851549 97 11/30/2013 6 1099 Sylmar Avenue
310851448 98 11/30/2008 6 7470,7504,7556,7582,7600 & 7620 Bridgeport Road
- -------------------------------------------------------------------------------------------------------------------------------
25466 99 7/31/2009 0 502-514 E Bautan Drive
25473 100 12/31/2006 0 Route 9 West
310900021 101 10/31/2009 3 4912 North Seventh Street #101
9905501 102 11/30/2008 3 13015 Canyon Road East
26528 103 10/31/2009 0 5675 South Rainbow Boulevard
- -------------------------------------------------------------------------------------------------------------------------------
25454 104 11/30/2009 0 1450-1490 E. Chicago Ave. & 11-15 S. Naper Blvd.
310851521 105 11/30/2013 6 2170-2200 Martin Avenue
310851632 106 6/30/2009 3 108 Powers Court
310851489 107 9/30/2008 6 605 Anita Street
9905467 108 5/31/2009 3 6120 Livingston Road
- -------------------------------------------------------------------------------------------------------------------------------
9905468 109 4/30/2009 3 13303 Baltimore Avenue
9905451 110 1/31/2009 3
9905451A 3215 Pinellas Pointe Drive
9905451B 920 - 1050 62nd Avenue S.
- -------------------------------------------------------------------------------------------------------------------------------
27165 111 8/31/2009 0 2124 BURTON DRIVE
310851588 112 4/30/2009 3 2109 O'Toole Avenue
310851634 113 6/30/2014 3 11220 South Main Street
9904923 114 4/30/2019 3 1540, 1588,1718 East March Lane and 5052 West Lane
27064 115 9/30/2009 0 69-74 DeMott St., 54-90 Franklin Ave., 52-56 Weste
- -------------------------------------------------------------------------------------------------------------------------------
310851541 116 11/30/2008 6 1483-1485 Broadway
310851614 117 5/31/2014 3 3075 Raymond Street
26725 118 10/31/2009 0 7415 Schultz Rd.
25773 119 7/31/2009 1 38 Townline Rd
310851616 120 6/30/2009 3 6860 Lantana Road
- -------------------------------------------------------------------------------------------------------------------------------
27936 121 1/31/2010 0 110,121,140 South Pointe Drive & 79 Industrial Par
26023 122 7/31/2009 0 1221 State Road 84
310851631 123 6/30/2014 3 1180 Olympic Drive & 1750 & 1760 California
25339 124 7/31/2009 6 102 North Lime Avenue
27780 125 1/31/2010 0 43636-43734 Schoenherr Road
- -------------------------------------------------------------------------------------------------------------------------------
9905453 126 1/31/2009 3 402 11th Street
310851533 127 12/31/2008 6 10 28th Avenue SW
310851640 128 6/30/2014 3 8955 East Pinnacle Peak Road
27108 129 9/30/2009 0 1631 Aquarena Springs Drive
310851496 130 10/31/2008 6 10301-10395 Jefferson Blvd.
- -------------------------------------------------------------------------------------------------------------------------------
310851576 131 12/31/2008 6 5515, 5521, 5525, 5535 Ruffin Road
310900031 132 10/31/2009 3 7920 Lower Sacramento Road
310900036 133 9/30/2009 3 5730 Corsa Ave.
310851621 134 5/31/2009 3 7900 Deering Avenue
9904324 135 4/30/2009 3 1625 South Fry Road
- -------------------------------------------------------------------------------------------------------------------------------
25309 136 8/31/2009 0 6735 Jonesboro Rd.
26909 137 9/30/2009 0 3400-3500 Los Coyotes Diagonal
310851546 138 11/30/2008 6 1335 4th Street
310851572 139 3/31/2009 3 3834 Duck Creek Drive
9905053 140 5/31/2009 3
9905053A 1275 Third Avenue
9905053B 1559 Second Avenue
9905053C 314 East 70th Street
- -------------------------------------------------------------------------------------------------------------------------------
310851596 141 4/30/2009 3 19224 & 19226 SE MOLALLA AVENUE
310851604 142 5/31/2014 3 1228 3rd Street
310851517 143 2/28/2009 6 3601, 3607 San Fernando Road & 1815, 1821 Tyburn S
310851527 144 11/30/2008 6 9765, 9775, & 9785 Marconi Drive
26981 145 12/31/2009 0 208-222 East Atlantic Avenue & 29 SE 21nd Ave.
- -------------------------------------------------------------------------------------------------------------------------------
26832 146 6/30/2009 2 1230-1266 Airport Pulling Road
9904785 147 5/31/2009 3 530 North 3rd Street
310851587 148 4/30/2014 3 222 Ramsay Street
310851611 149 2/28/2009 6 8200-8230 Alpine Avenue
310851613 150 2/28/2009 6 14141 Poway Road
- -------------------------------------------------------------------------------------------------------------------------------
310851490 151 9/30/2008 6
310851490A 1601-1649 West Collins Ave.
310851490B 2101 I-R & 2101-2119 S. Standard Ave.
25540 152 7/31/2009 0 154-160 ROUTE 31
- -------------------------------------------------------------------------------------------------------------------------------
310900030 153 9/30/2014 3 243 West 30th Street
310851608 154 4/30/2009 3 1249 West Stowell Road
310851497 155 9/30/2008 6 6880 Archibald Avenue
310851558 156 2/28/2014 3 517 Oxford Circle
310851575 157 1/31/2009 6 5404-5444 Napa Street, 5220 Gaines Street & 5225 R
- -------------------------------------------------------------------------------------------------------------------------------
310900006 158 8/31/2019 3 605 Paredes Line Road
310900018 159 9/30/2009 3 4931 West Brill Street
310900022 160 8/31/2009 3 1066 Locust Street
310900037 161 9/30/2009 3 2818, 2822, 2828, 2832, 2838, 2842, 2848, 2852 Wes
310851601 162 5/31/2009 3 807 Eden Street
- -------------------------------------------------------------------------------------------------------------------------------
310851568 163 12/31/2008 6 11367, 11373 and 11379 Trade Center Drive
310900029 164 9/30/2009 3 600 Kasota Avenue
310900035 165 9/30/2009 3 13921 S. Figueroa Street
26567 166 7/31/2009 1 757 Long Hill Road
9904982 167 12/31/2008 6 5555 W. Gulf Bank Road
- -------------------------------------------------------------------------------------------------------------------------------
25840 168 11/30/2014 0 9080 Bloomfield Ave.
310851646 169 8/31/2014 3 936 East Duane Avenue
310851625 170 5/31/2009 3 848 Gish Road
310851257 171 5/31/2013 6 6989 & 6999 South Jordan Road
310851321 172 9/30/2008 6 146-148 West 132nd Street
- -------------------------------------------------------------------------------------------------------------------------------
9905494 173 11/30/2008 3 302-323 Belmont Street
310851600 174 6/30/2009 3 17711/17721 E. Railroad Street
310851544 175 11/30/2008 6 2111, 2127 & 2133 Research Drive
26302 176 11/30/2014 0 1225 Route 9 North
310851583 177 3/31/2014 3 1227 & 1227A Knox Street
- -------------------------------------------------------------------------------------------------------------------------------
310851599 178 6/30/2009 3 554 Easy Street
310851626 179 5/31/2009 3 5701 Live Oak Drive
9905485 180 12/31/2008 3 1020 - 1050 Tiogue Avenue
310900002 181 6/30/2014 3 6450 Louetta Road
===============================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOAN NUMBER COUNT CITY STATE ZIP CODE PROPERTY TYPE PROPERTY SUB-TYPE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
310900043 1 San Francisco CA (N) 94103 Office Urban
310900024 2 Raleigh NC 27601 Office Urban
310851624 3 Self-Storage Self-Storage
310851624A La Marque TX 77568 Self-Storage Self-Storage
310851624B Houston TX 77024 Self-Storage Self-Storage
310851624C League City TX 77573 Self-Storage Self-Storage
310851624D Oldsmar FL 34677 Self-Storage Self-Storage
310851624E Tampa FL 33612 Self-Storage Self-Storage
310851624F Houston TX 77069 Self-Storage Self-Storage
310851624G Houston TX 77057 Self-Storage Self-Storage
310851624H Webster TX 77598 Self-Storage Self-Storage
310851624I Houston TX 77057 Self-Storage Self-Storage
310851624J Palm Harbor FL 34684 Self-Storage Self-Storage
310851624K Jacksonville FL 32210 Self-Storage Self-Storage
310851624L Houston TX 77074 Self-Storage Self-Storage
310851624M Houston TX 77074 Self-Storage Self-Storage
- ------------------------------------------------------------------------------------------------------------------------------------
9905426 4 SAN DIEGO CA (S) 92110 HOSPITALITY FULL SERVICE
26287 5 Retail Theater
26287A Raleigh-Durham NC 27613 Retail Theater
26287B Boise ID 83704 Retail Theater
26287C Pompano Beach FL 33062 Retail Theater
- ------------------------------------------------------------------------------------------------------------------------------------
27657 6 NEW YORK NY 100123203 HOSPITALITY BOUTIQUE
310900004 7 Charlotte NC 28208 Industrial/Warehouse Warehouse/Distribution
310900032 8 Santa Clara CA (N) 95054 Office Suburban
9905921 9 Richmond VA 23230 Office Suburban
310900041 10 Vacaville CA (N) 95687 Retail Anchored
- ------------------------------------------------------------------------------------------------------------------------------------
310900020 11 Self-Storage Self-Storage
310900020A Arlington TX 76015 Self-Storage Self-Storage
310900020B Austin TX 78704 Self-Storage Self-Storage
310900020C Dallas TX 75234 Self-Storage Self-Storage
310900020D Denver CO 80222 Self-Storage Self-Storage
310900020E Houston TX 77036 Self-Storage Self-Storage
310900020F Shawnee KS 66203 Self-Storage Self-Storage
310900020G Dallas TX 75231 Self-Storage Self-Storage
310900020H Westminster CO 80030 Self-Storage Self-Storage
- ------------------------------------------------------------------------------------------------------------------------------------
26660 12 MULTIFAMILY GARDEN
26660A Grand Forks ND 58201 Multifamily Garden
26660B Billings MT 59102 Multifamily Garden
26660C Billings MT 59102 Multifamily Garden
- ------------------------------------------------------------------------------------------------------------------------------------
26511 13 SEATTLE WA 98101 OFFICE URBAN
25503 14 Dover DE 19901 Industrial/Warehouse Flex Industrial
27112 15 Durham NC 27713 Multifamily Garden
27874 16 Las Vegas NV 89102 Office Urban
310900011 17 Fremont CA (N) 94555 Industrial/Warehouse Flex Industrial
- ------------------------------------------------------------------------------------------------------------------------------------
27931 18 Greenfield WI 53201 Multifamily Garden
9905475 19 East Brunswick NJ 08816 Retail Anchored
9904248 20 Manchester NH 03103 Retail Anchored
310851607 21 Tracy CA (N) 95376 Retail Anchored
27942 22 San Antonio TX 78240 Multifamily Garden
- ------------------------------------------------------------------------------------------------------------------------------------
26334 23 Las Vegas NV 89128 Retail Anchored
28027 24 Tustin CA (S) 927801951 Retail Anchored
26863 25 Arlington VA 22202 Multifamily High-Rise
27355 26 Jersey City NJ 07302 Office Urban
26597 27 Tampa FL 336351354 Manufactured Housing Manufactured Housing
Community Community
- ------------------------------------------------------------------------------------------------------------------------------------
26569 28 New York NY 10028 Office Urban
27018 29 Seattle WA 98108 Office Urban
26779 30 Lincoln NE 68506 Multifamily Garden
310851270 31 Petaluma CA (N) 94954 Industrial/Warehouse Flex Industrial
18079 32 New York NY 10036 Office Urban
- ------------------------------------------------------------------------------------------------------------------------------------
27638 33 Houston TX 77089 Retail Anchored
9905484 34 Quakertown PA 18951 Manufactured Housing Manufactured Housing
Community Community
27130 35 Dallas TX 75238 Retail Anchored
27708 36 Salem MA 01970 Ground Leased Land Ground Leased Land
310851529 37 King City OR 97224 Multifamily Low-Rise
- ------------------------------------------------------------------------------------------------------------------------------------
9904270 38 Chula Vista CA (S) 91911 Retail Anchored
5250 39 Aspen CO 81611 Retail Theater
26724 40 Erie PA 16509 Hospitality Limited Service
26136 41 Ithaca NY 14850 Multifamily Garden
26282 42 Cleveland OH 44114 Office Urban
- ------------------------------------------------------------------------------------------------------------------------------------
310851505 43 Escondido CA (S) 92025 Multifamily Low-Rise
27287 44 Glendale NY 11385 Self-Storage Self-Storage
27945 45 Colorado Springs CO 80909 Multifamily Garden
27489 46 Erie PA 16509 Hospitality Extended Stay
25138 47 Office
25138A Southfield MI 48075 Office Suburban
25138B Hartford CT 06101 Office Urban
- ------------------------------------------------------------------------------------------------------------------------------------
17584 48 NORWOOD MA 02062 RETAIL SHADOW/WEAK ANCHORED
26722 49 Erie PA 16509 Hospitality Limited Service
26120 50 Seattle WA 98101 Office Urban
26985 51 Ft. Lauderdale FL 33316 Hospitality Limited Service
27611 52 Woodbury NY 11797 Retail Unanchored
- ------------------------------------------------------------------------------------------------------------------------------------
310851522 53 Industrial/Warehouse Warehouse/Distribution
310851522A Brownsville TX 78521 Industrial/Warehouse Warehouse/Distribution
310851522B Brownsville TX 78521 Industrial/Warehouse Warehouse/Distribution
310851522C Los Indios TX 78576 Industrial/Warehouse Warehouse/Distribution
- ------------------------------------------------------------------------------------------------------------------------------------
310851643 54 SAN DIEGO CA (S) 92154 INDUSTRIAL/WAREHOUSE WAREHOUSE/DISTRIBUTION
9904545 55 Ft. Lauderdale FL 33304 Retail Unanchored
310851609 56 La Mirada CA (S) 90638 Retail Anchored
26989 57 Fresno CA (N) 94566 Retail Unanchored
9905478 58 Middle Island NY 11953 Retail Anchored
- ------------------------------------------------------------------------------------------------------------------------------------
310851557 59 Austin TX 78734 Other Marina
310851562 60 San Francisco CA (N) 94102 Mixed Use Mixed Use
310851622 61 Los Angeles CA (S) 90502 Industrial/Warehouse Light Industrial
27292 62 New York NY 10001 Office Urban
9904417 63 Farmington NM 87401 Retail Free-Standing
- ------------------------------------------------------------------------------------------------------------------------------------
9905472 64 Meridian MS 39301 Retail Anchored
310900033 65 Elk Grove CA (N) 95758 Retail Anchored
25413 66 Wyoming MI 49548 Industrial/Warehouse Flex Industrial
25465 67 Escondido CA (S) 92026 Multifamily Garden
27937 68 Philadelphia PA 19106 Multifamily Mid-Rise
- ------------------------------------------------------------------------------------------------------------------------------------
27005 69 Newark DE 19711 Multifamily Garden
310851641 70 Farmington CT 06032 Mixed Use Mixed Use
27397 71 Philadelphia PA 19151 Multifamily Garden
26766 72 Las Vegas NV 89129 Office Suburban
26271 73 San Diego CA (S) 92103 Office Urban
- ------------------------------------------------------------------------------------------------------------------------------------
26600 74 Coral Springs FL 33071 Office Suburban
26709 75 Seattle WA 98134 Industrial/Warehouse Flex Industrial
310851432 76 Encinitas CA (S) 92024 Self-Storage Self-Storage
310851547 77 Chatsworth CA (S) 91311 Industrial/Warehouse Warehouse/Distribution
310851612 78 Escondido CA (S) 92025 Self-Storage Self-Storage
- ------------------------------------------------------------------------------------------------------------------------------------
310851598 79 Concord CA (N) 94520 Multifamily Low-Rise
25895 80 Sunnyvale CA (N) 94086 Retail Unanchored
26367 81 Kansas City MO 64153 Hospitality Limited Service
26734 82 Salinas CA (N) 93906 Manufactured Housing Manufactured Housing
Community Community
27319 83 Baltimore MD 21207 Retail Anchored
- ------------------------------------------------------------------------------------------------------------------------------------
310851571 84 Mountain View CA (N) 94043 Industrial/Warehouse Flex Industrial
310900012 85 Los Angeles CA (S) 90048 Retail Big Box
310851414 86 Rocklin CA (N) 95677 Multifamily Garden
310851482 87 Stanton CA (S) 90680 Industrial/Warehouse Light Industrial
26553 88 Killeen TX 76542 Multifamily Garden
- ------------------------------------------------------------------------------------------------------------------------------------
310851633 89 San Diego CA (S) 92154 Manufactured Housing Manufactured Housing
Community Community
26494 90 Newark DE 197113241 Multifamily Garden
27654 91 Canton OH 44708 Retail Unanchored
9905404 92 New York NY 10021 Mixed Use Mixed Use
310851495 93 La Habra CA (S) 90631 Multifamily Garden
- ------------------------------------------------------------------------------------------------------------------------------------
310851627 94 Ukiah CA (N) 95842 Manufactured Housing Manufactured Housing
Community Community
310851644 95 Watsonville CA (N) 95076 Industrial/Warehouse Warehouse/Distribution
27379 96 Madison NJ 07940 Retail Anchored
310851549 97 Clovis CA (N) 93612 Multifamily Garden
310851448 98 Durham OR 97224 Industrial/Warehouse Flex Industrial
- ------------------------------------------------------------------------------------------------------------------------------------
25466 99 San Marcos CA (S) 92069 Multifamily Garden
25473 100 Ulster NY 12402 Retail Anchored
310900021 101 Fresno CA (N) 93726 Multifamily Garden
9905501 102 Puyallup WA 98373 Self-Storage Self-Storage
26528 103 Las Vegas NV 89113 Retail Anchored
- ------------------------------------------------------------------------------------------------------------------------------------
25454 104 Naperville IL 60563 Retail Unanchored
310851521 105 Santa Clara CA (N) 95050 Industrial/Warehouse Light Industrial
310851632 106 Sterling VA 20166 Industrial/Warehouse Flex Industrial
310851489 107 Chula Vista CA (S) 91911 Self-Storage Self-Storage
9905467 108 Oxon Hill MD 20745 Self-Storage Self-Storage
- ------------------------------------------------------------------------------------------------------------------------------------
9905468 109 Laurel MD 20707 Self-Storage Self-Storage
9905451 110 Multifamily Garden
9905451A St. Petersburg FL 33712 Multifamily Garden
9905451B ST. Petersburg FL 33705 Multifamily Garden
- ------------------------------------------------------------------------------------------------------------------------------------
27165 111 AUSTIN TX 78741 MULTIFAMILY GARDEN
310851588 112 San Jose CA (N) 95131 Industrial/Warehouse Light Industrial
310851634 113 Houston TX 77025 Industrial/Warehouse Warehouse/Distribution
9904923 114 Stockton CA (N) 95210 Retail Unanchored
27064 115 Tenafly NJ 07670 Multifamily Garden
- ------------------------------------------------------------------------------------------------------------------------------------
310851541 116 Chula Vista CA (S) 91911 Self-Storage Self-Storage
310851614 117 Santa Clara CA (N) 95054 Industrial/Warehouse Flex Industrial
26725 118 Erie PA 16509 Hospitality Limited Service
25773 119 Rocky Hill CT 06067 Retail Unanchored
310851616 120 Lake Worth FL 33467 Manufactured Housing Manufactured Housing
Community Community
- ------------------------------------------------------------------------------------------------------------------------------------
27936 121 South Fayette Township PA 15017 Industrial/Warehouse Flex Industrial
26023 122 Fort Lauderdale FL 33315 Hospitality Limited Service
310851631 123 Corona CA (S) 91719 Industrial/Warehouse Light Industrial
25339 124 Sarasota FL 34237 Retail Unanchored
27780 125 Sterling Heights MI 48313 Retail Unanchored
- ------------------------------------------------------------------------------------------------------------------------------------
9905453 126 Naples FL 34102 Multifamily Garden
310851533 127 Minot ND 58701 Retail Big Box
310851640 128 Scottsdale AZ 85255 Mixed Use Mixed Use
27108 129 San Marcos TX 78666 Multifamily Garden
310851496 130 Culver City CA (S) 90232 Industrial/Warehouse Light Industrial
- ------------------------------------------------------------------------------------------------------------------------------------
310851576 131 San Diego CA (S) 92123 Industrial/Warehouse Flex Industrial
310900031 132 Stockton CA (N) 95210 Ground Leased Land Ground Leased Land
310900036 133 Westlake Village CA (S) 91362 Self-Storage Self-Storage
310851621 134 Canoga Park CA (S) 91304 Self-Storage Self-Storage
9904324 135 Katy TX 77450 Retail Unanchored
- ------------------------------------------------------------------------------------------------------------------------------------
25309 136 Morrow GA 30260 Retail Unanchored
26909 137 Long Beach CA (S) 90808 Retail Unanchored
310851546 138 Santa Monica CA (S) 90401 Mixed Use Mixed Use
310851572 139 Stockton CA (N) 95215 Industrial/Warehouse Warehouse/Distribution
9905053 140
9905053A New York NY 10021 Mixed Use Mixed Use
9905053B New York NY 10021 Retail Specialty
9905053C New York NY 10021 Mixed Use Mixed Use
- ------------------------------------------------------------------------------------------------------------------------------------
310851596 141 OREGON CITY OR 97045 MIXED USE MIXED USE
310851604 142 Santa Monica CA (S) 90401 Retail Specialty
310851517 143 Glendale CA (S) 91204 Industrial/Warehouse Light Industrial
310851527 144 San Diego CA (S) 92173 Industrial/Warehouse Flex Industrial
26981 145 Delray Beach FL 33444 Retail Unanchored
- ------------------------------------------------------------------------------------------------------------------------------------
26832 146 Naples FL 34104 Retail Unanchored
9904785 147 Minneapolis MN 55401 Office Urban
310851587 148 San Marcos TX 78666 Multifamily Garden
310851611 149 Sacramento CA (N) 95825 Mixed Use Mixed Use
310851613 150 Poway CA (S) 92064 Self-Storage Self-Storage
- ------------------------------------------------------------------------------------------------------------------------------------
310851490 151 Industrial/Warehouse Light Industrial
310851490A Orange CA (S) 92867 Industrial/Warehouse Light Industrial
310851490B Santa Ana CA (S) 92707 Industrial/Warehouse Light Industrial
25540 152 HAMPTON NJ 08827 MULTIFAMILY GARDEN
- ------------------------------------------------------------------------------------------------------------------------------------
310900030 153 New York NY 10001 Office Urban
310851608 154 Santa Maria CA (S) 93454 Self-Storage Self-Storage
310851497 155 Rancho Cucamonga CA (S) 91701 Manufactured Housing Manufactured Housing
Community Community
310851558 156 Davis CA (N) 95616 Multifamily Garden
310851575 157 San Diego CA (S) 92110 Industrial/Warehouse Flex Industrial
- ------------------------------------------------------------------------------------------------------------------------------------
310900006 158 Brownsville TX 78521 Multifamily Garden
310900018 159 Phoenix AZ 85008 Industrial/Warehouse Warehouse/Distribution
310900022 160 Placerville CA (N) 95667 Self-Storage Self-Storage
310900037 161 Lancaster CA (S) 93536 Multifamily Garden
310851601 162 Salinas CA (N) 93901 Industrial/Warehouse Warehouse/Distribution
- ------------------------------------------------------------------------------------------------------------------------------------
310851568 163 Rancho Cordova CA (N) 95670 Industrial/Warehouse Light Industrial
310900029 164 Minneapolis MN 55414 Industrial/Warehouse Flex Industrial
310900035 165 Los Angeles CA (S) 90061 Industrial/Warehouse Warehouse/Distribution
26567 166 Groton CT 06340 Retail Anchored
9904982 167 Houston TX 77088 Multifamily Garden
- ------------------------------------------------------------------------------------------------------------------------------------
25840 168 Cypress CA (S) 90630 Manufactured Housing Manufactured Housing
Community Community
310851646 169 Sunnyvale CA (N) 94086 Industrial/Warehouse Flex Industrial
310851625 170 San Jose CA (N) 95112 Industrial/Warehouse Flex Industrial
310851257 171 Engelwood CO 80122 Industrial/Warehouse Flex Industrial
310851321 172 Los Angeles CA (S) 90061 Industrial/Warehouse Light Industrial
- ------------------------------------------------------------------------------------------------------------------------------------
9905494 173 Tomball TX 77375 Multifamily Garden
310851600 174 City of Industry CA (S) 91748 Industrial/Warehouse Warehouse/Distribution
310851544 175 Livermore CA (N) 94550 Industrial/Warehouse Flex Industrial
26302 176 Old Bridge NJ 08557 Ground Leased Land Ground Leased Land
310851583 177 Torrance CA (S) 90502 Industrial/Warehouse Warehouse/Distribution
- ------------------------------------------------------------------------------------------------------------------------------------
310851599 178 Simi Valley CA (S) 93065 Industrial/Warehouse Warehouse/Distribution
310851626 179 Kellseyville CA (N) 95451 Manufactured Housing Manufactured Housing
Community Community
9905485 180 Coventry RI 02816 Retail Unanchored
310900002 181 Houston TX 77379 Retail Unanchored
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUT-OFF CUT-OFF
YEAR SQUARE NUMBER BALANCE PER BALANCE OCCUPANCY
LOAN NUMBER COUNT BUILT/RENOVATED FEET OF UNITS SQUARE FOOT PER UNIT OCCUPANCY DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
310900043 1 1998 612,848 95.46 98% 10/13/1999
310900024 2 1991 544,482 86.32 92% 9/20/1999
310851624 3
310851624A 1989 87,600 589 41.10 6,112 77% 9/30/1999
310851624B 1989 67,502 676 80.19 8,008 96% 9/30/1999
310851624C 1992 145,374 1017 26.42 3,777 78% 9/30/1999
310851624D 1991 68,383 571 51.08 6,118 89% 9/30/1999
310851624E 1990 60,952 666 55.75 5,102 77% 9/30/1999
310851624F 1992 67,317 583 39.80 4,596 91% 9/30/1999
310851624G 1992 92,461 718 50.62 6,518 84% 9/30/1999
310851624H 1990 69,352 641 44.86 4,854 87% 9/30/1999
310851624I 1989 53,587 542 75.33 7,447 91% 6/30/1999
310851624J 1991 62,952 651 45.70 4,419 92% 9/30/1999
310851624K 1991 63,537 539 31.72 3,739 84% 9/30/1999
310851624L 1992 103,149 780 37.65 4,979 85% 9/30/1999
310851624M 1998 115 14,080 94% 3/31/1999
- ------------------------------------------------------------------------------------------------------------------------------------
9905426 4 1997 138,000 316 156.76 68,459 79% 7/31/1999
26287 5
26287A 1998 51,450 81.15 100% 12/24/1999
26287B 1997 140,300 57.02 100% 12/24/1999
26287C 1998 74,000 108.11 100% 12/24/1999
- ------------------------------------------------------------------------------------------------------------------------------------
27657 6 1997 17,900 75 1,117.32 266,667 88% 9/30/1999
310900004 7 1998 395,153 48.76 97% 10/1/1999
310900032 8 1999 142,552 134.57 100% 9/1/1999
9905921 9 1989 288,562 58.91 100% 10/1/1999
310900041 10 1992 204,191 78.36 98% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310900020 11
310900020A 1997 46,090 351 28.81 3,783 92% 9/30/1999
310900020B 1996 53,040 449 41.03 4,847 98% 9/30/1999
310900020C 1997 57,820 546 42.47 4,498 99% 9/30/1999
310900020D 1998 44,740 353 48.42 6,137 97% 9/30/1999
310900020E 1998 59,930 485 33.81 4,178 99% 9/30/1999
310900020F 1993 38,656 296 32.28 4,216 96% 9/30/1999
310900020G 1996 51,040 456 43.22 4,838 93% 9/30/1999
310900020H 1998 56,840 459 37.23 4,611 98% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
26660 12
26660A 1985 270 27,952 99% 7/1/1999
26660B 1984 78 33,441 97% 6/1/1999
26660C 1996 98 38,328 94% 6/1/1999
- ------------------------------------------------------------------------------------------------------------------------------------
26511 13 1983 362,438 37.93 88% 11/4/1999
25503 14 1999 374,000 28.57 100% 5/1/1999
27112 15 1986 0 320 32,733 95% 7/27/1999
27874 16 1997 77,649 132.00 99% 1/1/2000
310900011 17 1998 92,254 108.77 100% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
27931 18 1976 0 260 33,828 99% 10/29/1999
9905475 19 1995 111,647 75.95 100% 8/1/1999
9904248 20 1998 60,986 139.05 100% 6/21/1999
310851607 21 1992 86,050 89.80 98% 11/1/1999
27942 22 1974 0 276 27,161 97% 10/31/1999
- ------------------------------------------------------------------------------------------------------------------------------------
26334 23 1998 90,254 79.19 87% 12/19/1999
28027 24 1998 89,778 76.86 97% 10/21/1999
26863 25 1984 135 50,247 97% 7/12/1999
27355 26 1986 108,683 62.48 92% 11/17/1999
26597 27 1970 0 546 11,844 95% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
26569 28 1990 32,098 194.42 100% 10/14/1999
27018 29 1983 182,419 34.06 99% 11/4/1999
26779 30 1987 0 264 23,386 99% 8/8/1999
310851270 31 1999 86,486 70.56 100% 3/9/1999
18079 32 1998 82,441 71.34 98% 2/24/1999
- ------------------------------------------------------------------------------------------------------------------------------------
27638 33 1984 114,996 52.18 99% 9/1/1999
9905484 34 1989 406 14,694 98% 6/1/1999
27130 35 1965 98,558 59.23 97% 11/19/1999
27708 36 1999 710,525 8.01 100% 5/1/1999
310851529 37 1993 195 28,460 89% 11/2/1999
- ------------------------------------------------------------------------------------------------------------------------------------
9904270 38 1998 83,336 65.14 100% 9/1/1999
5250 39 1999 25,309 2 215.93 2,732,500 100% 11/1/1999
26724 40 1989 0 110 49,262 85% 5/31/1999
26136 41 1989 0 93 57,945 99% 8/4/1999
26282 42 1990 160,607 32.93 92% 8/27/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310851505 43 1971 169 30,511 95% 10/27/1998
27287 44 1997 87,297 57.12 84% 8/17/1999
27945 45 1952 0 168 29,750 99% 10/5/1999
27489 46 1995 0 78 62,052 92% 5/31/1999
25138 47
25138A 1973 254,439 11.65 79% 7/2/1999
25138B 1970 388,656 4.45 97% 7/2/1999
- ------------------------------------------------------------------------------------------------------------------------------------
17584 48 1989 46,582 99.68 100% 11/23/1999
26722 49 1990 0 97 46,938 78% 5/31/1999
26120 50 1998 43,898 103.56 100% 9/30/1999
26985 51 1997 0 78 57,852 66% 8/31/1999
27611 52 1998 28,373 158.60 100% 2/1/2000
- ------------------------------------------------------------------------------------------------------------------------------------
310851522 53
310851522A 1996 145,000 17.07 100% 9/30/1999
310851522B 1992 49,437 20.02 100% 9/30/1999
310851522C 1997 78,750 11.31 100% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310851643 54 1998 146,060 29.32 100% 9/27/1999
9904545 55 1990 32,076 0 132.80 100% 12/1/1999
310851609 56 1987 155,003 26.71 94% 8/1/1999
26989 57 1985 85,552 47.83 97% 3/19/1999
9905478 58 1991 160,967 25.26 100% 10/1/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310851557 59 1998 375 10,863 96% 9/30/1999
310851562 60 1972 64,072 63.79 94% 9/30/1999
310851622 61 1999 113,735 35.88 100% 10/1/1999
27292 62 1980 69,700 57.18 100% 12/6/1999
9904417 63 1999 55,684 71.58 100% 6/15/1999
- ------------------------------------------------------------------------------------------------------------------------------------
9905472 64 1998 102,779 38.60 100% 11/1/1999
310900033 65 1994 22,190 171.11 95% 11/15/1999
25413 66 1995 159,600 23.74 94% 11/1/1999
25465 67 1988 105 35,583 97% 11/30/1999
27937 68 1983 0 59 63,534 97% 12/14/1999
- ------------------------------------------------------------------------------------------------------------------------------------
27005 69 1995 85 43,454 100% 10/1/1999
310851641 70 1999 44,049 83.80 98% 11/11/1999
27397 71 1999 127 28,216 100% 11/23/1999
26766 72 1997 29,772 118.26 100% 7/12/1999
26271 73 1989 51,794 67.40 95% 7/27/1999
- ------------------------------------------------------------------------------------------------------------------------------------
26600 74 1994 43,728 79.90 89% 8/11/1999
26709 75 1988 51,853 67.40 100% 7/1/1999
310851432 76 1998 67,727 605 50.79 5,686 98% 9/30/1999
310851547 77 1997 88,777 38.47 100% 10/4/1999
310851612 78 1998 68,542 535 50.80 6,508 98% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310851598 79 1978 96 36,128 98% 9/30/1999
25895 80 1990 20,129 169.85 94% 1/1/2000
26367 81 1997 0 80 41,664 72% 8/31/1999
26734 82 1966 0 113 28,702 98% 7/20/1999
27319 83 1992 32,671 99.33 96% 9/14/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310851571 84 1998 31,635 102.13 99% 9/30/1999
310900012 85 1994 24,000 135.02 100% 10/13/1999
310851414 86 1986 96 32,873 100% 10/12/1999
310851482 87 1987 114,130 27.68 97% 10/15/1999
26553 88 1988 0 212 14,571 99% 6/23/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310851633 89 1975 128 24,124 99% 9/30/1999
26494 90 1999 31,945 14 93.85 214,157 100% 11/15/1999
27654 91 1999 102,869 29.15 90% 10/11/1999
9905404 92 1993 24,360 32 123.04 93,663 100% 9/13/1999
310851495 93 1999 128 23,116 96% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310851627 94 1997 137 21,831 100% 9/30/1999
310851644 95 1999 76,520 39.14 100% 4/1/1999
27379 96 1999 28,645 102.91 100% 11/15/1999
310851549 97 1978 177 15,749 97% 9/30/1999
310851448 98 1989 67,421 41.16 100% 10/6/1999
- ------------------------------------------------------------------------------------------------------------------------------------
25466 99 1988 84 33,210 96% 6/28/1999
25473 100 1999 44,744 62.56 90% 11/15/1999
310900021 101 1970 104 25,760 98% 10/20/1999
9905501 102 1996 75,875 33.66 95% 6/22/1999
26528 103 1999 16,708 151.47 100% 9/1/1999
- ------------------------------------------------------------------------------------------------------------------------------------
25454 104 1975 25,490 98.02 100% 11/1/1999
310851521 105 1972 76,512 31.79 100% 9/30/1999
310851632 106 1995 68,961 36.09 100% 10/20/1999
310851489 107 1984 97,790 858 24.87 2,834 86% 9/30/1999
9905467 108 1985 60,100 40.16 93% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
9905468 109 1982 57,525 41.91 91% 9/30/1999
9905451 110
9905451A 1964 60 24,711 95% 9/30/1999
9905451B 1960 40 21,394 96% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
27165 111 1973 0 112 20,483 96% 12/8/1999
310851588 112 1988 30,229 75.53 94% 10/8/1999
310851634 113 1999 61,274 36.12 100% 10/1/1999
9904923 114 1990 40,315 55.05 87% 11/1/1999
27064 115 1958 0 110 20,146 100% 9/1/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310851541 116 1985 140,788 1617 15.48 1,348 92% 9/30/1999
310851614 117 1999 21,000 102.98 100% 9/30/1999
26725 118 1986 0 113 19,358 74% 5/31/1999
25773 119 1976 37,462 57.25 100% 11/22/1999
310851616 120 1987 214 9,959 95% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
27936 121 1979 68,121 30.83 100% 11/19/1999
26023 122 1997 0 52 39,723 78% 12/31/1998
310851631 123 1990 50,824 40.05 100% 8/10/1999
25339 124 1991 47,442 43.21 96% 9/30/1999
27780 125 1988 30,582 67.03 100% 11/22/1999
- ------------------------------------------------------------------------------------------------------------------------------------
9905453 126 1998 0 104 0.00 19,545 97% 9/30/1999
310851533 127 1999 24,049 84.24 100% 9/30/1999
310851640 128 1998 16,467 120.90 93% 12/7/1999
27108 129 1999 0 88 22,632 94% 9/9/1999
310851496 130 1979 64,543 30.61 100% 11/19/1998
- ------------------------------------------------------------------------------------------------------------------------------------
310851576 131 1978 56,906 34.98 100% 9/30/1999
310900031 132 1999 52,000 38.44 100% 9/23/1999
310900036 133 1986 41,564 582 48.04 3,431 96% 11/15/1999
310851621 134 1999 46,821 550 42.29 3,600 91% 10/1/1999
9904324 135 1998 22,061 89.27 100% 11/18/1999
- ------------------------------------------------------------------------------------------------------------------------------------
25309 136 1998 14,562 132.27 85% 11/30/1999
26909 137 1989 16,863 112.48 100% 11/23/1999
310851546 138 1999 13,716 137.22 100% 10/17/1999
310851572 139 1998 72,000 26.19 100% 11/15/1999
9905053 140
9905053A 1997 7,405 9 83.47 68,675 100% 7/15/1999
9905053B 1910 2,574 238.19 100% 7/16/1999
9905053C 1910 9,370 15 65.43 40,873 100% 7/15/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310851596 141 1996 28,365 64.54 100% 9/30/1999
310851604 142 1997 15,000 121.13 100% 9/30/1999
310851517 143 1973 33,060 54.20 100% 10/14/1999
310851527 144 1989 32,394 55.27 97% 10/1/1999
26981 145 1996 17,657 101.06 100% 9/1/1999
- ------------------------------------------------------------------------------------------------------------------------------------
26832 146 1990 22,698 77.99 94% 8/30/1999
9904785 147 1998 37,786 46.20 96% 8/20/1999
310851587 148 1978 108 15,877 100% 9/24/1999
310851611 149 1983 103,488 16.68 100% 10/31/1999
310851613 150 1998 42,371 368 39.91 4,595 97% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310851490 151
310851490A 1972 28,750 22.38 100% 10/14/1999
310851490B 1975 45,926 21.55 98% 10/14/1999
25540 152 1980 48 33,752 96% 3/31/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310900030 153 1924 44,400 36.05 100% 8/1/1999
310851608 154 1980 53,750 603 28.67 2,555 100% 10/7/1999
310851497 155 1975 152 9,773 100% 10/7/1999
310851558 156 1969 46 31,720 100% 9/30/1999
310851575 157 1998 33,900 44.11 100% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310900006 158 1974 96 15,548 98% 10/3/1999
310900018 159 1999 35,328 42.38 100% 11/1/1999
310900022 160 1986 68,600 564 21.69 2,638 87% 9/30/1999
310900037 161 1989 36 41,630 94% 11/9/1999
310851601 162 1986 49,248 29.07 100% 10/11/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310851568 163 1985 62,400 22.26 94% 10/1/1999
310900029 164 1994 60,780 22.97 100% 8/30/1999
310900035 165 1999 54,016 24.05 100% 11/10/1999
26567 166 1996 10,800 115.46 100% 6/29/1999
9904982 167 1981 71,878 98 16.98 12,457 96% 9/30/1999
- ------------------------------------------------------------------------------------------------------------------------------------
25840 168 1967 0 305 3,928 100% 4/27/1999
310851646 169 1979 12,000 99.17 100% 9/22/1999
310851625 170 1981 28,668 39.53 77% 9/30/1999
310851257 171 1998 36,546 28.91 100% 9/16/1998
310851321 172 1988 35,210 30.56 92% 10/18/1999
- ------------------------------------------------------------------------------------------------------------------------------------
9905494 173 1984 58,200 48 18.56 22,507 92% 6/1/1999
310851600 174 1987 52,191 20.41 100% 10/15/1999
310851544 175 1981 28,609 36.40 97% 10/15/1999
26302 176 1999 85,813 11.62 100% 11/18/1999
310851583 177 1974 31,572 30.96 100% 11/2/1999
- ------------------------------------------------------------------------------------------------------------------------------------
310851599 178 1988 17,155 54.54 100% 10/15/1999
310851626 179 1970 84 11,098 98% 9/30/1999
9905485 180 1986 16,400 54.99 100% 10/26/1999
310900002 181 1983 25,812 34.42 92% 9/30/1999
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANNUAL ANNUAL
REPLACEMENT REPLACEMENT LARGEST
RESERVES PER RESERVES TENANT
LOAN NUMBER COUNT SQUARE FOOT (b) PER UNIT (b) LARGEST TENANT SQUARE FEET
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
310900043 1 Sega 155,699
310900024 2 0.32 First Union National Bank 27,623
310851624 3
310851624A 0.15
310851624B 0.15
310851624C 0.15
310851624D 0.15
310851624E 0.15
310851624F 0.15
310851624G 0.15
310851624H 0.15
310851624I 0.15
310851624J 0.15
310851624K 0.15
310851624L 0.15
310851624M 49.98
- ------------------------------------------------------------------------------------------------------------------------------------
9905426 4
26287 5
26287A 0.55 Consolidated Theatres 51,450
26287B 0.11 Edwards Cinemas 140,300
26287C 0.14 Muvico Theaters 74,000
- ------------------------------------------------------------------------------------------------------------------------------------
27657 6 3,333.33 J. CREW 11,200
310900004 7 0.10 Corporate Express 40,920
310900032 8 0.20 Cylink Corporation 117,927
9905921 9 Circuit City Stores, Inc. 288,562
310900041 10 0.16 Safeway 60,069
- ------------------------------------------------------------------------------------------------------------------------------------
310900020 11
310900020A 0.15
310900020B 0.15
310900020C 0.15
310900020D 0.15
310900020E 0.15
310900020F 0.15
310900020G 0.15
310900020H 0.15
- ------------------------------------------------------------------------------------------------------------------------------------
26660 12
26660A 250.00
26660B 250.00
26660C
- ------------------------------------------------------------------------------------------------------------------------------------
26511 13 0.15 BAKER, KNAPP & TUBBS 18,223
25503 14 0.15 Catalog Resources 374,000
27112 15 250.00
27874 16 0.20 Bank West of Nevada 19,260
310900011 17 0.20 Protein Design Labs, Inc. 92,254
- ------------------------------------------------------------------------------------------------------------------------------------
27931 18
9905475 19 0.21 Home Depot USA, Inc. 56,054
9904248 20 0.15 Best Buy 42,037
310851607 21 Food 4 Less 40,320
27942 22
- ------------------------------------------------------------------------------------------------------------------------------------
26334 23 0.15 Wild Oats 27,000
28027 24 0.15 Marshall's 32,504
26863 25
27355 26 0.21 Fleet Bank 27,751
26597 27
- ------------------------------------------------------------------------------------------------------------------------------------
26569 28 0.18 American Jewish Congress 32,098
27018 29 0.15 Pacific Rim 8,375
26779 30 250.00
310851270 31 Industrial Devices Corporation 86,486
18079 32 Kahan Jewelry Corp. 2,758
- ------------------------------------------------------------------------------------------------------------------------------------
27638 33 Randall's 52,990
9905484 34 84.26
27130 35 0.15 Albertson's (Minyard) 37,156
27708 36 Home Depot 710,525
310851529 37
- ------------------------------------------------------------------------------------------------------------------------------------
9904270 38 Rite Aid 20,100
5250 39 0.17 Resort Theaters of America 22,249
26724 40 926.89
26136 41 300.00
26282 42 0.20 National City Bank 82,412
- ------------------------------------------------------------------------------------------------------------------------------------
310851505 43
27287 44 0.15
27945 45
27489 46 1,282.67
25138 47
25138A 0.20 Health Alliance Plan "HAP" 55,309
25138B 0.20 Fleet National Bank 148,000
- ------------------------------------------------------------------------------------------------------------------------------------
17584 48 0.15 MAJESTIC CARDS 7,110
26722 49 853.16
26120 50 0.15 Aventail 22,849
26985 51 869.82
27611 52 0.15 Great Shapes Clothing 4,420
- ------------------------------------------------------------------------------------------------------------------------------------
310851522 53
310851522A Loera Custom Brokerage 59,540
310851522B Auto Trim, Inc. 31,234
310851522C Hand Made Bow 28,500
- ------------------------------------------------------------------------------------------------------------------------------------
310851643 54 0.10 KOJO WORLDWIDE 42,340
9904545 55 0.15 Houston's 6,688
310851609 56 0.15 Home Depot of Texas, Inc. 114,355
26989 57 0.23 AMF Bowl 51,760
9905478 58 0.23 Kmart Corp. 115,974
- ------------------------------------------------------------------------------------------------------------------------------------
310851557 59
310851562 60 IABC 7,740
310851622 61 0.15 Tatsumi Intermodal (U.S.A.), Inc. 113,735
27292 62 Ha-Lo Marketing 14,000
9904417 63 Furr's Supermarkets 55,684
- ------------------------------------------------------------------------------------------------------------------------------------
9905472 64 0.20 Kmart Corp 86,479
310900033 65 0.18 Blockbuster Video 6,000
25413 66 0.15 Presort Services, Inc 42,000
25465 67 250.00
27937 68 250.00
- ------------------------------------------------------------------------------------------------------------------------------------
27005 69 250.00
310851641 70 0.15 Dialysis Clinic 13,000
27397 71 250.00
26766 72 0.15 Shoreline Office Center 5,019
26271 73 0.15 Balestreri, Dorigan 8,821
- ------------------------------------------------------------------------------------------------------------------------------------
26600 74 0.20 Coral Springs Ambulatory Surgical Ctr. 14,576
26709 75 0.15 Burlington Northern 1 & 2 29,710
310851432 76 0.15
310851547 77 0.15 Natrol Inc. 88,777
310851612 78 0.15
- ------------------------------------------------------------------------------------------------------------------------------------
310851598 79
25895 80 0.15 Computerland 2,795
26367 81 959.71
26734 82
27319 83 0.15 Goodwill 17,095
- ------------------------------------------------------------------------------------------------------------------------------------
310851571 84 Larry Autoworks 8,100
310900012 85 Borders Books 24,000
310851414 86 287.50
310851482 87 0.15 Hollander Glass 30,000
26553 88
- ------------------------------------------------------------------------------------------------------------------------------------
310851633 89 100.03
26494 90 419.01 Happy Harry's 10,900
27654 91 0.15 Jo Ann Fabrics 13,000
9905404 92 Citarella East, Inc. 5,600
310851495 93
- ------------------------------------------------------------------------------------------------------------------------------------
310851627 94
310851644 95 Couch Distributing Company, Inc. 76,520
27379 96 0.15 Wild Oats 26,050
310851549 97 267.12
310851448 98 Bioject 21,786
- ------------------------------------------------------------------------------------------------------------------------------------
25466 99 250.00
25473 100 0.15 Office Depot 29,790
310900021 101 450.00
9905501 102
26528 103 Rite Aid 16,708
- ------------------------------------------------------------------------------------------------------------------------------------
25454 104 0.15 Solo Liquors 2,660
310851521 105 AMTAI Imports, Inc. 38,256
310851632 106 0.15 Re:Source (Formerly Parcom) 38,170
310851489 107
9905467 108 0.15
- ------------------------------------------------------------------------------------------------------------------------------------
9905468 109 0.14
9905451 110
9905451A 264.20
9905451B 228.60
- ------------------------------------------------------------------------------------------------------------------------------------
27165 111 250.00
310851588 112 HDC 12,100
310851634 113 Al's Formal Wear 61,274
9904923 114 China Palace Restaurant 8,000
27064 115 250.00
- ------------------------------------------------------------------------------------------------------------------------------------
310851541 116 0.16
310851614 117 0.20 Electric Lightwave, Inc. 21,000
26725 118 559.35
25773 119 0.15 Fitness Group 10,000
310851616 120
- ------------------------------------------------------------------------------------------------------------------------------------
27936 121 0.15 Castrol Industrial 21,936
26023 122 967.79
310851631 123 0.20 Mid Com 5,275
25339 124 0.15 Save-A-Lot 11,135
27780 125 0.18 Gotta Dance 4,800
- ------------------------------------------------------------------------------------------------------------------------------------
9905453 126 250.00
310851533 127 Staples 24,049
310851640 128 0.20 Piper Jaffray, Inc. 8,750
27108 129
310851496 130 M&K Sound Corporation 15,890
- ------------------------------------------------------------------------------------------------------------------------------------
310851576 131 Ridout Plastics 31,610
310900031 132 Soda Corners LLC/ PAQ, Inc. 52,000
310900036 133
310851621 134
9904324 135 0.15 Owen Child Care/Greentrails Academy 4,393
- ------------------------------------------------------------------------------------------------------------------------------------
25309 136 0.15 Original Mattress Factory 3,525
26909 137 0.15 Center Stage Dance 4,015
310851546 138 Miller Wishengrad, Inc. 10,916
310851572 139 Tab Distribution 72,000
9905053 140
9905053A Scoop East 1,800
9905053B Starbucks Coffee 1,930
9905053C Shabu-Shabu 2,100
- ------------------------------------------------------------------------------------------------------------------------------------
310851596 141 WILCO FARM STORE 21,257
310851604 142 Williams & Sonoma dba Pottery Barn 15,000
310851517 143 Nestle USA 18,760
310851527 144 KB Foam 2,806
26981 145 0.15 City Limits 6,900
- ------------------------------------------------------------------------------------------------------------------------------------
26832 146 0.15 Frascati's Restaurant & Deli 8,523
9904785 147 0.20 Cybernet Systems 9,829
310851587 148
310851611 149 Deliverex 38,000
310851613 150 0.15
- ------------------------------------------------------------------------------------------------------------------------------------
310851490 151
310851490A JR's Sports Collectables, LLC 5,200
310851490B S & R Cutting Service 5,000
25540 152 250.00
- ------------------------------------------------------------------------------------------------------------------------------------
310900030 153 0.25 Chong Ye Yang 7,500
310851608 154
310851497 155
310851558 156
310851575 157 DBA Canteen of San Diego 11,650
- ------------------------------------------------------------------------------------------------------------------------------------
310900006 158
310900018 159 Phoenix Newspapers, Inc. 35,328
310900022 160
310900037 161
310851601 162 Familian Corp. 49,248
- ------------------------------------------------------------------------------------------------------------------------------------
310851568 163 Ross's Sign Shop 3,200
310900029 164 0.15 Envirecycle Ink Recovery, Ltd. 31,550
310900035 165 Gin'l Fabrics, Inc. 54,016
26567 166 CVS 10,800
9904982 167 250.00
- ------------------------------------------------------------------------------------------------------------------------------------
25840 168
310851646 169 Advanced Micro Devices 12,000
310851625 170 Weaver's Inc. 6,533
310851257 171 Johnson Storage & Moving Cherry Creek 13,040
310851321 172 Mr. Ernest Ramos 5,220
- ------------------------------------------------------------------------------------------------------------------------------------
9905494 173 250.00
310851600 174 Familian Corp. 52,191
310851544 175 0.49 Custom Grinding 1,680
26302 176 Sears 85,813
310851583 177 The Prietive Group 15,972
- ------------------------------------------------------------------------------------------------------------------------------------
310851599 178 Familian Corp. 17,155
310851626 179
9905485 180 0.15 Video Junction 5,400
310900002 181 Hockey Stop 4,943
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SECOND SECOND
LARGEST LARGEST
LARGEST TENANT TENANT TENANT CROSS-
LOAN NUMBER COUNT EXPIRATION SECOND LARGEST TENANT SQUARE FEET EXPIRATION COLLATERALIZED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
310900043 1 12/31/2009 Ziff Davis Inc. 139,947 9/30/2005
310900024 2 6/30/2005 First Union National Bank 25,193 6/30/2024
310851624 3 Yes
310851624A Yes
310851624B Yes
310851624C Yes
310851624D Yes
310851624E Yes
310851624F Yes
310851624G Yes
310851624H Yes
310851624I Yes
310851624J Yes
310851624K Yes
310851624L Yes
310851624M Yes
- -----------------------------------------------------------------------------------------------------------------------------------
9905426 4
26287 5 Yes
26287A 5/1/2022 Yes
26287B 12/31/2018 Yes
26287C 8/1/2019 Yes
- -----------------------------------------------------------------------------------------------------------------------------------
27657 6 6/1/2011 MERCER KITCHEN 6,700 6/1/2011
310900004 7 7/14/2006 Nextlink North Carolina, Inc. 31,813 1/31/2015
310900032 8 8/31/2009 Tollbridge Technologies, Inc. 24,625 8/31/2004
9905921 9 2/28/2010
310900041 10 10/9/2017 Ross 24,000 1/31/2004
- -----------------------------------------------------------------------------------------------------------------------------------
310900020 11 Yes
310900020A Yes
310900020B Yes
310900020C Yes
310900020D Yes
310900020E Yes
310900020F Yes
310900020G Yes
310900020H Yes
- -----------------------------------------------------------------------------------------------------------------------------------
26660 12 YES
26660A Yes
26660B Yes
26660C Yes
- -----------------------------------------------------------------------------------------------------------------------------------
26511 13 7/31/2009 MICHAEL FOLKS SHOWROOM 16,810 11/30/2006 YES
25503 14 10/31/2009
27112 15
27874 16 12/31/2007 Harrah's 15,528 11/30/2004
310900011 17 9/30/2014
- -----------------------------------------------------------------------------------------------------------------------------------
27931 18
9905475 19 9/30/2013 Pathmark 55,593 8/31/2018
9904248 20 1/31/2014 Kitchen Etc. 18,949 1/31/2009
310851607 21 11/12/2006 Walgreens/$1 Always 13,990 12/31/2001
27942 22
- -----------------------------------------------------------------------------------------------------------------------------------
26334 23 11/30/2013 Dunn-Edwards 5,964 11/30/2004
28027 24 4/30/2008 Shoe Pavillions 8,243 10/1/2001
26863 25
27355 26 4/3/2004 Offices Unlimited of Jersey City 11,977 2/28/2004
26597 27
- -----------------------------------------------------------------------------------------------------------------------------------
26569 28 10/1/2014
27018 29 11/15/2002 Enesco Corp. 6,288 4/30/2000 Yes
26779 30
310851270 31 1/31/2014
18079 32 1/31/2003 Menorah Inc. 2,300 5/31/2000
- -----------------------------------------------------------------------------------------------------------------------------------
27638 33 7/31/2014 Eckerd Drugs 10,356 7/28/2004
9905484 34
27130 35 1/31/2014 Drug Emporium 26,700 1/31/2001
27708 36 1/31/2020
310851529 37
- -----------------------------------------------------------------------------------------------------------------------------------
9904270 38 5/31/2001 Save A Lot, Ltd. 20,000 9/30/2003
5250 39 9/24/2019
26724 40 Yes
26136 41
26282 42 12/31/2003 NatCity Investments 51,379 12/31/2003
- -----------------------------------------------------------------------------------------------------------------------------------
310851505 43
27287 44
27945 45
27489 46
25138 47 Yes
25138A 1/1/2005 Lutheran Social Service 37,201 12/15/2007 Yes
25138B 12/31/2006 Phoenix Home Life 44,882 5/31/2003 Yes
- -----------------------------------------------------------------------------------------------------------------------------------
17584 48 6/30/2001 ENDLESS VIDEO 5,250 12/31/2003
26722 49 Yes
26120 50 6/30/2002 Methodologie 14,026 5/31/2008
26985 51
27611 52 9/30/2008 National Jeans 3,315 5/31/2014
- -----------------------------------------------------------------------------------------------------------------------------------
310851522 53 Yes
310851522A 7/1/2003 Hand Made Bow 30,000 3/31/2000 Yes
310851522B 1/31/2002 Tex Mex Trim, Inc. 9,766 1/31/2002 Yes
310851522C 2/1/2002 Lucent Technologies 20,250 3/1/2000 Yes
- -----------------------------------------------------------------------------------------------------------------------------------
310851643 54 7/31/2006 SCHLAGE LOCK COMPANY 36,980 7/31/2004
9904545 55 3/31/2010 BC Sports 5,781 1/31/2006
310851609 56 10/31/2008 Auto Zone, Inc. 7,340 5/31/2009
26989 57 6/30/2004 DMV 10,483 8/31/2008
9905478 58 2/28/2006 Kmart Storage 30,988 2/28/2006 Yes
- -----------------------------------------------------------------------------------------------------------------------------------
310851557 59
310851562 60 1/31/2009 St. Giles College 7,740 7/31/2000
310851622 61 4/30/2005
27292 62 5/31/2008 Winfield Realty Corp. 8,000 9/30/2001
9904417 63 6/30/2024
- -----------------------------------------------------------------------------------------------------------------------------------
9905472 64 1/31/2015 Catosouth 6,890 1/31/2000 Yes
310900033 65 11/30/2005 Strings 2,520 4/30/2005
25413 66 11/30/2003 Graphic Specialties 12,000 8/31/2001
25465 67
27937 68
- -----------------------------------------------------------------------------------------------------------------------------------
27005 69
310851641 70 3/31/2014 Connecticut Culinary 6,410 12/31/2004
27397 71
26766 72 5/15/2007 Royal Construction Co. 4,135 11/1/2003
26271 73 11/30/2005 KPA Associates 8,278 11/30/2005
- -----------------------------------------------------------------------------------------------------------------------------------
26600 74 5/14/2014 Florida Urological Associates 8,297 7/31/2003
26709 75 6/30/2003 U. S. Postal Service 9,430 3/31/2002
310851432 76
310851547 77 4/30/2014
310851612 78
- -----------------------------------------------------------------------------------------------------------------------------------
310851598 79
25895 80 12/31/2001 Roundtable 2,398 10/1/2000
26367 81
26734 82
27319 83 9/30/2006 First Union 3,859 8/31/2002
- -----------------------------------------------------------------------------------------------------------------------------------
310851571 84 5/31/2002 Touchwave 8,049 2/28/2002
310900012 85 1/31/2010
310851414 86
310851482 87 11/4/2008 EZ Flow 11,600 6/30/2001
26553 88
- -----------------------------------------------------------------------------------------------------------------------------------
310851633 89
26494 90 10/31/2014 Cafe Gourmet 2,450 1/30/2010
27654 91 4/30/2000 Pat Catan's Crafts 10,158 1/31/2002
9905404 92 4/30/2022
310851495 93
- -----------------------------------------------------------------------------------------------------------------------------------
310851627 94
310851644 95 5/31/2019
27379 96 1/31/2019 A&P Liquors 2,595 11/1/2000
310851549 97
310851448 98 9/30/2002 Molectron 19,400 6/30/2002
- -----------------------------------------------------------------------------------------------------------------------------------
25466 99
25473 100 4/30/2009 Miron Liquor & Wine 7,245 1/31/2009
310900021 101
9905501 102
26528 103 5/31/2019
- -----------------------------------------------------------------------------------------------------------------------------------
25454 104 4/1/2004 Smith Beauty Salon 2,610 3/31/2001
310851521 105 4/30/2002 Dyna Mechtronics 38,256 4/14/2003
310851632 106 1/31/2006 Advanced Asphalt Tech 14,394 7/31/2003
310851489 107
9905467 108
- -----------------------------------------------------------------------------------------------------------------------------------
9905468 109
9905451 110 Yes
9905451A Yes
9905451B Yes
- -----------------------------------------------------------------------------------------------------------------------------------
27165 111
310851588 112 5/31/2002 Sanmina 4,200 6/30/2000
310851634 113 9/30/2014
9904923 114 11/30/2013 Village Dental Office - Adams 4,200 4/30/2012
27064 115
- -----------------------------------------------------------------------------------------------------------------------------------
310851541 116
310851614 117 3/31/2009
26725 118 Yes
25773 119 11/30/2008 Dress Barn 9,000 1/31/2006
310851616 120
- -----------------------------------------------------------------------------------------------------------------------------------
27936 121 9/30/2002 York International 17,965 3/2/2021
26023 122
310851631 123 1/31/2000 GGS Info. 3,350 2/28/2000
25339 124 12/4/2000 Ace Hardware 8,040 3/31/2004
27780 125 11/30/2003 Service Centers Corp 3,520 12/31/2001
- -----------------------------------------------------------------------------------------------------------------------------------
9905453 126 Yes
310851533 127 2/28/2014
310851640 128 2/28/2008 Fidelity National Title Insurance Co. 2,500 4/30/2003
27108 129
310851496 130 5/7/2001 Digital Plus, Inc. 7,137 10/31/2002
- -----------------------------------------------------------------------------------------------------------------------------------
310851576 131 3/31/2003 Airtouch Cellular 13,456 8/6/2000
310900031 132 5/31/2023
310900036 133
310851621 134
9904324 135 6/30/2004 Video Joe #8 3,185 2/28/2004
- -----------------------------------------------------------------------------------------------------------------------------------
25309 136 11/30/2003 Casual Male Big & Tall 3,000 9/30/2008
26909 137 8/31/2001 Arthur Murray Dance Studio 2,400 3/31/2002
310851546 138 12/1/2008 Shoe Concepts 2,800 12/1/2008
310851572 139 12/31/2004
9905053 140 Yes
9905053A 8/1/2012 Yes
9905053B 5/1/2009 Yes
9905053C 11/30/2003 Yes
- -----------------------------------------------------------------------------------------------------------------------------------
310851596 141 8/31/2011 WESTERN STATES FIRE PROTECTION 5,000 9/30/2001
310851604 142 5/31/2009
310851517 143 10/31/2004 Jon Mcullough Inc. 8,400 5/30/2002
310851527 144 10/14/2002 Kanematsu 1,705 5/17/2003
26981 145 5/31/2002 Hoots, Toots & Whistle 4,800 5/31/2002
- -----------------------------------------------------------------------------------------------------------------------------------
26832 146 11/30/2000 Heavenbound Books 2,600 10/31/2001
9904785 147 6/30/2003 Cybernet Systems 7,550 6/30/2003
310851587 148
310851611 149 7/31/2008 Western Wire Screen 20,800 4/30/2003
310851613 150
- -----------------------------------------------------------------------------------------------------------------------------------
310851490 151 Yes
310851490A 8/31/2001 Magtech & Pwer Conversion, Inc. 5,200 6/30/2000 Yes
310851490B M-T-M Alliance Technology 3,000 M-T-M Yes
25540 152
- -----------------------------------------------------------------------------------------------------------------------------------
310900030 153 6/30/2014 Sunders / Perfect Emblems 3,750 9/30/2004
310851608 154
310851497 155
310851558 156
310851575 157 5/31/2000 Graphic Builders, Inc. 6,250 8/31/2004
- -----------------------------------------------------------------------------------------------------------------------------------
310900006 158
310900018 159 9/1/2006
310900022 160
310900037 161
310851601 162 6/30/2002
- -----------------------------------------------------------------------------------------------------------------------------------
310851568 163 1/31/2000 Primary Source 3,200 4/30/2000
310900029 164 10/31/2008 HDG Automotive Group, Inc. 29,230 12/31/2001
310900035 165 6/14/2004
26567 166 1/31/2017
9904982 167
- -----------------------------------------------------------------------------------------------------------------------------------
25840 168
310851646 169 5/31/2004
310851625 170 12/31/2005 The McCall Gym Group 5,831 8/31/2001
310851257 171 9/30/2013 Info Architects, Inc. 7,200 9/20/2003
310851321 172 M-T-M J.R.Q. Trucking 3,830 2/28/2000
- -----------------------------------------------------------------------------------------------------------------------------------
9905494 173
310851600 174 6/30/2002
310851544 175 7/31/2001 AirCrafters 1,680 7/18/2000
26302 176 4/20/2014
310851583 177 5/31/2003 Mothers Cake & Cookie Co. 15,600 2/28/2006
- -----------------------------------------------------------------------------------------------------------------------------------
310851599 178 12/31/2004
310851626 179
9905485 180 3/31/2001 Honey Dew Donuts 2,800 3/26/2005
310900002 181 10/1/2002 Annie's Little Heart 2,364 10/1/2001
===================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CROSS-COLLATERAL RELEASE
LOAN NUMBER COUNT DESCRIPTION PROVISIONS RELEASE PROVISION TERMS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
310900043 1
310900024 2
310851624 3 Multiple Properties
310851624A Multiple Properties
310851624B Multiple Properties
310851624C Multiple Properties
310851624D Multiple Properties
310851624E Multiple Properties
310851624F Multiple Properties
310851624G Multiple Properties
310851624H Multiple Properties
310851624I Multiple Properties
310851624J Multiple Properties
310851624K Multiple Properties
310851624L Multiple Properties
310851624M Multiple Properties
- ------------------------------------------------------------------------------------------------------------------------------------
9905426 4
26287 5 Multiple Properties
26287A Multiple Properties
26287B Multiple Properties
26287C Multiple Properties
- ------------------------------------------------------------------------------------------------------------------------------------
27657 6
310900004 7
310900032 8
9905921 9
310900041 10
- ------------------------------------------------------------------------------------------------------------------------------------
310900020 11 Multiple Properties
310900020A Multiple Properties
310900020B Multiple Properties
310900020C Multiple Properties
310900020D Multiple Properties
310900020E Multiple Properties
310900020F Multiple Properties
310900020G Multiple Properties
310900020H Multiple Properties
- ------------------------------------------------------------------------------------------------------------------------------------
26660 12 MULTIPLE PROPERTIES YES
26660A Multiple Properties Yes 125% Defeasance; 1.43 DSCR; 70% LTV
26660B Multiple Properties Yes 125% Defeasance; 1.43 DSCR; 70% LTV
26660C Multiple Properties Yes 125% Defeasance; 1.43 DSCR; 70% LTV
- ------------------------------------------------------------------------------------------------------------------------------------
26511 13 LOAN #27018 YES 1.55X DSCR; 65% LTV; 110% DEFEASANCE OR SALE ONLY
25503 14
27112 15
27874 16
310900011 17
- ------------------------------------------------------------------------------------------------------------------------------------
27931 18
9905475 19
9904248 20
310851607 21
27942 22
- ------------------------------------------------------------------------------------------------------------------------------------
26334 23
28027 24
26863 25
27355 26
26597 27
- ------------------------------------------------------------------------------------------------------------------------------------
26569 28
27018 29 Loan #26511 Yes 1.55xDSCR; 65% LTV; 110% defeasance or sale only
26779 30
310851270 31
18079 32
- ------------------------------------------------------------------------------------------------------------------------------------
27638 33
9905484 34
27130 35
27708 36
310851529 37
- ------------------------------------------------------------------------------------------------------------------------------------
9904270 38
5250 39
26724 40 Loans #26725, #26722 Yes 110% Defeasance; 1.71x DSCR; 65%LTV
26136 41
26282 42
- ------------------------------------------------------------------------------------------------------------------------------------
310851505 43
27287 44
27945 45
27489 46
25138 47 Multiple Properties Yes
25138A Multiple Properties Yes 125%; 1.38xDSCR; 75%LTV
25138B Multiple Properties Yes 125%; 1.38xDSCR; 75%LTV
- ------------------------------------------------------------------------------------------------------------------------------------
17584 48
26722 49 Loans #26724, #26725 Yes 110% Defeasance; 1.71x DSCR; 65% LTV
26120 50
26985 51
27611 52
- ------------------------------------------------------------------------------------------------------------------------------------
310851522 53 Multiple Properties
310851522A Multiple Properties
310851522B Multiple Properties
310851522C Multiple Properties
- ------------------------------------------------------------------------------------------------------------------------------------
310851643 54
9904545 55
310851609 56
26989 57
9905478 58 Loan #9905472
- ------------------------------------------------------------------------------------------------------------------------------------
310851557 59
310851562 60
310851622 61
27292 62
9904417 63
- ------------------------------------------------------------------------------------------------------------------------------------
9905472 64 Loan #9905478
310900033 65
25413 66
25465 67
27937 68
- ------------------------------------------------------------------------------------------------------------------------------------
27005 69
310851641 70
27397 71
26766 72
26271 73
- ------------------------------------------------------------------------------------------------------------------------------------
26600 74
26709 75
310851432 76
310851547 77
310851612 78
- ------------------------------------------------------------------------------------------------------------------------------------
310851598 79
25895 80
26367 81
26734 82
27319 83
- ------------------------------------------------------------------------------------------------------------------------------------
310851571 84
310900012 85
310851414 86
310851482 87
26553 88
- ------------------------------------------------------------------------------------------------------------------------------------
310851633 89
26494 90
27654 91
9905404 92
310851495 93
- ------------------------------------------------------------------------------------------------------------------------------------
310851627 94
310851644 95
27379 96
310851549 97
310851448 98
- ------------------------------------------------------------------------------------------------------------------------------------
25466 99
25473 100
310900021 101
9905501 102
26528 103
- ------------------------------------------------------------------------------------------------------------------------------------
25454 104
310851521 105
310851632 106
310851489 107
9905467 108
- ------------------------------------------------------------------------------------------------------------------------------------
9905468 109
9905451 110 Multiple Properties and Loans #9905453 Yes
9905451A Multiple Properties and Loans #9905453 Yes 125% Defeasance; 1.30 DSCR; 75% LTV
9905451B Multiple Properties and Loans #9905453 Yes 125% Defeasance; 1.30 DSCR; 75% LTV
- ------------------------------------------------------------------------------------------------------------------------------------
27165 111
310851588 112
310851634 113
9904923 114
27064 115
- ------------------------------------------------------------------------------------------------------------------------------------
310851541 116
310851614 117
26725 118 Loans #26722, #26724 Yes 110% Defeasance. 1.71x DSCR, 65%LTV
25773 119
310851616 120
- ------------------------------------------------------------------------------------------------------------------------------------
27936 121
26023 122
310851631 123
25339 124
27780 125
- ------------------------------------------------------------------------------------------------------------------------------------
9905453 126 Loans #9905451, #9905454
310851533 127
310851640 128
27108 129
310851496 130
- ------------------------------------------------------------------------------------------------------------------------------------
310851576 131
310900031 132
310900036 133
310851621 134
9904324 135
- ------------------------------------------------------------------------------------------------------------------------------------
25309 136
26909 137
310851546 138
310851572 139
9905053 140 Multiple Properties Yes
9905053A Multiple Properties Yes 125% Defeasance; 2.0 DSCR; 60% LTV
9905053B Multiple Properties Yes 125% Defeasance; 2.0 DSCR; 60% LTV
9905053C Multiple Properties Yes 125% Defeasance; 2.0 DSCR; 60% LTV
- ------------------------------------------------------------------------------------------------------------------------------------
310851596 141
310851604 142
310851517 143
310851527 144
26981 145
- ------------------------------------------------------------------------------------------------------------------------------------
26832 146
9904785 147
310851587 148
310851611 149
310851613 150
- ------------------------------------------------------------------------------------------------------------------------------------
310851490 151 Multiple Properties
310851490A Multiple Properties
310851490B Multiple Properties
25540 152
- ------------------------------------------------------------------------------------------------------------------------------------
310900030 153
310851608 154
310851497 155
310851558 156
310851575 157
- ------------------------------------------------------------------------------------------------------------------------------------
310900006 158
310900018 159
310900022 160
310900037 161
310851601 162
- ------------------------------------------------------------------------------------------------------------------------------------
310851568 163
310900029 164
310900035 165
26567 166
9904982 167
- ------------------------------------------------------------------------------------------------------------------------------------
25840 168
310851646 169
310851625 170
310851257 171
310851321 172
- ------------------------------------------------------------------------------------------------------------------------------------
9905494 173
310851600 174
310851544 175
26302 176
310851583 177
- ------------------------------------------------------------------------------------------------------------------------------------
310851599 178
310851626 179
9905485 180
310900002 181
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX INSURANCE REPLACEMENT
LOAN NUMBER COUNT ESCROW ESCROW ESCROW SPRINGING ESCROW DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
310900043 1 Yes Yes No TI/LC, Replacement Reserves
310900024 2 Yes No Yes
310851624 3 Yes No Yes
310851624A Yes No Yes
310851624B Yes No Yes
310851624C Yes No Yes
310851624D Yes No Yes
310851624E Yes No Yes
310851624F Yes No Yes
310851624G Yes No Yes
310851624H Yes No Yes
310851624I Yes No Yes
310851624J Yes No Yes
310851624K Yes No Yes
310851624L Yes No Yes
310851624M Yes No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
9905426 4 YES NO YES REPLACEMENT RESERVES
26287 5 No No No
26287A No No No Tax, Insurance, Replacement Reserves
26287B No No No Tax, Insurance, Replacement Reserves
26287C No No No Tax, Insurance, Replacement Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
27657 6 YES YES YES
310900004 7 Yes Yes Yes
310900032 8 Yes No Yes TI/LC
9905921 9 No No No TI/LC
310900041 10 Yes No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
310900020 11 Yes No Yes
310900020A Yes No Yes
310900020B Yes No Yes
310900020C Yes No Yes
310900020D Yes No Yes
310900020E Yes No Yes
310900020F Yes No Yes
310900020G Yes No Yes
310900020H Yes No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
26660 12 YES YES YES
26660A Yes Yes Yes Tax, Insurance
26660B Yes Yes Yes Tax, Insurance
26660C Yes Yes No Tax, Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
26511 13 YES YES YES
25503 14 Yes Yes Yes
27112 15 Yes Yes Yes
27874 16 Yes Yes Yes
310900011 17 Yes No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
27931 18 Yes Yes No Replacement Reserves
9905475 19 No No Yes
9904248 20 Yes No Yes TI/LC
310851607 21 Yes Yes No
27942 22 Yes Yes No Replacement Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
26334 23 Yes Yes Yes
28027 24 Yes Yes Yes
26863 25 Yes Yes No Replacement Reserves
27355 26 Yes Yes Yes
26597 27 Yes Yes No Replacement Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
26569 28 No No Yes Tax, Insurance
27018 29 Yes Yes Yes
26779 30 Yes Yes Yes Tax, Insurance
310851270 31 Yes No No
18079 32 Yes No No Insurance, Replacement Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
27638 33 No No No Tax, Insurance, Replacement Reserves
9905484 34 Yes Yes Yes
27130 35 Yes Yes Yes
27708 36 No No No Tax, Insurance, Replacement Reserves
310851529 37 No No No
- ------------------------------------------------------------------------------------------------------------------------------------
9904270 38 No No No
5250 39 Yes Yes Yes
26724 40 Yes Yes Yes
26136 41 Yes Yes Yes
26282 42 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
310851505 43 Yes No No
27287 44 Yes Yes Yes
27945 45 Yes Yes No
27489 46 Yes Yes Yes
25138 47 Yes Yes Yes
25138A Yes Yes Yes
25138B Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
17584 48 YES YES YES
26722 49 Yes Yes Yes
26120 50 Yes Yes Yes
26985 51 Yes Yes Yes
27611 52 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
310851522 53 Yes Yes No
310851522A Yes Yes No
310851522B Yes Yes No
310851522C Yes Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
310851643 54 YES YES YES
9904545 55 Yes Yes Yes
310851609 56 Yes Yes Yes
26989 57 Yes Yes Yes
9905478 58 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
310851557 59 Yes Yes No
310851562 60 Yes No No
310851622 61 Yes No Yes
27292 62 Yes Yes Yes Replacement Reserves
9904417 63 No No No
- ------------------------------------------------------------------------------------------------------------------------------------
9905472 64 Yes Yes Yes
310900033 65 Yes Yes Yes
25413 66 Yes Yes Yes
25465 67 Yes Yes Yes
27937 68 Yes No Yes Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
27005 69 Yes Yes Yes
310851641 70 Yes Yes Yes
27397 71 Yes No Yes Insurance
26766 72 Yes Yes Yes
26271 73 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
26600 74 Yes Yes Yes
26709 75 Yes Yes Yes
310851432 76 Yes Yes Yes
310851547 77 No No Yes
310851612 78 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
310851598 79 Yes No No
25895 80 Yes Yes Yes
26367 81 Yes Yes Yes
26734 82 Yes Yes No Replacement Reserves
27319 83 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
310851571 84 Yes Yes No
310900012 85 Yes No No
310851414 86 Yes Yes Yes
310851482 87 Yes No Yes
26553 88 No No No Tax, Insurance, Replacement Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
310851633 89 Yes No Yes
26494 90 Yes Yes Yes
27654 91 Yes No Yes Insurance
9905404 92 No No Yes
310851495 93 No No No
- ------------------------------------------------------------------------------------------------------------------------------------
310851627 94 Yes Yes No
310851644 95 No No No Tax, Insurance
27379 96 Yes No Yes Insurance
310851549 97 Yes No Yes
310851448 98 Yes Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
25466 99 Yes Yes Yes
25473 100 Yes Yes Yes
310900021 101 Yes Yes Yes
9905501 102 Yes No No
26528 103 No No No Tax, Insurance, Replacement Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
25454 104 Yes Yes Yes
310851521 105 No No No
310851632 106 Yes No Yes
310851489 107 Yes No No
9905467 108 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
9905468 109 Yes Yes Yes
9905451 110 Yes Yes Yes
9905451A Yes Yes Yes
9905451B Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
27165 111 YES YES YES
310851588 112 Yes No No
310851634 113 No No No Tax, Insurance
9904923 114 Yes No No
27064 115 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
310851541 116 Yes Yes Yes
310851614 117 Yes No Yes
26725 118 Yes Yes Yes
25773 119 Yes Yes Yes
310851616 120 Yes No No
- ------------------------------------------------------------------------------------------------------------------------------------
27936 121 Yes Yes Yes
26023 122 Yes Yes Yes
310851631 123 Yes Yes Yes
25339 124 Yes No Yes Insurance
27780 125 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
9905453 126 Yes Yes Yes
310851533 127 No No No Tax, Insurance
310851640 128 Yes Yes Yes
27108 129 Yes Yes No Replacement Reserves
310851496 130 Yes Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
310851576 131 Yes Yes No
310900031 132 No No No
310900036 133 Yes Yes No
310851621 134 Yes Yes Yes
9904324 135 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
25309 136 Yes Yes Yes
26909 137 Yes No Yes Insurance
310851546 138 Yes Yes No
310851572 139 No No No
9905053 140 Yes No No
9905053A Yes No No
9905053B Yes No No
9905053C Yes No No
- ------------------------------------------------------------------------------------------------------------------------------------
310851596 141 YES YES NO
310851604 142 No No No
310851517 143 Yes Yes No TI/LC
310851527 144 Yes Yes No
26981 145 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
26832 146 Yes Yes Yes
9904785 147 Yes No Yes TI/LC
310851587 148 Yes Yes No
310851611 149 Yes Yes No
310851613 150 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
310851490 151 Yes No Yes
310851490A Yes No Yes
310851490B Yes No Yes
25540 152 YES YES YES
- ------------------------------------------------------------------------------------------------------------------------------------
310900030 153 Yes Yes Yes
310851608 154 Yes No No
310851497 155 No No No
310851558 156 Yes Yes No
310851575 157 Yes Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
310900006 158 Yes Yes No
310900018 159 No No No Tax, Insurance
310900022 160 Yes No No
310900037 161 Yes Yes No
310851601 162 Yes No No
- ------------------------------------------------------------------------------------------------------------------------------------
310851568 163 Yes Yes Yes
310900029 164 Yes Yes Yes
310900035 165 Yes No No
26567 166 Yes Yes Yes
9904982 167 Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
25840 168 No No No Tax, Insurance, Replacement Reserves
310851646 169 No No No Tax, Insurance
310851625 170 Yes Yes No
310851257 171 Yes No No
310851321 172 Yes Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
9905494 173 Yes Yes Yes
310851600 174 Yes No No
310851544 175 Yes Yes Yes
26302 176 Yes Yes No Replacement Reserves
310851583 177 Yes Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
310851599 178 Yes No No
310851626 179 Yes Yes No
9905485 180 Yes Yes Yes
310900002 181 Yes Yes No
====================================================================================================================================
</TABLE>
(a) 1999/T-12 Net Operating Income may reflect the property's historical
operating performance over the most recent 12 month period for which
operating statements are available. 1998 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 1998.
(b) In certain limited cases, the Annual Replacement Reserve per Square Foot
or Unit may represent a single initial deposit made by the borrower at
the closing of the related mortgage loan.
Note: As used above, "WFBNA" represents Wells Fargo Bank, National Association;
"BSFI" represents Bear Stearns Funding, Inc.; "MSMC" represents Morgan
Stanley Mortgage Capital Inc.
Note: In the case of Loan #25138, the related mortgage loan balance was subject
to a one time curtailment of approximately $350,000 following
origination. As a result, the balance of this mortgage loan as of the
Cut-Off Date is lower than it would have been had such curtailment not
been applied.
Note: In the case of Loan #25413, the interest rate under the related mortgage
note was subject to a one time reduction following origination. As a
result, for analytical purposes, it may be difficult to derive the actual
Cut-Off date balance (detailed herein) using the actual applicable loan
terms.
<PAGE>
ANNEX B
LOAN NO. 310900043 -- 650 TOWNSEND CENTER
OVERVIEW
This mortgage loan is secured by a first mortgage on the borrower's fee
interest in a 612,848 square foot office building located in San Francisco,
California. The loan was originated by Wells Fargo Bank, National Association
on January 13, 2000.
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $58,500,000 PROPERTY TYPE: Urban Office
GROSS MORTGAGE RATE: 7.8500% LOCATION: San Francisco,
California
INTEREST ACCRUAL METHOD: Actual/360 YEAR BUILT/RENOVATED: 1998
FIRST PAYMENT DATE: 3/1/2000 SQUARE FEET 612,848
MATURITY DATE: 2/1/2010 CUT-OFF DATE BALANCE/SQ.FT. 95.46
ORIGINAL AMORTIZATION: 360
ANNUAL DEBT SERVICE: $5,077,811 OCCUPANCY: 98.2%
LOCKOUT END DATE: 11/30/2009 OCCUPANCY DATE 10/13/1999
CALL PROTECTION Defeasance
CALL PROTECTION END DATE: 11/30/2009 APPRAISED VALUE: $123,000,000
ESCROWS CUT-OFF DATE LTV: 47.6%
REAL ESTATE TAXES: Yes BALLOON LTV: 43.8%
INSURANCE: Yes
REPLACEMENT RESERVES: Springing UNDERWRITTEN CASH FLOW: $8,887,940
DSCR: 1.75x
</TABLE>
THE PROPERTY
The property is a six-story office building located at the corner of
Townsend and 8th Street in the South of Market (SOMA)/Multimedia Gulch office
district. The SOMA/Multimedia Gulch office district contains many high-tech and
Internet related companies and a variety of other technology firms. The
building was constructed in 1989 and substantially renovated in 1998. The
building is the 10th largest office building in San Francisco and offers one of
the largest floor plates in that market. Major tenants at the property include
Sega (155,699 square feet) under a lease expiring December 2009, Ziff-Davis
(139,947 square feet) under a lease expiring September 2005, Macromedia (74,140
square feet) under a lease expiring December 2004 and Linuxcare (41,769 square
feet) under a lease expiring January 2005.
THE BORROWER
The borrower is Zoro LLC, a California limited liability company, with
Bernard Osher, Irving Rabin and Martin Zankel as managers and principals of
members of the borrower, Realstein, Inc., a California corporation, as a
member, and Robert Friend as a principal of a member of the borrower. The
borrower and Realstein, Inc. are single purpose entities whose organizational
documents do not permit them to engage in any business unrelated to the
mortgaged property, nor have any assets other than the mortgaged property or
any indebtedness (subject to limited exceptions such as trade payables incurred
in the ordinary course of business) other than the mortgage loan. Additionally,
Realstein, Inc.'s organizational documents require an independent director and
the unanimous vote of directors of Realstein, Inc. in connection with the
filing of a petition of bankruptcy relating to the borrower or Realstein, Inc.
The lender received an opinion from borrower's counsel that, among other
things, the assets of the borrower would 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 that party.
MANAGEMENT
The property is managed by Kennedy-Wilson Properties, Inc. which is
unaffiliated with the borrower.
B-1
<PAGE>
ESCROWS
The loan documents require the borrower to fund monthly escrow deposits in
amounts sufficient to pay real estate taxes and insurance premiums when due. If
the borrower fails to maintain the property in accordance with the loan
documents, the loan documents require borrower to fund an escrow to provide for
future capital expenditures. In addition, if certain tenants notify the
borrower of their intent not to exercise their renewal option, the borrower is
required to obtain a letter of credit for the benefit of the lender or deposit
cash with the lender in an amount equal to $22.50 per square foot of vacated
property to cover the rollover costs of that tenant.
ADDITIONAL DEBT/TRANSFERS
The loan documents provide that the mortgage loan will become immediately
due and payable upon (i) any transfer of the borrower's interest in the
property or, except as described below, any transfer of an interest in the
borrower or (ii) any additional encumbrance of the property, in each case
without the prior written consent of the lender. The loan documents permit
transfers of interests in the borrower provided that certain conditions are
satisfied, including among other conditions, that certain principals continue
to own at least 50% of their original ownership interest in the borrower, at
least one of those principals continues to control the management of the
borrower and the lender receives confirmation from DCR and Fitch that the
transfer would not result in a downgrade, qualification (if applicable) or
withdrawal of the then current ratings assigned to any class of certificates.
See Loan No. 310900043 in the mortgage loan schedule.
B-2
<PAGE>
LOAN NO. 310900024 FIRST UNION CAPITOL CENTER
OVERVIEW
This mortgage loan is secured by a first mortgage on the borrower's fee
interest in a 544,482 square foot high-rise office building located in Raleigh,
North Carolina. The loan was originated by Wells Fargo Bank, National
Association on September 27, 1999.
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $47,000,000 PROPERTY TYPE: Urban Office
GROSS MORTGAGE RATE: 7.6960% LOCATION: Raleigh, NC
INTEREST ACCRUAL METHOD: Actual/360 YEAR BUILT/RENOVATED: 1991
FIRST PAYMENT DATE: 11/1/1999 SQUARE FEET 544,482
MATURITY DATE: 10/1/2004 CUT-OFF DATE BALANCE/SQ.FT. $86.32
ORIGINAL AMORTIZATION: 360
ANNUAL DEBT SERVICE: $4,019,539 OCCUPANCY: 92.0%
LOCKOUT END DATE: 7/31/2004 OCCUPANCY DATE: 9/20/1999
CALL PROTECTION Defeasance
CALL PROTECTION END DATE: 7/31/2004 APPRAISED VALUE: $79,300,000
ESCROWS CUT-OFF DATE LTV: 59.3%
REAL ESTATE TAXES: Yes BALLOON LTV: 58.3%
INSURANCE: No
REPLACEMENT RESERVES: Yes UNDERWRITTEN CASH FLOW: $6,467,686
DSCR: 1.61x
</TABLE>
THE PROPERTY
The property is a 29-story office building located at the 150 Fayetteville
Street Mall in downtown Raleigh, North Carolina. The Fayetteville Street Mall
contains a pedestrian walkway and is buttressed by the State Capitol Building
and the Raleigh Convention Center with the Wake County Courthouse in between.
The First Union Capitol Center offers some of the largest floor plates in the
market. Major tenants include First Union National Bank (157,469 square feet)
under leases expiring between June 2002 and June 2024; Smith, Anderson, Blount,
Dorsett, Mitchell & Jernigan, L.L.P. (55,698 square feet) under a lease
expiring September 2011; and Womble Carlyle Sandridge & Rice, PLLC (34,754
square feet) under a lease expiring April 2003. Smith, Anderson, Blount,
Dorsett, Mitchell & Jernigan, L.L.P. is permitted to terminate its lease upon
180 days notice if the tenant dissolves or ceases to operate as a law firm.
Upon any such termination, the tenant is obligated to pay one year of rent and
unamortized tenant improvements in excess of $15 per square foot.
THE BORROWER
The borrower is Capitol Center Acquisition LLC, a Delaware limited
liability company, with G&I II Investment Capitol Center LLC as the managing
member and DRA Growth and Income Fund II, LLC as the non-managing member. The
managing member of G&I II Investment Capitol Center LLC is G&I II Investment
Capitol Center Corp. Both the borrower and its managing member are single
purpose entities whose organizational documents do not permit them to engage in
any business unrelated to the mortgaged property, nor have any assets other
than the mortgaged property or ownership interest in the borrower, as the case
may be, or any indebtedness (subject to limited exceptions such as trade
payables incurred in the ordinary course of business) other than the mortgage
loan. Additionally, G&I II Investment Capitol Center Corp.'s organizational
documents require an independent director and the unanimous vote of its
directors in connection with the filing of a petition in bankruptcy relating to
the borrower, the borrower's managing member or G&I II Investment Capitol
Center Corp. The lender received an opinion from borrower's counsel that, among
other things, the assets of the borrower would not be consolidated with the
assets of any partner considered having a principal interest in the borrower in
the event of a bankruptcy or insolvency of that party.
B-3
<PAGE>
MANAGEMENT
The mortgaged property is managed by Spectrum Properties Management
Company, a North Carolina corporation, which is unaffiliated with the borrower.
ESCROWS
The loan documents require the borrower to fund the following monthly
escrow deposits: (a) an amount sufficient to pay real estate taxes when due;
(b) $14,323 for future capital expenditures; and (c) $60,644 to cover any
expenses associated with re-leasing the property in the future. In addition,
the borrower funded $500,000 at the closing of the loan to offset future
re-leasing expenses.
AMORTIZATION
The mortgage loan requires monthly payments of interest only for the first
three years after origination and thereafter amortizes on a 30 year schedule
until its maturity date on October 1, 2004 when all outstanding principal,
together with accrued and unpaid interest is due.
ADDITIONAL DEBT/TRANSFERS
The loan documents provide that the mortgage loan will become immediately
due and payable upon (i) any transfer of the borrower's interest in the
property or, except as described below, any transfer of an interest in the
borrower or (ii) any additional encumbrance of the property, in each case
without the prior written consent of the lender. The loan documents permit
transfers of interests in the borrower to affiliates of the borrower and
transfers up to an aggregate of 49% of the original ownership interests in the
borrower provided that certain conditions are satisfied, including among other
conditions, that the proposed transfer will not result in a change of control
or management of the borrower and the lender receives confirmation from DCR and
Fitch that the transfer would not result in a downgrade, qualification (if
applicable) or withdrawal of the then current ratings assigned to any class of
certificates.
See Loan No. 310900024 in the mortgage loan schedule.
B-4
<PAGE>
LOAN NO. 310851624 PRIVATE MINI STORAGE
OVERVIEW
This mortgage loan is secured by thirteen first mortgages on the
borrower's fee interests in twelve self-storage facilities and one RV park. All
of the mortgages are cross-collateralized and cross-defaulted. Nine properties
are located in Texas and the remaining four are located in Florida. The twelve
self-storage facilities include 8,088 units totaling 942,166 square feet,
excluding outside parking and carport space which accounts for an additional
191,125 square feet. The RV park includes 115 pads. The mortgage loan was
originated by Wells Fargo Bank, National Association on August 24, 1999. The
information in the box immediately below is presented on a combined basis for
all 13 properties.
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $44,648,233 PROPERTY TYPE: Self-Storage
GROSS MORTGAGE RATE: 8.1700% LOCATION: Various, TX/FL
INTEREST ACCRUAL METHOD: Actual/360 YEAR BUILT/RENOVATED: See below
FIRST PAYMENT DATE: 10/1/1999 NO. OF UNITS 8,088
MATURITY DATE: 9/1/2009 CUT-OFF DATE BALANCE/UNIT $5,520.31
ORIGINAL AMORTIZATION: 300
ANNUAL DEBT SERVICE: $4,214,706 W/A OCCUPANCY: 86.4%
LOCKOUT END DATE: 6/30/2009
CALL PROTECTION Defeasance
CALL PROTECTION END DATE: 6/30/2009 APPRAISED VALUE: $61,530,000
ESCROWS CUT-OFF DATE LTV: 72.6%
REAL ESTATE TAXES: Yes BALLOON LTV: 60.4%
INSURANCE: No
REPLACEMENT RESERVES: Yes UNDERWRITTEN CASH FLOW: $5,981,276
DSCR: 1.42x
</TABLE>
B-5
<PAGE>
THE PROPERTIES
<TABLE>
<CAPTION>
NUMBER SQUARE
LOAN NO. PROPERTY NAME LOCATION PROPERTY TYPE OF UNITS FEET
<S> <C> <C> <C> <C> <C>
310851624A Private Mini Storage La Marque, TX Self-Storage 589 87,600
La Marque
310851624B Private Mini Storage Houston, TX Self-Storage 676 67,502
Katy
310851624C Private Mini Storage League City, TX Self-Storage 1,017 145,374
League City
310851624D Private Mini Storage Oldsmar, FL Self-Storage 571 68,383
Eastlake
310851624E Private Mini Storage Tampa, FL Self-Storage 666 60,952
Florida Avenue
310851624F Private Mini Storage Houston, TX Self-Storage 583 67,317
Cutten
310851624G Private Mini Storage Houston, TX Self-Storage 718 92,461
Fountainview
310851624H Private Mini Storage Webster, TX Self-Storage 641 69,352
Clearlake
310851624I Private Mini Storage Houston, TX Self-Storage 542 53,587
Voss
310851624J Private Mini Storage Palm Harbor, FL Self-Storage 651 62,952
Palm Harbor
310851624K Private Mini Storage Jacksonville, FL Self-Storage 539 63,537
Jacksonville
310851624L Private Mini Storage Houston, TX Self-Storage 780 103,149
Westbelt
310851624M Private Mini Storage Houston, TX RV Park 115 N/A
Westbelt RV
Total 8,088 942,166
</TABLE>
Private Mini Storage -- La Marque consists of seven single-story warehouse
storage buildings and one single-story office/manager's residence situated on
two parcels of land comprising 9.1 acres. The improvements were developed in
1989 and include 589 self-storage units and 102 outside parking/carport spaces,
58 of which are covered. The storage buildings contain 278 climate-controlled
units, 223 non climate-controlled units, 7 office/warehouse units, 57 indoor
boat storage units and 24 indoor RV storage units. The property was 77.3%
occupied as of September 30, 1999.
Private Mini Storage -- Katy consists of three two-story warehouse storage
buildings and one rental office/manager's residence situated on 2.1 acres. The
improvements were developed in 1989 and include 676 self-storage units; 407 of
the storage units are climate-controlled. The property was 96.0% occupied as of
September 30, 1999.
Private Mini Storage -- League City consists of nine single-story
warehouse storage buildings and one RV park office situated on three parcels of
land comprising 20.1 acres. The improvements were developed in 1992 and include
766 self-storage units and 251 outside parking/carport spaces. The storage
buildings include 273 climate-controlled units, 305 non-climate-controlled
units, 18 office/warehouse units, 115 indoor boat storage units and 55 indoor
RV storage units. The property was 78.4% occupied as of September 30, 1999.
Private Mini Storage -- Eastlake consists of seven single-story
self-storage buildings, a single-story office/apartment building and 17
enclosed RV/boat storage spaces situated on 4.8 acres. The
B-6
<PAGE>
improvements were developed in 1991 and include 571 self-storage units; 249 of
the storage units are climate-controlled. The property was 88.8% occupied as of
September 30, 1999.
Private Mini Storage -- Florida Avenue consists of one single-story
storage building, one three-story storage building and one two-story rental
office/manager's residence situated on 2.0 acres. The improvements were
developed in 1990 and include 666 self-storage units; 401 of the storage units
are climate-controlled. The property was 76.8% occupied as of September 30,
1999.
Private Mini Storage -- Cutten consists of three two-story
climate-controlled self-storage buildings, a single-story rental
office/manager's residence and two RV/boat storage buildings situated on 3.0
acres. The improvements were developed in 1992 and include 332
climate-controlled units, 219 non-climate-controlled units, 8 office/warehouse
units and 24 RV/boat storage units. The property was 91.3% occupied as of
September 30, 1999.
Private Mini Storage -- Fountainview consists of one two-story
self-storage building, four single-story ministorage warehouse buildings, three
RV/boat storage buildings and a single-story office/manager's residence
situated on 4.8 acres. The improvements were developed in 1992 and include 270
climate-controlled units, 428 non-climate-controlled units and 20 outside
parking/carport spaces. The property was 83.8% occupied as of September 30,
1999.
Private Mini Storage -- Clearlake consists of five single-story and one
two-story self-storage buildings, eight outside RV/boat storage spaces and a
property manager's apartment situated on 3.5 acres. The improvements were
developed in 1990 and include 641 storage units, of which 359 are
climate-controlled. The property was 86.5% occupied as of September 30, 1999.
Private Mini Storage -- Voss consists of two two or three-story
self-storage buildings and a single-story office/manager's residence building
situated on 1.5 acres. The improvements were developed in 1989 and include 542
units, of which 436 are climate-controlled. The property was 90.5% occupied as
of June 30, 1999.
Private Mini Storage -- Palm Harbor consists of one single-story storage
building, one two-story storage building, one three-story storage building and
a single-story office/manager's residence building situated on 2.2 acres. The
improvements were developed in 1991 and include 651 storage units, of which 432
are climate-controlled. The property was 92.3% occupied as of September 30,
1999.
Private Mini Storage -- Jacksonville consists of six one or two-story
storage buildings, an office building and two covered parking structures
situated on 5.2 acres. The improvements were developed in 1991 and include 260
climate-controlled storage units, 265 non-climate-controlled units and 32
covered parking spaces. The property was 84.1% occupied as of September 30,
1999.
Private Mini Storage -- Westbelt consists of four single-story storage
buildings, one two-story storage building, four RV/boat storage buildings and
one rental office/manager's residence situated on 7.8 acres. The improvements
were developed in 1992 with 646 self-storage units including 302
climate-controlled units, 15 office units, 85 RV/boat storage units, and 244
non-climate-controlled units. Additionally, there are 134 outdoor RV/boat
storage spaces, of which 96 are covered. The property was 84.5% leased as of
September 30, 1999.
Private Mini Storage -- Westbelt RV is a 115-pad recreational vehicle park
known as an All-Star RV Resort situated on 8 acres. The property was developed
in 1992 with an additional 25 pads added in 1999. Each pad site is equipped
with electrical, water, phone, cable television and sewer hookups for overnight
camping. There are also two single-story buildings containing
office/laundry/bathroom facilities, and clubhouse/exercise/bathroom facilities.
The property was 94.3% leased as of March 31, 1999.
THE BORROWER
The borrower is PM Partners L.P., a Texas limited partnership that is
99.5% owned by Private Mini Storage Realty L.P., as sole limited partner, and
0.5% owned by Mini Partners, Inc., the sole general partner. The borrower is
partially and indirectly owned by U-Haul International and its parent
B-7
<PAGE>
Amerco. The borrower is a single purpose entity whose organizational documents
do not permit it to engage in any business unrelated to the mortgaged
properties, nor have any assets other than the mortgaged properties or any
indebtedness (subject to limited exceptions such as trade payables incurred in
the ordinary course of business) other than the mortgage loan. Additionally,
the borrower's organizational documents require an independent director and the
unanimous vote of directors of the general partner and 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 would 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 that party.
MANAGEMENT
The mortgaged properties are managed by Private Mini Storage Inc., an
affiliate of the borrower.
ESCROWS
The loan documents require the borrower to fund monthly escrow deposits in
amounts sufficient to pay real estate taxes when due. In addition, the loan
documents require the borrower to fund escrow deposits for future capital
expenditures.
ADDITIONAL DEBT/TRANSFERS
The loan documents provide that the mortgage loan will become immediately
due and payable upon (i) any transfer of the borrower's interest in the
property or any transfer of an interest in the borrower or (ii) any additional
encumbrance of the property, in each case without the prior written consent of
the lender.
See Loan No. 310851624 in the mortgage loan schedule.
B-8
<PAGE>
LOAN NO. 9905426 -- HOLIDAY INN -- MISSION BAY
OVERVIEW
This mortgage loan is secured by a first mortgage on the borrower's fee
and leasehold interest in a hotel located in San Diego, California. The loan
was originated on June 26, 1998 and acquired by Morgan Stanley Mortgage Capital
Inc. in June 1999.
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $21,633,104 PROPERTY TYPE: Full Service,
Hospitality
GROSS MORTGAGE RATE: 7.4000% LOCATION: San Diego, CA
INTEREST ACCRUAL METHOD: Actual/360 YEAR BUILT/RENOVATED: 1997
FIRST PAYMENT DATE: 8/1/1998 UNITS: 316
MATURITY DATE: 7/1/2008 CUT-OFF DATE BALANCE/UNIT: $68,459.19
ORIGINAL AMORTIZATION: 300 OCCUPANCY: 78.7%
ANNUAL DEBT SERVICE: $1,942,587 OCCUPANCY DATE: 7/31/1999
LOCKOUT END DATE: 3/31/2008 APPRAISED VALUE: $35,000,000
CALL PROTECTION: Defeasance CUT-OFF DATE LTV: 61.8%
CALL PROTECTION END DATE: 3/31/2008 BALLOON LTV: 51.2%
ESCROWS UNDERWRITTEN CASH FLOW: $3,305,962
REAL ESTATE TAXES: Yes DSCR: 1.70x
INSURANCE: No
REPLACEMENT RESERVES: Yes
</TABLE>
THE PROPERTY
The property is a 316 room Holiday Inn hotel consisting of eight wood
frame and stucco buildings. The property features a 6,498 square foot full
service restaurant in a free standing building, currently leased to Bakers
Square. In addition, the property has a meeting room and a pool/spa. The
property is located near the San Diego Convention Center, Sea World, the San
Diego Sports Arena, Balboa Park, the San Diego Zoo, and Old Town San Diego.
The property was constructed in two phases (1982 and 1987). The borrower
purchased the property in phases between 1995 and 1997, and, during these two
years, performed an extensive property renovation. The renovation included the
conversion of 192 rooms into suites. This work included the addition of new
insulation, bathroom fixtures, flooring, furniture, and case goods. The
exterior was restuccoed, repainted, and re-roofed.
The property is divided into eight parcels, of which one approximately
0.60-acre parcel is encumbered by an unsubordinated ground lease expiring on
March 15, 2035. 42 of the property's 316 rooms are located on that parcel. The
fee owner includes MTB, LLC, the borrower (50%), and Palmer Hughes,
unaffiliated to the borrower (50%), as tenants in common. The ground lessee
("Lease 1") is Midway Group, which pays current annual ground rent of $69,194.
Midway Group subleases the parcel to Sarika Group ("Lease 2"), an entity
related to the borrower, for current annual ground rent of $181,187. Sarika
Group sub-subleases the parcel to MTB, LLC ("Lease 3") for a current annual
ground rent of $204,096, with a CPI-based increase every three years. Lease 1
provides notice to the lender of default, but does not provide the lender an
opportunity to cure any default thereunder; however, a 50% interest in the fee
estate of the 0.60-acre parcel is security for this loan. Additionally, Lease 2
and Lease 3 each provide the lender with notice of default, an opportunity to
cure and the right to a new lease on the same terms.
THE BORROWER
The borrower is MTB, LLC, a California limited liability company with MTB
Management LLC as its manager. The members of the borrower are B.U. Patel and
his son, Mayur Patel. The borrower is a single purpose entity whose
organizational documents do not permit it to engage in any business
B-9
<PAGE>
unrelated to the mortgaged property, nor have any assets other than the
mortgaged property or any indebtedness (subject to limited exceptions such as
trade payables incurred in the ordinary course of business) other than the
mortgage loan. The lender received an opinion from borrower's counsel that,
among other things, the assets of the borrower would not be consolidated with
the assets of any other affiliate (including Sarika Corporation, B.U. Patel or
Mayur Patel) in the event of a bankruptcy or insolvency of those parties.
MANAGEMENT
The property is managed by Tarsadia Hotels, a California corporation,
which is affiliated with the borrower.
ESCROWS
The loan documents require the borrower to fund monthly escrow deposits in
amounts sufficient to pay real estate taxes when due.
The borrower deposited $312,000 in a FF&E escrow at closing. The loan
documents require the borrower to make $26,000 monthly contributions to the
FF&E escrow if the balance falls below $312,000.
The lender also holds a $50,000 (original balance) interest accruing
escrow to ensure monthly equipment lease payments of $22,735.07. There are six
separate leases, five of which will be paid in full during 2000, and one of
which extends thorough July 2001.
ADDITIONAL DEBT/TRANSFERS
The loan documents provide that the mortgage loan will become immediately
due and payable upon (i) any transfer of the borrower's interest in the
property or any transfer of an interest in the borrower or (ii) any additional
encumbrance of the property, in each case without the prior written consent of
the lender, except as described below.
The loan documents permit equipment lease financing for certain items used
on the premises, including the telephone system, furniture, televisions,
carpeting, wallcovering, artwork and millwork. The last equipment lease is
scheduled to be paid off in July 2001.
Certain sponsor related transfers, as specified in the loan documents, are
permitted without payment of any transfer fee.
The mortgage loan documents also permit the borrower the right to two
transfers of the mortgaged property upon payment of a transfer fee equal to 1%
of the outstanding principal balance of the mortgage loan and compliance with
other conditions specified in the loan documents.
See Loan No. 9905426 in the mortgage loan schedule.
B-10
<PAGE>
LOAN NO. 26287 -- ENTERTAINMENT PROPERTIES TRUST
OVERVIEW
This mortgage loan consists of 3 properties, each of which is secured by a
first mortgage on the borrower's fee or leasehold interest in a megaplex
theater situated in North Carolina, Idaho or Florida. The mortgages are
cross-defaulted and cross-collateralized. The mortgage loan was originated by
Bear, Stearns Funding, Inc. on January 11, 2000. The information in the box
immediately below is presented on a combined basis.
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $20,175,000 PROPERTY TYPE: Retail-Theatre
GROSS MORTGAGE RATE: 8.1800% LOCATION: Various,
NC/ID/FL
INTEREST ACCRUAL METHOD: Actual/360 YEAR BUILT/RENOVATED: 1997,1998
FIRST PAYMENT DATE: 3/1/2000 SQUARE FEET 265,750
MATURITY DATE: 2/1/2005 CUT-OFF DATE BALANCE/SQ.FT. $75.92
ORIGINAL AMORTIZATION: 300
ANNUAL DEBT SERVICE: $1,897,527 OCCUPANCY: 100.0%
LOCKOUT END DATE: 1/31/2005 OCCUPANCY DATE: 12/24/1999
CALL PROTECTION: Defeasance
CALL PROTECTION END DATE: 1/31/2005 APPRAISED VALUE: $40,600,000
ESCROWS CUT-OFF DATE LTV: 49.7%
REAL ESTATE TAXES: Springing BALLOON LTV: 46.3%
INSURANCE: Springing
REPLACEMENT RESERVES: Springing UNDERWRITTEN CASH FLOW: $3,655,177
DSCR: 1.93x
</TABLE>
THE PROPERTIES
<TABLE>
<CAPTION>
LOAN NO. PROPERTY NAME LOCATION PROPERTY TYPE SQ. FT. SCREENS
- ---------- ------------------- ------------------- --------------- --------- --------
<S> <C> <C> <C> <C> <C>
26287A Raleigh Grand 16 Raleigh, NC Theater 51,450 16
26287B Boise Stadium 21 Boise, ID Theater 140,300 21
26287C Muvico Pompano 18 Pompano Beach, FL Theater 74,000 18
------- --
Total 265,750 55
======= ==
</TABLE>
Raleigh Grand 16 is a 51,450 square foot, 16-screen two-story megaplex
theater. The property, which was constructed in 1998, seats 2,596 and includes
stadium seating throughout. Raleigh Grand 16 is 100% leased to Raleigh 16, LLC
(whose obligations are guaranteed by Consolidated Theaters) under a lease
expiring May 2022.
Boise Stadium 21 is a 140,300 square foot, 21-screen two-story megaplex
theater. The property, which was constructed in late 1997, seats 4,734 and
includes stadium seating throughout. The theater is part of the Boise Spectrum
entertainment/retail complex. Boise Stadium 21 is 100% leased to Edwards
Theatres under a lease expiring December 2018. The property is secured by the
borrower's interest as a tenant under a ground lease that expires (including
options) on November 30, 2047.
Muvico Pompano 18 is a 74,000 square foot, 18-screen two-story megaplex
theater. The property, which was constructed in 1998, seats 3,484 and includes
stadium seating throughout. Muvico Pompano 18 is 100% leased to Muvico Theaters
under a lease expiring August 2019.
THE BORROWER
The borrower is 3 Theaters, Inc., a wholly owned subsidiary of
Entertainment Properties Trust, a Maryland real estate investment trust. The
borrower is a single purpose entity whose organizational
B-11
<PAGE>
documents do not permit it to engage in any business unrelated to the mortgaged
properties, nor have any assets other than the mortgaged properties or any
indebtedness (subject to limited exceptions such as trade payables incurred in
the ordinary course of business) other than the mortgage loan. Additionally,
the borrower's organizational documents require an independent director and the
unanimous vote of directors of the borrower in connection with the filing of a
petition in bankruptcy relating to the borrower. The lender received an opinion
from borrower's counsel that, among other things, the assets of the borrower
would not be consolidated with the assets of any party having a controlling
interest in the borrower in the event of a bankruptcy or insolvency of that
party.
MANAGEMENT
The properties are managed by the borrower.
ESCROWS
If the borrower fails to provide to the lender satisfactory evidence of
payment of real estate taxes and property insurance premiums (and in the case
of the Boise Stadium 21 property, ground rents) in accordance with the loan
documents, the loan documents require the borrower to fund escrows for those
items. If the properties are not maintained in accordance with the loan
documents, the loan documents require the borrower to fund an additional escrow
for future capital expenditures.
ADDITIONAL DEBT/TRANSFERS
The loan documents provide that the mortgage loan will become immediately
due and payable upon (i) any transfer of the borrower's interest in the
property or any transfer of more than 49% of the shares in the borrower or (ii)
any additional encumbrance of the property, in each case without the prior
written consent of the lender, except as described below.
The borrower has the right to transfer simultaneously all three properties
subject to the mortgages upon the payment of a 1% assumption fee, confirmation
from DCR and Fitch that the transfer would not result in a downgrade,
qualification (if applicable) or withdrawal of the then current ratings
assigned to any class of certificates and satisfaction of other conditions
specified in the loan documents.
See Loan No. 26287 in the mortgage loan schedule.
B-12
<PAGE>
LOAN NO. 27657 -- THE MERCER HOTEL
OVERVIEW
This mortgage loan is secured by a first mortgage on the borrower's fee
interest in a hotel located in New York, New York. The loan was originated by
Bear, Stearns Funding, Inc. on January 7, 2000.
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $20,000,000 PROPERTY TYPE: Boutique, Hospitality
GROSS MORTGAGE RATE: 8.5800% LOCATION: New York, NY
INTEREST ACCRUAL METHOD: Actual/360 YEAR BUILT/RENOVATED: 1997
FIRST PAYMENT DATE: 3/1/2000 NO. OF ROOMS 75
MATURITY DATE: 2/1/2010 CUT-OFF DATE BALANCE/ROOM: $ 266,666.67
ORIGINAL AMORTIZATION: 300
ANNUAL DEBT SERVICE: $1,945,501 OCCUPANCY: 88.0%
LOCKOUT END DATE: 10/31/2009 OCCUPANCY DATE: 9/30/1999
CALL PROTECTION Defeasance
CALL PROTECTION END
DATE: 10/31/2009 APPRAISED VALUE: $41,500,000
ESCROWS CUT-OFF DATE LTV: 48.2%
REAL ESTATE TAXES: Yes BALLOON LTV: 40.4%
INSURANCE: Yes
REPLACEMENT RESERVES: Yes UNDERWRITTEN CASH FLOW: $4,123,121
DSCR: 2.12x
</TABLE>
THE PROPERTY
The Mercer Hotel is a six-story Romanesque-style building originally
developed in 1888 as a commercial building and fully renovated and converted to
hotel use in 1994. The building was designated as an historical landmark by New
York City in 1973. The property is comprised of 75 guest rooms, ranging from
210 to 620 square feet. In addition, the property has retail space currently
occupied by two tenants, J. Crew and the Mercer Kitchen restaurant. The
property is situated in the SoHo section of lower Manhattan, at the northwest
corner of Prince and Mercer Streets. For the trailing twelve months ending
September 1999, the property operated at 88.0% occupancy at an average daily
rate of $423.28. The Mercer Hotel is not operated as a franchise of any
national hotel or motel chain or managed by any hotel or motel management
company.
THE BORROWER
The borrower is The Mercer I, LLC, a Delaware limited liability company,
with Mercer Management, LLC and BDL Prince, LLC as managing members. Mercer
Management, LLC is wholly owned by Andre Balazs and his wife, Katie Ford
Balazs; the ownership of BDL Prince is more widely distributed. The borrower is
a single purpose entity whose organizational documents do not permit it to
engage in any business unrelated to the mortgaged property, nor have any assets
other than the mortgaged property or any indebtedness (subject to limited
exceptions such as trade payables incurred in the ordinary course of business)
other than the mortgage loan. Additionally, the lender received an opinion from
borrower's counsel that, among other things, the assets of the borrower would
not be consolidated with the assets of any party having an ownership interest
in the borrower in the event of a bankruptcy or insolvency of that party.
MANAGEMENT
The hotel is managed by an individual, Klaus Ortlieb, who is affiliated
with the borrower.
ESCROWS
The loan documents require the borrower to fund monthly escrow deposits in
amounts sufficient to pay real estate taxes and property insurance premiums
when due. The loan documents also require
B-13
<PAGE>
the borrower to fund an escrow reserve for capital expenditure in an amount
equal to the lesser of (a) 5% of total hotel revenues or (b) $250,000 (but in
no event less than the amount required to be funded into the escrow account
during the first year after origination of the loan); provided that the unused
balance of that escrow reserve shall never be required to exceed $1,250,000.
ADDITIONAL DEBT/TRANSFERS
The loan documents provide that the mortgage loan will become immediately
due and payable upon (i) any transfer of the borrower's interest in the
property or any transfer of an interest in excess of 49% in the borrower or
(ii) any additional encumbrance of the property, in each case without the prior
written consent of the lender.
See Loan No. 27657 in the mortgage loan schedule.
B-14
<PAGE>
LOAN NO. 26511 -- SEATTLE DESIGN CENTER
OVERVIEW
This mortgage loan is secured by a first mortgage on the borrower's fee
interest in a design center facility located in Seattle, Washington. The
mortgage loan is cross-collateralized and cross-defaulted with Loan No. 27018
- -- Seattle Gift Center. On a combined basis, the overall debt service coverage
ratio is 1.69x and the overall loan to value ratio is 56.05%. The mortgage loan
was originated by Bear, Stearns Funding, Inc. on September 2, 1999. The
information in the box immediately below is presented for the Seattle Design
Center mortgage loan only.
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $13,748,376 PROPERTY TYPE: Urban Office
GROSS MORTGAGE RATE: 8.1700% LOCATION: Seattle, WA
INTEREST ACCRUAL METHOD: Actual/360 YEAR BUILT/RENOVATED: 1983
FIRST PAYMENT DATE: 11/1/1999 SQUARE FEET 362,438
MATURITY DATE: 10/1/2009 CUT-OFF DATE BALANCE/SQ.FT. $37.93
ORIGINAL AMORTIZATION: 360
ANNUAL DEBT SERVICE: $1,232,559 OCCUPANCY: 88.4%
LOCKOUT END DATE: 9/30/2009 OCCUPANCY DATE: 11/4/1999
CALL PROTECTION Defeasance
CALL PROTECTION END DATE: 9/30/2009 APPRAISED VALUE: $23,000,000
ESCROWS CUT-OFF DATE LTV: 59.8%
REAL ESTATE TAXES: Yes BALLOON LTV: 53.8%
INSURANCE: Yes
REPLACEMENT RESERVES: Yes UNDERWRITTEN CASH FLOW: $2,084,377
DSCR: 1.69x
</TABLE>
THE PROPERTY
The Seattle Design Center is comprised of 3 buildings which were
constructed between 1973 and 1983. The Seattle Design Center is a full service
design center which has over 60 showrooms that represent manufacturers of
residential and commercial furniture, fabrics, wall and floor coverings,
millwork and lighting. The major tenants at the center include Baker, Knapp &
Tubbs (18,223 square feet) under a lease expiring July 2009 and Michael Folks
Showroom (16,810 square feet) under a lease expiring November 2006.
THE BORROWER
The borrower is Bay West Design Center, LLC, a Delaware limited liability
company, with BW Seattle Corp., a Washington corporation, as the managing
member. Both the borrower and the managing member are single purpose entities
whose organizational documents do not permit them to engage in any business
unrelated to the mortgaged property (or the mortgaged property securing Loan
No. 27018 -- the Seattle Gift Center loan), nor have any assets other than the
mortgaged property or any indebtedness (subject to limited exceptions such as
trade payables incurred in the ordinary course of business) other than the
mortgage loan (or Loan No. 27018 -- the Seattle Gift Center loan). In addition,
the lender received an opinion from borrower's counsel that, among other
things, the assets of the borrower would 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 that party.
MANAGEMENT
The property is managed by Market Center Management, Inc. which is a
wholly owned affiliate of the borrower.
B-15
<PAGE>
ESCROWS
The loan documents require the borrower to fund monthly escrow deposits in
amounts sufficient to pay real estate taxes and insurance premiums when due.
The borrower is also required to escrow $4,541 monthly for future capital
expenditures. In addition, the borrower escrowed $344,375 at closing and is
required to escrow $25,143 monthly for expenses associated with lease rollover.
ADDITIONAL DEBT/TRANSFERS
The loan documents provide that the mortgage loan will become immediately
due and payable upon (i) any transfer of the borrower's interest in the
property or any transfer of a controlling interest in the borrower or (ii) any
additional encumbrance of the property, in each case without the prior written
consent of the lender, subject to the exceptions described below.
RIGHT TO TRANSFER AND UNCROSS
The loan documents permit the borrower and the immediate transferee of the
borrower a one-time only right to transfer the mortgaged property upon payment
of a transfer fee equal to 1% of the outstanding principal balance of the
mortgage loan, confirmation from DCR and Fitch that the transfer would not
result in a downgrade, qualification (if applicable) or withdrawal of the then
current ratings assigned to any class of certificates and compliance with other
conditions specified in the loan documents. That transfer may not occur prior
to three months after the issuance of the certificates.
The loan documents also permit the borrower to remove the
cross-collateralization/cross-default features of Loan No. 26511 and Loan No.
27018 upon a transfer of one or the other of the properties subject to
satisfaction of specified underwriting criteria.
See Loan No. 26511 in the mortgage loan schedule.
B-16
<PAGE>
LOAN NO. 27018 -- SEATTLE GIFT CENTER
OVERVIEW
This mortgage loan is secured by a first mortgage on the borrower's fee
and leasehold interest in a gift mart facility located in Seattle, Washington.
The mortgage loan is cross-collateralized and cross-defaulted with Loan No.
26511 -- Seattle Design Center. On a combined basis, the overall debt service
coverage ratio is 1.69x and the overall loan to value ratio is 56.05%. The
mortgage loan was originated by Bear, Stearns Funding, Inc. on September 2,
1999. The information in the box immediately below is presented for the Seattle
Gift Center mortgage loan only.
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $6,212,968 PROPERTY TYPE: Urban, Office
GROSS MORTGAGE RATE: 8.1700% LOCATION: Seattle, WA
INTEREST ACCRUAL METHOD: Actual/360 YEAR BUILT/RENOVATED: 1983
FIRST PAYMENT DATE: 11/1/1999 SQUARE FEET 182,419
CUT-OFF DATE
MATURITY DATE: 10/1/2009 BALANCE/SQ.FT. $34.06
ORIGINAL AMORTIZATION: 360
ANNUAL DEBT SERVICE: $557,001 OCCUPANCY: 99.0%
LOCKOUT END DATE: 9/30/2009 OCCUPANCY DATE: 11/4/1999
CALL PROTECTION Defeasance
CALL PROTECTION END DATE: 9/30/2009 APPRAISED VALUE: $13,000,000
ESCROWS CUT-OFF DATE LTV: 47.8%
REAL ESTATE TAXES: Yes BALLOON LTV: 43.0%
INSURANCE: Yes
REPLACEMENT RESERVES: Yes UNDERWRITTEN CASH
FLOW: $938,696
DSCR: 1.69x
</TABLE>
THE PROPERTY
The Seattle Gift Center is a gift mart facility which was constructed in
1976 as a two-story office building. After conversion to a gift mart, it was
expanded twice; three new stories were added in 1978 and a five-story tower was
added in 1983. There are approximately 120 showrooms in which wholesale gift
products are sold to retailers. The major tenants at the center include Pacific
Rim (8,375 square feet) under a lease expiring November 2002 and Enesco Corp.
(6,288 square feet) under a lease expiring April 2000.
A portion of the Seattle Gift Center property is constructed on the
borrower's interest as a tenant under a ground lease. The ground lease expires
December 31, 2019. Notwithstanding the above, the ground lease is subject to
the borrower's option to purchase the ground lessor's fee interest which may be
exercised in 2004. The fee interest when purchased will become subject to a
first mortgage lien securing the mortgage loan. The borrower has escrowed
$715,000 with the lender, which, together with the accrued interest thereon, is
expected to be sufficient to purchase the fee at the negotiated price of
$850,000. The purchase option is required to consummated immediately upon
exercise of the option. If the ground lessor is unable to comply with the terms
of the purchase option, the time period for exercising the option will be
extended for the duration of that inability.
THE BORROWER
The borrower is Bay West Gift Center, LLC, a Delaware limited liability
company with BW Seattle Corp., a Washington corporation, as the managing
member. Both the borrower and the managing member are single purpose entities
whose organizational documents do not permit them to engage in any business
unrelated to the mortgaged property (or the mortgaged property securing
B-17
<PAGE>
Loan No. 26511 -- the Seattle Design Center loan), nor have any assets other
than the mortgaged property or any indebtedness (subject to limited exceptions
such as trade payables incurred in the ordinary course of business) other than
the mortgage loan (or Loan No. 26511 -- the Seattle Design Center loan). In
addition, 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 that party.
MANAGEMENT
The property is managed by Market Center Management, Inc. which is a
wholly owned affiliate of the borrower.
ESCROWS
The loan documents require the borrower to fund monthly escrow deposits in
amounts sufficient to pay real estate taxes and insurance premiums when due.
The borrower is also required to escrow $2,277 monthly for future capital
expenditures. In addition, the borrower escrowed $155,625 at closing and is
required to escrow $14,674 monthly for expenses associated with lease rollover.
ADDITIONAL DEBT/TRANSFERS
The loan documents provide that the mortgage loan will become immediately
due and payable upon (i) any transfer of the borrower's interest in the
property or any transfer of a controlling interest in the borrower or (ii) any
additional encumbrance of the property, in each case without the prior written
consent of the lender, subject to the exceptions described below.
RIGHT TO TRANSFER AND UNCROSS
The loan documents permit the borrower and the immediate transferee of the
borrower a one-time only right to transfer the mortgaged property upon payment
of a transfer fee equal to 1% of the outstanding principal balance of the
mortgage loan, confirmation from DCR and Fitch that the transfer would not
result in a downgrade, qualification (if applicable) or withdrawal of the then
current ratings assigned to any class of certificates and compliance with other
conditions specified in the loan documents. That transfer may not occur prior
to three months after the issuance of the certificates.
The loan documents also permit the borrower to remove the
cross-collateralization/cross-default features of Loan No. 26511 and Loan No.
27018 upon a transfer of one or the other of the properties subject to
satisfaction of specified underwriting criteria.
See Loan No. 27018 in the mortgage loan schedule.
B-18
<PAGE>
LOAN NO. 310900004 -- INTERNATIONAL AIRPORT CENTER
OVERVIEW
This mortgage loan is secured by a first mortgage on the borrower's fee
interest in 10 office/distribution warehouse facilities located in Charlotte,
North Carolina. The mortgage loan was originated by Wells Fargo Bank, National
Association on October 7, 1999.
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $19,269,309 PROPERTY TYPE: Warehouse Distribution
GROSS MORTGAGE RATE: 7.9800% LOCATION: Charlotte, NC
INTEREST ACCRUAL METHOD: Actual/360 YEAR BUILT/RENOVATED: 1999
FIRST PAYMENT DATE: 12/1/1999 SQUARE FEET 395,153
CUT-OFF DATE
MATURITY DATE: 11/1/2009 BALANCE/SQ.FT. $48.76
ORIGINAL AMORTIZATION: 360
ANNUAL DEBT SERVICE: $1,696,171 OCCUPANCY: 96.8%
LOCKOUT END DATE: 8/31/2009 OCCUPANCY DATE: 10/1/1999
CALL PROTECTION Defeasance
CALL PROTECTION END DATE: 8/31/2009 APPRAISED VALUE: $26,900,000
ESCROWS CUT-OFF DATE LTV: 71.6%
REAL ESTATE TAXES: Yes BALLOON LTV: 64.1%
INSURANCE: Yes
REPLACEMENT RESERVES: Yes UNDERWRITTEN CASH
FLOW: $2,149,307
DSCR: 1.27x
</TABLE>
THE PROPERTY
The properties securing the mortgage loan include 10 single-story
office/distribution warehouse facilities. All buildings were constructed
between 1981 and 1999. The properties consist of approximately 34.9 acres
divided into 2 parcels. Tenant sizes range from 1,229 to 40,920 square feet.
The properties are located in the southwestern part of the City of Charlotte,
south of the Charlotte-Douglas Airport.
<TABLE>
<CAPTION>
OFFICE SPACE
AS A PERCENT
OF TOTAL
PROPERTY NAME YEAR BUILT TOTAL SQ. FT. SQ. FT.
- ------------- ------------ --------------- -------------
<S> <C> <C> <C>
3401 International Airport Dr., Bldg A 1996 43,345 80.6%
3400 International Airport Dr., Bldg B 1997 42,088 39.4%
3301 International Airport Dr., Bldg C 1996 40,920 10.9%
3300 International Airport Dr., Bldg D 1997 46,921 72.2%
3201 International Airport Dr., Bldg E 1998 31,813 30.0%
3200 International Airport Dr., Bldg F 1998 41,143 12.7%
3101 International Airport Dr., Bldg G 1998 28,238 80.0%
3100 International Airport Dr., Bldg H 1998 50,083 31.2%
3140 Yorkmont Road, Bldg A 1999 43,340 35.5%
3401 Yorkmont Road, Bldg B 1981 27,262 10.9%
-------
Total 395,153
=======
</TABLE>
Major tenants at the properties include Corporate Express (40,920 square
feet) under a lease expiring July 2006, Nextlink North Carolina, Inc. (31,813
square feet) under a lease expiring January 2015, Expeditors International of
Washington (31,122 square feet) under a lease expiring March 2001, and Federal
Express (30,514 square feet) under a lease expiring April 2001.
B-19
<PAGE>
THE BORROWER
The borrower is IAC Charlotte LLC, a Delaware limited liability company,
with International Airport Centers LLC as the managing member and IAC Charlotte
Inc. and IAC Investors LLC as the non-managing members. The borrower is managed
by International Airport Centers LLC, a privately-held, investment and
development company which focuses on the construction, ownership and management
of air-cargo distribution warehouse facilities located in close proximity to
airports. Both the borrower and IAC Charlotte Inc. are single purpose entities
whose organizational documents do not permit them to engage in any business
unrelated to the mortgaged property, nor have any assets other than the
mortgaged property or any indebtedness (subject to limited exceptions such as
trade payables incurred in the ordinary course of business) other than the
mortgage loan. Additionally, the IAC Charlotte Inc.'s organizational documents
require an independent director.
MANAGEMENT
The property is managed by International Airport Centers LLC which is
affiliated with the borrower.
ESCROWS
The loan documents require the borrower to fund monthly escrow deposits in
amounts sufficient to pay real estate taxes and insurance premiums when due.
The borrower is also required to escrow $3,282 monthly for future capital
expenditures. In addition, the borrower is required to escrow $9,522 monthly
for future tenant improvements and leasing commissions.
ADDITIONAL DEBT/TRANSFERS
The loan documents provide that the mortgage loan will become immediately
due and payable upon (i) any transfer of the borrower's interest in the
property or, except as described below, any transfer of an interest in the
borrower or its managing member or (ii) any additional encumbrance of the
property, in each case without the prior written consent of the lender. The
loan documents permit transfers of up to an aggregate of 49% of the original
ownership interests in the borrower's managing member provided that certain
conditions are satisfied, including among other conditions, that the proposed
transfer will not result in a change of control or management of the managing
member or the borrower and the net worth of that managing member following the
transfer will not be less than it was prior to the transfer. The loan documents
also permit transfers of more than 49% of the original ownership interests in
the managing member provided that certain additional conditions are satisfied,
including, among other conditions, the lender's reasonable determination that
the debt to asset ratio of any proposed transferee is 70% or less.
See Loan No. 310900004 in the mortgage loan schedule.
B-20
<PAGE>
LOAN NO. 310900032 -- ORCHARD BUSINESS CENTRE
OVERVIEW
This mortgage loan is secured by a first mortgage on three research and
development/office buildings situated in Santa Clara, California. The mortgage
loan was originated by Wells Fargo Bank, National Association on November 15,
1999.
<TABLE>
<S> <C> <C> <C>
CUT-OFF DATE BALANCE: $19,182,572 PROPERTY TYPE: Suburban Office
GROSS MORTGAGE RATE: 7.6140% LOCATION: Santa Clara, CA
INTEREST ACCRUAL METHOD: Actual/360 YEAR BUILT/RENOVATED: 1999
FIRST PAYMENT DATE: 2/1/2000 SQUARE FEET 142,552
MATURITY DATE: 1/1/2011 CUT-OFF DATE BALANCE/SQ.FT. $134.57
ORIGINAL AMORTIZATION: 300
ANNUAL DEBT SERVICE: $1,719,757 OCCUPANCY: 100.0%
LOCKOUT END DATE: 7/31/2010 9/1/1999
CALL PROTECTION Defeasance
CALL PROTECTION END DATE: 7/31/2010 APPRAISED VALUE: $35,000,000
ESCROWS CUT-OFF DATE LTV: 54.8%
REAL ESTATE TAXES: Yes BALLOON LTV: 43.2%
INSURANCE: No
REPLACEMENT RESERVES: Yes UNDERWRITTEN CASH FLOW: $2,889,427
DSCR: 1.68x
</TABLE>
THE PROPERTY
The property consists of three 2-story buildings constructed in 1999 on
approximately 7.07 acres of land. The properties are located in the San Tomas
Business Park, an office campus facility located in Santa Clara, California,
part of the region commonly referred to as Silicon Valley.
Major tenants at the properties include Cylink Corporation (117,927 square
feet) under three leases expiring in August and September of 2009, and
Tollbridge Technologies, Inc, (24,625 square feet) under a lease expiring
August 2004.
THE BORROWER
The borrowing entity is Orchard Jay Properties, LLC, a California limited
liability company, with DJB-MJB Jay Inc, as the managing member. Both the
borrower and its managing member are single purpose entities whose
organizational documents do not permit them to engage in any business unrelated
to the mortgaged property, nor have any assets other than the mortgaged
property or any indebtedness (subject to limited exceptions such as trade
payables incurred in the ordinary course of business) other than the mortgage
loan.
MANAGEMENT
The property is managed by Orchard Properties, Inc., a California
corporation, which is affiliated with the borrower.
ESCROWS
The loan documents require the borrower to fund monthly escrow deposits in
amounts sufficient to pay real estate taxes when due. The loan documents also
require the borrower to escrow $2,376 monthly for future capital expenditures.
In addition, a reserve in the amount of $1,847,884 is being held by the lender
as additional security until Cylink Corporation, the largest single tenant,
achieves certain operating results and complies with certain financial
covenants.
B-21
<PAGE>
ADDITIONAL DEBT/TRANSFERS
The loan documents provide that the mortgage loan will become immediately
due and payable upon (i) any transfer of the borrower's interest in the
property or any transfer of an interest in the borrower or (ii) any additional
encumbrance of the property, in each case without the prior written consent of
the lender.
See Loan No. 310900032 in the mortgage loan schedule.
B-22
<PAGE>
LOAN NO. 9905921 -- CIRCUIT CITY CORPORATE HEADQUARTERS
OVERVIEW
This mortgage loan is secured by a first leasehold deed of trust on an
office building located in Richmond, Virginia. The mortgage loan was originated
by Morgan Stanley Mortgage Capital Inc. on January 21, 2000.
<TABLE>
<S> <C> <C> <C>
CUT-OFF BALANCE: $17,000,000 PROPERTY TYPE: Suburban Office
GROSS MORTGAGE RATE: 8.1000% LOCATION: Richmond, VA
INTEREST ACCRUAL METHOD: Actual/360 YEAR BUILT/RENOVATED: 1989
FIRST PAYMENT DATE: 3/1/2000 SQUARE FEET: 288,562
MATURITY DATE: 2/1/2010 CUT-OFF DATE BALANCE/SQ. FT: $58.91
ORIGINAL AMORTIZATION: 360
ANNUAL DEBT SERVICE: $1,511,125 OCCUPANCY: 100.0%
LOCKOUT END DATE: 10/31/2009 OCCUPANCY DATE: 10/1/99
CALL PROTECTION: Defeasance
CALL PROTECTION END DATE: 10/31/2009 APPRAISED VALUE: $31,000,000
ESCROWS: CUT-OFF DATE LTV: 54.8%
REAL ESTATE TAXES: No BALLOON LTV: 49.2%
INSURANCE: No
REPLACEMENT RESERVE: No UNDERWRITTEN CASH FLOW: $2,311,596
DSCR: 1.53x
</TABLE>
THE PROPERTY
The property is a 5-story office building located in the northwest
quadrant of the Richmond, Virginia suburban office market. The building houses
the executive offices of Circuit City Stores, Inc.
The property has been ground leased to the borrower pursuant to a ground
lease with Circuit City Stores, Inc. as fee owner/lessor and the borrower as
lessee. The ground lease has an initial term expiration date of February 28,
2010 followed by four (4) options to extend for ten (10) years each and one (1)
final option to extend for five (5) years. The borrower has leased 100% of the
property back to Circuit City Stores, Inc. pursuant to a triple net lease. The
expiration date and extension options in the triple net lease are identical to
those in the ground lease.
THE BORROWER
The borrowing entity is Lexington Richmond, LLC, a Delaware limited
liability company, with Lexington Richmond Manager, Inc., a Delaware
corporation, as the managing member. Both the borrower and the managing member
are single purpose entities whose organizational documents do not permit them
to engage in any business unrelated to the mortgaged property, nor have any
assets other than the mortgaged property or any indebtedness (subject to
limited exceptions such as trade payables incurred in the ordinary course of
business) other than the mortgage loan.
MANAGEMENT
Circuit City Stores, Inc. as lessee under the triple net lease, is
responsible for all operating expenses and maintenance of the building. There
is no separate manager of the property.
ESCROWS
If Circuit City Stores, Inc. does not renew its lease at least one year
prior to the current expiration, the loan documents provide for a cash sweep of
rents to become effective, and all excess rents after operating expenses and
debt service will be placed in a tenant improvement and leasing commission
escrow account.
B-23
<PAGE>
ADDITIONAL DEBT/TRANSFERS
The loan documents provide that the mortgage loan will become immediately
due and payable upon (i) any transfer of the borrower's interest in the
property or any transfer of an interest in the borrower or (ii) any additional
encumbrance of the property, in each case without the prior written consent of
the lender.
Certain sponsor related transfers, as specified in the loan documents, are
permitted without payment of any transfer fee.
The loan documents also give the borrower the right to transfer the
mortgaged property up to two times. The first transfer is subject to receipt by
the lender of a transfer fee of $10,000 plus all out of pocket costs and
expenses incurred in connection with that transfer. The second transfer is
subject to receipt by the lender of a transfer fee equal to 1% of the
outstanding principal balance of the mortgage loan. Both transfers are subject
to compliance with other conditions specified in the loan documents.
See Loan No. 9905921 in the mortgage loan schedule.
B-24
<PAGE>
ANNEX C
------------------------------------------
[NORWEST BANKS LOGO] For Additional Information, please contact
CTSLink Customer Service
NORWEST BANK MINNESOTA, N.A. (301) 815-6600
CORPORATE TRUST SERVICES REPORTS AVAILABLE ON THE WORLD WIDE WEB
3 NEW YORK PLAZA, 15TH FLOOR @ www.ctslink.com/cmbs
NEW YORK, NY 10004 ------------------------------------------
PAYMENT DATE: 03/15/2000
RECORD DATE: 02/29/2000
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
- --------------------------------------------------------------------------------
DISTRIBUTION DATE STATEMENT
TABLE OF CONTENTS
================================================================================
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 Detai l 17
================================================================================
======================================== ======================================
UNDERWRITER MASTER SERVICER
Bear, Stearns & Co. Inc. Wells Fargo Bank, National Association
245 Park Avenue 420 Montgomery Street, 10th Floor
New York, New York 10167 San Francisco, CA 94104
Contact: General Information Number Contact: Matilde Sanchez
Phone Number: (212) 272-2000 Phone Number: (415) 222-2364
======================================== ======================================
==========================================
SPECIAL SERVICER
GMAC Commercial Mortgage Corporation
650 Dresher Road
Horsham, PA 10944-8015
Contact: Coral I. Horstmeyer
Phone Number: (215) 328-1790
==========================================
This report has been compiled from information provided to Norwest by various
third parties, which may include the Servicer, Master 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.
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 1 of 17
C-1
<PAGE>
------------------------------------------
[NORWEST BANKS LOGO] For Additional Information, please contact
CTSLink Customer Service
NORWEST BANK MINNESOTA, N.A. (301) 815-6600
CORPORATE TRUST SERVICES REPORTS AVAILABLE ON THE WORLD WIDE WEB
3 NEW YORK PLAZA, 15TH FLOOR @ www.ctslink.com/cmbs
NEW YORK, NY 10004 ------------------------------------------
PAYMENT DATE: 03/15/2000
RECORD DATE: 02/29/2000
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
- --------------------------------------------------------------------------------
CERTIFICATE DISTRIBUTION DETAIL
<TABLE>
<CAPTION>
=====================================================================================================================
Pass-Through Original Beginning Principal
Class CUSIP Rate Balance Balance Distribution
=====================================================================================================================
<S> <C> <C> <C> <C> <C>
A-1 0.000000% 0.00 0.00 0.00
A-2 0.000000% 0.00 0.00 0.00
B 0.000000% 0.00 0.00 0.00
C 0.000000% 0.00 0.00 0.00
D 0.000000% 0.00 0.00 0.00
E 0.000000% 0.00 0.00 0.00
F 0.000000% 0.00 0.00 0.00
G 0.000000% 0.00 0.00 0.00
H 0.000000% 0.00 0.00 0.00
I 0.000000% 0.00 0.00 0.00
J 0.000000% 0.00 0.00 0.00
K 0.000000% 0.00 0.00 0.00
L 0.000000% 0.00 0.00 0.00
M 0.000000% 0.00 0.00 0.00
RI 0.000000% 0.00 0.00 0.00
RII 0.000000% 0.00 0.00 0.00
RIII 0.000000% 0.00 0.00 0.00
=====================================================================================================================
Totals 0.00 0.00 0.00
=====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
======================================================================================================================
Realized Loss/ Current
Interest Prepayment Additional Trust Total Ending Subordination
Class Distribution Penalties Fund Expenses Distribution Balance Level (1)
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
A-1 0.00 0.00 0.00 0.00 0.00 0.00%
A-2 0.00 0.00 0.00 0.00 0.00 0.00%
B 0.00 0.00 0.00 0.00 0.00 0.00%
C 0.00 0.00 0.00 0.00 0.00 0.00%
D 0.00 0.00 0.00 0.00 0.00 0.00%
E 0.00 0.00 0.00 0.00 0.00 0.00%
F 0.00 0.00 0.00 0.00 0.00 0.00%
G 0.00 0.00 0.00 0.00 0.00 0.00%
H 0.00 0.00 0.00 0.00 0.00 0.00%
I 0.00 0.00 0.00 0.00 0.00 0.00%
J 0.00 0.00 0.00 0.00 0.00 0.00%
K 0.00 0.00 0.00 0.00 0.00 0.00%
L 0.00 0.00 0.00 0.00 0.00 0.00%
M 0.00 0.00 0.00 0.00 0.00 0.00%
RI 0.00 0.00 0.00 0.00 0.00 0.00%
RII 0.00 0.00 0.00 0.00 0.00 0.00%
RIII 0.00 0.00 0.00 0.00 0.00 0.00%
======================================================================================================================
Totals 0.00 0.00 0.00 0.00 0.00
======================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
=======================================================================================================================
Original Beginning Ending
Pass-Through Notional Notional Interest Prepayment Total Notional
Class CUSIP Rate Amount Amount Distribution Penalties Distribution Amount
=======================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
=======================================================================================================================
</TABLE>
(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).
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 2 of 17
C-2
<PAGE>
------------------------------------------
[NORWEST BANKS LOGO] For Additional Information, please contact
CTSLink Customer Service
NORWEST BANK MINNESOTA, N.A. (301) 815-6600
CORPORATE TRUST SERVICES REPORTS AVAILABLE ON THE WORLD WIDE WEB
3 NEW YORK PLAZA, 15TH FLOOR @ www.ctslink.com/cmbs
NEW YORK, NY 10004 ------------------------------------------
PAYMENT DATE: 03/15/2000
RECORD DATE: 02/29/2000
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
- --------------------------------------------------------------------------------
CERTIFICATE FACTOR DETAIL
<TABLE>
<CAPTION>
=========================================================================================================================
Realized Loss/
Beginning Principal Interest Prepayment Additional Trust Ending
Class CUSIP Balance Distribution Distribution Penalties Fund Expenses Balance
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
A-2 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
B 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
C 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
D 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
E 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
F 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
G 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
H 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
I 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
J 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
K 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
L 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
M 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
RI 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
RII 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
RIII 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000%
============================================================================================================================
</TABLE>
================================================================================
Beginning Ending
Notional Interest Prepayment Notional
Class CUSIP Amount Distribution Penalties Amount
================================================================================
X 0.00000000% 0.00000000% 0.00000000% 0.00000000%
================================================================================
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 3 of 17
C-3
<PAGE>
[NORWEST BANKS LOGO] For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR PAYMENT DATE: 03/15/2000
NEW YORK, NY 10004 RECORD DATE: 02/29/2000
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
- --------------------------------------------------------------------------------
RECONCILIATION DETAIL
ADVANCE SUMMARY
P&I Advances Outstanding 0.00
Servicing Advances Outstanding 0.00
Reimbursement for Interest on Advances 0.00
paid from general collections
SERVICING FEE BREAKDOWNS
Current Period Accrued Master Servicing Fees 0.00
Less Delinquent Master Servicing Fees 0.00
Less Reductions to Master Servicing Fees 0.00
Plus Master Servicing Fees for Delinquent
Payments Received 0.00
Plus Adjustments for Prior Master
Servicing Calculation 0.00
Total Master Servicing Fees Collected 0.00
CERTIFICATE INTEREST RECONCILIATION
<TABLE>
<CAPTION>
Accrued Net Aggregate Distributable Distributable Additional Remaining Unpaid
Certificate Prepayment Certificate Certificate Interest Trust Fund Interest Distributable
Class Interest Interest Shortfall Interest Adjustment Expenses Distribution Certificate Interest
- ------ ----------- ------------------ ------------ ------------------- ---------- ------------ --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
X 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B 0.00 0.00 0.00 0.00 0.00 0.00 0.00
C 0.00 0.00 0.00 0.00 0.00 0.00 0.00
D 0.00 0.00 0.00 0.00 0.00 0.00 0.00
E 0.00 0.00 0.00 0.00 0.00 0.00 0.00
F 0.00 0.00 0.00 0.00 0.00 0.00 0.00
G 0.00 0.00 0.00 0.00 0.00 0.00 0.00
H 0.00 0.00 0.00 0.00 0.00 0.00 0.00
I 0.00 0.00 0.00 0.00 0.00 0.00 0.00
J 0.00 0.00 0.00 0.00 0.00 0.00 0.00
K 0.00 0.00 0.00 0.00 0.00 0.00 0.00
L 0.00 0.00 0.00 0.00 0.00 0.00 0.00
M 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ------ ------ ------ ------ ------ ----- ------ ------
Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ------ ------ ------ ------ ------ ----- ------ ------
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A.
Page 4 of 17
C-4
<PAGE>
[NORWEST BANKS LOGO] For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR PAYMENT DATE: 03/15/2000
NEW YORK, NY 10004 RECORD DATE: 02/29/2000
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
- --------------------------------------------------------------------------------
OTHER REQUIRED INFORMATION
Available Distribution Amount 0.00
Principal Distribution Amount 0.00
(a) Principal portion of Scheduled Payments 0.00
and any Assumed Scheduled Payments
(b) Principal Prepayments 0.00
(c) Principal Portion of Balloon Payments 0.00
(d) Liquidation, Condemnation, Purchase,
and Insurance Proceeds and REO Income
Received on a Mortgage Loan
Interest Reserve Account
Deposits 0.00
Withdrawals 0.00
Aggregate Number of Outstanding Mortgage Loans 0
Aggregate Unpaid Principal Balance of the Mortgage
Loans 0.00
Aggregate Scheduled Principal Balance of the
Mortgage Loans 0.00
Total Servicing and Special Servicing Fee paid 0.00
Servicing Fee paid 0.00
Special Servicing Fee paid 0.00
Trustee Fee paid 0.00
Expense Losses (Additional Trust Fund Expenses) 0.00
(i) Special Servicing and Liquidation Fees 0.00
(ii) Advance Interest 0.00
(iii) Indemnification Expenses 0.00
(iv) Taxes Imposed on the Trust 0.00
(v) Amount of any Advance not Recovered
upon a Final Recovery Determination 0.00
Appraisal Reduction Amount
Appraisal Date Appraisal
Loan Reduction Reduction
Number Amount Effected
-------- --------- --------------
NONE
-------- --------- --------------
Total
-------- --------- --------------
Copyright 1997, Norwest Bank Minnesota, N.A.
Page 5 of 17
C-5
<PAGE>
[NORWEST BANKS LOGO] For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR PAYMENT DATE: 03/15/2000
NEW YORK, NY 10004 RECORD DATE: 02/29/2000
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
- --------------------------------------------------------------------------------
RATINGS DETAIL
<TABLE>
<CAPTION>
Original Ratings Current Ratings(1)
Class CUSIP --------------------------- ----------------------------
DCR Fitch Moody's S&P DCR Fitch Moody's S&P
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A-1
A-2
X
B
C
D
E
F
G
H
I
J
K
L
M
- ------------------------------------------------------------------------------------------
</TABLE>
NR - Designates that the class was not rated by the above agency at the
time of original issuance.
X - Designates that the above rating agency did not rate any classes in
this transaction at the time of original issuance.
N/A - 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.
Duff & Phelps Credit Rating Co. Fitch IBCA, Inc.
55 East Monroe Street One State Street Plaza
Chicago, Illinois 60603 New York, New York 10004
(312) 368-3100 (212) 908-0500
Moody's Investors Service Standard & Poor's Rating Services
99 Church Street 55 Water Street
New York, New York 10007 New York, New York 10041
(212) 553-0300 (212) 208-8000
Copyright 1997, Norwest Bank Minnesota, N.A.
Page 6 of 17
C-6
<PAGE>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
-------------------------------------------------------
For Additional Information, please contact
CTSLINK CUSTOMER SERVICE
(301) 815-6600
REPORTS AVAILABLE ON THE WORLD WIDE WEB
@ www.ctslink.com/cmbs
-------------------------------------------------------
PAYMENT DATE: 03/15/2000
RECORD DATE: 02/29/2000
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
SCHEDULED BALANCE
- --------------------------------------------------------------------------------
% of
Scheduled # of Scheduled Agg. WAM Weighted
Balance Loans Balance Bal. (2) WAC Avg DSCR(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
STATE (3)
- --------------------------------------------------------------------------------
% of
# of Scheduled Agg. WAM Weighted
State Props. Balance Bal. (2) WAC Avg DSCR(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
See footnotes on last page of this section.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 7 of 17
C-7
<PAGE>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
-------------------------------------------------------
For Additional Information, please contact
CTSLINK CUSTOMER SERVICE
(301) 815-6600
REPORTS AVAILABLE ON THE WORLD WIDE WEB
@ www.ctslink.com/cmbs
-------------------------------------------------------
PAYMENT DATE: 03/15/2000
RECORD DATE: 02/29/2000
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
DEBT SERVICE COVERAGE RATIO
- --------------------------------------------------------------------------------
% of
Debt Service # of Scheduled Agg. WAM Weighted
Coverage Ratio Loans Balance Bal. (2) WAC Avg DSCR(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
PROPERTY TYPE (3)
- --------------------------------------------------------------------------------
% of
Property # of Scheduled Agg. WAM Weighted
Type Props. Balance Bal. (2) WAC Avg DSCR(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
NOTE RATE
- --------------------------------------------------------------------------------
% of
Note # of Scheduled Agg. WAM Weighted
Rate Loans Balance Bal. (2) WAC Avg DSCR(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
SEASONING
- --------------------------------------------------------------------------------
% of
# of Scheduled Agg. WAM Weighted
Seasoning Loans Balance Bal. (2) WAC Avg DSCR(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
See footnotes on last page of this section.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 8 of 17
C-8
<PAGE>
[NORWEST BANKS LOGO]
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
-------------------------------------------------------
For Additional Information, please contact
CTSLINK CUSTOMER SERVICE
(301) 815-6600
REPORTS AVAILABLE ON THE WORLD WIDE WEB
@ www.ctslink.com/cmbs
-------------------------------------------------------
PAYMENT DATE: 03/15/2000
RECORD DATE: 02/29/2000
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
ANTICIPATED REMAINING TERM (ARD AND BALLOON LOANS)
- --------------------------------------------------------------------------------
Anticipated % of
Remaining # of Scheduled Agg. WAM Weighted
Term (2) Loans Balance Bal. (2) WAC Avg DSCR(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
REMAINING STATED TERM (FULLY AMORTIZING LOANS)
- --------------------------------------------------------------------------------
Remaining % of
Stated # of Scheduled Agg. WAM Weighted
Term Loans Balance Bal. (2) WAC Avg DSCR(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
REMAINING AMORTIZATION TERM (ARD AND BALLOON LOANS)
- --------------------------------------------------------------------------------
Remaining % of
Amortization # of Scheduled Agg. WAM Weighted
Term Loans Balance Bal. (2) WAC Avg DSCR(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
AGE OF MOST RECENT NOI
- --------------------------------------------------------------------------------
% of
Age of Most # of Scheduled Agg. WAM Weighted
Recent NOI Loans Balance Bal. (2) WAC Avg DSCR(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
(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.
(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.
(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.
Note: (i) "Scheduled Balance" has the meaning assigned thereto in the CMSA
Standard Information Package.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 9 of 17
C-9
<PAGE>
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
[NORWEST BANKS LOGO]
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 03/15/2000
New York, NY 10004 Record Date: 02/29/2000
MORTGAGE LOAN DETAIL
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Anticipated Neg.
Loan Property Interest Principal Gross Repayment Maturity Amort
Number ODCR Type (1) City State Payment Payment Coupon Date Date (Y/N)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Totals
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------
Beginning Ending Paid Appraisal Appraisal Res. Mod.
Scheduled Scheduled Thru Reduction Reduction Strat. Code
Balance Balance Date Date Amount (2) (3)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
(1) Property Type Code
----------------------
MF - Multi-Family OF - Office
RT - Retail MU - Mixed Use
HC - Health Care LO - Lodging
IN - Industrial SS - Self Storage
WH - Warehouse OT - Other
MH - Mobile Home Park
(2) Resolution Strategy Code
----------------------------
1 - Modification 6 - DPO 10 - Deed In Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
(3) Modification Code
---------------------
1 - Maturity Date Extension
2 - Amortization Change
3 - Principal Write-Off
4 - Combination
Copyright 1997, Norwest Bank Minnesota N.A. Page 10 of 17
C-10
<PAGE>
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
[NORWEST BANKS LOGO]
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 03/15/2000
New York, NY 10004 Record Date: 02/29/2000
<TABLE>
<CAPTION>
PRINCIPAL PREPAYMENT DETAIL
- -----------------------------------------------------------------------------------------------------------------------------------
Principal Prepayment Amount Prepayment Penalties
Offering Document -------------------------------------- ------------------------------------------------
Loan Number Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenance Premium
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Totals
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Copyright 1997, Norwest Bank Minnesota N.A. Page 11 of 17
C-11
<PAGE>
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
[NORWEST BANKS LOGO]
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 03/15/2000
New York, NY 10004 Record Date: 02/29/2000
HISTORICAL DETAIL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Delinquencies
- -----------------------------------------------------------------------------------------------------------------------------------
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications
Date # Balance # Balance # Balance # Balance # Balance # Balance
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
Prepayments Rate and Maturities
- --------------------------------------------------------------------------------
Curtailments Payoff Next Weighted Avg.
# Amount # Amount Coupon Remit WAM
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
</TABLE>
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
Copyright 1997, Norwest Bank Minnesota N.A. Page 12 of 17
C-12
<PAGE>
NORWEST BANKS LOGO
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
-------------------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
REPORTS AVAILABLE ON THE WORLD WIDE WEB
@ www.ctslink.com/cmbs
-------------------------------------------------------
PAYMENT DATE: 03/15/2000
RECORD DATE: 02/29/2000
DELINQUENCY LOAN DETAIL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Offering # of Paid Current Outstanding Status of Resolution
Document Months Through P & I P & I Mortgage Strategy
Loan Number Cross-Reference Delinq. Date Advances Advances** Loan(1) Code(2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Totals
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Current Outstanding
Servicing Foreclosure Servicing Servicing REO
Loan Number Transfer Date Date Advances Advances Bankruptcy Date Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Status of Mortgage Loan
---------------------------
1 - Modification 6 - DPO 10 - Deed In Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
(2) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed In Lieu Of
6 - DPO Foreclosure
** Outstanding P & I Advances include the current period advance
Copyright 1997, Norwest Bank Minnesota, N.A. Page 13 of 17
C-13
<PAGE>
NORWEST BANKS LOGO
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
-------------------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
REPORTS AVAILABLE ON THE WORLD WIDE WEB
@ www.ctslink.com/cmbs
-------------------------------------------------------
PAYMENT DATE: 03/15/2000
RECORD DATE: 02/29/2000
SPECIALLY SERVICED LOAN DETAIL - PART 1
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Offering Servicing Resolution
Distribution Loan Document Transfer Strategy Scheduled Property
Date Number Cross-Reference Date Code (1) Balance Type(2) State(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Net Remaining
Distribution Interest Actual Operating NOI Note Maturity Amortization
Date Rate Balance Income Date DSCR Date Date Term
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed In Lieu Of
6 - DPO Foreclosure
(2) Property Type Code
----------------------
MF - Multi-Family OF - Office
RT - Retail MU - Mixed Use
HC - Health Care LO - Lodging
IN - Industrial SS - Self Storage
WH - Warehouse OT - Other
MH - Mobile Home Park
Copyright 1997, Norwest Bank Minnesota, N.A. Page 14 of 17
C-14
<PAGE>
NORWEST BANKS LOGO
NORWEST BANK MINNESOTA, N.A.
CORPORATE TRUST SERVICES
3 NEW YORK PLAZA, 15TH FLOOR
NEW YORK, NY 10004
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
-------------------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 815-6600
REPORTS AVAILABLE ON THE WORLD WIDE WEB
@ www.ctslink.com/cmbs
-------------------------------------------------------
PAYMENT DATE: 03/15/2000
RECORD DATE: 02/29/2000
SPECIALLY SERVICED LOAN DETAIL - PART 2
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Offering Resolution Site
Distribution Loan Document Strategy Inspection Phase 1 Appraisal Appraisal
Date Number Cross-Reference Code (1) Date Date Date Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Distribution Other REO
Date Property Revenue Comment
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Resolution Strategy Code
----------------------------
1 - Modification 6 - DPO 10 - Deed In Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
Copyright 1997, Norwest Bank Minnesota, N.A. Page 15 of 17
C-15
<PAGE>
------------------------------------------
[NORWEST BANKS LOGO] For Additional Information, please contact
CTSLink Customer Service
NORWEST BANK MINNESOTA, N.A. (301) 815-6600
CORPORATE TRUST SERVICES REPORTS AVAILABLE ON THE WORLD WIDE WEB
3 NEW YORK PLAZA, 15TH FLOOR @ www.ctslink.com/cmbs
NEW YORK, NY 10004 ------------------------------------------
PAYMENT DATE: 03/15/2000
RECORD DATE: 02/29/2000
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
- --------------------------------------------------------------------------------
MODIFIED LOAN DETAIL
<TABLE>
<CAPTION>
====================================================================================================================================
Offering
Loan Document Pre-Modification
Number Cross-Reference Balance Modification Date Modification Description
====================================================================================================================================
<S> <C> <C> <C> <C>
====================================================================================================================================
Total
====================================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 16 of 17
C-16
<PAGE>
------------------------------------------
[NORWEST BANKS LOGO] For Additional Information, please contact
CTSLink Customer Service
NORWEST BANK MINNESOTA, N.A. (301) 815-6600
CORPORATE TRUST SERVICES REPORTS AVAILABLE ON THE WORLD WIDE WEB
3 NEW YORK PLAZA, 15TH FLOOR @ www.ctslink.com/cmbs
NEW YORK, NY 10004 ------------------------------------------
PAYMENT DATE: 03/15/2000
RECORD DATE: 02/29/2000
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
- --------------------------------------------------------------------------------
LIQUIDATED LOAN DETAIL
<TABLE>
<CAPTION>
==================================================================================================================
Final Recovery Offering
Loan Determination Document Appraisal Appraisal Actual Gross
Number Date Cross-Reference Date Value Balance Proceeds
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
==================================================================================================================
Current Total
==================================================================================================================
Cumulative Total
==================================================================================================================
<CAPTION>
=======================================================================================================================
Gross Proceeds Aggregate Net Net Proceeds Repurchased
Loan as a % of Liquidation Liquidation as a % of Realized by Seller
Number Actual Balance Expenses* Proceeds Actual Balance Loss (Y/N)
=======================================================================================================================
=======================================================================================================================
Current Total
=======================================================================================================================
Cumulative Total
=======================================================================================================================
</TABLE>
* Aggregate liquidation expenses also include outstanding P & I advances and
unpaid fees (servicing, trustee, etc.).
- --------------------------------------------------------------------------------
Copyright 1997, Norwest Bank Minnesota, N.A. Page 17 of 17
C-17
<PAGE>
<TABLE>
<CAPTION>
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES, INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
DELINQUENT LOAN STATUS REPORT
AS OF ______________
(LOAN LEVEL REPORT)
Operating Information Reflected As NOI______ or NCF________
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)=a+b+c+d
- ------------------------------------------------------------------------------------------------------------------------------------
ENDING OTHER
LOAN PAID SCHEDULED TOTAL P&I EXPENSE TOTAL T&I CURRENT CURRENT
PROSPECTUS PROPERTY PROPERTY SQ FT OR THRU LOAN ADVANCES ADVANCE ADVANCES TOTAL MONTHLY INTEREST
ID NAME TYPE CITY STATE UNITS DATE BALANCE OUTSTANDING OUTSTANDING OUTSTANDING EXPOSURE P&I RATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
LOANS IN FORECLOSURE AND NOT REO
- ------------------------------------------------------------------------------------------------------------------------------------
90 + DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
60 TO 89 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
30 TO 59 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CURENT AND AT SPECIAL SERVICER
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
FCL = Foreclosure
- ------------------------------------------------------------------------------------------------------------------------------------
LTM = Latest 12 Months either Last Normalized Annual, Normalized YTD or Trailing 12 months, if available.
- ------------------------------------------------------------------------------------------------------------------------------------
*Workout Strategy should match the CMSA Loan Periodic Update File using abbreviated words in place of a code number such as (FCL -
In Foreclosure, MOD - Modification, DPO - Discount Payoff, NS - Note Sale,
- ------------------------------------------------------------------------------------------------------------------------------------
BK - Bankruptcy, PP - Payment Plan, TBD - To be determined etc...). It is possible to combine the status codes if the loan is going
in more than one direction (i.e. FCL/Mod, BK/Mod, BK/FCL/DPO).
- ------------------------------------------------------------------------------------------------------------------------------------
**BPO - Broker opinion
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
(f) (.90*f)-e
- ------------------------------------------------------------------------------------------------------------------------------
DATE ASSET
APPRAISAL LOSS TOTAL EXPECTED
LTM LTM BPO OR USING 90% APPRAISAL TO BE
MATURITY NOI/NCF LTM DSCR VALUATION INTERNAL APPR. REDUCTION TRANSFER RESOLVED OR WORKOUT
DATE DATE NOI/NCF (NOI/NCF) DATE VALUE** OR BPO (f) REALIZED DATE FORECLOSED STRATEGY* COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
C-18
<PAGE>
<TABLE>
<CAPTION>
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES, INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
REO STATUS REPORT
AS OF ______________
(PROPERTY LEVEL REPORT)
Operating Information Reflected As NOI______ or NCF________
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)=a+b+c+d
- ------------------------------------------------------------------------------------------------------------------------------------
ALLOCATED
ENDING OTHER TOTAL
SQ FT PAID SCHEDULED TOTAL P&I EXPENSE T&I CURRENT
PROPERTY PROPERTY PROPERTY OR THRU LOAN ADVANCES ADVANCE ADVANCE TOTAL MONTHLY MATURITY
ID NAME TYPE CITY STATE UNITS DATE AMOUNT OUTSTANDING OUTSTANDING OUTSTANDING EXPOSURE P&I DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
REO' s data reflected at the property level for relationships with more than one (1) property should use the Allocated Ending
Scheduled Loan Amount, and prorate all advances and expenses or other loan level data as appropriate.
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Use the following codes; App. - Appraisal, BPO - Brokers Opinion, Int - Internal Value.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
(f) (g) (h)=(.90*g)-e
- ------------------------------------------------------------------------------------------------------------------------
APPRAISAL
BPO OR APPRAISAL LOSS TOTAL DATE ASSET
LTM LTM INTERNAL BPO OR USING 90% APPRAISAL REO EXPECTED
NOI/NCF DSCR VALUATION VALUE INTERNAL APPR. OR REDUCTION TRANSFER ACQUISITION TO BE
DATE (NOI/NCF) DATE SOURCE (1) VALUE BPO (f) REALIZED DATE DATE RESOLVED COMMENTS
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
C-19
<PAGE>
<TABLE>
<CAPTION>
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES, INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
COMPARATIVE FINANCIAL STATUS REPORT
AS OF ____________
(PROPERTY LEVEL REPORT)
Operating Information Reflected As NOI____ or NCF______
- ------------------------------------------------------------------------------------------------------------------------------------
ORIGINAL UNDERWRITING 2ND PRECEDING ANNUAL OPERATING
- ------------------------------------------------------------------------------------------------------------------------------------
Information Information
- ------------------------------------------------------------------------------------------------------------------------------------
Base Year as of _______ Normalized
- ------------------------------------------------------------------------------------------------------------------------------------
Last Current Allocated
Property Allocated Paid Annual Financial Financial
Property Inspection Loan Thru Debt Info as % Total $ (1) Info as % Total $
ID City State Date Amount Date Service of Date Occ Revenue NOI/NCF DSCR of Date Occ Revenue NOI/NCF
- ------------------------------------------------------------------------------------------------------------------------------------
yyyymmdd yyyymmdd yyyymmdd
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total: $ $ ** WA $ $ WA WA $ $
- ------------------------------------------------------------------------------------------------------------------------------------
(1) DSCR should match to Operating Statement Analysis Report and is normally calculated using NOI or NCF / Debt Service times the
allocated loan percentage.
- ------------------------------------------------------------------------------------------------------------------------------------
(2) Net change should compare the latest year to the Base Year.
- ------------------------------------------------------------------------------------------------------------------------------------
* As required by Trust Agreements.
- ------------------------------------------------------------------------------------------------------------------------------------
** Weighted Averages should be computed and reflected if the data is relevant and applicable.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
PRECEDING ANNUAL OPERATING MOST RECENT FINANCIAL NET CHANGE
- ------------------------------------------------------------------------------------------------------------------
Information Information
- ------------------------------------------------------------------------------------------------------------------
as of _______ Normalized *Normalized or Actual Preceding & Basis
- ------------------------------------------------------------------------------------------------------------------
Financial FS FS Occ %
(1) Info as % Total $ (1) Start End As of % Total $ (1) % Total (1)
DSCR of Date Occ Revenue NOI/NCF DSCR Date Date Date Occ Revenue NOI/NCF DSCR Occ Revenue DSCR
- ------------------------------------------------------------------------------------------------------------------------
yyyymmdd yyyymmdd yyyymmdd yyyymmdd
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
WA WA $ $ WA WA $ $ WA WA $ WA
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
C-20
<PAGE>
<TABLE>
<CAPTION>
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES, INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
HISTORICAL LOAN MODIFICATION REPORT
AS OF __________________
(LOAN LEVEL REPORT)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE
BALANCE AT THE # MTHS
MOD/ EXTENSION EFFECTIVE WHEN SENT EFFECTIVE FOR
PROSPECTUS EXTENSION PER DOCS DATE OF TO SPECIAL DATE OF OLD RATE NEW OLD
ID CITY STATE FLAG OR SERVICER MODIFICATION SERVICER MODIFICATION RATE CHANGE RATE P&I
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
THIS REPORT IS HISTORICAL
- ------------------------------------------------------------------------------------------------------------------------------------
Information is as of modification. Each line should not change in the future. Only new modifications should be added.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FOR ALL LOANS:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
* The information in these columns is from a particular point in time and should not change on this report once assigned. Future
modifications done on the same loan are additions to the report.
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Actual principal loss taken by bonds
- ------------------------------------------------------------------------------------------------------------------------------------
(2) Expected future loss due to a rate reduction. This is just an estimate calculated at the time of the modification.
- ------------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(2) EST.
FUTURE
INTEREST
TOTAL # (1) LOSS TO
MTHS FOR REALIZED TRUST $
NEW OLD NEW CHANGE OF LOSS TO (RATE
P&I MATURITY MATURITY MOD TRUST $ REDUCTION) COMMENT
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
C-21
<PAGE>
<TABLE>
<CAPTION>
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES, INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-WF1
HISTORICAL LIQUIDATION REPORT
(REO-SOLD, DISCOUNTED PO OR NOTE SALE)
AS OF ______________
- ----------------------------------------------------------------------------------------------------------------------------
(c)=b/a (a) (b) (d) (e) (f)
- ----------------------------------------------------------------------------------------------------------------------------
LATEST
% APPRAISAL TOTAL
RECEIVED OR EFFECTIVE NET AMT ENDING P&I
PROSPECTUS PROPERTY PROPERTY FROM BROKERS DATE OF SALES RECEIVED SCHEDULED ADVANCE
LOAN ID NAME TYPE CITY STATE LIQUIDATION OPINION LIQUIDATION PRICE FROM SALE BALANCE OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------------------
THIS REPORT IS HISTORICAL
- ----------------------------------------------------------------------------------------------------------------------------
All information is from the liquidation date and does not need to be updated.
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL ALL LOANS:
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
CURRENT MONTH ONLY:
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
(h) Servicing Fee Expense includes fees such as Liquidation or Disposition fees charged by the Special Servicer.
- ----------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
(g) (h) (i)=d-(f+g+h) (k) (m) (n)=k+m (o)=n/e
- --------------------------------------------------------------------------------------------
TOTAL
T&I AND
OTHER DATE DATE OF TOTAL LOSS
EXPENSE SERVICING LOSS MINOR MINOR ADJ LOSS % OF
ADVANCE FEES NET REALIZED PASSED ADJ TO PASSED WITH SCHEDULED
OUTSTANDING EXPENSE PROCEEDS LOSS THRU TRUST THRU ADJUSTMENT BALANCE
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
</TABLE>
C-22
<PAGE>
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-WF1
SERVICER WATCH LIST
AS OF __________________
(LOAN LEVEL REPORT)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Operating Information Reflected As NOI______ or NCF________
- --------------------------------------------------------------------------------------------------
S4 S55 S61 S57 S58 L7 L8 L11
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
ENDING
SCHEDULED PAID
PROSPECTUS PROPERTY LOAN THRU MATURITY
LOAN ID PROPERTY NAME TYPE CITY STATE BALANCE DATE DATE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Does not include loans that are specially serviced
Total: $
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
S4 L56/L93 L70/L97
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
PRECEDING MOST
FISCAL YR RECENT
PROSPECTUS DSCR DSCR
LOAN ID NOI/NCF NOI/NCF COMMENT/ACTION TO BE TAKEN
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Does not include loans that are specially serviced
Total:
</TABLE>
- ----------
(A) Mortgage Loans that have a current Debt Service Coverage Ratio that is 80%
or less of the Debt Service Coverage Ratio listed for such Mortgage Loan on
Annex A to the Prospectus Supplement or having a Debt Service Coverage Ratio
that is less than 1.00x
(B) Mortgage Loans as to which any required inspection of the related Mortgaged
Property conducted by the Servicer indicates a problem that the Servicer
determines can reasonably be expected to materially adversely affect the cash
flow generated by such Mortgaged Property
(C) Mortgage Loans which have come to the Servicer's attention in the
performance of its duties under this Agreement, that (i) any tenant occupying
25% or more of the space in the related Mortgaged Property has vacated (without
being replaced by a comparable tenant and lease) or is the subject of bankruptcy
or similar proceedings or (ii) any Mortgagor or an affiliate thereof has been
the subject of bankruptcy or similar proceedings
(D) Mortgage Loans that are at least 30 days delinquent in payment
(E) Mortgage Loans that are within 60 days of maturity
C-23
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL OPERATING STATEMENT ANALYSIS REPORT (includes Retail/Office/Industrial/Warehouse/Mixed Use/Self Storage)
AS OF MM/DD/YY
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
PROPERTY OVERVIEW
PROSPECTUS ID
Current Scheduled Loan Balance/Paid to Date Current Allocated Loan Amount %
Property Name
Property Type
Property Address, City, State
Net Rentable SF/Units/Pads,Beds Use second box to specify sqft.,units...
Year Built/Year Renovated
Cap Ex Reserve (annually)/per Unit.etc. (1) specify annual/per unit...
Year of Operations UNDERWRITING MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY
Occupancy Rate (physical)
Occupancy Date
Average Rental Rate
(1) Total $ amount of Capital Reserves required annually by loan documents,
excl. Leasing Commission and TI's
====================================================================================================================================
INCOME: (prcdng yr (prcdng yr to
Number of Mos. Covered to base) 2nd prcdng)
Period Ended UNDERWRITING 3RD 2ND PRECEDING YR. TTM/YTD (2) YYYY-U/W YYYY-YYYY
Statement Classification(yr) BASE LINE PRECEDING PRECEDING (FM NOI ADJ SHEET) AS OF / /98 VARIANCE VARIANCE
Gross Potential Rent (3)
Less: Vacancy/collection loss
OR
Base Rent (3)
Expense Reimbursement
Percentage Rent
Parking Income
Other Income
*EFFECTIVE GROSS INCOME
(2) Servicer will not be expected to "Normalize" these YTD/TTM numbers.
(3) Use either Gross Potential (with Vacancy/Collection Loss) or Base Rents; use negative
$amt for Vacancy/Collection Loss
OPERATING EXPENSES:
Real Estate Taxes
Property Insurance
Utilities
Repairs and Maintenance
Janitorial
Management Fees
Payroll & Benefits
Advertising & Marketing
Professional Fees
General and Administrative
Other Expenses
Ground Rent
*TOTAL OPERATING EXPENSES
OPERATING EXPENSE RATIO
*NET OPERATING INCOME
Leasing Commissions
Tenant Improvements
Capital Expenditures
Extraordinary Capital Expenditures
TOTAL CAPITAL ITEMS
*NET CASH FLOW
DEBT SERVICE (PER SERVICER)
*NET CASH FLOW AFTER DEBT SERVICE
*DSCR: (NOI/Debt Service)
*DSCR: (NCF/DEBT SERVICE)
Source of Financial Data:
(ie. operating statements, financial statements, tax return, other)
- ------------------------------------------------------------------------------------------------------------------------------------
NOTES AND ASSUMPTIONS: Years above will roll, always showing a 3yr sequential history. Comments from the most recent NOI Adjustment
Worksheet should be carried forward to Operating Statement Analysis Report. Year-over-year variances (either
higher or lower) must be explained and noted for the following: 10% DSCR CHANGE, 15% EGI/TOTAL OPERATING
EXPENSES OR TOTAL CAPITAL ITEMS.
INCOME: COMMENTS
EXPENSE: COMMENTS
CAPITAL ITEMS: COMMENTS
* Used in the CMSA Comparative Financial Status Report/CMSA Property File/CMSA Loan Periodic Update File. Note that information for
multiple property loans must be consolidated (if available) for reporting to the CMSA Loan Periodic Update file.
</TABLE>
C-24
<PAGE>
<TABLE>
<CAPTION>
MULTIFAMILY OPERATING STATEMENT ANALYSIS REPORT (includes Mobile Home Parks)
AS OF MM/DD/YY
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
PROPERTY OVERVIEW
Prospectus ID
Current Scheduled Loan Balance/Paid to Date Current Allocated Loan Amount %
Property Name
Property Type
Property Address, City, State
Net Rentable SF/Units/Pads,Beds Use second box to specify sq ft.,units...
Year Built/Year Renovated
Cap Ex Reserve (annually)/per Unit.etc. (1) specify annual/per unit...
Year of Operations UNDERWRITING MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY
Occupancy Rate (physical)
Occupancy Date
Average Rental Rate
(1) Total $ amount of Capital Reserves required annually by loan documents.
====================================================================================================================================
INCOME: (prcdng yr (prcdng yr to
Number of Mos. Covered to base) 2nd prcdng)
Period Ended UNDERWRITING 3RD 2ND PRECEDING YR. TTM/YTD (2) YYYY-U/W YYYY-YYYY
Statement Classification(yr) BASE LINE PRECEDING PRECEDING (FM NOI ADJ SHEET) AS OF / / VARIANCE VARIANCE
Gross Potential Rent (3)
Less: Vacancy/collection loss
OR
Base Rent (3)
Laundry/Vending Income
Parking Income
Other Income
*EFFECTIVE GROSS INCOME
(2) Servicer will not be expected to "Normalize" these YTD/TTM numbers.
(3) Use either Gross Potential (with Vacancy/Collection Loss) or Base Rents; use negative
$amt for Vacancy/Collection Loss
OPERATING EXPENSES:
Real Estate Taxes
Property Insurance
Utilities
Repairs and Maintenance
Management Fees
Payroll & Benefits
Advertising & Marketing
Professional Fees
General and Administrative
Other Expenses
Ground Rent
*TOTAL OPERATING EXPENSES
OPERATING EXPENSE RATIO
*NET OPERATING INCOME
Capital Expenditures
Extraordinary Capital Expenditures
TOTAL CAPITAL ITEMS
*NET CASH FLOW
DEBT SERVICE (PER SERVICER)
*NET CASH FLOW AFTER DEBT SERVICE
*DSCR: (NOI/DEBT SERVICE)
*DSCR: (NCF/DEBT SERVICE)
SOURCE OF FINANCIAL DATA:
(ie. operating statements, financial statements, tax return, other)
- ------------------------------------------------------------------------------------------------------------------------------------
NOTES AND ASSUMPTIONS: Years above will roll, always showing a 3yr sequential history. Comments from the most recent NOI Adjustment
Worksheet should be carried forward to Operating Statement Analysis Report. Year-over-year variances (either
higher or lower) must be explained and noted for the following: 10% DSCR CHANGE, 15% EGI/TOTAL OPERATING
EXPENSES OR TOTAL CAPITAL ITEMS.
INCOME: COMMENTS
EXPENSE: COMMENTS
CAPITAL ITEMS: COMMENTS
* Used in the CMSA Comparative Financial Status Report/CMSA Property File/CMSA Loan Periodic Update File. Note that information for
multiple property loans must be consolidated (if available) for reporting to the CMSA Loan Periodic Update file.
</TABLE>
C-25
<PAGE>
<TABLE>
<CAPTION>
LODGING OPERATING STATEMENT ANALYSIS REPORT
as of MM/DD/YY
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
PROPERTY OVERVIEW
Prospectus ID
Current Scheduled Loan Balance/Paid to Date Current Allocated Loan Amount %
Property Name
Property Type
Property Address, City, State
Net Rentable SF/Units/Pads,Beds Use second box to specify sqft.,units...
Year Built/Year Renovated
Cap Ex Reserve (annually)/per Unit.etc. (1) specify annual/per unit...
Year of Operations UNDERWRITING MM/DD/YY MM/DD/YY MM/DD/YY MM/DD/YY
Occupancy Rate (physical)
Occupancy Date
Average Daily Rate
Rev per Avg. Room
(1) Total $ amount of Capital Reserves required annually by loan documents
====================================================================================================================================
INCOME: (prcdng yr (prcdng yr
Number of Mos. Covered to base) to 2nd prcdng)
Period Ended UNDERWRITING 3RD 2ND PRECEDING YR. TTM/YTD (2) YYYY-U/W YYYY-YYYY
Statement Classification (yr) BASE LINE PRECEDING PRECEDING (FM NOI ADJ SHEET) AS OF / / VARIANCE VARIANCE
Room Revenue
Food & Beverage Revenues
Telephone Revenue
Other Departmental Revenue
Other Income
*DEPARTMENTAL REVENUE
(2) Servicer will not be expected to "Normalize" these YTD/TTM numbers.
OPERATING EXPENSES:
DEPARTMENTAL
Room
Food & Beverage
Telephone Expenses
Other Dept. Expenses
DEPARTMENTAL EXPENSES:
DEPARTMENTAL INCOME:
GENERAL/UNALLOCATED
Real Estate Taxes
Property Insurance
Utilities
Repairs and Maintenance
Franchise Fee
Management Fees
Payroll & Benefits
Advertising & Marketing
Professional Fees
General and Administrative
Other Expenses
Ground Rent
TOTAL GENERAL/UNALLOCATED
(For CMSA files, Total Expenses = Dept. Exp + General Exp.)
OPERATING EXPENSE RATIO
(=Departmental Revenue/(Dept. Exp. + General Exp.))
*NET OPERATING INCOME
Capital Expenditures
Extraordinary Capital Expenditures
TOTAL CAPITAL ITEMS
*NET CASH FLOW
DEBT SERVICE (PER SERVICER)
*NET CASH FLOW AFTER DEBT SERVICE
*DSCR: (NOI/DEBT SERVICE)
*DSCR: (NCF/DEBT SERVICE)
SOURCE OF FINANCIAL DATA:
(ie. operating statements, financial statements, tax return, other)
- ------------------------------------------------------------------------------------------------------------------------------------
NOTES AND ASSUMPTIONS: Years above will roll, always showing a 3yr sequential history. Comments from the most recent NOI Adjustment
Worksheet should be carried forward to Operating Statement Analysis Report. Year-over-year variances (either
higher or lower) must be explained and noted for the following: 10% DSCR CHANGE, 15% DEPT REVENUE, DEPT
EXPENSES, GENERAL EXPENSES OR TOTAL CAPITAL ITEMS.
INCOME: COMMENTS
EXPENSE: COMMENTS
CAPITAL ITEMS: COMMENTS
* Used in the CMSA Comparative Financial Status Report/CMSA Property File/CMSA Loan Periodic Update File. Note that information for
multiple property loans must be consolidated (if available) for reporting to the CMSA Loan Periodic Update file.
</TABLE>
C-26
<PAGE>
SCHEDULE OF INTEREST RESERVE LOANS
<TABLE>
<CAPTION>
ANNEX D
GROSS INTEREST
CUT-OFF DATE MORTGAGE ACCRUAL SERVICING
COUNT LOAN NUMBER LOAN NAME BALANCE RATE METHOD FEE RATE
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 310900043 650 Townsend Center 58,500,000 7.8500% Actual 360 0.0532%
2 310900024 First Union Capitol Center 47,000,000 7.6960% Actual 360 0.0532%
3 310851624 Private Mini Storage 44,648,233 8.1700% Actual 360 0.0532%
4 9905426 Holiday Inn-Mission Bay 21,633,104 7.4000% Actual 360 0.0532%
5 26287 Entertainment Properties Trust 20,175,000 8.1800% Actual 360 0.0532%
6 27657 The Mercer Hotel 20,000,000 8.5800% Actual 360 0.0532%
7 310900004 International Airport Center 19,269,309 7.9800% Actual 360 0.0532%
8 310900032 Orchard Business Centre 19,182,572 7.6140% Actual 360 0.0532%
9 9905921 Circuit City Corporate Headquarters 17,000,000 8.1000% Actual 360 0.1332%
10 310900041 Vacaville Commons Shopping Center 16,000,000 8.2500% Actual 360 0.0532%
11 310900020 Security Self Storage 15,722,584 7.8100% Actual 360 0.0532%
12 26660 IRET Apartment Portfolio 13,911,618 7.3300% Actual 360 0.0532%
13 26511 Seattle Design Center 13,748,376 8.1700% Actual 360 0.0532%
14 25503 97 Commerce Way 10,683,388 8.1900% Actual 360 0.0532%
15 27112 Cameron Green Apartments 10,474,608 7.4250% Actual 360 0.0532%
16 27874 Bank West Office Building 10,250,000 8.7850% Actual 360 0.0532%
17 310900011 34801 Campus Drive 10,034,207 7.6400% Actual 360 0.0532%
18 27931 American Colony Apartments 8,795,170 7.4150% Actual 360 0.0532%
19 9905475 Community Shopping Center 8,479,101 7.3200% Actual 360 0.0532%
20 9904248 Best Buy & Kitchen etc @ The Mall of New Hampshire 8,480,137 8.5300% Actual 360 0.0532%
21 310851607 Tracy Corners Shopping Center 7,727,680 8.0600% Actual 360 0.0532%
22 27942 Cinnamon Creek Apartments 7,496,510 7.9000% Actual 360 0.0532%
23 26334 Wild Oats Marketplace 7,146,850 8.0500% Actual 360 0.0532%
24 28027 Tustin French Quarter 6,900,000 8.6200% Actual 360 0.0532%
25 26863 Hampton Apartments 6,783,344 7.3800% Actual 360 0.0532%
26 27355 One Exchange Place 6,789,981 8.2350% Actual 360 0.0532%
27 26597 Fountainview Estates 6,466,944 7.4300% Actual 360 0.0532%
28 26569 Stephen Wise Congress House 6,240,451 8.1150% Actual 360 0.0532%
29 27018 Seattle Gift Center 6,212,968 8.1700% Actual 360 0.0532%
30 26779 Thomasbrook Apartments 6,173,896 7.2150% Actual 360 0.0532%
31 310851270 IDC Petaluma 6,102,295 7.2650% Actual 360 0.0532%
32 18079 36 West 47th Street 5,881,529 7.8800% Actual 360 0.0532%
33 9905484 Richland Meadows Mobile Home Park 5,965,945 7.9200% Actual 360 0.0532%
34 27130 Lake Highlands Plaza 5,837,573 8.2050% Actual 360 0.0532%
35 27708 Home Depot - Ground Lease 5,694,496 7.8050% Actual 360 0.0532%
36 310851529 King City Apartments 5,549,783 7.6000% Actual 360 0.0532%
37 5250 ISIS Theatre 5,465,000 9.4200% Actual 360 0.0532%
38 26724 Comfort Inn 5,418,805 7.8150% Actual 360 0.0532%
39 26136 Gun Hill Apartments 5,388,929 7.9820% Actual 360 0.0532%
40 26282 The National East Sixth Street Building 5,289,077 7.9650% Actual 360 0.0532%
41 310851505 Casa Grande Apartments 5,156,334 7.9000% Actual 360 0.0532%
42 27287 Stop & Stor - Woodhaven 4,986,617 8.0950% Actual 360 0.0532%
43 27945 Audubon Gardens 4,997,965 8.2600% Actual 360 0.0532%
44 27489 Marriott Residence Inn 4,840,045 7.9450% Actual 360 0.0532%
45 25138 Founders Plaza & Tower 14 4,694,564 7.4550% Actual 360 0.0632%
46 17584 Nahatan Place 4,643,428 8.3700% Actual 360 0.0532%
47 26722 Econo Lodge 4,552,990 7.8150% Actual 360 0.0532%
48 26120 Roffe Building 4,546,269 8.2500% Actual 360 0.0532%
49 26985 Holiday Inn Express-Ft. Lauderdale 4,512,449 9.1150% Actual 360 0.0532%
50 27611 Woodbury Town Plaza 4,500,000 8.2700% Actual 360 0.0532%
51 310851522 Loera Industrial Portfolio 4,355,376 8.5400% Actual 360 0.0532%
52 310851643 Pacific Rim Commerce 4,283,055 7.5400% Actual 360 0.0532%
53 9904545 Plaza Del Mar 4,259,724 8.1600% Actual 360 0.0532%
54 310851609 La Mirada Shopping Center 4,139,807 7.7400% Actual 360 0.0532%
55 26989 Sierra Village Shopping Center 4,092,326 8.2700% Actual 360 0.0532%
56 9905478 Kmart Shopping Plaza 4,066,578 8.1200% Actual 360 0.0532%
57 310851557 Lakeway Marina 4,073,620 8.7200% Actual 360 0.0532%
58 310851562 One Hallidie Plaza 4,087,177 8.5000% Actual 360 0.0532%
59 310851622 19780 Pacific Gateway Drive 4,080,944 8.0100% Actual 360 0.0532%
60 27292 35 West 35th Street 3,985,786 8.0300% Actual 360 0.0532%
61 9904417 Furr's Supermarket 3,985,712 8.0800% Actual 360 0.1332%
62 9905472 Meridian Plaza 3,967,393 8.1200% Actual 360 0.0532%
63 310900033 Laguna Greens Shopping Center 3,796,991 8.1900% Actual 360 0.0532%
64 25413 GR Corporate Center 3,788,130 7.9500% Actual 360 0.0532%
65 25465 El Norte Heights Apartments 3,736,165 7.4900% Actual 360 0.0532%
</TABLE>
D-1
<PAGE>
<TABLE>
<CAPTION>
GROSS INTEREST
CUT-OFF DATE MORTGAGE ACCRUAL SERVICING
COUNT LOAN NUMBER LOAN NAME BALANCE RATE METHOD FEE RATE
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
66 27937 Bank Street Court Apartments 3,748,480 8.2700% Actual 360 0.0532%
67 27005 Ivy Hall Apartments 3,693,549 7.6600% Actual 360 0.0532%
68 310851641 Talcott Plaza 3,691,169 8.4600% Actual 360 0.0532%
69 27397 Lancaster Court Apartments 3,583,391 8.0000% Actual 360 0.0532%
70 26766 Northwest Executive Center 3,520,745 8.1400% Actual 360 0.0532%
71 26271 Balboa Park Plaza 3,490,876 8.1600% Actual 360 0.0532%
72 26600 Coral Springs Surgical Center 3,493,967 7.7000% Actual 360 0.0532%
73 26709 South Lander Business Park 3,494,780 8.1950% Actual 360 0.0532%
74 310851432 Olivenhain Self Storage 3,439,727 6.7800% Actual 360 0.0532%
75 310851612 North County Self Storage 3,481,683 8.2500% Actual 360 0.0532%
76 310851598 Windsor Park Apartments 3,468,261 7.8100% Actual 360 0.0532%
77 25895 Mary Avenue Plaza 3,418,847 8.3950% Actual 360 0.0532%
78 26367 Holiday Inn Express 3,333,119 9.4550% Actual 360 0.0532%
79 26734 La Canada Mobile Home Park 3,243,271 7.9500% Actual 360 0.0532%
80 27319 Security Station 3,245,190 8.2200% Actual 360 0.0532%
81 310900012 Borders Books 3,240,416 7.6250% Actual 360 0.0532%
82 310851414 Springview Village Apartments 3,155,764 6.1500% Actual 360 0.0532%
83 310851482 Hollander Industrial Park 3,158,709 7.5900% Actual 360 0.0532%
84 26553 Keystone Apartments 3,089,034 7.0250% Actual 360 0.0532%
85 310851633 Rancho Chula Vista 3,087,923 7.7900% Actual 360 0.0532%
86 26494 Center Square 2,998,197 8.0800% Actual 360 0.0532%
87 27654 Country Fair Shopping Center 2,998,712 8.1200% Actual 360 0.0532%
88 9905404 1313 Third Avenue 2,997,209 7.9100% Actual 360 0.0532%
89 310851495 La Habra Woods Apartments 2,958,882 6.5400% Actual 360 0.0532%
90 310851627 Manor Oaks Mobile Estate 2,990,812 8.1400% Actual 360 0.0532%
91 310851644 104 Lee Road 2,994,820 7.8450% Actual 360 0.0532%
92 27379 Madison Centre 2,947,766 8.4500% Actual 360 0.0532%
93 310851448 Bridgeport Woods 2,775,293 7.2900% Actual 360 0.0532%
94 25466 San Marcos Racquet Club 2,789,670 7.4900% Actual 360 0.0532%
95 25473 Office Depot Shopping Center 2,799,165 8.9850% Actual 360 0.0532%
96 310900021 Meadowbrook Apartments 2,679,005 8.4900% Actual 360 0.0532%
97 9905501 Safeland Self Storage 2,554,234 8.1800% Actual 360 0.0532%
98 26528 Rite Aid 2,530,813 7.8500% Actual 360 0.0532%
99 25454 Huntington Shopping Center 2,498,456 8.9200% Actual 360 0.0532%
100 310851521 Martin Avenue Office Warehouse 2,432,087 7.2800% Actual 360 0.0532%
101 310851632 Bays-Dulles Building 2,488,614 8.1100% Actual 360 0.0532%
102 310851489 A-Storage Place Chula Vista 2,431,965 7.2700% Actual 360 0.0532%
103 9905467 U-Stor Delta 2,413,706 8.0000% Actual 360 0.0532%
104 9905468 U-Stor Beta 2,410,721 7.6800% Actual 360 0.0532%
105 9905451 Edgewater & Plaza Arms 2,338,465 7.9500% Actual 360 0.0532%
106 27165 The Arrangement Apartments 2,294,116 8.2250% Actual 360 0.0532%
107 310851588 Redwood Business Park 2,283,270 7.3600% Actual 360 0.0532%
108 310851634 Al's Formal Wear Distribution Center 2,212,996 7.7950% Actual 360 0.0532%
109 9904923 Village At Weber Ranch 2,219,515 8.2300% Actual 360 0.1332%
110 27064 The Marlborough 2,216,031 7.4300% Actual 360 0.0532%
111 310851541 1483 Broadway 2,179,258 7.4000% Actual 360 0.0532%
112 310851614 Electric Lightwave Building 2,162,566 7.8300% Actual 360 0.0532%
113 26725 Days Inn 2,187,426 7.8150% Actual 360 0.0532%
114 25773 Rocky Hill Plaza 2,144,853 8.4500% Actual 360 0.0532%
115 310851616 Plantation Atlantana 2,131,199 7.3100% Actual 360 0.0532%
116 27936 Southpointe 79 2,100,000 7.9450% Actual 360 0.0532%
117 26023 Best Western 2,065,579 8.9000% Actual 360 0.0532%
118 25339 Colonial Village Shopping Center 2,050,000 8.2900% Actual 360 0.0532%
119 27780 Lakeview Square Shopping Center 2,050,000 8.4600% Actual 360 0.0532%
120 9905453 Riverpark Apartments 2,032,691 7.9500% Actual 360 0.0532%
121 310851533 Staples-Minot 2,025,829 8.3600% Actual 360 0.0532%
122 310851640 Desert Village Corporate Center 1,990,883 7.6800% Actual 360 0.0532%
123 27108 Ye Olde Colony Apartments 1,991,622 7.2400% Actual 360 0.0532%
124 310851496 Westside Business Park 1,975,843 7.2200% Actual 360 0.0532%
125 310851576 Ruffin Road Building 1,990,483 7.6900% Actual 360 0.0532%
126 310900031 Hammer Lane 1,999,086 7.9500% Actual 360 0.0532%
127 310900036 Corsa Self Storage 1,996,636 7.9550% Actual 360 0.0532%
128 310851621 Canoga Park Self Storage 1,979,892 8.3900% Actual 360 0.0532%
129 9904324 Green Trails Shopping Plaza 1,969,395 8.3900% Actual 360 0.0532%
130 25309 Southpointe Shopping Center 1,926,110 9.0000% Actual 360 0.0532%
</TABLE>
D-2
<PAGE>
<TABLE>
<CAPTION>
GROSS INTEREST
CUT-OFF DATE MORTGAGE ACCRUAL SERVICING
COUNT LOAN NUMBER LOAN NAME BALANCE RATE METHOD FEE RATE
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
131 26909 Los Coyotes Shopping Center 1,896,693 8.4900% Actual 360 0.0532%
132 310851546 Imming Office Building 1,882,156 7.4200% Actual 360 0.0532%
133 310851572 Tab Transportation 1,885,407 7.8700% Actual 360 0.0532%
134 9905053 Third Ave & Second Ave & 70th St 1,844,259 7.5300% Actual 360 0.0532%
135 310851596 Wilco Building 1,830,661 8.3400% Actual 360 0.0532%
136 310851517 Nestle Industrial Park 1,791,791 8.8800% Actual 360 0.0532%
137 310851527 Sail Otay Business Park 1,790,405 7.6600% Actual 360 0.0532%
138 26981 Grove Square 1,784,467 8.9850% Actual 360 0.0532%
139 26832 River Reach Plaza 1,770,286 8.0950% Actual 360 0.0532%
140 9904785 530 North 3rd Street Office Building 1,745,684 8.3500% Actual 360 0.0532%
141 310851587 The Meadows Apartments 1,714,661 7.6500% Actual 360 0.0532%
142 310851611 Alpine Business Center 1,726,644 8.6350% Actual 360 0.0532%
143 310851613 Poway Road Mini Storage 1,691,037 8.2150% Actual 360 0.0532%
144 310851490 West Collins and South Standard 1,633,006 8.0300% Actual 360 0.0532%
145 25540 Hampton Manor Apartments 1,620,082 8.1800% Actual 360 0.0532%
146 310851608 Crocker's Lockers 1,540,808 8.3400% Actual 360 0.0532%
147 310851497 Chaparral Heights Mobile Home Park 1,485,459 6.7600% Actual 360 0.0532%
148 310851558 La Casa de Flores 1,459,098 7.2400% Actual 360 0.0532%
149 310851575 Napa/Riley/Gaines Properties 1,495,232 8.4500% Actual 360 0.0532%
150 310900006 Brandywyne Apartrments 1,492,620 7.6600% Actual 360 0.0532%
151 310900018 Arizona Republic Distribution Center 1,497,377 7.7900% Actual 360 0.0532%
152 310900022 Placerville Mini-Storage 1,487,935 8.2950% Actual 360 0.0532%
153 310900037 Desert Colony Town Home Apartments 1,498,679 8.0600% Actual 360 0.0532%
154 310851601 807 Eden Street 1,431,792 7.8400% Actual 360 0.0532%
155 310851568 Trade Center Business Park 1,389,161 7.8300% Actual 360 0.0532%
156 310900029 Kasota Avenue 1,395,828 7.9600% Actual 360 0.0532%
157 310900035 Gin'l Fabrics Industrial 1,298,880 8.1200% Actual 360 0.0532%
158 26567 CVS-Groton 1,246,963 8.4000% Actual 360 0.0532%
159 9904982 Park Lane I Apartments 1,220,783 8.2000% Actual 360 0.0532%
160 25840 Lincoln Center Mobile Home 1,198,125 8.2600% Actual 360 0.0532%
161 310851625 848 Gish Rd 1,133,274 7.6700% Actual 360 0.0532%
162 310851257 Johnson Warehouse-Englewood 1,056,714 6.9850% Actual 360 0.0532%
163 9905494 Hampton Place Townhomes 1,080,348 8.7500% Actual 360 0.0532%
164 310851600 17711-17721 Railroad Street 1,065,097 8.0800% Actual 360 0.0532%
165 310851544 Livermore Industrial 1,041,458 8.1300% Actual 360 0.0532%
166 26302 Sears Auto - Ground Lease 997,206 8.3550% Actual 360 0.0532%
167 310851583 1227 & 1227 A Knox Street 977,412 7.9800% Actual 360 0.0532%
168 310851599 554 Easy Street 935,693 8.0800% Actual 360 0.0532%
169 310851626 Idle Wheels Mobile Home Park 932,255 8.2800% Actual 360 0.0532%
170 9905485 Video Junction Retail Center 901,886 8.3000% Actual 360 0.0532%
171 310900002 Spring Creek Plaza 888,571 8.9700% Actual 360 0.0532%
</TABLE>
D-3
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROSPECTUS
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
(DEPOSITOR)
---------------------
Consider carefully the risk factors beginning on page 8 in this
prospectus.
The securities to be issued are mortgage backed certificates issued by a
trust. The securities represent interests only in the related trust fund and do
not represent interests in or obligations of Bear Stearns Commercial Mortgage
Securities Inc.
Unless otherwise specified in the applicable prospectus supplement,
neither the certificates nor the underlying assets are insured or guaranteed by
any governmental agency or other person.
This prospectus may be used to offer and sell any series of certificates
only if accompanied by the prospectus supplement for that series.
THE TRUST FUNDS--
(1) A new trust fund will be established to issue each series of
certificates.
(2) Each trust fund will consist primarily of loans secured by pledges of
commercial, multifamily residential or mixed use properties.
(3) A new trust fund may also include letters of credit, insurance
policies, guarantees, reserve funds or other types of credit support, and
interest rate exchange agreements, interest rate cap or floor agreements or
currency exchange agreements.
THE CERTIFICATES--
(1) Each series of certificates will be issued as part of a designated
series that may include one or more classes.
(2) Each series of certificates will represent the entire beneficial
ownership interest in the related trust fund and will be paid only from the
related trust fund assets.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE CERTIFICATES OR DETERMINED THAT
THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this prospectus is January 24, 2000.
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE APPLICABLE PROSPECTUS SUPPLEMENT
We provide information about the certificates in two separate documents
that progressively provide more detail. These documents are:
o this prospectus, which provides general information, some of which may
not apply to a particular series of certificates, including your
series; and
o the prospectus supplement for a series of certificates, which will
describe the specific terms of that series of certificates.
You should rely only on the information provided in this prospectus and
the applicable prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not offering the certificates in any state where the offer
is not permitted.
We have included cross-references to captions in these materials where you
can find related discussions that we believe will enhance your understanding of
the topic being discussed. The table of contents of this prospectus and the
table of contents included in the applicable prospectus supplement list the
pages on which these captions are located. You can also find references to key
topics in the table of contents on the preceding page.
You can find the definitions of capitalized terms that are used in this
prospectus beginning on page 114 of this prospectus under the caption
"Glossary."
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE APPLICABLE PROSPECTUS SUPPLEMENT ..................................... 2
SUMMARY OF PROSPECTUS .................................................................... 7
RISK FACTORS ............................................................................. 8
Risks Relating to the Certificates ...................................................... 8
Risks Relating to the Mortgage Loans .................................................... 12
DESCRIPTION OF THE TRUST FUNDS ........................................................... 20
General ................................................................................. 20
Mortgage Loans .......................................................................... 20
General ................................................................................ 20
Mortgage Loans Secured by Office Properties ........................................... 21
Mortgage Loans Secured by Retail Properties ........................................... 21
Mortgage Loans Secured by Multifamily Rental Properties ............................... 22
Mortgage Loans Secured by Cooperatively Owned Apartment Buildings ..................... 23
Mortgage Loans Secured by Industrial Properties ....................................... 24
Mortgage Loans Secured by Warehouse, Mini-Warehouse and Self-Storage Facilities ....... 24
Mortgage Loans Secured by Hotel and Motel Properties .................................. 24
Mortgage Loans Secured by Manufactured Housing Community Properties and Recreational
Vehicle Parks ........................................................................ 25
Default and Loss Considerations with Respect to the Mortgage Loans ..................... 26
Payment Provisions of the Mortgage Loans ............................................... 28
Mortgage Loan Information in Prospectus Supplements .................................... 28
MBS ..................................................................................... 29
Certificate Accounts .................................................................... 30
Credit Support .......................................................................... 30
Cash Flow Agreements .................................................................... 31
YIELD AND MATURITY CONSIDERATIONS ........................................................ 31
General ................................................................................. 31
Pass-Through Rate ....................................................................... 31
Payment Delays .......................................................................... 31
Shortfalls in Collections of Interest as a Result of Prepayments of Mortgage Loans ...... 31
Yield and Prepayment Considerations ..................................................... 32
Weighted Average Life and Maturity ...................................................... 34
Controlled Amortization Classes and Companion Classes ................................... 34
Other Factors Affecting Yield, Weighted Average Life and Maturity ....................... 35
Balloon Payments; Extensions of Maturity .............................................. 35
Negative Amortization ................................................................. 35
Foreclosures and Payment Plans ........................................................ 36
Losses and Shortfalls on the Mortgage Loans ........................................... 36
Additional Certificate Amortization ................................................... 37
Optional Early Termination ............................................................ 37
THE DEPOSITOR ............................................................................ 37
USE OF PROCEEDS .......................................................................... 37
DESCRIPTION OF THE CERTIFICATES .......................................................... 37
General ................................................................................. 37
Distributions ........................................................................... 38
Distributions of Interest on the Certificates ........................................... 39
Distributions of Principal on the Certificates .......................................... 39
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Distributions on the Certificates in Respect of Prepayment Premiums or in Respect of
Equity Participations .................................................................. 40
Allocation of Losses and Shortfalls ..................................................... 40
Advances in Respect of Delinquencies .................................................... 40
Reports to Certificateholders ........................................................... 41
Voting Rights ........................................................................... 43
Termination ............................................................................. 43
Book-Entry Registration and Definitive Certificates ..................................... 43
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS ...................................... 45
General ................................................................................. 45
Assignment of Mortgage Loans; Repurchases ............................................... 46
Representations and Warranties; Repurchases ............................................. 47
Collection and Other Servicing Procedures ............................................... 47
Sub-Servicers ........................................................................... 48
Special Servicers ....................................................................... 49
Certificate Account ..................................................................... 49
General ................................................................................ 49
Deposits ............................................................................... 49
Withdrawals ............................................................................ 50
Modifications, Waivers and Amendments of Mortgage Loans ................................. 52
Realization upon Defaulted Mortgage Loans ............................................... 52
Hazard Insurance Policies ............................................................... 54
Due-on-Sale and Due-on-Encumbrance Provisions ........................................... 55
Servicing Compensation and Payment of Expenses .......................................... 55
Evidence as to Compliance ............................................................... 56
Some Matters Regarding the Servicer and the Depositor ................................... 56
Events of Default ....................................................................... 58
Rights upon Event of Default ............................................................ 58
Amendment ............................................................................... 59
List of Certificateholders .............................................................. 60
The Trustee ............................................................................. 60
Duties of the Trustee ................................................................... 60
Regarding the Fees, Indemnities and Powers of the Trustee ............................... 60
Resignation and Removal of the Trustee .................................................. 61
DESCRIPTION OF CREDIT SUPPORT ............................................................ 61
General ................................................................................. 61
Subordinate Certificates ................................................................ 62
Cross-Support Provisions ................................................................ 62
Insurance or Guarantees with Respect to Mortgage Loans .................................. 62
Letter of Credit ........................................................................ 62
Certificate Insurance and Surety Bonds .................................................. 63
Reserve Funds ........................................................................... 63
Credit Support with Respect to MBS ...................................................... 63
LEGAL ASPECTS OF MORTGAGE LOANS .......................................................... 64
General ................................................................................. 64
Types of Mortgage Instruments ........................................................... 64
Leases and Rents ........................................................................ 64
Personal Property ....................................................................... 65
Foreclosure ............................................................................. 65
General ............................................................................... 65
Foreclosure Procedures Vary from State to State ....................................... 65
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Judicial Foreclosure .................................................. 65
Equitable Limitations on Enforceability of Some Provisions ............ 65
Non-Judicial Foreclosure/Power of Sale ................................ 66
Public Sale ........................................................... 66
Rights of Redemption .................................................. 67
Anti-Deficiency Legislation ........................................... 68
Leasehold Risks ......................................................... 68
Cooperative Shares ...................................................... 69
Bankruptcy Laws ......................................................... 69
Environmental Risks ..................................................... 72
Due-on-Sale and Due-on-Encumbrance Provisions ........................... 74
Subordinate Financing ................................................... 74
Default Interest and Limitations on Prepayments ......................... 74
Adjustable Rate Loans ................................................... 74
Applicability of Usury Laws ............................................. 75
Soldiers' and Sailors' Civil Relief Act of 1940 ......................... 75
Type of Mortgaged Property .............................................. 75
Americans with Disabilities Act ......................................... 76
Forfeitures in Drug and RICO Proceedings ................................ 76
MATERIAL FEDERAL INCOME TAX CONSEQUENCES ................................. 76
Federal Income Tax Consequences for REMIC Certificates .................. 77
General ................................................................ 77
Status of REMIC Certificates ........................................... 77
Qualification as a REMIC ............................................... 78
Taxation of Regular Certificates ........................................ 80
General ............................................................... 80
Original Issue Discount ............................................... 80
Acquisition Premium ................................................... 83
Variable Rate Regular Certificates .................................... 83
Deferred Interest ..................................................... 85
Market Discount ....................................................... 85
Premium ............................................................... 86
Election to Treat All Interest Under the Constant Yield Method ........ 86
Sale or Exchange of Regular Certificates .............................. 87
Treatment of Losses ................................................... 87
Taxation of Residual Certificates ....................................... 88
Taxation of REMIC Income ............................................... 88
Basis and Losses ...................................................... 89
Treatment of Some Items of REMIC Income and Expense ..................... 90
Original Issue Discount and Premium ................................... 90
Deferred Interest ..................................................... 90
Market Discount ....................................................... 90
Premium ............................................................... 90
Limitations on Offset or Exemption of REMIC Income ...................... 91
Tax-Related Restrictions on Transfer of Residual Certificates ........... 92
Disqualified Organizations ............................................ 92
Noneconomic Residual Interests ........................................ 93
Foreign Investors ..................................................... 93
Sale or Exchange of a Residual Certificate .............................. 94
Mark-to-Market Regulations .............................................. 95
Taxes That May Be Imposed on the REMIC Pool ............................. 95
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Prohibited Transactions ............................................................... 95
Contributions to the REMIC Pool After the Startup Day ................................. 95
Net Income from Foreclosure Property .................................................. 96
Liquidation of the REMIC Pool ......................................................... 96
Administrative Matters ................................................................ 96
Limitations on Deduction of Some Expenses ............................................. 96
Taxation of Some Foreign Investors ...................................................... 97
Regular Certificates .................................................................. 97
Residual Certificates ................................................................. 97
Backup Withholding .................................................................... 98
Reporting Requirements ................................................................ 98
Federal Income Tax Consequences for Certificates as to Which No REMIC Election Is Made .. 99
Standard Certificates ................................................................. 99
General ............................................................................ 99
Tax Status ......................................................................... 99
Premium and Discount ............................................................... 100
Premium ........................................................................... 100
Original Issue Discount ........................................................... 100
Market Discount ................................................................... 100
Recharacterization of Servicing Fees .............................................. 100
Sale or Exchange of Standard Certificates ......................................... 101
Stripped Certificates ................................................................. 102
General .............................................................................. 102
Status of Stripped Certificates ...................................................... 103
Taxation of Stripped Certificates .................................................... 103
Original Issue Discount ............................................................ 103
Sale or Exchange of Stripped Certificates .......................................... 104
Purchase of More than One Class of Stripped Certificates ........................... 104
Possible Alternative Characterizations ............................................. 104
Federal Income Tax Consequences for FASIT Certificates .................................. 105
Reporting Requirements and Backup Withholding ........................................... 105
Taxation of Some Foreign Investors ...................................................... 105
STATE AND OTHER TAX CONSIDERATIONS ....................................................... 106
ERISA CONSIDERATIONS ..................................................................... 106
General ................................................................................. 106
Plan Asset Regulations .................................................................. 107
Administrative Exemptions ............................................................... 107
Unrelated Business Taxable Income; Residual Certificates ................................ 107
LEGAL INVESTMENT ......................................................................... 108
METHOD OF DISTRIBUTION ................................................................... 110
WHERE YOU CAN FIND MORE INFORMATION ...................................................... 111
INCORPORATION OF SOME INFORMATION BY REFERENCE ........................................... 112
REPORTS .................................................................................. 112
FINANCIAL INFORMATION .................................................................... 112
LEGAL MATTERS ............................................................................ 112
RATINGS .................................................................................. 112
GLOSSARY ................................................................................. 114
</TABLE>
6
<PAGE>
SUMMARY OF PROSPECTUS
This summary includes selected information from this prospectus. It does
not contain all of the information you need to consider in deciding whether to
buy any class of the offered certificates. To understand the terms of the
offering of the offered certificates, you should read carefully this entire
prospectus and the applicable prospectus supplement.
TITLE OF CERTIFICATES....... Commercial/Multifamily Mortgage Pass-Through
Certificates, issuable in series.
DEPOSITOR................... Bear Stearns Commercial Mortgage Securities
Inc., a Delaware corporation. Our telephone
number is (212) 272-2000.
DESCRIPTION OF
CERTIFICATES; RATINGS....... The certificates of each series will be issued
pursuant to a pooling and servicing agreement and
may be issued in one or more classes. The
certificates of each series will represent in the
aggregate the entire beneficial ownership
interest in the property of the related trust
fund. Each trust fund will consist primarily of a
segregated pool of commercial or multifamily
mortgage loans, or mortgage-backed securities
that evidence interests in, or that are secured
by commercial or multifamily mortgage loans. Each
class or certificate will be rated not lower than
investment grade by one or more nationally
recognized statistical rating agencies at the
date of issuance.
The prospectus supplement for a series of certificates includes important
information on related trust fund, certificates, and risks, including
information on the following:
(1) the name of the servicer and special
servicer, the circumstances when a special
servicer will be appointed and their
respective obligations (if any) to make
advances to cover delinquent payments on
the assets of the trust fund, taxes,
assessments or insurance premiums;
(2) the assets in the trust fund, including a
description of the pool of mortgage loans
or mortgage-backed securities;
(3) the identity and attributes of each class
within a series of certificates, including
whether (and to what extent) any credit
enhancement benefits any class of a series
of certificates;
(4) the tax status of certificates; and
(5) whether the certificates will be eligible
to be purchased by investors subject to
ERISA or will be mortgage related
securities for purposes of SMMEA.
7
<PAGE>
RISK FACTORS
You should carefully 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 mortgage-backed securities included in the trust fund. If
any of the following risks are realized, your investment could be materially
and adversely affected. In addition, other risks unknown to us or which we
currently consider immaterial may also impair your investment.
RISKS RELATING TO THE CERTIFICATES
LACK OF A SECONDARY MARKET FOR THE CERTIFICATES MAY MAKE IT DIFFICULT FOR
YOU TO RESELL YOUR CERTIFICATES AT ALL OR AT AN ATTRACTIVE PRICE. We cannot
assure you that a secondary market will develop for certificates. Even if a
secondary market develops, we cannot assure you that it will provide you with
liquidity of investment or will continue for as long as the offered
certificates remain outstanding. The absence of a secondary market for your
certificates means that you may not be able to find a buyer for your
certificates or, if you find a buyer, that the selling price may be less than
it would have been if a secondary market existed for the certificates. The
underwriter for a series of certificates will not be obligated to make a market
for that series of certificates even if it intends to do so. Even if a
secondary market for your certificates develops, it may provide less liquidity
than any comparable market for securities that evidence interests in
single-family mortgage loans.
Insofar as a secondary market does develop with respect to any series of
offered certificates or class of any series of offered certificates, other
factors may affect their market value. These include:
o the perceived liquidity of the offered certificates;
o their anticipated cash flow, which may vary widely depending upon the
prepayment and default assumptions applied in respect of the
underlying mortgage loans; and
o prevailing interest rates.
For example, small fluctuations in prevailing interest rates may affect at
any given time the price payable of some of the 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. In addition, 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 the
offered certificate in response to an equal but opposite movement in the rates.
Accordingly, you may only be able to sell your certificates at a discount from
the price that you paid for them even if a secondary market develops for the
certificates. We are not aware of any source through which holders of the
certificates may obtain price information about the offered certificates on an
ongoing basis.
You will have no right to redeem your certificates except to the extent
described in this prospectus and the related prospectus supplement. Offered
certificates are subject to early retirement only under some specified
circumstances described in this prospectus and in the related prospectus
supplicant.
You will be entitled to receive periodic reports pursuant to the related
pooling and servicing agreement regarding the status of the related mortgage
assets and any credit support for your certificates and any subordination of
your certificates to other classes of certificates. The periodic reports will
be the primary source of ongoing information regarding the offered certificates
of any series. The certificateholders may not receive any additional
information from any other source. The limited nature of the information may
adversely affect the liquidity of your certificates, even if a secondary market
does develop for them.
8
<PAGE>
SINCE THE MORTGAGE LOANS WILL NOT BE GUARANTEED, YOU MAY NOT RECEIVE FULL
PAYMENT ON YOUR CERTIFICATES TO THE EXTENT THERE IS A SHORTFALL IN PAYMENT ON
THE ASSETS OR THE RELATED TRUST FUND. The only sources of funds for payment on
a series of certificates will generally be the assets of the related trust fund
and, to the extent provided in the applicable prospectus supplement, any credit
enhancement. The certificates will not be guaranteed by us or any of our
affiliates, by any governmental agency or instrumentality or by any other
person or entity unless otherwise stated in the related prospectus supplement.
A portion of the amounts remaining in some funds or accounts constituting part
of a trust fund, including any certificate account and any accounts maintained
as credit support, may be withdrawn under conditions described in the
applicable prospectus supplement for purposes other than the payment of
principal or interest in the related series of certificates. A series of
certificates will have no claim against or security interest in the trust fund
for any other series. As a result, you may suffer a loss on your certificates
if the sources for payment are insufficient to pay all the principal of and
interest on the certificates of your series. If you are a holder of a
subordinate certificate, you may bear a portion of the amount of the losses or
shortfalls in collections on the mortgage assets before the holders of the
remaining classes of certificates in the priority and manner and subject to the
limitations specified in the applicable prospectus supplement.
THE RATE OF PRINCIPAL PREPAYMENTS ON THE MORTGAGE LOANS AND THE RATE OF
REPURCHASES OF THE MORTGAGE LOANS MAY ADVERSELY AFFECT THE YIELD ON YOUR
INVESTMENT. In deciding whether to purchase any offered certificates, you
should make an independent decision as to the appropriate prepayment
assumptions to be used. The pre-tax return on your investment will change from
time to time for a number of reasons, including the following:
o The amount of distributions of principal of the certificates and the
times when you receive those distributions depends on the amount and
the times at which borrowers make principal payments of the underlying
mortgage loans, and on whether we or the servicer purchases the
underlying mortgage loans.
o Prepayments of the mortgage loans in any trust fund by the related
borrowers generally will result in a faster rate of principal payments
on one or more classes of the related certificates than if payment on
those mortgage loans are made as scheduled. The prepayment rate on
mortgage loans may be influenced by a variety of economic, tax, legal
and social factors. While one prepayment rate may be used for the
purpose of pricing the certificates, there can be no assurance that
the actual prepayment rate will be faster or slower than any assumed
prepayment rate.
In addition, to the extent described in this prospectus and in the related
prospectus supplement, in order to maximize recoveries on defaulted mortgage
loans, the 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 servicer or a special servicer
generally will be required to determine that any extension or modification is
reasonably likely to produce a greater recovery than liquidation, we can give
you no assurance that any extension or modification will increase the present
value of receipts from or proceeds of the affected mortgage loans.
We or the mortgage loan seller or sellers named in the applicable
prospectus supplement will be required to repurchase a mortgage loan from the
trust, or if so specified in the applicable prospectus supplement, substitute
another mortgage loan, if we or such seller or sellers breach the
representations and warranties made with respect to that mortgage loan. In
addition, the servicer may have the option to purchase the mortgage loans in
the trust fund and may be obligated to purchase mortgage loans from the trust
fund under the circumstances described in the prospectus supplement.
If you buy your certificates at a premium or discount your yield to
maturity will be sensitive to prepayments on the mortgage loans in the related
trust fund. If the amount of interest payable with respect to your class is
disproportionately large, as compared to the amount of principal, as with some
classes of stripped interest certificates, you might fail to recover your
original investment under some prepayment scenarios. The extent to which the
yield to maturity of your certificates may vary from the anticipated yield will
depend in part upon the degree to which you purchased them at a discount or
9
<PAGE>
premium and the amount and timing of distributions on those certificates. If
you purchase a certificate at a discount, you should consider the risk that a
slower than anticipated rate of principal payments on the mortgage loans could
result in an actual yield to you that is lower than the anticipated yield, and
if you purchase a certificate at a premium, you should consider the risk that a
faster than anticipated rate of principal payments could result in an actual
yield to you that is lower than the anticipated yield. For more detailed
information regarding these risks, you should refer to the section in this
prospectus titled "Yield and Maturity Considerations."
Average Life of Certificates. The terms of your certificates will
determine the extent to which prepayments on the mortgage loans in any trust
fund ultimately affect the average life of your certificates. For example, a
class of certificates, including a class of offered certificates, may provide
that on any distribution date you are entitled to a pro rata share of the
prepayments on the mortgage loans in the related trust fund that are
distributable on that date, to all or a disproportionately large share of the
prepayments, or to none or a disproportionately small share of the prepayments.
A class of certificates that entitles you to a disproportionately large share
of the prepayments on the mortgage loans in the related trust fund increases
the likelihood of early retirement of that class if the rate of prepayment is
relatively fast. A class of certificates that entitles you 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 that
class if the rate of prepayment is relatively slow. 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 some events, e.g., the retirement of
one or more classes of certificates of the series, or subject to some
contingencies, e.g., prepayment and default rates with respect to the mortgage
loans.
Controlled Amortization Classes and Companion Classes. A series of
certificates may include one or more controlled amortization classes, which
will entitle you to receive principal distributions according to a specified
principal payment schedule. Although prepayment risk cannot be eliminated
entirely for any class of certificates, a controlled amortization class will
generally provide a relatively stable cash flow so long as the actual rate of
prepayment of 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 the certificates.
However, prepayment risk will not disappear.
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, a
companion class may entitle you 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 you 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 companion class absorbs some, but
not all, of the 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.
RATINGS ON YOUR CERTIFICATES DO NOT GUARANTEE THAT YOU WILL RECEIVE
PAYMENT UNDER THE POOLING AND SERVICING AGREEMENT. Ratings assigned by a rating
agency to a class of certificates reflect the rating agency's assessment of the
likelihood that the holders of certificates of that class will receive all
payments to which they are entitled. The ratings are based on the structural,
legal and issuer-related aspects associated with these certificates, the nature
of the underlying mortgage loans and the extent and quality of any credit
enhancement. Ratings will not constitute an assessment of the following:
o the likelihood that principal prepayments on the related mortgage
loans will be made;
o the degree to which the rate of prepayments might differ from that
originally anticipated;
o the likelihood of early optional termination of the related trust
fund; or
o the possibility that prepayment of the related mortgage loans may be
made at any particular rate.
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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 the
series. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, we can not assure you
that the historical data supporting any related 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. These criteria may
also be based upon determinations of the values of the mortgaged properties
that provide security for the mortgage loans. However, we cannot assure you
that those values will not decline in the future. For more detailed information
regarding these risks, you should refer to the section in this prospectus
titled "Description of Credit Support" and "Ratings."
ERISA IMPOSES LIMITATIONS ON WHO CAN PURCHASE THE CERTIFICATES; FAILURE TO
COMPLY WITH ERISA MAY MATERIALLY AND ADVERSELY AFFECT THE TRUST FUND AND RESULT
IN REDUCED PAYMENTS ON YOUR CERTIFICATES. Generally, ERISA applies to
investments made by employee benefit plans and transactions involving the
assets of those plans. In addition, some other retirement plans and
arrangements, including individual retirement accounts and Keogh plans, are
subject to Section 4975 of the Internal Revenue Code. Due to the complexity of
regulations that govern the plans, if you are subject to ERISA or Section 4975
of the Internal Revenue Code you are urged to consult your own counsel
regarding the consequences under ERISA or the Internal Revenue Code of
acquisition, ownership and disposition of the offered certificates of any
series.
For more detailed information regarding ERISA restrictions, you should
review the section in this prospectus titled "ERISA Considerations."
IF YOU ACQUIRE RESIDUAL CERTIFICATES YOU MAY BE SUBJECT TO ADDITIONAL TAX
LIABILITIES. If you are a holder of residual certificates you will be required
to report on your federal income tax returns as ordinary income your pro rata
share of the taxable income of the REMIC, regardless of the amount or timing of
your receipt of cash payments. Accordingly, you may have taxable income and tax
liabilities arising from your investment during a taxable year in excess of the
cash received during that period. The requirement that you report your 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 you, as a holder of residual certificates,
have received full payment of their stated interest and principal. A
portion--or, in some circumstances, all--of your share of the REMIC taxable
income may be treated under the Internal Revenue Code as "excess inclusion"
income to you. Excess inclusion income:
o generally will not be subject to offset by losses from other
activities;
o will be treated as unrelated business taxable income for a tax-exempt
holder; and
o will not qualify for exemption from withholding tax for a foreign
holder.
As a holder of residual certificates, you may be limited in your ability
to deduct servicing fees and other expenses of the REMIC. In addition, residual
certificates are subject to some 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 that you receive may be significantly less
than that of a corporate bond or stripped instrument having similar cash flow
characteristics.
YOU MAY BE ALLOCATED TAXABLE INCOME IN EXCESS OF DISTRIBUTIONS RECEIVED IF
YOU ACQUIRE CERTIFICATES WITH ORIGINAL ISSUE DISCOUNT. Accrual certificates
will be, and some of the other classes of certificates of a series may be,
issued with original issue discount for federal income tax purposes. This will
generally result in recognition of some taxable income to you in advance of the
receipt of cash attributable to the income.
For more detailed information regarding original issue discount you should
review the section in this prospectus titled "Material Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates."
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IF YOUR CERTIFICATES ARE ISSUED IN BOOK-ENTRY FORM, YOU WILL ONLY BE ABLE
TO EXERCISE YOUR RIGHTS INDIRECTLY THROUGH DTC AND YOU MAY ALSO HAVE LIMITED
ACCESS TO INFORMATION REGARDING THOSE CERTIFICATES. One or more classes of the
offered certificates of any series may 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, you will be
able to exercise your rights only indirectly through DTC and its participating
organizations. In addition, your access to information regarding the book-entry
certificates may be limited. Conveyance of notices and other communications by
DTC to its participating organizations, and directly and indirectly through
these organizations to you, 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 in this prospectus, you may suffer
delays in the receipt of payments on the book-entry certificates. In addition,
your ability to pledge or otherwise take actions with respect to your interest
in the book-entry certificates may be limited due to the lack of a physical
certificate evidencing that interest.
For more detailed information regarding book-entry registration, you
should review the section in this prospectus titled "Description of the
Certificates--Book-Entry Registration and Definitive Certificates."
RISKS RELATING TO THE MORTGAGE LOANS
MORTGAGE LOANS ARE SUSCEPTIBLE TO NUMEROUS RISKS THAT MAY RESULT IN LOSSES
TO YOU.
(1) Mortgage loans made on the security of multifamily or commercial
property may entail risks of delinquency and foreclosure that are greater than
similar risks associated with loans made on the security of an owner-occupied
single-family property. The ability of a borrower to repay a loan secured by an
income-producing property typically is dependent primarily upon the successful
operation of that 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 that 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 the
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 the following:
o changes in general or local economic conditions and/or specific
industry segments;
o declines in real estate values;
o declines in rental or occupancy rates;
o increases in interest rates, real estate tax rates and other operating
expenses;
o changes in governmental rules, regulations and fiscal policies,
including environmental legislation; and
o acts of God and other factors beyond the control of the servicer.
In the case of mortgage loans that represent participation interests in a
mortgage loan, the trustee's or the servicer's enforcement rights may be
limited in the event of default by the related borrower.
(2) The type and use of a particular mortgaged property may present
additional risks. 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
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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.
(3) 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. The 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, the 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.
(4) 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 related 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, we can give you no assurance that
enforcement of the 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.
(5) 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. 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.
OFFICE PROPERTIES HAVE PARTICULAR RISKS. In addition to risks generally
associated with real estate, office properties are also affected significantly
by
o adverse changes in population and employment growth, which generally
creates demand for office space,
o local competitive conditions, including the supply of office space or
the existence or construction of new competitive office buildings,
o the quality and management philosophy of management,
o the attractiveness of the properties to tenants and their customers or
clients,
o the attractiveness of the surrounding neighborhood, and
o the need to make major repairs or improvements to the property to
satisfy the needs of major tenants.
Office properties that are not equipped to accommodate the needs of modern
business may become functionally obsolete and thus non-competitive. In
addition, office properties may be adversely affected by an economic decline in
the businesses operated by their tenants. A decline of this sort may result in
one or more significant tenants ceasing operations at the related locations,
which may occur on account of
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o a tenant's voluntary decision not to renew a lease,
o bankruptcy or insolvency of these tenants, or
o these tenant's general cessation of business activities or for other
reasons.
The risk of an economic decline as described above is greater if revenue
is dependent on a single tenant of if there is a significant concentration of
tenants in a particular business or industry.
MORTGAGE LENDERS SECURED BY RETAIL PROPERTIES MAY BE ADVERSELY AFFECTED BY
CHANGES IN CONSUMER SPENDING PATTERNS, ALTERNATIVE FORMS OF RETAILING AND
CHANGES IN TENANTS OCCUPYING THE RETAIL PROPERTIES. In addition to risks
generally associated with real estate, mortgage loans secured by retail
properties are also affected significantly by a number of factors, including:
o adverse changes in consumer spending patterns;
o local competitive conditions, including the supply of retail space or
the existence or construction of new competitive shopping centers or
shopping malls;
o alternative forms of retailing, including direct mail, television
shopping networks and Internet based sales, which reduce the need for
retail space by retail companies;
o the quality and management philosophy of management;
o the attractiveness of the properties and the surrounding neighborhood
to tenants and their customers;
o the public perception of the safety of customers, at shopping malls
and shopping centers, for example;
o the need to make major repairs or improvements to satisfy the needs of
major tenants; and
o if an anchor or other significant tenant ceases operations at the
locations, which may occur on account of a decision not to renew a
lease, bankruptcy or insolvency of the tenant, the 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 the property. In addition, some tenants at retail
properties may be entitled to terminate their leases if an anchor
tenant ceases operations at the property.
SOME RISKS THAT AFFECT OCCUPANCY AND RENT LEVELS OF MULTIFAMILY RENTAL
PROPERTIES SUCH AS ADVERSE ECONOMIC CONDITIONS, CONSTRUCTION OF ADDITIONAL
HOUSING, MILITARY BASE CLOSINGS, COMPANY RELOCATIONS AND RENT CONTROL LAWS MAY
AFFECT THE ABILITY OF THE BORROWER TO MEET ITS OBLIGATIONS UNDER THE MORTGAGE
LOAN. Adverse economic conditions, either local, regional or national, may
limit or reduce the following:
o the amount of rent that can be charged for rental units;
o tenants' ability to pay rent;
o timeliness of rent payments;
o occupancy levels without a corresponding decrease in
expenses--occupancy and rent levels may also be affected by
construction of additional housing units;
o local military base closings;
o construction of additional housing units;
o company relocations and closings; and
o 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. In addition, the level
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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, rent control laws could impact the future
cash flows of multifamily rental properties that are subject to rental control
laws.
Some multifamily rental properties are eligible to receive low-income
housing tax credits pursuant to Section 42 of the Internal Revenue Code.
However, Section 42 properties are subject to some restrictions that may affect
a borrower's ability to meet its obligations under a mortgage loan. This
includes the following:
o rent limitations associated with those properties may adversely affect
the ability of the applicable borrowers to increase rents to maintain
those properties in proper condition during periods of rapid inflation
or declining market value of those properties;
o the income restrictions on tenants imposed by Section 42 of the
Internal Revenue Code may reduce the number of eligible tenants;
o 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; and
o a Section 42 property may also have fewer amenities or otherwise be
less attractive as a residence making it less attractive to eligible
tenants.
All of the foregoing conditions and events may increase the possibility
that a borrower may be unable to meet its obligations under its mortgage loan.
MORTGAGE LENDERS SECURED BY COOPERATIVELY OWNED APARTMENT BUILDINGS ARE
SUBJECT TO THE RISK THAT TENANT-SHAREHOLDERS OF A COOPERATIVELY OWNED APARTMENT
BUILDING WILL BE UNABLE TO MAKE THE REQUIRED MAINTENANCE PAYMENTS. Generally,
a tenant-shareholder of a cooperative corporation must make a monthly
maintenance payment to the cooperative corporation that owns the apartment
building representing that tenant-shareholder's pro rata share of the
corporation's payments in respect of the mortgage loan secured by that
apartment building. The tenant-shareholder must also pay its pro rata share of
all real property taxes, maintenance expenses and other capital and ordinary
expenses with respect to that apartment building, 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 adverse economic conditions have impaired the
individual financial conditions of the 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 that building will be subject to all the risks that it
would have in connection with lending on the security of a multifamily rental
property. 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 the building will be
subject to a risk associated with the sponsor's creditworthiness.
SELF-STORAGE PROPERTIES HAVE PARTICULAR RISKS. Warehouse, mini-warehouse
and self-storage properties ("Storage Properties") are considered vulnerable to
competition because both acquisition costs and break-even occupancy are
relatively low. The conversion of Storage Properties to alternative uses would
generally require substantial capital expenditures. Thus, if the operation of
any of the Storage Properties becomes unprofitable due to decreased demand,
competition, age of improvements or other factors, such that the borrower
becomes unable to meet its obligation on the related mortgage loan, the
liquidation value of that Storage Property may be substantially less, relative
to the amount owing on the mortgage loan, than would be the case if the Storage
Property were readily adaptable to other uses. Tenant privacy, anonymity and
efficient access are important to the success of a Storage Property, as are
building design and location.
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HOTEL AND MOTEL PROPERTIES HAVE PARTICULAR RISKS. Hotel and motel
properties are subject to operating risks common to the lodging industry. These
risks include, among other things,
o a high level of continuing capital expenditures to keep necessary
furniture, fixtures and equipment updated,
o competition from other hotels and motels,
o increases in operating costs, which increases may not necessarily in
the future be offset by increased room rates and
o dependence on business and commercial travelers and tourism, increases
in energy costs and other expenses of travel and adverse effects of
general and local economic conditions.
These factors could adversely affect the related borrower's ability to
make payments on the related mortgage loans. Since limited service hotels and
motels are relatively quick and inexpensive to construct, an over-building of
hotels and motels could occur in any given region,which would likely adversely
affect occupancy and daily room rates. Further, because hotel and motel rooms
are generally rented for short periods of time, hotel and motel properties tend
to be more sensitive to adverse economic conditions and competition than many
other commercial properties. Furthermore, the financial strength and
capabilities of the owner and operator of a hotel may have a substantial impact
onthat hotel's quality of service and economic performances. Additionally, the
revenues of certain hotels and motels, particularly those located in regions
whose economies depend upon tourism, may be highly seasonal in nature.
A hotel or motel property may present additional risks as compared to
other commercial property types in that
o hotels and motels may be operated pursuant to franchise, management
and operating agreements that may be terminable by the franchisor, the
manager or the operator;
o the transferability of any operating, liquor and other licenses to the
entity acquiring the related hotel and motel, either through purchase
or foreclosure, is subject to local law requirements;
o it may be difficult to terminate an ineffective operator of a hotel or
motel property subsequent to a foreclosure of the related property;
and
o future occupancy rates may be adversely affected by, among other
factors, any negative perception of a hotel or motel based upon its
historical reputation.
Hotel and motel properties may be operated pursuant to franchise
agreements. The continuation of franchise is typically subject to specified
operating standards and other terms and conditions. The franchisor periodically
inspects its licensed properties to confirm adherence to its operating
standards. The failure of the hotel or motel property to maintain these
standards or adhere to other terms and conditions could result in the loss or
cancellation of the franchise license. It is possible that the franchisor could
condition the continuation of a franchise license on the completion of capital
improvements or the making of certain capital expenditures that the related
borrower determines are too expensive or are otherwise unwarranted in light of
general economic conditions or the operating results or prospects of the
affected hotels or motels. In that event, the related borrower may elect to
allow the franchise license to lapse. In any case, if the franchise is
terminated, the related borrower may seek to obtain a suitable replacement
franchise or to operate the related hotel or motel property independently of a
franchise license. The loss of a franchise license could have a material
adverse effect upon the operations or the underlying value of the hotel or
motel covered by the franchise because of the loss of associated name
recognition, marketing support and centralized reservation systems provided by
the franchisor.
MANUFACTURED HOUSING COMMUNITY PROPERTIES AND RECREATIONAL VEHICLE PARKS
HAVE PARTICULAR RISKS. The successful operation of a manufactured housing
community or recreational vehicle park will generally depend upon the number of
competing manufactured housing communities or recreational vehicle parks in the
local market, as well as upon other factors, including its age, appearance,
reputation, management and the types of facilities and services it provides.
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Manufactured housing communities also compete against alternative forms of
residential housing, including multifamily rental properties,
cooperatively-owned apartment buildings, condominium complexes and
single-family residential developments. Recreational vehicle parks also compete
against alternative forms of recreation and short-term lodging, for example,
staying at a hotel at the beach.
Manufactured housing community properties and recreational vehicle parks
are "special purpose" properties that cannot be readily converted to general
residential, retail or office use. Thus, if the operation of a manufactured
housing community or recreational vehicle park becomes unprofitable due to
competititon, age of the improvements or other factors such that the borrower
becomes unable to meet its obligations on the related mortgage loan, the
liquidation value of the mortgaged property may be substantially less, relative
to the amount owing on the related mortgage loan, than would be the case if the
mortgaged property were readily adaptable to other uses.
MORTGAGE LOANS WITH BALLOON PAYMENTS INVOLVE THE RISK THAT BORROWERS MAY
NOT BE ABLE TO REFINANCE THE LOAN OR SELL THE RELATED PROPERTY. Mortgage loans
may be non-amortizing or only partially amortizing over their terms to
maturity. Those mortgage loans 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:
o value of the related mortgaged property;
o the level of available mortgage rates at the time of sale or
refinancing;
o the borrower's equity in the related mortgaged property;
o the financial condition and operating history of the borrower and the
related mortgaged property;
o tax laws and rent control laws, with respect to some residential
properties;
o Medicaid and Medicare reimbursement rates, with respect to hospitals
and nursing homes; and
o 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 we nor any of our affiliates will be required to refinance any
mortgage loan.
CREDIT SUPPORT FOR A SERIES OF CERTIFICATES MAY COVER SOME OF YOUR LOSSES
OR RISKS BUT MAY NOT COVER ALL POTENTIAL RISKS TO YOU. The prospectus
supplement for a series of certificates will describe any credit support
provided for these certificates. Use of credit support will be subject to the
conditions and limitations described in this prospectus and in the related
prospectus supplement. Moreover, the available 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, in turn, include offered certificates. Subordination
is intended to reduce the risk to holders of each more senior class of
certificates of delinquent distributions or ultimate losses on the mortgage
assets. However, the amount of subordination will be limited and may decline.
Since the senior certificateholders are paid principal before subordinate
certificateholders, subordinate certificateholders may not be paid any
principal if the available credit support is exhausted. As a result, if you are
a holder of subordinate certificates, you will primarily experience the impact
of losses and shortfalls. Moreover, if the available credit support covers more
than one series of certificates, you will be subject to the risk that the
credit support will be exhausted by the claims of the holders of certificates
of one or more other series.
Rating agencies rating the certificates will determine the level of credit
support based on an assumed level of defaults, delinquencies and losses on the
underlying mortgage assets and some other factors. We cannot, however, assure
you that the loss experience on the related mortgage assets will not exceed the
assumed levels.
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For more detail information regarding credit support of certificates you
should review the sections in this prospectus titled "--Risks Relating to the
Certificates--Ratings on your certificates do not guarantee that you will
receive payment under the pooling and servicing agreement," "Description of the
Certificates" and "Description of Credit Support."
IF THE MORTGAGED PROPERTY IS SUBJECT TO A LEASE, THE LENDER IS SUBJECT TO
THE RISK THAT IF THE BORROWER DEFAULTS, THE MORTGAGE LENDER MAY HAVE TO OBTAIN
A COURT ORDER APPOINTING A RECEIVER BEFORE BEING ABLE TO COLLECT RENTS. Each
mortgage loan secured by mortgaged property that is subject to leases typically
will be secured by an assignment of leases and rents. This means that 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 from it,
as further security for the related mortgage loan. The borrower may continue to
collect rents for so long as there is no default. If the borrower defaults, 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.
For more detailed information regarding leases and rents, you should
review the section in this prospectus titled "Legal Aspects of Mortgage
Loans--Leases and Rents."
OWNERS AND OPERATORS OF A MORTGAGED PROPERTY AND MORTGAGE LENDERS MAY
BECOME LIABLE FOR THE COSTS OF ENVIRONMENTAL CLEANUP. Under the laws of some
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 that 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 that property. The
owner may become liable without regard to whether the owner knew of, or was
responsible for, the presence of hazardous or toxic substances on the property.
The cost of any required remediation and the owner or operator's liability as
to any property could exceed the value of the mortgaged property and the
aggregate assets of the owner or operator. In addition, owners or operators of
mortgaged properties that generate hazardous substances that are disposed of at
off-site locations may be held strictly, jointly and severally liable if there
are releases or threatened releases of hazardous substances at the off-site
locations where the hazardous substances were disposed.
Lenders whose primary indicia of ownership in a particular property is the
holding of a security interest are exempted from the definition of owner under
the federal Comprehensive Environmental Response Compensation and Liability Act
of 1980. However, lenders may forfeit their secured creditor exemption, as a
result of their actions with respect to particular borrowers, and be deemed an
owner or operator of property so that they are liable for remediation costs. A
lender also risks liability for remediation costs on foreclosure of the
mortgage. Unless otherwise specified in the related prospectus supplement, if a
trust fund includes mortgage loans, then the related pooling and servicing
agreement will contain provisions generally to the effect that the servicer,
acting on behalf of the trust fund, may not acquire title to a mortgaged
property or assume control of its operation unless the 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. We cannot assure you
that any requirements of a pooling and servicing agreement will effectively
insulate the related trust fund from potential liability for a materially
adverse environmental condition at a mortgaged property.
For more detailed information regarding environmental risks, you should
review the section in this prospectus titled "Legal Aspects of Mortgage
Loans--Environmental Risks."
HAZARD INSURANCE POLICIES ON MORTGAGED PROPERTIES MAY NOT FULLY COVER ALL
TYPES OF DAMAGE TO THE MORTGAGED PROPERTIES. Unless otherwise specified in a
prospectus supplement, the servicer will be required to cause the borrower on
each mortgage loan to maintain insurance coverage in respect of the related
mortgaged property, including hazard insurance. However, the servicer may be
able to satisfy its obligation to cause hazard insurance to be maintained
through acquisition of a blanket policy. In general, the standard form of fire
and extended coverage policy covers physical damage to
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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. The
insurance policies 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 insurance policies,
however, 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 some other kinds of risks. Unless the related
mortgage specifically requires the mortgagor to insure against physical damage
arising from causes not typically covered by an insurance policy, then, to the
extent any consequent losses are not covered by the available credit support,
you may in part bear the resulting losses.
For more detailed information regarding insurance policies, you should
review the section in this prospectus titled "Description of the Pooling and
Servicing Agreements--Hazard Insurance Policies."
THE YIELD ON YOUR CERTIFICATES MAY BE ADVERSELY AFFECTED TO THE EXTENT
THAT THE RELATED TRUST FUND MAY INCLUDE DELINQUENT MORTGAGE LOANS BECAUSE THE
AVAILABLE CREDIT SUPPORT MAY NOT COVER ALL LOSSES RELATED TO THE DELINQUENT
MORTGAGE LOANS. The trust fund for a particular series of certificates may
include mortgage loans that are past-due, i.e., beyond any applicable grace
period. However, delinquent mortgage loans may only constitute up to, but not
including, 20% (by principal balance) of the trust fund. A special servicer may
perform the servicing of delinquent mortgage loans. 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 the cases, the related borrower may not
have an incentive to continue to perform under that 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 the mortgaged property and to
pay debt service on that mortgage loan and all mortgage loans senior to that
mortgage loan. In those cases, the related borrower will be required to pay
from sources other than cash flow from the related mortgaged property. If the
related borrower ceases to use alternative cash sources at a time when
operating revenue from the related mortgaged property is still insufficient to
cover all expenses and debt service, deferred maintenance at the related
mortgaged property and/or a default under the subject mortgage loan may occur.
Available credit may not cover all losses related to delinquent mortgage loans.
You should therefore consider the risk that the inclusion of delinquent
mortgage loans in the trust fund may adversely affect the rate of defaults and
prepayments on the mortgage assets in the trust fund and the yield on the
offered certificates.
For more detailed information regarding delinquent mortgage loans, you
should review the section in this prospectus titled "Description of the Trust
Funds--Mortgage Loans--General."
A WORD ABOUT FORWARD LOOKING STATEMENTS. Whenever we use words like
"intends," "anticipates" or "expects" or similar words in this prospectus, 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 might be. Any
forward-looking statements in this prospectus speak only as of the date of this
prospectus. We do not assume any responsibility to update or review any
forward-looking statement or to reflect any change in events, conditions or
circumstances on which we have based any forward-looking statement.
Defined terms in the rest of the Prospectus appear in initial capitals and
are defined in the Glossary beginning at page 114.
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DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each trust fund will consist of the following:
o various types of multifamily or commercial mortgage loans or
participations in those mortgage loans;
o pass-through certificates or other mortgage-backed securities ("MBS")
that evidence interests in, or that are secured by pledges of, one or
more of various types of multifamily or commercial mortgage loans; or
o a combination of the foregoing, which we call mortgage assets.
We will establish each trust fund. We will select each mortgage asset for
inclusion in a trust fund from among those purchased, either directly or
indirectly, from a mortgage asset seller, which may or may not be the
originator of a mortgage loan or the issuer of a MBS and may be our affiliate.
Unless otherwise provided in the related prospectus supplement, neither we nor
any of our affiliates and no governmental agency or instrumentality or any
other person will guarantee or insure any of the mortgage assets included in a
trust fund. 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 called mortgage notes, secured by liens on fee or
leasehold estates in properties called mortgaged properties consisting of the
following:
o 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, called
multifamily properties, and manufactured housing community properties;
o 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 any
cooperatively owned units therein; and
o mixed use properties--that is, any combination of the foregoing--and
unimproved land, both called commercial properties.
The multifamily properties may include mixed commercial and residential
structures, and apartment buildings owned by a private cooperative housing
corporation, with shares of the cooperative allocable to one or more dwelling
units occupied by non-owner tenants or to vacant units. The liens may be
created by mortgages, deeds of trust and similar security instruments. 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 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 other than us; however, the originator may be or may have been one
of our affiliates.
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 those certificates are issued. In
that case, the related prospectus supplement will set forth available
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information as to the period of the 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 Office Properties. Significant factors affecting
the value of office properties include the quality of the tenants in the
building, the physical attributes of the building in relation to competing
buildings, the location of the building with respect to the central business
district or population centers, demographic trends within the metropolitan area
to move away from or towards the central business district, social trends
combined with space management trends, which may change towards options such as
telecommuting, tax incentives offered to businesses by cities or suburbs
adjacent to or near the city where the building is located and the strength and
stability of the market area as a desirable business location. Office
properties may be adversely affected by an economic decline in the businesses
operated by their tenants. The risk of an economic decline 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.
Office properties are also subject to competition with other office
properties in the same market. Competition is affected by various factors
affecting a building, including
o its age,
o its condition,
o its design, including floor sizes and layout,
o its access to transportation,
o the availability of parking and the owner's ability to offer certain
amenities to its tenants, including sophisticated building systems
such as
o fiberoptic cables,
o satellite communications or
o other base building technological features.
Office properties that are not equipped to accommodate the needs of modern
business may become functionally obsolete and thus non-competitive.
The success of an office property also depends on the local economy. A
company's decision to locate office headquarters in a given area, for example,
may be affected by an array of factors including
o labor cost and quality,
o tax environment and
o quality of life matters, such as schools and cultural amenities.
A central business district may have a substantially different economy
from that of a suburb. The local economy will affect an office property's
ability to attract stable tenants on a consistent basis. In addition, the cost
of refitting office space for a new tenant is often higher than for other
property types.
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 following:
o the ability to lease space in the properties,
o the ability of tenants to meet their lease obligations,
o the possibility of a significant tenant becoming bankrupt or
insolvent,
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o and 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
these 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 lease, 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 some 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.
Mortgage Loans Secured by Multifamily Rental Properties. Significant
factors determining the value and successful operation of a multifamily rental
property include the following:
o location of the property;
o the number of competing residential developments in the local market,
such as apartment buildings, manufactured housing communities and
site-built single family homes;
o the physical attributes of the multifamily building, such as its age
and appearance; and
o state and local regulations affecting the 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.
Some 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
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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 the 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. The proprietary leases and occupancy agreements 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 the tenant-shareholder's pro rata share
of the corporation's payments in respect of any mortgage loan secured by,
including all real property taxes, maintenance expenses and other capital and
ordinary expenses with respect to, the real property owned by the cooperative
corporation, less any other income that the cooperative corporation may
realize. 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 the cooperative
corporation, as well as all other operating expenses of the 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 the cooperative corporation depends primarily on its ability
to refinance the mortgage loan. Neither we 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. The owner or sponsor allocates shares to each apartment unit, and
the current tenants have a fixed period to subscribe at prices discounted from
the prices to be offered to the public after that 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 so-called "non-eviction" plans. Under a non-eviction
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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 that apartment unit. Any applicable rent control or rent
stabilization laws would continue to be applicable to that subtenancy. 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 Industrial Properties. Significant factors that
affect the value of industrial properties are
o the quality of tenants,
o building design and adaptability and
o the location of the property.
Industrial properties may be adversely affected by reduced demand for
industrial space occasioned by a decline in a particular industry segment
and/or by a general slow-down in the economy, and an industrial property that
suited the particular needs of its original tenant may be difficult to relet to
another tenant or may become functionally obsolete relative to newer
properties. Furthermore, industrial properties may be adversely affected by the
availability of labor sources or a change in the proximity of supply sources.
Because industrial properties frequently have a single tenant, any related
property is heavily dependent on the success of the tenant's business.
Aspects of building site, design and adaptability affect the value of an
industrial property. Site characteristics which are valuable to an industrial
property include ceiling heights, column spacing, number of bays and bay
depths, divisibility, floor loading capacities, truck turning radius and
overall functionality and accessibility. Nevertheless, site characteristics of
an industrial property suitable for one tenant may not be appropriate for other
potential tenants, which may make it difficult to relet the property.
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.
Further, industrial properties may be adversely affected by economic declines
in the industry segment of their tenants.
Mortgage Loans Secured by Warehouse, Mini-Warehouse and Self-Storage
Facilities. Because of relatively low acquisition costs and break-even
occupancy rates, warehouse, mini-warehouse and self-storage properties
("Storage Properties") are considered vulnerable to competition. Despite their
relatively low acquisition costs, and because of their particular building
characteristics, Storage Properties would require substantial capital
investments in order to adapt them to alternative uses. Limited adaptability to
other uses may substantially reduce the liquidation value of a Storage
Property. In addition to competition, factors that affect the success of a
Storage Property include the location and visibility of the facility, its
proximity to apartment complexes or commercial users, trends of apartment
tenants in the area moving to single-family homes, services provided, including
security and accessibility, age of improvements, the appearance of the
improvements and the quality of management.
Mortgage Loans Secured by Hotel and Motel Properties. Hotel and motel
properties may include full service hotels, resort hotels with many amenities,
limited service hotels, hotels and motels associated with national franchise
chains, hotels and motels associated with regional franchise chains and hotels
that are not affiliated with any franchise chain but may have their own brand
identity. Various factors, including location, quality and franchise
affiliation affect the economic performance of a hotel or motel. 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. The
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construction of competing hotels and motels can have similar effects. To meet
competition in the industry and to maintain economic values, continuing
expenditures must be made for modernizing, refurbishing, and maintaining
existing facilities prior to the expiration of their anticipated useful lives.
Because hotel and motel rooms generally are rented for short periods of time,
hotels and motels tend to respond more quickly to adverse economic conditions
and competition than do other commercial properties. Furthermore, the financial
strength and capabilities of the owner and operator of a hotel or motel may
have an impact on quality of service and economic performance. Additionally,
the lodging industry, in certain locations, is 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. The demand for
particular accommodations may also be affected by changes in travel patterns
caused by changes in energy prices, strikes, relocation of highways, the
construction of additional highways and other factors.
The viability of any hotel or motel property that is part of a national or
regional hotel or motel chain depends in part on the continued existence and
financial strength of the franchisor, the public perception of the franchise
service mark and the duration of the franchise licensing agreement. The
transferability of franchise license agreements may be restricted and, in the
event of a foreclosure on any related hotel or motel property, the consent of
the franchisor for the continued use of the franchise license by the hotel or
motel property would be required. Conversely, a lender may be unable to remove
a franchisor that it desires to replace following a foreclosure. Further, in
the event of a foreclosure on a hotel or motel property, it is unlikely that
the purchaser of the related hotel or motel property would be entitled to the
rights under any associated liquor license, and the purchaser would be required
to apply in its own right for that license. There can be no assurance that a
new license could be obtained or that it could be obtained promptly.
Mortgage Loans Secured by Manufatured Housing Community Properties and
Recreational Vehicle Parks. Manufactured housing community properties consist
of land that is divided into "spaces" or "homesites" that are primarily leased
to manufactured housing community unit owners. Accordingly, the related
mortgage loans will be secured by mortgage liens on the real estate, or a
leasehold interest therein, upon which the manufactured housing community units
are situated, but not the units themselves. The manufactured housing community
unit owner often invests in site-specific improvements, including carports,
steps, fencing, skirts around the base of the unit, and landscaping. The park
owner typically provides private roads within the park, common facilities and,
in many cases, utilities. Park amenities may include
o driveways,
o visitor parking,
o recreational vehicle and pleasure boat storage,
o laundry facilities,
o community rooms,
o swimming pools,
o tennis courts,
o security systems and
o healthclubs.
Due to relocation costs and, in some cases, demand for manufactured
housing community unit spaces, the value of a unit in place in a park is
generally higher, and can be significantly higher, than the value of the same
unit not placed in a park. As a result, a well-operated manufactured housing
community that has achieved stabilized occupancy is typically able to maintain
occupancy at or near that level. For the same reason, a lender that provided
financing for the unit of a tenant who defaulted in his or her space rent
generally has an incentive to keep rental payments current until the mobile
home can be resold in place, rather than to allow the unit to be removed from
the park.
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Recreational vehicle parks lease spaces primarily or exclusively for motor
homes, travel trailers and portable truck campers primarily designed for
recreational, camping or travel use. In general, parks that lease recreational
vehicle spaces can be viewed as having a less stable tenant population than
parks occupied predominantly by mobile homes. However, it is not unusual for
the owner of a recreational vehicle to leave the vehicle at the park on a
year-round basis or to use the vehicle as low cost housing and reside in the
park indefinitely.
Mortgage loans secured by liens on manufactured housing community
properties and recreational vehicle parks are affected by factors not
associated with loans secured by liens on other types of income-producing real
estate. The successful operation of these types of properties will generally
depend upon the number of competing parks, as well as upon other factors,
including its age, appearance, reputation, the ability of management to provide
adequate maintenance and insurance, and the types of facilities and services it
provides. Manufactured housing community properties also compete against
alternative forms of residential housing, including
o multifamily rental properties,
o cooperatively-owned apartment buildings,
o condominium complexes and
o single-family residential developments.
Recreational vehicle parks also compete against alternative forms of
recreation and short-term lodging, for example, staying at a hotel at the
beach. Manufactured housing community properties and recreational vehicle parks
are "special purpose" properties that cannot be readily converted to general
residential, retail or office use. Thus, if the operation of a manufactured
housing community or recreational vehicle park becomes unprofitable due to
competition, age of the improvements or other factors such that the borrower
becomes unable to meet its obligations on the related mortgage loan, the
liquidation value of the manufactured housing community may be substantially
less, relative to the amount owing on the mortgage loan, than would be the case
if the manufactured housing community or recreational vehicle park were readily
adaptable to other uses.
Certain states regulate the relationship of a manufactured housing
community 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. Manufactured housing
community 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 unit owner's tenancy or increase
its rent or prohibit a landlord from terminating a tenancy solely by reason of
the sale of the owner's unit. Certain states also regulate changes in
manufactured housing community use and require that the landlord give written
notice to its tenants a substantial period of time prior to the projected
change.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on manufactured
housing communities. 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
either do not provide for decontrol of rental rates upon vacancy of individual
units or permit decontrol only in the relatively rare event that the unit is
removed from the unitsite. Any limitations on a borrower's ability to raise
property rents may impair the related 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.
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
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income-producing property is typically dependent upon the successful operation
of that property--that is, its ability to generate income. Moreover, some or
all of the mortgage loans included in a particular trust fund may be
non-recourse loans. Absent special facts, recourse in the case of default of
non-recourse loans will be limited to the mortgaged property and the 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. 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 some 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 those 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. However,
the existence of 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. The lower the Loan-to-Value Ratio, the greater the percentage of the
borrower's equity in a mortgaged property. This in turn has the following
effects:
o it increases the incentive of the borrower to perform under the terms
of the related mortgage loan, in order to protect the equity; and
o it increases the cushion provided to the lender against loss on
liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure
of the risk of liquidation loss in a pool of mortgage loans. For example, the
value of a mortgaged property as of the date of initial issuance of the related
series of certificates may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
changes in economic conditions, the real estate market and other factors
described in this prospectus. Moreover, even when current, an appraisal is not
necessarily a reliable estimate of value. Appraised values of income-producing
properties are generally based on:
o the market comparison method, i.e., recent resale value of comparable
properties at the date of the appraisal;
o the cost replacement method, i.e., the cost of replacing the property
at the date;
o the income capitalization method, i.e., a projection of value based
upon the property's projected net cash flow; or
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o upon a selection from or interpolation of the values derived from the
foregoing 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 we believe 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
the foregoing 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. For additional information regarding risks
associated with mortgage loans, you should review the sections in this
prospectus titled "Risk Factors--Risks Relating to the Mortgage Loans--Mortgage
Loans are susceptible to numerous risks that may result in losses to you" and
"--Mortgage loans with balloon payments involve the risk that borrowers may not
be able to refinance the loan or sell the related property."
Payment Provisions of the Mortgage Loans. Unless otherwise specified in
the related prospectus supplement, all of the mortgage loans will have the
following characteristics:
o have had individual principal balances at origination of not less than
$25,000;
o have had original terms to maturity of not more than 40 years; and
o provide for scheduled payments of principal, interest or both, to be
made on specified dates, known as due dates, that occur monthly,
quarterly, semi-annually or annually.
A mortgage loan may also have the following characteristics:
o provide for no accrual of interest or for accrual of interest thereon
at an interest rate, known as 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;
o 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 some events, and may permit negative
amortization;
o be fully amortizing or partially amortizing or non-amortizing, with a
balloon payment due on its stated maturity date; and
o prohibit over its term or for a certain period prepayments (the period
of the prohibition is known as a lock-out period and its date of
expiration is known as a lock-out date) and/or require payment of a
premium or a yield maintenance penalty, more commonly known as a
prepayment premium) in connection with some 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 the related mortgaged property or the
benefit, if any, resulting from the refinancing of the mortgage loan 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 the offered certificates, the related prospectus supplement
will describe the equity participation and the method or methods by which
distributions relating to the equity participation will be made to the holders.
Mortgage Loan Information in Prospectus Supplements. Each prospectus
supplement will contain 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. To the extent then applicable and
specifically known to us, the prospectus supplement will include the following:
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1. the aggregate outstanding principal balance and the largest, smallest
and average outstanding principal balance of the mortgage loans;
2. the type or types of property that provide security for repayment of
the mortgage loans;
3. the earliest and latest origination date and maturity date of the
mortgage loans;
4. the original and remaining terms to maturity of the mortgage loans, or
the respective ranges those terms to maturity, and the weighted average
original and remaining terms to maturity of the mortgage loans;
5. the original Loan-to-Value Ratios of the mortgage loans, or the range
of those Loan-to-Value Ratios, and the weighted average original
Loan-to-Value Ratio of the mortgage loans;
6. the mortgage rates borne by the mortgage loans, or range of those
mortgage rates, and the weighted average mortgage rate borne by the
mortgage loans;
7. with respect to mortgage loans with adjustable mortgage rates ("ARM
Loans"), the index or indices upon which the 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;
8. information regarding the payment characteristics of the mortgage
loans, including, without limitation, balloon payment and other
amortization provisions, lock-out periods and prepayment premiums;
9. the Debt Service Coverage Ratios of the mortgage loans, either at
origination or as of a more recent date, or the range of those Debt
Service Coverage Ratios, and the weighted average of the Debt Service
Coverage Ratios; and
10. the geographic distribution of the mortgaged properties on a
state-by-state basis.
In appropriate cases, the related prospectus supplement will also contain
some information available to us that pertains to the provisions of leases and
the nature of tenants of the mortgaged properties. If we are 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 their initial issuance and will be filed as
part of a Current Report on Form 8-K with the SEC within fifteen days following
their issuance.
MBS
Mortgage-backed securities included in a trust fund may include:
o mortgage pass-through certificates or other mortgage-backed securities
that are not guaranteed or insured by the United States or any of its
agencies or instrumentalities; or
o 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 in this prospectus.
Any MBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar
agreement. The issuer of the MBS and/or the servicer of the underlying mortgage
loans will have entered into the MBS agreement, generally with a 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 in this prospectus.
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
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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" in this
prospectus may have been provided with respect to the MBS. The type,
characteristics and amount of 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, the following:
1. the aggregate approximate initial and outstanding principal amount and
type of the MBS to be included in the trust fund;
2. the original and remaining term to stated maturity of the MBS, if
applicable;
3. the pass-through or bond rate of the MBS or the formula for determining
those rates;
4. the payment characteristics of the MBS;
5. the MBS issuer, MBS servicer and MBS trustee, as applicable;
6. a description of the credit support, if any;
7. the circumstances under which the related underlying mortgage loans, or
the MBS themselves, may be purchased prior to their maturity;
8. the terms on which mortgage loans may be substituted for those
originally underlying the MBS;
9. the type of mortgage loans underlying the MBS and, to the extent
available to us and appropriate under the circumstances, any other
information in respect of the underlying mortgage loans described under
"--Mortgage Loans--Mortgage Loan Information in Prospectus Supplements";
and
10. the characteristics of any cash flow agreements that relate to the MBS.
CERTIFICATE ACCOUNTS
Each trust fund will include one or more accounts 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
in this prospectus and in the 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 a
certificate account may be held as cash or invested in some 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 some defaults and losses on the mortgage
assets in the related trust fund may be provided to one or more classes of
certificates of that series in the form of subordination of one or more other
classes of certificates of the series or by one or more other types of credit
support arrangements. Other types of credit support arrangements may include
letters of credit, insurance policies, guarantees, surety bonds or reserve
funds, among others, or a combination. 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
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series of certificates. For additional information regarding credit support,
you should review the sections in this prospectus titled " Risk Factors--Risks
Relating to the Mortgage Loans--Credit support for a series of certificates may
cover some of your losses or risks but may not cover all potential risks to
you."
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 that 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 guaranteed
investment contract or other agreement, and the identity of an obligor or
counterparty under the agreement, 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. 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 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 the series or,
in the case of a class of offered certificates with a variable or adjustable
pass-through rate the prospectus supplement will specify, the method of
determining the pass-through rate. The prospectus supplement will also discuss
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
guaranteed investment contract or other 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 the payments are passed through
to certificateholders. That delay will effectively reduce the yield that would
otherwise be produced if payments on those mortgage loans were distributed to
certificateholders on or near the date they were due.
SHORTFALLS IN COLLECTIONS OF INTEREST AS A RESULT OF PREPAYMENTS OF MORTGAGE
LOANS
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 the prepayment only
through the date of the prepayment, instead of through the due date for the
next succeeding scheduled payment. However, interest accrued
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on any series of certificates and distributable on any distribution date will
generally correspond to interest accrued on the mortgage loans to their
respective due dates during the related Due Period. Consequently, if a
prepayment on any mortgage loan is distributable to certificateholders on a
particular distribution date, but the prepayment is not accompanied by interest
to the due date for the mortgage loan in the related Due Period, then the
interest charged to the borrower, net of servicing and administrative fees, may
be less than the corresponding amount of interest accrued and otherwise payable
on the certificates of the related series. If and to the extent that any
shortfall is allocated to a class of offered certificates, the yield on those
certificates will be adversely affected. The prospectus supplement for each
series of certificates will describe the manner in which any prepayment
interest shortfalls will be allocated among the classes of certificates. If so
specified in the prospectus supplement for a series of certificates, the
servicer for that series will be required to apply some or all of its servicing
compensation for the corresponding period to offset the amount of any
prepayment interest shortfalls. The related prospectus supplement will also
describe any other amounts available to offset shortfalls.
For additional information regarding prepayment interest shortfalls, you
should review the section in this prospectus titled "Description of the Pooling
and Servicing 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 of those payments to reduce the principal balance--or notional
amount, if applicable--of that certificate. The rate of principal payments on
the mortgage loans in any trust fund will in turn be affected by their
amortization schedules, the dates on which any balloon payments are due, and
the rate of voluntary and/or involuntary principal prepayments. You should note
that the amortization schedule of an ARM Loan may change periodically to
accommodate adjustments to the mortgage rate thereon and that these changes may
affect the rate of principal payments on an ARM loan. 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 the rate at which any one will prepay.
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 the certificates of that series or, in
the case of a class of stripped interest certificates, result in the reduction
of its notional amount. You 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 you 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
could result in an actual yield to you that is lower than the anticipated
yield. In addition, if you purchase an offered certificate at a discount, or a
premium, and principal payments are made in reduction of the principal balance
or notional amount of your offered certificates at a rate slower, or faster,
than the rate anticipated by you during any particular period, the consequent
adverse effects on your 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 those certificates are
entitled to a pro rata share of the prepayments on the mortgage loans in the
related trust fund that are distributable on the date, to a disproportionately
large share-- which, in some cases, may be all--of the prepayments, or to a
disproportionately small share--which, in some cases, may be none--of the
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,
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prepayments of principal of the mortgage loans in the related trust fund may
vary based on the occurrence of some events, e.g., the retirement of one or
more classes of certificates of the series, or subject to some contingencies,
e.g., prepayment and default rates with respect to the mortgage loans.
In general, the notional amount of a class of stripped interest
certificates will either:
o be based on the principal balances of some or all of the mortgage
assets in the related trust fund; or
o equal the certificate balances of one or more of the other classes of
certificates of the same series.
Accordingly, the yield on stripped interest certificates will be inversely
related to the rate at which payments and other collections of principal are
received on mortgage assets or distributions are made in reduction of the
certificate balances of the 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 the mortgage loans will negatively affect the yield to
investors in stripped interest certificates. If the offered certificates of a
series include any of those certificates, the related prospectus supplement
will include a table showing the effect of various assumed levels of prepayment
on yields on those certificates. The 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 you to predict,
yields or prepayment rates.
We are 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 the provisions may be
practicably enforced.
The rate of prepayment on a pool of mortgage loans is also affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
coupon, a borrower may have an increased incentive to refinance its mortgage
loan. Even in the case of ARM Loans, as prevailing market interest rates
decline, and without regard to whether the mortgage rates on the ARM Loans
decline in a manner consistent therewith, the related borrowers may have an
increased incentive to refinance for purposes of either:
o converting to a fixed rate loan and thereby locking in the rate; or
o 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. We
will make no representation as to the particular factors that will affect the
prepayment of the mortgage loans in any trust fund, as to their relative
importance, as to the percentage of the principal balance of mortgage loans
that will be paid as of any date or as to the overall rate of prepayment on
those mortgage loans.
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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 the 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 the 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 that 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 the related
mortgage 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 the 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 the series. The prospectus
supplement will also contain the percentage of the initial certificate balance
or notional amount of each class of offered certificates that would be
outstanding on specified distribution dates based on the assumptions stated in
that 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 other rates specified in the prospectus supplement. The
tables and assumptions will illustrate the sensitivity of the weighted average
lives of the certificates to various assumed prepayment rates and will not be
intended to predict, or to provide information that will enable investors to
predict, the actual weighted average lives of the certificates.
CONTROLLED AMORTIZATION CLASSES AND COMPANION CLASSES
A series of certificates may include one or more controlled amortization
classes, which will entitle the holders of those certificates to receive
principal distributions according to a specified principal payment schedule.
The principal payment 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 or a targeted amortization
class. In general, a planned amortization class has a prepayment collar--that
is, a range of prepayment rates that can be sustained without disruption--that
determines the principal cash flow of the certificates. A prepayment collar is
not static, and may expand or contract after the issuance of the planned
amortization class depending on the actual prepayment experience for the
underlying mortgage loans. Distributions of principal on a planned amortization
class 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
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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 planned amortization
class. A targeted amortization class is structured so that principal
distributions generally will be payable 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 the schedule. A targeted amortization class will generally afford
the holders 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 those 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 of certificates in that class 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 those holders 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 to a disproportionately large share of
the prepayments on the mortgage loans in the related trust fund enhances the
risk of early retirement of that class, known as call risk, if the rate of
prepayment is relatively fast; while a class of certificates that entitles its
holders 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 that class, known as extension risk, if the rate of prepayment is relatively
slow. Thus, as and to the extent described in the related prospectus
supplement, a companion class absorbs some, but not all, of the call risk
and/or extension risk that would otherwise belong to the related controlled
amortization class if all payments of principal of the mortgage loans in the
related trust fund were allocated on a pro rata basis.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the mortgage
loans included in a particular trust fund may require that balloon payments be
made at maturity. Because the ability of a borrower to make a balloon payment
typically will depend upon its ability either to refinance the loan or to sell
the related mortgaged property, there is a risk that mortgage loans that
require balloon payments may default at maturity, or that the maturity of such
a mortgage loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things,
bankruptcy of the borrower or adverse conditions in the market where the
property is located. In order to minimize losses on defaulted mortgage loans,
the servicer or a special servicer, to the extent and under the circumstances
set forth in this prospectus 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
the certificates and, if the 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 on
those mortgage loan 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. A slower rate of mortgage loan
amortization would correspondingly be reflected in a slower rate of
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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. Negative amortization allocated to a class of certificates may result
in a deferral of some or all of the interest payable on those certificates,
which deferred interest may be added to the certificate balance of those
certificates. Accordingly, the weighted average lives of mortgage loans that
permit negative amortization, and that of the classes of certificates to which
any related negative amortization would be allocated or that would bear the
effects of a slower rate of amortization on the mortgage loans, may increase as
a result of this 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 a mortgage loan may
exceed the amount necessary to amortize the loan fully over its remaining
amortization schedule thereby resulting in the accelerated amortization of the
mortgage loan. Any related acceleration in amortization of its principal
balance will shorten the weighted average life of a mortgage loan and,
correspondingly, the weighted average lives of those classes of certificates
entitled to a portion of the principal payments on the 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:
o whether the offered certificate was purchased at a premium or a
discount; and
o the extent to which the payment characteristics of those mortgage
loans delay or accelerate the distributions of principal on the
certificate, or, in the case of a stripped interest certificate, delay
or accelerate the amortization of its notional amount.
For additional information on the effects of negative amortization on the
yield of certificates, you should review the section titled "--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 Loans. The yield to holders of the
offered certificates of any series will directly depend on the extent to which
the holders are required to bear the effects of any losses or shortfalls in
collections arising out of defaults on the mortgage loans in the related trust
fund and the timing of the losses and shortfalls. In general, the earlier that
any loss or shortfall occurs, the greater will be the negative effect on yield
for any class of certificates that is required to bear its effects.
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, allocations of
losses and shortfalls may be effected by a reduction in the entitlements to
interest and/or certificate balances of one or more classes of certificates, or
by establishing a priority of payments among those classes of certificates.
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The yield to maturity on a class of subordinate certificates may be
extremely sensitive to losses and shortfalls in collections on the mortgage
loans in the related trust fund.
Additional Certificate Amortization. In addition to entitling the holders
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 the series, may provide for
distributions of principal. Distributions may be provided from:
o amounts attributable to interest accrued but not currently
distributable on one or more classes of accrual certificates;
o Excess Funds; or
o any other amounts described in the related prospectus supplement.
The amortization of any class of certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of the
certificates and, if those certificates were purchased at a premium, reduce the
yield on those certificates. 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 any of the foregoing sources
would have any material effect on the rate at which the 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 under the circumstances and in the manner set forth in the prospectus
supplement. 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 the
mortgage assets to retire the class or classes, under the circumstances and in
the manner set forth in the related prospectus supplement. In the absence of
other factors, any early retirement of a class of offered certificates would
shorten the weighted average life of the certificates and, if the certificates
were purchased at premium, reduce the yield on those certificates.
THE DEPOSITOR
We are Bear Stearns Commercial Mortgage Securities Inc., a Delaware
corporation organized on April 20, 1987, and we function as the depositor. Our
primary business is to acquire mortgage loans, mortgage-backed securities and
related assets and sell interests therein or bonds secured thereby. We are an
affiliate of Bear, Stearns & Co. Inc. We maintain our principal office at 245
Park Avenue, New York, New York 10167. Our telephone number is (212) 272-2000.
We do not have, nor do we expect in the future to have, any significant assets.
USE OF PROCEEDS
The net proceeds to be received from the sale of the certificates of any
series will be applied by us to the purchase of trust assets or will be used by
us for general corporate purposes. We expect 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 us,
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 and
servicing agreement. As described in the related prospectus supplement, the
certificates of each series, including the offered certificates of any series,
may consist of one or more classes of certificates that, among other things:
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o provide for the accrual of interest thereon at a fixed, variable or
adjustable rate;
o are senior or subordinate to one or more other classes of certificates
in entitlement to distributions on the certificates;
o are stripped principal certificates;
o are stripped interest certificates;
o provide for distributions of interest or principal that commence only
after the occurrence of some events, such as the retirement of one or
more other classes of certificates of the series;
o provide for distributions of principal 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;
o provide for distributions of principal to be made, subject to
available funds, based on a specified principal payment schedule or
other methodology; or
o 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 some
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 or may be offered in book-entry format through the
facilities of 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 with the transfer. Interests in a class of book-entry certificates
will be transferred on the book-entry records of DTC and its participating
organizations.
DISTRIBUTIONS
Distributions on the certificates of each series will be made by or on
behalf of the related trustee or servicer on each distribution date as
specified in the related prospectus supplement from the Available Distribution
Amount for the series and the distribution date. The particular components of
the Available Distribution Amount for any series on each distribution date will
be more specifically described in the related prospectus supplement.
Except as otherwise specified in the related prospectus supplement,
distributions on the certificates of each series, other than the final
distribution in retirement of any certificate, will be made to the persons in
whose names the 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 amount of each distribution will be determined as
of the close of business on the 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 that 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 or by check mailed to the
address of the certificateholder as it appears in the certificate register.
Payment will be made by wire transfer if the certificateholder has provided the
person required to make 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, the
certificateholder holds certificates in the requisite amount or denomination
specified therein. If the certificateholder does not provide any wiring
instructions, payments will be made by check mailed to the address of the
certificateholder as it appears on the
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certificate register. 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 the certificates at the
location specified in the notice to certificateholders of the final
distribution.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of certificates of each series, other than some classes of
stripped principal certificates and some 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 some classes of 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 the class and the distribution date, subject
to the sufficiency of the portion of the Available Distribution Amount
allocable to that class on the distribution date. Prior to the time interest is
distributable on any class of accrual certificates, the amount of Accrued
Certificate Interest otherwise distributable on that class will be added to the
certificate balance of that class on each distribution date. Reference to a
notional amount with respect to a class of stripped interest certificates is
solely for convenience in making appropriate 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 those
certificates--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--Shortfalls in Collections of Interest
as a Result of Prepayments of Mortgage Loans," exceed the amount of any
sums--including, if and to the extent specified in the related prospectus
supplement, all or a portion of the servicer's or special servicer's servicing
compensation--that are applied to offset the amount of the shortfalls. The
particular manner in which 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 the 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 that class.
DISTRIBUTIONS OF PRINCIPAL ON THE CERTIFICATES
Each class of certificates of each series, other than some classes of
stripped interest certificates and some 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 the 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 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 to these certificates 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 to them from time to
time, and will be increased, in the case of a class
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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, 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 the 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 the series who are entitled to receive those distributions
until the certificate balances of the 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 one or more specified 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 is known as 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 is known as 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 that 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 who are entitled in accordance with the provisions described in the
prospectus supplement.
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, allocations of
losses or shortfalls may be effected by a reduction in the entitlements to
interest and/or certificate balances of one or more classes of certificates, or
by establishing a priority of payments among 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 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, the amount may be advanced 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
the distribution date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of certificates who are
entitled, rather than to guarantee or insure
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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 the advances were made--as to any mortgage loan, more commonly known as
related proceeds. Advances may also be reimbursed from 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 those
subordinate certificates. No advance will be required to be made by the
servicer, a special servicer or the trustee if, in the good faith judgment of
the servicer, a special servicer or the trustee, as the case may be, the
advance would not be recoverable from related proceeds or another specifically
identified source--any such advance is known as a nonrecoverable advance. If an
advance was previously made by the servicer, a special servicer or the trustee,
a nonrecoverable advance will be reimbursable 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 servicer, special servicer, trustee or
other entity from excess funds in a certificate account, the servicer, special
servicer, trustee or other entity, as the case may be, will be required to
replace the funds in the certificate account on any future distribution date to
the extent that funds in the certificate account on the distribution date are
less than payments required to be made to the related series of
certificateholders on that date. If so specified in the related prospectus
supplement, the obligation of the 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 related 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 on the advances
made by that entity. Interest will be payable for the period that the advances
are outstanding at the rate specified in the related prospectus supplement, and
the entity making advances will be entitled to payment of 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 and servicing agreement and prospectus
supplement.
The prospectus supplement for any series of certificates evidencing an
interest in a trust fund that includes MBS will describe any comparable
advancing obligation of a party to the related pooling and servicing 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 servicer, the
trustee, or such other party as may be specified in the related prospectus
supplement, will forward or make available to each holder 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:
1. the amount of distribution to holders of the class of offered
certificates that was applied to reduce the certificate balance of those
certificates;
2. the amount of distribution to holders of the class of offered
certificates that is allocable to Accrued Certificate Interest;
3. the amount, if any, of distribution to holders of that class of offered
certificates that is allocable to both prepayment premiums and payments
on account of equity participations;
4. the amount, if any, by which the distribution is less than the amounts
to which holders of a class of offered certificates are entitled;
5. if the related trust fund includes mortgage loans, the aggregate amount
of advances included in the distribution;
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6. if the related trust fund includes mortgage loans, the amount of
servicing compensation received by the related servicer, and, if payable
directly out of the related trust fund, by any special servicer and any
sub-servicer, and 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;
7. information regarding the aggregate principal balance of the related
mortgage assets on or about the distribution date;
8. if the related trust fund includes mortgage loans, information
regarding the number and aggregate principal balance of those mortgage
loans that are delinquent in varying degrees, including specific
identification of mortgage loans that are more than 60 days delinquent
or in foreclosure;
9. if the related trust fund includes mortgage loans, information
regarding the aggregate amount of losses incurred and principal
prepayments made with respect to those mortgage loans during the related
period. The related period is 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;
10. 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 a distribution date, separately
identifying any reduction in the certificate balance or notional amount
due to the allocation of any losses in respect of the related mortgage
assets, any increase in the 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 the balance;
11. if a class of offered certificates has a variable pass-through rate or
an adjustable pass-through rate, the applicable pass-through rate for
the distribution date and, if determinable, for the next succeeding
distribution date;
12. the amount deposited in or withdrawn from any reserve fund on the
distribution date, and the amount remaining on deposit in the reserve
fund as of the close of business on the distribution date;
13. 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 instrument as of the close of
business on the distribution date; and
14. to the extent not otherwise reflected through the information furnished
pursuant to subclauses 10 and 13 above, the amount of credit support
being afforded by any classes of subordinate certificates.
In the case of information furnished pursuant to subclauses 1-3 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 the
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 a series.
Within a reasonable period of time after the end of each calendar year,
the servicer or trustee for a series of certificates, as the case may be, will
be required to furnish or make available to you at any time during the calendar
year you were a holder of an offered certificate of a series a statement
containing the information set forth in subclauses 1-3 above. The information
will be aggregated for that calendar year or the applicable portion of that
calendar year during which the person was a certificateholder. The obligation
to furnish information to a certificateholder will be deemed to have been
satisfied to the extent that substantially comparable information is provided
pursuant to any requirements of the Internal Revenue Code as are from time to
time in force.
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For other information regarding information provided to a
certificateholder, you should review the section in the prospectus titled
"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 servicer, the trustee or such other party as may be specified in
the applicable prospectus supplement, as the case may be, to include in any
distribution date statement information regarding the mortgage loans underlying
the MBS will depend on the reports received with respect to the MBS. In those
cases, the related prospectus supplement will describe the loan-specific
information to be included in the distribution date Statements that will be
forwarded or made available 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 will be
allocated among the respective classes of that series in the manner described
in the related prospectus supplement.
You will generally not have a right to vote, except with respect to
required consents to some amendments to the related pooling and servicing
agreement and as otherwise specified in the related prospectus supplement. For
additional information, you should review the section in this prospectus titled
"Description of the Pooling and Servicing 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
some events which if continuing would constitute an event of default on the
part of the related servicer. For further information, you should also review
the section in this prospectus titled "Description of the Pooling and Servicing
Agreements--Events of Default," "--Rights upon Event of Default" and
"--Resignation and Removal of the Trustee."
TERMINATION
The obligations created by the pooling and servicing agreement for each
series of certificates will terminate following:
o the final payment or other liquidation of the last mortgage asset or
the disposition of all property acquired upon foreclosure of any
mortgage loan; and
o the payment to the certificateholders of that series of all amounts
required to be paid to them pursuant to that pooling and servicing
agreement.
Written notice of termination of a pooling and servicing 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 that 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 under the
circumstances and in the manner set forth in that prospectus supplement. 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 designated in that prospectus
supplement 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 the mortgage assets to retire the related class or classes.
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 that series will be offered
in book-entry format through the facilities of DTC, and each class will be
represented by one or more global certificates registered in the name of DTC or
its nominee.
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DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking corporation" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Internal Revenue 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 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 some 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 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. The
rules applicable to DTC and its participants are on file with SEC.
Purchases of book-entry certificates under DTC system must be made by or
through direct participants, which will receive a credit for the book-entry
certificates on DTC's records. Your ownership interest of a book-entry
certificate is in turn to be recorded on the direct and indirect participants'
records. You will not receive written confirmation from DTC of your purchases,
but you are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the direct
or indirect participant through which you 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 your behalf. 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 the
certificates are credited, which may or may not be the certificate owners. The
participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to certificate owners will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Distributions on the book-entry certificates will be made to DTC. DTC's
practice is to credit direct participants' accounts on the related distribution
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on that date.
Disbursement of the distributions by participants to you 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 participant--and not of DTC, us as the
depositor, any trustee or servicer--subject to any statutory or regulatory
requirements as may be in effect from time to time. Under a book-entry system,
you may receive payments after the related distribution date.
Unless otherwise provided in the related prospectus supplement, the only
certificateholder, as the term is used in the related pooling and servicing
agreement, will be the nominee of DTC, and you will not be recognized as
certificateholders under the pooling and servicing agreement. You will be
permitted to exercise your rights under the related pooling and servicing
agreement only indirectly through the participants who in turn will exercise
their rights through DTC. We will be informed that DTC will take action
permitted to be taken by a certificateholder under a pooling and servicing
agreement only at the direction of one or more participants to whose account
with DTC interests in the book-entry certificates are credited.
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Because DTC can act only on behalf of participants, who in turn act on
behalf of indirect participants and some of you, your ability to pledge your
interest in book-entry certificates to persons or entities that do not
participate in 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 the interest.
Unless otherwise specified in the related prospectus supplement,
certificates initially issued in book-entry form will be issued as definitive
certificates to you or your nominees, rather than to DTC or its nominee, only
if:
o we advise the trustee in writing that DTC is no longer willing or able
to discharge properly its responsibilities as depository with respect
to those certificates and we are unable to locate a qualified
successor; or
o we, at our option, elect to terminate the book-entry system through
DTC with respect to those 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 our instructions the definitive certificates to which they are
entitled, and thereafter the holders of those definitive certificates will be
recognized as certificateholders under the related pooling and servicing
agreement.
DESCRIPTION OF THE POOLING AND SERVICING 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 general, the parties to a pooling and servicing agreement will
include us, the trustee, the servicer and, in some cases, a special servicer
appointed as of the date of the pooling and servicing agreement. However, a
pooling and servicing agreement may include a mortgage asset seller as a party,
and a pooling and servicing agreement that relates to a trust fund that
consists solely of MBS may not include the servicer or other servicer as a
party. All parties to each pooling and servicing 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,
our affiliate, or the mortgage asset seller or its affiliate, may perform the
functions of servicer or special servicer. Any party to a pooling and servicing
agreement may own certificates issued under that pooling and servicing
agreement. However, except with respect to required consents to some amendments
to a pooling and servicing agreement, certificates that are held by the
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 and servicing 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 some provisions that may
appear in a pooling and servicing 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
and servicing agreement that materially differs from the description contained
in this prospectus. If the related trust fund includes MBS, it will summarize
all of the material provisions of the related pooling and servicing agreement.
The summaries in this prospectus 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 and servicing agreement for each series of certificates and the
description of the provisions in the related prospectus supplement. As used in
this prospectus 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. We will
provide a copy of the pooling and servicing agreement, without exhibits, that
relates to any series of certificates without
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charge upon written request of a holder of a certificate of that 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, we will assign, or
cause to be assigned, to the designated trustee the mortgage loans to be
included in the related trust fund. Unless otherwise specified in the related
prospectus supplement, we will assign, or cause to be assigned, all principal
and interest to be received on or with respect to those 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 the assignment, deliver the
certificates to or at our direction in exchange for the mortgage loans and the
other assets to be included in the trust fund for the series. Each mortgage
loan will be identified in a schedule appearing as an exhibit to the related
pooling and servicing agreement. The schedule generally will include detailed
information that pertains to each mortgage loan included in the related trust
fund. The information will typically include the address of the related
mortgaged property and type of the 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.
We will deliver, or cause to be delivered, to the related trustee, or to a
custodian appointed by the trustee, some loan documents with respect to each
mortgage loan to be included in a trust fund. Unless otherwise specified in the
related prospectus supplement, the loan documents will include the following:
o the original mortgage note endorsed, without recourse, to the order of
the trustee; and
o the original Mortgage, or a certified copy, with evidence of recording
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 and servicing agreement will require
that we or another party to the pooling and servicing agreement
promptly cause each 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. The trustee, or the
custodian, will hold the mortgage loan documents in trust for the benefit of
the certificateholders of that series. Unless otherwise specified in the
related prospectus supplement, if any document is found to be missing or
defective, and that omission or defect, as the case may be, materially and
adversely affects the interests of the certificateholders of the related
series, the trustee, or custodian, will be required to notify the servicer and
us, and one of us 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
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 the occurrence of conditions, and/or
within a specified period, specified in the pooling and servicing agreement,
after initial issuance of the series of certificates, to replace that 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. Neither we nor, unless it is the mortgage asset seller, the
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 that
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document has been submitted for recording, and neither that document nor a
certified copy, in either case with evidence of recording, 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 that missing document so long as it continues in good faith to
attempt to obtain that document or a certified copy of that document.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the prospectus supplement for a series of
certificates, we will, with respect to each mortgage loan in the related trust
fund, make or assign, or cause to be made or assigned, some representations and
warranties covering, by way of example:
o the accuracy of the information set forth for the mortgage loan on the
schedule of mortgage loans appearing as an exhibit to the related
pooling and servicing agreement;
o the enforceability of the related mortgage note and mortgage and the
existence of title insurance insuring the lien priority of the related
mortgage;
o the warranting party's title to the mortgage loan and the authority of
the warranting party to sell the mortgage loan; and
o 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 servicer, a special servicer or another
person acceptable to us, or us or our affiliate. 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 and servicing agreement will provide that the 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 your interests. If a warranting party cannot
cure the breach within a specified period following the date on which it was
notified of that breach, then, unless otherwise provided in the related
prospectus supplement, it 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 warranting party, in lieu of repurchasing a mortgage loan as
to which a breach has occurred, will have the option, exercisable upon some
conditions and/or within a specified period after initial issuance of a series
of certificates, to replace the related mortgage loan with one or more other
mortgage loans. Unless otherwise specified in the related prospectus
supplement, this repurchase or substitution obligation will constitute the sole
remedy available to you or to the related trustee on your behalf for a breach
of representation and warranty by a warranting party. Neither we nor the
servicer, in either case unless we or the servicer 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. Consequently, those representations
and warranties may not address events that may occur following the date as of
which they were made. However, we will not include any mortgage loan in the
trust fund for any series of certificates if anything has come to our attention
that would cause it to believe that the representations and warranties made in
respect of a 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 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 a trust fund. The
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servicer will be required to follow collection procedures as it would follow
with respect to mortgage loans that are comparable to the mortgage loans in the
trust fund and held for its own account, provided the procedures are consistent
with:
o the terms of the related pooling and servicing agreement and any
related instrument of credit support included in the trust fund;
o applicable law; and
o the servicing standard specified in the related pooling and servicing
agreement and prospectus supplement.
The servicer for any trust fund, directly or through sub-servicers, will
also be required to perform as to the mortgage loans in the trust fund various
other customary functions of a servicer of comparable loans. These obligations
include the following:
o maintaining escrow or impound accounts, if required under the related
pooling and servicing agreement, for payment of taxes, insurance
premiums, ground rents and similar items, or otherwise monitoring the
timely payment of those items;
o attempting to collect delinquent payments; supervising foreclosures;
negotiating modifications; conducting property inspections on a
periodic or other basis;
o managing, or overseeing the management of, mortgaged properties
acquired on behalf of the trust fund through foreclosure, deed-in-lieu
of foreclosure or otherwise, each of which is called an REO property;
and
o maintaining servicing records relating to the mortgage loans.
Unless otherwise specified in the related prospectus supplement, the servicer
will be responsible for filing and settling claims in respect of particular
mortgage loans under any applicable instrument of credit support.
For additional information regarding credit support, you should review the
section in this prospectus titled "Description of Credit Support."
SUB-SERVICERS
The servicer may delegate its servicing obligations in respect of the
mortgage loans serviced thereby to one or more third-party servicers. However,
unless otherwise specified in the related prospectus supplement, the servicer
will remain obligated under the related pooling and servicing agreement. A
sub-servicer for any series of certificates may be our affiliate or an
affiliate of the servicer. Unless otherwise provided in the related prospectus
supplement, each sub-servicing agreement between the servicer and a
sub-servicer will provide that, if for any reason the servicer is no longer
acting in that capacity, the trustee or any successor servicer may assume the
servicer's rights and obligations under the sub-servicing agreement. The
servicer will be required to monitor the performance of sub-servicers retained
by it and will have the right to remove a sub-servicer retained by it at any
time it considers the removal of the sub-servicer to be in your best interest.
Unless otherwise provided in the related prospectus supplement, the
servicer will be solely liable for all fees owed by it to any sub-servicer,
irrespective of whether the servicer's compensation pursuant to the related
pooling and servicing agreement is sufficient to pay the sub-servicer's fees.
Each sub-servicer will be reimbursed by the servicer that retained it for some
expenditures which it makes, generally to the same extent the servicer would be
reimbursed under a pooling and servicing agreement.
For additional information regarding payment of fees and expenses to a
sub-servicer, you should review the sections in this prospectus titled
"--Certificate Account" and "--Servicing Compensation and Payment of Expenses."
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SPECIAL SERVICERS
To the extent so specified in the related prospectus supplement, one or
more special servicers may be a party to the related pooling and servicing
agreement or may be appointed by the servicer or another specified party. A
special servicer for any series of certificates may be our affiliate or an
affiliate of the servicer. A special servicer may be entitled to any of the
rights, and subject to any of the obligations, described in this prospectus in
respect of the 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 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 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 the mortgage loans. Those
certificate accounts 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. The funds held in a
certificate account 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. 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 servicer, trustee or special
servicer, if any, as additional compensation. A certificate account may be
maintained with the related servicer, special servicer or mortgage asset seller
or with a depository institution that is our affiliate or an affiliate of any
of the foregoing. Any entity that maintains a certificate account must comply
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 servicer or special servicer,
if any, or serviced by either on behalf of others.
Deposits. Unless otherwise provided in the related pooling and servicing
agreement and described in the related prospectus supplement, the 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 and servicing agreement, the following payments and collections
received or made by the servicer, the trustee or any special servicer
subsequent to the cut-off date, other than payments due on or before the
cut-off date:
1. all payments on account of principal, including principal prepayments,
on the mortgage loans;
2. all payments on account of interest on the mortgage loans, including any
default interest collected, in each case net of any portion retained by
the servicer or any special servicer as its servicing compensation or as
compensation to the trustee;
3. 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 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 with respect
to the liquidation, by foreclosure
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or otherwise [collectively, 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;
4. 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";
5. any advances made as described under "Description of the
Certificates--Advances in Respect of Delinquencies";
6. any amounts paid under any cash flow agreement, as described under
"Description of the Trust Funds--MBS--Cash Flow Agreements";
7. all proceeds of the purchase of any mortgage loan, or property acquired
with respect to the liquidation, by us, 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);
8. any amounts paid by the servicer to cover prepayment interest shortfalls
arising out of the prepayment of mortgage loans as described under
"--Servicing Compensation and Payment of Expenses";
9. to the extent that any related item does not constitute additional
servicing compensation to the 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;
10. 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";
11. any amount required to be deposited by the servicer or the trustee in
connection with losses realized on investments for the benefit of the
servicer or the trustee, as the case may be, of funds held in the
certificate account; and
12. any other amounts required to be deposited in the certificate account
as provided in the related pooling and servicing agreement and described
in the related prospectus supplement.
Withdrawals. Unless otherwise provided in the related pooling and
servicing agreement and described in the related prospectus supplement, the
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:
1. to make distributions to you on each distribution date;
2. to pay the servicer, the trustee or a special servicer any servicing
fees not previously retained thereby, the payment to be made out of
payments on the particular mortgage loans as to which the fees were
earned;
3. to reimburse the servicer, a special servicer, the trustee or any other
specified person for any unreimbursed amounts advanced by it as described
under "Description of the Certificates--Advances in Respect of
Delinquencies", the reimbursement to be made out of amounts received that
were identified and applied by the 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 those mortgage loans;
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4. to reimburse the servicer, the trustee or a special servicer for unpaid
servicing fees earned by it and unreimbursed servicing expenses incurred
by it with respect to mortgage loans in the trust fund and properties
acquired in respect thereof, the 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
their fees were earned or their expenses were incurred or out of amounts
drawn under any instrument of credit support with respect to the mortgage
loans and properties;
5. to reimburse the servicer, a special servicer, the trustee or other
specified person for any advances described in clause (3) above made by
it and/or any servicing expenses referred to in clause (4) above incurred
by it that, in the good faith judgment of the servicer, special servicer,
trustee or other specified person, as applicable, will not be recoverable
from the amounts described in clauses (3) and (4), respectively, the
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 and servicing agreement and described in the related
prospectus supplement, only from that portion of amounts collected on the
other mortgage loans that is otherwise distributable on one or more
classes of subordinate certificates of the related series;
6. if and to the extent described in the related prospectus supplement, to
pay the servicer, a special servicer, the trustee or any other specified
person interest accrued on the advances described in clause (3) above
made by it and the servicing expenses described in clause (4) above
incurred by it while the advances remain outstanding and unreimbursed;
7. 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 the mortgaged properties, as described under
"--Realization Upon Defaulted Mortgage Loans";
8. to reimburse the servicer, the special servicer, the depositor, or any
of their respective directors, officers, employees and agents, as the
case may be, for some expenses, costs and liabilities incurred thereby,
as and to the extent described under "--Some Matters Regarding the
Servicer and the Depositor";
9. if and to the extent described in the related prospectus supplement, to
pay the fees of trustee;
10. to reimburse the trustee or any of its directors, officers, employees
and agents, as the case may be, for some expenses, costs and liabilities
incurred thereby, as and to the extent described under "--Regarding the
Fees, Indemnities and Powers of the Trustee";
11. if and to the extent described in the related prospectus supplement, to
pay the fees of any provider of credit support;
12. if and to the extent described in the related prospectus supplement, to
reimburse prior draws on any instrument of credit support;
13. to pay the 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;
14. 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;
15. if one or more elections have been made to treat the trust fund or its
designated portions as a REMIC, to pay any federal, state or local taxes
imposed on the trust fund or its assets or transactions, as and to the
extent described under "Material Federal Income Tax Consequences--Federal
Income Tax Consequences for REMIC Certificates--Taxes That May Be Imposed
on the REMIC Pool";
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16. 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 with respect to a defaulted mortgage
loan in connection with the liquidation of the mortgage loan or property;
17. to pay for the cost of various opinions of counsel obtained pursuant to
the related pooling and servicing agreement for the benefit of
certificateholders;
18. to make any other withdrawals permitted by the related pooling and
servicing agreement and described in the related prospectus supplement;
and
19. to clear and terminate the certificate account upon the termination of
the trust fund.
MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS
The 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 set forth in the related pooling and servicing agreement. However,
unless otherwise set forth in the related prospectus supplement, the
modification, waiver or amendment will not do the following:
o affect the amount or timing of any scheduled payments of principal or
interest on the mortgage loan;
o in the judgment of the servicer, materially impair the security for
the mortgage loan or reduce the likelihood of timely payment of
amounts due on that mortgage loan; and
o adversely affect the coverage under any applicable instrument of
credit support.
Unless otherwise provided in the related prospectus supplement, the
servicer also may agree to any other modification, waiver or amendment if, in
its judgment,
o a material default on the mortgage loan has occurred or a payment
default is imminent;
o the 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
o the 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 the other actions as are consistent with the
servicing standard set forth in the pooling and servicing agreement. A
significant period of time may elapse before the special servicer is able to
assess the success of any related 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
your behalf 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
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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 the mortgage
loan may be restructured in the resulting bankruptcy proceedings. For
additional information regarding the restructuring of a mortgage loan, you
should review the Section in this prospectus titled "Legal Aspects of Mortgage
Loans".
A pooling and servicing agreement may grant to the servicer, a special
servicer, a provider of credit support and/or the holder or holders of one or
more classes of the related series of certificates a right of first refusal to
purchase from the trust fund, at a predetermined purchase price any mortgage
loan as to which a specified number of scheduled payments are delinquent. If
the predetermined purchase price is insufficient to fully fund the entitlements
of certificateholders to principal and interest, it will be so specified in the
related prospectus supplement. 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 and servicing agreement will
require that the special servicer accept the highest cash bid received from any
person, including itself, us or any affiliate of either of us or any
certificateholder, that constitutes a fair price for the defaulted mortgage
loan. In the absence of any bid determined in accordance with the related
pooling and servicing 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 do the following so long as it is consistent with the
servicing standard:
o institute foreclosure proceedings;
o exercise any power of sale contained in the related Mortgage;
o obtain a deed in lieu of foreclosure; or
o otherwise acquire title to the related mortgaged property.
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 the mortgaged
property within the meaning of some federal environmental laws. The special
servicer may do so only if 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:
o either the mortgaged property is in compliance with applicable
environmental laws and regulations or, if not, that taking the 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 the actions; and
o 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 the circumstances or conditions are present for
which any related action could be required, taking the 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 the actions.
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For additional information regarding environmental risks associated with
mortgage loans, you should review the section in this prospectus titled "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 three years of
acquisition, unless one of the following events occurs:
o the Internal Revenue Service grants an extension of time to sell the
property or
o the trustee receives an opinion of independent counsel to the effect
that the holding of the property by the trust fund for more than three
years after its acquisition will not result in the imposition of a tax
on the trust fund or cause the trust fund or any of its designated
portions to fail to qualify as a REMIC under the Internal Revenue 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 the 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
that property. The retention of an independent contractor, however, will not
relieve the special servicer of its obligation to manage that mortgaged
property in a manner consistent with the servicing standard set forth in the
related pooling and servicing agreement.
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 on that mortgage loan and the aggregate amount of
reimbursable expenses incurred by the special servicer in connection with that
mortgage loan, the trust fund will realize a loss in the amount of the
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 liquidation proceeds to you. The reimbursement amount will
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 the restoration unless, and to the extent not otherwise
provided in the related prospectus supplement, it determines:
o that the restoration will increase the proceeds to certificateholders
on liquidation of the mortgage loan after reimbursement of the special
servicer for its expenses; and
o that the 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 and servicing agreement will require the servicer to cause each
mortgage loan borrower to maintain a hazard insurance policy that provides for
the coverage as is required under the related Mortgage. Alternatively, if the
Mortgage permits the holder to dictate to the borrower the insurance coverage
to be maintained on the related mortgaged property, the hazard insurance policy
coverage should be consistent with the requirements of the servicing standard.
Unless otherwise specified in the related prospectus supplement, the hazard
insurance policy coverage generally will be in an amount equal to the lesser of
the principal balance owing on the mortgage loan and the replacement cost of
the related mortgaged property. The ability of the servicer to assure that
hazard insurance proceeds are appropriately applied may depend 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
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information concerning covered losses is furnished by borrowers. All amounts
collected by the servicer under any policy will be deposited in the related
certificate account. Amounts to be applied to the restoration or repair of the
mortgaged property or released to the borrower in accordance with the
servicer's normal servicing procedures and/or to the terms and conditions of
the related Mortgage and mortgage note will be otherwise distributed. The
pooling and servicing agreement may provide that the servicer may satisfy its
obligation to cause each borrower to maintain a hazard insurance policy by
maintaining a blanket policy insuring against hazard losses on all of the
mortgage loans in a trust fund. If a blanket policy contains a deductible
clause, the servicer will be required, in the event of a casualty covered by
that blanket policy, to deposit in the related certificate account all sums
that would have been deposited in that certificate account but for the
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.
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. Nevertheless, most of the 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 some
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 its holder to require, that type of coverage.
The hazard insurance policies covering the mortgaged properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage, generally 80% to 90%, of
the full replacement value of the improvements on the property in order to
recover the full amount of any partial loss. If the insured's coverage falls
below this specified percentage, the clauses generally provide that the
insurer's liability in the event of partial loss does not exceed the lesser of:
o the replacement cost of the improvements less physical depreciation;
and
o the proportion of the loss as the amount of insurance carried bears to
the specified percentage of the full replacement cost of the
improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Some 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.
Some 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 servicer will
determine whether to exercise any right the trustee may have under any related
provision in a manner consistent with the servicing standard set forth in the
related pooling and servicing agreement. Unless otherwise specified in the
related prospectus supplement, the servicer will be entitled to retain as
additional servicing compensation any fee collected in connection with the
permitted transfer of a mortgaged property.
For additional information regarding due-on-sale and due-on-encumbrance
clauses relating to mortgage loans, you should review the section in this
prospectus titled "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
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. Any
special
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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 compensation is generally based on a
percentage of the principal balance of each 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 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 servicer's compensation as its sub-servicing
compensation.
In addition to amounts payable to any sub-servicer, the servicer may be
required, to the extent provided in the related prospectus supplement, to pay
from amounts that represent its servicing compensation some expenses incurred
in connection with the administration of the related trust fund. Those expenses
may include, without limitation, payment of the fees and disbursements of
independent accountants and payment of expenses incurred in connection with
distributions and reports to certificateholders. Some other expenses, including
some expenses related to mortgage loan defaults and liquidations and, to the
extent so provided in the related prospectus supplement, interest on those
expenses at the rate specified in the related prospectus supplement, 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
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. For further information regarding prepayment interest shortfalls,
you should review the section in the prospectus titled "Yield and Maturity
Considerations--Shortfalls in Collections of Interest as a Result of
Prepayments of Mortgage Loans".
EVIDENCE AS TO COMPLIANCE
Unless otherwise provided in the related prospectus supplement, each
pooling and servicing agreement will require, on or before a specified date in
each year, the servicer to cause a firm of independent public accountants to
furnish to the trustee a statement. The statement should provide that, on the
basis of the examination by that 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
servicer of mortgage loans under pooling and servicing agreements substantially
similar to each other, which may include the pooling and servicing agreement,
was conducted through the preceding calendar year or other specified
twelve-month period in compliance with the terms of those agreements except for
any significant exceptions or errors in records that, in the opinion of the
firm, neither the Audit Program for Mortgages serviced for FHLMC, nor paragraph
4 of the Uniform Single Audit Program for Mortgage Bankers, requires it to
report.
Each pooling and servicing agreement will also require, on or before a
specified date in each year, the servicer to furnish to the trustee a statement
signed by one or more officers of the servicer to the effect that the servicer
has fulfilled its material obligations under the applicable pooling and
servicing agreement throughout the preceding calendar year or other specified
twelve-month period.
SOME MATTERS REGARDING THE SERVICER AND THE DEPOSITOR
The entity serving as servicer under a pooling and servicing agreement may
be our affiliate and may have other normal business relationships with us or
our affiliates. Unless otherwise specified in the prospectus supplement for a
series of certificates, the related pooling and servicing agreement will permit
the servicer to resign from its obligations only upon the following conditions:
o the appointment of, and the acceptance of the appointment by, a
successor to it and receipt by the trustee of written confirmation
from each applicable rating agency that the resignation and
appointment will not have an adverse effect on the rating assigned by
the rating agency to any class of certificates of the series; or
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o a determination that the servicer's 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 resignation by the servicer will become effective until the trustee or
a successor servicer has assumed the servicer's obligations and duties under
the pooling and servicing agreement. Unless otherwise specified in the related
prospectus supplement, the 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 some limitations as to amount of coverage, deductible amounts,
conditions, exclusions and exceptions permitted by the related pooling and
servicing agreement.
Unless otherwise specified in the related prospectus supplement, each
pooling and servicing agreement will further provide that none of the servicer,
any special servicer, the depositor or any director, officer, employee or agent
of any of them will be under any liability to the related trust fund or
certificateholders for any action taken, or not taken, in good faith pursuant
to the pooling and servicing agreement or for errors in judgment. However, none
of the servicer, us or any other person will be protected against any of the
following:
o breach of a representation, warranty or covenant made in the pooling
and servicing agreement;
o any expense or liability that that person is specifically required to
bear pursuant to the terms of the pooling and servicing agreement; and
o any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of
obligations or duties or by reason of reckless disregard of the
obligations and duties.
Unless otherwise specified in the related prospectus supplement, each
pooling and servicing agreement will further provide that the 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 the pooling and servicing agreement or the related series of certificates.
However, indemnification will not extend to any loss, liability or expense:
o that the person is specifically required to bear pursuant to the terms
of the agreement, or is incidental to the performance of obligations
and duties thereunder and is not otherwise reimbursable pursuant to
the pooling and servicing agreement;
o those that are incurred in connection with any breach of a
representation, warranty or covenant made in the pooling and servicing
agreement;
o that are incurred by reason of misfeasance, bad faith or gross
negligence in the performance of obligations or duties under the
pooling and servicing agreement, or by reason of reckless disregard of
the obligations or duties; or
o that are incurred in connection with any violation of any state or
federal securities law.
In addition, each pooling and servicing agreement will provide that
neither the 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 and servicing agreement and that
in its opinion may involve it in any expense or liability. However, each of the
servicer and the depositor will be permitted, in the exercise of its
discretion, to undertake any action that it may deem necessary or desirable
with respect to the enforcement and/or protection of the rights and duties of
the parties to the pooling and servicing agreement and the interests of the
related series of certificateholders. In that event, the legal expenses and
costs of the action, and any liability resulting therefrom, will be expenses,
costs and liabilities of the related series of certificateholders, and the
servicer or the depositor, as the case may be, will be entitled to charge the
related certificate account for those expenses, costs and liabilities.
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Any person into which the servicer or the depositor may be merged or
consolidated, or any person resulting from any merger or consolidation to which
the servicer or the depositor is a party, or any person succeeding to the
business of the servicer or the depositor, will be the successor of the
servicer or the depositor, as the case may be, under the related pooling and
servicing agreement.
EVENTS OF DEFAULT
Unless otherwise provided in the prospectus supplement for a series of
certificates, events of default under the related pooling and servicing
agreement will include the following:
o any failure by the servicer to distribute or cause to be distributed
to the certificateholders of that series, or to remit to the trustee
for distribution to those certificateholders, any amount required to
be so distributed or remitted, which failure continues unremedied for
five days after written notice has been given to the servicer by the
trustee or the depositor, or to the servicer, the depositor and the
trustee by certificateholders entitled to not less than 25%, or the
other percentage specified in the related prospectus supplement, of
the voting rights for that series;
o any failure by the servicer duly to observe or perform in any material
respect any of its other covenants or obligations under the related
pooling and servicing agreement, which failure continues unremedied
for sixty days after written notice of the failure has been given to
the servicer by the trustee or the depositor, or to the servicer, the
depositor and the trustee by certificateholders entitled to not less
than 25%, or the other percentage specified in the related prospectus
supplement, of the voting rights for that series; and
o some events of insolvency, readjustment of debt, marshalling of assets
and liabilities, or similar proceedings in respect of or relating to
the servicer and some actions by or on behalf of the servicer
indicating its insolvency or inability to pay its obligations.
Material variations to the foregoing events of default, other than to add
to it 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 servicer under a pooling
and servicing agreement and 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 the other percentage specified in the
related prospectus supplement, of the voting rights for the series, the trustee
will be required, to terminate all of the rights and obligations of the
servicer under the pooling and servicing agreement. Upon termination of the
servicer's rights and obligations, the trustee will succeed to all of the
responsibilities, duties and liabilities of the servicer under the pooling and
servicing agreement and will be entitled to similar compensation arrangements.
However, if the servicer is required to make advances under the pooling and
servicing agreement 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 the
advances. 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 the other percentage specified in the related prospectus supplement, of
the voting rights for the 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 servicer
under the pooling and servicing agreement. Pending appointment of a successor,
the trustee will be obligated to continue to act in that capacity.
You will not have the right under any pooling and servicing agreement to
institute any proceeding with respect to the pooling and servicing agreement.
You may do so only if the following conditions have been met:
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o you previously have given to the trustee written notice of default and
other certificateholders of the same series entitled to not less than
25%, or the other percentage specified in the related prospectus
supplement, of the voting rights for the series shall have made
written request upon the trustee to institute the proceeding in its
own name as trustee;
o you shall have offered to the trustee reasonable indemnity; and
o the trustee for sixty days, or the other period specified in the
related prospectus supplement, shall have neglected or refused to
institute any related proceeding.
The trustee, however, will be under no obligation to exercise any of the
trusts or powers vested in it by the related pooling and servicing agreement or
to make any investigation of matters arising thereunder or to institute,
conduct or defend any litigation thereunder or in relation to it at the
request, order or direction of any of the holders of certificates of the
related series, unless the 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 and servicing agreement may be amended by the respective
parties to it, without your consent, to do the following:
o to cure any ambiguity;
o to correct a defective provision therein or to correct, modify or
supplement any provision in the pooling and servicing agreement that
may be inconsistent with any other provision in the pooling and
servicing agreement;
o to add any other provisions with respect to matters or questions
arising under the pooling and servicing agreement that are not
inconsistent with its provisions;
o to comply with any requirements imposed by the Internal Revenue Code;
or
o for any other purpose; provided that the amendment, other than an
amendment for the specific purpose referred to in clause 4 above, may
not, as evidenced by an opinion of counsel to the effect satisfactory
to the trustee, adversely affect in any material respect your
interests; and provided further that the amendment, other than an
amendment for one of the specific purposes referred to in clauses 1
through 4 above, must be acceptable to each applicable rating agency.
Unless otherwise specified in the related prospectus supplement, each
pooling and servicing agreement may also be amended by the respective parties
to the pooling and servicing agreement, with the consent of the holders of the
related series of certificates entitled to not less than 51%, or another
percentage specified in the related prospectus supplement, of the voting rights
for that series allocated to the affected classes, for any purpose. However,
unless otherwise specified in the related prospectus supplement, no amendment
may:
o 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 that certificate;
o adversely affect in any material respect the interests of the holders
of any class of certificates, in a manner other than as described in
the immediately preceding clause, without the consent of the holders
of all certificates of that class; or
o modify the provisions of the pooling and servicing 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
and servicing agreement pursuant to which one or more REMIC elections are to be
or have been made unless the trustee shall first have
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received an opinion of counsel to the effect that the amendment will not result
in the imposition of a tax on the related trust fund or cause the related trust
fund, or any of its designated portions, 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 and servicing agreement, the
trustee or other specified person will afford the certificateholders access
during normal business hours to the most recent list of certificateholders of
that series held by the person. If the list is of a date more than 90 days
prior to the date of receipt of the certificateholders' request, then the
person, if not the registrar for that series of certificates, will be required
to request from the registrar a current list and to afford the requesting
certificateholders access to it promptly upon receipt.
THE TRUSTEE
The trustee under each pooling and servicing agreement will be named in
the related prospectus supplement. The commercial bank, national banking
association, banking corporation or trust company that serves as trustee may
have typical banking relationships with us or our affiliates and with any
servicer or special servicer and its affiliates. If and to the extent specified
under the related pooling and servicing agreement, some functions of the
trustee may be performed by a fiscal agent under some 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 and servicing agreement,
the certificates or any underlying mortgage loan or related document. The
trustee will not be accountable for the use or application by or on behalf of
the servicer for that series of any funds paid to the 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 that series by or on behalf of the 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 and servicing 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 and
servicing agreement, a trustee will be required to examine those documents and
to determine whether they conform to the requirements of the pooling and
servicing agreement.
REGARDING THE FEES, INDEMNITIES AND POWERS OF 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
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 that series. The trustee may
be indemnified 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 and servicing agreement. However, the indemnification will
not extend to any loss, liability or expense that:
o constitutes a specific liability imposed on the trustee pursuant to
the related pooling and servicing agreement,
o constitutes 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 or by reason of its
reckless disregard of its obligations or duties; or
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o may arise from a breach of any representation, warranty or covenant of
the trustee made in the pooling and servicing agreement.
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 and servicing agreement or perform
any of its duties either directly or by or through agents or attorneys. The
trustee will not be responsible for any willful misconduct or gross negligence
on the part of any other 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 and servicing agreement by giving written
notice to us. Upon receiving a notice of resignation, we, or any other person
as may be specified in the related prospectus supplement, will be required to
use our 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 the 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 the under
the related pooling and servicing agreement, or if at any time the trustee
becomes incapable of acting, or if some events of, or proceedings in respect
of, bankruptcy or insolvency occur with respect to the trustee, we 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 the
other percentage specified in the related prospectus supplement, of the voting
rights for the series may at any time, with cause, or if so specified in the
related prospectus supplement, without cause, remove the trustee under the
related pooling and servicing agreement and appoint a successor trustee.
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 loans or
mortgage backed securities backing the certificates. 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 in that instrument.
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 you of all amounts to which
you are entitled under the related pooling and servicing agreement. If losses
or shortfalls occur that exceed the amount covered by the related credit
support or that are not covered by the credit support, you will bear the share
of deficiencies allocable to your certificates. 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 that credit support
will be exhausted by the claims of the holders of certificates of one or more
other series before they receive their intended share of the credit support
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 loans or
mortgage backed securities backing the certificates, the related prospectus
supplement will include a description of the following:
o the nature and amount of coverage under the credit support;
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o any conditions to payment thereunder not otherwise described in this
prospectus;
o the conditions, if any, under which the amount of coverage under the
credit support may be reduced and under which the credit support may
be terminated or replaced; and
o the material provisions relating to the credit support.
Additionally, the related prospectus supplement will set forth some
information with respect to the obligor under any instrument of credit support,
including the following:
o a brief description of its principal business activities;
o its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do business;
o if applicable, the identity of regulatory agencies that exercise
primary jurisdiction over the conduct of its business; and
o its total assets, and its stockholders' equity or policyholders'
surplus, if applicable, as of a date that will be specified in the
prospectus supplement.
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, some 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 the subordination will be available.
CROSS-SUPPORT PROVISIONS
If the mortgage loans or mortgage backed securities 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 loans or mortgage
backed securities prior to distributions on subordinate certificates evidencing
interests in a different group of mortgage loans or mortgage backed securities
within the trust fund. The prospectus supplement for a series that includes a
cross-support provision will describe the manner and conditions for applying
the provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the prospectus supplement for a series of certificates,
mortgage loans included in the related trust fund will be covered for some
default risks by insurance policies or guarantees. To the extent deemed by us
to be material, a copy of each instrument will accompany the Current Report on
Form 8-K to be filed with the SEC 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 those certificates or some classes
of those certificates will be covered by one or more letters of credit, issued
by a bank or financial institution specified in the prospectus supplement.
Under a letter of credit, the issuing bank will be obligated to honor draws in
an aggregate fixed dollar amount, net of unreimbursed payments, 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
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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 some 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 issuing 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
related letter of credit will accompany the Current Report on Form 8-K to be
filed with the SEC 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 those certificates or some classes
of those certificates will be covered by insurance policies and/or surety bonds
provided by one or more insurance companies or sureties. The 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 insurance policies and/or surety bonds. A copy of any
insurance policy or surety bond will accompany the Current Report on Form 8-K
to be filed with the SEC 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 the certificates or some classes
of those certificates will be covered, to the extent of available funds, by one
or more reserve funds. Cash, a letter of credit, permitted investments, a
demand note or a combination of the following will be deposited into the
reserve funds, in the amounts specified in the 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 some types of losses and
shortfalls. Following each distribution date, amounts in a reserve fund in
excess of any amount required to be maintained therein may be released from the
reserve fund under the conditions and to the extent specified in the related
prospectus supplement.
If so specified in the related prospectus supplement, amounts deposited in
any reserve fund will be invested in permitted investments. Unless otherwise
specified in the related prospectus supplement, any reinvestment income or
other gain from the investments will be credited to the related reserve fund
for the series, and any loss resulting from the investments will be charged to
that reserve fund. However, any reinvestment income or gain from investments
may be payable to any related 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 in this prospectus. The related prospectus supplement will specify,
as to each credit support instrument, the information indicated above, to the
extent the information is material and available.
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LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of some legal aspects
of loans secured by commercial and multifamily residential properties. Because
the 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.
For additional information regarding legal aspects of mortgage loans, you
should review the section in this prospectus titled "Description of the Trust
Funds--Mortgage Loans". For purposes of the following discussion, the term
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 the 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, some 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.
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.
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In most states, hotel and motel room revenues are considered accounts
receivable under the 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
its 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.
For additional information regarding foreclosure action with respect to
revenue from income-producing properties, you should also review the section in
the prospectus titled "--Bankruptcy Laws".
PERSONAL PROPERTY
In the case of some 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 the 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. Public sales of mortgaged property are
made in accordance with procedures that vary from state to state.
Equitable Limitations on Enforceability of Some 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 the principles, a court may alter the
specific terms of a loan to the extent it considers necessary to prevent or
remedy an injustice, undue
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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 the 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
that 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 and, therefore, could be rescinded in favor of the bankrupt's
estate, if:
o the foreclosure sale was held while the debtor was insolvent; and
o the price paid for the foreclosed property did not represent
(reasonably equivalent value).
Although the reasoning and result of Durrett in respect of the Bankruptcy Code
was rejected by the United States Supreme Court in 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
right in some states to remain in possession during a redemption period, if
applicable, the lender will become the owner of the
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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
any 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 the 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 the
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 some 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. Generally state law controls the amount of foreclosure expenses
and costs, including attorneys' fees, that may be recovered by a lender.
For additional information regarding environmental costs associated with a
mortgaged property, you should review the section in this prospectus titled
"--Environmental Risks".
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 the 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
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only a portion of the sums due. The effect of a statutory right of redemption
is to diminish the ability of the lender to sell the foreclosed property
because the exercise of a right of redemption would defeat the title of any
purchaser through a foreclosure. Consequently, the practical effect of the
redemption right is to force the lender to maintain the property and pay the
expenses of ownership until the redemption period has expired. In some states,
a post-sale statutory right of redemption may exist following a judicial
foreclosure, but not following a trustee's sale under a deed of trust.
Anti-Deficiency Legislation. Some or all of the mortgage loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the mortgaged property and any other assets 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
some other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting that security.
However, in some of those states, the lender, following judgment on the
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 some 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 under some circumstances
such as the following:
o if the ground lease requires the lessor to give the leasehold
mortgagee notices of lessee defaults and an opportunity to cure them;
o if the ground lease permits the leasehold estate to be assigned to and
by the leasehold mortgagee or the purchaser at a foreclosure sale; and
o if the ground lease contains some 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 following:
o the right of the leasehold mortgagee to receive notices from the
ground lessor of any defaults by the borrower under the ground lease;
o the right of the leasehold mortgagee to cure the defaults, with
adequate cure periods;
o if a default is not susceptible of cure by the leasehold mortgagee,
the right to acquire the leasehold estate through foreclosure or
otherwise;
o 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
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o 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, although this provision may not be enforceable.
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, such a provision may not be enforceable. 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 some 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.
COOPERATIVE SHARES
Mortgage loans may be secured by a security interest on the borrower's
ownership interest in shares, and the proprietary leases appurtenant to those
shares, allocable to cooperative dwelling units that may be vacant or occupied
by non-owner tenants. The loans are subject to some 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.
For additional information regarding payment of deficiencies, you should
review the sections in this prospectus titled "--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 caused
by an automatic stay can be significant. Also, under the
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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
the junior lien.
Under the Bankruptcy Code, provided some 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 outstanding amount of the secured loan may be reduced to the then-current
value of the property, thus leaving the lender a general unsecured creditor for
the difference between the value and the outstanding balance of the loan. Other
modifications may include the reduction in the amount of each scheduled
payment, a reduction in the rate of interest and/or an alteration of the
repayment schedule and an extension (or shortening) of the term to maturity.
The lien of the lender may be transferred to other collateral or collateral may
be released from the lien of the lender. 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 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. 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 the 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 rents and hotel revenues, unless a bankruptcy court orders to the
contrary based on the equities of the case. Thus, if the borrower has executed
an assignment of leases, 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 is adequately
protected. 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 personality necessary for a security
interest to attach to hotel revenues.
Bankruptcies of tenants of the mortgaged properties could have an adverse
impact on the borrowers' ability to meet their obligations. For example, 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 some other similar events. In addition, there is
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 the remedies in the event that a lessee becomes the subject of a proceeding
under the Bankruptcy Code.
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 the case. If the trustee or debtor-in-possession rejects an
executory contract or an unexpired lease, the 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
the 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 the breach, which could adversely affect the security
for the related mortgage loan. Moreover, the claim of a lessor for the damages
from the termination of a lease of real property will be limited to the sum of:
1. the rent reserved by the lease, without acceleration, for the greater of
one year or 15 percent, not to exceed three years, of the remaining term
of the lease, following the earlier of the date of the filing of the
petition and the date on which the leased property was surrendered; and
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2. any unpaid rent due under that lease, without acceleration, on the
earlier of those dates.
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 the executory contract or unexpired lease, notwithstanding any
provision in that executory contract or unexpired lease or in applicable law
that prohibits, restricts or conditions the 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 the following:
o adequate assurance of the source of rent due under the 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,
o that any percentage rent due under the lease will not decline
substantially;
o that the assumption and assignment of the lease is subject to all the
provisions in that lease, including, but not limited to, provisions
such as a radius, location, use or exclusivity provision, and will not
breach any provision contained in any other lease, financing
agreement, or master agreement relating to that shopping center; and
o that the assumption or assignment of the lease will not disrupt the
tenant mix or balance in that 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.
If a trustee for a lessor as a debtor-in-possession, rejects an unexpired
lease of real property, the lessee may treat that lease as terminated by that
rejection or, in the alternative, may remain in possession of the leasehold for
the balance of the term of the lease and for any renewal or extension of that
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
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 renewal or extension thereof, the value of any damages occurring after the
date of rejection caused by the nonperformance of any obligation of the lessor
after that 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 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 or otherwise
meets the statutory criteria for fraudulent transfer.
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 some 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 some states also give priority to some 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.
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Pursuant to the doctrines of substantive consolidation or 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 that
is 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. 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 the mortgagor and its ability to incur debt
are restricted by the applicable Mortgage or the organizational documents of
that mortgagor. The activities of the mortgagor are restricted in a manner as
is intended to make the likelihood of a bankruptcy proceeding being commenced
by or against that mortgagor remote, and that mortgagor has been organized and
is designed to operate in a manner that makes it reasonably likely that its
separate existence will be respected notwithstanding a bankruptcy proceeding in
respect of one or more affiliated entities of that mortgagor. However, we make
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.
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. The
environmental risks may give rise to:
o a diminution in value of property securing a mortgage loan or the
inability to foreclose against the property; or
o in some circumstances as more fully described below, liability for
clean-up costs or other remedial actions, which liability could exceed
the value of the 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, including those of existing mortgages. In
these states, the lien of the mortgage for any mortgage loan may lose its
priority to that type of lien.
Under the federal Comprehensive Response Compensation and Liability Act, 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, or
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 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,
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President Clinton signed into law the "Asset Conservation, Lender Liability and
Deposit Insurance Protection Act of 1996," 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
environmental clean-up costs could become a liability of the related trust fund
and occasion a loss to certificateholders if 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 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.
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 the costs of remediating hazardous substance
contamination at a property 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 and servicing agreement
will provide that the servicer, acting on behalf of the related trust fund, may
not acquire title to a mortgaged property or take over its operation unless the
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 and
Servicing Agreements--Realization Upon Defaulted Mortgage Loans". There can be
no assurance that any environmental site assessment obtained by the servicer
will detect all possible environmental contamination or conditions or that the
other requirements of the related pooling and servicing agreement, even if
fully observed by the 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.
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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.
The 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
Some 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 the clauses in many states. By
virtue, however, of the Garn-St Germain Depository Institutions Act of 1982,
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 some loans made after the effective date of the Garn Act
are enforceable, within some limitations, as set forth in the Garn Act and the
regulations promulgated thereunder, the 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
servicer's ability to demonstrate that a sale threatens its legitimate security
interest.
SUBORDINATE FINANCING
Some of the mortgage loans may not restrict the ability of the borrower to
use the mortgaged property as security for one or more additional loans. Where
a borrower encumbers a mortgaged property with one or more junior liens, the
senior lender is subjected to additional risk. First, the borrower may have
difficulty servicing and repaying multiple loans. Moreover, if the subordinate
financing permits recourse to the borrower, as is frequently the case, and the
senior loan does not, a borrower may have more incentive to repay sums due on
the subordinate loan. Second, acts of the senior lender that prejudice the
junior lender or impair the junior lender's security may create a superior
equity in favor of the junior lender. For example, if the borrower and the
senior lender agree to an increase in the principal amount of or the interest
rate payable on the senior loan, the senior lender may lose its priority to the
extent any existing junior lender is harmed or the borrower is additionally
burdened. Third, if the borrower defaults on the senior loan and/or any junior
loan or loans, the existence of junior loans and actions taken by junior
lenders can impair the security available to the senior lender and can
interfere with or delay the taking of action by the senior lender. Moreover,
the bankruptcy of a junior lender may operate to stay foreclosure or similar
proceedings by the senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and
in some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In some states, there are or may be specific limitations
upon the late charges which a lender may collect from a borrower for delinquent
payments. Some 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 some states may provide that mortgage notes relating to
adjustable rate loans are not negotiable instruments under the UCC. In that
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 a mortgage note subject to
restrictions on the ability to foreclose and to contractual defenses available
to a mortgagor.
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APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, as amended, provides that state usury limitations shall not apply
to some types of residential (including multifamily) first mortgage loans
originated by some 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. Some 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:
o the mortgage loan provides for an interest rate, discount points and
charges as are permitted under the laws of the state; or
o the mortgage loan provides that the terms of that mortgage loan are to
be construed in accordance with the laws of another state under which
its interest rate, discount points and charges would not be usurious
and the borrower's counsel has rendered an opinion that the 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, a borrower who enters military service after the origination of the
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 the borrower's active duty status, unless a court orders
otherwise upon application of the lender. The Relief Act applies to individuals
who are members of the Army, Navy, Air Force, Marines, National Guard,
Reserves, Coast Guard and officers of the U.S. Public Health Service assigned
to duty with the military. Because the Relief Act applies to individuals who
enter military service, including reservists who are called to active duty,
after origination of the related mortgage loan, we cannot give you any
information 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 some 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. The shortfalls would not be covered by advances
or, unless otherwise specified in the related prospectus supplement, any
instrument of credit support provided in connection with the 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 some circumstances, during an
additional three-month period thereafter. Thus, in the event 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:
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o hotels and motels are typically operated pursuant to franchise,
management and operating agreements which may be terminable by the
operator; and
o 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 the properties.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder, 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" within the meaning of
the ADA. 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 portion is 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 the 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 statute can be seized by the government if the property
was used in, or purchased with the proceeds of, the crimes. Under procedures
contained in the Comprehensive Crime Control Act of 1984, the government may
seize the property even before conviction. The government must publish notice
of the forfeiture proceeding and may give notice to all parties known to have
an alleged interest in the property, including the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
established that:
o its mortgage was executed and recorded before commission of the crime
upon which the forfeiture is based; or
o 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, activities proscribed by the Racketeer
Influenced and Corrupt Organizations statute.
In addition, there may be other state or municipal laws providing for
forfeiture of mortgaged properties.
MATERIAL 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 related change or interpretation could
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apply retroactively. This discussion reflects the applicable provisions of the
Internal Revenue Code of 1986, as amended, as well as the REMIC regulations
promulgated by the U.S. Department of 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, references to the mortgage loans include
references to the mortgage loans underlying MBS included in the mortgage
assets, and, 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 Internal Revenue Code
Section 860D. A trust fund or any of its portions 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 some conditions. With respect to each series of REMIC certificates,
Shearman & Sterling, our counsel, has advised us that in the firm's opinion,
assuming:
o the making of such an election;
o compliance with the pooling and servicing agreement; and
o compliance with any changes in the law, including any amendments to
the Internal Revenue Code or applicable Treasury regulations
thereunder,
each REMIC pool will qualify as a REMIC. The regular certificates will be
considered to be "regular interests" in the REMIC pool within the meaning of
Internal Revenue Code Section 860D 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 within the meaning of Internal Revenue Code Section 860D. 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, or FASIT, a grantor trust for federal income tax purposes.
For additional information regarding federal income tax consequences on
the certificates, you should also review the sections in this prospectus titled
"--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 Internal Revenue 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 Internal Revenue Code
Section 7701(a)(19)(C)(v) or as other assets described in Internal Revenue Code
Section 7701(a)(19)(C), and otherwise will not qualify for the treatment. REMIC
certificates held by a real estate investment trust will constitute real estate
assets within the meaning of Internal Revenue Code Section 856(c)(4)(A).
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 Internal
Revenue
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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. For purposes of Internal Revenue 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 the
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 the
assets constituting "loans . . . secured by an interest in real property which
is . . . residential real property" for purposes of Internal Revenue 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
Internal Revenue Code Section 851(b)(3)(A)(i). REMIC certificates held by some
financial institutions will constitute an evidence of indebtedness within the
meaning of Internal Revenue Code Section 582(c)(1). The Small Business Job
Protection Act 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
Internal Revenue Code Section 593(d) for taxable years beginning after December
31, 1995. The requirement in the SBJPA of 1996 that the institutions must
recapture a portion of their existing bad debt reserves is suspended if a
certain portion of their assets is maintained in residential loans under
Internal Revenue Code Section 7701(a)(19)(C)(v), but only if the 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 Internal Revenue 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 and servicing agreement for each Series will
contain a provision designed to meet this requirement.
For further information, you should review the section in this prospectus
titled "--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 the following:
o whole mortgage loans, such as the mortgage loans;
o certificates of beneficial interest in a grantor trust that holds
mortgage loans, including some of the MBS;
o regular interests in another REMIC, such as MBS issued by a trust as
to which a REMIC election has been made;
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o loans secured by timeshare interests; and
o loans secured by shares held by a tenant stockholder in a cooperative
housing corporation.
However, in general:
o the fair market value of the real property securing the mortgage
(including any buildings and structural components) must be at least
80% of the principal balance of the related mortgage loan or of the
mortgage loan underlying any related MBS 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
o 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 the first bullet point of the preceding sentence as of
the date of the last the 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 either:
o in exchange for any qualified mortgage within a three-month period
thereafter; or
o in exchange for a mortgage loan that is a defective obligation, as
defined immediately below, within a two-year period thereafter.
A defective obligation includes the following:
1. a mortgage in default or as to which default is reasonably
foreseeable;
2. a mortgage as to which a customary representation or warranty made at
the time of transfer to the REMIC pool has been breached;
3. a mortgage that was fraudulently procured by the mortgagor; and
4. a mortgage that was not in fact principally secured by real property
(but only if the mortgage is disposed of within 90 days of discovery).
A mortgage loan that is defective as described in clause 4 in the
immediately preceding sentence 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 that 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 some other
contingencies. The reserve fund will be disqualified if more than 30% of the
gross income from the assets in the 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
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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. They are generally held beyond the close of the third
calendar year following the acquisition of the property by a REMIC pool for not
more than two years, with possible extensions granted by the Internal Revenue
Service of up to an additional four years.
In addition to the foregoing requirements, the various interests in a
REMIC pool also must meet some requirements. All of the interests in a REMIC
pool must be either of the following:
o one or more classes of regular interests; or
o 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. The 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
that 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.
If an entity, such as the REMIC pool, fails to comply with one or more of
the ongoing requirements of the Internal Revenue Code for REMIC status during
any taxable year, the Internal Revenue Code provides that the entity will not
be treated as a REMIC for that 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 Internal
Revenue 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. You should be aware,
however, that the Conference Committee Report to the Tax Reform Act of 1986
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 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 to it. Regular
certificateholders must use the accrual method of accounting with regard to
regular certificates, regardless of the method of accounting otherwise used by
the 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
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Internal Revenue 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
the 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,
under Internal Revenue 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 some issues
relevant to repayable securities, such as the regular certificates. To the
extent the issues are not addressed in the regulations, we intend 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. You are advised to consult your own tax advisors as to the
discussion in this prospectus 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, 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, we intend 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 us 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 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 that
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 the 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 the
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, we intend 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 the regular
certificates includes all distributions of interest as well as principal
thereon. Likewise, we intend to treat an interest only class, or a class on
which interest is substantially disproportionate to its principal amount 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 the 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
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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 the
distributions should be determined in accordance with the assumed rate of
prepayment of the mortgage loans 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 the 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.
For additional information regarding an election to treat interest under
the constant yield method, you should review the section in this prospectus
titled "--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. We 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:
(a) the sum of:
o 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
o 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:
(b) the adjusted issue price of the regular certificate at the beginning
of the accrual period.
The present value of the remaining distributions referred to in the
preceding sentence is calculated based on:
o the yield to maturity of the regular certificate at the issue date;
o events, including actual prepayments, that have occurred prior to the
end of the accrual period; and
o 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 those prior periods. The original issue discount accruing during
any accrual period (as determined in this paragraph) will then be divided by
the
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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. The daily portions 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 some classes of regular certificates and
either an increase or decrease in the daily portions of original issue discount
with respect to the regular certificates.
In the case of a random lot certificate, we intend to determine the yield
to maturity of that 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 the unpaid principal balance:
o the remaining unaccrued original issue discount allocable to the
Certificate, or to the portion, will accrue at the time of the
distribution; and
o the accrual of original issue discount allocable to each remaining
certificate of that 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 the class and the adjusted issue
price of that class to the extent attributable to the portion of its
unpaid principal balance that was distributed.
We believe 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. You are advised to consult your 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 the
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, a subsequent purchaser may elect to treat all 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:
o the issue price does not exceed the original principal balance by more
than a specified de minimis amount; and
o the interest compounds or is payable at least annually at current
values of:
o one or more qualified floating rates;
o a single fixed rate and one or more qualified floating rates;
o a single objective rate; or
o a single fixed rate and a single objective rate that is a
qualified inverse floating rate.
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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 the rate is subject to a fixed multiple that is
greater than 0.65, but not more than 1.35. The 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 the 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 the 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 the
information is not within the control of the issuer or a related party or
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 may be issued
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 the
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, the
final regulations may lead to different timing of income inclusion than would
be the case under the OID regulations. Furthermore, application of those
principles could lead to the characterization of gain on the sale of contingent
interest regular certificates as ordinary income. You should consult your 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 floating-rate certificate qualifies
as a regular interest in a REMIC if:
o it bears a rate that qualifies as a variable rate under the OID
regulations:
o 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 the rate (plus or minus a specified number of basis points);
or
o 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
the rate that is subject to one or more caps or floors;
or:
o it bears one or more 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.
Accordingly, unless otherwise indicated in the applicable prospectus
supplement, we intend 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 that 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, we intend to treat variable
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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, we intend 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 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 the 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. Accordingly, any Deferred Interest that
accrues with respect to a class of regular certificates may constitute income
to the holders of those regular certificates prior to the time distributions of
cash with respect to the Deferred Interest are made.
Market Discount. A purchaser of a regular certificate also may be subject
to the market discount rules of Internal Revenue Code Sections 1276 through
1278. Under these Internal Revenue 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:
o is exceeded by the then-current principal amount of the regular
certificate; or
o in the case of a regular certificate having original issue discount,
is exceeded by the adjusted issue price of the regular certificate at
the time of purchase.
The purchaser generally will be required to recognize ordinary income to the
extent of accrued market discount on the regular certificate as distributions
includible in its stated redemption price at maturity are received, in an
amount not exceeding any related distribution. The 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 the
Treasury regulations are issued, market discount would accrue either:
o on the basis of a constant interest rate or
o in the ratio of stated interest allocable to the relevant period to
the sum of the interest for that period plus the remaining interest as
of the end of the 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 that period plus the remaining original
issue discount as of the end of that period.
The 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. The 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 on that certificate. The deferred portion of the
interest expense in any
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taxable year generally will not exceed the accrued market discount on the
regular certificate for that year. Any 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 that regular certificateholder in that taxable year or thereafter,
in which case the interest deferral rule will not apply.
For additional information, you should also review the section in this
prospectus titled "--Election to Treat All Interest Under the Constant Yield
Method" below regarding an alternative manner in which the election may be
deemed to be made.
Market discount with respect to a regular certificate will be considered
to be zero if the market discount is less than 0.25% of the remaining stated
redemption price at maturity of that regular certificate multiplied by the
weighted average maturity of the regular certificate (determined as 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. You 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 the regular
certificate as a capital asset within the meaning of Internal Revenue Code
Section 1221, the regular certificateholder may elect under Internal Revenue
Code Section 171 to amortize the 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
Internal Revenue 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.
For additional information, you should also review the section in this
prospectus titled "--Election to Treat All Interest Under the Constant Yield
Method" below regarding an alternative manner in which the Internal Revenue
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:
o 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
o 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 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
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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. You should consult your
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, currently more than one year. The gain
will be treated as ordinary income in the following instances:
o if a regular certificate is held as part of a conversion transaction
as defined in Internal Revenue 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 Internal Revenue 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 the transaction;
o in the case of a non-corporate taxpayer, to the extent the taxpayer
has made an election under Internal Revenue Code Section 163(d)(4) to
have net capital gains taxed as investment income at ordinary rates;
or
o to the extent that the gain does not exceed the excess, if any, of:
o the amount that would have been includible in the gross income of
the holder if its yield on the regular certificate were 110% of
the applicable Federal rate as of the date of purchase; over
o the amount of income actually includible in the gross income of
the holder with respect to the regular certificate.
In addition, gain or loss recognized from the sale of a regular
certificate by some banks or thrift institutions will be treated as ordinary
income or loss pursuant to Internal Revenue Code Section 582(c). Capital gains
of some non-corporate taxpayers are subject to a lower maximum tax rate (28%)
than ordinary income of those 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 the 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, you are cautioned that while you may generally
cease to accrue interest income if it reasonably appears that the interest will
be uncollectible, the Service may take the position that original issue
discount must continue to be accrued in spite of its uncollectibility until the
debt
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instrument is disposed of in a taxable transaction or becomes worthless in
accordance with the rules of Internal Revenue Code Section 166. To the extent
the rules of Internal Revenue 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 loss sustained during the taxable year on account of any regular
certificates becoming wholly or partially worthless. 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 the
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 the time as the principal balance of any class or
subclass of the 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 those losses only after all mortgage loans remaining in the trust fund
have been liquidated or the 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 the 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
the 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 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. You are advised to consult
your tax advisors regarding the treatment of losses on regular certificates.
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, 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 the quarter and by allocating the daily portion among the residual
certificateholders in proportion to their respective holdings of residual
certificates in the REMIC pool on the 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 for the following:
o the limitations on deductibility of investment interest expense and
expenses for the production of income do not apply;
o all bad loans will be deductible as business bad debts; and
o 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.
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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 the mortgage loans is prepaid, the residual
certificateholder may recognize taxable income without being entitled to
receive a corresponding amount of cash because the prepayment may be used in
whole or in part to make distributions in reduction of principal on the regular
certificates and the discount on the mortgage loans which is includible in
income may exceed the deduction allowed upon the 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 those classes are not issued with substantial discount. If
taxable income attributable to the 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
the 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 the mismatching or unrelated deductions against which to offset the
income, subject to the discussion of excess inclusions below under
"--Limitations on Offset or Exemption of REMIC Income." The timing of the
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 income during some periods may exceed the
income reflected by the residual certificateholder for the periods in
accordance with generally accepted accounting principles. You should consult
your own accountants concerning the accounting treatment of your 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 that residual
certificate. The 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 the loss was disallowed and may be used by the
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. The 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 the issue price is effectively amortized may be
longer than the economic life of the residual certificates.
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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 a residual
interest as zero rather than the 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 the 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
the basis until termination of the REMIC pool unless future Treasury
regulations provide for periodic adjustments to the REMIC income otherwise
reportable by the holder. The REMIC regulations currently in effect do not so
provide.
You should review the sections titled "--Treatment of Some 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 SOME ITEMS OF REMIC INCOME AND EXPENSE
Although we intend to compute REMIC income and expense in accordance with
the Internal Revenue Code and applicable regulations, the authorities regarding
the determination of specific items of income and expense are subject to
differing interpretations. We make no representation as to the specific method
that we 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 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 the mortgage loans is exceeded by their unpaid principal balances. The REMIC
pool's basis in the mortgage loans is generally the fair market value of the
mortgage loans immediately after its transfer to the REMIC pool. The REMIC
regulations provide that the basis is equal in the aggregate to the issue
prices of all regular and residual interests in the REMIC pool, or its fair
market value at the Closing Date, in the case of a retained class. In respect
of mortgage loans that have market discount to which Internal Revenue Code
Section 1276 applies, the accrued portion of the 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 its unpaid principal balances, the REMIC pool will be considered to
have acquired the mortgage loans at a premium equal to the amount of the
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
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immediately after its transfer 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 Internal Revenue Code
Section 1221 may elect under Internal Revenue 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, Internal Revenue 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 the mortgage loans
may be deductible in accordance with a reasonable method regularly employed by
its holder. The allocation of the premium pro rata among principal payments
should be considered a reasonable method; however, the Service may argue that
the premium should be allocated in a different manner, such as allocating the
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 the quarterly period of:
o 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 Internal Revenue Code Section 1274(d); multiplied by
o the adjusted issue price of the residual certificate at the beginning
of the 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 the daily accruals of REMIC income described in this paragraph for
all prior quarters, decreased by any distributions made with respect to that
residual certificate prior to the beginning of the 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 the 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 carryforwards, on the residual
certificateholder's return. However, net operating loss carryforwards 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 Internal Revenue Code Section 511, the residual
certificateholder's excess inclusions will be treated as unrelated business
taxable income of that residual certificateholder for purposes of Internal
Revenue Code Section 511. In addition, REMIC taxable income is subject to 30%
withholding tax with respect to some persons who are not U.S. Persons, as
defined below under "--Tax-Related Restrictions on Transfer of Residual
Certificates--Foreign Investors", and its portion attributable to excess
inclusions is not eligible for any reduction in the rate of withholding tax, by
treaty or otherwise. See "--Taxation of Some 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 some persons who are not U.S. Persons. The SBJPA of
1996 has eliminated the special rule permitting Section 593 institutions,
called 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.
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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 the 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 other than
in connection with the formation of a REMIC pool, if the Disqualified
Organization is required, pursuant to a binding contract, to sell that residual
certificate, which sale occurs within seven days after the startup day, a tax
would be imposed in an amount equal to the product of:
o the present value of the total anticipated excess inclusions with
respect to the residual certificate for periods after the transfer;
and
o 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 Internal Revenue 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. The tax generally would be imposed on
the transferor of the residual certificate, except that where the transfer is
through an agent (including a broker, nominee or other middleman) for a
Disqualified Organization, the tax would instead be imposed on the agent.
However, a transferor of a residual certificate would in no event be liable for
the 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 the 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 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 the entity, then a
tax is imposed on the entity equal to the product of the amount of excess
inclusions on the residual certificate that are allocable to the interest in
the Pass-Through Entity during the period the interest is held by the
Disqualified Organization, and the highest marginal federal corporate income
tax rate. The 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 the tax if it has received an affidavit from the record holder that
it is not a Disqualified Organization or stating the holder's taxpayer
identification number and, during the period the person is the record holder of
the residual certificate, the Pass-Through Entity does not have actual
knowledge that the affidavit is false.
The pooling and servicing agreement with respect to a series of
certificates will provide that no legal or beneficial interest in a residual
certificate may be transferred unless the following occurs:
o the proposed transferee provides to the transferor and the trustee an
affidavit providing its taxpayer identification number and stating
that the transferee is the beneficial owner of the residual
certificate, is not a Disqualified Organization and is not purchasing
the residual certificates on behalf of a Disqualified Organization
(i.e., as a broker, nominee or middleman on its behalf); and
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o the transferor provides a statement in writing to us and the trustee
that it has no actual knowledge that the affidavit is false.
Moreover, the pooling and servicing 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
the restrictions on transfer, and each residual certificateholder will be
deemed to have agreed, as a condition of ownership, to any amendments to the
related pooling and servicing agreement required under the Internal Revenue
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 we or the trustee may charge a fee for computing and providing the
information.
Noneconomic Residual Interests. The REMIC regulations would disregard some
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, 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:
o 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
o 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 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:
o 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;
o 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 and servicing 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 the 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, unless the 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:
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o the future value of expected distributions equals at least 30% of the
anticipated excess inclusions after the transfer; and
o 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 the transfer may be made.
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 the residual certificateholder
in the 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 the adjusted basis on that distribution date. The 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 the residual
certificateholder's residual certificate remaining when its interest in the
REMIC pool terminates, and if the residual certificateholder holds the residual
certificate as a capital asset under Internal Revenue Code Section 1221, then
the residual certificateholder will recognize a capital loss at that time in
the amount of the remaining adjusted basis.
Any gain on the sale of a residual certificate will be treated as ordinary
income if one or both of the following conditions are met:
o if a residual certificate is held as part of a conversion transaction
as defined in Internal Revenue 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 the transaction; or
o in the case of a non-corporate taxpayer, to the extent the taxpayer
has made an election under Internal Revenue 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
some banks or thrift institutions will be treated as ordinary income or loss
pursuant to Internal Revenue 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
Internal Revenue 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 the 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.
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MARK-TO-MARKET REGULATIONS
The Service has issued Mark-to-Market regulations under Internal Revenue
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 some 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:
1. the disposition of a qualified mortgage other than pursuant to:
o 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;
o foreclosure, default or imminent default of a qualified mortgage;
o bankruptcy or insolvency of the REMIC pool; or
o qualified (complete) liquidation;
2. the receipt of income from assets that are not the type of mortgages or
investments that the REMIC pool is permitted to hold;
3. the receipt of compensation for services; or
4. the receipt of gain from disposition of cash flow investments other than
pursuant to a qualified liquidation.
Notwithstanding (1) and (4), 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 made under the following
circumstances:
o during the three months following the startup day;
o if made to a qualified reserve fund by a residual certificateholder;
o if in the nature of a guarantee;
o if made to facilitate a qualified liquidation or clean-up call; and
o if as otherwise permitted in Treasury regulations yet to be issued.
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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 Internal Revenue 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 the 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
the 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 Internal
Revenue 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 the
applicable Treasury regulations, with respect to the REMIC pool. Each residual
certificateholder will be deemed, by acceptance of the residual certificates,
to have agreed to:
o the appointment of the tax matters person as provided in the preceding
sentence; and
o the irrevocable designation of the servicer as agent for performing
the functions of the tax matters person.
Limitations on Deduction of Some Expenses. An investor who is an
individual, estate or trust will be subject to limitation with respect to some
itemized deductions described in Internal Revenue Code Section 67, to the
extent that the itemized deductions, in the aggregate, do not exceed 2% of the
investor's adjusted gross income. In addition, Internal Revenue Code Section 68
provides that itemized deductions otherwise allowable for a taxable year of an
individual taxpayer will be reduced by the lesser of the following:
o 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
o 80% of the amount of itemized deductions otherwise allowable for the
year.
In the case of a REMIC pool, the deductions may include deductions under
Internal Revenue Code Section 212 for the servicing fee and all administrative
and other expenses relating to the
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REMIC pool, or any similar expenses allocated to the REMIC pool with respect to
a regular interest it holds in another REMIC. Investors who hold REMIC
certificates either directly or indirectly through some pass-through entities
may have their pro rata share of the expenses allocated to them as additional
gross income, but may be subject to the limitation on deductions. In addition,
those expenses are not deductible at all for purposes of computing the
alternative minimum tax, and may cause 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, the additional gross income and limitation on
deductions will apply to the allocable portion of the expenses to holders of
regular certificates, as well as holders of residual certificates, where
regular certificates are issued in a manner that is similar to pass-through
certificates in a fixed investment trust. In general, the 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 some 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 the expenses
will be allocable to the residual certificates.
TAXATION OF SOME 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, will be considered portfolio
interest and, therefore, generally will not be subject to 30% United States
withholding tax, provided that the Non-U.S. Person:
o is not a 10-percent shareholder within the meaning of Internal Revenue
Code Section 871(h)(3)(B) or a controlled foreign corporation
described in Internal Revenue Code Section 881(c)(3)(C); and
o provides the trustee, or the person who would otherwise be required to
withhold tax from the distributions under Internal Revenue 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 the 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 the
Non-U.S. Person. In the latter case, the 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.
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:
o the mortgage loans, including mortgage loans underlying MBS, were
issued after July 18, 1984; and
o 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 Internal Revenue Code Section 163(f)(1).
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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 of REMIC taxable income that constitutes an excess inclusion. See
"Taxation of Residual Certificates--Limitations on Offset or Exemption of REMIC
Income" for further information. 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 the Non-U.S.
Persons, 30% (or lower treaty rate) withholding will not apply. Instead, the
amounts paid to the 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, the 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 some 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 some brokers,
may be subject to a backup withholding tax under Internal Revenue Code Section
3406 of 31% on reportable payments (including interest distributions, original
issue discount, and, under some circumstances, principal distributions) unless
the regular certificateholder complies with some 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 the certificateholder is otherwise an exempt recipient under
applicable provisions of the Internal Revenue 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 the
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
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 Internal Revenue
Code Section 67 expenses (see "Limitations on Deduction of Some Expenses"
above) allocable to the holders. Furthermore, under the 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, or as a REMIC, the trust fund will
be classified as a grantor trust under subpart E, Part 1 of subchapter J of the
Internal Revenue Code and not as an association taxable as a corporation or a
taxable mortgage pool within the meaning of Internal Revenue 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 standard
certificate in the 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 "--Premium and Discount--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 the mortgage
loans, original issue discount, if any, prepayment fees, assumption fees, and
late payment charges received by the servicer, in accordance with the 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 the 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 some pass-through entities, will be subject to limitation with respect
to some itemized deductions described in Internal Revenue Code Section 67,
including deductions under Internal Revenue Code Section 212 for the servicing
fee and all the administrative and other expenses of the trust fund, to the
extent that the deductions, in the aggregate, do not exceed two percent of an
investor's adjusted gross income. In addition, Internal Revenue Code Section 68
provides that itemized deductions otherwise allowable for a taxable year of an
individual taxpayer will be reduced by the lesser of:
o 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
o 80% of the amount of itemized deductions otherwise allowable for the
year.
As a result, 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 the standard certificates with respect
to interest at the pass-through rate on the standard certificates. In addition,
the expenses are not deductible at all for purposes of computing the
alternative minimum tax, and may cause the 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 Internal Revenue Code, as
described below under "Stripped Certificates" and "--Premium and
Discount--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 Internal Revenue 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
Internal Revenue 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 the section of the Internal
Revenue Code.
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2. A standard certificate owned by a real estate investment trust will be
considered to represent real estate assets within the meaning of Internal
Revenue 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
the assets will be considered interest on obligations secured by
mortgages on real property to the extent within the meaning of Internal
Revenue Code Section 856(c)(3)(B).
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 Internal Revenue 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 Internal Revenue
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 "--Federal
Income Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates--Treatment of Some 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, the 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 Internal Revenue Code provisions or, under some
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 the income.
Unless indicated otherwise in the applicable prospectus supplement, no
prepayment assumption will be assumed for purposes of the accrual. However,
Internal Revenue 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 the mortgage loans
acquired by a standard certificateholder are purchased at a price equal to the
then unpaid principal amount of the mortgage loans, no original issue discount
attributable to the difference between the issue price and the original
principal amount of the mortgage loans (i.e., points) will be includible by the
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 "--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
the accrual.
Recharacterization of Servicing Fees. If the servicing fee paid to the
servicer were deemed to exceed reasonable servicing compensation, the amount of
the excess would represent neither income
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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 the 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, known as excess servicing, will cause the mortgage loans to be
treated under the stripped bond rules. The guidance provides safe harbors for
servicing deemed to be reasonable and requires taxpayers to demonstrate that
the value of servicing fees in excess of the 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 the amounts would be viewed as retaining an
ownership interest in a portion of the interest payments on the mortgage loans.
Under the rules of Internal Revenue 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 the 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 Internal Revenue Code would apply to its holder. While standard
certificateholders would still be treated as owners of beneficial interests in
a grantor trust for federal income tax purposes, the corpus of the trust could
be viewed as excluding the portion of the mortgage loans the ownership of which
is attributed to the servicer, or as including the 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, the 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.
You should also review "--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 some financial institutions
subject to the provisions of Internal Revenue Code Section 582(c), any related
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:
o if a standard certificate is held as part of a conversion transaction
as defined in Internal Revenue 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 the transaction; or
o in the case of a non-corporate taxpayer, to the extent the taxpayer
has made an election under Internal Revenue Code Section 163(d)(4) to
have net capital gains taxed as investment income at ordinary income
rates. Capital gains of some non-corporate taxpayers are subject to a
lower
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maximum tax rate (28%) than ordinary income of the 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 Internal Revenue 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 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 to which no REMIC
election is made.
The certificates will be subject to those rules if the following occur:
o we or any of our 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;
o the 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
o 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 servicer, to the extent that the 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.
Internal Revenue Code Section 1286 treats a stripped bond or a stripped
coupon as an obligation issued at an original issue discount on the date that
the stripped interest is purchased. Although the treatment of stripped
certificates for federal income tax purposes is not clear in some respects at
this time, particularly where the stripped certificates are issued with respect
to a mortgage pool containing variable-rate mortgage loans, we have been
advised by counsel that:
o the trust fund will be treated as a grantor trust under subpart E,
Part 1 of subchapter J of the Internal Revenue Code and not as an
association taxable as a corporation or a taxable mortgage pool within
the meaning of Internal Revenue Code Section 7701(i); and
o 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 Internal Revenue Code Section 1286, Internal
Revenue Code Sections 1272 through 1275, and the OID regulations.
While under Internal Revenue 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
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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 and servicing 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 the stripped certificate would be treated as
qualified stated interest under the OID regulations. Further pursuant to these
final regulations the purchaser of the stripped certificate will be required to
account for any discount as market discount rather than original issue discount
unless either:
o the initial discount with respect to the stripped certificate was
treated as zero under the de minimis rule of Internal Revenue Code
Section 1273(a)(3); or
o no more than 100 basis points in excess of reasonable servicing is
stripped off the related mortgage loans. Any related market discount
would be reportable as described under "--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 the
computation.
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, our counsel has advised us that stripped certificates
owned by applicable holders should be considered to represent real estate
assets within the meaning of Internal Revenue Code Section 856(c)(4)(A),
"obligation[s] principally secured by an interest in real property" within the
meaning of Internal Revenue Code Section 860G(a)(3)(A), and "loans . . .
secured by an interest in real property which is . . . residential real
property" within the meaning of Internal Revenue 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 Internal Revenue Code Section 856(c)(3)(B), provided that in each
case the mortgage loans and interest on the mortgage loans qualify for the
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 the income. Based in part on the OID regulations and the
amendments to the original issue discount sections of the Internal Revenue 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 of a stripped
certificate, 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 the 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 the original issue discount will be either increased or decreased
depending on the relative interests in principal and interest on each mortgage
loan
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represented by the 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 the
stripped certificate to recognize an ordinary loss equal to the 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
the 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, the regulations may lead to different timing of income inclusion
that would be the case under the OID regulations. Furthermore, application of
the principles could lead to the characterization of gain on the sale of
contingent interest stripped certificates as ordinary income. You should
consult your 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 the stripped certificate, as described
above under "--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates--Sale or Exchange of Regular Certificates." To the
extent that a subsequent purchaser's purchase price is exceeded by the
remaining payments on the stripped certificates, the subsequent purchaser will
be required for federal income tax purposes to accrue and report the 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 the 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 Internal Revenue Code provisions. For example, the stripped
certificateholder may be treated as the owner of any of the following:
o one installment obligation consisting of the Stripped Certificate's
pro rata share of the payments attributable to principal on each
mortgage loan and a second installment obligation consisting of the
Stripped Certificate's pro rata share of the payments attributable to
interest on each mortgage loan;
o as many stripped bonds or stripped coupons as there are scheduled
payments of principal and/or interest on each mortgage loan; or
o 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 to it.
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 the Stripped Certificate, or classes of
stripped certificates in the aggregate, represent the same pro rata portion of
principal and interest on each 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
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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 Internal Revenue 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, or FASITs, within the meaning
of Internal Revenue Code Section 860L(a). Qualification as a FASIT requires
ongoing compliance with some conditions. With respect to each series of FASIT
Certificates, Shearman & Sterling, our counsel, will advise us that in the
firm's opinion, assuming the making of such an election, compliance with the
pooling and servicing agreement and compliance with any changes in the law,
including any amendments to the Internal Revenue Code or applicable Treasury
Regulations thereunder, each FASIT Pool will qualify as a FASIT. In that 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 the election.
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 the year, the information, prepared on the basis described
above, as the trustee deems to be necessary or desirable to enable the
certificateholders to prepare their federal income tax returns. The 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, the reporting will be based upon a representative
initial offering price of each class of stripped certificates. The trustee will
also file the 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 "--Federal Income Tax
Consequences for REMIC Certificates--Backup Withholding."
TAXATION OF SOME 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 Internal Revenue 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 the
lower
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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 the 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 the persons will be
subject to the same certification requirements, described above under
"--Federal Income Tax Consequences for REMIC Certificates--Taxation of Some
Foreign Investors--Regular Certificates."
STATE AND OTHER TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Material
Federal Income Tax Consequences," you 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, you should
consult your 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, and
Section 4975 of the Internal Revenue Code impose some requirements on employee
benefit plans, and on some 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 the plans, accounts or arrangements are
invested, and on persons who are fiduciaries with respect to plans in
connection with the investment of plan assets.
ERISA generally imposes on Plan fiduciaries some 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 Section 4975 of the
Internal Revenue Code prohibit a broad range of transactions involving assets
of a Plan and parties in interest who have some 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 Internal Revenue 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 Internal Revenue Code. Special caution should be exercised before the
assets of a Plan are used to purchase a Certificate if, with respect to the
assets, we, the servicer, a special servicer or any sub-servicer or the trustee
or an affiliate thereof, either:
o has discretionary authority or control with respect to the investment
of the assets of the Plan; or
o has authority or responsibility to give, or regularly gives,
investment advice with respect to the assets of the Plan for a fee and
pursuant to an agreement or understanding that the advice will serve
as a primary basis for investment decisions with respect to the assets
and that the 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
the 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 the series of certificates.
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Some employee benefit plans, such as governmental plans, as defined in
Section 3(32) of ERISA, and, if no election has been made under Section 410(d)
of the Internal Revenue Code, church plans, as defined in Section 3(33) of
ERISA, are not subject to ERISA requirements. Accordingly, assets of
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 governmental or church plan
which is qualified and exempt from taxation under Sections 401(a) and 501(a) of
the Internal Revenue Code, however, is subject to the prohibited transaction
rules set forth in Section 503 of the Internal Revenue 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 of the Department
of Labor provides that, when a Plan acquires an equity interest in an entity,
the Plan's assets include both the equity interest and an undivided interest in
each of the underlying assets of the entity, unless some exceptions not
applicable to this discussion apply, or unless the equity participation in the
entity by benefit plan investors, i.e., Plans, 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, we cannot assure you 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 the 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 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
Section 4975 of the Internal Revenue 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 Section 4975 of the Internal Revenue Code.
ADMINISTRATIVE EXEMPTIONS
Several underwriters of morgage-backed securities have applied for and
obtained from the Department of Labor 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
that 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 the 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 Section 401(a) of the Internal Revenue Code and exempt from
taxation under Section 501(a) of the Internal Revenue Code Section, including
most varieties of ERISA subject plans, may give rise to unrelated business
taxable income as described in Sections 511-515 and 860E of the Internal
Revenue Code. 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 some tax-exempt
entities not subject to Section 511 of the Internal Revenue Code including some
governmental plans, as discussed above under the caption "Material 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."
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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.
LEGAL INVESTMENT
The offered certificates will constitute mortgage related securities for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended,
only if so specified in the related prospectus supplement. The appropriate
characterization of those certificates not qualifying as mortgage related
securities, called non-SMMEA eligible certificates, under various legal
investment restrictions, and thus the ability of investors subject to these
restrictions to purchase the 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 eligible certificates
constitute legal investments for them.
Generally, only classes of offered certificates that meet the following
criteria will be mortgage related securities for purposes of SMMEA:
o are rated in one of the two highest rating categories by one or more
rating agencies;
o are part of a series evidencing interests in a trust fund consisting
of loans originated by some types of originators as specified in
SMMEA; and
o 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 either a
single parcel of real estate on which is located a residential and/or
mixed residential and commercial structure or one or more parcels of
real estate upon which are located one or more commercial structures.
As mortgage related securities, the 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 of its
agencies or instrumentalities constitute legal investments for the entities
under applicable law. Under SMMEA, a number of states enacted legislation on or
prior to the October 3, 1991 cut-off for the enactments limiting to various
extents the ability of some 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 the legislation
will be authorized to invest in offered certificates qualifying as mortgage
related securities only to the extent provided in the legislation.
SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows:
o 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;
o federal credit unions may invest in the securities; and
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o national banks may purchase the 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 the regulations as the applicable federal regulatory
authority may prescribe.
In this connection, effective December 31, 1996, the Office of the
Comptroller of the Currency, called 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 some general standards in 12 C.F.R. Section 1.5 concerning
"safety and soundness" and retention of credit information), some "Type IV
securities," defined in 12 C.F.R. Section 1.2(1) to include some "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 some mortgage related securities (including securities
such as some 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
some 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, of the Federal
Financial Institutions Examination Council, or 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 some modifications), prohibits depository
institutions from investing in some high-risk mortgage securities (including
securities such as some classes of the offered certificates), except under
limited circumstances, and sets forth some 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," which would replace
the policy statement. As proposed, the 1997 Statement would delete the specific
"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 the authorities before purchasing any class of the
offered certificates, as some classes may be deemed unsuitable investments, or
may otherwise be restricted, under the rules, policies or guidelines, in some
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,
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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 some 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, if your investment activities are subject to legal investment
laws and regulations, regulatory capital requirements or review by regulatory
authorities, you should consult with your 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 certificates offered hereby and by related prospectus supplements 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 us
from that sale.
We intend that 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.
The methods are as follows:
o by negotiated firm commitment underwriting and public offering by one
or more underwriters specified in the related prospectus supplement;
o by placements through one or more placement agents specified in the
related prospectus supplement primarily with institutional investors
and dealers; and
o through direct offerings by us.
If specified in the prospectus supplement relating to a series of offered
certificates, we or any of our affiliates or any other person or persons
specified in the prospectus supplement (including originators of mortgage
loans) may purchase some or all of one or more classes of offered certificates
of that series from the underwriter or underwriters or any other person or
persons specified in the prospectus supplement. Pursuant to this prospectus and
the related prospectus supplement, a purchaser may thereafter from time to time
offer and sell some or all of the certificates directly, or through one or more
underwriters to be designated at the time of the offering of the certificates,
or through dealers (whether acting as agent or as principal) or in any other
manner that may be specified in the related prospectus supplement. The offering
may be restricted in the manner specified in the related prospectus supplement.
The 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, the 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. The
underwriters may be broker-dealers affiliated with us whose identities and
relationships to us 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 that series and the members of the
underwriting syndicate, if any, will be named in the prospectus supplement.
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In connection with the sale of the offered certificates, underwriters may
receive compensation from us or from purchasers of the offered certificates in
the form of discounts, concessions or commissions. Underwriters and dealers
participating in the distribution of the certificates may be deemed to be
underwriters in connection with those certificates, and any discounts or
commissions received by them from us and any profit on the resale of
certificates by them may be deemed to be underwriting discounts and commissions
under the Securities Act of 1933, as amended.
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 some conditions precedent, including the
following:
o that the underwriters will be obligated to purchase all certificates
if any are purchased, other than in connection with an underwriting on
a best efforts basis; and
o that we will indemnify the several underwriters, and each person, if
any, who controls any related underwriters within the meaning of
Section 15 of the Securities Act, against some civil liabilities,
including liabilities under the Securities Act, or will contribute to
payments required to be made in respect of the Securities Act.
The prospectus supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of the offering
and any agreements to be entered into between us and purchasers of certificates
of those series.
We anticipate that the certificates offered hereby will be sold primarily
to institutional investors. Purchasers of offered certificates, including
dealers, may, depending on the facts and circumstances of their 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 related 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 us, and may be sold by us 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., our affiliate, 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 those transactions. Sales may be made at negotiated prices
determined at the time of sale.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement, including this
prospectus and a form of the prospectus supplement, under the Securities Act of
1933, as amended, with respect to the offered certificates. This prospectus and
the applicable prospectus supplement relating to each series of offered
certificates contain summaries of the material terms of the documents referred
to, but do not contain all of the information contained in the registration
statement. For further information regarding the documents referred to in this
prospectus and the applicable prospectus supplement, you should refer to the
registration statement and the exhibits to the registration statement. The
registration statement and the exhibits can be inspected and copied at the
Public Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549 and the SEC's regional offices at Seven World Trade Center, 13th Floor,
New York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite
1500, Chicago, Illinois 60661. Copies of these materials can be obtained at
prescribed rates from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, the SEC maintains a public
access site on the Internet through the World Wide Web at which provides
on-line access to reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC at the
address http://www.sec.gov.
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INCORPORATION OF SOME INFORMATION BY REFERENCE
The SEC allows us to incorporate by reference information that we file
with the SEC, which allows us to disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus and the applicable prospectus
supplement. Information that we file later with the SEC will automatically
update the information in this prospectus and the applicable prospectus
supplement. In all cases, you should rely on the later information over
different information included in this prospectus or the applicable prospectus
supplement. As a recipient of this prospectus, you may request a copy of any
document we incorporate by reference, except exhibits to the documents (unless
the exhibits are specifically incorporated by reference), at no cost, by
writing or calling: Bear Stearns Commercial Mortgage Securities Inc., 245 Park
Avenue, New York, New York 10167, Attention: James G. Reichek (212) 272-2000.
We have determined that our financial statements will not be material to the
offering of any offered certificates.
REPORTS
We have not authorized anybody to give you any information or to make any
representation not contained in this prospectus and any related prospectus
supplement and you should not rely on any related information or representation
that is not contained in this document. 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 certificates being offered
pursuant to the related prospectus supplement. They also do not constitute an
offer of the offered certificates to any person in any state or other
jurisdiction in which the offer would be unlawful. The delivery of this
prospectus to you at any time does not imply that information contained in this
document is correct as of any time subsequent to the date of this document;
however, if any material change occurs while this prospectus is required by law
to be delivered, we will amend or supplement this prospectus accordingly.
The servicer or trustee for each series will be required to mail to
holders of the certificates of each series periodic unaudited reports
concerning the related trust fund. If holders of beneficial interests in a
class of offered certificates are holding and transferring in book-entry form
through the facilities of DTC, then unless otherwise provided in the related
prospectus supplement, the reports will be sent on behalf of the related trust
fund to a nominee of DTC as the registered holder of the offered certificates.
Conveyance of notices and other communications by DTC to its participating
organizations, and directly or indirectly through the 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. We will file or
cause to be filed with the SEC the periodic reports with respect to each trust
fund as are required under the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC thereunder.
FINANCIAL INFORMATION
A new trust fund will be formed with respect to each series of
certificates. 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.
LEGAL MATTERS
The validity of the certificates of each series will be passed upon for us
by Shearman & Sterling, New York, New York.
RATINGS
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.
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Ratings on mortgage pass-through certificates address the likelihood of
receipt by you of all collections on the underlying mortgage assets to which
you are entitled. Ratings address the structural, legal and issuer-related
aspects associated with those certificates, the nature of the underlying
mortgage loans 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
prepayments might differ from those originally anticipated. As a result, you
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.
113
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GLOSSARY
DEFINITIONS
Accrued Certificate Interest -- With respect to each class of certificates
(other than some classes of stripped interest certificates and some 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 the class of
certificates immediately prior to the 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 that is
either based on the principal balances of some or all of the mortgage assets in
the related trust fund or equal to the certificate balances of one or more
other classes of certificates of the same series.
ARM Loans -- mortgage loans with adjustable mortgage rates.
Available Distribution Amount -- 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 the
series on the date.
Debt Service Coverage Ratio -- 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 the Net Operating Income derived from the
related mortgaged property for a twelve-month period to the annualized
scheduled payments on the mortgage loan and any other loans senior to it that
are secured by the related mortgaged property.
Disqualified Organization -- any of the following:
o the United States, any of its state or political subdivisions;
o any foreign government;
o any international organization;
o any agency or instrumentality of any of the foregoing, provided that
the 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 related governmental entity;
o any cooperative organization furnishing electric energy or providing
telephone service to persons in rural areas as described in Internal
Revenue Code Section 1381(a)(2)(C); and
o any organization, other than a farmers' cooperative described in
Internal Revenue Code Section 521, that is exempt from taxation under
the Internal Revenue Code unless the organization is subject to the
tax on unrelated business income imposed by Internal Revenue Code
Section 511.
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,
called the determination date, or otherwise advanced by the related servicer or
other specified person, be distributed to the holders of the certificates of
the series on the next succeeding distribution date.
Excess Funds -- 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 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 or
114
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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 or principal.
Loan-to-Value Ratio -- 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 the then outstanding principal balance
of the mortgage loan and any other loans senior to it that are secured by the
related mortgaged property to the Value of the related mortgaged property.
MBS -- pass-through certificates or other mortgage-backed securities
("MBS") that evidence interests in, or that are secured by pledges of, one or
more of various types of multifamily or commercial mortgage loans.
Net Operating Income -- 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 the period, minus
the total operating expenses incurred in respect of the mortgaged property
during the period other than non-cash items such as depreciation and
amortization, capital expenditures, and debt service on the related mortgage
loan or on any other loans that are secured by the mortgaged property.
Non-U.S. Person -- The term "Non-U.S. Person" means any person who is not
a U.S. Person.
Pass-Through Entity -- "Pass-Through Entity" means any regulated
investment company, real estate investment trust, common trust fund,
partnership, trust or estate and some 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 the interest, be treated as a Pass-Through Entity.
SMMEA -- The Secondary Market Mortgage Enhancement Act.
U.S. Person -- 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:
o 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 the trust, and
one or more United States persons have the authority to control all
substantial decisions of the trust; or
o for all other taxable years, the 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, some trusts in
existence on August 20, 1996 which are eligible to elect to be treated
as U.S. Persons).
Value -- The "Value" of a mortgaged property is generally its fair market
value determined in an appraisal obtained by the originator at the origination
of the loan.
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[Pictures of Certain Mortgaged Properties Included Here]
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[Pictures of Certain Mortgaged Properties Included Here]
<PAGE>
This diskette contains one spreadsheet file that can be put on a
user-specified hard drive or network drive. The spreadsheet file "BS00WF1" is a
Microsoft Excel,(1) Version 5.0 spreadsheet. The spreadsheet file provides, in
electronic format, all of the information shown in Annex A to this 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 accompanying 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 this prospectus supplement. All of the
information contained in this diskette is subject to the same limitations and
qualifications contained elsewhere in this prospectus supplement and the
accompanying prospectus. Prospective investors are strongly urged to read the
paper portion of this prospectus supplement and the accompanying 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.
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>
================================================================================
YOU SHOULD RELY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO GIVE YOU DIFFERENT INFORMATION. WE DO NOT CLAIM THAT THE
INFORMATION IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE AS OF
ANY DATE OTHER THAN THE DATE STATED ON THE COVER PAGE OF THIS PROSPECTUS
SUPPLEMENT. WE ARE NOT OFFERING THE CERTIFICATES IN ANY STATES WHERE IT IS NOT
PERMITTED.
DEALER PROSPECTUS DELIVERY OBLIGATION. UNTIL MAY 8, 2000 ALL DEALERS
THAT EFFECT TRANSACTIONS IN THESE CERTIFICATES, WHETHER OR NOT PARTICIPATING IN
THE OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
-----------------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Important Notice About Information Presented in
this Prospectus Supplement and the Accompanying
Prospectus ........................................... S-3
Certificate Summary .................................... S-6
Summary of Prospectus Supplement ....................... S-8
Risk Factors ........................................... S-26
Description of the Mortgage Pool ....................... S-49
Description of the Certificates ........................ S-72
Yield and Maturity Considerations ...................... S-92
Servicing of the Mortgage Loans ........................ S-101
Material Federal Income Tax Consequences ............... S-110
Method of Distribution ................................. S-112
Legal Matters .......................................... S-113
Ratings ................................................ S-113
Legal Investment Considerations ........................ S-114
ERISA Considerations ................................... S-114
Glossary ............................................... S-118
Mortgage Loan Schedule ................................. A-1
Summary of Ten Largest Loans ........................... B-1
Forms of Distribution Date Statement and Operating
Statement Analysis Report ............................ C-1
Schedule of Interest Reserve Loans ..................... D-1
PROSPECTUS
Important Notice About Information Presented in
this Prospectus and the Applicable Prospectus
Supplement ........................................... 2
Summary of Prospectus .................................. 7
Risk Factors ........................................... 8
Description of the Trust Funds ......................... 20
Yield and Maturity Considerations ...................... 31
The Depositor .......................................... 37
Use of Proceeds ........................................ 37
Description of the Certificates ........................ 37
Description of the Pooling and Servicing Agreements 45
Description of Credit Support .......................... 61
Legal Aspects of Mortgage Loans ........................ 64
Material Federal Income Tax Consequences ............... 76
State and Other Tax Considerations ..................... 106
ERISA Considerations ................................... 106
Legal Investment ....................................... 108
Method of Distribution ................................. 110
Where You Can Find More Information .................... 111
Incorporation of Some Information by Reference ......... 112
Reports ................................................ 112
Financial Information .................................. 112
Legal Matters .......................................... 112
Ratings ................................................ 112
Glossary ............................................... 114
</TABLE>
APPROXIMATELY $826,089,000
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-WF1
BEAR STEARNS COMMERCIAL
MORTGAGE SECURITIES INC.
DEPOSITOR
<TABLE>
<S> <C>
CLASS A-1 CERTIFICATES ......... $ 260,078,000
CLASS A-2 CERTIFICATES ......... $ 454,979,000
CLASS B CERTIFICATES ........... $ 31,089,000
CLASS C CERTIFICATES ........... $ 35,531,000
CLASS D CERTIFICATES ........... $ 8,882,000
CLASS E CERTIFICATES ........... $ 26,648,000
CLASS F CERTIFICATES ........... $ 8,882,000
CLASS X CERTIFICATES ........... $ 888,269,752*
</TABLE>
*(NOTIONAL AMOUNT)
---------------------
PROSPECTUS SUPPLEMENT
---------------------
BEAR, STEARNS & CO. INC.
MORGAN STANLEY DEAN WITTER
NORWEST INVESTMENT
SERVICES, INC.
FEBRUARY 7, 2000
================================================================================
