<PAGE>
As filed with the Securities and Exchange Commission on October 19, 1998
Registration No. 333-59731
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
AMENDMENT NO. 1 to
Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------
GREENPOINT CREDIT CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
Delaware 13-4002891
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
</TABLE>
GREENPOINT FINANCIAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
Delaware 06-1379001
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
</TABLE>
90 Park Avenue
New York, New York 10016
(212) 834-1000
(Address, including zip code, and telephone number,
including area code, of each registrant's principal executive offices)
Howard C. Bluver, Esq.
GreenPoint Credit Corp.
90 Park Avenue
New York, New York 10016
(212) 834-1000
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
Copies to:
Mark R. Levie, Esq.
Martin B. Howard, Esq.
Orrick, Herrington & Sutcliffe LLP
777 South Figueroa Street, Suite 3200
Los Angeles, California 90017
(213) 629-2020
<PAGE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after the effective date of this Registration
Statement
If any of the securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, check the following
box: [_]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, please check
the following box and list the registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Proposed
maximum Proposed maximum Amount of
Title of securities to be Amount to be offering price aggregate offering registration
registered registered per unit* price fee(1)
- ------------------------- ------------ --------------- ------------------- -------------
<S> <C> <C> <C> <C>
GreenPoint 100% $10,000,000.00 $2,950.00
Manufactured Housing $10,000,000.00
Contract Trust Pass-
Through Certificates
Limited Guarantee of 100% $10,000,000.00 N/A
GreenPoint Financial $10,000,000.00
Corp.
</TABLE>
*Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(a).
(1) $2,950.00 was filed on July 23, 1998 with the initial filing of the
Registration Statement.
-----------------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the accompanying prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there by any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
Subject to Completion, Dated [______], 199[_]
[FORM OF PROSPECTUS SUPPLEMENT]
PROSPECTUS SUPPLEMENT DATED [ ]
(To Prospectus dated [ ], 199[ ])
$[ ] (APPROXIMATE)
GreenPoint Credit Corp. Manufactured Housing Contract Trust
Senior/Subordinate Pass-Through Certificates, Series 199[ ]-[ ]
<TABLE>
<CAPTION>
Final Scheduled Distribution
Initial Class Certificate Balance Pass-Through Rate Date(2)
------------------------- ------------------------- -----------------------------
<S> <C> <C> <C>
Class A-1................ $[ ]
[Class A-2............... $[ ] ]
[Class A-IO(3)........... $[ ] ]
Class M.................. [ ](1)
Class B-1................ [ ](1)
</TABLE>
(1) [The Pass-Through Rate is subject to a maximum rate equal to the weighted
average of the Net Contract Rates (as defined herein) in the Contract
Pool.]
(2) Determined as described under "Prepayment and Yield Considerations - Final
Distribution Date"; the Final Distribution Date could occur significantly
earlier.
(3) For risks associated with such securities, including loss of entire
investment, see "Risk Factors--Interest-only Certificates" herein.
(Distributions payable on the 10th day of each month beginning in [ ], 199[ ])
GREENPOINT CREDIT CORP., SELLER AND SERVICER
[Manufactured Housing Contract Trust, Grantor Trust and Owner Trust], Issuer
For the Index of Defined Terms, see page __ herein.
FOR A DISCUSSION OF SIGNIFICANT MATTERS AFFECTING INVESTMENTS IN THE
OFFERED CERTIFICATES (DEFINED HEREIN), SEE "RISK FACTORS" HEREIN AT PAGE __ AND
IN THE PROSPECTUS AT PAGE __.
THE OFFERED CERTIFICATES WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF
GREENPOINT. NEITHER THE OFFERED CERTIFICATES NOR THE UNDERLYING CONTRACTS OR
ANY COLLECTIONS THEREON WILL BE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY
OR INSTRUMENTALITY, THE UNDERWRITERS OR ANY OF THEIR AFFILIATES, GREENPOINT OR
ANY ITS AFFILIATES [EXCEPT WITH RESPECT TO THE LIMITED GUARANTEE OR ALTERNATIVE
CREDIT ENHANCEMENT APPLICABLE TO THE CLASS [ ] CERTIFICATES AS DESCRIBED
HEREIN)]. THE [LIMITED GUARANTEE OR ALTERNATIVE CREDIT ENHANCEMENT WITH RESPECT
TO THE CLASS [ ] CERTIFICATES AND] COLLECTIONS ON THE CONTRACTS WILL CONSTITUTE
THE ONLY SOURCE OF FUNDS FOR PAYMENT ON THE OFFERED CERTIFICATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Public(1) Underwriting Discount Proceeds to Seller(s)(1)(2)
<S> <C> <C> <C>
Class A-1 Certificates......................... % % %
[Class A-IO Certificates....................... $___ % $___]
Class M Certificates........................... % % %
Class B-1 Certificates......................... % % %
Total......................................... $___ $___ $___
</TABLE>
(1) Plus accrued interest, if any, at the applicable rate from [ ], 199[ ].
Accrued Interest will be calculated on the Class A-IO Certificates on the
basis of a Notional Principal Amount [equal to the Pool Scheduled Principal
Balance.]
(2) Before deducting expenses payable by the Seller, estimated to be
$_________.
The Offered Certificates are offered subject to prior sale, when, as and if
issued by the Trust Fund and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Offered Certificates will be made in book-entry form only through the Same Day
Funds Settlement system of The Depository Trust Company on or about [ ],
199[ ].
[UNDERWRITERS]
The date of this Prospectus Supplement is [ ], 199[ ]
<PAGE>
(continued from previous page)
The Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 199[ ]-[ ] (the "Certificates") will represent interests in
a pool (the "Contract Pool") of [actuarial] manufactured housing installment
sales contracts and installment loan agreements (the "Contracts") and certain
related property (the Contracts and such related property being referred to as
the "Trust Fund"). See "Description of the Certificates--General" herein. The
Contracts will be conveyed to the Trust Fund by GreenPoint Credit Corp.
("GreenPoint" or the "Seller"). Each Contract was [either (i)] originated or
purchased by GreenPoint [or (ii) purchased by GreenPoint in bulk from other
lenders or finance companies (including from affiliates of the Seller), from
governmental agencies or instrumentalities or from other entities.] GreenPoint
will serve as servicer of the Contracts (together with any successor servicer,
the "Servicer"). The term "approximate," with respect to the aggregate
principal amount of any Certificates or Contracts, means that the amount is
subject to a variance of plus or minus 5%. Terms used and not otherwise defined
herein have the respective meanings ascribed to such terms in the Prospectus
dated [ ], 199[ ] attached hereto (the "Prospectus").
The Certificates will consist of [three] classes of senior
certificates designated as the [Class A-1 Certificates, the Class A-2
Certificates and the Class A-IO Certificates] (collectively, the "Class A
Certificates" or the "Senior Certificates"), [four] classes of subordinate
certificates designated as the Class M Certificates, the Class B-1 Certificates,
the Class B-2 Certificates and the Class R Certificates(collectively, the
"Subordinate Certificates"). The Class R Certificates represent the residual
interest in the Trust Fund. Only the Class A Certificates, the Class M
Certificates and the Class B-1 Certificates (collectively, the "Offered
Certificates") are being offered hereby. The [Class B-2 Certificates and the]
Class R Certificates have not been registered under the Securities Act and are
not being offered hereby. The Class A Certificates, the Class M Certificates,
Class B-1 Certificates and the Class B-2 Certificates will evidence in the
aggregate approximate initial [ ]%, [ ]%, [ ]% and [ ]% undivided interests in
the Contract Pool, respectively. The rights of the holders (the
"Certificateholders") of the Class B Certificates to receive distributions of
principal and/or interest are subordinated as described herein to the rights of
the Class A and Class M Certificateholders and the rights of the Class M
Certificateholders to receive distributions of principal and/or interest are
subordinated as described here into such rights of the Class A
Certificateholders, and the rights of the Class R Certificateholders to receive
distributions of principal and/or interest are subordinated as described herein
to such rights of the Class A, the Class M and the Class B Certificateholders.
See "Description of the Certificates -- Subordination" herein and "Credit and
Liquidity Enhancement" in the Prospectus.
[The Class A-2 Floating Certificates, represent undivided ownership
interests in the assets held by Manufactured Housing Grantor Trust 199[ ]-[ ]
(the "Grantor Trust"). The assets of the Grantor Trust will consist of (1) the
Class A-2 Fixed Certificates issued by the Trust, (2) a swap agreement between
the Grantor Trust and [ ] (the "Swap Agreement") pursuant to which the [
] (the "Swap Counterparty") will be entitled to receive the fixed rate of
interest paid to the Grantor Trust in respect of the Class A-2 Fixed
Certificates and will be obligated to pay to the Grantor Trust a floating rate
based on one-month LIBOR which is sufficient to pay interest due on the Class A-
2 Floating Certificates and (3) the rights of the Grantor Trustee under the
related Certificate Insurance Policy. The Grantor Trust will be created pursuant
to a Trust
ii
<PAGE>
Agreement (the "Grantor Trust Agreement") to be dated as of [ ], among
GreenPoint Credit Corp., as the Depositor and servicer, and [Grantor Trustee],
as the trustee (the "Grantor Trustee"). See "Description of the Certificates--
Grantor Trust" herein.]
Distributions of principal and/or interest on the Certificates will be
made to the holders of the Certificates on the 10th day of each month (or if the
10th day is not a business day, the next business day) (each, a "Distribution
Date"), beginning in [ ], 199[ ]. [The Class A-IO Certificates will not have a
principal balance and will not be entitled to distributions of principal but
will be entitled to distributions of interest as described herein.] The Offered
Certificates will have the respective [fixed] Pass-Through Rates specified
above. See "Description of the Certificates" herein.
[The [Class B-2 Certificates] will initially have the benefit of a
limited guarantee (the "Limited Guarantee") of GreenPoint Financial Corp.
("GFC") to protect against losses that would otherwise be absorbed by the [Class
B-2 Certificateholders]. Pursuant to the Limited Guarantee, to the extent that
funds in the Certificate Account are insufficient to distribute to the holders
of the [Class B-2 Certificates] the [Class B-2 Formula Distribution Amount] (as
described herein), GFC will be obligated to pay an Enhancement Payment (as
described herein). See "Description of the Certificates--Limited Guarantee of
GFC" herein. [The Limited Guarantee may be replaced by an Alternative Credit
Enhancement (as described herein).]]
The yields to maturity of the Offered Certificates may vary from the
anticipated yields to the extent such Certificates are purchased at a discount
or premium and to the extent the rate and timing of payments thereon are
sensitive to the rate and timing of principal payments (including prepayments)of
the Contracts. [The yield to maturity of the Class A-IO Certificates will be
extremely sensitive to the rate and timing of principal payments (including
prepayments) of the Contracts.] Certificateholders should consider, in the case
of any offered Certificates purchased at a discount, the risk that a lower than
anticipated rate of principal payment could result in an actual yield that is
lower than the anticipated yield and, in the case of any Offered Certificates
purchased at a premium, the risk that a faster than anticipated rate of
principal payments could result in an actual yield that is lower than the
anticipated yield. [Holders of the Class A-IO Certificates should carefully
consider the risk that a rapid rate of principal payments on the contracts will
have a negative effect on the yield thereon and could result in the failure of
such holders to recover their initial investments.] See "Risk Factors--Interest-
only Certificates" herein.
An election will be made to treat the Trust Fund as a real estate
mortgage investment conduit (a "REMIC") for federal income tax purposes. The
Offered Certificates will represent "regular interests" in the REMIC. See
"Certain Federal Income Tax Consequences" herein and in the Prospectus.
The underwriters named herein (the "Underwriters") intend to make a
secondary market in the Offered Certificates, but have no obligation to do so.
There can be no assurance that a secondary market for the Offered Certificates
will develop, or if it does develop, that it will continue or provide sufficient
liquidity. See "Risk Factors" herein and in the Prospectus.
iii
<PAGE>
This Prospectus Supplement does not contain complete information about
the offering of the Offered Certificates. Additional information is contained
in the Prospectus and purchasers are urged to read both this Prospectus
Supplement and the Prospectus in full. Sales of the Offered Certificates may
not be consummated unless the purchaser has received both this Prospectus
Supplement and the Prospectus. Terms used and not otherwise defined herein have
the respective meanings ascribed to such terms in the Prospectus.
Until ninety days after the date of this Prospectus Supplement, all
dealers effecting transactions in the Offered Certificates, whether or not
participating in this distribution, may be required to deliver a Prospectus
Supplement and Prospectus. This is in addition to the obligation of dealers to
deliver a Prospectus Supplement and Prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.
No dealer, salesman or person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus Supplement or the accompanying
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by any Seller or Underwriter. This
Prospectus Supplement and the accompanying Prospectus do not constitute an offer
to sell or a solicitation of an offer to buy any of the securities offered
hereby and thereby in any state or jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such state or jurisdiction.
Neither the delivery of this Prospectus Supplement, the accompanying Prospectus
nor any sale made hereunder and thereunder shall, under any circumstances,
create any implication that information herein or therein is correct as of
anytime subsequent to the date hereof or thereof or that there has been no
change in the affairs of the Seller since such dates.
--------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF
CERTIFICATES, INCLUDING ENTERING STABILIZING BIDS OR EFFECTING SYNDICATE
COVERING TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "METHOD OF
DISTRIBUTION."
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
TERMS OF THE OFFERED CERTIFICATES...................................................................................... 1
RISK FACTORS........................................................................................................... 19
THE CONTRACT POOL...................................................................................................... 21
THE SELLER............................................................................................................. 28
GreenPoint Credit Corp.'s Management's Discussion and Analysis of Delinquency, Repossession and Loan Loss Experience... 29
Impact of the Year 2000................................................................................................ 29
[Ratio of Earnings to Fixed Charges for GFC............................................................................ 30
PREPAYMENT AND YIELD CONSIDERATIONS.................................................................................... 31
Weighted Average Life of the Offered Certificates...................................................................... 35
[Sensitivity Of The Class A-IO Certificates]........................................................................... 39
[Pre-Tax Yields on the Class A-IO Certificates]........................................................................ 39
DESCRIPTION OF THE CERTIFICATES........................................................................................ 41
General................................................................................................................ 41
Pass-Through Rates..................................................................................................... 42
Conveyance of Contracts................................................................................................ 43
[Conveyance of [Subsequent Contracts and] [Pre-Funding Account]........................................................ 46
Payments on the Contracts; Certificate Account......................................................................... 47
Distributions.......................................................................................................... 49
[Reserve Account]...................................................................................................... 52
Subordination.......................................................................................................... 53
Losses on Liquidated Contracts......................................................................................... 53
Example of Distributions............................................................................................... 54
Advances............................................................................................................... 54
[Limited Guarantee of GFC.............................................................................................. 55
[Alternative Credit Enhancement........................................................................................ 56
Reports to Certificateholders.......................................................................................... 57
Optional Termination and Termination Auction........................................................................... 58
Termination of the Agreement........................................................................................... 59
Collection and Other Servicing Procedures.............................................................................. 59
Servicing Compensation; Certain Other Matters Regarding the Servicer................................................... 60
The Trustee............................................................................................................ 60
</TABLE>
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
[Registration of the Offered Certificates.............................................................................. 61
[FORMATION OF THE GRANTOR TRUST AND GRANTOR TRUST PROPERTY............................................................. 66
Assignment of Class [A-2 Fixed] Certificates........................................................................... 66
Servicing.............................................................................................................. 67
[Removal and Designation of Servicer................................................................................... 67
The Grantor Trustee.................................................................................................... 68
Reporting Requirements................................................................................................. 68
Termination of the Trust............................................................................................... 69
Calculation of LIBOR................................................................................................... 69
CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................................................................ 70
[Grantor Trust]........................................................................................................ 72
ERISA CONSIDERATIONS................................................................................................... 74
General................................................................................................................ 74
Senior Certificates.................................................................................................... 74
[The Class [A-2 Floating] Certificates]................................................................................ 78
Class M and Class B-1 Certificates..................................................................................... 79
RATINGS................................................................................................................ 79
LEGAL INVESTMENT....................................................................................................... 80
METHOD OF DISTRIBUTION................................................................................................. 80
USE OF PROCEEDS........................................................................................................ 82
LEGAL MATTERS.......................................................................................................... 82
INDEX OF SIGNIFICANT DEFINITIONS....................................................................................... 83
ANNEX I................................................................................................................ 1
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES.......................................................... 1
Initial Settlement..................................................................................................... 1
Secondary Market Trading............................................................................................... 2
Certain U.S. Federal Income Tax Documentation Requirements............................................................. 4
</TABLE>
<PAGE>
TERMS OF THE OFFERED CERTIFICATES
This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and in the
accompanying Prospectus. Capitalized terms used and not otherwise defined
herein have the respective meanings assigned them in the Prospectus or elsewhere
in this Prospectus Supplement. Reference is made to the "Index of Significant
Definitions" herein for the location of the definitions of certain capitalized
terms.
Securities Offered............. Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates,
Series 199[ ]-[ ] (the "Certificates"), Class
A-1, Class A-2 and Class A-IO Certificates
(collectively, the "Class A Certificates" or
"Senior Certificates"), Class M Certificates
(the "Class M Certificates"), Class B-1
Certificates (the "Class B-1 Certificates")
and Class B-2 Certificates (the "Class B-2
Certificates" and, together with the Class B-1
Certificates, the "Class B Certificates" and
the Class B Certificates and the Class M
Certificates, the "Subordinate
Certificates").The residual interest is
evidenced by the Class R Certificates (the
"Class R Certificates"). The [Class B-2 and]
the Class R Certificates are not being offered
hereby. The Class A Certificates are senior to
the Class M Certificates to the extent
described herein, the Class M Certificates are
senior to the Class B Certificates to the
extent described herein, the Class B-1
Certificates are senior to the Class B-2
Certificates to the extent described herein
and the Class B-2 Certificates are senior to
the Class R Certificates to the extent
described herein. The Class A Certificates,
the Class M Certificates and the Class B
Certificates are sometimes referred to herein
collectively as the "Series 199[ ]-[ ] Regular
Certificates ." The Class R Certificates are
sometimes referred to herein as the "Series
199[ ]-[ ] Residual Certificates ."
Issuer......................... [The Trust, a Grantor Trust or an Owner
Trust.]
The Seller..................... GreenPoint Credit Corp. ("GreenPoint" or the
"Seller"), a Delaware corporation.
Servicer....................... GreenPoint (together with any successor
servicer under the Agreement (defined below),
the "Servicer").
Trustee........................ [ ] (the "Trustee").
Cut-off Date................... [ ], 199[ ].
S-1
<PAGE>
Cut-off Date Pool Principal
Balance........................ $[ ] (Approximate, subject to a variance of
plus or minus 5%).
[Initial Class A-1 Certificate
Balance........................ $(Approximate, subject to a variance of plus
or minus 5%).]
Initial Class A-IO Notional
Principal Amount............... $[ ] (Approximate, subject to a variance of
plus or minus 5%).
Initial Class M Certificate
Balance........................ $[ ] (Approximate, subject to a variance of
plus or minus 5%).
Initial Class B-1 Certificate
Balance........................ $[ ] (Approximate, subject to a variance of
plus or minus 5%).
Initial Class B-2 Certificate
Balance........................ $[ ] (Approximate, subject to a variance of
plus or minus 5%).
Class A-1 Pass-Through Rate.... [ ]%, calculated on the basis of a 360-day
year comprised of twelve 30-day months.
Class A-IO Pass-Through Rate... [ ]%, calculated on the basis of a 360-day
year comprised of twelve 30-day months.
Class M Pass-Through Rate...... [ ]%, [subject to a maximum rate equal to the
weighted average of the Net Contract Rate on
the Contracts in the Contract Pool] calculated
on the basis of a 360-day year comprised of
twelve 30-day months.
Class B-1 Pass-Through Rate.... [ ]%, [subject to a maximum rate equal to the
weighted average of the Net Contract Rate on
the Contracts in the Contract Pool] calculated
on the basis of a 360-day year comprised of
twelve 30-day months.
Class B-2 Pass-Through Rate.... [ ]%, [subject to a maximum rate equal to the
weighted average of the Net Contract Rate on
the Contracts in the Contract Pool] calculated
on the basis of a 360-day year comprised of
twelve 30-day months.
Distribution Date.............. The 10th day of each month (or if such 10th
day is not a business day, the next succeeding
business day), commencing in [ ], 199[ ]. The
first Distribution Date is [ ], 199[ ] (the
"First Distribution Date").
Collection Period.............. With respect to any Distribution Date, the
calendar month prior to the month in which
such Distribution Date occurs (each, a
"Collection Period").
Agreement...................... The Pooling and Servicing Agreement, dated as
of [ ], 199[ ] (the "Agreement"), between
GreenPoint, as Seller and Servicer, and the
Trustee.
[Swap Agreement................ Pursuant to the Swap Agreement, on each
Payment Date, the Swap Counterparty will be
entitled to receive
S-2
<PAGE>
from the Grantor Trust the distributions of
interest on the outstanding Certificate
Principal Balance of the Class A-2 Fixed
Certificates immediately prior to such Payment
Date, which are calculated at a fixed rate of
[ ]% per annum, and will be obligated to pay
to the Grantor Trust an amount equal to one
months' interest at the Class A-2 Floating
Pass-Through Rate on the outstanding
Certificate Principal Balance of the Class A-2
Floating Certificates immediately prior to
such Payment Date. At all times the
outstanding Certificate Principal Balance of
the Class A-2 Floating Certificates will equal
the outstanding Certificate Principal Balance
of the Class A-2 Fixed Certificates.
Swap Counterparty.............. [ ]].
The Contract Pool.............. The Contract Pool is comprised of [fixed] rate
[actuarial] manufactured housing installment
sales contracts and installment loan
agreements (collectively, the "Contracts"), in
each case secured by a new or used
manufactured home (each manufactured home
securing a Contract being referred to herein
as a "Manufactured Home"). Some of the
Contracts are secured by a lien on real
estate. Each Contract was [either (i)]
originated or purchased by GreenPoint on an
individual basis in the ordinary course of its
business [or (ii) purchased by GreenPoint as
part of bulk purchases of manufactured housing
contracts from other private lenders or
finance companies, or from governmental
agencies or instrumentalities or from other
entities]. Neither the Contracts nor any
collections thereon will be insured or
guaranteed by any governmental agency or
instrumentality.
As of the Cut-off Date, the Contract Pool
consists of approximately [ ] Contracts having
an aggregate unpaid principal balance of
approximately $[ ]. The Contracts, as of their
origination, were secured by Manufactured
Homes located in [ ] states and the District
of Columbia and have been selected by
GreenPoint from the manufactured housing
installment sale contracts and installment
loan portfolios of GreenPoint on the basis of
the criteria specified in the Agreement (as
defined herein). Monthly payments of principal
and interest on the Contracts will be due on
various days (each, a "Due Date") throughout
each month. As of the Cut-off Date, the
Contract Rates on the Contracts ranged from
S-3
<PAGE>
[ ]% to [ ]%, with a weighted average of
approximately [ ]%. As of the Cut-off Date,
the Contracts had a weighted average original
term to maturity of approximately [ ] months
and a weighted average remaining term to
maturity of approximately [ ] months. The
final scheduled payment date on the Contract
with the latest maturity is in [ ] 20[ ]. The
Contracts were originated from 19[ ] through
19[ ], inclusive. See "The Contract Pool" and
"Prepayment and Yield Considerations" herein
for a detailed description of the Contracts.
[In no event shall any Contract have a loan-
to-value ratio in excess of 100% as of the
Cut-off Date.]
The charge-off policy with respect to any
particular manufactured housing installment
sales contract or installment loan agreement
will be determined by GreenPoint on a case by
case basis.
[The Agreement provides that additional
contracts will be purchased by the Trust on
the Closing Date (the "Additional Contracts")
and that Contracts representing no more than [
]% of the aggregate Contract Pool will be
purchased by the Trust no later than [ ] (the
"Subsequent Contracts". No such Subsequent or
Additional Contracts shall have a loan-to-
value ratio in excess of 100% as of its date
of inclusion in the Trust.]
In addition to the security interest on the
Manufactured Home, certain of the Contracts
(the "Land Home Contracts" and "Land-in-Lieu
Contracts") will be secured by a mortgage,
deed of trust or other instrument securing the
real estate on which the Manufactured Home is
located. Land Home and Land-in-Lieu Contracts
in the aggregate comprise approximately [ ] in
dollars of the Contract Pool as of the Cut-off
Date. See "The Contract Pools" in the
Prospectus.
Description of Certificates.... The Certificates evidence undivided interests
in the Contract Pool and certain other
property held in trust for the benefit of the
Certificateholders (the Contracts and such
other property being collectively referred to
as the "Trust Fund"). The Class A Certificates
are Senior Certificates and the Class M
Certificates and the Class B Certificates are
Subordinate Certificates, all as described
herein. The Class M Certificates are a
S-4
<PAGE>
"mezzanine" Class of Certificates as described
in the Prospectus. The residual interest is
evidenced by the Class R Certificates. The
Offered Certificates will be offered in
denominations of [$1,000] and integral
multiples of [one dollar] in excess thereof.
The undivided percentage interest (the
"Percentage Interest") evidenced by a
Certificate of any Class (other than a [Class
A-IO or a] Class R Certificate) in the
distributions to the related Class will be
equal to the percentage obtained by dividing
the original denomination of such Certificate
by the initial Certificate Balance of such
Class of Certificates.
Non-Recourse Obligations....... The Offered Certificates will not represent
interests in or obligations of GreenPoint.
None of the Offered Certificates nor the
underlying Contracts or any collections
thereon will be insured or guaranteed by any
governmental agency or instrumentality, the
Underwriters or any of their affiliates,
GreenPoint or any its affiliates [(except to
the extent of the Limited Guarantee of GFC)].
[Except with respect to the Limited
Guarantee], collections on the Contracts will
constitute the only source of funds for
payment on the Offered Certificates.
Record Date.................... The last business day preceding the
Distribution Date.
Distributions.................. Distributions to the holders of the Series
199[ ]-[ ] Regular Certificates of interest
and/or principal, will be made first to the
holders of the Senior Certificates and second
to the holders of the Subordinate
Certificates. Within each Class of
Certificates, such distributions will be
applied first to the payment of interest and
then to the payment of principal. The funds
available in the Certificate Account (as
hereinafter defined) for distribution on a
Distribution Date (the "Available Distribution
Amount," as further defined herein under
"Description of the Certificates Payments on
the Contracts; Certificate Account") will be
applied in the amounts and the order of
priority set forth below.
Distributions of interest and principal to
holders of each Class of Certificates[, other
than the Class A-IO Certificates,] will be
made on each Distribution Date in an amount
equal to their respective Percentage Interests
multiplied by the aggregate amount distributed
to such Class of Certificates on such
Distribution Date. [Interest will be
calculated on the
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Class A-IO Certificates on the basis of a
"Notional Principal Amount"[equal to the Pool
Scheduled Principal Balance, as defined
below]. Reference to the Notional Principal
Amount of the Class A-IO Certificates is only
for convenience in certain calculations and
does not represent the right to receive any
distribution allocable to principal.]
Distributions will be made on each
Distribution Date to holders of record on the
preceding Record Date, except that the final
distribution in respect of the Certificates
will only be made upon presentation and
surrender of the Certificates at the office or
agency appointed by the Trustee for that
purpose in [Chicago] [or] [New York City].
Priorities. On each Distribution Date, the
Available Distribution Amount will be
distributed in the following amounts and in
the following order of priority:
(i) to the Class A Certificateholders, the
Class A Interest Distribution Amount[,
payment to be distributed among the
Class A-1, Class A-2 and Class A-IO
Certificates pro rata based on
entitlement];
(ii) to the Class A-1 Certificateholders,
the Formula Principal Distribution
Amount until the Class A-1 Certificate
Balance is reduced to zero;
(iii) to the Class A-2 Certificateholders,
the Formula Principal Distribution
Amount until the Class A-2 Certificate
Balance is reduced to zero;
(iv) to the Class M Certificateholders, the
Class M Interest Distribution Amount
(v) to the Class M Certificateholders, any
remaining Formula Principal
Distribution Amount after distribution
under clause (ii) above until the Class
M Certificate Balance is reduced to
zero
(vi) to the Class B-1 Certificateholders,
the Class B-1 Interest Distribution
Amount;
(vii) to the Class B-1 Certificateholders,
any remaining Formula Principal
Distribution Amount until the Class B-1
Certificate Balance is reduced to zero;
(viii) to the Class B-2 Certificateholders,
the Class B-2
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Interest Distribution Amount;
(ix) to the Class B-2 Certificateholders,
any remaining Formula Principal
Distribution Amount until the Class B-
2 Certificate Balance is reduced to
zero; and
(x) to the Class R Certificateholders, any
remaining Available Distribution Amount
Definitions. As to any Distribution Date, the
"Class A Interest Distribution Amount" is
equal to the sum of (i) one month's interest
at the Class A Pass-Through Rate on the Class
A Certificate Balance or Notional Principal
Amount, as the case may be, and (ii) any
previously undistributed shortfalls in
interest due to the Class A Certificateholders
in respect of prior Distribution Dates; the
"Class M Interest Distribution Amount" is
equal to the sum of (i) one month's interest
at the Class M Pass-Through Rate on the Class
M Certificate Balance and (ii) any previously
undistributed shortfalls in interest due to
the Class M Certificateholders in respect of
prior Distribution Dates; the "Class B
Interest Distribution Amount" is equal to the
sum of (i) one month's interest at the Class B
Pass-Through Rate on the Class B Certificate
Balance and (ii) any previously undistributed
shortfalls in interest due to the Class B
Certificateholders in respect of prior
Distribution Dates. Any shortfall in interest
due to Certificateholders will, to the extent
legally permissible, bear interest at the
related Class A, Class M or Class B Pass-
Through Rate.
The "Formula Principal Distribution Amount" in
respect of a Distribution Date equals the sum
of (a) the Total Regular Principal Amount (as
defined below) for such Distribution Date and
(b) any previously undistributed shortfalls in
the distribution of the Total Regular
Principal Amount in respect of prior
Distribution Dates
The "Total Regular Principal Amount" on each
Distribution Date is the sum of (i) the
Scheduled Principal Reduction Amount (defined
below) for such Distribution Date, (ii) the
Scheduled Principal Balance (defined below) of
each Contract which, during the related
Collection Period, was purchased by GreenPoint
on account of certain breaches of
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representations and warranties made by it in
the Agreement, (iii) all partial prepayments
received during such related Collection
Period,(iv) the Scheduled Principal Balance of
each Contract that was prepaid in full during
such related Collection Period and (v) the
Scheduled Principal Balance of each Contract
that became a Liquidated Contract (defined
below) during such related Collection Period
The "Scheduled Principal Balance" of a
Contract for any Distribution Date is its
principal balance as of the Due Date in the
Collection Period immediately preceding such
Distribution Date, after giving effect to all
previous partial prepayments, all previous
scheduled principal payments (whether or not
paid) and the scheduled principal payment due
on such Due Date, but without giving effect to
any adjustment due to bankruptcy or similar
proceedings. The "Scheduled Principal
Reduction Amount" for any Distribution Date is
an approximate calculation (performed on an
aggregate basis rather than on a Contract-by-
Contract basis) of the scheduled payments of
principal due during the related Collection
Period. Both of these terms are more fully
described herein under "Description of the
Certificates -- Distributions" herein
The "Pool Scheduled Principal Balance" for any
Distribution Date is equal to the Cut-off Date
Pool Principal Balance less the aggregate of
the Total Regular Principal Amounts for all
prior Distribution Dates
In general, a "Liquidated Contract" is a
defaulted Contract as to which all amounts
that the Servicer expects to recover relating
to such Contract ("Liquidation Proceeds") have
been received. A Liquidated Contract includes
any defaulted Contract in respect of which the
related Manufactured Home has been realized
upon and disposed of and the proceeds of such
disposition have been received.
The "Certificate Balance" for any Class as of
any Distribution Date is the Initial
Certificate Balance of that Class less all
amounts previously distributed to
Certificateholders of that Class on account of
principal; The "Senior Certificate Balance" as
of any Distribution Date is the sum of the
Certificate Balances of the Senior
Certificates immediately prior to such
Distribution Date. The "Subordinate
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Certificate Balance" as of any Distribution
Date is the sum of the Class M Certificate
Balance and the Class B Certificate Balance
immediately prior to such Distribution Date.
In no event shall the aggregate distributions
of principal to the holders of the Senior
Certificates and Subordinate Certificates
exceed the Initial Senior Certificate Balance
and the Initial Subordinate Certificate
Balance, respectively.
[Reserve Account............... [On the Closing Date, the Trustee shall
establish an account (the "Reserve Account")
for the benefit of the Certificateholders. The
Reserve Account will be funded as described
under "Reserve Account" herein. On each
Distribution Date, the Trustee will withdraw
from the Reserve Account an amount (the
"Reserve Account Draw Amount") equal to the
lesser of (a) the amount then on deposit in
the Reserve Account and (b) the amount by
which the aggregate of amounts due to
Certificateholders in clauses (i) to (vi)
under "Distributions" above exceeds the
Available Distribution Amount on such
Distribution Date and distribute such amount,
together with the Available Distribution
Amount. The Reserve Account is intended to
enhance the likelihood of regular receipt by
the holders of the Series 199[ ]-[ ] Regular
Certificates of the full amount of the
distributions due them and to afford such
holders protection against losses on
Liquidated Contracts, but no assurance can be
given that the Reserve Account will be
sufficient for such purpose.]
[Pre-Funding On the Closing Date, GreenPoint will deposit
Account....................... an amount (as reduced from time to time, the
"Pre-Funded Amount") in the Pre-Funding
Account to provide the Trust with sufficient
funds to purchase the Subsequent Contracts.
The Pre-Funded Amount will initially equal the
difference between [ ] and the aggregate
principal balance as of the Cut-off Date of
the Initial and Additional Contracts. Any
income earned on amounts on deposit in the
Pre-Funding Account will be taxable to the
GreenPoint. See "Prepayment and Yield
Considerations" and "Description of the
Certificates- Conveyance of Subsequent
Contracts and Pre-Funding Account" herein. In
no event, will the Pre-Funding Account extend
beyond 90 days past the Closing Date.]
Subordination.................. The rights of the holders of the Subordinate
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Certificates to receive distributions of
available amounts in the Trust Fund will be
subordinate, to the extent described herein,
to such rights of the holders of the Senior
Certificates. This subordination is intended
to enhance the likelihood of regular receipt
by the holders of the Senior Certificates of
the full amount of interest and principal
distributable thereon and to afford such
holders protection against losses on
Liquidated Contracts. Similarly, the rights of
the holders of the Class B Certificates to
receive distributions due them from available
amounts in the Trust Fund will be
subordinated, to the extent described herein,
to such rights of the holders of the Class M
Certificates. Subject to the subordination of
the Subordinate Certificates to the Senior
Certificates, this subordination of the Class
B Certificates to the Class M Certificates is
intended to enhance the likelihood of regular
receipt by the holders of the Class M
Certificates of the full amount of the
distributions due them and to afford such
holders protection against losses on
Liquidated Contracts.
The protection afforded to the holders of
Senior Certificates by means of the
subordination of the Subordinate Certificates,
to the holders of the Class M Certificates by
the subordination of the Class B Certificates
and to the holders of the Class B-1
Certificates by the subordination of the Class
B-2 Certificates will be accomplished by the
application of the Available Distribution
Amount in the order specified under
"Distributions" above. Accordingly, in the
event that the Available Distribution Amount
on any Distribution Date is not sufficient to
permit the distribution of the amount of
interest and the specified portion of the
Formula Principal Distribution Amount due to
the holders of the Senior Certificates, the
subordination of the Subordinate Certificates
will protect the Senior Certificateholders by
the right of such Certificateholders to
receive distributions of the Available
Distribution Amount in respect of interest and
the Formula Principal Distribution Amount that
would otherwise have been distributable to the
Certificateholders of any Class subordinate in
priority of distribution to such Class, until
any shortfall in distributions to the holders
of the related senior Class or Classes of
Certificates in respect thereof has been
satisfied, to the extent described herein. See
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<PAGE>
"Description of the Certificates --
Distributions" and "Description of the
Certificates -- Subordination" herein.
Losses on Liquidated Contracts. As described above, the Total Regular
Principal Amount distributable to the holders
of the Series 199[ ]-[ ] Regular Certificates
on each Distribution Date includes the
Scheduled Principal Balance of each Contract
that became a Liquidated Contract during the
immediately preceding Collection Period. The
Liquidation Proceeds, net of (i) certain
expenses incurred to liquidate such Liquidated
Contract, (ii) all accrued and unpaid interest
thereon and (iii) all Monthly Advances (as
defined below) required to be made in respect
of such Liquidated Contract (the "Net
Liquidation Proceeds"), may be less than the
Scheduled Principal Balance of such Liquidated
Contract. Under such circumstances, the loss
on the Liquidated Contract, in the amount of
the deficiency between the Net Liquidation
Proceeds and the Scheduled Principal Balance
of such Liquidated Contract, maybe covered to
the extent of the amount (the "Excess
Interest"), if any, by which the interest
collected on nondefaulted Contracts during the
same Collection Period exceeds interest
distributions due to the holders of the Series
199[ ]-[ ] Regular Certificates and [if
GreenPoint is not acting as Servicer,] the
Monthly Servicing Fee.
The effect of any losses on Liquidated
Contracts during a Collection Period in excess
of the aggregate of Excess Interest generally
will be to reduce the Pool Scheduled Principal
Balance below the aggregate Certificate
Balance (excluding the Class R Certificates)
on the related Distribution Date. In the event
the Pool Scheduled Principal Balance falls
below the aggregate Certificate Balance on any
Distribution Date, shortfalls and/or losses
will arise with respect to the Certificates,
which shortfalls and/or losses will be borne
by the Class B-2 Certificateholders, the Class
B-1 Certificateholders, the Class M
Certificateholders and the Senior
Certificateholders, in that order.
[Limited Guarantee of GFC...... In order to mitigate the effect of [the
subordination of the Class [B-2] Certificates
and] liquidation losses and delinquencies on
the Contracts borne by the [Class B-2
Certificates], GFC will initially provide a
guarantee
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(the "Limited Guarantee.") against losses that
would otherwise be absorbed by the [Class B-2
Certificates] to the extent set forth under
"Description of the Certificates--Limited
Guarantee" herein. [Such Limited Guarantee may
be replaced by an Alternative Credit
Enhancement. See "Alternative Credit
Enhancement" herein.]
The Limited Guarantee will be an unsecured
general obligation of GFC and will not be
supported by any letter of credit or other
enhancement arrangement.
The Limited Guarantee is for the benefit of
the Class [B-2] Certificates only and will not
result in any payments on the other
Certificates.
GFC will be entitled to reimbursement for
payments made under the Limited Guarantee as
described under "Description of the
Certificates--Limited Guarantee" herein.]
[Alternative Credit Enhancement In the event that, at GFC's option,
Alternative Credit Enhancement (as described
below) is provided in the amount, and upon the
terms and conditions, set forth under
"Description of the Certificates--Alternative
Credit Enhancement," the Limited Guarantee
shall be released and shall terminate. The
Alternative Credit Enhancement may consist of
cash or securities deposited by GFC or any
other person in a segregated escrow, trust or
collateral account or a letter of credit,
certificate insurance policy or surety bond
provided by a third party (an "Alternative
Credit Enhancement."). See "Description of the
Certificates--Alternative Credit Enhancement"
herein. GFC shall have no obligation to
replace such enhancement once it has been
exhausted. See "Risk Factors--Alternative
Credit Enhancement" herein.]
Monthly Advances............... For each Distribution Date, the Servicer will
be obligated to make an advance (a "Monthly
Advance") equal to the lesser of (i)
delinquent scheduled payments of principal and
interest on the Contracts that were due in the
preceding Collection Period and (ii) the
amount, if any, by which scheduled
distributions of principal and interest due on
the Series 199[ ]-[ ] Regular Certificates
exceeds certain amounts on deposit in the
Certificate Account (as hereinafter defined)
as of the last day of the immediately
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<PAGE>
preceding Collection Period, except to the
extent, in the Servicer's judgment, such
advance would not be recoverable from related
late payments, Liquidation Proceeds or
otherwise. Advances are reimbursable to the
Servicer as described herein under
"Description of the Certificates Advances."
Security Interests in the
Manufactured Homes; Transfer of In connection with the issuance of the
Contracts and Security Certificates, the Seller will convey to the
Interests; Repurchase or Trustee all of its interests in the
Substitution Obligations...... Contracts. The certificates of title for the
Manufactured Homes will show GreenPoint, or,
as described in the Prospectus under "Risk
Factors" and "Certain Legal Aspects of the
Contracts" Bank of America, FSB, as the lien
holder, and the UCC financing statements,
where applicable, will show GreenPoint or, as
described in the Prospectus under "Risk
Factors" and "Certain Legal Aspects of the
Contracts" Bank of America, FSB, as secured
party. Because of the expense and
administrative inconvenience involved, neither
the certificates of title for the Manufactured
Homes nor the UCC financing statements
evidencing the security interest in such
Manufactured Homes will be notated or amended,
as the case may be, to change the lienholder
specified therein to the Trustee. Similarly,
GreenPoint will not record an assignment to
the Trustee of the mortgage, deed of trust or
other instrument securing each Land Home and
Land-in-Lieu Contract. In some states, in the
absence of such a notation or amendment or
recordation of assignment, the assignment to
the Trustee of the security interest in the
Manufactured Homes or the mortgage, deed of
trust or other instrument securing a Land Home
or Land-in-Lieu Contract may not be effective
against creditors of GreenPoint or Bank of
America, FSB, as applicable. However, the
Seller will not be obligated to repurchase or
substitute a Contract solely on the basis of
the failure by it to cause any such notation
or amendment to be made with respect to a
document of title or UCC financing statement
relating to a Manufactured Home, except under
certain limited specified circumstances
described herein under "Description of the
Certificates Conveyance of Contracts." Under
the Agreement, the Seller will agree to
repurchase, or at its option substitute
another contract for, a Contract sold by it if
it has failed to perfect a first-priority
security interest in such
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Manufactured Home or in the event of certain
violations of federal and state consumer
protection laws applicable to creditors or
assignees of the Contracts, unless such
failure does not materially and adversely
affect the Trustee's interest in the Contract
or such failure has been cured. Under certain
federal and state laws governing the
perfection of security interests in
manufactured homes and enforcement of rights
to realize upon the value of manufactured
homes, the Trustee's security interest in a
Manufactured Home could be rendered
subordinate to the interest of other parties
if the Manufactured Home (that does not secure
a Land Home or Land-in-Lieu Contract) has been
affixed to real estate or is relocated to
another state without reperfection of the
security interest. See "Risk Factors --
Security Interest in the Manufactured Homes;
Transfer of Contracts and Security Interest"
and "Certain Legal Aspects of the Contracts --
Security Interests in the Manufactured Homes"
in the Prospectus. The Servicer, will maintain
possession of the Contract documents, and the
Seller will stamp or cause to be stamped each
Contract with a legend indicating that the
Contract has been assigned to the Trustee.
Optional Termination and The Servicer has the option to purchase from
Termination Auction........... the Trust Fund all Contracts then outstanding
and all other property in the Trust Fund on
any Distribution Date after the First
Distribution Date if, among other conditions,
the Pool Scheduled Principal Balance is less
than 10% of the Cut-off Date Pool Principal
Balance. See "Description of the Certificates
-- Optional Termination and Termination
Auction" herein. During that period, the
Servicer also may direct the Trustee to
conduct a Termination Auction for the sale of
all Contracts then outstanding in the Trust
Fund, and, in any event, if the Servicer has
not exercised the option call within 90 days
of the first Distribution Date when the Pool
Scheduled Principal Balance is less than 10%
of the Cut-off Date Pool Principal Balance,
the Servicer shall direct the Trustee to
conduct a Termination Auction. See
"Description of the Certificates -- Optional
Termination and Termination Auction" herein.
Any early termination of the Trust Fund and
early retirement of the Certificates that
results from the Servicer's exercise of the
option call or a "successful Termination
Auction"
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(a Termination Auction where a bidder has been
accepted and the funds have been deposited in
the Certificate Account) may have an effect on
an investor's yield on such Certificates. See
"Prepayment and Yield Considerations" herein
and in the Prospectus.
Registration of Offered
Certificates.................. The Offered Certificates initially will be
represented by certificates registered in the
name of Cede & Co. ("Cede") as the nominee of
The Depository Trust Company ("DTC"), and will
only be available in the form of book-entries
on the records of DTC and participating
members thereof. Certificates representing the
Offered Certificates will be issued in
definitive form only under the limited
circumstances described herein. All references
herein to "holders" or "Certificateholders"
shall reflect the rights of beneficial owners
of the Offered Certificates ("Certificate
Owners") as they may indirectly exercise such
rights through DTC and participating members
thereof, except as otherwise specified herein.
See "Risk Factors" and "Description of the
Certificates Global Certificates" in the
Prospectus and "Description of the
Certificates -- General" and "Description of
the Certificates -- Distributions" herein.
Federal Income Tax Consequences [For federal income tax purposes, an election
will be made to treat certain assets of the
Trust Fund as a real estate mortgage
investment conduit ("REMIC"). Orrick,
Herrington & Sutcliffe LLP, special counsel to
GreenPoint, based on certain assumptions set
forth herein and in the Prospectus, is of the
opinion that the electing portion of the Trust
Fund will qualify as a REMIC for federal
income tax purposes and that the Series 1998-2
Regular Certificates will constitute "regular
interests" in the REMIC and generally will be
treated as debt instruments of the Trust Fund
for federal income tax purposes. The Series
1998-2 Residual Certificates will be treated
as the "residual interest" in the REMIC for
federal income tax purposes. Holders of the
Series 1998-2 Regular Certificates that would
otherwise report income under a cash method of
accounting will be required to include in
income interest on the Series 1998-2 Regular
Certificates (including original issue
discount ("OID"), if any) in accordance with
the accrual method of accounting with the
effect that an investor
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<PAGE>
may be required to report income for federal
income tax purposes despite not yet having
received a cash distribution in respect of
such income. The Class __ Certificates and the
Class __ Certificates are not expected to be
issued with OID. See "Certain Federal Income
Tax Consequences" herein and in the
Prospectus.]
[No election will be made to treat the Grantor
Trust as a REMIC for federal income tax
purposes. For federal income tax purposes,
Orrick, Herrington & Sutcliffe LLP, special
counsel to GreenPoint, based on certain
assumptions set forth herein and in the
Prospectus, is of the opinion that the Grantor
Trust will be classified as a grantor trust
under Subpart E, part I of Subchapter J of the
Code, and not as an association taxable as a
corporation. The Class A-2 Floating
Certificates represent an undivided ownership
interest in the Grantor Trust. See "Certain
Federal Income Tax Consequences -- REMIC
Elections" and "--Non-REMIC Trusts" in the
Prospectus.]
ERISA Considerations........... Senior Certificates. Subject to the conditions
and discussion set forth herein, the Senior
Certificates [(other than the Class A-2 Fixed
Certificates)] may be purchased by employee
benefit or other plans that are subject to the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and/or Section
4975 of the Internal Revenue Code of 1986 (the
"Code"). See "ERISA Considerations" herein and
in the Prospectus.
Subordinate Certificates. Unless the opinion
referred to under "ERISA Considerations--Class
M and Class B-1 Certificates" is delivered to
the Trustee, an employee benefit or other plan
subject to ERISA and/or Section 4975 of the
Code will not be permitted to purchase or hold
the Class M or the Class B Certificates as
such actions may give rise to a non-exempt
prohibited transaction under ERISA or Section
4975 of the Code. However, an insurance
company investing assets of its general
account may purchase and hold the Class M or
the Class B Certificates if it delivers the
required certification to the Trustee. See
"ERISA Considerations" herein and in the
Prospectus.
Legal Investment............... The [Senior and Class M Certificates] offered
hereby
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<PAGE>
will not constitute "mortgage related
securities" under the Secondary Mortgage
Market Enhancement Act of 1984, as amended
("SMMEA") until such time as the balance of
the Pre-Funding Account is reduced to zero. At
such time, the [Senior and Class M
Certificates] will constitute legal
investments for certain types of investors to
the extent provided in SMMEA. Such
institutions should consult their own legal
advisors in determining whether and to what
extent the [Senior Certificates and the Class
M Certificates] constitute legal investments
for such investors.
Because [the Class B Certificates] will not,
at the time of issuance, be rated in one of
the two highest rating categories of [ ], [the
Class B Certificates] will not constitute
"mortgage related securities" for purposes of
SMMEA. Accordingly, many institutions with
legal authority to invest in more highly rated
securities based on first mortgage loans may
not be legally authorized to invest in [the
Class B Certificates]. No representation is
made as to any regulatory requirements or
considerations (including without limitation
regulatory capital or permissible investment
requirements) applicable to the purchase of
[the Class B Certificates] by banks, savings
and loan associations or other financial
institutions. Such institutions should consult
their own legal advisors in determining
whether and to what extent the Offered
Certificates constitute legal investments for
such investors. See "Legal Investment" herein
and in the Prospectus.
Rating......................... It is a condition to the issuance of the
Offered Certificates that the Senior
Certificates be rated "[ ]," that the Class M
Certificates be rated at least "[ ]" and that
the Class B Certificates be rated at least "[
]" by [ ]. The Seller has not requested
ratings on the Offered Certificates by any
rating agency other than [ ]. However, there
can be no assurance as to whether any other
rating agency will rate any or all of the
Offered Certificates, or if it does, what
rating would be assigned by any such other
rating agency. A rating on any or all of the
Offered Certificates by certain other rating
agencies, if assigned at all, may be lower
than the rating assigned to such Certificates
by [ ]. See "Ratings" herein and in the
Prospectus.
A security rating is not a recommendation to
buy, sell
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<PAGE>
or hold securities and may be subject to
revision or withdrawal at any time.
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<PAGE>
RISK FACTORS
The discussion under "Risk Factors" in the Prospectus should be read
carefully in connection with a decision to invest in any of the Offered
Certificates. The following discussion supplements, and does not replace or
supersede the discussion under "Risk Factors" in the Prospectus, unless the
context expressly so provides.
1. Limited Liquidity. The Underwriters intend to make a secondary
market in the Offered Certificates, but have no obligation to do so. There can
be no assurance that a secondary market will develop for the Offered
Certificates or, if it does develop, that it will provide the holders of any
Class of Offered Certificates with liquidity of investment or that it will
remain for the term of such Class of Offered Certificates.
2. Mortgage Related Securities. The Class B Certificates will not
constitute "mortgage related securities" for purposes of SMMEA. Accordingly,
many institutions with legal authority to invest in SMMEA securities will not be
able to invest in the Class B Certificates, thus limiting the liquidity of the
investment of the holders of any Class B Certificates.
3. Subordination of Class M and Class B Certificates. The rights of
the holders of the Class M Certificates to receive distributions of available
amounts in the Trust Fund will be subordinate, to the extent described herein,
to the rights of the holders of the Senior Certificates. Consequently, if
shortfalls and/or losses arise with respect to the Certificates, they will be
borne by the Class M Certificateholders before they are borne by the Senior
Certificateholders. The rights of the holders of the Class B Certificates to
receive distributions of available amounts in the Trust Fund will be
subordinate, to the extent described herein, to the rights of the holders of the
Class M certificates. Consequently, if shortfalls and/or losses arise with
respect to the Certificates, they will be borne by the Class B
Certificateholders before they are borne by the Class M certificateholders.
4. Distributions of Principal. The yield to maturity on the Class M
and the Class B Certificates will be affected by the rate at which Contracts
become Liquidated Contracts and the severity of ensuing losses on such
Liquidated Contracts and the timing thereof. [For any Distribution Date on
which the Senior Certificate Balance has not been reduced to zero, the Senior
Certificateholders (other than the Class A-IO Certificateholders) will receive
all payments of principal that are made on the Contracts.] It is not possible
to predict the timing of the occurrence of the Distribution Date, if any, on
which the Senior Certificate Balance will be reduced to zero or which
occurrences will be affected by the rate of voluntary prepayments in addition to
prepayments due to default and subsequent liquidation. Any such losses caused
by Liquidated Contracts will be borne first by the holders of the Class M and
Class B Certificateholders.
5. Economic Conditions. Prepayment on Contracts may be influenced by
a variety of economic, geographic, social and other factors, including
repossessions, aging, seasonality, market interest rates, changes in housing
needs, job transfers and unemployment. To the extent any losses or delays in
distributions to Certificateholders are caused by prepayments,
S-19
<PAGE>
the Subordinate Certificates will be the first to bear these delays or losses.
See "Prepayment and Yield Considerations" herein and in the Prospectus.
6. No Recourse. The Offered Certificates will not represent interests
in or obligations of the Seller or the Servicer. None of the Offered
Certificates nor the underlying Contracts or any collections thereon will be
insured or guaranteed by any governmental agency or instrumentality, the
Underwriters or any of their affiliates, GreenPoint or any its affiliates
[(except to the extent of the Limited Guarantee of GFC or any Alternative Credit
Enhancement)]. [Except for the Limited Guarantee or any Alternative Credit
Enhancement with respect to the Class [ ] Certificates], collections on the
Contracts will constitute the only source of funds for payment on the Offered
Certificates. Any shortfalls in the collections on Contracts will be borne by
the Certificateholders [(except to the extent of the Limited Guarantee of GFC or
any Alternative Credit Enhancement)]. The Subordinate Certificates will be the
first to bear any such losses.
7. [Prepayments May Affect Pass-Through Rates. The Pass-Through Rate
for some of the Certificates on any Distribution Date may be adjusted so as not
to exceed the weighted average of the Net Contract Rates in the Contract Pool.
The "Net Contract Rate" of a Contract equals the rate of interest borne by such
Contract minus the Annual Servicing Rate. Disproportionate prepayments
(including prepayments due to liquidations and repurchases by the Seller[s] as
required or permitted by the Agreement) of Contracts with Net Contract Rates in
excess of the initial Pass-Through Rates (each an "Initial Pass-Through Rate")
for such Certificates will increase the possibility that the Pass-Through Rate
for such Classes of Certificates will be adjusted to an amount lower than the
related Initial Pass-Through Rate. There is no mechanism to compensate Holders
of such Classes of Certificates for any such reduction. Any difference between
interest at the actual Pass-Through Rate and interest at the Initial Pass-
Through Rate will not constitute a shortfall, and any such difference will be
foregone permanently.]
8. [Interest-only Certificates. Because amounts distributable to the
holders of interest-only Certificates consist entirely of interest, the yield to
maturity of the interest-only Certificates will be extremely sensitive to the
repurchase, prepayment and default experience of the Contracts and prospective
investors should fully consider the associated risks, including the risk that
such investors may not fully recover their initial investment. In addition,
investors in the interest-only Certificates should be aware that the Servicer
may exercise a right to repurchase all remaining contracts and other property in
the Trust Fund or direct the Trustee to conduct a Termination Auction for the
sale of all Contracts then outstanding in the Trust Fund after the first
Distribution Date when the Pool Scheduled Principal Balance is less than 10% of
the Cut-Off Date Pool Principal Balance and certain other conditions exist. See
"Prepayment and Yield Considerations" herein.]
9. Limited Operating History of Servicer. GreenPoint was
incorporated on May 8, 1998 for the purpose of acquiring the manufactured
housing contract business from Bank of America, FSB as described under "The
Seller -- The Acquisition" in the Prospectus. Accordingly, GreenPoint has a
limited operating history, and no relevant delinquency and loss experience is
available. Neither GreenPoint nor any of its affiliates were previously engaged
in the origination or servicing of manufactured housing contracts prior to the
Acquisition. As of
S-20
<PAGE>
September 30, 1998, the Servicer services manufactured housing installment loans
with an aggregate principal balance of $11.137 billion, of which $801 million
were acquired from Bank of America, FSB in the Acquisition. Because GreenPoint
did not originate or service manufactured housing contracts prior to the
Acquisition, it has no prior history or experience with respect to the
origination and servicing of manufactured housing contracts or statistical
information relating to the average percentage of principal recovered upon
liquidation of certain manufactured housing contracts. Therefore, no statistical
information with respect to loss and delinquencies can be provided. POTENTIAL
CERTIFICATEHOLDERS ARE ENCOURAGED TO EVALUATE THE RISKS ASSOCIATED WITH RESPECT
TO THE LIMITED OPERATING HISTORY OF GREENPOINT.
10. Insolvency or Bankruptcy of GreenPoint. GreenPoint intends that
each transfer of Certificates to the related Trust Fund constitutes a sale,
rather than a pledge of the Contracts to secure indebtedness of GreenPoint.
However, if GreenPoint were to become a debtor under the federal bankruptcy
code, it is possible that a creditor or trustee in bankruptcy of GreenPoint or
GreenPoint as debtor-in-possession may argue that the sale of the Contracts by
GreenPoint could be recharacterized as a borrowing secured by a pledge of the
Contracts. Such an attempt, even if unsuccessful, could result in delays in or
reductions of distributions on the Certificates to the holders of the
Certificates. To the extent that the Certificates have been designated as senior
or subordinate, the most junior certificates would be the first to bear these
delays or losses.
11. [Limited Guarantee of GFC. The Limited Guarantee will be an
unsecured general obligation of GFC and will not be supported by any letter of
credit or other enhancement arrangement. See "Incorporation of Certain
Documents by Reference" in the Prospectus.]
12. [Alternative Credit Enhancement. If GFC has replaced the Limited
Guarantee with an Alternative Credit Enhancement and such Alternative Credit
Enhancement is exhausted, GFC has no obligation to replace such enhancement.
Consequently, the Limited Guarantee may bear a greater risk of loss on the
Contracts than if the Limited Guarantee was in place and GFC was able to make
payment on the Limited Guarantee. Any such greater risk of loss on the
Contracts will be borne first by the Subordinate Certificateholders. See
"Description of the Certificates--Alternative Credit Enhancement" herein.
THE CONTRACT POOL
Each Contract was purchased or originated by GreenPoint on an
individual basis in the ordinary course of its business. A description of the
general practices of GreenPoint with respect to the origination or purchase of
manufactured housing contracts similar to the Contracts is set forth in the
Prospectus under "The Seller - Loan Originations" and "The Seller - Underwriting
Policies."
On the date of initial issuance of the Offered Certificates, the
Seller will convey to the Trust Fund the Contracts owned by it immediately prior
to such conveyance. The Contract Pool in the Trust Fund will consist of such
Contracts. GreenPoint, as Servicer, will obtain and maintain possession of all
Contract documents. [Approximately [ ]% of the Contracts (by
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<PAGE>
outstanding principal balance as of the Cut-off Date) will be Contracts acquired
by GreenPoint in the Acquisition.]
[The Agreement provides that the Additional Contracts will be
purchased by the Trust on the Closing Date and that the Subsequent Contracts
will be purchased by the Trust no later than [ ]. Although the Additional
Contracts and Subsequent Contracts sold to the Trust will have characteristics
that differ somewhat from the Initial Contracts described herein, the Company
does not expect that the characteristics of the Additional Contracts and
Subsequent Contracts will vary materially from the Initial Contracts since the
Additional Contracts and Subsequent Contracts will conform to the
representations and warranties set forth in the applicable Agreement as they
relate to such Additional Contracts and Subsequent Contracts. See "Description
of the Certificates -- Conveyance of Subsequent Contracts and Pre-Funding
Account" herein.]
No manufactured housing installment sales contract or installment loan
agreement will be in excess of 100% of the value of the manufactured home. See
"The Contract Pool" in the Prospectus.
The Contracts are all [fixed rate, actuarial Contracts]. [Some of the
Contracts in the Contract Pool are secured by a lien on real estate. None of
the Contracts was (i) purchased in bulk from an unrelated third party, (ii) is
insured in whole or in part or guaranteed in whole or in part, as applicable, by
the Veterans Administration, the Federal Housing Administration or by any other
governmental entity or instrumentality, (iii) is amortized using the "simple
interest" amortization method or (iv) has a variable Contract Rate or a Contract
Rate which steps up on particular dates.]
Management of GreenPoint estimates that in excess of [ ]% of the
Manufactured Homes are used as primary residences by the Obligors under the
Contracts secured by such Manufactured Homes.
As of the Cut-off Date, the Contract Rates on the Contracts ranged
from[ ]% to [ ]%. The weighted average Contract Rate of the Contracts as of the
Cut-off Date was approximately [ ]%. As of the Cut-off Date, the Contracts had
remaining scheduled maturities of at least [ ] months but not more than [
]months, and original scheduled maturities of at least [ ] months but not more
than [ ] months. As of the Cut-off Date, the Contracts had a weighted average
remaining term to maturity of approximately [ ] months, and a weighted average
original term to scheduled maturity of approximately [ ] months. The average
outstanding principal balance of the Contracts as of the Cut-off Date was
approximately $[ ] and the outstanding principal balances of the Contracts as of
the Cut-off Date ranged from approximately $[ ] to $[ ]. The weighted average
loan-to-value ratio for the Contracts at origination was approximately [ ]% and
the loan-to-value ratio of the Contracts at origination ranged from [ ]% to [
]%. "Value" is equal to the total buyer's cost of the manufactured home or in
the case of some used homes, the NADA Mobile/Manufactured Housing Appraisal
Guide (including taxes, insurance and any prepaid finance charges or closing
costs that are financed). For Land Home and Land-in-Lieu Contracts, "Value" is
equal to (i) the value of the real property as determined by appraisal or tax
assessment, plus the total buyer's cost of the manufactured home (as indicated
above), plus the cost of the improvements to the land or (ii) in the case of a
manufactured home that is already
S-22
<PAGE>
located on the land, the final appraised value of the land and manufactured home
together. The underwriting practices of GreenPoint regarding loan-to-value
ratios of Contracts it originates or purchases are set forth in the Prospectus
under "The Seller -- Loan Originations" and "The Seller -- Underwriting
Policies." Manufactured homes, unlike site-built homes, generally depreciate in
value, and GreenPoint believes that, upon repossession, the market value of a
manufactured home securing a manufactured housing contract is generally lower
than the principal balance of the related manufactured housing contract.
However, because GreenPoint did not service manufactured homes prior to the
Acquisition, it has no statistical information relating to the average
percentage of principal recovered upon liquidation of certain manufactured
housing contracts. Therefore, no statistical information with respect to loss
and delinquencies can be provided. In addition, the percentage recovery of
principal on liquidation of manufactured housing contracts historically has been
adversely affected by downturns in regional or local economic conditions. These
regional or local economic conditions are often volatile, and no predictions can
be made regarding future economic loss upon liquidation.
The Contracts are secured by Manufactured Homes located in [ ] states
and the District of Columbia; approximately [ ]% of the Contracts by outstanding
principal balance as of the Cut-off Date were secured by Manufactured Homes
located in [ ], [ ]% in [ ], [ ]% in [ ], [ ]% in [ ], [ ]% in [ ], [ ]% in [
]and [ ]% in [ ]. No other state represented more than 5% (by outstanding
principal balance as of the Cut-off Date) of the Contracts.
Approximately [ ]% of the Contracts by outstanding principal balance
as of the Cut-off Date are secured by Manufactured Homes which were new at the
time the related Contracts were originated, and approximately [ ]% of the
Contracts by outstanding principal balance as of the Cut-off Date are secured by
Manufactured Homes which were used at the time the related Contracts were
originated.
Approximately [ ]% (by principal balance) of the Contracts are Land
Home Contracts or Land-in-Lieu Contracts. The Land Home Contracts or Land-in-
Lieu Contracts will be secured by either first mortgages or deeds of trust on
the real estate on which the Manufactured Home is located, depending upon the
prevailing practice in the state in which the underlying property is located.
See "Certain Legal Aspects of the Contracts -- Land Home or Land-in-Lieu
Contracts" in the Prospectus.
The charge-off policy with respect to any particular manufactured
housing installment sales contract or installment loan agreement is determined
by GreenPoint on a case by case basis.
Set forth below is a description of certain additional characteristics
of the Contracts:
S-23
<PAGE>
Geographical Distribution of Manufactured Homes as of Origination
<TABLE>
<CAPTION>
State Number of Aggregate % of Contract Pool By
------ Contracts Principal Outstanding Principal
As of Balance Balance As of
Cut-off Date Outstanding Cut-off Date(1)
------------- As of -----------------------
Cut-off Date
-------------
<S> <C> <C> <C>
Alabama..........................
Arizona..........................
Arkansas.........................
California.......................
Colorado.........................
Connecticut......................
Delaware.........................
District of Columbia.............
Florida..........................
Georgia..........................
Idaho............................
Illinois.........................
Indiana..........................
Iowa.............................
Kansas...........................
Kentucky.........................
Louisiana........................
Maine............................
Maryland.........................
Massachusetts....................
Michigan.........................
Minnesota........................
Mississippi......................
Missouri.........................
Montana..........................
Nebraska.........................
Nevada...........................
New Hampshire....................
New Jersey.......................
New Mexico.......................
New York.........................
North Carolina...................
North Dakota.....................
Ohio.............................
Oklahoma.........................
Oregon...........................
Pennsylvania.....................
South Carolina...................
South Dakota.....................
Tennessee........................
Texas............................
Utah.............................
Vermont..........................
Virginia.........................
Washington.......................
West Virginia....................
Wisconsin........................
Wyoming..........................
Total...........................
</TABLE>
_________
(1) Entries may not add to 100.00% due to rounding.
S-24
<PAGE>
Years of Origination of Contracts
<TABLE>
<CAPTION>
Aggregate Principal % of Contract Pool By
Number of Balance Outstanding Principal
Contracts As of Outstanding As of Balance As of Cut-off
Year of Origination Cut-off Date Cut-off Date Date(1)
------------------- --------------- ------------------- ---------------------
<S> <C> <C> <C>
1998....................
Total...................
</TABLE>
_________
(1) Entries may not add to 100.00% due to rounding.
Distribution of Original Principal Balances of Contracts(1)
<TABLE>
<CAPTION>
% of Contract Pool By
Aggregate Principal Outstanding Principal
Number of Contracts Balance Outstanding As Balance As of Cut-off
Original Contract Amount As of Cut-off Date of Cut-off Date Date (2)
------------------------ -------------------- ----------------------- ----------------------
<S> <C> <C> <C>
$ 0 - 5,000...........
$ 5,001 - 7,500...........
$ 7,501 - 10,000...........
$10,001 - 12,500...........
$12,501 - 15,000...........
$15,001 - 17,500...........
$17,501 - 20,000...........
$20,001 - 22,500...........
$22,501 - 25,000...........
$25,001 - 27,500...........
$27,501 - 30,000...........
$30,001 - 32,500...........
$32,501 - 35,000...........
$35,001 - 40,000...........
$40,001 - 45,000...........
$45,001 - 50,000...........
$50,001 - 55,000...........
$55,001 - 60,000...........
$60,001 - 65,000...........
$65,001 - 70,000...........
$70,001 - 75,000...........
$75,001 - 80,000...........
Total....................
</TABLE>
________
(1) The greatest original Contract principal balance is $[ ], which represents
[ ]% of the outstanding principal balance of the Contracts as of the Cut-
off Date
(2) Entries may not add to 100.00% due to rounding.
S-25
<PAGE>
Distribution of Original Loan-to-Value Ratios
<TABLE>
<CAPTION>
% of Contract Pool By
Aggregate Principal Outstanding Principal
Number of Contracts As Balance Outstanding As Balance As of Cut-off
Loan-to-Value Ratio(1) of Cut-off Date of Cut-off Date Date(2)
---------------------- ---------------------- ----------------------- ----------------------
<S> <C> <C> <C>
Less than or equal to 50%
51-60%.......................
61-70%.......................
71-80%.......................
81-85%.......................
86-90%.......................
91-95%.......................
Total........................
</TABLE>
_______
(1) Rounded to the nearest 1%. The definition of "Value" is set forth under
"The Contract Pool" above. Manufactured Homes, unlike site-built homes,
generally depreciate in value, and it should generally be expected,
especially with Contracts with high loan-to-value ratios at origination,
that at any time after the origination of a Contract, the market value of
the Manufactured Home securing such Contract may be lower than the
outstanding principal balance of such Contract
(2) Entries may not add to 100.00% due to rounding.
Distribution of Contract Rates
<TABLE>
<CAPTION>
% of Contract Pool By
Aggregate Principal Outstanding Principal
Ranges of Contracts by Number of Contracts As Balance Outstanding As Balance As of Cut-off
Contract Rate of Cut-off Date of Cut-off Date Date(1)
------------------------ ----------------------- ----------------------- ----------------------
<S> <C> <C> <C>
10.25-10.49%.................
10.50-10.74%.................
10.75-10.99%.................
11.00-11.24%.................
11.25-11.49%.................
11.50-11.74%.................
11.75-11.99%.................
12.00-12.24%.................
12.25-12.49%.................
Total......................
</TABLE>
_________
(1) Entries may not add to 100.00% due to rounding.
S-26
<PAGE>
Remaining Months to Maturity
<TABLE>
<CAPTION>
% of Contract Pool By
Aggregate Principal Outstanding Principal
Number of Contracts As Balance Outstanding As Balance As of Cut-off
Months Remaining as of Cut-off Date of Cut-off Date of Cut-off Date Date(1)
----------------------------------- ---------------------- ---------------------- ---------------------
<S> <C> <C> <C>
Greater than 15 and less than or equal to 30...........
Greater than 31 and less than or equal to 60...........
Greater than 61 and less than or equal to 90...........
Greater than 91 and less than or equal to 120..........
Greater than 121 and less than or equal to 150.........
Greater than 151 and less than or equal to 180.........
Greater than 181 and less than or equal to 210.........
Greater than 211 and less than or equal to 240.........
Greater than 241 and less than or equal to 300.........
Greater than 301 and less than or equal to 360.........
Total.................................................
</TABLE>
_________
(1) Entries may not add to 100.00% due to rounding.
S-27
<PAGE>
THE SELLER
The following information supplements, and to the extent inconsistent
therewith supersedes, the information in the Prospectus under the heading "The
Seller."
The volume of manufactured housing contracts originated by GreenPoint,
or purchased from dealers on an individual basis by GreenPoint, for the periods
indicated below and certain other information at the end of such periods are as
follows:
Contracts Originated or Purchased on an Individual Basis
(Dollars in Thousands)
[Year Ended December 31,]
-------------------------
<TABLE>
<CAPTION>
[ ] Quarter
ended
[ ], 1998
-----------
<S> <C>
Principal Balance of Contracts Purchased(1)(2)........... $ [ .]
Number of Contracts Purchased(1)......................... [ .]
Average Contract Size(2)................................. $ [ .]
Weighted Average Contract Rate(2)........................ [ .]%
Number of Regional Offices(3)............................ [ .]
</TABLE>
_________
(1) Does not include any portfolios acquired in bulk from third parties other
than from Bank of America, FSB in the Acquisition. Includes only contracts
originated by GreenPoint or purchased from dealers.
(2) As of period end.
(3) Includes regional offices in the United States originating or purchasing
manufactured housing contracts as of the end of the time period.
The following table shows the size of the portfolio of manufactured
housing contracts serviced (including contracts already in repossession) by
GreenPoint, through the manufactured housing regional office system, as of the
dates indicated:
Size of Serviced Portfolio
(Dollars in Thousands)
[Year Ended December 31],
-------------------------
<TABLE>
<CAPTION>
[ ] Quarter
ended
[ ], 1998
------------
<S> <C>
Unpaid Principal Balance of Contracts Being Serviced..... $ ______
Average Contract Unpaid Principal Balance................ $ ______
Number of Contracts Being Serviced ______
</TABLE>
S-28
<PAGE>
[Under certain limited circumstances, as set forth in the Agreement,
the Servicer may make a one-time modification to the Contract Rate with respect
to any Contract by an amount equal to the lesser of (i) 5% of such Contract Rate
and (ii) 0.50%.]
GreenPoint Credit Corp.'s Management's Discussion and Analysis of Delinquency,
Repossession and Loan Loss Experience
[Management has not observed any material economic development in the
general business environment of the county or in local areas where GreenPoint
Credit Corp. originates its manufactured housing contracts which has unfavorably
affected portfolio performance in relation to delinquencies, repossessions and
loan losses during this period. However, the delinquency, loan loss and
repossession experience of manufactured housing contracts historically has been
adversely affected by a downturn in regional or local economic conditions.
These regional or local economic conditions are often volatile, and no
predictions can be made regarding future economic loss upon repossession.
Information regarding the geographic location, at origination, of the
Manufactured Homes securing the Contracts in the Contract Pool is set forth
under "The Contract Pool" herein.]
IMPACT OF THE YEAR 2000
[The Year 2000 issue is the result of many computer programs that were
written using two digits rather than four to define an applicable year. Any of
the computer programs used by the Registrants, their suppliers or outside
service providers that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations, causing disruption of operations, including, among
other things, a temporary inability to process transactions or engage in normal
business activities.]
[The Registrants have determined that they will be required to modify
or replace portions of their software so that their computer systems will
properly utilize dates beyond December 31, 1999. The Registrants presently
believe that, if modifications to existing software and conversions are not
made, or are not completed on a timely basis, the Year 200 issue could have a
material impact on the operations of the Registrants.]
[The Registrants have also initiated formal communications with all of
their suppliers and service providers (including hardware, software, processing,
voice and data communication, facility components and services) to determine the
extent to which the Registrants are vulnerable to those third parties' failure
to remediate their respective Year 2000 issue. The Registrants are working with
each of these third parties to facilitate remediation of the Year 2000 issue and
will actively participate in testing of each system to ensure Year 2000
compliance. However, there can be no guarantee that the systems of third
parties, upon which the Registrants rely, will be timely remediated, or that a
failure to remediate by a third party would not have a materially adverse effect
on the Registrants. The Registrants will utilize both internal and external
resources for the Year 2000 project.]
S-29
<PAGE>
[The Registrants' total Year 2000 project cost include estimated costs
and time associated with the impact of a third party's Year 2000 issue, together
with the costs of outside consultants and the purchase of replacement programs.
The total cost of the Year 2000 project is estimated to be immaterial to the
Registrants' financial statements. Such costs will be funded through operating
cash flows and expensed as incurred. The current status and costs of the
project are based on management's best estimates, which were derived utilizing
numerous assumptions of future events, including the continued availability of
certain resources, third party modification plans and other factors. However,
there can be no guarantee that these estimates will be achieved and actual
results could differ materially from those plans. Specific factors that might
cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, the failure of outside third parties to
remediate their Year 2000 issue on a timely basis, and similar uncertainties.]
[RATIO OF EARNINGS TO FIXED CHARGES FOR GFC
Set forth below are GFC's ratios of earnings to fixed charges for the
past five years. For the purposes of compiling these ratios, earnings consist
of earnings before income taxes plus fixed charges. Fixed charges consist of
interest expense and the interest portion of rent expense.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges..........]
</TABLE>
S-30
<PAGE>
PREPAYMENT AND YIELD CONSIDERATIONS
The general prepayment and yield considerations discussed in the
Prospectus under "Prepayment and Yield Considerations" should be read carefully
in connection with a decision to invest in any of the Offered Certificates. The
following discussion supplements, and does not replace or supersede the
discussion under "Prepayment and Yield Considerations" in the Prospectus, unless
the context expressly so provides.
The Contracts had maturities at origination ranging from [ ] months to
[ ] months, but may be prepaid in full or in part at any time. The prepayment
experience of the Contracts (including prepayments due to liquidations of
defaulted Contracts) will affect the average life and the maturity of the
Offered Certificates. GreenPoint does not maintain statistics with respect to
the rate of prepayment of manufactured housing contracts in its servicing
portfolio [, except for contracts in certain pools of securitized manufactured
housing contracts that its is servicing for others for which at least [ ] months
of prepayment information is available, as described in this Prospectus
Supplement]. Any pool of contracts, including the Contract Pool, might include
contracts with contract rates that are generally higher or lower, in absolute
terms or in comparison to prevailing rates, than the contract rates of the
contracts from which are derived certain historical statistical data set herein.
As a result, the prepayment experience of the contracts contained in any
contract pool, including the Contract Pool, might be faster or slower than the
prepayment experience of the contracts reflected in the historical data. In
addition, although management of GreenPoint is aware of limited publicly
available information relating to historical rates of prepayment on manufactured
housing contracts, management of GreenPoint believes that such information is
not necessarily indicative of the rate of prepayment that may be expected to be
exhibited by the Contracts. Nevertheless, management of GreenPoint anticipates
that a number of Contracts will be prepaid in full in each year during which the
Offered Certificates are outstanding. See "Prepayment and Yield Considerations
- -- Prepayment Considerations," "Description of the Certificates -- Optional and
Mandatory Repurchase; Optional Termination" and "Certain Legal Aspects of the
Contracts -- Transfers of Manufactured Homes; Enforceability of Restrictions on
Transfer" in the Prospectus [and "Description of the Certificates -- Optional
Termination and Termination Auction" herein] for a discussion of certain factors
that may influence prepayments, including homeowner mobility, general and
regional economic conditions, prevailing interest rates, provisions in the
Contracts prohibiting the owner from selling the Manufactured Home without the
prior consent of the holder of the related Contract, the early termination of
the Trust Fund pursuant to a successful Termination Auction and the option of
the Servicer (whether or not GreenPoint remains the Servicer) to purchase the
Contracts and any other property constituting the Trust Fund or to direct the
Trustee to solicit bids for an auction at which to sell the Contracts and any
other property constituting the Trust Fund. In addition, repurchases of
Contracts on account of certain breaches of representations and warranties as
described below under "Description of the Certificates -- Conveyance of
Contracts" will have the effect of prepaying such Contracts and therefore will
affect the average life of the Certificates.
[The Class A-1 Certificates will be prepaid in part on the first
Payment date after the Pre-Funding Period (in no event later than [ ]) in the
event that any Pre-Funded Amount remains in the Pre-Funding Account on such
Payment Date. Any amounts remaining which
S-31
<PAGE>
have not been used to purchase Subsequent Contracts will be paid to the Class A-
1 Certificateholders. GreenPoint believes that substantially all of the Pre-
Funded Amount will be used to acquire the Subsequent Contracts. It is unlikely,
however, that the aggregate principal amount of Subsequent Contracts purchased
by the Trust will be identical to the Pre-Funded Amount, and that consequently,
Class A-1 Certificateholders will receive some prepayment of principal.]
The allocation of distributions to the Certificateholders in
accordance with the Agreement will have the effect of accelerating the
amortization of certain of the Classes of the Series 199[ ]-[ ] Regular
Certificates and delaying the amortization of certain other Classes of the
Series 199[ ]-[ ] Regular Certificates from the amortization that otherwise
would be applicable if distributions in respect of the Total Regular Principal
Amount were made pro rata according to the outstanding principal balances of the
Series 199[ ]-[ ] Regular Certificates. If a purchaser of Offered Certificates
in a Class of Offered Certificates purchases them at a discount and calculates
its anticipated yield to maturity based on an assumed rate of distributions of
principal on such Class of Offered Certificates that is faster than the rate
actually realized, such purchaser's actual yield to maturity will be lower than
the yield so calculated by such purchaser. See "Description of the Certificates
- -- Distributions" herein and "Prepayment and Yield Considerations" in the
Prospectus.
The Class A-IO Certificates, which pay interest only, are extremely
sensitive to the repurchase, prepayment and default experience of the Contracts.
If principal distributions on the Contracts occur at a rate faster than
anticipated at the time of purchase, the purchaser's actual yield to maturity
could be significantly lower than that assumed at the time of purchase. A Class
A-IO Certificateholder could, under some prepayment scenarios, fail to recoup
the original investment. See " - Sensitivity of the Class A-IO Certificates."
There can be no assurance that as to what the delinquency or
repossession experience of GreenPoint on a going forward basis will be. See
"Prepayment and Yield Considerations" in the Prospectus for a discussion of the
effect delinquencies and repossessions on the Contracts would have on the
average life of the Certificates.
The expected final scheduled payment date on the Contract with the
latest maturity is in [ ].
The last scheduled Distribution Dates for the Series 199[ ]-[ ]
Regular Certificates are set forth on the cover of this Prospectus Supplement.
However, the actual last Distribution Date for each such Class of Offered
Certificates could occur significantly earlier than such scheduled Distribution
Dates. In particular, when the Pool Scheduled Principal Balance falls below 10%
of the Cut-off Date Pool Principal Balance and certain other conditions are met,
the Trust Fund could be terminated pursuant to the Servicer's exercise of an
option call or pursuant to a successful Termination Auction. See "Description
of the Certificates -- Optional Termination and Termination Auction" herein.
Either of these events, if they occur, would result in the early retirement of
the then outstanding Certificates.
As described herein under "Description of the Certificates --
Subordination" and "Description of the Certificates -- Losses on Liquidated
Contracts," to the extent that, on any
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<PAGE>
Distribution Date, the Available Distribution Amount is not sufficient to permit
a full distribution of the Total Regular Principal Amount to the holders of any
Class of Offered Certificates (other than the Class A-IO Certificates), the
effect will be to cause the Offered Certificates (other than the Class A-IO
Certificates) to be amortized more slowly than they otherwise would have been
amortized, and losses on Liquidated Contracts and delinquencies on the Contracts
(if not covered by Monthly Advances) will be borne by the holders of such Class
of Offered Certificates in the manner described thereunder and as described
below.
In the event there is a sufficiently large number of delinquencies on
the Contracts in any Collection Period that were not covered by Monthly Advances
as described herein, the amounts distributed to the holders of the Offered
Certificates could be less than the amount of principal and/or interest that
otherwise would be payable on such Certificates on the related Distribution
Date. In such event, even if delinquent payments on the Contracts were
eventually recovered upon liquidation, if the amounts received do not include
interest on delinquent interest payments, the effective yield on the Contracts
would be reduced, and under certain circumstances it is possible that sufficient
Available Distribution Amounts might not be available to provide, in the case of
the Offered Certificates other than the Class A-IO Certificates, for aggregate
distributions equal to the sum of their initial outstanding Certificate Balances
plus accrued interest thereon, and in the case of the Class A-IO Certificates,
for aggregate distributions equal to the accrued interest thereon, thereby
reducing the effective yield on such Certificates.
Obligors are not required to pay interest on the Contracts after the
date of full prepayment of principal or the date of a partial prepayment of
principal (to the extent of such partial prepayment). As a result, partial or
full prepayments in advance of the related Due Dates for such Contracts in any
Collection Period will reduce the amount of interest received from the related
Obligors during such Collection Period to less than one month's interest.
However, when a partial prepayment is made on a Contract or a Contract is
prepaid in full during any Collection Period, but after the Due Date for such
Contract in such Collection Period, the effect will be to increase the amount of
interest received from the related Obligor during such Collection Period to more
than one month's interest. If a sufficient amount of partial prepayments are
made or a sufficient number of Contracts are prepaid in full in a given
Collection Period in advance of their respective Due Dates, interest received on
all of the Contracts during that Collection Period, after netting out the
Monthly Servicing Fee [if GreenPoint is not acting as Servicer] (and other
expenses of the Trust Fund), may be less than the interest payable on the Senior
and/or Subordinate Certificates on the related Distribution Date. As a result,
the Available Distribution Amount for the related Distribution Date may not be
sufficient to distribute the interest on the Offered Certificates in the full
amount set forth herein under "Description of the Certificates - Distributions"
and to make a full distribution of the Total Regular Principal Amount to the
Senior (other than the Class A-IO) and/or Subordinate Certificateholders.
Although no assurance can be given in this matter, GreenPoint does not
anticipate that the net shortfall of interest caused by partial prepayments or
prepayments in full in any Collection Period would be great enough, in the
absence of delinquencies or liquidation losses, to reduce the Available
Distribution Amount for a Distribution Date below the amount that would have
been required to be distributed to the holders of the Offered Certificates on
that Distribution Date in the absence of such prepayment interest shortfalls.
S-33
<PAGE>
Because the Contracts are [actuarial] Contracts, the outstanding
principal balances thereof will reduce, for purposes of accrual of interest
thereon, by a precomputed amortization amount on each Due Date whether or not
the Scheduled Payment for such Due Date is received in advance of or subsequent
to such Due Date, except as described above with respect to prepayments. See
"The Contract Pools" in the Prospectus. Thus, the effect of delinquent
Scheduled Payments, even if they are ultimately paid by the Obligor, will be to
reduce the yields on such Contracts below their respective Contract Rates
(because interest will not have accrued on the principal portion of any
Scheduled Payment while it is delinquent). If the Servicer does not make an
advance with respect to such delinquent Contracts as described herein, the
result will be to reduce the effective yield to the Trust Fund derived from such
Contracts to a yield below their Contract Rates. Under certain circumstances,
such yield reductions could cause the aggregate yield to the Trust Fund derived
from the Contract Pool to be insufficient to support the distribution of
interest on the Offered Certificates, after netting out other expenses of the
Trust Fund.
[Certain statistical information relating to the prepayment behavior
of certain but not all pools of manufactured housing contracts sold by entities
other than GreenPoint or its affiliates but serviced by GreenPoint is set forth
below in tabular form. The table relates to [ ] sold pools for which prepayment
information is available covering a period of at least [ ] months and which had
an aggregate principal balance as of the first day of the month of sale of at
least $[ ]. In evaluating whether the data contained in the table contains
useful information with respect to the expected prepayment behavior of any
particular contract pool, prospective Certificateholders should consider that
GreenPoint has not performed statistical analysis to determine whether the
contracts to which the table relates constitutes a statistically significant
sample of manufactured housing contracts for purposes of determining expected
prepayment behavior. Furthermore, no assurance can be given that the Contracts
in the Contract Pool will have characteristics similar to the contracts in any
sold pool to which the following table relates. For these reasons, and because
of the unpredictable nature of the factors described under "Weighted Average
Life of the Offered Certificates" herein, which may influence the amount of
prepayments of manufactured housing contracts, no assurance can be given that
the prepayment experience for the Contract Pool with an average age as of the
Cut-off Date similar to the average ages (as of the first day of the month of
sale) of the pools to which the table relates will exhibit prepayment behavior
similar to the behavior summarized in such table for the periods covered by such
table.
In addition to the foregoing, prospective Certificateholders should
consider that the table set forth below is limited in the periods which are
covered thereby and thus cannot reflect the effects, if any, of aging on the
prepayment behavior of manufactured housing contracts beyond the periods covered
thereby.
The table below sets forth with respect to certain pools of contracts
(a) the initial aggregate principal balance of the contracts in the pool
(calculated as of the first day of the month of the sale), (b) the weighted
average contract rate ("WAC") of the contracts in the pool as of the first day
of the month of the sale of such pool, (c) the weighted average remaining term
to maturity ("WAM") of the contracts in the pool as of the first day of the
month of the sale of such pool, (d) the estimated average age of the pool as of
the first day of the month of the sale of such pool, (e) the aggregate principal
balance of such pool as of [ ], (f) the WAC of the
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<PAGE>
contracts in the pool as of [ ] and (g) the percentage of the Prepayment Model
(as described in "--Weighted Average Life of the Offered Certificates" below)
for the life of each pool through [ ]. The prepayment performance of the
contract pools described in the following table is not indicative of the
prepayment performance of the Contracts in the Trust Fund, and no assurance can
be given that the prepayment performance of the Contracts in the Trust Fund will
correspond with the prepayment performance of any of the pools described below.
<TABLE>
<CAPTION>
Aggregate Estimated Percentage
Month and Original Average Aggregate of the
Year of Principal Original WAM Age at Sale Principal Prepayment
Sale Balance Original WAC (months) (months) Balance WAC(1) Model(1)
---------- ---------- ------------ ------------- ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) As of [ ], 199[ ].]
WEIGHTED AVERAGE LIFE OF THE OFFERED CERTIFICATES
The following information is given solely to illustrate the effect of
prepayments of the Contracts on the weighted average life of the Offered
Certificates under the stated assumptions and is not a prediction of the
prepayment rate that might actually be experienced by the Contracts.
Weighted average life refers to the average amount of time from the
date of issuance of a security until each dollar of principal of such security
is repaid to the investor. The weighted average life of an Offered Certificate,
other than the Class A-IO Certificates, is determined by (i) multiplying the
amount of each cash distribution in reduction of the Certificate Balance of such
Certificate by the number of years from the date of issuance of such Certificate
to the stated Distribution Date, (ii) adding the results, and (iii) dividing the
sum by the Initial Certificate Balance of such Certificate. The weighted
average life of the Offered Certificates, other than the Class A-IO
Certificates, will be affected by the rate at which principal on the Contracts
is paid. Principal payments on Contracts may be in the form of scheduled
amortization or prepayments (for this purpose, the term "prepayment" includes
repayments (other than from scheduled amortization) and liquidations due to
default or other dispositions of Contracts). Prepayments on Contracts may be
measured by a prepayment standard or model. The model used in this Prospectus
Supplement ("Prepayment Model") is based on an assumed rate of prepayment each
month of the then unpaid principal balance of a pool of new contracts. 100% of
the Prepayment Model assumes prepayment rates of [ ]% per annum of the then
unpaid principal balance of such Contracts in the first month of the life of the
Contracts and an additional [ ]% per annum in each month thereafter (for
example, [ ]% per annum in the third month) until the [ ]th month. Beginning in
the [ ]th month and in each month thereafter during the life of the Contracts,
100% of the Prepayment Model assumes a constant prepayment rate of [ ]% per
annum.
As used in the following table, "0% of the Prepayment Model" assumes
no prepayments on the Contracts; "100% of the Prepayment Model" assumes the
Contracts will prepay at rates equal to 100% of the Prepayment Model assumed
prepayment rates; "150% of the
S-35
<PAGE>
Prepayment Model" assumes the Contracts will prepay at rates equal to 150% of
the Prepayment Model assumed prepayment rates; "170% of the Prepayment Model"
assumes the Contracts will prepay at rates equal to 170% of the Prepayment Model
assumed prepayment rates; "200% of the Prepayment Model" assumes the Contracts
will prepay at rates equal to 200% of the Prepayment Model assumed prepayment
rates; "250% of the Prepayment Model" assumes the Contracts will prepay at rates
equal to 250% of the Prepayment Model assumed prepayment rates; and "300% of the
Prepayment Model" assumes the Contracts will prepay at rates equal to 300% of
the Prepayment Model assumed prepayment rates.
There is no assurance, however, that prepayments of the Contracts will
conform to any level of the Prepayment Model, and no representation is made that
the Contracts will prepay at the prepayment rates shown or any other prepayment
rate. The rate of principal payments on pools of manufactured housing contracts
is influenced by a variety of economic, geographic, social and other factors,
including the level of interest rates and the rate at which manufactured
homeowners sell their manufactured homes or default on their contracts. Other
factors affecting prepayment of such contracts include changes in obligors'
housing needs, job transfers, unemployment and obligors' net equity in the
manufactured homes. In the case of mortgage loans secured by site-built homes,
in general, if prevailing interest rates fall significantly below the interest
rates on such mortgage loans, the mortgage loans are likely to be subject to
higher prepayment rates than if prevailing interest rates remained at or above
the rates borne by such mortgage loans. Conversely, if prevailing interest
rates rise above the interest rates on such mortgage loans, the rate of
prepayment would be expected to decrease. In the case of manufactured housing
contracts, however, because the outstanding principal balances are, in general,
smaller than mortgage loan balances and the original term to maturity of each
such contract is generally shorter, the reduction or increase in the size of the
monthly payments on contracts of the same maturity and principal balance arising
from a change in the interest rate thereon is generally smaller. Consequently,
changes in prevailing interest rates may not have a similar effect, or may have
a similar effect, but to a smaller degree, on the prepayment rates on
manufactured housing contracts.
The percentages and weighted average lives in the following tables
were determined using the following assumptions (the "Structuring Assumptions")
(i) scheduled interest and principal payments on the Contracts are received in a
timely manner and prepayments are made at the indicated percentages of the
Prepayment Model set forth in the tables, (ii) the Servicer does not exercise
its right of optional termination described above but the Trust Fund is
terminated pursuant to a Termination Auction as described in "Description of the
Certificates -- Optional Termination and Termination Auction" herein, (iii) the
Contracts, as of the Cut-off Date, will be grouped into [four] groups having the
additional characteristics set forth in the table entitled "Assumed Contract
Characteristics" below, (iv) the Class A-1 Certificates initially represent [ ]%
of the entire ownership interest in the Trust Fund and have a Class A Pass-
Through Rate of [ ]% per annum, the Class A-IO Certificates have a Pass-Through
Rate of [ ]% per annum, the Class M Certificates initially represent [ ]% of the
entire ownership interest in the Trust Fund and have a Class M Pass-Through Rate
of [ ]% per annum and the Class B Certificates initially represent [ ]% of the
entire ownership interest in the Trust Fund and have a Class B Pass-Through Rate
of [ ]% per annum, (v) no interest shortfalls will arise in connection with
prepayment in full of the Contracts, (vi) there will be no repurchases of any
Contracts due to a breach in a representation or warranty with respect thereto,
and (vii) a servicing fee of [ ]%
S-36
<PAGE>
per annum will be paid to the Servicer. The tables assume that there are no
losses or delinquencies on the Contracts. No representation is made that losses
or delinquencies on the Contracts will be experienced at the rate assumed in the
preceding sentence or at any other rate.
Assumed Contract Characteristics
<TABLE>
<CAPTION>
Remaining
Current Original Term Term to
Principal to Maturity Maturity
Pool Balance Contract Rate (Months) (Months)
---- ---------- ------------- -------------- ----------
<S> <C> <C> <C> <C>
1..............................
2..............................
3..............................
4..............................
Total or weighted average......
</TABLE>
Since the tables were prepared on the basis of the Structuring
Assumptions in the preceding paragraph, there are discrepancies between the
characteristics of the actual Contracts and the characteristics of the Contracts
assumed in preparing the tables. Any such discrepancy may have an effect upon
the percentages of the Initial Certificate Balance of each Class of Offered
Certificates outstanding and weighted average lives of such Certificates set
forth in the tables. In addition, since the actual Contracts and the Trust Fund
have characteristics which differ from those assumed in preparing the tables set
forth below, the distributions of principal on the Offered Certificates may be
made earlier or later than as indicated in the tables.
It is not likely that Contracts will prepay at any constant percentage
of the Prepayment Model to maturity or that all Contracts will prepay at the
same rate. In addition, the diverse remaining terms to maturity of the
Contracts (which include recently originated Contracts) could produce slower
distributions of principal than indicated in the tables at the various
percentages of the Prepayment Model specified even if the weighted average
remaining term to maturity of the Contracts is [ ] months.
Investors are urged to make their investment decisions on a basis that
includes their determination as to anticipated prepayment rates under a variety
of the assumptions discussed herein.
Based on the Structuring Assumptions, the following tables indicate
the resulting weighted average lives of the Offered Certificates and sets forth
the percentage of the Initial Class A Certificate Balance, the Initial Class M
Certificate Balance and the Initial Class B Certificate Balance that would be
outstanding after each of the dates shown at the indicated percentages of the
Prepayment Model.
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<PAGE>
Percent of the Initial Class A Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
----------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C>
Date 0% 100% 150% 170% 200% 250% 300%
- ------------------------------------------------------- --- --- --- --- --- --- ---
Initial Percentage..................................... 100 100 100 100 100 100 100
--- --- --- --- --- --- ---
[ ], 19[ ] (first distribution date)...................
[ ], 19[ ] (anniversary of first distribution date)....
[ ], 19[ ].............................................
[ ], 19[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
Weighted Average Life (years)..........................
</TABLE>
Percent of the Initial Class M Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
----------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C>
Date 0% 100% 150% 170% 200% 250% 300%
- ------------------------------------------------------- --- --- --- --- --- --- ---
Initial Percentage..................................... 100 100 100 100 100 100 100
--- --- --- --- --- --- ---
[ ], 19[ ] (first distribution date)...................
[ ], 19[ ] (anniversary of first distribution date)....
[ ], 19[ ].............................................
[ ], 19[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
Weighted Average Life (years)..........................
</TABLE>
Percent of the Initial Class B-1 Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
----------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C>
Date 0% 100% 150% 170% 200% 250% 300%
- ------------------------------------------------------- --- --- --- --- --- --- ---
Initial Percentage..................................... 100 100 100 100 100 100 100
--- --- --- --- --- --- ---
[ ], 19[ ] (first distribution date)...................
[ ], 19[ ] (anniversary of first distribution date)....
[ ], 19[ ].............................................
[ ], 19[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
[ ], 20[ ].............................................
Weighted Average Life (years)..........................
</TABLE>
S-38
<PAGE>
[SENSITIVITY OF THE CLASS A-IO CERTIFICATES]
[The yield to maturity of the Class A-IO Certificates will be highly
sensitive to the principal prepayment, repurchase and default experience of the
Contracts. Investors should carefully consider the risk that a rapid rate of
principal prepayments on the Contracts or repurchases of Contracts will have an
adverse effect on the yield to investors in the Class A-IO Certificates and,
under certain scenarios, could result in the failure of such investors to
recover their initial investments. The yield to holders of the Class A-IO
Certificates would also be adversely affected in the event that the Servicer
exercises the right under the Pooling and Servicing Agreement to repurchase all
remaining Contracts in the Trust Fund and thereby effect the early termination
of the Certificates, or if there is a successful Termination Auction, as
described in "Description of the Certificates -- Optional Termination and
Termination Auction" herein.]
[The following table (the "Yield Table") demonstrates the sensitivity
of the pre-tax yields on the Class A-IO Certificates to various constant rates
of prepayment by projecting the aggregate payments of interest on such
Certificates and the corresponding pre-tax yields on a corporate bond equivalent
("CBE") basis, assuming distributions on the Contracts are made as set forth in
the Pooling and Servicing Agreement. The Yield Table is also based on the
assumption set forth above under "Description of the Certificates -- Weighted
Average Life of the Offered Certificates."]
[PRE-TAX YIELDS ON THE CLASS A-IO CERTIFICATES]
<TABLE>
<CAPTION>
Percentage of Prepayment Assumption
-----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assumed Purchase Price 0% 50% 75% 100% 150% 200%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
</TABLE>
- --------------------
[The pre-tax yields set forth in the preceding table were calculated
by determining the monthly discount rates which, when applied to the assumed
streams of cash flows to be paid on the Class A-IO Certificates, would cause the
discounted present value of such assumed stream of cash flows to the Closing
Date to equal the assumed purchase prices (which include accrued interest), and
converting such monthly rates to CBE rates. Such calculation does not take into
account the interest rates at which funds received by holders of the Class A-IO
Certificates may be reinvested and consequently does not purport to reflect the
return on any investment in the Class A-IO Certificates when such reinvestment
rates are considered.]
[It is highly unlikely that the Contracts will prepay at the same rate
until maturity or that all of the Contracts will prepay at the same rate or
time. As a result of these factors, the pre-tax yield on the Class A-IO
Certificates is likely to differ from those shown in such tables, even if all of
the Contracts prepay at the indicated percentages of the prepayment assumption.
No representation is made as to the actual rate of principal payments on the
Contracts (or the Contract Rates thereon) for any period or over the life of the
Class A-IO Certificates or as to the
S-39
<PAGE>
yield on the Class A-IO Certificates. Investors must make their own decisions as
to the appropriate prepayment assumptions to be used in deciding whether to
purchase the Class A-IO Certificates.]
S-40
<PAGE>
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement (the "Agreement"). A form of the Pooling and Servicing Agreement will
be made available to prospective investors upon request (made to the Servicer at
the address specified in the Prospectus under "Incorporation of Certain
Documents by Reference") and will be filed with the Securities and Exchange
Commission after the initial issuance of the Certificates as exhibits to a
Current Report on Form 8-K. Reference is made to the Prospectus for additional
information regarding the terms and conditions of the Agreement. The following
discussion supplements, and does not replace or supersede the discussion under
"Description of the Certificates" in the Prospectus, unless the context
otherwise provides.
Set forth below are summaries of the specific terms and provisions
pursuant to which the Certificates will be issued. The following summaries do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, the provisions of the Agreement. When particular
provisions or terms used in the Agreement are referred to, the actual provisions
(including definitions of terms) are incorporated by reference.
GENERAL
[All the Offered Certificates initially will be issuable in one or
more Global Certificates registered in the name of Cede as the nominee of DTC.
Ownership in Offered Certificates represented by such Global Certificates will
only be available in the form of book-entries on the records of DTC and
participating members thereof. All references to "holders" or
"Certificateholders," and to authorized denominations, when used with respect to
the Offered Certificates issued as Global Certificates, shall reflect the rights
of beneficial owners of the Offered Certificates ("Certificate Owners"), and
limitations thereof, as they may be indirectly exercised through DTC and its
participating members, except as otherwise specified herein. See "Description
of the Certificates - Global Certificates" in the Prospectus. See the
Prospectus under "Description of the Certificates - Global Certificates" for a
description of the circumstances in which Definitive Certificates in the future
may be issued. Any Offered Certificates issued as Definitive Certificates will
be transferable and exchangeable at the corporate trust office of the Trustee at
its Corporate Trust Department in [ ] or, if it so elects, at the office of an
agent in [New York, New York]. No service charge will be made for any
registration of exchange or transfer, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge. ]
The Offered Certificates will be issued in fully registered form only,
in denominations equal to [$1,000] or any integral multiple of [one dollar] in
excess thereof. The "Percentage Interest" of a Certificate of a Class (other
than a [Class A-IO or ]Class R Certificate) is the percentage obtained from
dividing the original denomination of such Certificate by the Initial
Certificate Balance of the Certificates of that Class.
The Trust Fund includes (i) the Contract Pool, including certain
rights to receive payments on the Contracts on and after the Cut-off Date, (ii)
the amounts held from time to time in the "Certificate Account" (as described
below under " -- Payment on Contracts; Certificate
S-41
<PAGE>
Account") maintained by the Trustee pursuant to the Agreement, (iii) any
property which initially secured a Contract and which is acquired in the process
of realizing thereon, (iv) the obligations of the Seller, under certain
conditions, to repurchase Contracts sold by it with respect to which certain
representations and warranties have been breached and not cured and (v) the
proceeds of all insurance policies described herein.
The Seller will convey the Contracts to the Trustee. See "The
Contract Pool" herein and " -- Conveyance of Contracts" below. The Servicer will
service the Contracts pursuant to the Agreement. The Contract documents will be
held for the benefit of the Trustee by the Servicer.
Distributions of principal, interest or both to the holders of the
Certificates will be made on the 10th day of each month, or, if such day is not
a business day, the next succeeding business day (each, a "Distribution Date")
beginning in [ ], 199[ ], to the persons in whose names the Certificates are
registered at the close of business on the last business day preceding each
Distribution Date (the "Record Date").
PASS-THROUGH RATES
The Pass-Through Rates for the Class [ ] and Class [ ] Certificates
will be [ ] and [ ] respectively.
[The Pass-Through Rate for each of the Certificates of Class [ ] on
any Distribution Date will be adjusted so as not to exceed the weighted average
of the Net Contract Rates of the Contracts in the Contract Pool at the beginning
of the month preceding the month of such Distribution Date. The "Net Contract
Rate" of a Contract equals the rate of interest borne by such Contract minus the
Annual Servicing Rate. The "Annual Servicing Rate" is equal to [ ]%. The
weighted average Net Contract Rate of the Contract Pool as of the Cut-off Date
was approximately [ ]%.]
[The Class [ ] Pass-Through Rate on each Distribution Date will be [
]% per annum, subject to a maximum rate equal to the weighted average of the Net
Contract Rates on the Contracts in the Contract Pool, computed on the basis of a
360-day year of twelve 30-day months. In all but the most unusual prepayment
scenarios, it is anticipated that the Class [ ] Pass-Through Rate will remain at
the initial rate of [ ]%. However, disproportionate prepayments of Contracts
with higher Net Contract Rates will lower the weighted average Net Contract Rate
on the outstanding Contracts remaining in the Contract Pool. If a larger
principal amount of Contracts having Contract Rates equal to or higher than [ ]%
were to prepay while a proportionate principal amount of the Contracts having
Contract Rates lower than [ ]% did not prepay, to such a great extent that the
weighted average Net Contract Rate fell below the initial Class [ ] Pass-Through
Rate of [ ]%, then the Class [ ] Pass-Through Rate would automatically be
reduced to a level equal to the weighted average of the Net Contract Rates on
the Contracts remaining in the Contract Pool. Of the initial Contracts, [ ]% by
aggregate principal balance as of the Cut-off Date had Contract Rates equal to
or higher than [ ]%.]
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<PAGE>
CONVEYANCE OF CONTRACTS
On the date of initial issuance of the Certificates, the Seller will
convey to the Trustee, without recourse, all its right, title and interest in
and to the Contracts, and all rights under the standard hazard insurance
policies on the related Manufactured Homes. The conveyance of the Contracts to
the Trustee will include a conveyance of all rights to receive Scheduled
Payments thereon that were due on or after the Cut-off Date, even if received
prior to the Cut-off Date, as well as all rights to any payments received on or
after the Cut-off Date (other than late receipts of Scheduled Payments that were
due prior to the Cut-off Date). The Contracts will be described on a schedule
attached to the Agreement (the "Contract Schedule"). The Contract Schedule will
include the principal balance of each Contract as of the Cut-off Date, the
amount of each Scheduled Payment due on each Contract as of the Cut-off Date,
the Contract Rate on each Contract (determined as of the Cut-off Date) and the
maturity date of each Contract. Prior to the conveyance of the Contracts to the
Trustee, the operations department of the GreenPoint will be required to
complete a review of all of the originals of the Contracts, the certificates of
title to, or other evidence of a perfected security interest in, the
Manufactured Homes, any related mortgages and any assignments or modifications
of the foregoing (collectively, the "Contract Files") confirming the accuracy of
the Contract Schedule delivered to the Trustee. Any Contract discovered not to
agree with such schedule in a manner that is materially adverse to the interests
of the Certificateholders will be repurchased by the Seller, or replaced with
another Contract, except that if the discrepancy relates to the principal
balance of a Contract (determined as described above), the Seller may, under
certain conditions, deposit cash in the Certificate Account in an amount
sufficient to offset such discrepancy. The Trustee will not review the Contract
Files.
The Servicer will hold, as custodian and agent on behalf of the
Trustee, the original Contracts and copies of documents and instruments relating
to each Contract and the security interest in the Manufactured Home, and real
property, if any, relating to each Contract. See "Risk Factors -- Security
Interests in the Manufactured Homes; Transfer of Contracts and Security
Interests" and "Certain Legal Aspects of the Contracts -- Security Interests in
Manufactured Homes" and "Land Home and Land-in-Lieu Contracts" in the Prospectus
for discussion of the consequences of the Servicer maintaining possession of the
original Contracts and the security interest in the related Manufactured Homes
and real property securing such Contracts, if any. In order to give notice of
the Trustee's right, title and interest in and to the Contracts, a UCC-1
financing statement identifying the Trustee as the secured party and identifying
all the Contracts as collateral will be filed in the appropriate office in the
appropriate states. The Contracts will be stamped or otherwise marked to
reflect their assignment to the Trustee. To the extent that the Contracts do
not constitute "chattel paper" within the meaning of the UCC as in effect in the
applicable jurisdictions or to the extent that the Contracts do constitute
chattel paper and a subsequent purchaser is able to take physical possession of
the Contracts without notice of such assignment, the Trustee's interest in the
Contracts could be defeated. See "Certain Legal Aspects of the Contracts" in
the Prospectus.
The Seller will make certain representations and warranties to the
Trustee with respect to each Contract sold by it, as of the Closing Date (unless
expressly stated otherwise), including the following: (a) as of the Cut-off
Date, no Contract is more than 59 days delinquent; (b) no provision of such
Contract has been waived, altered or modified in any respect, except by
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instruments or documents identified in the related Contract File; (c) such
Contract is a legal, valid and binding obligation of the Obligor and is
enforceable in accordance with its terms (except as may be limited by laws
affecting creditors' rights generally or by general equity principles); (d) such
Contract is not subject to any right of rescission, set-off, counterclaim or
defense; (e) such Contract is covered by hazard insurance described under
"Description of the Certificates -- Servicing Compensation and Payment of
Expenses; Certain Matters Regarding the Servicer -- Hazard Insurance Policies"
in the Prospectus; (f) such Contract was either (i) originated by a manufactured
housing dealer acting, to the knowledge of the Seller, in the regular course of
its business and purchased on an individual basis by the Seller in the ordinary
course of its business, [or] (ii) originated by the Seller in the ordinary
course of its business [or (iii) purchased by the Seller as part of bulk
purchases of manufactured housing contracts in connection with the Acquisition,
from other private lenders or finance companies, or from governmental agencies
or instrumentalities or from other entities]; (g) such Contract was neither
originated in nor is subject to the laws of any jurisdiction whose laws would
make the transfer of the Contract or an interest therein to the Trustee pursuant
to the Agreement or pursuant to the Certificates unlawful; (h) such Contract
complies with all requirements of law; (i) such Contract has not been satisfied
or subordinated in whole or in part or rescinded and the Manufactured Home
securing such Contract has not been released from the lien of such Contract; (j)
such Contract creates a valid and enforceable first-priority security interest
in favor of GreenPoint in the Manufactured Home and real property securing such
Contract, if any; (k) such security interest has been assigned to the Trustee,
and, after such assignment, the Trustee has a valid and perfected first-priority
security interest in the Manufactured Home and real property securing such
Contract, if any; (l) such Contract has not been sold, assigned or pledged to
any other person, and prior to the transfer of the Contracts to the Trustee, the
Seller had good and marketable title to such Contract sold by it, free and clear
of any encumbrance, equity, loan, pledge, charge, claim or security interest,
and it was the sole owner thereof and had full right to transfer such Contract
to the Trustee; (m) as of the Cut-off Date, there was no default, breach,
violation or event permitting acceleration under such Contract and no event
which, with notice and the expiration of any grace or cure period, would
constitute such a default, breach, violation or event permitting acceleration
(except payment delinquencies permitted by clause (a) above), the Seller has not
waived any of the foregoing; (n) as of the Closing Date (as defined below),
there were, to the knowledge of the Seller no liens or claims which have been
filed for work, labor or materials affecting a Manufactured Home or real
property securing such Contract, which are or may be liens prior to or equal
with or subordinate to the lien of such Contract; (o) such Contract is a fully-
amortizing loan with a [fixed] Contract Rate and provides for level payments
over the term of such Contract; (p) such Contract contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for realization against the collateral of the benefits of the
security; (q) the information contained in the Contract Schedule with respect to
such Contract is true and correct; (r) there is only one original of such
Contract; (s) such Contract did not have a loan-to-value ratio at origination
greater than 100%; (t) the related Manufactured Home is not considered or
classified as part of the real estate on which it is located under the laws of
the jurisdiction in which it is located unless it is subject to a Land-in-Lieu
or Land Home Contract and as of the Closing Date such Manufactured Home is, to
the knowledge of the Seller free of damage and in good repair; (u) such Contract
is a "qualified mortgage" under Section 860G(a)(3) of the Code; (v) the related
Manufactured Home is a "manufactured home" within the meaning of Section 5402(6)
of Title 42 of the United States
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Code and, as to each Contract sold by the Seller to the Trust Fund, the Seller
is an approved mortgagee as of the time of such Contract's origination as
required under Section 3(a)(41)(A)(ii) of the Exchange Act; (w) such Contract is
secured by a "single family residence" within the meaning of Section 25(e)(10)
of the Code; (x) such Contract has been stamped to indicate its assignment to
the Trustee within 60 days of the Closing Date and (y) the Contract with the
lowest Contract Rate has a Contract Rate of [ ]% and the Contract with the
highest Contract Rate has a Contract Rate of [ ]%. Under the terms of the
Agreement, and subject to the relevant Seller's option to effect a substitution
with respect to Contracts sold by it as described in the last paragraph under
this subheading, the Seller will be obligated to repurchase, at the price
described below, any Contract sold by it within 90 days after the Seller becomes
aware, or after the Seller's receipt of written notice from the Trustee or the
Servicer, of a breach of any representation or warranty of the Seller in the
Agreement that materially and adversely affects the Trust Fund's interest in any
Contract it sold thereto unless such breach has been cured.
Notwithstanding the foregoing, the Seller will not be required to
repurchase or substitute any Contract relating to a Manufactured Home and real
property securing such Contract, if any, located in any jurisdiction on account
of a breach of the representation and warranty described in clause (k) above
solely on the basis of the failure by the Seller to cause a notation to be made
on any document of title relating to any such Manufactured Home or to execute
any transfer instrument relating to any such Manufactured Home or real property,
if any (other than a notation or transfer instrument necessary to show the
Seller as lienholder or legal title holder) unless (i) a court of competent
jurisdiction has adjudged that, because of such failure, the Trustee does not
have a perfected first-priority security interest in such related Manufactured
Home or (ii)(A) the Servicer has received written advice of counsel to the
effect that a court of competent jurisdiction has held that, solely because of a
substantially similar failure on the part of a pledgor or assignor of
manufactured housing contracts (who has perfected the assignment or pledge of
such contracts), a perfected first-priority security interest was not created in
favor of the pledgee or assignee in a related manufactured home which is located
in such jurisdiction and which is subject to the same laws regarding the
perfection of security interests therein applicable to the Manufactured Homes
located in such jurisdiction and (B) the Servicer shall not have completed all
appropriate remedial action with respect to such Manufactured Home within 180
days after receipt of such written advice. Any such advice will be from counsel
selected by the Servicer on a non-discriminatory basis from among the counsel
used by the Servicer in its general business in the jurisdiction in question.
The Servicer will have no ongoing obligation to seek advice with respect to the
matters described in clause (ii) above. However, the Servicer is required to
seek advice with respect to such matters whenever information comes to the
attention of its counsel which causes such counsel to determine that a holding
of the type described in clause (ii)(A) might exist. If any counsel selected by
the Servicer informs the Servicer that no holding of the type described in
clause (ii)(A) exists, such advice will be conclusive and binding on the parties
to the Agreement pursuant to which a Trustee has an interest in any Contracts in
the applicable jurisdiction as of the applicable date. If any holding described
above which would give rise to a repurchase obligation on the part of the Seller
were to result from proceedings brought by a receiver or conservator of the
Seller, it is likely that such receiver or conservator would also reject the
resulting repurchase obligation.
The repurchase obligation described above generally constitutes the
sole remedy available to the Trustee and the Certificateholders for a breach of
a representation or warranty
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under the Agreement with respect to the Contracts. The repurchase price for any
Contract will be equal to the remaining principal balance of such Contract as of
the beginning of the month of repurchase, plus accrued and unpaid interest from
the Due Date with respect to which the Obligor last made a payment to the Due
Date occurring in the Collection Period during which such Contract is
repurchased.
In lieu of repurchasing a Contract as specified above, during the two-
year period following the date of the initial issuance of the Certificates (the
"Closing Date"), the Seller may, at its option, substitute an Eligible
Substitute Contract (as defined below) for the Contract that it is otherwise
obligated to repurchase (referred to herein as the "Replaced Contract"). An
"Eligible Substitute Contract" is a Contract that satisfies, as of the date of
its substitution, the representations and warranties specified in the Agreement,
has a Scheduled Principal Balance that is not greater than the Scheduled
Principal Balance of the Replaced Contract as of the beginning of the month in
which such substitution takes place, has a Contract Rate that is at least equal
to the Contract Rate of the Replaced Contract, has a remaining term to scheduled
maturity that is not greater than the remaining term to scheduled maturity of
the Replaced Contract and has not been delinquent for more than 31 days as to
any Scheduled Payment due in the twelve months prior to its substitution. The
Seller will be required to deposit in the Certificate Account cash in the
amount, if any, by which the Scheduled Principal Balance of the Replaced
Contract as of the beginning of the month in which substitution takes place
exceeds the Scheduled Principal Balance of the Contract it sold being
substituted as of the beginning of the month.
[CONVEYANCE OF [SUBSEQUENT CONTRACTS AND] [PRE-FUNDING ACCOUNT]
[An account (the "Pre-Funding Account") will be established by the
Trustee and funded by GreenPoint on the Closing Date to provide the Trust with
sufficient funds to purchase Subsequent Contracts. The amount deposited in the
Pre-Funding Account (as reduced from time-to-time, the "Pre-Funded Amount") will
initially equal the difference between [$ ] and the aggregate principal balance
as of the Cut-off Date of the Initial Contracts and Additional Contracts. The
Pre-Funding Account will be used to purchase Subsequent Contracts during the
period from the Closing Date until the earliest of (i) the date on which the
amount on deposit in the Pre-Funding Account is less than [$ ], (ii) [$ ] or
(iii) the date on which an Event of Termination occurs under the Agreement (the
"Pre-Funding Period"). The Pre-Funded Amount will be reduced during the Pre-
Funding Period by the amount used to purchase Subsequent Contracts in accordance
with the Agreement. [The Pre-Funding Account will be part of the Trust but not
part of the REMIC.] Any reimbursement income earned on amount on deposit in the
Pre-Funding Account will be taxable to GreenPoint.]
[Under the Agreement, following the initial issuance of the
Certificates, the Trust will be obligated to purchase Subsequent Contracts from
GreenPoint during the Pre-Funding Period, subject to the availability thereof.
Each Subsequent Contract will have been underwritten in accordance with the
Company's standard underwriting criteria. Subsequent Contracts will be
transferred to the Trust pursuant to subsequent transfer instruments between
GreenPoint and the Trust. In connection with the purchase of Subsequent
Contracts on such dates of transfer (the "Subsequent Transfer Dates"), the Trust
will be required to pay to GreenPoint from amounts on deposit in the Pre-Funding
Account a cash purchase price of 100% of the principal balance thereof.
GreenPoint will designate the Subsequent Transfer Date as the Cut-off Date
with
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respect to the related Subsequent Transfer Date will not include accrued
interest on the related Subsequent Contracts in the Trust will increase by an
amount equal to the aggregate principal balance of the Contracts so purchased
and the amount in the Pre-Funding Account will decrease accordingly. Any Pre-
Funded Amount remaining after the purchase of Subsequent Contracts will be
applied on the first Payment Date on or after the last day of the Pre-Funding
Period to prepay principal on the [Class A-1 Certificates].
Any conveyance of Subsequent Contracts on a Subsequent Transfer Date
is subject to certain conditions including, but not limited to: (a) each
Subsequent Contract must satisfy the representations and warranties specified in
the related subsequent transfer instrument and the Agreement; (b) GreenPoint
will not select Subsequent Contracts in a manner that it believes is adverse to
the interests of the Certificateholders; [(c) as of its respective Cut-off Date,
each Subsequent Contract must satisfy the following criteria: (i) no Subsequent
Contract may be more than [ ] days contractually delinquent; (ii) the remaining
stated term to maturity of each Subsequent Contract may not exceed [ ] months;
(iii) each Subsequent Contract must be underwritten in accordance with
GreenPoint's standard underwriting criteria; and (iv) no Subsequent Contract may
have a loan-to-value ratio greater than 100%; (d) the Contract Pool following
the addition of the Subsequent Contracts must satisfy the following criteria:
(i) the weighted average Contract Rate must not be less than [ ]%; (ii) the
weighted average loan-to-value ratio must not be greater than [ ]%; (iii) not
less than [ ]% of the Cut-off Date Pool Principal Balance must be attributable
to loans to purchase new Manufactured Homes; and (v) at least [ ]% of the Cut-
off Date Pool Principal Balance must consist of Land-and Home Contracts; (e) as
a result of the purchase of the Subsequent Contracts, the Class A Certificates
will not receive from [Rating Agencies] a lower credit rating than the rating
assigned at the initial issuance of such Class A Certificates; and (f) an
independent accountant will provide a letter stating whether or not the
characteristics of the Subsequent Contracts conform to the Characteristics
described herein].]
PAYMENTS ON THE CONTRACTS; CERTIFICATE ACCOUNT
The Trustee will initially establish and maintain an account (the
"Certificate Account") at a depository institution organized under the laws of
the United States or any state, the deposits of which are insured to the full
extent permitted by law by the Federal Deposit Insurance Corporation (the
"FDIC") whose commercial paper, long-term deposits or long-term unsecured senior
debt has a rating of [ ] by [ ][and [ ] by [ ] (if rated by [ ])] in the case of
commercial paper or in one of the two highest rating categories by [ ] [and] [ ]
(if rated by [ ])] in the case of long-term deposits or long-term unsecured
senior debt, and which is subject to examination by federal or state authorities
or a depository institution otherwise acceptable to [ ] and [ ] (an "Eligible
Institution"). The funds in the Certificate Account are required to be invested
by the Trustee in common trust funds, collective investment trusts or Eligible
Investments that will mature not later than the business day preceding the
applicable Distribution Date. "Eligible Investments" include, among other
investments, obligations of the United States or of any agency thereof backed by
the full faith and credit of the United States; certificates of deposit, time
deposits and bankers' acceptances sold by eligible financial institutions;
commercial paper rated [ ] by [ ] [and [ ] by [ ] (if rated by [ ])]; money
market funds acceptable
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to [ ] [and [ ]] (as evidenced by a letter from [ ] [and [ ]] to such effect);
and other obligations acceptable to [ ] [and [ ]].
All payments in respect of principal and interest on the Contracts
received [during any Collection Period] by the Servicer (exclusive of Scheduled
Payments due prior to the Cut-off Date), including Liquidation Proceeds (net of
Liquidation Expenses, as defined below), are required to be paid into the
Certificate Account not later than the second business day following receipt
thereof. [Notwithstanding the foregoing, for as long as GreenPoint remains the
Servicer under the Pooling and Servicing Agreement and GreenPoint maintains a
short-term rating of at least [ ] from [the rating agency], which is currently
the case, the Servicer need not deposit collections into the Certificate Account
within two business days of receipt but may use for its own benefit all such
collections until the related Distribution Date without an obligation to pay
interest or any other investment return thereon, it being understood that any
benefit to the Servicer from this arrangement shall be additional servicing
compensation. While such rating is maintained, on or prior to each Distribution
Date, the Servicer will deposit in the Certificate Account amounts which are to
be included in the funds available for the related Distribution Date. [Amounts
deposited in the Certificate Account may be invested in Permitted Investments
(as described in the Pooling and Servicing Agreement) maturing no later than the
related Distribution Date.]]
[At any time that the short-term rating of the Servicer does not
satisfy the rating requirements specified above, the Servicer may continue to
hold collections prior to distribution as described above so long as it causes
to be maintained an irrevocable letter of credit or surety bond or other credit
enhancement instrument in form and substance satisfactory to the rating agency,
issued by a depository institution or insurance company having a rating on its
short-term obligations of at least [ ] and long-term obligations of at least [ ]
by [the rating agency] or other ratings if approved by [the rating agency] and
providing that the Trustee may draw thereon in the event that the Servicer,
fails to make any deposit or payment required under the Pooling and Servicing
Agreement.]
Amounts received as late payment fees, extension fees, assumption fees
or similar fees may be retained by the Servicer as part of its servicing fees.
See " Servicing Compensation; Certain Other Matters Regarding the Servicer"
below. In addition, the amount paid by the Seller for any Contract repurchased
by it as a result of a breach of a representation or warranty under the
Agreement, and amounts required to be deposited upon substitution of an Eligible
Substitute Contract because of a breach of a representation or warranty (which
amounts will be treated as partial principal prepayments), as described under "
Conveyance of Contracts" above, are required to be paid into the Certificate
Account.
On the third business day prior to each Distribution Date (the
"Determination Date"), the Servicer will determine the Available Distribution
Amount and the amounts to be distributed on the Certificates on such
Distribution Date. The "Available Distribution Amount" for any Distribution
Date is the sum of (a) the Monthly Advance for such Distribution Date (as
defined below under " Advances") and (b) the amount in the Certificate Account
on the close of business on the last day of the immediately preceding Collection
Period, less the sum of (i) any repossession profits (of which there are
expected to be a de minimis amount) on defaulted Contracts, (ii) payments on
Contracts that have been repurchased as a result of a breach of a
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representation or warranty that are received during or after the month of
repurchase, (iii) Excess Contract Payments (as defined below) and any other
payments not required to be distributed to Certificateholders on the related
Distribution Date, (iv) reimbursements to the Servicer in the amount of expenses
incurred in connection with the liquidation of a Contract ("Liquidation
Expenses") and certain taxes and insurance premiums advanced by the Servicer in
respect of Manufactured Homes (as described below under " Advances"), (v)
reimbursements to the Servicer for Nonrecoverable Advances in respect of
Contracts and Monthly Advances to the extent permitted by the Agreement (as
described below under " Advances") and (vi) [if GreenPoint is not acting as
Servicer,] the Monthly Servicing Fee (as hereinafter defined).
An "Excess Contract Payment" is a payment received on a Contract that
is in excess of the Scheduled Payment (or, generally, an integral multiple
thereof) on such Contract, is not a partial principal prepayment or prepayment
in full and is not part of any Liquidation Proceeds. Excess Contract Payments
will be held by the Trustee in the Certificate Account and may be applied as
described under " Advances" below.
The Trustee or its paying agent will withdraw funds from the
Certificate Account on each Distribution Date (but only to the extent of the
related Available Distribution Amount) to make payments to Certificateholders as
specified under " Distributions" below. From time to time, as provided in the
Agreement, the Servicer will also withdraw funds from the Certificate Account to
make payments to it the Seller as permitted by the Agreement and described in
subclauses (i), (ii), (iv), (v) and (vi) of clause (b) in the second preceding
paragraph.
DISTRIBUTIONS
Distributions to the holders of the Series 199[ ]-[ ] Regular
Certificates will be applied first to the holders of the Senior Certificates,
second to the holders of the Class M Certificates and then to the holders of the
Class B Certificates. The Available Distribution Amount for each Distribution
Date will be applied in the amounts and the order of priority set forth below.
Distributions of principal and interest to holders of each Class of
Certificates[, other than the Class A-IO Certificates,] will be made on each
Distribution Date in an amount equal to their respective Percentage Interests
multiplied by the aggregate amount distributed to such Class of Certificates on
such Distribution Date. [Interest will be calculated on the Class A-IO
Certificates on the basis of a "Notional Principal Amount" [equal to the Pool
Scheduled Principal Balance]. Reference to the Notional Principal Amount of the
Class A-IO Certificates is solely for convenience in certain calculations and
does not represent the right to receive any distribution allocable to
principal.] Interest on each Class of the Series 199[ ]-[ ] Regular Certificates
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months.
Each distribution with respect to book-entry certificates will be paid
to DTC, which will credit the amount of such distribution to the accounts of its
participants in accordance with its normal procedures. Each participant will be
responsible for disbursing such distribution to the Certificate Owners that it
represents and to each indirect participating brokerage firm (a "brokerage firm"
or "indirect participating firm") for which it acts as agent. Each brokerage
firm will be responsible for disbursing funds to the Certificate Owners that it
represents. All such credits and disbursements with respect to book-entry
certificates are to be made by DTC and its
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participants in accordance with DTC's rules. See "Description of the
Certificates Global Certificates" below.
Priorities. On each Distribution Date, the Available Distribution
Amount will be distributed in the following amounts and in the following order
of priority:
to the Class A Certificateholders, the Class A Interest
Distribution Amount, payment to be distributed among the Class A-1 and Class A-
IO Certificates pro rata, based on entitlement;
to the Class A-1 Certificateholders, the Formula Principal
Distribution Amount until the Class A Certificate Balance is reduced to zero
[and on the [ ] Payment Date any amounts remaining in the Pre-Funded Account].
to the Class M Certificateholders, the Class M Interest
Distribution Amount;
to the Class M Certificateholders, any remaining Formula Principal
Distribution Amount after distribution under clause (ii) above until the Class M
Certificate Balance is reduced to zero;
to the Class B-1 Certificateholders, the Class B-1 Interest
Distribution Amount;
to the Class B-1 Certificateholders, any remaining Formula
Principal Distribution Amount until the Class B-1 Certificate Balance is reduced
to zero;
to the Class B-2 Certificateholders, the Class B-2 Interest
Distribution Amount;
to the Class B-2 Certificateholders, any remaining Formula
Principal Distribution Amount until the Class B-2 Certificate Balance is reduced
to zero;
to GFC an for any Enhancement Payments made under the Limited
Guarantee and not previously reimbursed; and.
to the Class R Certificateholders, any remaining Available
Distribution Amount.
[The Class A-IO Certificates are interest-only and are not entitled to
receive distributions of principal, but the Notional Principal Amount decreases
as the Certificate Balance of all Senior Certificates is reduced.]
Definitions. As to any Distribution Date, the "Class A Interest
Distribution Amount" is equal to the sum of (i) one month's interest at the
Class A Pass-Through Rate on the Class A Certificate Balance or Notional
Principal Amount, as the case any be, and (ii) any previously undistributed
shortfalls in interest due to the Class A Certificateholders in respect of prior
Distribution Dates; the "Class M Interest Distribution Amount" is equal to the
sum of (i) one month's interest at the Class M Pass-Through Rate on the Class M
Certificate Balance and
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(ii) any previously undistributed shortfalls in interest due to the Class M
Certificateholders in respect of prior Distribution Dates; the "Class B-1
Interest Distribution Amount" is equal to the sum of (i) one month's interest at
the Class B-1 Pass-Through Rate on the Class B-1 Certificate Balance and (ii)
any previously undistributed shortfalls in interest due to the Class B
Certificateholders in respect of prior Distribution Dates; and the "Class B-2
Interest Distribution Amount" is equal to the sum of (i) one month's interest at
the Class B-2 Pass-Through Rate on the Class B-2 Certificate Balance and (ii)
any previously undistributed shortfalls in interest due to the Class B
Certificateholders in respect of prior Distribution Dates. Any shortfall in
interest due to Certificateholders will, to the extent legally permissible, bear
interest at the related Class A-1, Class A-IO, Class M, Class B-1 Pass-Through
Rate and Class B-2 Pass-Through.
The "Formula Principal Distribution Amount" in respect of a
Distribution Date equals the sum of (a) the Total Regular Principal Amount for
such Distribution Date and (b) any previously undistributed shortfalls in the
distribution of the Total Regular Principal Amount in respect of prior
Distribution Dates.
The "Total Regular Principal Amount" on each Distribution Date is the
sum of (i) the Scheduled Principal Reduction Amount (defined below) for such
Distribution Date, (ii) the Scheduled Principal Balance (defined below) of each
Contract which, during the related Collection Period, was purchased by the
Seller on account of certain breaches of representations and warranties made by
it in the Agreement, (iii) all partial prepayments received during such related
Collection Period, (iv) the Scheduled Principal Balance of each Contract that
was prepaid in full during such related Collection Period and (v) the Scheduled
Principal Balance of each Contract that became a Liquidated Contract (defined
below) during such related Collection Period.
The "Scheduled Principal Balance" of a Contract for any Distribution
Date is its principal balance as of the Due Date in the Collection Period
immediately preceding such Distribution Date, after giving effect to all
previous partial prepayments, all previous scheduled principal payments (whether
or not paid) and the scheduled principal payment due on such Due Date, but
without giving effect to any adjustment due to bankruptcy or similar
proceedings. The "Scheduled Principal Reduction Amount" for any Distribution
Date is an approximate calculation (performed on an aggregate basis rather than
on a Contract-by-Contract basis) of the scheduled payments of principal due
during the related Collection Period. Both of these terms are more fully
described herein under "Distributions" above.
The "Pool Scheduled Principal Balance" for any Distribution Date is
equal to the Cut-off Date Pool Principal Balance less the aggregate of the Total
Regular Principal Amounts for all prior Distribution Dates.
In general, a "Liquidated Contract" is a defaulted Contract as to
which all amounts that the Servicer expects to recover relating to such Contract
("Liquidation Proceeds") have been received. A Liquidated Contract includes any
defaulted Contract in respect of which the related Manufactured Home has been
realized upon and disposed of and the proceeds of such disposition have been
received.
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The "Certificate Balance" for any Class as of any Distribution Date is
the Initial Certificate Balance of that Class less all amounts previously
distributed to Certificateholders of that Class on account of principal. In no
event shall the aggregate distributions of principal to the holders of the
Senior and Subordinate Certificates exceed the Initial Senior Certificate
Balance and the Initial Subordinate Certificate Balance, respectively.
[RESERVE ACCOUNT]
[On the Closing Date, the Trustee shall establish an account (the
"Reserve Account") for the benefit of the Certificateholders. The Reserve
Account shall have an initial balance of [$ ] [zero] on the Closing Date.
Commencing on the Distribution Date which is the earlier of (a) the Distribution
Date in [ ] and (b) the first Distribution Date on which the percentage
equivalent of a fraction, the numerator of which is the Pool Scheduled Principal
Balance (after giving effect to distribution with respect to principal) for such
Distribution Date and the denominator of which is the Cut-off Date Pool
Principal Balance, is less than or equal to [ ]%, the Trustee shall make a
deposit into the Reserve Account up to the Reserve Account Cap. On each
Distribution Date, the Trustee will withdraw from the Reserve Account an amount
(the "Reserve Account Draw Amount") equal to the lesser of (a) the amount then
on deposit in the Reserve Account and (b) the amount by which the aggregate of
amounts due to Certificateholders in clauses (i) through (vi) under
"Distributions" above exceeds the Available Distribution Amount on such
Distribution Date and distribute such amount, together with the Available
Distribution Amount.]
[Funds in the Reserve Account will be invested in Eligible Investments
as directed by the Trustee, and the net investment earnings, if any, will be
paid to the Class R Certificateholders. "Eligible Investments" means one or
more common trust funds, collective investment trusts or money market funds
acceptable to [the rating agency] (as evidenced by a letter from [the rating
agency] to such effect or, if no such trusts or funds are acceptable to [the
rating agency] any other obligations acceptable to [the rating agency].]
On any Distribution Date, any funds on deposit in the Reserve Account
in excess of the Reserve Account Cap (after giving effect to any Reserve Account
Draw Amount paid to the Certificateholders on such date) will be withdrawn from
the Reserve Account and paid to the Class R Certificateholders.]
[Amounts paid to the Class R Certificateholders pursuant to the two
immediately preceding paragraphs will not be available to offset shortfalls in
distributions to holders of other Classes of Certificates.] [The Reserve
Account is intended to enhance the likelihood of regular receipt by the holders
of the Series 199[ ]-[ ] Regular Certificates of the full amount of the
distributions due them and to afford such holders protection against losses on
Liquidated Contracts, but no assurance can be given that the Reserve Account
will be sufficient for such purpose.]
[The "Reserve Account Cap" shall be (i) as to any Distribution Date
(after giving effect to distributions due thereon) after the Closing Date and
until none of the Offered Certificates remain outstanding, $[ ] (which is [ ]%
of the Cut-off Date Pool Principal Balance) and (ii) as to any Distribution Date
(after giving effect to distributions due thereon) after none of
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the Offered Certificates remain outstanding, the lesser of the then outstanding
Class B-[ ] Certificate Balance and $[ ] (which is [ ]% of the Cut-off Date Pool
Principal Balance).]
SUBORDINATION
The rights of the holders of the Subordinate Certificates to receive
distributions of available amounts in the Trust Fund will be subordinate, to the
extent described herein, to such rights of the holders of the Senior
Certificates. This subordination is intended to enhance the likelihood of
regular receipt by the holders of the Senior Certificates of the full amount of
interest and principal distributable thereon and to afford such holders
protection against losses on Liquidated Contracts.
Similarly, the rights of the holders of the Class B Certificates to
receive distributions due them from available amounts in the Trust Fund will be
subordinated, to the extent described herein, to such rights of the holders of
the Class M Certificates. Subject to the subordination of the Subordinate
Certificates to the Senior Certificates, this subordination of the Class B
Certificates to the Class M Certificates is intended to enhance the likelihood
of regular receipt by the holders of the Class M Certificates of the full amount
of the distributions due them and to afford such holders protection against
losses on Liquidated Contracts.
The protection afforded to the holders of Senior Certificates by means
of the subordination of the Subordinate Certificates and to the Class M
Certificateholders by the subordination of the Class B Certificates (in each
case, to the extent described herein) will be accomplished by the application of
the Available Distribution Amount in the order specified under "Distributions"
above. Accordingly, in the event that the Available Distribution Amount on any
Distribution Date is not sufficient to permit the distribution of the amount of
interest and the specified portion of the Formula Principal Distribution Amount
due to the holders of any Class of Certificates, the subordination is intended
to protect such Certificateholders by the right of such Certificateholders to
receive distributions of the Available Distribution Amount in respect of
interest and the Formula Principal Distribution Amount that would otherwise have
been distributable to the Certificateholders of any Class subordinate in
priority of distribution to such Class, until any shortfall in distributions to
the holders of the related senior Class or Classes of Certificates in respect
thereof has been satisfied, to the extent described herein.
LOSSES ON LIQUIDATED CONTRACTS
As described above, the Total Regular Principal Amount distributable
to the holders of the Series 199[ ]-[ ] Regular Certificates on each
Distribution Date includes the Scheduled Principal Balance of each Contract that
became a Liquidated Contract during the immediately preceding Collection Period.
The Liquidation Proceeds, net of (i) certain expenses incurred to liquidate such
Liquidated Contract, (ii) all accrued and unpaid interest thereon and (iii) all
Monthly Advances required to be made in respect of such Liquidated Contract (the
"Net Liquidation Proceeds"), may be less than the Scheduled Principal Balance of
such Liquidated Contract. Under such circumstances, the loss on the Liquidated
Contract during a Collection Period, in the amount of the deficiency between the
Net Liquidation Proceeds and the Scheduled Principal Balance of such Liquidated
Contract, may be covered to the extent of the amount (the
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"Excess Interest"), if any, by which the interest collected on nondefaulted
Contracts during the same Collection Period exceeds interest distributions due
to holders of the Series 199[ ]-[ ] Regular Certificates and the Monthly
Servicing Fee.
The effect of any losses on Liquidated Contracts during a Collection
Period in excess of the aggregate of Excess Interest generally will be to cause
shortfalls, losses or both with respect to the Certificates, which shortfalls or
losses will be borne by the Class B Certificateholders, the Class M
Certificateholders and the Class A Certificateholders, in that order.
EXAMPLE OF DISTRIBUTIONS
The following chart sets forth an example of the flow of funds on the
Certificates for the Distribution Date occurring in [August 1998]:
<TABLE>
<S> <C>
[June 30] (A) Cut-off Date.
[July 1-31]................................................. (B) Servicer receives scheduled payments on the
Contracts and any principal prepayments made by
Obligors and applicable interest thereon.
[August 8].................................................. (C) Record Date.
[August 6].................................................. (D) Determination Date.
[August 11]................................................. (E) (Distribution Date is the 10th day of each
month or, if the 10th day is not a business day,
the next business day.)
Succeeding months follow the pattern of (B) through (E).....
</TABLE>
(A) The Cut-off Date Pool Principal Balance on [June 30, 1997] will be computed
as described under "Conveyance of Contracts" above.
(B) Scheduled Payments, principal prepayments and Liquidation Proceeds (net of
Liquidation Expenses) and amounts for the repurchase of Contracts may be
received at any time during this period and will be distributed to
Certificateholders on [August 11, 1997]. When a partial prepayment is made
or a Contract is prepaid in full, interest on the amount prepaid is
collected from the Obligor only to the date of payment. The Available
Distribution Amount for the distribution on [June 10, 1996] are described
under "Payments on Contracts; Certificate Account" above.
(C) Distributions on [August 11, 1998] will be made to Certificateholders of
record at the close of business on [August 8, 1998].
(D) On [August 6, 1998] (three business days prior to the Distribution Date),
the Servicer will determine the amounts of principal and interest which
will be passed through on [August 10, 1998] to Certificateholders.
(E) On [August 10, 1998], the amounts determined on [August 6, 1998] will be
distributed to Certificateholders.
ADVANCES
For each Distribution Date, the Servicer will be obligated to make an
advance (a "Monthly Advance") equal to the lesser of (i) delinquent scheduled
payments of principal and interest on the Contracts that were due in the
preceding Collection Period and (ii) the amount, if any, by which scheduled
distributions of principal and interest due on the Series 199[ ]-[ ] Regular
Certificates exceeds the amount specified in clause (b) of the definition of
Available Distribution Amount (as set forth above under "Payments on
Contracts; Certificate Account"),
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except to the extent, in the Servicer's judgment, such advance would not be
recoverable from related late payments, Liquidation Proceeds or otherwise (a
"Nonrecoverable Advance").
The aggregate amount of any additional advances made by the Servicer
that have not been reimbursed to the Servicer as described below is referred to
herein as the "Outstanding Amount Advanced." The Servicer may apply any Excess
Contract Payments in the Certificate Account (rather than its own funds) to make
all or a portion of a Monthly Advance, but must replace such Excess Contract
Payments to the extent required to make scheduled payments on the related
Contracts. In addition, upon the determination that a Nonrecoverable Advance
has been made in respect of a Contract, the Servicer will reimburse itself (but
only to the extent of the Outstanding Amount Advanced) out of funds in the
Certificate Account for the delinquent Scheduled Payments on such Contract or
out of any other funds in the Certificate Account.
In making Monthly Advances, the Servicer will be attempting to
maintain a regular flow of scheduled interest and principal to the Series 199[
]-[ ] Regular Certificateholders rather than to guarantee or insure against
losses.
The Servicer will also be obligated to make advances, to the extent
recoverable out of Liquidation Proceeds or otherwise, in respect of certain
taxes and insurance premiums not paid by an Obligor on a timely basis. Funds so
advanced are reimbursable to the Servicer as provided in the Agreement.
[LIMITED GUARANTEE OF GFC
In order to mitigate the effect of [the subordination of the Class [B-
2] Certificates and] liquidation losses and delinquencies on the Contracts borne
by the [Class B-2 Certificates], GFC will initially provide a guarantee (the
"Limited Guarantee.") against losses that would otherwise be absorbed by the
[Class B-2 Certificates]. [Such Limited Guarantee may be replaced by an
Alternative Credit Enhancement. See "Alternative Credit Enhancement" herein.]
Each payment required to be made under the Limited Guarantee is referred to as
an "Enhancement Payment." Prior to the Remittance Date with respect to the
[Class B-2 Certificates] (the "Initial [Class B-2] Principal Remittance Date")
on which the [Class B-1] Principal Balance is reduced to zero, the Enhancement
Payment will equal the amount, if any, by which (a) the sum of (i) the [Class B-
2] Formula Distribution Amount (which will be equal to interest accrued during
the related Interest Period on the [Class B-2] Principal Balance and an amount
of principal described in the Agreement) for such Remittance Date and (ii) the
[Class B-2] Principal Balance and an amount of principal described in the
Agreement) for such Remittance Date and (ii) the [Class B-2] Principal
Liquidation Loss Amount, if any, exceeds (b) the amount (other than the
Enhancement Payment) that will otherwise be distributed on the [Class B-2
Certificates] on such Remittance Date (the "[Class B-2] Distribution Amount.").
On each Remittance Date on or after the Initial [Class B-2] Principal Remittance
Date, the Enhancement Payment will equal the amount, if any, by which the [Class
B-2] Formula Distribution Amount (which will include both interest and
principal) exceeds the [Class B-2] Distribution Amount for such Remittance
Date.
[The "[Class B-2] Principal Liquidation Loss Amount . " for any
Remittance Date will equal the amount, if any, by which (a) the Formula
Principal Distribution Amount (exclusive of
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the portion thereof specified in clause (vi) of the definition of Formula
Principal Distribution Amount) for such Remittance Date exceeds (b) the amount
distributed on the Certificates on account of principal on such Remittance Date.
The [Class B-2] Principal Liquidation Loss Amount represents future principal
payments on the Contracts that, because of the subordination of the [Class B-2]
Certificates and liquidation losses on the Contracts, will not be paid to the
[Class B-2] Certificate holders from the assets of the Trust Fund but may be
paid in the form of an Enhancement Payment.]
[In the event, that on a particular Remittance Date, the [Class B-2]
Distribution Amount in the Certificate Account plus any amounts actually paid
under the Limited Guarantee are not sufficient to make a full distribution of
interest to [the Class B-2 Certificateholder], the amount of the deficiency will
be carried forward as an amount that [the Class B-2 Certificateholders] are
entitled to receive on the next Remittance Date.]
The Limited Guarantee will be an unsecured general obligation of GFC
and will not be supported by any letter of credit or other enhancement
arrangement.
The Limited Guarantee is for the benefit of [the Class B-2
Certificates] only and will not result in any payments on the other
Certificates.
As reimbursement to GFC for Enhancement Payments made by GFC pursuant
to the Limited Guarantee, GFC will be entitled to receive on each Remittance
Date an amount equal to the lesser of (a) the Available Distribution Amount,
less the portion of the Available Distribution Amount distributed on the
Certificates (other than the Class R Certificate), and (b) the aggregate amount
of Enhancement Payments outstanding which remain unreimbursed as of such
Remittance Date.
[ALTERNATIVE CREDIT ENHANCEMENT
In the event that, at GFC's option, Alternative Credit Enhancement (as
defined herein) is provided and, upon prior written notice to the Rating
Agencies, the Rating Agencies shall have notified GFC, the Servicer and the
Trustee in writing, that substitution of such Alternative Credit Enhancement for
the Limited Guarantee will not result in the downgrade or withdrawal of the then
current rating of any class of the Certificates, and upon the delivery by GFC to
the Trustee of an opinion of counsel, acceptable to the Trustee, that such
action would not cause the Trust to fail to qualify as a REMIC, the Limited
Guarantee shall be released and shall terminate. The Alternative Credit
Enhancement may consist of cash or securities deposited by GFC or any other
person in a segregated escrow, trust or collateral account or a letter of
credit, certificate insurance policy or surety bond provided by a third party
(an "Alternative Credit Enhancement."). On each Remittance Date after delivery
of the Alternative Credit Enhancement, an amount, equal to the lesser of the
amount which would have been payable under the Limited Guarantee and the amount
available under such Alternative Credit Enhancement, shall be transferred from
such account to the applicable Certificate Account to make payments to the Class
[B-2] and Certificateholders, as applicable (the "Enhancement Payment"). GFC
shall have no obligation to replace such enhancement once it has been exhausted.
See "Risk Factors--Alternative Credit Enhancement" herein.]
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REPORTS TO CERTIFICATEHOLDERS
The Trustee will include with each distribution to a Certificateholder
a statement as of the related Distribution Date setting forth, among other
things:
the aggregate amount distributed on each Class of Certificates on
such Distribution Date;
the amount of such distribution on each Class of Certificates
which constitutes principal;
the amount of such distribution on each Class of Certificates
which constitutes interest;
the remaining Certificate Balance;
the Monthly Servicing Fee payable on such Distribution Date and
the amount of any other fees payable out of the Trust Fund;
the number of and aggregate unpaid principal balance of Contracts
with payments delinquent 31 to 59, 60 to 89, and 90 or more days,
respectively;
the number of Contracts that were repurchased or replaced by a
Seller in accordance with the Agreement during the prior Collection Period,
identifying such Contracts and (i) the Repurchase Price of such Contracts
and (ii) the amount, if any, paid by such Seller due to the differences, if
any, between the remaining principal balances of the replaced Contracts and
the Eligible Substitute Contracts;
the aggregate principal balances of all Contracts that are not
Liquidated Contracts and in respect of which the related Manufactured Homes
have been repossessed or foreclosed upon;
the aggregate liquidation losses (less costs of liquidation)
realized by the Trust Fund through the Collection Period immediately
preceding such Distribution Date, expressed in dollars;
the aggregate liquidation losses (less costs of liquidation)
realized by the Trust Fund through the Collection Period immediately
preceding such Distribution Date, expressed as a percentage of the Cut-off
Date Pool Principal Balance;
the amount of any Monthly Advance for such Distribution Date and
the aggregate amount of Monthly Advances that remain outstanding as of such
Distribution Date;
the weighted average Contract Rate for the Contract Pool for the
Collection Period immediately preceding the month of such Distribution
Date; and
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the number of Manufactured Homes currently held by the Servicer
due to repossessions and the aggregate principal balance of the related
defaulted Contracts.
In addition, within a reasonable period of time after the end of each
calendar year, the Trustee will furnish a report to each holder of a Series 199[
]-[ ] Regular Certificate of record at any time during such calendar year as to
the aggregate of amounts reported pursuant to clauses (a) and (b) above for such
calendar year.
OPTIONAL TERMINATION AND TERMINATION AUCTION
The Agreement provides that on any Distribution Date after the
Distribution Date on which the Pool Scheduled Principal Balance is less than 10%
of the Cut-off Date Pool Principal Balance, the Servicer will have the option to
repurchase, upon giving notice mailed no later than the 10th day of the month
next preceding the month of the exercise of such option, all outstanding
Contracts at a price equal to the greater of (a) the sum of (x) 100% of the
Scheduled Principal Balance of each Contract (other than any Contract as to
which the related Manufactured Home has been acquired and not yet disposed of
and whose fair market value is included pursuant to clause (y) below) as of the
final Distribution Date, and (y) the fair market value of such acquired property
(as determined by the Servicer), and (b) the aggregate fair market value (as
determined by the Servicer) of all of the assets of the Trust Fund, plus, in the
case of both clause (a) and (b), an amount sufficient to reimburse
Certificateholders for any shortfall in interest due thereto in respect of prior
Distribution Dates. Notwithstanding the foregoing, the Servicer's option shall
not be exercisable if there will not be distributed to the Class A
Certificateholders an amount equal to the Class A Certificate Balance together
with any shortfall in interest due to the Class A Certificateholders in respect
of prior Distribution Dates and one month's interest on the Class A Certificate
Balance [or the Notional Principal Amount, as the case may be,] at the Class A
Pass-Through Rate, to the Class M Certificateholders an amount equal to the
Class M Certificate Balance together with any shortfall in interest due to the
Class M Certificateholders in respect of prior Distribution Dates and one
month's interest on the Class M Certificate Balance at the Class M Pass-Through
Rate, to the Class B-1 Certificateholders an amount equal to the Class B-1
Certificate Balance together with any shortfall in interest due to the Class B-1
Certificateholders in respect of prior Distribution Dates and one month's
interest on the Class B-1 Certificate Balance at the Class B-1 Pass-Through Rate
and to the to the Class B-2 Certificateholders an amount equal to the Class B-2
Certificate Balance together with any shortfall in interest due to the Class B-2
Certificateholders in respect of prior Distribution Dates and one (the "Minimum
Termination Amount").
On any Distribution Date after the Distribution Date on which the Pool
Scheduled Principal Balance is less than 10% of the Cut-off Date Pool Principal
Balance, the Servicer may also direct the Trustee to conduct a Termination
Auction for the sale of all Contracts then outstanding in the Trust Fund, and in
any case the Servicer shall be obligated to direct the Trustee to conduct such a
Termination Auction within 90 days of the Distribution Date on which the Pool
Scheduled Principal Balance is less than 10% of the Cut-off Date Pool Principal
Balance, unless the Servicer has exercised the repurchase option described
above. The Servicer shall give notice mailed no later than [ ] days preceding
the date on which the Termination Auction is to occur. The Trustee will solicit
each Certificateholder, the Seller and one or more
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active participants in the asset-backed securities or manufactured housing
contract market that are not affiliated with GFC to make a bid to purchase the
Contracts at the Termination Auction. The Trustee will sell all the Contracts to
the highest bidder, subject, among other things, to (i) the requirement that the
highest bid equal or exceed the Minimum Termination Amount, and (ii) the
requirement that at least one bid be tendered by an active participant in the
asset-backed securities or manufactured housing contract market that is not
affiliated with GFC. If the foregoing requirements are satisfied, the successful
bidder or bidders shall deposit the aggregate purchase price for the Contracts
in the Certificate Account. If the foregoing requirements are not satisfied, the
purchase shall not occur and distributions will continue to be made on the
Certificates. Any sale and consequent termination of the Trust Fund as a result
of a Termination Auction must constitute a "qualified liquidation" of the Trust
Fund under Section 860F of the Code.
TERMINATION OF THE AGREEMENT
The Agreement will terminate upon the last action required to be taken
by the Trustee on the final Distribution Date following the earlier of (i) the
purchase by the Servicer of all Contracts and all property acquired in respect
of any Contract remaining in the Trust Fund as described above under " Optional
Termination and Termination Auction"[,/or] (ii) the final payment or other
liquidation (or any advance with respect thereto) of the last Contract remaining
in the Trust Fund or the disposition of all property acquired upon repossession
of any Manufactured Home [or (iii) the sale in a Termination Auction of all
Contracts and all other property acquired in respect of any Contract remaining
in the Trust Fund as described above under " Optional Termination and
Termination Auction"].
Upon presentation and surrender of the Series 199[ ]-[ ] Regular
Certificates, the Trustee shall cause to be distributed, to the extent of funds
available, to such Certificateholders on the final Distribution Date in
proportion to their respective Percentage Interests an amount equal to the
respective unpaid Certificate Balances of the Series 199[ ]-[ ] Regular
Certificates, together with any unpaid interest on such Certificates due on
prior Distribution Dates and one month's interest at the applicable pass-through
rates on such unpaid Certificate Balances; provided that such funds will be
distributed in the applicable order of priority specified under "
Distributions" above. If the Agreement is then being terminated, any amount
which remains on deposit in the Certificate Account (other than amounts retained
to meet claims) after distribution to the holders of the Series 199[ ]-[ ]
Regular Certificates will be distributed to the Class R Certificateholders.
COLLECTION AND OTHER SERVICING PROCEDURES
The Servicer will administer, service and make collections on the
Contracts, exercising the degree of care that the Servicer exercises with
respect to similar contracts serviced by the Servicer.
Subject to the requirements of applicable law, the Servicer will be
required to commence repossession and other realization procedures with respect
to any defaulted Contract promptly after the Servicer determines that such
Contract will not be brought current. The
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Servicer may rescind, cancel or make material modifications of the terms of a
Contract (including modifying the amounts and Due Dates of Scheduled Payments)
in connection with a default or imminent default thereunder.
SERVICING COMPENSATION; CERTAIN OTHER MATTERS REGARDING THE SERVICER
For its servicing of the Contracts, the Servicer will be entitled to
receive a monthly servicing fee equal to the product of one-twelfth of [ ]%
and the Pool Scheduled Principal Balance for the related Distribution Date (the
"Monthly Servicing Fee"), whether or not the related Scheduled Payments on the
Contracts are received. The Available Distribution Amount will be net of the
Monthly Servicing Fee. See " Payments on the Contracts; Certificate Account"
above. [For so long as the Servicer is entitled to delay deposits to the
Certificate Account until on or prior to the Distribution Date, any earnings on
the amounts retained by the Servicer will constitute additional servicing
compensation.]
As part of its servicing fees, the Servicer will also be entitled to
retain, as compensation for the additional services provided in connection
therewith, any fees for late payments made by Obligors, extension fees paid by
Obligors for the extension of scheduled payments and assumption fees for
permitted assumptions of Contracts by purchasers of the related Manufactured
Homes and real property securing such Contracts, if any.
THE TRUSTEE
[ ] (the "Trustee") has its corporate trust offices at [ ]. The
Trustee may resign at any time, in which event the Seller[s] will be obligated
to appoint a successor Trustee. The Seller[s] may also remove the Trustee if
the Trustee ceases to be eligible to continue as such under the Agreement or if
the Trustee becomes insolvent. In such circumstances, the Seller[s] will also
be obligated to appoint a successor Trustee. Any resignation or removal of the
Trustee and appointment of a successor Trustee will not become effective until
acceptance of the appointment by the successor Trustee.
The Agreement requires the Trustee to maintain, at its own expense, an
office or agency in New York City or [ ] where Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Trustee and the certificate registrar in respect of the Certificates
pursuant to the Agreement may be served.
The Trustee, or any of its affiliates, in its individual or any other
capacity, may become the owner or pledgee of Certificates with the same rights
as it would have if it were not Trustee.
The Trustee will also act as paying agent, certificate registrar and
authenticating agent under the Agreement.
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<PAGE>
[REGISTRATION OF THE OFFERED CERTIFICATES
The Offered Certificates will be book-entry Certificates (the "Book-
Entry Certificates"). Persons acquiring beneficial ownership interests in the
Offered Certificates ("Certificate Owners") will hold their Offered Certificates
through DTC in the United States, or Cedel Bank, societe anonyme ("Cedel") or
Euroclear System ("Euroclear") in Europe if they are participants of such
systems, or indirectly through organizations which are participants in such
systems. The Book-Entry Certificates will be issued in one or more certificates
which equal the aggregate principal balance of the Offered Certificates and will
initially be registered in the name of Cede & Co., the nominee of DTC. Cedel
and Euroclear will hold omnibus positions on behalf of their participants
through customers' securities accounts in Cedel's and Euroclear's names on the
books of their respective depositaries which in turn will hold such positions in
customers' securities accounts in the depositaries' names on the books of DTC.
Citibank will act as depositary for Cedel and The Chase Manhattan Bank will act
as depositary for Euroclear (in such capacities, individually the "Relevant
Depositary" and collectively the "European Depositaries"). Except as described
below, no person acquiring a Book-Entry Certificate (each, a "Beneficial Owner")
will be entitled to receive a physical certificate representing such Certificate
(a "Definitive Certificate"). Unless and until Definitive Certificates are
issued, it is anticipated that the only "Certificateholder" of the Offered
Certificates will be Cede & Co., as nominee of DTC. Certificate Owners will not
be Certificateholders as that term is used in the Agreement. Certificate Owners
are only permitted to exercise their rights indirectly through Participants and
DTC.
The beneficial owner's ownership of a Book-Entry Certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or other
financial intermediary (each, a "Financial Intermediary") that maintains the
beneficial owner's account for such purpose. In turn, the Financial
Intermediary's ownership of such Book-Entry Certificate will be recorded in the
records of DTC (or of a participating firm that acts as agent for the Financial
Intermediary, whose interest will in turn be recorded on the records of DTC, if
the beneficial owner's Financial Intermediary is not a DTC participant and on
the records of Cedel or Euroclear, as appropriate).
Certificate Owners will receive all distributions of principal of and
interest on the Offered Certificates from the Trustee through DTC and DTC
participants. While the Offered Certificates are outstanding (except under the
circumstances described below), under the rules, regulations and procedures
creating and affecting DTC and its operations (the "Rules"), DTC is required to
make book-entry transfers among Participants on whose behalf it acts with
respect to the Offered Certificates and is required to receive and transmit
distributions of principal of, and interest on, the Offered Certificates.
Participants and indirect participants with whom Certificate Owners have
accounts with respect to Offered Certificates are similarly required to make
book-entry transfers and receive and transmit such distributions on behalf of
their respective Certificate Owners. Accordingly, although Certificate Owners
will not possess certificates representing their respective interests in the
Offered Certificates, the Rules provide a mechanism by which Certificate Owners
will receive distributions and will be able to transfer their interest.
Certificateholders will not receive or be entitled to receive
certificates representing their respective interests in the Offered
Certificates, except under the limited circumstances described below. Unless
and until Definitive Certificates are issued,
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Certificateholders who are not Participants may transfer ownership of Offered
Certificates only through Participants and indirect participants by instructing
such Participants and indirect participants to transfer Offered Certificates, by
book-entry transfer, through DTC for the account of the purchasers of such
Offered Certificates, which account is maintained with their respective
Participants. Under the Rules and in accordance with DTC's normal procedures,
transfers of ownership of Offered Certificates will be executed through DTC and
the accounts of the respective Participants at DTC will be debited and credited.
Similarly, the Participants and indirect participants will make debits or
credits, as the case may be, on their records on behalf of the selling and
purchasing Certificateholders.
Because of time zone differences, credits of securities received in
Cedel or Euroclear as a result of a transaction with a Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or Cedel Participants on such business day. Cash received in Cedel or
Euroclear as a result of sales of securities by or through a Cedel Participant
(as defined below) or Euroclear Participant (as defined below) to a DTC
Participant will be received with value on the DTC settlement date but will be
available in the relevant Cedel or Euroclear cash account only as of the
business day following settlement in DTC. For information with respect to tax
documentation procedures relating to the Certificates, see "Certain Federal
Income Tax Consequences--REMIC Certificates--Taxation of Regular Certificates--
Taxation of Certain Foreign Investors" and "--Backup Withholding" in the
Prospectus and "Global Clearance, Settlement and Tax Documentation Procedures--
Certain U.S. Federal Income Tax Documentation Requirements" in Annex I
hereto.
Transfers between Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants and Euroclear Participants will
occur in accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by the Relevant Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by a counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to the
Relevant Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver instructions
directly to the European Depositaries.
DTC, which is a New York-chartered limited purpose trust company,
performs services for its participants, some of which (and/or their
representatives) own DTC. In accordance with its normal procedures, DTC is
expected to record the positions held by each DTC participant in the Book-Entry
Certificates, whether held for its own account or as a
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nominee for another person. In general, beneficial ownership of Book-Entry
Certificates will be subject to the Rules, as in effect from time to time.
Cedel Bank, societe anonyme, 67 Bd Grande-Duchesse Charlotte, L-1331
Luxembourg, was incorporated in 1970 as a limited company under Luxembourg law.
Cedel is owned by banks, securities dealers and financial institutions, and
currently has about 100 shareholders, including U.S. financial institutions or
their subsidiaries. No single entity may own more than five percent of Cedel's
stock.
Cedel is registered as a bank in Luxembourg, and as such is subject to
regulation by the Institute Monetaire Luxembourgeois, "IML", the Luxembourg
Monetary Authority, which supervises Luxembourg banks.
Cedel holds securities for its customers ("Cedel Participants") and
facilitates the clearance and settlement of securities transactions by
electronic book-entry transfers between their accounts. Cedel provides various
services, including safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. Cedel
also deals with domestic securities markets in several countries through
established depository and custodial relationships. Cedel has established an
electronic bridge with Morgan Guaranty Trust as the Euroclear Operator in
Brussels to facilitate settlement of trades between systems. Cedel currently
accepts over 70,000 securities issues on its books.
Cedel's customers are world-wide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Cedel's United States customers are limited to
securities brokers and dealers and banks. Currently, Cedel has approximately
3,000 customers located in over 60 countries, including all major European
countries, Canada, and the United States. Indirect access to Cedel is available
to other institutions which clear through or maintain a custodial relationship
with an account holder of Cedel.
Euroclear was created in 1968 to hold securities for its participants
("Euroclear Participants") and to clear and settle transactions between
Euroclear Participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may be settled in any of 29 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York (the "Euroclear Operator"), under
contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a
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Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a tangible basis with
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions on the Book-Entry Certificates will be made on each
Distribution Date by the Trustee to DTC. DTC will be responsible for crediting
the amount of such payments to the accounts of the applicable DTC participants
in accordance with DTC's normal procedures. Each DTC participant will be
responsible for disbursing such payments to the beneficial owners of the Book-
Entry Certificates that it represents and to each Financial Intermediary for
which it acts as agent. Each such Financial Intermediary will be responsible
for distributing funds to the beneficial owners of the Book-Entry Certificates
that it represents.
Under a book-entry format, beneficial owners of the Book-Entry
Certificates may experience some delay in their receipt of payments, since such
payments will be forwarded by the Trustee to Cede. Distributions with respect
to Certificates held through Cedel or Euroclear will be credited to the cash
accounts of Cedel Participants or Euroclear Participants in accordance with the
relevant system's rules and procedures, to the extent received by the Relevant
Depositary. Such distributions will be subject to tax reporting in accordance
with relevant United States tax laws and regulations. See "Certain Federal
Income Tax Consequences--REMIC Certificates--C. Taxation of Regular
Certificates--9. Taxation of Certain Foreign Investors" and "--10. Backup
Withholding" in the Prospectus. Because DTC can only act on behalf of Financial
Intermediaries, the ability of a beneficial owner to pledge Book-Entry
Certificates to persons or entities that do not participate in the Depository
system, or otherwise take actions in respect of such Book-Entry Certificates,
may be limited due to the lack of physical certificates for such Book-Entry
Certificates. In addition, issuance of the Book-Entry Certificates in the book-
entry form may reduce the liquidity of such Certificates in the secondary market
since certain potential investors may be unwilling to purchase Certificates for
which they cannot obtain physical certificates.
Monthly and annual reports on the Trust will be provided to Cede, as
nominee of DTC, and may be made available by Cede to beneficial owners upon
request, in accordance with the rules, regulations and procedures creating and
affecting the Depository, and to the Financial
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Intermediaries to whose DTC accounts the Book-Entry Certificates of such
beneficial owners are credited.
DTC has advised the Trustee that, unless and until Definitive
Certificates are issued, DTC will take any action permitted to be taken by the
holders of the Book-Entry Certificates under the Agreement only at the direction
of one or more Financial Intermediaries to whose DTC accounts the Book-Entry
Certificates are credited, to the extent that such actions are taken on behalf
of Financial Intermediaries whose holdings include such Book-Entry Certificates.
Cedel or the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a Certificateholder under the Agreement on behalf of a
Cedel Participant or Euroclear Participant only in accordance with its relevant
rules and procedures and subject to the ability of the Relevant Depository to
effect such actions on its behalf through DTC. DTC may take actions, at the
direction of the related Participants, with respect to some Offered Certificates
which conflict with actions taken with respect to other Offered Certificates.
Definitive Certificates will be issued to beneficial owners of the
Book-Entry Certificates, or their nominees, rather than to DTC, only if (a) DTC
or GreenPoint advises the Trustee in writing that DTC is no longer willing,
qualified or able to discharge properly its responsibilities as nominee and
depository with respect to the Book-Entry Certificates and GreenPoint or the
Trustee is unable to locate a qualified successor, (b) GreenPoint, at its sole
option, with the consent of the Trustee, elects to terminate a book-entry system
through DTC or (c) after the occurrence of an event of default under the
Agreement, beneficial owners having Percentage Interests aggregating not less
than 51% of the Book-Entry Certificates advise the Trustee and DTC through the
Financial Intermediaries and the DTC participants in writing that the
continuation of a book-entry system through DTC (or a successor thereto) is no
longer in the best interests of beneficial owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all beneficial
owners of the occurrence of such event and the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the global certificate or
certificates representing the Book-Entry Certificates and instructions for re-
registration, the Trustee will issue Definitive Certificates, and thereafter the
Trustee will recognize the holders of such Definitive Certificates as
Certificateholders under the Agreement.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfer of Offered Certificates among
participants of DTC, Cedel and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
Neither the Seller or the Servicer nor the Trustee will have any
responsibility for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Book-Entry Certificates held by
Cede & Co., as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
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[FORMATION OF THE GRANTOR TRUST AND GRANTOR TRUST PROPERTY
Manufactured Housing Grantor Trust 199[ ]-[ ] will be created and
established pursuant to the Grantor Trust Agreement. [GreenPoint] will deposit
into the Grantor Trust without recourse $[ ] of Class [A-2 Fixed]
Certificates issued by the Trust, and the Grantor Trust will issue the Class [A-
2 Floating] Certificates.
The property of the Grantor Trust will include (a) the Class [A-2
Fixed] Certificates issued by the Trust and all payments therein and proceeds of
the conversion, voluntary or involuntary of such Certificates, (b) such amounts
as may be held by the Grantor Trustee in the Grantor Trust Account and any other
accounts held by the Grantor Trustee for the benefit of the Owners of the Class
[A-2] Floating Certificates [and the Certificate Insurer, (c) the rights of the
Grantor Trustee under the related Certificate Insurance Policy], (d) the Swap
Agreement and all payments received thereunder and (e) proceeds of all of the
foregoing (including, but not by way of limitation, cash proceeds, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payments of any and every kind and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing) to pay the Class [A-2 Floating] Certificates
and to make payments to the Swap Counterparty as specified in the Grantor Trust
Agreement.
Prior to its formation the Grantor Trust will have had no assets or
obligations. Upon formation, the Grantor Trust will not engage in any business
activity other than acquiring, holding and collecting payments on the Class [A-2
Fixed] Certificates, receiving and making payments under the Swap Agreement,
issuing the Class [A-2 Floating] Certificates and distributing payments thereon.
The Grantor Trust will not acquire any receivables or assets other than the
Class [A-2 Fixed] Certificates, the Swap Agreement and the rights appurtenant
thereto and will not have any need for additional capital resources. To the
extent that payments are made on the Class [A-2 Fixed] Certificates, and
payments are received by the Grantor Trustee as required under the Swap
Agreement [or corresponding amounts are received from the Certificate Insurer],
the Grantor Trust will have sufficient liquidity to make interest distributions
on the [Class A-2 Floating] Certificates. Principal distributions on the [Class
A-2 Floating] Certificates are not insured by the Certificate Insurance Policy
issued with respect to the Class [A-2 Floating] Certificates[, although the
principal distributions on the [Class A-2 Fixed] Certificates are insured by the
Certificate Insurance Policy related to the Trust]. As the Grantor Trust does
not have any operating history and will not engage in a business activity other
than as described above, there has not been included any historical or pro forma
ratio of earnings to fixed charges with respect to the Grantor Trust.
In addition to the provisions of the Grantor Trust Agreement
summarized elsewhere in this Prospectus Supplement, there is set forth below a
summary of certain other provisions of the Grantor Trust Agreement.
ASSIGNMENT OF CLASS [A-2 FIXED] CERTIFICATES
[Pursuant to the Grantor Trust Agreement, [GreenPoint] on the Closing
Date will transfer, assign, set over and otherwise convey without recourse to
the Grantor Trustee in trust all of its respective right, title and interest in
and to the Class [A-2 Fixed] Certificates and all its
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respective right, title and interest in and to principal and interest due on
each such Class [A-2 Fixed] Certificate (together with the Swap Agreement, the
amounts on deposit in the Grantor Trust Account [and the related Certificate
Insurance Policy], the "Grantor Trust Estate"). Purely as a protective measure
and not to be construed as contrary to the parties' intent that the transfer on
the Closing Date is a sale, [GreenPoint] has been deemed to have granted to the
Grantor Trustee a security interest in the Grantor Trust Estate in the event
that the transfer of the Grantor Trust Estate is deemed to be a loan and not a
sale.
In connection with the transfer and assignment of the Class A-2 Fixed
Certificates on the Closing Date, [GreenPoint] will deliver to the Grantor
Trustee without recourse the Class A-2 Fixed Certificates.
SERVICING
Under the terms of the Pooling and Servicing Agreement, the Servicer
will be required to pay all "out of pocket" costs and expenses incurred in the
performance of its servicing obligations under the Grantor Trust
Agreement.]
Under the terms of the Pooling and Servicing Agreement ,the Servicer
agrees to indemnify and hold the Grantor Trustee[, the Certificate Insurer] and
each Owner of a Class [A-2 Floating] Certificate harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Grantor Trustee, the
Certificate Insurer and any Owner of a Class [A-2 Floating] Certificate may
sustain in any way related to the failure of the Servicer to perform its duties.
The Servicer shall immediately notify the Grantor Trustee[, the Certificate
Insurer] and each Owner if a claim is made by a third party with respect to the
Grantor Trust Agreement, and the Servicer shall assume (with the consent of the
Grantor Trustee) the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Servicer, the Grantor Trustee[, the Certificate Insurer] and/or Owner in respect
of such claim.]
[REMOVAL AND DESIGNATION OF SERVICER
The [Certificate Insurer or the] Owners[, with the consent of the
Certificate Insurer,] will have the right pursuant to the Pooling and Servicing
Agreement, to remove the Servicer under the Pooling and Servicing Agreement upon
the occurrence of: (a) certain acts of bankruptcy or insolvency on the part of
the Servicer; (b) certain failures on the part of the Servicer to perform its
obligations under the Pooling and Servicing Agreement; or (c) the failure to
cure material breaches of the Servicer's representations in the Pooling and
Servicing Agreement.]
[The Pooling and Servicing Agreement also provides that the
Certificate Insurer may remove the Servicer if delinquencies and/or losses
exceed certain levels set forth in the Pooling and Servicing Agreement (the
"Servicer Termination Event").]
The removal of the Servicer pursuant to the Pooling and Servicing
Agreement shall also constitute a removal of the Servicer under the Grantor
Trust Agreement.
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The Servicer is not permitted to resign from the obligations and
duties imposed on it under the Grantor Trust Agreement except upon determination
that its duties thereunder 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, the other activities of the Servicer so causing such conflict
being of a type and nature carried on by the Servicer on the date of the Grantor
Trust Agreement. Any such determination permitting the resignation of the
Servicer is required to be evidenced by an opinion of counsel to such effect
which shall be delivered to the Grantor Trustee [and the Certificate Insurer] by
the Servicer at its expense [(provided that if the Certificate Insurer and such
Owners of the Class [A-2 Floating] Certificates cannot agree as to the
acceptability of such successor Servicer, the decision of the Certificate
Insurer shall control).]
The successor servicer appointed pursuant to the Pooling and Servicing
Agreement shall become the successor servicer under the Grantor Trust
Agreement.
No removal or resignation of the Servicer will become effective until
the Trustee or a successor servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with the Pooling and Servicing
Agreement.
THE GRANTOR TRUSTEE
[ ], having its principal corporate trust office at [ ] will
be named as Grantor Trustee under the Grantor Trust Agreement.
REPORTING REQUIREMENTS
On each Payment Date the Grantor Trustee is required to report in
writing to each Owner of a Class [A-2 Floating] Certificate, each Rating Agency
and the Certificate Insurer the same information with respect to the
manufactured housing installment contracts required to be reported by the
Trustee as described in the Pooling and Servicing Agreement and with respect to
the Class [A-2 Floating] Certificates, the following information:
[(i) the amount of the distribution with respect to the each Class
A-2 Floating Certificates (based on a Certificate in the original principal
amount of $1,000);]
[(ii) the principal amount and the Planned Principal Balance, if any,
of the Class [A-2 Floating] Certificates (based on a Certificate in the original
principal amount of $1,000) which will be outstanding after giving effect to any
payment of principal on such Payment Date;]
[(iii) based upon information furnished by the Seller such
information as may be required by Section 6049(d)(7)(C) of the Code and the
regulations promulgated thereunder to assist the Owners in computing their
market discount;]
[(iv) whether a Delinquency Trigger Event, Cumulative Realized Loss
Trigger Event and/or the Servicer Termination Event has occurred under the
Pooling and Servicing Agreement;]
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[(v) the Senior Enhancement Percentage;
(vi) the Overcollateralization Amount;]
[(vii) the amount of any Applied Realized Loss Amount, Realized Loss
Amortization Amount and Unpaid Realized Loss Amount for the Subordinate
Certificates as of the close of such Payment Date;]
[(viii) the Pass-Through Rate for the Class A-2 Floating
Certificates; and]
[(ix) the amount of any Insured Payment included in the distribution
to Owners of Class A-2 Floating Trust Certificates.]
[Certain obligations of the Grantor Trustee to provide information to
the Owners are conditioned upon such information being received from the
Servicer.]
[In addition, on each Payment Date the Grantor Trustee will be
required to distribute to each Owner [and the Certificate Insurer], together
with the information described above, the same information distributed to Owners
by the Trustee under the Pooling and Servicing Agreement.]
TERMINATION OF THE TRUST
The Grantor Trust Agreement provides that the Grantor Trust will
terminate upon the payment to the Owners of all Class [A-2 Floating]
Certificates from amounts [other than those available under the related
Certificate Insurance Policy] of all amounts required to be paid to such Owners
upon the final payment of the Class [A-2 Fixed] Certificate.]
CALCULATION OF LIBOR
On each LIBOR Determination Date (as defined below), the Trustee will
determine LIBOR for the next Accrual Period for each Class of the Floating Rate
Certificates.
["LIBOR" means, as of any LIBOR Determination Date, the rate for
deposits in United States dollars for a period equal to the relevant Accrual
Period (commencing on the first day of such Accrual Period) which appears in the
Telerate Page 3750 as of 11:00 a.m., London time, on such date. If such rate
does not appear on Telerate Page 3750, the rate for that day will be determined
on the basis of the rates at which deposits in United States dollars are offered
by the Reference Banks at approximately 11:00 a.m., London time, on that day to
prime banks in the London interbank market for a period equal to the relevant
Accrual Period (commencing on the first day of such Accrual Period). The Trustee
will request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two such quotations are provided,
the rate for that day will be the arithmetic mean of the quotations. If fewer
than two quotations are provided as requested, the rate for that day will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by
the Servicer, at approximately 11:00 a.m., New York City time, on that day for
loans in United States dollars to leading European banks for
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a period equal to the relevant Accrual Period (commencing on the first day of
such Accrual Period).]
["LIBOR Determination Date" means, with respect to any Accrual Period,
the first London business day preceding the commencement of such Accrual Period.
For purposes of determining LIBOR, a "London business day" is any day on which
dealings in deposits of United States dollars are transacted in the London
interbank market.]
["Telerate Page 3750" means the display page currently so designated
on the Dow Jones Telerate Service (or such other page as may replace that page
on that service for the purpose of displaying comparable rates or prices) and
"Reference Banks" means leading banks selected by the Trustee and engaged in
transactions in Eurodollar deposits in the international Eurocurrency
market.]
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Orrick, Herrington & Sutcliffe LLP, special counsel to the Seller, is
of the opinion that, assuming (i) the making of appropriate elections, (ii)
compliance with applicable provisions of the Code, including Sections 860A
through 860G of the Code (the "REMIC Provisions"), and related Treasury
regulations, and (iii) compliance by the Seller, the Servicer and the Trustee
with all of the provisions of the related Agreements, (a) the electing portion
of the Trust Fund will qualify, for federal income tax purposes, as a real
estate mortgage investment conduit" (a "REMIC") within the meaning of the REMIC
Provisions, and (b) the Offered Certificates, together with the Class B-2
Certificates, evidence the "regular interests" in such REMIC and (c) the Class R
Certificates is the sole class of "residual interests" in such REMIC,
respectively, each within the meaning of the REMIC Provisions in effect on the
date hereof.
The following is a general discussion of the currently applicable
federal income tax consequences of the purchase, ownership and disposition of
Offered Certificates. In addition to its opinions set forth above, Orrick,
Herrington & Sutcliffe LLP has prepared or reviewed the statements in the
Prospectus and this Prospectus Supplement under the headings "Certain Federal
Income Tax Consequences," and is of the opinion that such statements in the
Prospectus and as supplemented by such statements in this Prospectus Supplement
are correct in all material respects. Such statements are intended as an
explanatory discussion of the possible effects of the classification of the
Trust Fund as a REMIC for federal income tax purposes on investors generally and
of related tax matters affecting investors generally, but do not purport to
furnish information in the level of detail or with the attention to an
investor's specific tax circumstances that would be provided by an investor's
own tax advisor. Accordingly, each investor is urged to consult its own tax
advisors with regard to the tax consequences to it of investing in the Offered
Certificates.
The Offered Certificates will be Regular Certificates (as defined in
the Prospectus under "Certain Federal Income Tax Consequences--REMIC
Certificates"). Generally, the Offered Certificates will be treated as debt
instruments for federal income tax purposes. Holders of Offered Certificates
will be required to report income with respect to such Offered Certificates
under the accrual method of accounting, regardless of their normal tax
accounting method.
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For federal income tax reporting purposes, the Class __ and Class __
Certificates will be treated as having been issued with original issue
discount. All other classes of Offered Certificates will be treated as not
having been issued with original issue discount for federal income tax reporting
purposes. The prepayment assumption that will be used in determining the rate
of accrual of original issue discount, market discount and premium, if any, for
federal income tax purposes will be based on the assumption that, subsequent to
the date of any determination the Contracts will prepay at a rate equal to 170%
of the Prepayment Assumption. No representation is made that the Contracts will
prepay at that rate or at any other rate. See "Certain Federal Income Tax
Consequences--REMIC Certificates--Taxation of Regular Certificates--Original
Issue Discount" and "--Premium" in the Prospectus.
If the method for computing original issue discount described in the
Prospectus results in a negative amount for any period with respect to a
Certificateholder, the amount of original issue discount allocable to such
period would be zero and such Certificateholder will be permitted to offset such
negative amount only against future original issue discount (if any)
attributable to such Certificates.
In certain circumstances OID Regulations permit the holder of a debt
instrument to recognize original issue discount under a method that differs from
that used by the issuer. Accordingly, it is possible that the holder of a
Certificate may be able to select a method for recognizing original issue
discount that differs from that used by the REMIC administrator in preparing
reports to the Certificateholders and the IRS.
Certain classes of the Offered Certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
such a class of Certificates will be treated as holding a certificate with
amortizable bond premium will depend on such Certificateholder's purchase price
and the distributions remaining to be made on such Certificate at the time of
its acquisition by such Certificateholder. Holders of such classes of
Certificates should consult their tax advisors regarding the possibility of
making an election to amortize such premium. See "Certain Federal Income Tax
Consequences--REMIC Certificates--Taxation of Regular Certificates" and "--
Premium" in the Prospectus.
The Offered Certificates will be treated as assets described in
Section 7701(a)(19)(C) of the Code and "real estate assets" under Section
856(c)(4)(A) of the Code generally in the same proportion that the assets of the
Trust Fund would be so treated. In addition, interest on the Offered
Certificates will be treated as "interest on obligations secured by mortgages on
real property" under Section 856(c)(3)(B) of the Code generally to the extent
that such Offered Certificates are treated as "real estate assets" under Section
856(c)(4)(A) of the Code. Moreover, the Offered Certificates (other than the
Residual Certificates) will be "qualified mortgages" within the meaning of
Section 860G(a)(3) of the Code if transferred to another REMIC on its startup
day in exchange for a regular or residual interest therein. However,
prospective investors in Offered Certificates that will be generally treated as
assets described in Section 860G(a)(3) of the Code should note that,
notwithstanding such treatment, any repurchase of such a Certificate pursuant to
the right of the Master Servicer or the Company to repurchase such Offered
Certificates may adversely affect any REMIC that holds such Offered Certificates
if such repurchase is made under circumstances giving rise to a Prohibited
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Transaction Tax. See "The Pooling and Servicing Agreement--Termination" herein
and "Certain Federal Income Tax Consequences--REMIC Certificates" in the
Prospectus.
For further information regarding federal income tax consequences of
investing in the Offered Certificates, see "Certain Federal Income Tax
Consequences--REMICs" in the Prospectus.]
[GRANTOR TRUST]
Orrick, Herrington & Sutcliffe LLP, special tax counsel, is of the opinion
that for federal income tax purposes, assuming compliance with the terms of the
Grantor Trust Agreement, the Grantor Trust created pursuant to the Grantor Trust
Agreement will constitute a grantor trust under Subpart E, Part I of Subchapter
J of the Code, and not an association taxable as a corporation. Accordingly,
each holder of a Class A-2 Floating Certificate issued by the grantor trust will
be treated as the owner of an undivided interest in the Class A-2 Fixed
Certificates (which as described above are "regular interests" in a REMIC), the
Swap Agreement, the Certificate Insurance Policy and other assets held by the
Grantor Trust. See "Certain Federal Income Tax Consequences REMIC Elections"
and "--Non-REMIC Trusts" in the Prospectus.
Although the Class A-2 Floating Certificates resemble in certain respects
variable rate debt instruments, their tax treatment can differ substantially
from such an investment. The Certificates may not be a suitable investment for
individuals, trusts or estates and certain "pass-thru entities," the beneficial
owners of which are individuals, trusts or estates. The Class [A-2 Floating]
Certificates may not be a suitable investment for real estate investment trusts
or REMICs. Moreover, other special rules may apply to certain investors,
including dealers in securities, dealers in notional principal contracts, and
persons holding the Class [A-2 Floating] Certificates or any of the assets in
the Grantor Trust as part of a straddle.
The interest in the Swap Agreement will not constitute a "real estate
asset" within the meaning of Section 856(c)(4)(A) of the Code if held by a real
estate investment trust, a "qualified mortgage" or "permitted investment" within
the meaning of Sections 860G(a)(3) and 860G(a)(5) of the Code, respectively, if
held by a REMIC, nor an asset described in Section 7701(a)(19)(c)(xi) if held by
a domestic building and loan association. Further, the income received under the
Swap Agreement will not constitute income described in Section 856(c)(3)(B) for
a real estate investment trust.
A purchaser of Class [A-2 Floating] Certificates will be required to
allocate its purchase price between its ownership interest in the various assets
of the grantor trust. In general, such allocation would be based on the relative
fair market values of such assets on the date of purchase of the [Class A-2
Floating] Certificate. No representation is or will be made as to such relative
fair market values and holders of Class [A-2 Floating] Certificates should
consult their tax advisors concerning the determination of such fair market
values and the taxation of the holder's interest in the Swap Agreement, the tax
treatment of which is generally governed by the provisions of the Code and
Treasury regulations relating to notional principal contracts and possibly those
relating to straddles.
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Each holder of a Class [A-2 Floating] Certificate must report on its
federal income tax return ordinary income equal to its share of the interest
payable with respect to the Class A-2 Fixed Certificates and a proportionate
share of the net amounts payable to the Grantor Trust under the Swap Agreement,
and may deduct the portion of the expenses incurred by the Grantor Trust that is
allocable to such Certificate (including net payments under the Swap Agreement),
at the same time and to the same extent as such items would be reported by such
holder if it had purchased and held directly the assets held by the Grantor
Trust and incurred directly its share of expenses incurred by the grantor trust.
A holder of Class [A-2 Floating] Certificates that is an individual, estate or
trust should consult its tax advisers concerning possible limitations on the
deductibility of expenses of the grantor trust. See "Certain Federal Income Tax
Consequences REMIC Elections" and "--Non-REMIC Trusts" in the Prospectus
regarding such limitations.]
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ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and Section 4975 of the Code impose certain restrictions on employee
benefit or other plans that are subject to ERISA and/or Section 4975 of the Code
("Plans") and on persons who are fiduciaries with respect to such Plans. See
"ERISA Considerations" in the Prospectus.
Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the applicability of the Exemption
(defined below) and other administrative exemptions under ERISA and the
potential consequences in their specific circumstances, prior to making an
investment in the Offered Certificates. Moreover, each Plan fiduciary should
determine whether under the general fiduciary standards of investment prudence
and diversification 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.
SENIOR CERTIFICATES
The Department of Labor ("DOL") has granted to [ ] administrative
exemptions [ ] (collectively, the "Exemption")) from certain of the
prohibited transaction rules of ERISA. The Exemption exempts from the
prohibitions of Sections 406(a) and 407(a) of ERISA, and the related excise tax
provisions of Section 4975 of the Code, the purchase, holding and resale by
Plans of pass-through certificates representing interests in trusts that hold
assets consisting primarily of certain receivables, loans and other obligations
that are secured and meet the general conditions summarized below. The
receivables covered by the Exemption include manufactured housing installment
sales contracts and installment loan agreements secured by manufactured homes
such as the Contracts.
Among the general conditions which must be satisfied for the Exemption
to apply to the acquisition, holding and resale by a Plan of the Senior
Certificates are the following:
The acquisition of the Senior Certificates by a Plan is on terms
(including the price for the Senior Certificates) that are at least as
favorable to the Plan as they would be in an arm's-length transaction with
an unrelated party.
The rights and interests evidenced by the Senior Certificates
acquired by the Plan are not subordinated to the rights and interests
evidenced by other Certificates of the Trust.
The Senior Certificates acquired by the Plan have received a
rating at the time of such acquisition that is in one of the three highest
generic rating categories from either Standard & Poor's Ratings Group
("S&P"), Duff & Phelps Credit Rating Co. ("Duff & Phelps"), Moody's or
Fitch (the "Exemption Rating Agencies").
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The Trustee is not an affiliate of the Underwriters, GreenPoint,
the obligor under any Alternative Credit Enhancement, any Obligor with
respect to Contracts included in the Trust Fund constituting more than 5%
of the aggregate unamortized principal balance of the assets in the Trust
Fund, or any affiliate of such parties. (Such parties, and the Trustee and
its affiliates, are sometimes referred to herein collectively as the
"Restricted Group"). As of the date hereof, no Obligor with respect to
Contracts included in the Trust Fund is an Obligor with respect to
Contracts constituting more than 5% of the aggregate unamortized principal
balance of the assets of the Trust Fund.
The sum of all payments made to and retained by the Underwriters
in connection with the distribution of the Senior Certificates represents
not more than reasonable compensation for underwriting the Senior
Certificates. The sum of all payments made to and retained by the Seller
pursuant to the sale of the Contracts to the Trust Fund represents not more
than the fair market value of such Contracts. The sum of all payments made
to and retained by GreenPoint, represents not more than reasonable
compensation for GreenPoint's services under the Agreement and
reimbursement of GreenPoint's reasonable expenses in connection therewith.
The Plan is an "accredited investor" as defined in Rule 501(a)(1)
of Regulation D of the Securities and Exchange Commission under the
Securities Act of 1933.
In addition, the Exemption exempts from the prohibitions of Sections
406(a), 406(b) and 407(a) of ERISA, and the related excise tax provisions of
Section 4975 of the Code, transactions undertaken in connection with the
servicing, management and operation of such a trust pursuant to a binding
pooling and servicing agreement, subject to the foregoing general conditions and
to certain additional requirements. The Seller believes that the Exemption will
apply to such transactions undertaken with respect to the Trust Fund and the
Contracts and that all conditions of the Exemption other than those within the
control of the investors have been or will be met.
The Exemption also exempts from the prohibition of Sections 406(b)(1)
and 406(b)(2) of ERISA, and the related excise tax provisions of Section 4975 of
the Code, the direct or indirect sale, exchange or transfer of Senior
Certificates between either Seller or the Underwriters and a Plan when the
person who has discretionary authority or renders investment advice with respect
to the investment of the Plan's assets in the Senior Certificates (the
"Fiduciary") is (a) an obligor with respect to 5% or less of the fair market
value of Contracts in the Trust Fund or (b) an affiliate of any such person,
subject to the general conditions summarized above and to the following
additional requirements:
(1) No member of the Restricted Group is a sponsor of the Plan.
In connection with the initial issuance of Senior Certificates, at
least 50% in Percentage Interests of such Class of Certificates is acquired
by persons independent of the Restricted Group and at least 50% of the
aggregate interest in the Trust Fund is acquired by persons independent of
the Restricted Group.
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The Plan's investment in the Senior Certificates does not exceed
25% in Percentage Interests of any such Class of Certificates outstanding
at the time of acquisition.
Immediately after the acquisition of the Senior Certificates, no
more than 25% of the assets of a Plan with respect to which the Fiduciary
has discretionary authority or renders investment advice are invested in
certificates representing an interest in a trust containing assets sold or
serviced by the same entity.
The Exemption also applies to the direct or indirect acquisition or
disposition of Senior Certificates by a Plan in the secondary market if certain
conditions are met and the continued holding of Senior Certificates acquired in
initial or secondary markets.
On July 21, 1997, the DOL published in the Federal Register an
amendment to the Exemption, which extends exemptive relief to certain mortgage-
backed and asset-backed securities transactions using pre-funding accounts for
trusts issuing pass-through certificates. With respect to the Certificates, the
amendment will generally allow Subsequent Contracts supporting payments to
Certificateholders, and having a value equal to no more than 25% of the total
principal amount of the Certificates, to be transferred to the Trust during the
Pre-Funding Period, instead of requiring that all the Contracts be either
identified or transferred on or before the Closing Date. In general, the relief
applies to the purchase, sale and holding of Certificates which otherwise
qualify for the Exemption, provided that the following general conditions are
met:
(1) the ratio of the amount allocated to the Pre-Funding Account to
the total principal amount of the Certificates must not exceed 25%;
(2) all Subsequent Contracts transferred to the Trust after the
Closing Date must meet the same terms and conditions for eligibility as the
Initial Contracts used to create the Trust, which terms and conditions have
been approved by one of the Exemption Rating Agencies;
(3) the transfer of the Subsequent Contracts to the Trust during the
Pre-Funding Period must not result in the Certificates receiving a lower
credit rating from an Exemption Rating Agency upon termination of the Pre-
Funding Period than the rating that was obtained at the time of the initial
issuance of the Certificates by the Trust;
(4) solely as a result of the use of pre-funding, the weighted average
annual percentage interest rate (the "Average Interest Rate") for all of
the Contracts in the Trust at the end of the Pre-Funding Period must not be
more than 100 basis points lower than the Average Interest Rate for the
Contracts which were transferred to the Trust on the Closing Date;
(5) either:
(i) the characteristics of the Subsequent Contracts must be
monitored by an insurer or other credit support provider which is
independent of the Seller; or
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(ii) an independent accountant retained by the Seller must
provide the Seller with a letter (with copies provided to the
Exemption Rating Agencies rating the Certificates, the Underwriter and
the Trustee) stating whether or not the characteristics of the
Subsequent Contracts conform to the characteristics described in the
Prospectus Supplement and/or Agreement. In preparing such letter, the
independent accountant must use the same type of procedures as were
applicable to the Contracts which were transferred to the Trust as of
the Closing Date;
(6) the Pre-Funding Period must end no later than three months or 90
days after the Closing Date or earlier in certain circumstances if the Pre-
Funding Account falls below the minimum level specified in the Agreement or
an event of default occurs;
(7) amounts transferred to the Pre-Funding Account and any capitalized
interest account used in connection with the pre-funding may be invested
only in cash or in investments which are permitted by the Exemption Rating
Agencies rating the Certificates, and such investment must be described in
the Agreement and must:
(i) be direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof (provided that such obligations
are backed by the full faith and credit of the United States); or
(ii) have been rated (or the obligor has been rated) in one of
the three highest generic rating categories by one of the Exemption
Rating Agencies.
(8) the Prospectus or Prospectus Supplement must describe the duration
of the Funding Period;
(9) the Trustee (or any agent with which the Trustee contracts to
provide trust services) must be a substantial financial institution or
trust company experienced in trust activities and familiar with its duties,
responsibilities and liabilities as a fiduciary under ERISA. The Trustee,
as legal owner of the Trust, must enforce all the rights created in favor
of Certificateholders of the Trust, including Plans.
[The Seller believes that the Exemption will apply to the acquisition
and holding of Senior Certificates by Plans and that all conditions of the
Exemption other than those within the control of the investors have been met.]
In addition, as of the date hereof, no Obligor with respect to Contracts
included in the Trust constitutes more than 5% of the aggregate unamortized
principal balance of the assets of the Trust. Any Plan fiduciary who proposes
to cause a Plan to purchase Senior Certificates should consult with its own
counsel with respect to the potential consequences under ERISA and the Code of
the Plan's acquisition and ownership of Senior Certificates. Assets of a Plan
should not be invested in Senior Certificates unless it is clear that the
Exemption will apply and exempt all potential prohibited transactions. See
"ERISA Considerations" in the Prospectus.
Before purchasing a Senior Certificate, a fiduciary of a Plan should
make its own determination as to the availability of the exemptive relief
provided in the Exemption or the
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availability of any other prohibited transaction exemptions, and whether the
conditions of any such exemption will be applicable to the Certificate. Any
fiduciary of a Plan considering whether to purchase a Senior Certificate should
also carefully review with its own legal advisors the applicability of the
fiduciary duty and prohibited transaction provisions of ERISA and Section 4975
of the Code to such investment. See "ERISA Considerations" in the Prospectus.
[THE CLASS [A-2 FLOATING] CERTIFICATES]
The Exemptions do not apply to the purchase, holding or subsequent
resale of the Class [A-2 Floating] Certificates. However, Prohibited Transaction
Class Exemption ("PTCE") 75-1, Part II, regarding principal transactions by
broker-dealers should be applicable to the acquisition of the Class A-2 Floating
Certificates, provided that the Underwriter is not a fiduciary with respect to
the Plan (and is not a party in interest with respect to the Plan by reason of
being a participating employer or affiliate thereof). In addition, one or more
of the following prohibited transaction class exemptions may be applicable to
the purchase, holding or subsequent resale of the Class A-2 Floating
Certificates by a Plan; (i) PTCE 96-23, regarding investments determined by in-
house asset managers, (ii) PTCE 95-60, regarding investments by insurance
company pooled accounts; (iii) PTCE 91-38, regarding investments by bank
collective investment funds; (iv) PTCE 90-1; regarding investments by insurance
company pooled separate accounts; or (v) PTCE 84-14, regarding transactions
negotiated by qualified professional asset managers. To the extent that the
acquisition of a Class A-2 Floating Certificate by a Plan is deemed for purposes
of ERISA to be a purchase of an interest in the Class A-2 Fixed Certificates,
the Exemption should be applicable to the purchase, holding or subsequent resale
of such interest.
In addition to the matters described above, purchasers of Class [A-2
Floating] Certificates that are insurance companies should consult with their
counsel with respect to the United States Supreme Court case interpreting the
fiduciary responsibility rules of ERISA, JOHN HANCOCK MUTUAL LIFE INSURANCE CO.
V. HARRIS TRUST AND SAVINGS BANK 114 S.Ct. 517 (1993). In JOHN HANCOCK, the
Supreme Court ruled that assets held in an insurance company's general account
may be deemed to be "plan assets" for ERISA purposes under certain
circumstances. Prospective purchasers using insurance company general account
assets should determine whether the decision or federal legislation enacted
affecting insurance company general accounts (see Section 1460 of the Small
Business Job Protection Act of 1996) affects their ability to make purchases of
the Class [A-2 Floating] Certificates.
[Any fiduciary of a Plan considering whether to purchase a Class [A-2
Floating] Certificate should consult with its own legal advisors concerning the
impact of ERISA and the Code and the potential consequences to its specific
circumstances, prior to making an investment in the such Certificates. Moreover,
each Plan fiduciary should determine whether under the general fiduciary
standards of investment procedure and diversification an investment in the Class
[A-2 Floating] Certificate is appropriate for the Plan, taking into account the
overall investment of the Plan and the composition of the Plan's investment
portfolio.]
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CLASS M AND CLASS B-1 CERTIFICATES
A Plan fiduciary or other person investing "plan assets" of any Plan
will not be permitted to purchase or hold the Class M and Class B-1
Certificates, unless such person delivers to the Trustee the certificate or
opinion referred to below, as such actions may give rise to a non-exempt
prohibited transaction under ERISA or Section 4975 of the Code. See "ERISA
Considerations" in the Prospectus. Because the Class M and Class B-1
Certificates do not meet the requirements of the Exemption, it does not provide
exemptive relief for the purchase or holding of such Certificates with "plan
assets" of any Plan.
In addition, no transfer of a Class M or Class B-1 Certificate shall
be registered unless the prospective transferee provides the Trustee, the Seller
and the Servicer with (a) a certification to the effect that such transferee (1)
is neither an employee benefit plan subject to Section 406 or Section 407 of
ERISA or a plan subject to Section 4975 of the Code, the trustee of any such
plan or a person acting on behalf of any such plan nor a person using "plan
assets" of any such plan, or (2) if such transferee is an insurance company, it
is purchasing such Certificates with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates is eligible for the exemptive relief available
under Sections I and III of PTCE 95-60; or (b) an opinion of counsel (a "Benefit
Plan Opinion") satisfactory to the Trustee, the Seller and the Servicer, and
upon which the Trustee, the Seller and the Servicer shall be entitled to rely,
to the effect that the purchase or holding of such Class M or Class B-1
Certificate by the prospective transferee will not result in any non-exempt
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the Trustee, the Seller or the Servicer to any obligation in addition to
those undertaken by such entities in the Agreement, which opinion of counsel
shall not be an expense of the Trustee, the Seller or the Servicer. Owners of
the Class M or Class B-1 Certificates will be deemed to have made one of the
certifications in clauses (a)(1) and (a)(2) above.
RATINGS
It is a condition to the issuance of the Certificates that the Senior
Certificates be rated "[ ]" by [ ], that the Class M Certificates be rated at
least "[ ]" by [ ] and that the Class B Certificates be rated at least "[ ]" by
[ ]. A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
agency. The security rating of the offered Certificates should be evaluated
independently of similar security ratings assigned to other kinds of securities.
The ratings assigned by [ ] to pass-through certificates address the
likelihood of the receipt by the related certificateholders of their allocable
share of principal and/or interest on the underlying assets. [ ] ratings take
into consideration the credit quality of the related underlying assets, any
credit support arrangements, structural and legal aspects associated with such
certificates, and the extent to which the payment stream on such underlying
assets is adequate to make payments required by such certificates. [ ] ratings
on such certificates do not, however, constitute a statement regarding frequency
of prepayments on the underlying assets or
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as to whether yield may be adversely affected as a result thereof. An
explanation of the significance of such ratings may be obtained from [ ], [ ],
New York, New York [ ], telephone [( )-].
The Seller has not requested a rating on the Offered Certificates by
any rating agency other than [ ]. However, there can be no assurance as to
whether any other rating agency will rate any or all of the Offered
Certificates, or if it did, what rating would be assigned to the Offered
Certificates by any such other rating agency. A rating on any or all of the
Offered Certificates by certain other rating agencies, if assigned at all, may
be lower than the rating assigned to such Certificates by [ ].
LEGAL INVESTMENT
The [Senior and Class M Certificates] offered hereby will not
constitute "mortgage related securities" under the Secondary Mortgage Market
Enhancement Act of 1984, as amended ("SMMEA") until such time as the balance of
the Pre-Funding Account is reduced to zero. At such time, the [Senior and Class
M Certificates] will constitute legal investments for certain types of investors
to the extent provided in SMMEA. Such institutions should consult their own
legal advisors in determining whether and to what extent the Senior Certificates
constitute legal investments for such investors.
Because the Class B-1 Certificates will not, at the time of issuance,
be rated in one of the two highest rating categories of Moody's and Fitch, the
Class B-1 Certificates will not constitute "mortgage related securities" for
purposes of SMMEA. Accordingly, many institutions with legal authority to
invest in more highly rated securities based on first mortgage loans may not be
legally authorized to invest in the Class B-1 Certificates. No representation
is made as to any regulatory requirements or considerations (including without
limitation regulatory capital or permissible investment requirements) applicable
to the purchase of the Class B-1 Certificates by banks, savings and loan
associations or other financial institutions. Such institutions should consult
their own legal advisors in determining whether and to what extent the Offered
Certificates constitute legal investments for such investors. See "Legal
Investment" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions of the Underwriting Agreement
dated [ , 19 ] (the "Underwriting Agreement"), the Seller has agreed to sell,
and [each of ] (the "Underwriters") has agreed to purchase from the Seller[s],
the respective principal amounts of the Offered Certificates set forth below its
name in the table below.
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<TABLE>
<CAPTION>
Underwriters
------------------
<S> <C>
Principal Amount of
- -------------------
Class A-1 Certificates................................................. $
[Class A-IO Certificates................................................ $ ]
Class M Certificates.................................................... $
Class B-1 Certificates.................................................. $
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all of the Offered
Certificates offered hereby if any Offered Certificates are purchased. In the
event of default by an Underwriter, the Underwriting Agreement provides that, in
certain circumstances, the Underwriting Agreement may be terminated.
The Seller has been advised by the Underwriters that they propose
initially to offer the Offered Certificates to the public at the prices set
forth herein, and to certain dealers at such prices less the initial concession
not in excess of [ %] of the Class A-1 Certificate Balance, [ %] of the Class A-
IO offering price, [ %] of the Class M Certificate Balance and [ %] of the Class
B-1 Certificate Balance. The Underwriters may allow dealers, and such dealers
may allow, a concession not in excess of [ %] of the Class A-1 Certificate
Balance, [[ %] of the Class A-IO offering price,] [ %] of the Class M
Certificate Balance and [ %] of the Class B-1 Certificate Balance. After the
initial public offering of the Offered Certificates, the public offering prices
and such concessions may be changed.
The Underwriting Agreement provides that the Seller will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriters
may be required to make in respect thereof.
The Underwriters will reimburse certain expenses of the Seller.
In connection with the sale of the Offered Certificates, the
Underwriters and other persons participating in the sale may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Offered Certificates. Specifically, the Underwriters may over-allot in
connection with the sale, creating a short position in the Offered Certificates
for their own account. To cover over-allotments or to stabilize the price of
the Offered Certificates, the Underwriters may bid for, and purchase, Offered
Certificates in the open market. The Underwriters may also impose a penalty bid
whereby they may reclaim selling concessions allowed to an underwriter or a
dealer for distributing the Offered Certificates, if the Underwriters repurchase
previously distributed Offered Certificates in transactions to cover their short
position, in stabilization transactions or otherwise. Finally, the Underwriters
may bid for, and purchase, Offered Certificates in market making transactions.
These activities may stabilize or maintain the market price of the Offered
Certificates above market levels that may otherwise prevail. The Underwriters
are not required to engage in these activities and may end any of these
activities at any time.
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USE OF PROCEEDS
[Substantially all of the net proceeds to be received from the sale of
the Offered Certificates will be used by the Seller for general corporate
purposes, including the purchase of the Contracts and the payment of other
expenses connected with pooling the Contracts and issuing the Offered
Certificates.]
LEGAL MATTERS
Certain legal matters relating to the Offered Certificates, including
legal matters relating to material federal income tax consequences concerning
the Offered Certificates, will be passed upon for the Seller by Orrick,
Herrington & Sutcliffe LLP, Los Angeles, California and for the Underwriters by
[ ].
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INDEX OF SIGNIFICANT DEFINITIONS
<TABLE>
<S> <C>
Additional Contracts............................................................................... 7
Agreement....................................................................................... 6, 44
Alternative Credit Enhancement................................................................. 16, 59
Annual Servicing Rate.............................................................................. 45
approximate........................................................................................ ii
Available Distribution Amount................................................................... 9, 51
Average Interest Rate.............................................................................. 79
Beneficial Owner................................................................................... 64
Benefit Plan Opinion............................................................................... 82
Book-Entry Certificates............................................................................ 64
CBE................................................................................................ 42
Cede............................................................................................... 18
Cedel.............................................................................................. 64
Cedel Participants................................................................................. 66
Certain legal matters relating..................................................................... 85
Certificate Account............................................................................ 44, 50
Certificate Balance............................................................................ 12, 55
Certificate Owners......................................................................... 18, 44, 64
Certificateholder.................................................................................. 64
Certificateholders............................................................................. ii, 18
Certificates................................................................................... ii, iv
Class A Certificates........................................................................... ii, iv
Class A Interest Distribution Amount........................................................... 10, 53
Class B Certificates............................................................................... iv
Class B Interest Distribution Amount............................................................... 10
Class B-1 Interest Distribution Amount............................................................. 54
Class B-2 Distribution Amount...................................................................... 58
Class B-2 Interest Distribution Amount............................................................. 54
Class B-2 Principal Liquidation Loss Amount........................................................ 58
Class M Certificates............................................................................... iv
Class M Interest Distribution Amount........................................................... 10, 53
Class R Certificates............................................................................... iv
Closing Date....................................................................................... 49
Code............................................................................................... 20
Collection Period.................................................................................. 6
Contract Files..................................................................................... 46
Contract Pool...................................................................................... ii
Contract Schedule.................................................................................. 46
Contracts....................................................................................... ii, 7
Cooperative........................................................................................ 66
Definitive Certificate............................................................................. 64
Determination Date................................................................................. 51
Distribution Date............................................................................. iii, 45
DOL................................................................................................ 77
</TABLE>
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<TABLE>
<S> <C>
DTC............................................................................................ 18, 1
Due Date........................................................................................... 7
Duff & Phelps..................................................................................... 77
Eligible Institution.............................................................................. 50
Eligible Investments.......................................................................... 50, 55
Eligible Substitute Contract...................................................................... 49
Enhancement Payment........................................................................... 58, 59
ERISA............................................................................................. 77
Euroclear......................................................................................... 64
Euroclear Operator................................................................................ 66
Euroclear Participants............................................................................ 66
European Depositaries............................................................................. 64
Excess Contract Payment........................................................................... 52
Excess Interest............................................................................... 14, 57
Exemption......................................................................................... 77
Exemption Rating Agencies......................................................................... 77
FDIC.............................................................................................. 50
Fiduciary......................................................................................... 78
Financial Intermediary............................................................................ 64
First Distribution Date............................................................................ 6
Formula Principal Distribution Amount......................................................... 11, 54
GFC...............................................................................................iii
Global Securities.................................................................................. 1
Grantor Trust..................................................................................... ii
Grantor Trust Agreement...........................................................................iii
Grantor Trust Estate.............................................................................. 70
Grantor Trustee...................................................................................iii
GreenPoint..................................................................................... ii, 5
IML............................................................................................... 66
Initial Class [B-2] Principal Remittance Date..................................................... 58
Initial Pass-Through Rate......................................................................... 23
Land Home Contracts................................................................................ 8
Land-in-Lieu Contracts............................................................................. 8
Legal Investment.................................................................................. 21
LIBOR............................................................................................. 72
LIBOR Determination Date.......................................................................... 73
Limited Guarantee........................................................................ iii, 15, 58
Liquidated Contract........................................................................... 12, 54
Liquidation Expenses.............................................................................. 52
Liquidation Proceeds.......................................................................... 12, 54
London business day............................................................................... 73
manufactured home................................................................................. 47
Manufactured Home................................................................................. 7
Minimum Termination Amount........................................................................ 61
Monthly Advance............................................................................... 16, 57
Monthly Servicing Fee............................................................................. 63
</TABLE>
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<TABLE>
<S> <C>
mortgage related securities............................................................................. 20
Net Contract Rate................................................................................... 23, 45
Net Liquidation Proceeds............................................................................ 14, 56
Nonrecoverable Advance.................................................................................. 58
Notional Principal Amount................................................................................ 9
Offered Certificates.................................................................................... ii
OID..................................................................................................... 19
Outstanding Amount Advanced............................................................................. 58
pass-thru entities...................................................................................... 75
Percentage Interest...................................................................................... 8
Plans................................................................................................... 77
Pool Scheduled Principal Balance.................................................................... 12, 54
Pre-Funded Amount....................................................................................... 49
Pre-Funding Account..................................................................................... 49
Pre-Funding Period...................................................................................... 49
prepayment.............................................................................................. 38
Prepayment Model........................................................................................ 38
Prospectus.............................................................................................. ii
PTCE.................................................................................................... 81
PTCE 95-60.............................................................................................. 82
qualified liquidation................................................................................... 62
qualified mortgage...................................................................................... 47
Record Date............................................................................................. 45
Reference Banks......................................................................................... 73
regular interests.......................................................................... iii, 19, 73, 75
Relevant Depositary..................................................................................... 64
REMIC.............................................................................................. iii, 73
REMIC Provisions........................................................................................ 73
Replaced Contract....................................................................................... 49
Reserve Account..................................................................................... 12, 55
Reserve Account Cap..................................................................................... 55
Reserve Account Draw Amount......................................................................... 12, 55
residual interest....................................................................................... 19
residual interests...................................................................................... 73
Restricted Group........................................................................................ 78
Rules................................................................................................... 64
S&P..................................................................................................... 77
Scheduled Principal Balance......................................................................... 11, 54
Scheduled Principal Reduction Amount.................................................................... 54
Securities Act.......................................................................................... 5
Seller.................................................................................................. ii
Senior Certificate Balance.............................................................................. 12
Senior Certificates................................................................................. ii, iv
Series 199[ ]-[ ] Regular Certificates.................................................................. iv
Series 199[ ]-[ ] Residual Certificates................................................................. iv
Servicer................................................................................................ 5
</TABLE>
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<TABLE>
<S> <C>
Servicer Termination Event.............................................................................. 70
single family residence................................................................................. 48
SMMEA............................................................................................... 20, 83
Structuring Assumptions................................................................................. 39
Subordinate Certificate Balance......................................................................... 12
Subordinate Certificates............................................................................ ii, iv
Subsequent Contracts.................................................................................... 7
Subsequent Transfer Dates............................................................................... 49
successful Termination Auction.......................................................................... 18
Swap Agreement.......................................................................................... ii
Swap Counterparty....................................................................................... ii
Telerate Page 3750...................................................................................... 73
Terms and Conditions.................................................................................... 67
Total Regular Principal Amount...................................................................... 11, 54
Trust Fund........................................................................................... ii, 8
Trustee.............................................................................................. 5, 63
U.S. Person............................................................................................. 5
Underwriters....................................................................................... iii, 83
Underwriting Agreement.................................................................................. 83
Value................................................................................................... 25
WAC..................................................................................................... 37
WAM..................................................................................................... 37
Yield Table............................................................................................. 42
</TABLE>
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
GreenPoint Manufactured Housing Contract Trust V Senior/Subordinate Pass-Through
Certificates, Series 1998-2 (the "Global Securities") will be available only in
book-entry form. Investors in the Global Securities may hold such Global
Securities through any of The Depository Trust Company ("DTC"), Cedel or
Euroclear. The Global Securities will be tradable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedel and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions noting on their
behalf as direct and indirect Participants in DTC. As a result, Cedel and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts as
DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable conventional eurobonds, except that
there will be no temporary global security and no "lock-up" or restricted
period. Investors securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" restricted period. Global Securities
I-1
<PAGE>
will be credited to the securities custody accounts on the settlement date
against payment same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between
DTC Participants will be settled using the procedures applicable to prior
manufactured housing contract pass-through certificates issues in same-day
funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedel Participant or a Euroclear Participant, the purchaser
will send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date, on the basis of the actual number of days
in such accrual period and a year assumed to consist of 360 days. For
transactions settling on the 31st of the month, payment will include interest
accrued to and excluding the first day of the following month. Payment will
then be made by the respective Depositary of the DTC Participant's account
against delivery of the Global Securities. After settlement has been completed,
the Global Securities will be credited to the respective clearing system and by
the clearing system, in accordance with its usual procedures, to the Cedel
Participant's or Euroclear Participant's account. The securities credit will
appear the next day (European time) and the cash debt will be back-valued to,
and the interest on the Global Securities will accrue from, the value date
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the Cedel or Euroclear cash debt will be valued instead as of the actual
settlement date.
Cedel Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit
to them, Cedel Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day,
I-2
<PAGE>
assuming they cleared the overdraft when the Global Securities were credited to
their accounts. However, interest on the Global Securities would accrue from the
value date. Therefore, in many cases the investment income on the Global
Securities earned during that one-day period may substantially reduce or offset
the amount of such overdraft charges, although this result will depend on each
Cedel Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global Securities
to the respective European Depositary for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC Participants a cross-market
transaction will settle no differently than a trade between two DTC
Participants.
Trading between Cedel or Euroclear Seller and DTC Purchaser. Due to
time zone differences in their favor, Cedel Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to Cedel Participants or Euroclear Participants through a Cedel
Participant or Euroclear Participant at least one business day prior to
settlement. In these cases Cedel or Euroclear will instruct the respective
Depositary, as appropriate, to deliver the Global Securities to the DTC
Participant's account against payment. Payment will include interest accrued on
the Global Securities from and including the last coupon payment to and
excluding the settlement date on the basis of either the actual number of days
in such accrual period and a year assumed to consist of 360 days or a 360-day
year of twelve 30-day months, as applicable to the related class of Global
Securities. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following month.
The payment will then be reflected in the account of the Cedel Participant or
Euroclear Participant the following day, and receipt of the cash proceeds in the
Cedel Participant's or Euroclear Participant's account would be back-valued to
the value date (which would be the preceding day, when settlement occurred in
New York). Should the Cedel Participant or Euroclear Participant have a line of
credit with its respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft incurred over that one-day period. If settlement
is not completed on the intended value date (i.e., the trade fails), receipt of
the cash proceeds in the Cedel Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedel Participants or
Euroclear Participants should note that these trades would automatically fail on
the sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
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<PAGE>
borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would give the
Global Securities sufficient time to be reflected in their Cedel or
Euroclear account in order to settle the sale side of the trade; or
staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC Participant is
at least one day prior to the value date for the sale to the Cedel
Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through
Cedel or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless, under currently applicable laws, (i) each
clearing system, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business in the chain of
intermediaries between such beneficial owner and the U.S. entity required to
withhold tax complies with applicable certification requirements and (ii) such
beneficial owner takes one of the following steps to obtain an exemption or
reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Global Securities that are non-U.S. Persons can obtain a complete exemption from
the withholding tax by filing a signed Form W-8 (Certificate of Foreign Status).
If the information shown on Form W-8 changes, a new Form W-8 must be filed
within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners residing in
a country that has a tax treaty with the United States can obtain an exemption
or reduced tax rate (depending on the treaty terms) by filing Form 1001
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides only
for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the Certificate
Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of
a Global Security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom it
holds (the clearing agency, in the case of persons holding directly on the books
of the clearing agency). Form W-8 and Form 1001 are
I-4
<PAGE>
effective for three calendar years and Form 4224 is effective for one calendar
year. The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary does not deal with all aspects
of U.S. Federal income tax withholding that may be relevant to foreign holders
of the Global Securities. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of the
Global Securities. Further, the U.S. Treasury Department has recently finalized
new regulations that will revise some aspects of the current system for
withholding on amounts paid to foreign persons. Under these regulations,
interest or OID paid to a nonresident alien would continue to be exempt from
U.S. withholding taxes (including backup withholding) provided that the holder
complies with the new certification procedures.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
SUBJECT TO COMPLETION, DATED OCTOBER 19, 1998
GREENPOINT CREDIT CORP., SELLER AND SERVICER
MANUFACTURED HOUSING CONTRACT TRUST PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
Manufactured Housing Pass-Through Certificates ("Certificates") of one
or more series (each, a "Series") may be sold from time to time under this
Prospectus and a Prospectus Supplement for each such Series. The Certificates
of each Series may be issued in one or more classes or subclasses (each, a
"Class"), as further described herein. If the Certificates of a Series are
issued in more than one Class, all or less than all of such Classes may be sold
under this Prospectus, and there may be separate Prospectus Supplements for one
or more of such Classes so sold. Any reference herein to the Prospectus
Supplement relating to a Series comprised of more than one Class should be
understood to refer to each of the Prospectus Supplements relating to the
Classes sold hereunder.
The Certificates of each Series will represent interests, as specified
in the related Prospectus Supplement, in a trust fund (a "Trust Fund") created
by GreenPoint Credit Corp. ("GreenPoint" or the "Seller").
For the Index of defined terms, see page 95 herein.
CERTAIN FACTORS SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
CERTIFICATES. SEE "RISK FACTORS' HEREIN AT PAGE 11 AND IN THE RELATED PROSPECTUS
SUPPLEMENT AT PAGE S-19.
THE CERTIFICATES WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF
GREENPOINT OR, UNLESS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS SUPPLEMENT,
ANY OF ITS AFFILIATES. THE CERTIFICATES WILL NOT BE INSURED OR GUARANTEED BY
ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY, THE UNDERWRITER OR ANY OF ITS
AFFILIATES, GREENPOINT OR (EXCEPT AS OTHERWISE SPECIFIED IN THE RELATED
PROSPECTUS SUPPLEMENT) ANY OF ITS AFFILIATES. EXCEPT AS OTHERWISE SPECIFIED IN
THE RELATED PROSPECTUS SUPPLEMENT, THE COLLECTIONS ON THE CONTRACTS WILL
CONSTITUTE THE ONLY SOURCE OF FUNDS FOR PAYMENT ON THE CERTIFICATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus may not be used to consummate sales of Certificates
unless accompanied by a Prospectus Supplement.
The date of this Prospectus is ________, 1998.
<PAGE>
The Trust Fund for each Series of Certificates will be separate from
the Trust Fund for any other Series of Certificates. Each Trust Fund will
include a pool (each, a "Contract Pool") of manufactured housing installment
sales contracts and installment loan agreements (the "Contracts") together with
certain contract rights and other rights relating to such Contracts. GreenPoint
will act as the servicer of the Contracts in each Trust Fund (together with any
successor servicer appointed as described herein, the "Servicer").
The Contracts comprising each Contract Pool will be conveyed to the
relevant Trust Fund by the Seller. Each Contract will have been either (i)
originated or purchased by the Seller, in each case on an individual basis in
the ordinary course of its business or (ii) purchased by the Seller in bulk from
other lenders or finance companies (including from Bank of America, FSB in the
Acquisition (as defined herein)), from governmental agencies or
instrumentalities or from other entities. Interests in each Trust Fund will be
evidenced by a separate Series of Certificates.
If a Series of Certificates is comprised of more than one Class, the
related Prospectus Supplement will set forth the interest in the applicable
Trust Fund represented by each Class sold hereunder. The timing of
distributions of principal or of interest or of both to the holders of
Certificates of such Classes may be on a sequential, pro-rata or other basis as
specified in the related Prospectus Supplement. In addition, if specified in
the related Prospectus Supplement, the rights of the holders of the Certificates
of one or more Classes of a multiple-Class Series to receive distributions with
respect to some or all of the assets of the related Trust Fund may be
subordinate to such rights of the holders of the Certificates of one or more
other Classes.
Neither the Seller nor any of its affiliates will have any obligations
with respect to any Series of Certificates except, in the case of the Seller,
for obligations arising from certain representations and warranties with respect
to the Contracts sold by it in the related Contract Pool and, in the case of the
Servicer, for certain contractual servicing obligations, each as further
described herein. See "Risk Factors--No Recourse" herein.
To the extent specified in the related Prospectus Supplement, the
holders of the Certificates of any Series, or of one or more Classes within a
Series, may be entitled to the benefit of overcollateralization or subordination
of one or more Classes of Certificates within such Series, one or more spread
accounts or other reserve funds, one or more letters of credit, one or more
surety bonds or other credit facilities and/or one or more certificate purchase
agreements or other liquidity facilities. See "Credit and Liquidity
Enhancement" herein and the related Prospectus Supplement.
If so specified in the applicable Prospectus Supplement, the
Certificates of a Series or of any Class within a Series will be issuable in the
form of one or more global certificates represented by book-entries on the
records of a depository or participating members thereof. See "Reports to
Certificateholders," "Risk Factors," and "Description of the Certificates--
Global Certificates" herein and the related Prospectus Supplement.
There will have been no public market for any Certificates sold
hereunder prior to the offering thereof and there is no assurance that any such
market will develop. The
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<PAGE>
Underwriters named in the Prospectus Supplement relating to a Series may from
time to time buy and sell Certificates of such Series, but there can be no
assurance that an active secondary market therefor will develop, and there is no
assurance that any such market, if established, will continue. See "Risk
Factors--Limited Liquidity" herein.
An election may be made to cause the Trust Fund relating to a Series
of Certificates to be treated as a real estate mortgage investment conduit (a
"REMIC") for federal income tax purposes. See "Certain Federal Income Tax
Consequences" herein.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
With respect to any Class of Certificates that is supported by a
guarantee of GreenPoint Financial Corp. ("GFC"), GFC's Annual Report on Form 10-
K for the year ended December 31, 1997 and Quarterly Reports on form 10-Q for
the periods ended March 31 and June 30, 1998, which have been filed with the
Commission, are hereby incorporated by reference in this Prospectus and the
related Prospectus Supplement.
All reports and other documents filed by the Servicer with respect to
the Trust Fund for any Series of Certificates, pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") subsequent to the date of this Prospectus and prior to the termination of
the offering of the Certificates of such Series shall be deemed to be
incorporated by reference into this Prospectus and to be made a part hereof.
All reports and other documents filed by the GFC pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Certificates of such Series
shall be deemed to be incorporated by reference into this Prospectus and the
Prospectus Supplement relating to a Class of Certificates that is supported by a
guarantee of GFC, and to be a part thereof from the respective dates of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as modified or superseded, to constitute a part of this Prospectus.
Upon request by any person to whom this Prospectus and the applicable
Prospectus Supplement are delivered in connection with the offering of one or
more Classes of Certificates, the Servicer will provide or cause to be provided
without charge a copy of any such documents and/or reports incorporated herein
by reference, in each case to the extent such documents or reports relate to
such Classes of Certificates, other than the exhibits to such documents (unless
such exhibits are specifically incorporated by reference in such documents).
Requests to the Servicer should be directed orally or in writing to GreenPoint
Credit Corp., telephone number (212) 834-1000. The Seller has determined that
its financial statements are not material to the offering of any Certificates.
iii
<PAGE>
ADDITIONAL INFORMATION
This Prospectus contains, and the Prospectus Supplement for each
Series of Certificates will contain, a summary of certain material terms of
certain of the documents referred to herein and therein, but neither contains or
will contain all of the information set forth in the Registration Statement of
which this Prospectus is a part (the "Registration Statement"). For further
information, reference is made to such Registration Statement and the exhibits
thereto which the Seller has filed with the Securities and Exchange Commission
(the "Commission"), Washington, D.C., under the Securities Act. Statements
contained in this Prospectus and any Prospectus Supplement describing a
provision of any contract or other document referred to are summaries, and if
this Prospectus or such Prospectus Supplement indicates that such contract or
other document has been filed as an exhibit to the Registration Statement,
reference is made to the copy of the contract or other document filed as an
exhibit. Copies of the Registration Statement can be inspected and, upon
payment of the Commission's prescribed charges, copies can be obtained at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's following regional
offices: Northeast Regional Office, 7 World Trade Center, Suite 1300, New York,
New York 10048; and Midwest Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. The Commission maintains a web
site at http://www.sec.gov that contains reports and other documents filed by
registrants electronically with the Commission.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates (as defined herein) with
respect to a Trust Fund are issued, monthly and annual reports, which contain
unaudited information concerning the Trust Fund and are prepared by the
Servicer, will be sent on behalf of the Trust Fund to Cede & Co. ("Cede"), as
nominee of The Depository Trust Company ("DTC") and registered holder of the
Certificates offered hereby, pursuant to the Agreement (as defined herein). See
"Description of the Certificates--Global Certificates." Such reports will not
constitute financial statements prepared in accordance with generally accepted
accounting principles. The Agreement will not require the sending of, and the
Seller does not intend to send, any of its financial reports to registered
holders (the "Certificateholders") of the Certificates offered hereby or to
owners (the "Certificate Owners") of beneficial interests in the Certificates.
The Servicer will file with the Commission such periodic reports with respect to
the Trust Fund as are required under the Exchange Act, and the rules and
regulations of the Commission thereunder. If the number of Certificateholders
of record is below 300, the Certificates may cease to be subject to the periodic
reporting requirements of the Exchange Act. In that case, the Servicer may
cease to file such reports with the Commission. The Trustee would, however,
continue to provide periodic reports to Certificateholders as and to the extent
described in the Prospectus Supplement.
iv
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. III
ADDITIONAL INFORMATION...................................................... IV
REPORTS TO CERTIFICATEHOLDERS............................................... IV
SUMMARY OF TERMS............................................................ 1
RISK FACTORS................................................................ 11
THE CONTRACT POOLS.......................................................... 15
THE SELLER.................................................................. 19
THE ACQUISITION............................................................. 19
LOAN ORIGINATIONS........................................................... 20
UNDERWRITING PRACTICES...................................................... 20
SERVICING................................................................... 23
PREPAYMENT AND YIELD CONSIDERATIONS......................................... 24
PREPAYMENT CONSIDERATIONS................................................... 24
YIELD CONSIDERATIONS........................................................ 25
DESCRIPTION OF THE CERTIFICATES............................................. 26
GENERAL..................................................................... 27
CONVEYANCE OF CONTRACTS..................................................... 28
PAYMENTS ON CONTRACTS....................................................... 29
DISTRIBUTIONS ON CERTIFICATES............................................... 29
GLOBAL CERTIFICATES......................................................... 32
DTC'S YEAR 2000 EFFORTS..................................................... 33
OPTIONAL AND MANDATORY REPURCHASE OF CERTIFICATES; OPTIONAL
TERMINATION AND TERMINATION AUCTION........................................ 34
TERMINATION OF THE AGREEMENT................................................ 36
COLLECTION AND OTHER SERVICING PROCEDURES................................... 36
SERVICING COMPENSATION AND PAYMENT OF EXPENSES; CERTAIN
MATTERS REGARDING THE SERVICER............................................. 36
AMENDMENT................................................................... 39
THE TRUSTEE................................................................. 40
INDEMNIFICATION............................................................. 41
CREDIT AND LIQUIDITY ENHANCEMENT............................................ 41
SUBORDINATION............................................................... 41
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page in Prospectus
on Which Term
is Defined
------------------
<S> <C>
RESERVE FUNDS................................................................ 44
CREDIT FACILITIES............................................................ 44
LIQUIDITY FACILITIES......................................................... 45
CERTAIN FEDERAL INCOME TAX CONSEQUENCES...................................... 45
REMIC ELECTIONS.............................................................. 47
REMIC CERTIFICATES........................................................... 47
TAXATION OF REGULAR CERTIFICATES............................................. 50
TREATMENT OF CERTIFICATES REPRESENTING A REMIC REGULAR
INTEREST COUPLED WITH A SWAP OR CAP CONTRACT................................ 61
TAXATION OF RESIDUAL CERTIFICATES............................................ 62
NON-REMIC TRUSTS............................................................. 73
OWNER TRUST CERTIFICATES OR NOTES............................................ 77
TREATMENT OF THE OWNER TRUST CERTIFICATES OR NOTES AS DEBT................... 77
TREATMENT OF THE OWNER TRUST................................................. 78
TREATMENT OF THE OWNER TRUST CERTIFICATES OR NOTES........................... 78
OTHER TAX CONSEQUENCES....................................................... 80
RESTRICTIONS ON TRANSFER OF REMIC RESIDUAL CERTIFICATES...................... 80
TAX-EXEMPT INVESTORS......................................................... 80
LEGAL INVESTMENT............................................................. 80
ERISA CONSIDERATIONS......................................................... 82
CERTAIN LEGAL ASPECTS OF THE CONTRACTS....................................... 83
THE CONTRACTS (OTHER THAN LAND HOME AND LAND-IN LIEU
CONTRACTS).................................................................. 83
LAND HOME AND LAND-IN-LIEU CONTRACTS......................................... 87
CERTAIN MATTERS RELATING TO INSOLVENCY....................................... 90
CONSUMER PROTECTION LAWS..................................................... 90
TRANSFERS OF MANUFACTURED HOMES; ENFORCEABILITY OF
RESTRICTIONS ON TRANSFER.................................................... 91
APPLICABILITY OF USURY LAWS.................................................. 92
RATINGS...................................................................... 92
METHOD OF DISTRIBUTION....................................................... 93
USE OF PROCEEDS.............................................................. 94
LEGAL MATTERS................................................................ 94
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page in Prospectus
on Which Term
is Defined
------------------
<S> <C>
EXPERTS...................................................................... 94
INDEX OF SIGNIFICANT DEFINITIONS............................................. 95
</TABLE>
<PAGE>
SUMMARY OF TERMS
This section is provided only as a summary of the detailed information
appearing elsewhere in this Prospectus and the information with respect to each
Series of Certificates contained in the related Prospectus Supplement. Reference
is made to the "Index of Significant Definitions" herein beginning at page 95
for the location in this Prospectus of the definitions of certain terms.
<TABLE>
<CAPTION>
<C> <S>
Title of Certificates......... Manufactured Housing Contract Trust Pass-Through
Certificates (Issuable in Series).
Issuer........................ The Trust, a Grantor Trust or an Owner Trust as
specified in the related prospectus supplement.
Seller........................ GreenPoint Credit Corp. ("GreenPoint").
Servicer...................... GreenPoint (together with any successor servicer
under the Agreement (as defined herein), the
"Servicer").
Risk Factors.................. Certain risk factors are particularly relevant
to a decision to invest in any Certificates sold
hereunder. See "Risk Factors" herein.
The Contracts................. The Certificates of any Series will represent
undivided ownership interest in a pool (a
"Contract Pool") of certain manufactured housing
installment sales contracts and installment loan
agreements (each, a "Contract" and,
collectively, the "Contracts"). Contracts
comprising a Contract Pool will have been either
(i) originated or purchased by the Seller, in
each case on an individual basis in the ordinary
course of its business or (ii) purchased by the
Seller in bulk from other lenders or finance
companies (including from Bank of America, FSB
in the Acquisition (as defined herein) and
including from lenders and finance companies
with whom GreenPoint may have or may establish
referral arrangements), from governmental
agencies or instrumentalities or from other
entities. Each Contract will be secured by a new
or used manufactured home (each manufactured
home securing a Contract being referred to
herein as a "Manufactured Home") and, in certain
cases, by a mortgage, deed of trust or other
instrument securing the real estate on which the
Manufactured Home is located ("Land Home" or
"Land-in-Lieu Contract"). If so specified in the
related Prospectus Supplement, none of the
Contracts or collections thereon will be insured
or guaranteed by any governmental agency or
instrumentality. The applicable Prospectus
Supplement will specify if any of the related
Contracts are Land Home or Land-in-Lieu
Contracts and whether the annual percentage rate
("Contract Rate") for each such Contract is
fixed, is variable or increases
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("steps up") in specified increments on certain
dates. The Prospectus Supplement relating to
each Series of Certificates will provide
information as of the first day of the month of
initial issuance of such Certificates (the "Cut-
off Date") with respect to, among other things,
(i) the number, the aggregate unpaid principal
balance, and the range of outstanding principal
balances of the Contracts comprising the related
Contract Pool; (ii) the weighted average of the
Contract Rates ("Weighted Average Contract
Rate") of the Contracts and the distribution of
Contract Rates as of the related Cut-off Date;
(iii) the weighted average original and
remaining terms to maturity of the Contracts and
the distribution of remaining terms to maturity;
(iv) the average outstanding principal balance
of the Contracts; (v) the geographical
distribution of the related Manufactured Homes
at origination; (vi) the years of origination of
the Contracts; (vii) the distribution of
original principal balances of the Contracts;
(viii) the percentage amount of Contracts
secured by new or used Manufactured Homes; (ix)
the range of and weighted average loan-to-value
ratios at origination; and (x) the month and
year in which the final scheduled payment date
for the Contract with the latest maturity is
scheduled to occur. No more than a maximum of 5%
of the Contracts (measured by aggregate
principal balance of the assets in the Contract
Pool), as described herein and the related
prospectus supplement, as of the Cut-off Date,
may deviate from the characteristics of the
assets in the Contract Pool as of the Cut-off
Date. If a Contract Pool contains Step-Up Rate
Contracts (as defined herein), the related
Prospectus Supplement will specify the
percentage of the Contract Pool comprised of
such Contracts, the period during which the
Contract Rates for such Contracts will be
stepped up, the range of increases in such
Contract Rates and the range of increases in the
Scheduled Payments (as defined herein) for such
Contracts. If a Contract Pool contains variable
rate Contracts, the related Prospectus
Supplement will contain a description of the
basis on which such rates are determined,
including any maximum or minimum rates and the
frequency with which any such rate adjusts. The
Prospectus Supplement relating to a Series of
Certificates also will contain certain
information about Contracts in the related Trust
Fund that are Land Home Contracts (as defined
herein), Land-in-Lieu Contracts (as defined
herein) or Contracts that are partially
guaranteed by the Veterans Administration or
partially insured by the Federal Housing
Administration. In addition, if so specified in
the related Prospectus Supplement, additional
Contracts may be purchased from GreenPoint
during the Pre-Funding Period as defined in the
related Prospectus Supplement, from funds on
deposit in a Pre-Funding Account, as defined in
the
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related Prospectus Supplement. To the extent
that the Seller believes such information to be
material, any Prospectus Supplement may also
include additional information concerning the
related Contract Pool that is stored in the
electronic data processing system of the Seller.
Description of Certificates... Each Series of Certificates will be issued
pursuant to a pooling and servicing agreement
(each, an "Agreement") entered into by
GreenPoint as Seller and as Servicer, the
trustee specified in the related Prospectus
Supplement (the "Trustee"), and such other
parties, if any, as may be specified in the
related Prospectus Supplement. The Certificates
of a Series may be issued in one or more classes
or subclasses (each referred to in this
Prospectus as a "Class"). If the Certificates of
a Series are issued in more than one Class, the
Certificates of all or less than all of such
Classes may be sold under this Prospectus, and
there may be separate Prospectus Supplements
relating to one or more of such Classes so sold.
Any reference herein to the Prospectus
Supplement relating to a Series comprised of
more than one Class should be understood to
refer to each of the Prospectus Supplements
relating to the Classes of such Series sold
hereunder. Any reference herein to the
Certificates of a Class should be understood as
a reference to the Certificates of a Class
within a Series, the Certificates of a subclass
within a Class or all of the Certificates of a
single-Class Series, as the context may require.
The Certificates of each Series will evidence an
interest, as specified in the related Prospectus
Supplement, in a trust fund (a "Trust Fund")
created by the Seller pursuant to an Agreement.
Each Trust Fund will include a Contract Pool
together with certain contract rights and other
rights relating to such Contracts (as discussed
below). Each Trust Fund may from time to time
also include title to any Manufactured Home that
is repossessed following a Contract default,
hazard insurance claims and proceeds from the
sale of any such Manufactured Home or such
hazard insurance claims. The Contracts
comprising each Contract Pool will be sold to
the related Trust Fund by the Seller.
Non-Recourse Obligations...... The Certificates will not represent interests in
or obligations of GreenPoint or, if so specified
in the related Prospectus Supplement, any of its
affiliates. The Certificates will not be insured
or guaranteed by any governmental agency or
instrumentality, the Underwriter or any of its
affiliates, GreenPoint or (except as otherwise
specified in the related Prospectus Supplement)
any of its affiliates. Except as otherwise
specified in the related Prospectus Supplement,
the collections on the Contracts will constitute
the only source of funds for payment
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on the Certificates.
Distributions on Certificates.... All Certificates will entitle the holders
thereof to distributions, on the dates
specified in the related Prospectus
Supplement (each, a "Distribution Date"),
from amounts collected on the underlying
Contracts. The Certificates of a Class may
entitle the holders thereof to (a)
distributions of both principal and
interest, (b) distributions of principal
only or (c) distributions of interest only.
Such distributions will be made in
accordance with a formula described in the
related Prospectus Supplement, and, if so
specified in such Prospectus Supplement,
distributions allocable to a Class of
Certificates will be applied first to
interest, if any, and second to principal,
if any. To the extent specified in the
related Prospectus Supplement, the rights of
the holders of the Certificates of one or
more Classes of a multiple-Class Series to
receive distributions of principal or of
interest or both from amounts collected on
the Contracts may be subordinate to such
rights of the holders of Certificates of one
or more other Classes. See "Credit and
Liquidity Enhancement" herein and the
applicable Prospectus Supplement.
A. Distributions of Principal.... If the Certificates of a Class entitle the
holders thereof to distributions of
principal, the related Prospectus Supplement
will specify an initial aggregate principal
balance for the Certificates of the Class
(the related "Certificate Balance") and a
method of computing the amount of principal,
if any, to be distributed to the holders of
such Certificates on each Distribution Date.
If so specified in the related Prospectus
Supplement, principal distributions for the
Certificates of a Class will be computed on
the basis of a formula which, on each
Distribution Date, allocates all or a
portion of the Total Regular Principal
Amount relating to that Distribution Date to
the Certificates of that Class. The "Total
Regular Principal Amount" is the total
amount by which the aggregate outstanding
principal balance of the Contracts in the
related Contract Pool is reduced during one
or more collection periods prior to the
Distribution Date designated in such
Prospectus Supplement (each, a "Collection
Period"). Such reduction may occur as a
result of actuarially predetermined
scheduled principal reductions, receipt of
principal prepayments, liquidation of
Contracts, losses on Contracts and
repurchases of Contracts under certain
conditions, the failure of a third party
credit support provider, if any, to make a
required payment, or a combination of the
foregoing events. See "The Contract Pools,"
"Description of the Certificates--Conveyance
of Contracts," "Description of the
Certificates--Optional and Mandatory
Repurchase of Certificates; Termination
Auction" and "Description of the
Certificates--Collection and Other Servicing
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Procedures" herein. Distributions with
respect to all or a portion of the Total
Regular Principal Amount are sometimes
referred to herein as distributions of
"Regular Principal." The Total Regular
Principal Amount with respect to any
Contract Pool and any Distribution Date may
be estimated in a manner specified in the
related Prospectus Supplement.
If, due to liquidation losses or other
circumstances adversely affecting the
collections on the underlying Contract Pool,
the Contract collections available on any
Distribution Date to make distributions of
Regular Principal to the holders of the
Certificates of a Class are less than the
portion of the Total Regular Principal
Amount allocable to such Class, the
deficiency may be made up from (i) the
amount, if any, by which the interest
collected on nondefaulted Contracts during
the same Collection Period exceeds the
interest distribution due to the holders of
Certificates for the related Series, the
servicing fee of the Servicer (to the extent
such servicing fee is payable prior to
distributions of interest to the holders of
any Class of Certificates) and other
expenses of the Trust Fund or (ii) funds
available from one or more forms of credit
support, but only to the extent, if any,
specified in the applicable Prospectus
Supplement. Additionally, if so specified in
the related Prospectus Supplement, if
GreenPoint is acting as Servicer, GreenPoint
may subordinate the Monthly Servicing Fee
for a Series with respect to all, or a
portion of, the amounts due to the related
Certificateholders on the terms and
conditions set forth in such Prospectus
Supplement. See "Credit and Liquidity
Enhancement" herein. If specified in the
applicable Prospectus Supplement, the
Certificate Balance of the Certificates of a
Class will be reduced on each Distribution
Date by the full amount of the portion of
the Total Regular Principal Amount allocable
to such Class even if, due to deficient
Contract collections, a full distribution
thereof is not made.
The applicable distribution formula for each
Class of a multiple-Class Series may
allocate the Total Regular Principal Amount
among the various Classes on a pro rata,
sequential or other basis, as specified in
the related Prospectus Supplement. If
specified in the related Prospectus
Supplement, any such formula may entitle the
holders of Certificates of a particular
Class to receive on certain Distribution
Dates, distributions of Regular Principal
from particular sources of credit support
upon the occurrence of certain losses or
delinquencies, even if the holders of the
Certificates of such Class would not have
been entitled to receive principal
distributions on such Distribution Dates
from amounts collected on the underlying
Contracts in the absence of such losses or
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delinquencies.
If specified in the applicable Prospectus
Supplement, the Certificates of a Class may
entitle the holders thereof to special
principal distributions on particular
Distribution Dates that are unrelated to the
Total Regular Principal Amount for any such
Distribution Date ("Special Principal
Distributions"). Special Principal
Distributions may be made, under the
circumstances set forth in the applicable
Prospectus Supplement, from interest
collected on the underlying Contract Pool,
from funds available from one or more forms
of credit support or from such other source
as may be specified in such Prospectus
Supplement. The Certificates of a Class
having an initial Certificate Balance may
entitle the holders thereof to distributions
of Regular Principal only, to distributions
of Regular Principal and to Special
Principal Distributions or to Special
Principal Distributions only. However, if so
specified in the related Prospectus
Supplement, the Certificates of a Class will
not entitle the holders thereof to aggregate
principal distributions in excess of the
initial Certificate Balance for such Class.
B. Distributions of Interest..... The distribution formula for a Class of
Certificates having an initial Certificate
Balance may, but need not, also specify a
method of computing the interest, if any, to
be distributed on specified Distribution
Dates (which may include all or less than
all of the Distribution Dates) to the
holders of the Certificates of such Class.
Such interest may be equal, subject to such
adjustments as may be described in the
related Prospectus Supplement, to a
specified number of days' interest on the
applicable Certificate Balance (before
giving effect to any reduction thereof on
such Distribution Date), calculated at a
rate (the "Pass-Through Rate") specified in
the related Prospectus Supplement. The Pass-
Through Rate may be fixed or variable, and,
if specified in the related Prospectus
Supplement, may shift from a variable rate
to a fixed rate under the conditions
specified in such Prospectus Supplement. See
"Description of the Certificates--
Distributions on Certificates--Distributions
of Interest" herein for a general
description of the types of variable Pass-
Through Rates that might be applicable to a
Class of Certificates. Alternatively, such
interest may be equal to all or a portion
(which portion will be determined as
described in the related Prospectus
Supplement) of the interest due on the
related Contracts during one or more
Collection Periods occurring prior to such
Distribution Date. Classes of Certificates
that do not entitle the holders thereof to
receive distributions of principal may
nevertheless entitle such holders to receive
interest distributions calculated on this
basis. If, due to liquidation losses or
other
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circumstances adversely affecting the
collections on the underlying Contract Pool,
the Contract collections available to make
distributions of interest to the holders of
the Certificates of a Class are less than
the amount of interest computed as described
above, the deficiency may be made up from
other sources, but only to the extent, if
any, specified in the related Prospectus
Supplement. See "Credit and Liquidity
Enhancement" herein and the applicable
Prospectus Supplement.
C. Residual Interests........... If specified in the related Prospectus
Supplement, a Class of Certificates in any
Series may evidence a residual interest in
the related Trust Fund (the "Residual
Interest"). Any such Class will not have
been registered under the Securities Act and
will not be offered or sold pursuant to this
Prospectus. Certificates evidencing a
Residual Interest will not have the features
described above. Rather, if so specified in
such Prospectus Supplement, such
Certificates will entitle the holders
thereof to receive distributions from
amounts collected on the Contracts which
would not be needed to make distributions to
the holders of other interests in the Trust
Fund (or to pay expenses of the related
Trust Fund) in the absence of liquidation
losses or other events resulting in
deficient Contract collections.
In addition, if specified in the related
Prospectus Supplement, certain or all
Certificates evidencing Residual Interests
may also entitle the holders thereof to
receive additional distributions of assets
of the related Trust Fund, to the extent any
such assets remain after being applied to
make distributions to the holders of other
interests in the Trust Fund (or to pay
expenses of the Trust Fund). The
Certificates evidencing a Residual Interest
may entitle the holders thereof to
distributions at various times throughout
the life of the related Trust Fund or only
upon termination of the Trust Fund, all as
more fully set forth in the related
Prospectus Supplement. If an election is
made to treat the related Trust Fund as a
REMIC, the holders of a Residual Interest in
such Trust Fund will be subject to federal
income taxation with respect to their
ownership of such Residual Interest as
described herein under "Certain Federal
Income Tax Consequences--REMIC Certificates--
Taxation of Residual Certificates."
Global Certificates.............. If so specified in the related Prospectus
Supplement, the Certificates of a Series, or
of one or more Classes within a Series, will
be issuable in the form of one or more
global certificates (each, a "Global
Certificate") to be held by Cede & Co.
("Cede"), as nominee of The Depository Trust
Company ("DTC"), on behalf of the beneficial
owners (the "Certificate Owners") of the
Certificates, as described herein under
"Description of the
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Certificates--Global Certificates." If some
or all of the Certificates of a Series are
issued in the form of one or more Global
Certificates, certain monthly and annual
reports prepared by the Servicer under the
related Agreement will be sent on behalf of
the related Trust Fund to Cede and not to
the Certificate Owners, as described in
"Reports to Certificateholders" above.
Credit and Liquidity Enhancement.. The extent, if any, to which a Class of
Certificates in any Series may be entitled
to the benefit of one or more forms of
credit and liquidity enhancement by means of
overcollateralization or subordination of
one or more Classes of Certificates in such
Series, the deposit of funds into one or
more spread accounts or other reserve funds,
the issuance of one or more letters of
credit, a limited guarantee of GreenPoint
Financial Corp. ("GFC"), surety bonds, or
other credit facilities, or a combination
thereof, and/or the performance under one or
more certificate purchase agreements or
other liquidity facilities, or a combination
thereof, will be described in the related
Prospectus Supplement. See "Credit and
Liquidity Enhancement" herein and the
related Prospectus Supplement.
Advances.......................... The extent, if any, to which the Servicer
will be required to make advances of
delinquent scheduled payments on the
Contracts in a Contract Pool will be
described in the related Prospectus
Supplement.
Optional Termination and
Termination Auction.............. The Servicer has the option to purchase from
the Trust Fund all Contracts then
outstanding and all other property in the
Trust Fund on any Distribution Date after
the First Distribution Date if, among other
conditions, the Pool Scheduled Principal
Balance is less than 10% (or such other
percentage as may be specified in the
related Prospectus Supplement) of the Cut-
off Date Pool Principal Balance. See
"Description of the Certificates--Optional
Termination and Termination Auction" herein.
During that period, the Servicer also may
direct the Trustee to conduct a Termination
Auction for the sale of all Contracts then
outstanding in the Trust Fund, and, in any
event, if the Servicer has not exercised the
option call within 90 days of the first
Distribution Date when the Pool Scheduled
Principal Balance is less than 10% (or such
other percentage as may be specified in the
related Prospectus Supplement) of the Cut-
off Date Pool Principal Balance, the
Servicer shall direct the Trustee to conduct
a Termination Auction. The Trustee will sell
all the Contracts to the highest bidder,
subject, among other things, to (i) the
requirement that the highest bid equal or
exceed the Minimum Termination Amount, and
(ii) the requirement that at least one bid
be tendered by an active participant in the
asset-backed securities
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or manufactured housing contract market
that is not affiliated with GreenPoint.
See "Description of the Certificates--
Optional Termination and Termination
Auction" herein. Any early termination of
the Trust Fund and early retirement of
the Certificates that results from the
Servicer's exercise of the option call or
a "successful Termination Auction" (a
Termination Auction where a bidder has
been accepted and funds have been
deposited in the Certificate Account) may
have an effect on an investor's yield on
such Certificates. See "Prepayment and
Yield Considerations" herein and in the
Prospectus Supplement.
Federal Income Tax Consequences..... The federal income tax consequences of
the purchase, ownership and disposition
of the Certificates in any Series will
depend on, among other factors, whether
an election is made to treat the related
Trust Fund as a REMIC under the
provisions of the Internal Revenue Code
of 1986, as amended (the "Code"). See
"Certain Federal Income Tax Consequences--
REMIC Certificates" herein for a
discussion of the federal income tax
consequences of the purchase, ownership
and disposition of the Certificates in
any Series if such an election is made.
See "Certain Federal Income Tax
Consequences--Non-REMIC Trusts" for a
discussion of the federal income tax
consequences of the purchase, ownership
and disposition of the Certificates in
any Series if such an election is not
made.
ERISA Considerations................ A fiduciary of any employee benefit or
other plan subject to the Employee
Retirement Income Security Act of 1974,
as amended ("ERISA"), or Section 4975 of
the Code should carefully review with its
own legal advisors whether the purchase
or holding of Certificates could give
rise to a transaction that is prohibited
or otherwise impermissible under ERISA or
the Code. See "ERISA Considerations"
herein and in the related Prospectus
Supplement. If specified in the related
Prospectus Supplement, certain
Certificates sold hereunder will not be
transferable to certain benefit plan
investors except under the conditions set
forth in such Prospectus Supplement.
Legal Investment.................... Unless otherwise indicated in the
applicable Prospectus Supplement, any
Certificates offered hereby that are
rated by at least one nationally
recognized statistical rating
organization in one of its two highest
rating categories will generally
constitute "mortgage related securities"
under the Secondary Mortgage Market
Enhancement Act of 1984, as amended
("SMMEA") and, as such, would be "legal
investments" for certain types of
institutional investors to the extent
provided in SMMEA. Certain state laws
have overridden SMMEA and, therefore,
institutional investors should review
with their own legal advisors whether
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such Certificates would constitute a
legal investment. In addition, some
Classes of Certificates offered hereby
may not be rated in one of the two
highest rating categories and thus would
not constitute "mortgage related
securities." See "Legal Investment"
herein and in the related Prospectus
Supplement.
Ratings............................. It is a condition to the issuance of each
Class of Certificates sold under this
Prospectus that it be rated at the time
of issuance by at least one nationally
recognized statistical rating
organization in one of its four highest
rating categories. A security rating is
not a recommendation to buy, sell or hold
securities and may be subject to revision
or withdrawal at any time by the
assigning rating agency. The security
rating of any Class of Certificates
should be evaluated independently of
similar security ratings assigned to
other kinds of securities, including
Certificates in the same Series or
Certificates of other Series sold under
this Prospectus.
Ratings on manufactured housing contract
pass-through certificates address the
likelihood of the receipt by
Certificateholders of their allocable
share of principal and interest on the
underlying manufactured housing contract
assets. These ratings address structural
and legal aspects associated with such
certificates, the extent to which the
payment stream on such underlying assets
is adequate to make payments required by
such certificates and the credit quality
of the credit enhancer, if any. Ratings
on the Certificates do not, however,
constitute a statement regarding the
likelihood of principal prepayments by
Obligors under the Contracts in the
related Contract Pool, the degree by
which prepayments made by such Obligors
might differ from those originally
anticipated or whether the yield
originally anticipated by investors of
any Series of Certificates may be
adversely affected as a result of such
prepayments. As a result, investors of
any Series of Certificates might suffer a
lower than anticipated yield. See
"Rating" herein and in the related
Prospectus Supplement.
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RISK FACTORS
Prospective purchasers of Certificates should consider, among other
things, the following factors in connection with the purchase of Certificates.
Actual results could differ materially from those projected in the forward-
looking statements as a result of the risk factors set forth below and elsewhere
in this Prospectus.
1. Limited Liquidity. There can be no assurance that a secondary
market will develop for Certificates or, if it does develop, that it will
provide the holders of Certificates with liquidity of investment or that it will
remain for the term of such Certificates.
2. Book-entry Form. To the extent any Certificate is represented
by a Global Certificate, the issuance of such Certificates in book-entry form
may reduce the liquidity of such Certificates in the secondary trading market
since investors may be unwilling to purchase Certificates for which they cannot
obtain physical certificates. See "Description of the Certificates--Global
Certificates" herein.
3. Economic Conditions. An investment in Certificates may be
affected by, among other things, a downturn in national, regional or local
economic conditions. The geographic location of the Manufactured Homes in any
Contract Pool at origination of the related Contract will be set forth in the
related Prospectus Supplement under "The Contract Pool." Regional and local
economic conditions are often volatile and, historically, regional and local
economic conditions, as well as national economic conditions, have affected the
delinquency, loan loss and repossession experience of manufactured housing
installment sales contracts and/or installment loan contracts (hereinafter
generally referred to as "contracts" or "manufactured housing contracts").
Sufficiently high delinquencies and liquidation losses on the Contracts in any
contract pool will have the effect of reducing, and possibly eliminating, the
protection against loss afforded by any credit enhancement supporting any Class
of the related Certificates. If such protection is eliminated with respect to a
Class of Certificates, the holders of such Certificates will bear all risk of
loss on the related Contracts and will have to rely on the value of the related
Manufactured Homes for recovery of the outstanding principal of and unpaid
interest on any defaulted Contracts in the related Contract Pool. See "Credit
and Liquidity Enhancement" herein and the related Prospectus Supplement.
4. Losses and Credit Risk. Manufactured housing generally
depreciates in value, regardless of its location. Thus, Certificateholders
should expect that, as a general matter, the market value of any Manufactured
Home will be lower than the outstanding balance of the related Contract. To the
extent that the Servicer is required to repossess Manufactured Homes because of
owner defaults under the Contracts, liquidation losses will likely occur. The
primary protection of Certificateholders against these liquidation losses comes
from three sources: first, the amount (the "Excess Interest"), if any, by which
the interest collected on nondefaulted Contracts during a Collection Period
exceeds interest distributions due to the holders of the Regular Certificates
and, if so specified in the related Prospectus Supplement, the Monthly Servicing
Fee; second, any Credit Facility or Reserve Fund that may support one or more
Classes of Certificates, and third, as to the holders of Senior Certificates,
the subordination in interest of the junior Classes of Certificates. The amount
of Excess Interest can vary from Contract Pool to Contract Pool, and will be
reduced if interest-only Certificates are issued. If the liquidation
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losses exceed the amount of Excess Interest and any Credit Facility or Reserve
Fund, the payments on Certificates will be delayed and losses are likely to
occur that will be borne by the holders of the Certificates. To the extent that
the Certificates have been designated as senior or subordinate, the most junior
certificates would be the first to bear these delays or losses. See "The
Contract Pools" and "Credit and Liquidity Enhancement" herein and in the related
Prospectus Supplement.
5. No Recourse. The Certificates will not represent interests in or
obligations of GreenPoint or, if so specified in the related Prospectus
Supplement, any of its affiliates. The Certificates will not be insured or
guaranteed by any governmental agency or instrumentality, the Underwriter or any
of its affiliates, GreenPoint or any of its affiliates (except in the case of a
Limited Guaranty or Alternative Credit Enhancement if so specified in the
related Prospectus Supplement). Except as otherwise specified in the related
Prospectus Supplement, the collections on the Contracts will constitute the only
source of funds for payment on the Certificates. Therefore, any delays or
losses on the Contracts that occur will be borne by the holders of the
Certificates and such holders will have no recourse against GreenPoint or any of
its affiliates (except in the case of a Limited Guaranty or Alternative Credit
Enhancement if so specified in the related Prospectus Supplement). To the
extent that the Certificates have been designated as senior or subordinate, the
most junior certificates would be the first to bear these delays or losses.
6. Security Interests of the Trust Fund in the Manufactured Homes.
On the date of initial issuance of Certificates in any Series, the Seller will
convey the related Contracts to the related Trust Fund. GreenPoint, as Servicer,
will obtain and maintain physical possession of the Contract documents as
custodian and agent for the related Trustee. Each Contract is secured by a
security interest in a Manufactured Home and, in the case of Land Home Contracts
or Land-in-Lieu Contracts (both as defined herein), the real estate on which the
related Manufactured Home is located. Perfection of security interests in the
Manufactured Homes and enforcement of rights to realize upon the value of the
Manufactured Homes as collateral for the Contracts are subject to a number of
federal and state laws, including the Uniform Commercial Code (the "UCC") as
adopted in the states in which the Manufactured Homes are located and such
states' certificate of title statutes, and, in the case of Land Home Contracts
or Land-in-Lieu Contracts, their real estate laws. Under such federal and state
laws, a number of factors may limit the ability of a holder of a perfected
security interest in Manufactured Homes to realize upon such Manufactured Homes
or may limit the amount realized to less than the amount due under the related
Contract. See "Certain Legal Aspects of the Contracts--Security Interests in the
Manufactured Homes" and "Land Home and Land-in-Lieu Contracts" herein.
GreenPoint will not retitle any certificates of title that are in the
name of Bank of America, FSB or BankAmerica Housing Services, a division of Bank
of America, FSB relating to any contracts that it purchases in the Acquisition
as described under "The Seller." Further, if so specified in the related
Prospectus Supplement, the certificates of title for the Manufactured Homes will
show "Bank of America, FSB," "BankAmerica Housing Services, a division of Bank
of America, FSB" or "GreenPoint Credit Corp." as the lienholder and the UCC
financing statements, where applicable, will show "Bank of America, FSB,"
"BankAmerica Housing Services, a division of Bank of America, FSB" or
"GreenPoint Credit Corp." as secured party. Because it is not economically
feasible to amend the certificates of title, GreenPoint will not
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amend the certificates of title to change the lienholder specified therein to
the relevant Trustee at the time Contracts are conveyed to a Trust Fund, and
will not execute any transfer instrument (including, among other instruments,
UCC-3 assignments) relating to any Manufactured Home in favor of the relevant
Trustee or deliver any certificate of title to such Trustee or note thereon such
Trustee's interest. Similarly, GreenPoint will not record an assignment to the
Trustee of the mortgage, deed of trust or other instrument securing each Land
Home or Land-in-Lieu Contract. In some states, in the absence of such an
amendment, notation, execution, delivery or recordation of assignment, the
assignment to the Trustee of the security interest in the Manufactured Homes, or
the mortgage, deed of trust or other instrument securing a Land Home Contract,
may not be effective or such security interest may not be perfected. If any
otherwise effectively assigned security interest in favor of the Trustee is not
perfected, such assignment of the security interest to the Trustee may not be
effective against creditors of GreenPoint or Bank of America, FSB, as the case
may be, which continues to be specified as lienholder on any certificate of
title or as secured party on any UCC filing, or against a receiver or trustee in
bankruptcy for GreenPoint or Bank of America, FSB, as applicable. Pursuant to
the Agreement, GreenPoint will (i) represent and warrant that each Contract
complies with all requirements of law and (ii) provide certain warranties
relating to the validity, perfection and priority of the security interest in
each Manufactured Home securing a Contract. A breach by GreenPoint of any such
warrant that materially and adversely affects the related Trust Fund's interest
in a Contract will create an obligation on GreenPoint to repurchase, or at its
option substitute another contract for, such Contract, unless such breach is
cured within the time period specified in the related Agreement. If GreenPoint
does not honor such repurchase or substitute obligation in respect of a
Contract, the Trustee may not have a perfected first-priority security interest
in the related Manufactured Home or, if applicable, the related real property.
Therefore, payments on Certificates may be delayed. If losses occur, they will
be borne by the holders of the Certificates. To the extent that the Certificates
have been designated as senior or subordinate, the most junior certificates
would be the first to bear these delays or losses.
7. Federal and State Consumer Protection Laws. Numerous federal
and state consumer protection laws could adversely affect the interest of any
Trust Fund in the Contracts comprising the related Contract Pool. For example,
as described herein under "Certain Legal Aspects of the Contracts--Consumer
Protection Laws," the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act") could, under certain circumstances, cap the amount of
interest that may be charged on certain Contracts at 6% per annum and may hinder
the ability of the Servicer to foreclose on such Contracts in a timely fashion.
In addition, other federal and state consumer protection laws impose
requirements on lending under installment sales contracts and installment loan
agreements such as the Contracts, and the failure by the lender or seller of
goods to comply with such requirements could give rise to liabilities of
assignees for amounts due under such agreements and the right of set-off against
claims by such assignees. These laws could apply to any Trust Fund as assignee
of the related Contracts. Pursuant to each Agreement, GreenPoint will represent
and warrant that each Contract complies with all requirements of law. To the
extent described in the applicable Prospectus Supplement under "Description of
Certificates--Conveyance of Contracts," a breach of any such representation or
warranty that materially and adversely affects the related Trust Fund's interest
in a Contract will create an obligation by GreenPoint to repurchase, or at its
option substitute another contract for, such Contract, unless such breach is
cured within the time period specified in the related Agreement. GreenPoint will
not have any obligation to repurchase any Contract
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because of limitations imposed under the Relief Act, however. Therefore,
payments on Certificates may be delayed. If losses occur, they will be borne by
the holders of the Certificates. To the extent that the Certificates have been
designated as senior or subordinate, the most junior certificates would be the
first to bear these delays or losses.
8. Prepayment Considerations. The prepayment experience on the
Contracts underlying any Series of Certificates (including prepayments due to
liquidations of defaulted Contracts) will affect the average life and the
maturity of such Certificates. Prepayments on the Contracts in any Contract Pool
may be influenced by a variety of economic, geographic, social and other
factors, including repossessions, aging, seasonality and interest rates. Other
factors affecting prepayment on such Contracts include changes in housing needs,
job transfers and unemployment. In addition, in the event a partial prepayment
is made on a Contract, or a Contract is prepaid in full, interest on such
Contract to the extent of such prepayment will cease to accrue as of the date of
prepayment. If, with respect to any Trust Fund, such prepayments and related
interest shortfalls were sufficiently high during a Collection Period, the
Available Distribution Amount (as defined in the applicable Prospectus
Supplement) for the related Distribution Date could be less than the amount of
principal and interest that would be distributable to the related
Certificateholders in the absence of such shortfalls which would result in
losses to the holders of Certificates. To the extent that the Certificates have
been designated as senior or subordinate, the most junior certificates would be
the first to bear these delays or losses. See "Prepayment and Yield
Considerations" herein and in the related Prospectus Supplement.
9. Difficulty in Pledging. To the extent transactions in
Certificates can be effected only through DTC, participating organizations,
indirect participants and certain banks, the ability of a Certificate Owner to
pledge any such Certificate to persons or entities that do not participate in
the DTC system, or otherwise to take actions in respect of such Certificates,
may be limited due to the lack of physical certificates representing any such
Certificate. This may limit the holders of Certificates liquidity of investment.
See "Description of the Certificates--Global Certificates" herein.
10. Potential Delays in Receipt of Distributions. To the extent
any Certificate is represented by a Global Certificate, Certificate Owners with
respect thereto may experience some delay in their receipt of distributions.
Distributions will be forwarded by the Trustee to DTC and DTC will credit such
distributions to the accounts of its Participants (as defined herein), which
will thereafter credit them to the accounts of Certificate Owners either
directly or indirectly through indirect participants. See "Description of the
Certificates--Global Certificates" herein.
11. Insolvency or Bankruptcy of GreenPoint. GreenPoint intends
that each transfer of Certificates to the related Trust Fund constitutes a sale,
rather than a pledge of the Contracts to secure indebtedness of GreenPoint.
However, if GreenPoint were to become a debtor under the federal bankruptcy
code, it is possible that a creditor or trustee in bankruptcy of GreenPoint or
GreenPoint as debtor-in-possession may argue that the sale of the Contracts by
GreenPoint could be recharacterized as a borrowing secured by a pledge of the
Contracts. Such an attempt, even if unsuccessful, could result in delays in or
reductions of distributions on the Certificates to the holders of the
Certificates. To the extent that the Certificates have been
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designated as senior or subordinate, the most junior certificates would be the
first to bear these delays or losses.
12. Bankruptcy of Servicer. In the event of a bankruptcy of
GreenPoint, the trustee-in-bankruptcy for GreenPoint could prevent the
termination of GreenPoint as Servicer if no event of default under the
applicable Agreement exists other than the bankruptcy of the Servicer. Such
restriction could result in a delay or possibly a reduction in payments on the
Certificates to the holders of the Certificates to the extent GreenPoint
received (but did not deposit with the Trustee) Contract collections before the
date of bankruptcy. To the extent that the Certificates have been designated as
senior or subordinate, the most junior certificates would be the first to bear
these delays or losses. See "Certain Legal Aspects of the Contracts" herein.
13. Limited Operating History of Seller and Servicer. GreenPoint
was incorporated on May 8, 1998 for the purpose of acquiring the manufactured
housing contract business from Bank of America, FSB as described under "The
Seller The Acquisition" herein. Accordingly, GreenPoint has a limited operating
history, and no relevant delinquency and loss experience is available. Neither
GreenPoint nor any of its affiliates were previously engaged in the origination
or servicing of manufactured housing contracts prior to the Acquisition.
POTENTIAL CERTIFICATEHOLDERS ARE ENCOURAGED TO EVALUATE THE RISKS ASSOCIATED
WITH RESPECT TO THE LIMITED OPERATING HISTORY OF GREENPOINT. As of September 30,
1998, the Servicer services manufactured housing installment loans with an
aggregate principal balance of $11.137 billion, of which $801 million were
acquired from Bank of America, FSB in the Acquisition.
14. Limited Guarantee of GFC. If the related Prospectus Supplement
so specifies, certain Classes of Certificates may be entitled to the benefits of
a limited guarantee of GFC which would be an unsecured obligation of GFC and
would not be supported by any letter of credit or other enhancement arrangement.
THE CONTRACT POOLS
Each Contract contained in a Contract Pool will have been either (i)
originated or purchased by the Seller, in each case on an individual basis in
the ordinary course of its business and/or (ii) purchased by GreenPoint in bulk
from other lenders or finance companies (including from Bank of America, FSB in
the Acquisition (as defined herein)), from other lenders or finance companies
(including Bank of America, FSB or any of its affiliates) with whom GreenPoint
may have or may establish referral arrangements, from governmental agencies or
instrumentalities or from the portfolios of other entities that purchase and
hold manufactured housing contracts ("Bulk Sellers"), all as more particularly
specified in the related Prospectus Supplement. Each Contract will be secured
by a new or used Manufactured Home and, in the case of a Land Home or Land-in-
Lieu Contract, by real property upon which the Manufactured Home is located. If
so specified in the related Prospectus Supplement, the Contracts will not be
insured by any governmental agency or instrumentality. However, if so specified
in the related Prospectus Supplement, some or all of the Contracts and
collections thereon will, subject to the conditions described below, be
partially insured by the Federal Housing Administration or partially guaranteed
by the Veterans Administration.
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On the date of initial issuance of the Certificates of any Series,
GreenPoint will convey the Contracts comprising the related Contract Pool to the
related Trust Fund. GreenPoint, as Servicer, will obtain and maintain
possession of all Contract documents.
If so specified in the applicable Prospectus Supplement, the Agreement
relating to each Contract Pool will require the related Manufactured Homes to
comply with the requirements of certain federal statutes which generally would
require the Manufactured Homes to have a minimum of 400 square feet of living
space and a minimum width of 102 inches and to be of a kind customarily used at
a fixed location. Such statutes would also require the Manufactured Homes to be
transportable in one or more sections, built on a permanent chassis and designed
to be used as dwellings, with or without permanent foundations, when connected
to the required utilities. The statutes also would require that the security
interest in any Manufactured Home include the plumbing, heating, air
conditioning and electrical systems relating to such Manufactured Home.
Each Agreement will require the Servicer to maintain hazard insurance
policies with respect to each Manufactured Home in the amounts and manner set
forth herein under "Description of the Certificates--Servicing Compensation and
Payment of Expenses; Certain Matters Regarding the Servicer--Hazard Insurance
Policies." Generally, no other insurance will be required with respect to the
Manufactured Homes, the Contracts or any Contract Pool.
Each Contract Pool may contain actuarial or simple interest Contracts
(as further described below) bearing a Contract Rate that is fixed or variable
or increases in specified increments on particular dates (a "Step-Up Rate").
The rate at which the Contracts in a particular Contract Pool bear interest will
be further described in the applicable Prospectus Supplement. If so specified
in the applicable Prospectus Supplement, each Contract will provide for payments
on scheduled monthly due dates (each, a "Due Date"). The day of each month
constituting the Due Date will vary from Contract to Contract. Unless the
Contracts bear interest at a variable rate, the scheduled payment due on each
monthly Due Date (the "Scheduled Payment") will be specified in the Contract.
The Scheduled Payments for fixed-rate Contracts will be constant assuming no
prepayments. If so specified in the applicable Prospectus Supplement, the
Scheduled Payments for Contracts bearing interest at a Step-Up Rate ("Step-Up
Rate Contracts") will increase on the dates on which the Contract Rates are
stepped up. In addition, if so specified in the related Prospectus Supplement,
the Contracts may be prepaid in full or in part at any time.
If so specified in the applicable Prospectus Supplement, Scheduled
Payments whether for actuarial or simple interest Contracts, may be paid prior
to their Due Dates, whether in, or in months prior to, the months of their Due
Dates. Thus, the obligor under a Contract (each, an "Obligor") may, in June,
pay the Scheduled Payments due in June, July and August. In that event, no
further payment will become due on such Contract until the September Due Date.
In the case of a simple interest Contract, the Obligor would have to instruct
the Servicer to apply such payment as a pay-ahead of future Scheduled Payments;
otherwise such payment would be applied as a partial principal prepayment.
There is no limit to the number of Scheduled Payments that may be paid ahead in
this manner. The effect of paid-ahead Scheduled Payments will be different for
actuarial Contracts than for simple interest Contracts, as further described
below.
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The Scheduled Payments for each actuarial Contract (whether a fixed
rate Contract or a Step-Up Rate Contract) will fully amortize the principal
balance of the Contract over its term. The portion of each Scheduled Payment
allocable to principal is equal to the total amount thereof less the portion
allocable to interest. The portion of each Scheduled Payment due in a
particular month that is allocable to interest is a precomputed amount equal to
one month's interest (determined on the basis of a thirty-day month and a 360-
day calendar year, except in the state of Kansas where it is determined on the
basis of a 365/366-day calendar year and actual days elapsed) on the principal
balance of the Contract, which principal balance is determined by reducing the
initial principal balance by the principal portion of all Scheduled Payments
that were due in prior months (whether or not such Scheduled Payments were
timely made) and all prior partial principal prepayments. Thus, each Scheduled
Payment will be applied to interest and to principal in accordance with a
precomputed allocation, whether such Scheduled Payments are received in advance
of or subsequent to their Due Dates. If so specified in the applicable
Prospectus Supplement, all payments received in a Collection Period on an
actuarial Contract in excess of the related Obligor's Scheduled Payment (other
than payments not allocated to principal and interest (such as late payment
charges) or payments sufficient to pay in full the outstanding principal balance
of and all accrued and unpaid interest on such Contract) are applied as a
partial prepayment of principal on the Contract, unless (i) the related Obligor
notifies or confirms with the Servicer that such payments are to be applied to
future Scheduled Payments in the order of the Due Dates of such payments or (ii)
the amount of such excess payment is approximately equal (subject to a variance
of plus or minus 10%) to the amount of a future Scheduled Payment.
If simple interest Contracts are to be included in the related
Contract Pool, the related Prospectus Supplement will describe the
characteristics of such simple interest Contracts.
If so specified in the related Prospectus Supplement, the Scheduled
Payments on variable rate Contracts will be allocated between principal and
interest as described above for actuarial Contracts based upon the Contract Rate
in effect when such Scheduled Payments are due. If so specified in the related
Prospectus Supplement, the amounts of such Scheduled Payments will be adjusted,
on the basis described in such Prospectus Supplement, whenever the related
variable rate is adjusted.
If so specified in the applicable Prospectus Supplement, the related
Contract Pool may contain Contracts which combine certain features of actuarial
and simple interest Contracts.
If specified in the related Prospectus Supplement, certain Contracts
("Land Home Contracts" and "Land-in-Lieu Contracts") will also be secured by
liens on the real estate on which the related Manufactured Homes are located.
If so specified in the related Prospectus Supplement, all Land Home Contracts
will have financed the purchase of the related Manufactured Home together with
the real estate on which the Manufactured Home is located. In certain
jurisdictions, a lender cannot obtain separate evidence of its lien on the
Manufactured Home securing a Land Home Contract and its lien on the property on
which the Manufactured Home is located. In those jurisdictions, the only
evidence of liens on the Manufactured Homes securing Land Home Contracts will be
the deeds of trust, mortgages or similar security instruments (in each case, a
"Mortgage") on the real estate on which the Manufactured Homes are located. It
is a policy of GreenPoint, to obtain title insurance policies, where available,
with
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respect to any such Land Home Contract that it originates insuring that the
related Manufactured Home is subject to the lien of the related Mortgage,
although title policies may not have been obtained with respect to Land Home
Contracts acquired from Bulk Sellers and some title insurers will not insure the
Manufactured Home unless it is permanently attached to the land. Where the real
estate on which the related Manufactured Home is located is owned by the related
Obligor, the Obligor may provide a Mortgage on the real estate in lieu of all or
part of any required down payment for any such Contract. Any such Contract is
referred to herein as a "Land-in-Lieu Contract" rather than a "Land Home
Contract." Generally, separate evidences of liens on Manufactured Homes and the
real property securing Land-in-Lieu Contracts are obtained. However, no title
insurance is obtained in respect of such Contracts. See "Certain Legal Aspects
of the Contracts--Land Home and Land-in-Lieu Contracts" herein.
A Contract Pool may include "staged-funding" Contracts which provide
multiple disbursements to an Obligor to finance the purchase of a Manufactured
Home or the acquisition or improvement of the real estate on which the
Manufactured Home will be located. The Obligor pays only the interest on the
disbursed amount of the loan (or an additional origination fee which is
financed, in lieu of interest) until the final disbursement, and, following the
final disbursement, pays both interest and principal. If so specified in the
related Prospectus Supplement, no Contract Pool will contain a stage funding
Contract unless such stage funding Contract has been fully disbursed.
The Prospectus Supplement relating to each Series of Certificates will
provide information as of the Cut-off Date for such Series with respect to,
among other things, (i) the number, the aggregate principal balance, and the
range of outstanding principal balances of the Contracts comprising the related
Contract Pool; (ii) the weighted average of the Contract Rates ("Weighted
Average Contract Rate") of the Contracts and the distribution of Contract Rates;
(iii) the weighted average original and remaining terms to maturity of the
Contracts and the distribution of remaining terms to maturity; (iv) the average
outstanding principal balance of the Contracts; (v) the geographical
distribution of the related Manufactured Homes at origination; (vi) the years of
origination of the Contracts; (vii) the distribution of original principal
balances of the Contracts; (viii) the percentage amount of Contracts secured by
new or used Manufactured Homes; (ix) the range of and weighted average loan-to-
value ratios at origination; and (x) the month and year in which the final
scheduled payment date for the Contract with the latest maturity is scheduled to
occur. Additionally, no more than a maximum of 5% of the Contracts (measured by
aggregate principal balance of the assets in the Contract Pool), as described
herein and the related prospectus supplement, as of the Cut-off Date, may
deviate from the characteristics of the assets in the Contract Pool as of the
Cut-off Date. If a Contract Pool contains Step-Up Rate Contracts, the related
Prospectus Supplement will specify the percentage of the Contract Pool comprised
of such Contracts, the period during which the Contract Rates for such Contracts
will be stepped up, the range of increases in such Contract Rates and the range
of increases in the Scheduled Payments for such Contracts. If a Contract Pool
contains variable rate Contracts, the related Prospectus Supplement will contain
a description of the basis on which such rates are determined, including any
maximum or minimum rates and the frequency with which any such rate adjusts.
The Prospectus Supplement relating to a Series of Certificates also will contain
certain information about Contracts in the related Trust Fund that are Land Home
Contracts, Land-in-Lieu Contracts or Contracts that are partially guaranteed by
the Veterans Administration or partially insured by the Federal Housing
Administration. If the Trust Fund
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includes a Pre-Funding Account, as defined in the related Prospectus Supplement,
such Prospectus Supplement will specify the conditions that must be satisfied
prior to any transfer of Additional Contracts and/or Subsequent Contracts, as
described in such Prospectus Supplement, including the requisite characteristics
of such Additional Contracts or Subsequent Contracts. In addition, to the extent
GreenPoint's management believes such information to be material, any Prospectus
Supplement may also include additional information concerning the related
Contract Pool that is stored in the electronic data processing system of
GreenPoint.
To the extent any Contracts in a Contract Pool were purchased by
GreenPoint from one or more Bulk Sellers, the applicable Prospectus Supplement
will contain a description of certain practices observed by such seller or
sellers, as the case may be, in connection with any such purchase.
THE SELLER
GreenPoint is a Delaware corporation and a wholly owned subsidiary of
GreenPoint Bank ("GreenPoint Bank"), a New York state chartered bank. GreenPoint
Bank is a wholly owned subsidiary of GFC, a publicly traded corporation whose
shares are traded on the New York stock exchange. As of December 31, 1997, GFC
and its consolidated subsidiaries had total deposits of $10,973.0 million, total
assets of $13,083.5 million and total stockholders' equity of $1,269.6 million.
As of September 30, 1998, GreenPoint had total assets of $1,478.3 million, total
liabilities of $1,408.3 million and total stockholders' equity of $70.0 million.
The headquarters of both GFC and GreenPoint are located in New York, New York.
THE ACQUISITION
On April 11, 1998, GreenPoint Bank executed an agreement (the "Sale
Agreement") with BankAmerica Corporation, the parent of Bank of America, FSB for
the sale of the operating business of the BankAmerica Housing Services division
of Bank of America, FSB to GreenPoint (such sale is referred to herein as the
"Acquisition"). GreenPoint was formed in May 1998 as a Delaware corporation for
the purpose of acquiring the such operating business of the BankAmerica Housing
Services division of Bank of America, FSB from Bank of America, FSB. The
Acquisition was consummated on September 30, 1998. The operating business of
the BankAmerica Housing Services division consisted primarily of originating,
purchasing and servicing manufactured housing installment sale contracts and
installment loan agreements. Pursuant to the terms of the Sale Agreement,
GreenPoint also purchased $801 million in aggregate principal balance of
manufactured housing installment sale contracts and installment loan agreements
in the Acquisition. The origination and underwriting practices of Bank of
America, FSB and its affiliates relating to the manufactured housing installment
sale contracts and installment loan agreements acquired by GreenPoint in the
Acquisition were substantially similar to those described under "--Loan
Originations" below.
As of September 30, 1998, GreenPoint owned $801 million in aggregate
principal balance of manufactured housing contracts, all of which were acquired
from Bank of America, FSB in the Acquisition.
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LOAN ORIGINATIONS
GreenPoint purchases and originates manufactured housing contracts on
an individual basis through 45 regional offices throughout the United States,
serving retailers and borrowers in the 48 contiguous states and the District of
Columbia. In the states of Mississippi and Minnesota, manufactured housing
contracts are purchased and originated through wholly owned subsidiaries of
GreenPoint. These subsidiaries are named GreenPoint Corp. of Mississippi and
GreenPoint Corp. of Minnesota respectively. Regional personnel of GreenPoint
arrange to purchase manufactured housing contracts originated by manufactured
housing retailers located throughout the United States. Generally, these
purchases result from GreenPoint regional office personnel contacting retailers
located in their regions and explaining GreenPoint's available financing plans,
terms, prevailing rates and credit and financing policies. If a retailer wishes
to make such financing available to its customers, the retailer would apply for
retailer approval. Upon satisfactory results of GreenPoint's investigation of
the retailer's creditworthiness and general business reputation, GreenPoint and
the retailer would enter into a retailer agreement. GreenPoint also originates
manufactured housing contracts and installment loan agreements directly with
customers.
UNDERWRITING PRACTICES
With respect to each retail manufactured housing contract that was
purchased from a retailer, the general practice of GreenPoint has been that the
retailer submit the customer's credit application, manufacturer's invoice (if
the contract was for a new home) and certain other information relating to the
contract to the applicable regional office of GreenPoint. Personnel at the
regional office analyze the creditworthiness of the customer and certain other
aspects of the proposed transaction. If the creditworthiness of the customer
and other aspects of the transaction are approved by the regional office, the
customer and the retailer execute a contract on a form provided or approved in
advance by the GreenPoint. After the manufactured home financed under the
contract is delivered and set up by the retailer, and the customer has moved in,
GreenPoint purchases the contract from the retailer.
Because manufactured homes generally depreciate in value, GreenPoint's
management believes that the creditworthiness of a potential obligor should be
the most important criterion in determining whether to approve the purchase or
origination of a contract. As a result, the underwriting guidelines of
GreenPoint generally require regional office personnel to examine each
applicant's credit history, residence history, employment history and debt-to-
income ratio. There is no minimum requirement for any of these criteria,
although GreenPoint has developed certain guidelines for employment history and
debt-to-income ratios. In the case of employment history, GreenPoint generally
requires its regional office personnel to consider whether the applicant had
worked continuously for the same employer for at least 24 months and, if not,
whether the applicant has worked in the same occupational field for at least 24
months. The recommended debt-to-income ratio for a particular credit
application depends on the credit score recommendation (described below)
generated for that application. In general, the maximum debt-to-income ratio
for each application that is approved by the credit scoring system ranged from
70 percent to 53 percent, based on GreenPoint's estimate of the applicant's
after-tax income. Although GreenPoint has guidelines for some of these
criteria, GreenPoint's management does not believe that an applicant's inability
to satisfy some of these guidelines
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warrants denial of credit in all cases. For example, if an applicant fails to
meet a guideline by a certain margin for one of the criteria mentioned above,
the applicant generally must exceed the threshold for one or more other criteria
by a compensating margin for such applicant's credit application to be approved.
In addition, in special cases, credit applications are approved even if certain
of the criteria are not met. For these reasons, management of GreenPoint believe
that the ultimate decision whether to approve or reject a credit application
should be made by regional office personnel. To assist personnel in evaluating
credit applications, GreenPoint utilizes a Fair-Isaacs credit scoring system
implemented in July 1997. The Fair-Isaacs credit scoring system generates a
recommendation to approve or deny a credit application based on certain criteria
established by GreenPoint. The underwriting guidelines of GreenPoint allow the
recommendation generated by the Fair-Isaacs credit scoring system to be used by
regional personnel as a guide in determining whether to extend credit to an
applicant, but do not require regional personnel to make credit decisions based
solely on the system's recommendations. GreenPoint does not disclose the
criteria used by this credit scoring system either to regional personnel or to
the retailers assisting in the preparation of credit applications. The criteria
will be periodically reviewed by of GreenPoint, and modified as necessary.
It is the policy of GreenPoint that one authorized person provide
written approval of credit applications for amounts up to or equal to certain
limits and that two authorized persons provide written approval of credit
applications for amounts over those limits. The credit limits established by
GreenPoint vary with each regional office. In addition, each person authorized
to make these credit decisions has to be either a regional manager or another
regional office employee to whom the authority to approve credit applications
has been delegated. Any such delegated authority may be limited in that the
person to whom such authority was delegated may not have been authorized to
approve credit applications for contracts with initial principal amounts above
certain specified levels. The qualifications of all regional office personnel
authorized to approve or reject credit applications are reviewed and approved by
GreenPoint's senior management. Generally, both the retailer service manager
and the credit manager in each regional office (in addition to the regional
manager) have authority to approve credit applications. However, each regional
office may at various times have additional, or in some cases fewer, personnel
authorized to approve or reject credit applications. GreenPoint has no set
qualifications for regional managers or for other employees to whom authority to
approve credit applications may be delegated; rather, such authority is given
commensurate with such manager's or employee's experience.
It is the policy of GreenPoint that each credit application be
approved or rejected within one to seven days after receipt. Thus, there is
less time for credit investigation than is the case, for example, with loans for
site-built homes. Although GreenPoint's management believes that the one to
seven-day period for approval or rejection of each credit application is
consistent with industry practice, no assurance can be given that any credit
application that was approved in one to seven days would have been approved if a
longer period had been provided for credit investigation.
The credit review and approval practices of each regional office are
subject to internal reviews and audits that, through sampling, examine the
nature of the verification of credit histories, residence histories, employment
histories and debt-to-income ratios of the applicants and evaluate the credit
risks associated with the contracts purchased through such
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regional offices by rating the obligors on such contracts according to their
credit histories, employment histories and debt-to-income ratios. Selection of
underwriting files for review is generally made by the personnel performing the
examination, without prior knowledge on the part of regional office personnel of
the files to be selected for review. However, GreenPoint has no requirement that
any specific random selection procedures be followed and no assurance can be
given that the files reviewed in any examination process are representative of
the contract originations in the related regional office. In addition, no
statistical analysis is performed on the results of any such examination of
underwriting files.
With respect to new and used manufactured homes, Green Point's policy
is to finance no more than 95% of the total buyer's cost of any manufactured
home (including taxes and insurance premiums) plus 100% of the costs
attributable to prepaid finance charges and closing costs that are financed. In
the case of new manufactured homes, the maximum amount financed cannot exceed
(i) 130% of the manufacturer's invoice price plus (ii) taxes, insurance, freight
charges, certain retailer installed equipment, certain set-up costs and certain
prepaid finance charges and closing costs. For used manufactured homes, the
amount financed cannot exceed (i) the lesser of 95% of the total sales price or
95% of the retail value, as specified in the NADA Mobile/Manufactured Housing
Appraisal Guide or the "Kelly Blue Book" plus (ii) taxes, insurance, certain
retailer installed equipment, certain set-up costs and certain prepaid finance
charges and closing costs.
With respect to Land/Home Contracts involving new manufactured homes,
GreenPoint's policy is to finance no more than (i) the lesser of 95% of the
value of the real property as determined by appraisal or tax assessment (for the
first five acres) or 95% of the purchase price of the land (for the first five
acres) or the payoff of the encumbered land plus (ii) 130% of the manufacturer's
invoice plus (iii) taxes, insurance, freight charges, certain retailer installed
equipment, certain set-up costs and prepaid finance charges and closing costs
plus (iv) the cost of improvements to the land, subject to certain limitations.
In the case of a manufactured home that is already located on the land,
GreenPoint's policy is to finance no more than the lesser of (i) 95% of the
total sales price or 95% of the appraised value of the land plus (ii) 95% of the
NADA Mobile/Manufactured Housing Appraisal Guide or "Kelly Blue Book" retail
value of the home plus (iii) taxes, insurance, certain retailer installed
equipment, certain set-up costs, prepaid finance charges and closing costs plus
(iv) the cost of improvements to the land, subject to certain limitations.
With respect to Land-in Lieu contracts involving new manufactured
homes, GreenPoint's policy is to finance (i) up to 140% of the manufacturer's
invoice for the home depending on the borrower's down payment plus (ii) taxes,
insurance, freight charges, certain retailer installed equipment, certain set-up
costs and pre-paid finance charges and closing costs plus (iii) the costs of
improvements to the land, subject to certain limitations. In the case of a
manufactured home which is already located on the land, GreenPoint's policy is
to finance no more than the lesser of (i) 95% of the total sales price or 95% of
the retail value, as specified in the NADA Mobile/Manufactured Housing Appraisal
Guide or the "Kelly Blue Book" plus (ii) taxes, insurance, certain retailer
installed equipment, certain set-up costs and prepaid finance charges and
closing costs plus (iii) the cost of improvements to the land, subject to
certain limitations.
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GreenPoint requires a down payment in the form of cash and/or the
trade-in value of a previously owned manufactured home and/or, in the case of
Land-in-Lieu Contracts, an estimated value of equity in real property pledged as
an additional collateral. For previously owned homes, the trade-in allowance
accepted by the retailer must have be consistent with the value of such home
determined by GreenPoint in light of current market conditions. The value of
real property pledged as additional collateral is estimated by regional
personnel or appraisers who are familiar with the area in which the property is
located.
Underwriting policies for the origination or purchase on an individual
basis of manufactured housing contracts are established by GreenPoint's
management at its headquarters in San Diego.
SERVICING
GreenPoint, through its regional offices, services all of the
manufactured housing contracts that it purchases or originates, whether on an
individual basis or in bulk. Generally, whenever any contracts are sold,
GreenPoint will retain servicing responsibilities with respect to such
contracts. In addition, GreenPoint may make arrangements pursuant to which it
services, or would service, manufactured housing contracts owned by other
entities. Such contracts were not originated, and would not be purchased, by
GreenPoint. Servicing responsibilities include collecting principal and interest
payments, taxes, insurance premiums and other payments from obligors and, when
such contracts are not owned by GreenPoint, remitting principal and interest
payments to the owners thereof, to the extent such owners are entitled thereto.
Collection procedures include repossession and resale of manufactured homes
securing defaulted contracts (and foreclosure if land is involved) and, if
deemed advisable by GreenPoint, entering into workout arrangements with obligors
under certain defaulted contracts. Although decisions as to whether to
repossess any manufactured home are made on an individual basis, GreenPoint's
general policy is to institute repossession procedures promptly after regional
office personnel determine that it is unlikely that a defaulted contract will be
brought current, and thereafter to diligently pursue the resale of such
manufactured homes.
Because GreenPoint is recently formed and has a limited operating
history, GreenPoint's management believes that the historical statistical data
relating to the delinquency and repossession experience of contracts serviced by
GreenPoint is not informative. If in the future, however, GreenPoint's
management believes such information may be informative, GreenPoint may publish
such information in the Prospectus Supplement.
Certain historical data relating to the delinquency and repossession
experience of the contracts serviced by Bank of America, FSB prior to the
Acquisition by GreenPoint is available. However, GreenPoint's management
likewise believes that such information is not relevant or informative since
GreenPoint, and not Bank of America, FSB, is now servicing such contracts.
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PREPAYMENT AND YIELD CONSIDERATIONS
PREPAYMENT CONSIDERATIONS
If so specified in the related Prospectus Supplement, the Contracts in
any Contract Pool may be prepaid in full or in part at any time. The prepayment
experience of the Contracts (including prepayments due to liquidations of
defaulted Contracts) will affect the average life and the maturity of the
related Certificates. Except to the limited extent that may be set forth in the
related Prospectus Supplement, GreenPoint does not maintain statistics with
respect to the rate of prepayment of manufactured housing contracts in its
servicing portfolio. A Contract Pool might include Contracts with Contract
Rates that are generally higher or lower, in absolute terms or in comparison to
prevailing rates, than the contract rates of the contracts from which are
derived certain historical statistical data set forth in the Prospectus or
Prospectus Supplement. As a result, the prepayment performance of the Contracts
contained in that Contract Pool might be higher or lower than the prepayment
performance of the contracts reflected in the historical data. In addition,
GreenPoint's management is aware of limited publicly available information
relating to historical rates of prepayment on manufactured housing contracts.
However, GreenPoint's management believes that neither the prepayment experience
of other pools of manufactured housing contracts nor the historical rates of
prepayment for any other manufactured housing contracts will necessarily be
indicative of the rate of prepayment that may be expected to be exhibited by the
Contracts in any other Contract Pool. Nevertheless, GreenPoint's management
anticipates that a number of Contracts will be prepaid in full in each year
during which any related Certificates are outstanding. The amount of
prepayments on such Contracts (including prepayments due to liquidations of
defaulted Contracts) during any particular year may be influenced by a variety
of economic, geographic, social and other factors, including repossessions,
aging, seasonality, interest rates and the rate at which manufactured homeowners
sell their manufactured homes. Other factors affecting prepayments on such
Contracts include changes in Obligors' housing needs, job transfers,
unemployment and Obligors' net equity in manufactured homes. Because of the
depreciating nature of manufactured housing, which limits the possibilities for
refinancing, and because the terms of manufactured housing contracts are
generally shorter than the terms for mortgage loans secured by site-built homes
(and changes in interest rates have a correspondingly smaller effect on the
monthly payments on manufactured housing contracts as opposed to mortgage loans
secured by site-built homes), changes in interest rates may play a smaller role
in prepayment behavior of manufactured housing contracts than they do in the
prepayment behavior of loans secured by mortgages on site-built homes.
Conversely, local economic conditions and certain of the other factors mentioned
above are likely to play a larger role in the prepayment behavior of
manufactured housing contracts than they do in the prepayment behavior of loans
secured by mortgages on site-built homes.
Repurchases of Contracts on account of certain breaches of
representations and warranties as described in the applicable Prospectus
Supplement also will have the effect of prepaying such Contracts and therefore
will affect the average life of and yield on the Certificates. See "Description
of the Certificates--Conveyance of Contracts." In addition, most of the
Contracts contain provisions that prohibit the related owner from selling the
Manufactured Home without the prior consent of the holder of the related
Contract. Such provisions are similar to "due-on-sale" clauses and may not be
enforceable in certain states. See "Certain Legal
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Aspects of the Contracts--Transfers of Manufactured Homes; Enforceability of
Restrictions on Transfer" herein. The Servicer's policy is to permit most sales
of Manufactured Homes where the proposed buyer meets the Servicer's then current
underwriting standards and enters into an assumption agreement.
To the extent provided in the related Prospectus Supplement, the
Servicer under each Agreement will have the option to purchase all of the
Contracts in the related Contract Pool, at the price and under the conditions
specified in such Prospectus Supplement, when the aggregate Pool Principal
Balance (as defined in the related Prospectus Supplement) of the Contract Pool
has been reduced to 10% (or such other percentage as may be specified in the
related Prospectus Supplement) of its initial Pool Principal Balance. The
exercise of any such option will affect the average life of and yield on the
related Certificates. To the extent provided in the related Prospectus
Supplement, the Trustee for the related Trust Fund shall solicit bids for the
purchase of the Contracts remaining in the Trust Fund at a Termination Auction
(as defined herein) within ninety days following the Distribution Date as of
which the Pool Principal Balance for a Contract Pool is less than 10% (or such
other percentage as may be specified in the related Prospectus Supplement) of
such Contract Pool's Cut-off Date Pool Principal Balance. The sale and
consequent termination of the related Trust Fund pursuant to a Termination
Auction will affect the average life and yield on the related Certificates.
The average life and maturity of the Certificates of any Class will
also be affected by the amount and timing of any Special Principal Distributions
to the holders of such Certificates. In addition, if any Certificate of a Class
is subject to mandatory repurchase, the occurrence of the Repurchase Date (as
hereinafter defined) for such Certificate will have the same effect as the
maturation of such Certificate (with the repurchase price being equivalent to
the amount due at maturity). See "Description of the Certificates--
Distributions on Certificates" and "Description of the Certificates--Optional
and Mandatory Repurchase of Certificates; Termination Auction" herein. The
Prospectus Supplement relating to any Class that is entitled to Special
Principal Distributions or is subject to mandatory repurchase will contain a
description of the conditions under which such distributions or repurchases will
take place and a description of some of the factors that might affect the rate
of Special Principal Distributions or the timing of any Repurchase Dates.
Information regarding the "Prepayment Model" (to be defined in the
related Prospectus Supplement) or any other rate of assumed prepayment, as
applicable, will be set forth in the Prospectus Supplement applicable to the
relevant Class or Classes of Certificates offered hereby.
YIELD CONSIDERATIONS
To the extent that any credit enhancement or any advancing obligation
of the Servicer described in the related Prospectus Supplement is insufficient
to protect the holders of any Class of Certificates from losses or delinquencies
on the related Contract Pool, the yield to such holders from their investment in
such Certificates will be adversely affected should such losses or delinquencies
occur. In the absence of losses or delinquencies which are not covered by
credit enhancement or advances, respectively, on a Distribution Date, the
effective yield on the Certificates will depend upon, among other things, the
price at which the Certificates are
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purchased, the rate at which the Contracts for the related Trust Fund liquidate
or are prepaid and the amount and timing of any Special Principal Distributions.
If a purchaser of Certificates purchases them at a discount (premium) and
calculates its anticipated yield to maturity based on an assumed rate of
distributions of principal on such Certificates that is faster (slower) than the
rate actually realized, such purchaser's actual yield to maturity will be lower
than the yield so calculated by such purchaser. Losses which are covered by
credit enhancement, but on later than anticipated Distribution Dates, will have
the same effect on anticipated yield as prepayments that are made later than
anticipated, as just described, depending on whether the Certificates were
purchased at a discount or premium.
The yield to holders of any Class of Certificates may be below that
otherwise produced by the applicable Pass-Through Rate because, while, in the
absence of losses or delinquencies, one month's interest on the related
Contracts will be collected during each Collection Period, the portion of such
interest to which the holders of such Certificates are entitled will not be
distributed until the first Distribution Date after such Collection Period.
If a Certificate is subject to mandatory repurchase, the yield to the
Repurchase Date will be affected by, among other things, the applicable
repurchase price, the ability of any Liquidity Facility Provider (as hereinafter
defined) to distribute the repurchase price and the date, if any, on which the
Repurchase Date occurs. If, in connection with a mandatory repurchase, the
repurchase price for a Certificate is equal to its Percentage Interest (as
hereinafter defined) of the then current Certificate Balance, and the
Certificate is purchased at a discount, and the purchaser calculates its
anticipated yield to the Repurchase Date based on an assumed Repurchase Date
that is earlier than the actual Repurchase Date, then such purchaser's actual
yield to maturity will be lower than it would have been if a repurchase occurred
on the assumed date.
The payment features of the Contracts comprising any Contract Pool (as
described above under "The Contract Pools") may, under certain extraordinary
circumstances, cause the amounts collected thereon during particular Collection
Periods to be insufficient to fund all distributions of principal and interest
to the holders of some or all of the Certificates of the related Series, even in
the absence of losses or delinquencies. Such circumstances could occur if a
sufficiently large number of partial or full prepayments, as a percentage of the
then outstanding Pool Principal Balance of the related Contract Pool, are
received on Contracts in a particular Collection Period, if such prepayments are
made in advance of such Contracts' respective Due Dates during such Collection
Period. In such case, a non-default collection shortfall could occur because
interest that actually accrues on such Contracts is less than interest that
would have accrued if the payments were paid on the Contracts' respective Due
Dates. A non-default collection shortfall could adversely affect the yield to
holders of any Class of Certificates to the extent such shortfalls are not
covered by credit enhancement or advances.
DESCRIPTION OF THE CERTIFICATES
Each Series of Certificates will be issued pursuant to a separate
Agreement. The following summaries describe only the material provisions
expected to be common to each Agreement and the related Certificates.
GreenPoint recommends that the investor read all of the provisions of the
related Agreement and the description set forth in the related Prospectus
Supplement. Section references contained herein refer to sections of the form
of Agreement
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filed as an exhibit to the Registration Statement. The Prospectus Supplement for
each Series will describe the specific material provisions of the Agreement
relating to such Series. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned to them in the form of Agreement filed as an
exhibit to the Registration Statement.
GENERAL
The Certificates may be issued in one or more Classes. If the
Certificates of a Series are issued in more than one Class, the Certificates of
all or less than all of such Classes may be sold pursuant to this Prospectus,
and there may be separate Prospectus Supplements relating to one or more of such
Classes so sold. Any reference herein to the Prospectus Supplement relating to a
Series comprised of more than one Class should be understood as a reference to
each of the Prospectus Supplements relating to the Classes sold hereunder. Any
reference herein to the Certificates of a Class should be understood to refer to
the Certificates of a Class within a Series, the Certificates of a subclass
within a Series or all of the Certificates of a single-Class Series, as the
context may require.
The Certificates will be issued in the denominations specified in the
related Prospectus Supplement. (Section 6.02.) The "Percentage Interest" of a
Certificate is the percentage obtained from dividing the original denomination
of such Certificate by the initial principal balance of all of the Certificates
of such Class. Interest-only Certificates will have no Percentage Interest.
Certificates, if issued in registered form ("Definitive Certificates") to
Certificate Owners or nominees thereof, will be transferable and exchangeable at
the corporate trust office of the Trustee or, if it so elects, at the office of
an agent in New York, New York. (Sections 6.02 and 9.11.) No service charge
will be made for any registration of exchange or transfer, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge. (Section 6.02.)
The Certificates of each Series will evidence an interest, as
specified in the related Prospectus Supplement, in a Trust Fund. Each Trust
Fund will include (i) a Contract Pool, including certain rights to receive
payments on the Contracts comprising such Contract Pool on and after the Cut-off
Date, (ii) the amounts held from time to time in the "Certificate Account" (as
described in the applicable Prospectus Supplement under "--Payment on Contracts;
Certificate Account") maintained by the Trustee pursuant to the Agreement, (iii)
any property which initially secured a Contract and which is acquired in the
process of realizing thereon, (iv) the obligations of GreenPoint, under certain
conditions, to repurchase Contracts sold by it with respect to which certain
representations and warranties have been breached and not cured, (v) certain
contractual servicing obligations of the Servicer, (vi) the proceeds of all
insurance policies described herein and (vii) if applicable, one or more forms
of credit support. If so specified in the related Prospectus Supplement, a
limited guarantee of GFC may exist and, if so specified therein, will be a part
of the Trust Fund.
GreenPoint will convey the Contracts to the Trustee. See "The
Contract Pools" herein and "--Conveyance of Contracts" below. GreenPoint, as
Servicer, will service the Contracts pursuant to the Agreement. If so specified
in the related Prospectus Supplement, the Contract documents will be held for
the benefit of the Trustee by the Servicer.
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CONVEYANCE OF CONTRACTS
On the date of initial issuance of the Certificates of a Series,
GreenPoint will sell to the Trustee, without recourse, all of its right, title
and interest in and to the Contracts sold by it, and all rights under the
standard hazard insurance policies on the related Manufactured Homes. The
conveyance of the Contracts to the Trustee will include a conveyance of all
rights to receive Scheduled Payments thereon that were due on or after the Cut-
off Date, even if received prior to the Cut-off Date, as well as all rights to
any payments received on or after the Cut-off Date other than late receipts of
Scheduled Payments that were due prior to the Cut-off Date. The Contracts will
be described on a schedule attached to the Agreement (the "Contract Schedule").
The Contract Schedule will include the principal balance of each Contract as of
the Cut-off Date, the amount of each Scheduled Payment due on each Contract as
of the Cut-off Date, the Contract Rate on each Contract (determined as of the
Cut-off Date) and the maturity date of each Contract. GreenPoint will be
required to complete a review of all of the originals of the Contracts, the
certificates of title to, or other evidence of a perfected security interest in,
the Manufactured Homes, any related Mortgages, if any, and any assignments or
modifications of the foregoing (collectively, the "Contract Files") confirming
the accuracy of the Contract Schedule delivered to the Trustee within the time
period set forth in the related Agreement. Any Contract discovered not to agree
with such schedule in a manner that is materially adverse to the interests of
the Certificateholders will be repurchased by GreenPoint, or replaced with
another Contract, except that if the discrepancy relates to the principal
balance of a Contract (determined as described above), GreenPoint may, under
certain conditions, deposit cash in the Certificate Account in an amount
sufficient to offset such discrepancy. The Trustee will not review the Contract
Files. (Section 2.01.)
If so provided in the related Prospectus Supplement, the Servicer will
hold, as custodian and agent on behalf of the Trustee, the original Contracts
and copies of documents and instruments relating to each Contract and the
security interest in the Manufactured Home, and real property, if any, relating
to each Contract. In order to give notice of the Trustee's right, title and
interest in and to the Contracts, a UCC-1 financing statement identifying the
Trustee as the secured party and identifying all the Contracts as collateral
will be filed in the appropriate office in the appropriate states. The
Contracts will be stamped or otherwise marked to reflect their assignment to the
Trustee. To the extent that the Contracts do not constitute "chattel paper"
within the meaning of the UCC as in effect in the applicable jurisdictions or to
the extent that the Contracts do constitute chattel paper and a subsequent
purchaser is able to take physical possession of the Contracts without notice of
such assignment, the Trustee's interest in the Contracts could be defeated. See
"Certain Legal Aspects of the Contracts--Security Interests in the Manufactured
Homes" and "Land Home and Land-in-Lieu Contracts" herein.
GreenPoint will make certain representations and warranties to the
Trustee with respect to each Contract sold by it. The applicable Prospectus
Supplement will describe the representations and warranties made by GreenPoint
in connection with the Contracts conveyed to the related Trust Fund, the terms
pursuant to which GreenPoint will be obligated to repurchase, at the price
specified therein, any Contract sold by it if any such representation and
warranty has been breached (unless such breach has been cured or otherwise is
not required to be cured), and the terms pursuant to which GreenPoint may remedy
any such breach. (Section 3.05.)
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PAYMENTS ON CONTRACTS
The applicable Prospectus Supplement will specify the arrangements
pursuant to which Contract collections are held pending distribution to
Certificateholders. (Section 4.05.) Certain Contract collections will be
applied to pay the Servicer's servicing compensation and to reimburse it for
certain expenses, as set forth in each Prospectus Supplement and as set forth
herein under "--Servicing Compensation and Payment of Expenses; Certain Matters
Regarding the Servicer" below.
DISTRIBUTIONS ON CERTIFICATES
The Certificates of any Class will entitle the holders thereof to
distributions, on the Distribution Dates specified in the related Prospectus
Supplement, from amounts collected on the underlying Contracts. The
Certificates of a Class may entitle the holders thereof to (a) distributions of
both principal and interest, (b) distributions of principal only, or (c)
distributions of interest only. Such distributions will be made in accordance
with a formula described in the related Prospectus Supplement, and, if so
specified in such Prospectus Supplement, such distributions will be applied
first to interest, if any, and second to principal, if any. To the extent
specified in the related Prospectus Supplement, the rights of the holders of the
Certificates of one or more Classes of a multiple Class Series to receive
distributions of principal or of interest or of both from amounts collected on
the Contracts may be subordinate to such rights of the holders of Certificates
of one or more other Classes. See "Credit and Liquidity Enhancement"
herein.
Distributions of Principal. If the Certificates of a Class entitle
the holders thereof to distributions of principal, the related Prospectus
Supplement will specify an initial aggregate Certificate Balance for the
Certificates of such Class and a method of computing the amount of principal, if
any, to be distributed to the holders of such Certificates on each Distribution
Date. If so specified in the related Prospectus Supplement, principal
distributions for the Certificates of a Class will be computed on the basis of a
formula which, on each Distribution Date, allocates all or a portion of the
Total Regular Principal Amount relating to such Distribution Date to the
Certificates of such Class. The "Total Regular Principal Amount" is the total
amount by which the aggregate outstanding principal balance of the Contracts in
the related Contract Pool is reduced during one or more collection periods prior
to such Distribution Date designated in such Prospectus Supplement (each, a
"Collection Period"). Such reduction may occur as a result of actuarially
predetermined scheduled principal reductions, receipt of principal prepayments,
liquidation of Contracts, repurchases of Contracts under certain conditions,
losses on Contracts, the failure of a third party credit support provider, if
any, to make a required payment, or a combination of any of the foregoing
events. See "The Contract Pools" and "--Servicing Compensation and Payment of
Expenses; Certain Matters Regarding the Servicer" herein. Distributions with
respect to all or a portion of the Total Regular Principal Amount are sometimes
referred to herein as distributions of "Regular Principal." The Total Regular
Principal Amount with respect to any Contract Pool and any Distribution Date may
be estimated in a manner specified in the related Prospectus Supplement.
If, due to liquidation losses or other circumstances adversely
affecting the collections on the underlying Contract Pool, the Contract
collections available on any Distribution Date to make distributions of Regular
Principal to the holders of the Certificates of a
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Class are less than the portion of the Total Regular Principal Amount allocable
to such Class, the deficiency may be made up from (i) the amount ("Excess
Interest"), if any, by which the interest collected on nondefaulted Contracts
during the same Collection Period exceeds the interest distribution due to the
holders of the Certificates for the related Series and, if so specified in the
related Prospectus Supplement and if GreenPoint is acting as Servicer, the
Monthly Servicing Fee (as defined hereinafter and in the related Prospectus
Supplement), or (ii) funds available from one or more forms of credit support
referred to below, but only to the extent, if any, specified in the applicable
Prospectus Supplement. See "Credit and Liquidity Enhancement" herein. If
specified in the applicable Prospectus Supplement, the Certificate Balance of
the Certificates of a Class will be reduced on each Distribution Date by the
full amount of the portion of the Total Regular Principal Amount allocable to
such Class even if, due to deficient Contract collections, a full distribution
thereof is not made.
The applicable distribution formula for each Class of a multiple-Class
Series may allocate the Total Regular Principal Amount among the various Classes
on a pro rata, sequential or other basis, as specified in the related Prospectus
Supplement. If specified in the related Prospectus Supplement, any such formula
may entitle the holders of Certificates of a particular Class to receive on
certain Distribution Dates, distributions of Regular Principal from particular
sources of funds (e.g., one or more of the forms of credit support referred to
below) upon the occurrence of certain losses or delinquencies, even if the
holders of the Certificates of such Class would not have been entitled to
receive principal distributions on such Distribution Dates from amounts
collected on the underlying Contracts in the absence of such losses or
delinquencies.
If specified in the applicable Prospectus Supplement, the Certificates
of a Class may entitle the holders thereof to Special Principal Distributions on
particular Distribution Dates that are unrelated to the Total Regular Principal
Amount for any such Distribution Date ("Special Principal Distributions").
Special Principal Distributions may be made, under the circumstances set forth
in the applicable Prospectus Supplement, from interest collected on the
underlying Contract Pool, from funds available from one or more forms of credit
support or from any other source specified in such Prospectus Supplement. The
Certificates of a Class having an initial Certificate Balance may entitle the
holders thereof to distributions of Regular Principal only, to distributions of
Regular Principal and to Special Principal Distributions or to Special Principal
Distributions only. However, if so specified in the related Prospectus
Supplement, the Certificates of a Class will not entitle the holders thereof to
aggregate principal distributions in excess of the initial Certificate Balance
for such Class.
Distributions of Interest. The distribution formula for a Class of
Certificates having an initial Certificate Balance may, but need not, also
specify a method of computing the interest, if any, to be distributed on
specified Distribution Dates (which may include all or less than all of the
Distribution Dates) to the holders of the Certificates of such Class. Such
interest may be equal, subject to such adjustments as may be described in the
related Prospectus Supplement, to a specified number of days' interest on the
applicable Certificate Balance (before giving effect to any reduction thereof on
such Distribution Date), calculated at a rate (the "Pass-Through Rate")
specified in the related Prospectus Supplement. The Pass-Through Rate may be
fixed or variable, and, if specified in the related Prospectus Supplement, may
shift from a variable rate to a fixed rate under the conditions specified in
such Prospectus Supplement. Variable Pass-Through Rates may vary from time to
time based upon changes in an index or
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other measure of certain market rates, all as more fully described in the
related Prospectus Supplement. In that case, the time period between Pass-
Through Rate adjustments (each, a "Rate Period") and the specific basis on which
the Pass-Through Rate for each Rate Period will be determined (including the
particular market rates and measures thereof relevant for determining the Pass-
Through Rate for each Rate Period) may remain constant or may change from time
to time at the election of the Servicer or otherwise, all as specified in the
related Prospectus Supplement. Variable Pass-Through Rates may also vary from
time to time, in the manner specified in the related Prospectus Supplement,
based upon changes in the weighted average of the Contract Rates of the
Contracts in the related Contract Pool or on any other basis. To the extent set
forth in the related Prospectus Supplement, variable Pass-Through Rates may also
have floor rates and/or ceiling rates which may be fixed or subject to
adjustment as set forth in such Prospectus Supplement. In addition, a variable
Pass-Through Rate may be converted to a fixed Pass-Through Rate at the election
of the Seller or upon the occurrence of certain conditions. In that event, the
related Prospectus Supplement will set forth the conditions under which the
variable Pass-Through Rate may be converted to a fixed Pass-Through Rate.
Rather than entitling the holders thereof to receive distributions of
interest based upon a Pass-Through Rate, the distribution formula for the
Certificates of a Class may entitle the holders thereof to distributions of
interest on specified Distribution Dates (which may include all or less than all
of the Distribution Dates) equal, in the case of any such Distribution Date, to
all or a portion (which portion will be determined as described in the related
Prospectus Supplement) of the interest payable on the related Contracts during
one or more Collection Periods occurring prior to such Distribution Date.
Classes of Certificates that do not entitle the holders thereof to receive
distributions of principal may nevertheless entitle such holders to receive
interest distributions calculated on this basis.
If, due to liquidation losses or other circumstances adversely
affecting the collections on the underlying Contract Pool, the Contract
collections available to make distributions of interest to the holders of the
Certificates of a Class are less than the amount of interest computed as
described above, the deficiency may be made up from other sources, but only to
the extent, if any, specified in the applicable Prospectus Supplement. See
"Credit and Liquidity Enhancement" herein.
Each Prospectus Supplement will contain information relating to the
full amounts of principal and interest required to be distributed to the holders
of the related Class or Classes of Certificates, to the extent there are
sufficient Contract collections available therefor (sometimes referred to herein
as "full distributions"), from amounts paid or payable on the underlying
Contracts.
Residual Interests. If specified in the related Prospectus
Supplement, a Class of Certificates sold hereunder may evidence a residual
interest in the related Trust Fund (the "Residual Interest"). Certificates
evidencing a Residual Interest will not have the features described above.
Rather, if so specified in such Prospectus Supplement, such Certificates will
entitle the holders thereof to receive distributions from amounts collected on
the Contracts which would not be needed to make distributions to the holders of
other interests in the Trust Fund (or to pay expenses of the Trust Fund) in the
absence of liquidation losses or other events resulting in deficient Contract
collections. In addition, if specified in such Prospectus Supplement, any
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such Certificates may also entitle the holders thereof to receive additional
distributions of assets of the related Trust Fund, to the extent any such assets
remain after being applied to make distributions to the holders of other
interests in the Trust Fund (or to pay expenses of the Trust Fund). Further, is
so specified in the related Prospectus Supplement, any amounts due to the
holders of a Residual Interest with respect to any Series may be subordinated to
amounts due to holders of Certificates of another Series to the extent described
in such Prospectus Supplement. The Certificates evidencing a Residual Interest
may entitle the holders thereof to distributions at various times throughout the
life of the related Trust Fund or only upon termination of the Trust Fund, all
as more fully set forth in the related Prospectus Supplement. If an election is
made to treat the related Trust Fund as a REMIC (as hereinafter defined), the
holders of a Residual Interest in such Trust Fund will be subject to federal
income taxation with respect to their ownership of such Residual Interest as
described herein under "Certain Federal Income Tax Consequences--REMIC
Certificates--Taxation of Residual Certificates."
GLOBAL CERTIFICATES
If so specified in the applicable Prospectus Supplement, the
Certificates of a Series, or of one or more Classes within a Series, will be
issuable in the form of one or more global certificates (each, a "Global
Certificate") that are initially registered in the name of Cede & Co. ("Cede"),
as nominee of The Depository Trust Company ("DTC"), on behalf of the beneficial
owners (the "Certificate Owners") of the Certificates. DTC is a limited-purpose
trust company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC accepts securities for
deposit from its participating organizations ("Participants") and facilitates
the clearance and settlement of securities transactions between Participants in
such securities through electronic book-entry changes in accounts of
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks and
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system is also available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Certificate Owners who are not Participants but desire to purchase,
sell or otherwise transfer ownership of Certificates may do so only through
Participants (unless and until Definitive Certificates are issued). In
addition, Certificate Owners will receive all distributions of principal of, and
interest on, the Certificates from the Trustee through DTC and Participants.
Certificate Owners will not receive or be entitled to receive certificates
representing their respective interests in the Certificates, except under the
limited circumstances described below. In addition, if some or all of the
Certificates of a Series are issued in the form of one or more Global
Certificates, certain monthly and annual reports prepared by the Servicer under
the related Agreement will be sent on behalf of the related Trust Fund to Cede
and not to the Certificate Owners.
Unless and until Definitive Certificates are issued, it is anticipated
that the only "Certificateholder" of the Certificates will be Cede, as nominee
of DTC. Certificate Owners will
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not be Certificateholders as that term is used in the Agreement. Certificate
Owners are only permitted to exercise the rights of Certificateholders
indirectly through Participants and DTC.
If so specified in the related Prospectus Supplement, while the
Certificates are outstanding (except under the circumstances described below),
under the rules, regulations and procedures creating and affecting DTC and its
operations (the "DTC Rules"), Participants are required to make book-entry
transfers through DTC's facilities with respect to the Certificates, and DTC as
the sole holder of the Certificates is required to receive and transmit
distributions of principal of, and interest on, the Certificates. Unless and
until Definitive Certificates are issued, Certificate Owners who are not
Participants may transfer ownership of Certificates only through Participants by
instructing such Participants to transfer Certificates, by book-entry transfer,
through DTC for the account of the purchasers of such Certificates, which
account is maintained with their respective Participants. Under the DTC Rules
and in accordance with DTC's normal procedures, transfers of ownership of
Certificates will be executed through DTC, and the accounts of the respective
Participants at DTC will be debited and credited.
Definitive Certificates will be issued to Certificate Owners, or their
nominees, rather than to DTC, only if (i) the Servicer advises the Trustee in
writing that DTC is no longer willing or qualified to discharge properly its
responsibilities as nominee and depository with respect to the Certificates and
the Servicer or the Trustee is unable to locate a qualified successor, (ii) the
Seller, at its option, elects to terminate the book-entry system through DTC, or
(iii) after the occurrence of an Event of Default (See "--Servicing Compensation
and Payment of Expenses; Certain Matters Regarding the Servicer--Events of
Default" below), Certificate Owners having a majority in Percentage Interests of
each Class of the Certificates advise the Trustee and DTC through the
Participants, in writing, that the continuation of a book-entry system through
DTC (or a successor thereto) to the exclusion of any physical certificates being
issued to Certificate Owners is no longer in the best interests of Certificate
Owners. Upon issuance of Definitive Certificates to Certificate Owners, such
Certificates will be transferable directly (and not exclusively on a book-entry
basis), and registered holders will deal directly with the Trustee with respect
to transfers, notices and distributions.
Except as otherwise specified in the related Prospectus Supplement,
unless and until Definitive Certificates are issued, DTC will take any action
permitted to be taken by a Certificateholder under the Agreement only at the
direction of one or more Participants to whose DTC accounts the Certificates are
credited and will take such action with respect to any Percentage Interests of
the Certificates only at the direction of and on behalf of such Participants
with respect to such Percentage Interests of the Certificates. DTC may take
actions, at the direction of the related Participants, with respect to some
Certificates which conflict with actions taken with respect to other
Certificates.
DTC'S YEAR 2000 EFFORTS
DTC management is aware that some computer applications, systems, and
the like for processing data ("Systems") that are dependent upon calendar dates,
including dates before, on, and after January 1, 2000, may encounter "Year 2000
problems." DTC has informed its Participants and other members of the financial
community (the "Industry") that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payment of
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distributions (including principal and income payments) to securityholders,
book-entry deliveries, and settlement of trades within DTC ("DTC Services"),
continue to function appropriately. This program includes a technical assessment
and a remediation plan, each of which is complete. Additionally, DTC's plan
includes a testing phase, which is expected to be completed within appropriate
time frames.
However, DTC's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third party vendors from whom DTC license software and
hardware, and third party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed the Industry that it is
contacting (and will continue to contact) third party vendors from whom DTC
acquires services to: (i) impress upon them the importance of such services
being Year 2000 compliance; and (ii) determine the extent of their efforts for
Year 2000 remediation (and, as appropriate, testing) for their services. In
addition, DTC is in the process of developing such contingency plans as it deems
appropriate.
According to DTC, the foregoing information with respect to DTC has
been provided to the Industry for informational purposes only and is not
intended to serve as a representation, warranty, or contract modification of any
kind.
OPTIONAL AND MANDATORY REPURCHASE OF CERTIFICATES; OPTIONAL TERMINATION AND
TERMINATION AUCTION
Optional Repurchase. If so specified in the applicable Prospectus
Supplement, the Servicer for any Trust Fund will have the option to repurchase,
upon giving notice mailed no later than the Distribution Date next preceding the
month of the exercise of such option, all outstanding Contracts after the first
Distribution Date on which the Pool Scheduled Principal Balance (as defined
hereinafter) is less than 10% (or such other percentage as may be specified in
the related Prospectus Supplement) of the initial Pool Principal Balance on the
Cut-off Date. The price at which the Servicer for such Trust Fund may
repurchase the related Contracts will equal, after deductions of related
advances by the Servicer, the greater of (a) the sum of (x) 100% of the Pool
Scheduled Principal Balance of each Contract (other than any Contract as to
which the related Manufactured Home has been acquired and not yet disposed of
and whose fair market value is included pursuant to clause (y) below) as of the
final Distribution Date, and (y) the fair market value of such acquired property
(as determined by the Servicer) and (b) the aggregate fair market value (as
determined by the Servicer) of all of the assets of such Trust Fund, plus, in
the case of both clause (a) and (b), an amount sufficient to reimburse
Certificateholders for each outstanding Class for any shortfall in interest due
thereto in respect of prior Distribution Dates. Notwithstanding the foregoing,
the Servicer's option shall not be exercisable if there will not be distributed
to the Certificateholders for each outstanding Class an amount equal to the
aggregate Certificate Balance for each outstanding Class together with any
shortfall in interest due to such Certificateholders in respect of prior
Distribution Dates and one month's interest on the aggregate Certificate Balance
for each outstanding Class at the respective Pass-Through Rates for such Classes
(the "Minimum Termination Amount"). The related Prospectus Supplement will
specify whether losses suffered on the Contracts in the normal course will be
allocated to the holders of Certificates when realized or upon the termination
of the related Trust and whether an adjustment to the Minimum Termination Amount
will be made.
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In no event, will losses be recognized until a liquidation of the collateral
securing any such defaulted Contract has been liquidated. See "Description of
the Certificates--Optional Termination" in the related Prospectus Supplement.
(Section 10.01.)
Mandatory Repurchase. Some or all of the Certificates of a Class may
be subject to repurchase by or on behalf of the Seller at the option of the
holders thereof and/or at the option of the Seller, but only to the extent, at
the prices, on the dates and under the conditions specified in the related
Prospectus Supplement. In addition, some or all of the Certificates of a Class
may be subject to mandatory repurchase by or on behalf of the Seller to the
extent, at the prices, on the dates and under the conditions specified in the
related Prospectus Supplement. On the date on which any Certificate is subject
to repurchase (the "Repurchase Date") the holder thereof will cease to be
entitled to any benefit of the Certificate or the related Agreement and will be
entitled only to receive from the Trustee the repurchase price of the
Certificate upon surrender thereof at the office or agency designated by the
Trustee. To the extent specified in the related Prospectus Supplement, the
funds necessary to distribute the repurchase price of any Certificate subject to
mandatory or optional repurchase as described therein will be provided under a
certificate purchase agreement or other Liquidity Facility as described in
"Credit and Liquidity Enhancement" herein.
Optional or Mandatory Termination Auction. If specified in the
applicable Prospectus Supplement, on any Distribution Date after the
Distribution Date on which the Pool Scheduled Principal Balance is less than 10%
(or such other percentage as may be specified in the related Prospectus
Supplement) of the Cut-off Date Pool Principal Balance, the Servicer will, in
addition to the option to repurchase the Contracts discussed above, have the
option to direct the Trustee to solicit bids for the purchase at an auction (the
"Termination Auction") of the Contracts remaining in the Trust Fund. Unless the
Servicer has either exercised the option to repurchase the Contracts or directed
the Trustee to conduct a Termination Auction within 90 days of the Distribution
Date on which the Pool Scheduled Principal Balance is less than 10% (or such
other percentage as may be specified in the related Prospectus Supplement) of
the Cut-off Date Pool Principal Balance, the Servicer shall, to the extent
specified in the related Prospectus Supplement, be obligated to direct the
Trustee to conduct such a Termination Auction. In any Termination Auction, the
Servicer shall give notice as specified in the applicable Prospectus Supplement
before the date on which the Termination Auction is to occur. The Trustee will
solicit each Certificateholder, the Seller and one or more active participants
in the asset-backed securities or manufactured housing contract market that are
not affiliated with GreenPoint to make a bid to purchase the Contracts at the
Termination Auction. The Trustee will sell all the Contracts to the highest
bidder, subject, among other things, to (i) the requirement that the highest bid
equal or exceed the Minimum Termination Amount, and (ii) the requirement that at
least one bid be tendered by an active participant in the asset-backed
securities or manufactured housing contract market that is not affiliated with
GreenPoint. If the foregoing requirements are satisfied, the successful bidder
or bidders shall deposit the aggregate purchase price for the Contracts in the
Certificate Account. If the foregoing requirements are not satisfied, the
purchase shall not occur and distributions will continue to be made on the
Certificates. Any sale and consequent termination of the Trust Fund as a result
of a Termination Auction must constitute a "qualified liquidation" of the Trust
Fund under Section 860F of the Code. (Section 10.1)
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TERMINATION OF THE AGREEMENT
The Agreement will terminate upon the last action required to be taken
by the Trustee on the final Distribution Date following the earlier of (i) the
purchase or sale of all Contracts and all property acquired in respect of any
Contract remaining in the Trust Fund as described above under "--Optional and
Mandatory Repurchase of Certificates; Termination Auction" or (ii) the final
payment or other liquidation (or any advance with respect thereto) of the last
Contract remaining in the relevant Trust Fund (including the disposition of all
property acquired upon repossession of any Manufactured Home). (Section 10.01.)
In the event of the termination of any Agreement, the holders of
Certificates of any Class of the related Series will be entitled to receive,
upon presentation and surrender of their Certificates at the office or agency
designated by the Trustee, a final distribution in an amount computed as
described in the related Prospectus Supplement.
COLLECTION AND OTHER SERVICING PROCEDURES
Except as otherwise provided in the related Agreement, the Servicer
may rescind, cancel or make material modifications of the terms of a Contract
(including modifying the amounts and Due Dates of Scheduled Payments) in
connection with a default or imminent default thereunder. However, if so
specified in the related Prospectus Supplement and unless required by the
applicable law or to bring Contracts into conformity with the representations
and warranties contained in the Agreement, the Servicer may not rescind, cancel
or materially modify any Contract unless the Servicer obtains an opinion of
counsel to the effect that such action will not have certain adverse federal
income tax consequences. (Section 4.07.)
SERVICING COMPENSATION AND PAYMENT OF EXPENSES; CERTAIN MATTERS REGARDING THE
SERVICER
The monthly servicing fee (the "Monthly Servicing Fee") and any
additional servicing compensation with respect to the Contracts underlying a
Series of Certificates will be specified in the applicable Prospectus
Supplement. (Section 1.01.) If so specified in the related Prospectus
Supplement, if GreenPoint is acting as Servicer, GreenPoint may subordinate the
Monthly Servicing Fee for a Series with respect to all, or a portion of, the
amounts due to the related Certificateholders on the terms and conditions set
forth in such Prospectus Supplement.
The Monthly Servicing Fee provides compensation for customary
manufactured housing contract third-party servicing activities to be performed
by the Servicer for the Trust Fund and for additional administrative services
performed by the Servicer on behalf of the Trust Fund. Customary servicing
activities include collecting and recording payments, communicating with
Obligors, investigating payment delinquencies, providing billing and tax records
to Obligors and maintaining internal records with respect to each Contract.
Administrative services performed by the Servicer on behalf of the Trust Fund
include calculating distributions to Certificateholders and providing related
data processing and reporting services for Certificateholders and on behalf of
the Trustee. If so specified in the applicable Prospectus Supplement, expenses
incurred in connection with servicing the Contracts and paid by the Servicer
from its Monthly Servicing Fee include, without limitation, payment of fees
and
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expenses of accountants, payment of all fees and expenses incurred in connection
with the enforcement of Contracts (except liquidation expenses and certain other
expenses) and payment of expenses incurred in connection with distributions and
reports to Certificateholders. The Servicer will be reimbursed out of the
liquidation proceeds from a defaulted Contract for all reasonable, out-of-pocket
liquidation expenses incurred by it in realizing upon the related Manufactured
Home as well as for advances of taxes and insurance premiums previously made
with respect to any such Contract (to the extent not previously recovered).
If so specified in the related Prospectus Supplement, as part of its
servicing fees, the Servicer will also be entitled to retain, as compensation
for the additional services provided in connection therewith, any fees for late
payments made by Obligors, conversion fees relating to variable rate Contracts,
a fee associated with the enforcement of deficiency amounts on Liquidated
Contracts if deficiency amounts are recoverable under the laws of the applicable
jurisdiction, extension fees paid by Obligors for the extension of scheduled
payments and assumption fees for permitted assumptions of Contracts by
purchasers of the related Manufactured Homes. (Sections 4.15 and 5.03.) To the
extent specified in the related Prospectus Supplement, the Servicer will also be
entitled to use payments of principal and interest (including Liquidation
Proceeds net of Liquidation Expenses) for its own benefit, without an obligation
to pay interest or any other investment return thereon, until the related
Distribution Date.
If so specified in the applicable Prospectus Supplement, any person
with which the Servicer is merged or consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Servicer is a party,
or any person succeeding to the business of the Servicer, will be the successor
to the Servicer under the Agreement, so long as such successor has a net worth
of at least $50 million and has serviced at least $100 million of manufactured
housing contracts for at least one year. The Servicer may assign its rights and
delegate its duties under the Agreement (whereupon it will no longer be liable
for the obligations of the Servicer under the Agreement), provided that, among
other conditions, any rating assigned to the Certificates will not be reduced
because of such assignment and delegation. (Sections 7.04, 7.06 and 7.07.)
Hazard Insurance Policies. If so specified in the related Prospectus
Supplement, the Servicer will be obligated to cause to be maintained one or more
hazard insurance policies with respect to each Manufactured Home in an amount at
least equal to the lesser of its maximum insurable value or the principal amount
due from the Obligor under the related Contract. Such hazard insurance policies
will, at a minimum, provide fire and extended coverage on terms and conditions
customary in manufactured housing hazard insurance policies. If a Manufactured
Home is located within a federally designated flood area, the Servicer will, to
the extent required by applicable law or regulation, also be obligated to cause
flood insurance to be maintained in an amount equal to the lesser of the amounts
described above or the maximum amount available for such Manufactured Home under
the federal flood insurance programs. Such policies may provide for customary
deductible amounts. Coverage thereunder will be required to be sufficient to
avoid the application of any co-insurance provisions. Such policies will be
required to contain a standard loss payee clause in favor of the Servicer and
its successors and assigns. In general, the Servicer will not be obligated to
cause to be obtained and maintained hazard insurance policies that provide
earthquake coverage. If earthquake coverage is required
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with respect to Contracts in a particular Trust Fund, that fact will be
disclosed in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, all amounts
collected by the Servicer under a hazard or flood insurance policy will be
applied either to the restoration or repair of the Manufactured Home or against
the remaining principal balance of the related Contract upon repossession of the
Manufactured Home, after reimbursing the Servicer for amounts previously
advanced by it for such purposes. The Servicer may satisfy its obligation to
maintain hazard and flood insurance policies with respect to each Manufactured
Home by maintaining a blanket policy insuring against hazard and flood losses on
the related Obligor's interest in such Manufactured Home. Such blanket policy
may contain a deductible clause, in which case the Servicer will be required to
make payments to the related Trust Fund in the amount of any deductible amounts
in connection with insurance claims on repossessed Manufactured Homes.
If so specified in the related Prospectus Supplement, if the Servicer
repossesses a Manufactured Home on behalf of the Trustee, the Servicer is
required to either maintain a Hazard Insurance Policy with respect to such
Manufactured Home meeting the requirements set forth above, or to indemnify the
Trust Fund against any damage to such Manufactured Home prior to resale or other
disposition. (Section 4.09.)
Evidence as to Compliance. If so specified in the related Prospectus
Supplement, the Servicer will be required to deliver to the Trustee each year an
officer's certificate executed by an officer of the Servicer (i) stating that a
review of the activities of the Servicer during the preceding calendar year and
of performance under the Agreement has been made under the supervision of such
officer, and (ii) stating that to the best of such officer's knowledge, the
Servicer has fulfilled all its obligations under the Agreement throughout such
year, or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. Such officer's certificate will be accompanied by a statement of a
firm of independent public accountants to the effect that, on the basis of an
examination of certain documents and records relating to servicing of the
Contracts under the Agreement (or, at the Servicer's option, the Contracts and
other contracts being serviced by the Servicer under agreements similar to the
Agreement), conducted in accordance with generally accepted auditing standards,
the Servicer's servicing has been conducted in compliance with the provisions of
the Agreement (or such agreements), except (i) such exceptions as such firm
believes to be immaterial and (ii) such other exceptions as may be set forth in
such statement. (Sections 4.20 and 4.21.)
Events of Default. If so specified in the related Prospectus
Supplement, events of default under the Agreement will consist of (i) any
failure by the Servicer to make any deposit or payment required of it under the
Agreement which continues unremedied for five days after the giving of written
notice, (ii) any failure by the Servicer duly to observe or perform in any
material respect any of its other covenants or agreements in the Agreement which
continues unremedied for 30 days after the giving of written notice of such
failure, and (iii) certain events of insolvency, readjustment of debt,
marshaling of assets and liabilities or other similar proceedings regarding the
Servicer. If so specified in the related Prospectus Supplement, "notice" as
used in this paragraph means notice to the Servicer by the Trustee, the Seller
or, if
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applicable, the Credit Facility Provider, or to the Servicer, the Trustee and
the Seller by the holders of Certificates evidencing interests ("Fractional
Interests") in the outstanding principal balance of outstanding Certificates
that, in the aggregate, equal at least 25% of the principal balance of all
outstanding Certificates (excluding Certificates held by the Seller or any of
its affiliates). (Section 8.01.)
Rights Upon Event of Default. If so specified in the related
Prospectus Supplement so long as an event of default remains unremedied, the
Trustee may (but only with the consent of the Credit Facility Provider (if any)
if the Credit Facility has not expired or if the Credit Facility has expired or
been terminated and such Credit Facility Provider has not been reimbursed for
all amounts due it), and at the written direction of the holders of Certificates
evidencing Fractional Interests aggregating not less than 51% shall, terminate
all of the rights and obligations of the Servicer under the Agreement and in and
to the related Contracts, whereupon (subject to applicable law regarding the
Trustee's ability to make monthly advances) the Trustee or a successor Servicer
under the Agreement will succeed to all the responsibilities, duties and
liabilities of the Servicer under the Agreement and will be entitled to similar
compensation arrangements. If the Trustee is obligated to succeed the Servicer
but is unwilling or unable so to act, it may appoint or petition a court of
competent jurisdiction for the appointment of a Servicer. Pending such
appointment, the Trustee is obligated to act in such capacity. The Trustee and
such successor Servicer may agree upon the servicing compensation to be paid,
which in no event may be greater than a monthly amount specified in the
Agreement. (Sections 7.07 and 8.01.)
If so specified in the related Prospectus Supplement, no
Certificateholder will have any right under the Agreement to institute any
proceeding with respect to the Agreement unless such holder previously has given
to the Trustee written notice of default and unless the holders of Certificates
evidencing Fractional Interests aggregating not less than 25% have requested the
Trustee in writing to institute such proceeding in its own name as Trustee and
have offered to the Trustee reasonable indemnity and the Trustee for 60 days has
neglected or refused to institute any such proceeding. The Trustee will be
under no obligation to take any action or institute, conduct or defend any
litigation under the Agreement at the request, order or direction of any of the
holders of Certificates, unless such Certificateholders have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which the Trustee may incur. (Sections 8.01 and 11.08.)
AMENDMENT
If so specified in the related Prospectus Supplement, the Agreement
may be amended by the Seller, the Servicer and the Trustee without the consent
of the Certificateholders (but only with the consent of the Credit Facility
Provider (if any) if the Credit Facility has not expired or if the Credit
Facility has expired or been terminated and such Credit Facility Provider has
not been reimbursed for all amounts due it), (i) to cure any ambiguity, (ii) to
correct or supplement any provision therein that may be inconsistent with any
other provision therein, (iii) to add to the duties or obligations of the
Servicer, (iv) to obtain a rating from a nationally recognized rating agency or
to maintain or improve the ratings of any Class of the Certificates then given
by any rating agency (it being understood that, after obtaining the rating of
the Certificates from the rating agencies specified in such Agreement, none of
the Trustee, the Seller
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or the Servicer is obligated to obtain, maintain or improve any rating assigned
to the Certificates), or (v) to make any other provisions with respect to
matters or questions arising under such Agreement, provided that such action
will not, as evidenced by an opinion of counsel, adversely affect in any
material respect the interests of the Certificateholders. The Agreement may also
be amended, by the Seller, the Servicer and the Trustee with the consent of at
least 51% of the holders of Certificates of each Class affected thereby for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of such Agreement or of modifying in any manner the rights of
the Certificateholders; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, any distributions on
any Certificate, without the consent of the Holder of such Certificate as the
case may be, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in (i),
without the consent of the Holders of Certificates of such Class evidencing, as
to such Class, Percentage Interests aggregating 66% or (iii) reduce the
aforesaid percentage of Certificates the holders of which are required to
consent to any such amendment, without the consent of the holders of all
Certificates then outstanding, and no such amendment shall adversely affect the
status of the Trust Fund as a REMIC.
If so specified in the applicable Prospectus Supplement, the Agreement
may also be amended from time to time, without the consent of any
Certificateholders, by the Seller, the Trustee and the Servicer to modify,
eliminate or add to the provisions of the Agreement to (i) maintain the
qualification of the Trust Fund as a REMIC under the Code or avoid, or minimize
the risk of, the imposition of any tax on the Trust Fund under the Code that
would be a claim against the Trust Fund assets, provided that an opinion of
counsel is delivered to the Trustee to the effect that such action is necessary
or appropriate to maintain such qualification or avoid any such tax or minimize
the risk of its imposition, or (ii) prevent the Trust Fund from entering into
any "prohibited transaction" as defined in Section 860F of the Code, provided
that an opinion of counsel is delivered to the Trustee to the effect that such
action is necessary or appropriate to prevent the Trust Fund from entering into
such prohibited transaction. (Section 11.01.)
The Agreement may otherwise be subject to amendment without the
consent of any Certificateholders and, under certain circumstances, without the
consent of the Trustee, if and to the extent specified in the related Prospectus
Supplement.
THE TRUSTEE
The Trustee with respect to a Series will be identified in the
applicable Prospectus Supplement. If so specified therein, the Trustee may
resign at any time, in which event the Seller will be obligated to appoint a
successor Trustee. The Seller may also remove the Trustee if the Trustee ceases
to be eligible to continue as such under the related Agreement or if the Trustee
becomes insolvent. In such circumstances, the Seller will also be obligated to
appoint a successor Trustee. Any resignation or removal of the Trustee and
appointment of a successor Trustee will not become effective until acceptance of
the appointment by the successor Trustee. (Section 9.07.)
If so specified in the related Prospectus Supplement, the Agreement
for any Series will require the Trustee to maintain, at its own expense, an
office or agency in New York City where the Certificates for such Series may be
surrendered for registration of transfer or exchange
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and where notices and demands to or upon the Trustee and the Certificate
Registrar in respect of such Certificates pursuant to the related Agreement may
be served.
If so specified in the related Prospectus Supplement, the Trustee, or
any of its affiliates, in its individual or any other capacity, may become the
owner or pledgee of the Certificates of any Series with the same rights as it
would have if it were not Trustee.
If so specified in the related Prospectus Supplement, the Trustee will
act as Paying Agent, Certificate Registrar and Authenticating Agent for the
related Series of Certificates.
INDEMNIFICATION
If so specified in the applicable Prospectus Supplement, each
Agreement will provide that neither the Servicer nor any of its directors,
officers, employees or agents will be under any liability to the Trustee or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to such Agreement, or for errors in judgment;
provided, however, that such provision shall not protect the Servicer or any
such person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action which
arises under an Agreement (other than in connection with the enforcement of any
Contract in accordance with the Agreement) and which in its opinion may involve
it in any expenses or liability; provided, however, that the Servicer may in its
discretion undertake any such other legal action which it may deem necessary or
desirable in respect of the Agreement and the rights and duties of the parties
thereto. In such event, the legal expenses and costs of such other legal action
and any liability resulting therefrom shall be expenses, costs and liabilities
payable from the Trust Fund and the Servicer shall be entitled to be reimbursed
therefor from amounts collected on the Contracts. (Section 7.05.)
CREDIT AND LIQUIDITY ENHANCEMENT
To the extent specified in the related Prospectus Supplement, a Class
of Certificates may be entitled to the benefit of one or more of the following
forms of credit and liquidity enhancement:
SUBORDINATION
The Certificates of one or more Classes of a multiple-Class Series
(the "Senior Certificates") may afford the holders thereof a right to receive
distributions of principal or of interest or of both on each Distribution Date
from amounts collected on the related Contract Pool that is prior to the right
to receive such distributions afforded by the Certificates of the other Class or
Classes (the "Junior Certificates" or "Subordinate Certificates"). If so
specified in the related Prospectus Supplement, this prior right will result
from one or both of the following two features:
The Senior Certificates will entitle the holders thereof to receive on
some or all Distribution Dates, prior to any distribution of principal or of
interest or of both (as specified in the related Prospectus Supplement) being
made to the holders of the Junior Certificates on any
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such Distribution Date, a full distribution of principal or of interest or of
both principal and interest (as specified in the related Prospectus Supplement)
from amounts collected on the Contracts during the related Collection Period(s).
To the extent that Contract collections during the related Collection Period(s)
would, in the absence of liquidation losses or other circumstances adversely
affecting such Contract collections, have been applied to make distributions to
the holders of the Junior Certificates, this feature will enhance the likelihood
of timely receipt by the holders of the Senior Certificates of full
distributions of principal or of interest or of both in accordance with the
applicable distribution formula.
The distribution formula for the Senior Certificates (other than
interest-only Certificates) will entitle the holders thereof to receive, on some
or all Distribution Dates, all or a disproportionate share of the Total Regular
Principal Amount until the Certificate Balance of the Senior Certificates has
been reduced to zero. See "Description of Certificates--Distributions on
Certificates--Distributions of Principal" above. This feature, in effect, will
provide the holders of the Senior Certificates (other than holders of interest-
only Certificates) with a prior right to receive the principal collected on the
Contracts until the Certificate Balance of the Senior Certificates has been
reduced to zero. The degree of priority will depend on the share of the Total
Regular Principal Amount to which the holders of the Senior Certificates (other
than holders of interest-only Certificates) are entitled on particular
Distribution Dates. If the holders of the Senior Certificates (other than
holders of interest-only Certificates) are entitled to receive all of the Total
Regular Principal Amount on each Distribution Date (to the extent of the
Contract collections available to make distributions of Regular Principal on
such Distribution Date), then the holders of the Senior Certificates (other than
holders of interest-only Certificates) will, in effect, have a right to receive
all principal collected on the Contracts that is absolutely prior to the right
of the holders of the Junior Certificates to receive any principal collected on
the Contracts. If, however, the holders of the Senior Certificates (other than
holders of interest-only Certificates) are entitled to receive only a
disproportionate share of the Total Regular Principal Amount, or are entitled to
receive all or a disproportionate share of the Total Regular Principal Amount
only on certain Distribution Dates, then the prior right of the holders of the
Senior Certificates (other than holders of interest-only Certificates) to
receive distributions of principal collected on the Contracts will, to that
extent, be limited. The prior right to receive distributions of principal
collections described above will enhance the likelihood that the holders of the
Senior Certificates (other than holders of interest-only Certificates) will
ultimately receive distributions of principal in an aggregate amount equal to
the initial Certificate Balance of the Senior Certificates. It will not,
however, enhance the likelihood of timely receipt by the holders of the Senior
Certificates of full distributions of the amounts to which they would have been
entitled in the absence of liquidation losses or other circumstances adversely
affecting Contract collections.
If specified in the related Prospectus Supplement, the features
described above may be characteristic of different Classes within a multiple-
Class Series. Thus, Certificates which constitute Senior Certificates under the
criteria described in paragraph 1 above may constitute Junior Certificates under
the criteria described in paragraph 2 above, and Certificates which constitute
Senior Certificates under the criteria described in paragraph 2 above may
constitute Junior Certificates under the criteria described in paragraph 1
above. In general, the splitting of the features described above among two
separate Classes of a multiple-Class Series will undercut the protection against
loss afforded by each of such features. The particular effects of any such
splitting will be discussed in the applicable Prospectus Supplement. The
following
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discussion is based on the assumption that the features described above will not
be characteristic of different Classes within a multiple-Class Series.
The degree of protection against loss provided to the holders of the
Senior Certificates at any time by either of the subordination features
described above will be determined primarily by the degree to which the
aggregate principal balance of the underlying Contracts (the "Pool Principal
Balance") exceeds the Certificate Balance of the Senior Certificates (and to a
lesser extent, if the holders of the Senior Certificates also have a prior right
to receive interest, by the degree to which the interest payable on the
Contracts, net of the portions thereof used to pay the servicing fee of the
Servicer (if such servicing fee is payable prior to distributions of interest to
the holders of the Senior Certificates) and other expenses of the Trust Fund,
exceeds the interest distributable to the holders of the Senior Certificates).
The relative levels of the Certificate Balance of the Senior Certificates (the
"Senior Certificate Balance") and the related Pool Principal Balance, and hence
the degree of protection against loss afforded by the subordination features
described above, may change over time depending on, among other things, the
formula by which principal is distributed to the holders of the Senior
Certificates and the level of liquidation losses on the underlying Contracts.
Generally, if the holders of Senior Certificates (other than holders of
interest-only Certificates) receive a disproportionate share of the Total
Regular Principal Amount on any Distribution Date, the effect will be to
increase, as a relative matter, the degree by which the Pool Principal Balance
exceeds the Certificate Balance of the Senior Certificates, thus increasing the
degree of protection against loss afforded by the subordination of the Junior
Certificates. In addition, Special Principal Distributions to the holders of
the Senior Certificates from sources other than principal collections on the
underlying Contracts generally will increase the degree of protection against
loss above the protection that would have been provided if such distributions
were not made (because the Senior Certificate Balance will be reduced without a
reduction in the Pool Principal Balance). On the other hand, if, due to
liquidation losses or other circumstances adversely affecting Contract
collections, the holders of Senior Certificates (other than holders of interest-
only Certificates) receive less than their proportionate share of the Total
Regular Principal Amount, the effect will be to decrease, as a relative matter,
the degree to which the Pool Principal Balance exceeds the Certificate Balance
of the Senior Certificates, thus decreasing the degree of protection against
loss afforded by the subordination of the Junior Certificates. The effects of
particular principal distribution formulae in this regard will be discussed in
the applicable Prospectus Supplement. The description of any such effects in a
particular Prospectus Supplement may relate the Certificate Balances of the
Senior Certificates to Pool Principal Balances which are estimated or adjusted
as described therein. Such Pool Principal Balances may sometimes be referred to
in a Prospectus Supplement as "Pool Scheduled Principal Balances."
Where there is more than one Class of Junior Certificates, the rights
of one or more of such Classes of Junior Certificates to receive distributions
of principal, interest or principal and interest may be subordinated to the
rights of one or more other Classes of Junior Certificates to receive such
distributions. Any Class of Junior Certificates that is entitled to receive
such distributions from Contract Pool collections prior to any other Class of
Junior Certificates is a "mezzanine" Class of Junior Certificates. The
subordination of any Class of Junior Certificate to a mezzanine Class of Junior
Certificates will enhance the likelihood of timely receipt by the holders of
such mezzanine Class of Junior Certificates relative to any Class
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of Junior Certificates that is subordinate to such mezzanine Class of Junior
Certificates. Junior Certificates, including any mezzanine Classes of Junior
Certificates, may only be sold hereunder if rated in one of the four highest
rating categories of a nationally recognized statistical rating organization.
(See "Rating" herein). The effect of any subordination on any Classes of Junior
Certificates sold hereunder will be discussed in the applicable Prospectus
Supplement.
RESERVE FUNDS
The Certificates of one or more Classes may be entitled to the benefit
of one or more spread accounts or other reserve funds (each, a "Reserve Fund")
which, to the extent specified in the related Prospectus Supplement, will cover
shortfalls created when collections on the related Contract Pool that are
available to make distributions to the holders of such Certificates are not
sufficient to fund full distributions of principal, interest or principal and
interest to such Certificateholders. Any Reserve Fund may be available to cover
all or a portion of such shortfalls and may be available to cover any
shortfalls, no matter what the cause, or only shortfalls due to certain causes
(e.g., liquidation losses only or delinquencies only), all as specified in the
related Prospectus Supplement. In addition, to the extent specified in the
related Prospectus Supplement, a Reserve Fund may be used to make distributions
of interest or Regular Principal to the holders of a Class of Certificates on
particular Distribution Dates upon the occurrence of certain losses,
delinquencies or other events, even if such Certificateholders would not have
been entitled to any such distributions on such Distribution Dates in the
absence of losses, delinquencies or other events. A Reserve Fund may also be
used to fund Special Principal Distributions under the circumstances set forth
in the related Prospectus Supplement. The related Prospectus Supplement will
specify whether any Reserve Fund will be established as part of the Trust Fund
or held outside of the Trust Fund by a collateral agent or similar third party
(who may be the Trustee acting in a different capacity) and will contain a
description of any arrangement pursuant to which the Reserve Fund is held
outside of the Trust Fund.
The method of funding any Reserve Fund, and the required levels of
funding, if any, as well as the circumstances under which amounts on deposit in
any Reserve Fund may be distributed to persons other than Certificateholders,
will be described in the applicable Prospectus Supplement. To the extent that a
Reserve Fund may be funded in whole or in part from some or all of the interest
collected on the Contracts in excess of the interest needed to make
distributions to the holders of one or more Classes of Certificates, such
Reserve Fund may be referred to in the applicable Prospectus Supplement as a
"Spread Account."
CREDIT FACILITIES
The Certificates of one or more Classes may be entitled to the benefit
of one or more letters of credit, swap agreements, interest rate caps, surety
bonds or similar credit facilities (each, a "Credit Facility"). Each such
Credit Facility may be in an amount greater than, equal to or less than the
Certificate Balance of the Certificates of each Class entitled to the benefits
thereof, and may be subject to reduction or be limited as to duration, all as
described in the applicable Prospectus Supplement. To the extent specified in
the related Prospectus Supplement, amounts realized under a Credit Facility
supporting the Certificates of any Class may be used for the same purposes as
amounts on deposit in Reserve Funds. See "--Reserve Funds" above. A Credit
Facility may be held by a Trustee as part of the related Trust Fund or may be
held by a
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collateral agent or other third party (who may be the Trustee acting in a
different capacity). The related Prospectus Supplement will contain a
description of the material terms of any Credit Facility and any arrangement
pursuant to which the Credit Facility is held outside of the Trust Fund. Such
Prospectus Supplement will also contain certain information concerning the
provider of the Credit Facility (the "Credit Facility Provider"), which
information will have been provided to the Seller by the Credit Facility
Provider for use in such Prospectus Supplement. GreenPoint or an affiliate
thereof may be a Credit Facility Provider.
If specified in the applicable Prospectus Supplement, a Credit
Facility, rather than supporting distributions of particular amounts to the
holders of Certificates of particular Classes, may, instead, support certain
collections on the related Contract Pool. These collections may be of all or a
portion of amounts due on Contracts in liquidation, all or a portion of the
scheduled monthly payments due on the Contracts or of other amounts. The extent
to which any such collections are supported by a Credit Facility which functions
in this manner will be described in the applicable Prospectus Supplement.
LIQUIDITY FACILITIES
The Certificates of one or more Classes may be entitled to the benefit
of one or more certificate purchase agreements or other liquidity facilities
(each, a "Liquidity Facility"), pursuant to which the provider of such Liquidity
Facility (the "Liquidity Facility Provider") will provide funds to be used to
purchase some or all of such Certificates on the Repurchase Dates applicable
thereto. If so specified in the applicable Prospectus Supplement, a Liquidity
Facility will be held outside of the Trust Fund by a third party (which may be
the Trustee acting in another capacity). The related Prospectus Supplement will
contain a description of the material terms of any such Liquidity Facility and
any arrangement pursuant to which it is held outside of the Trust Fund, and will
contain certain information concerning the Liquidity Facility Provider, which
information will have been provided to the Seller by the Liquidity Facility
Provider for use in such Prospectus Supplement. GreenPoint or an affiliate
thereof may be a Liquidity Facility Provider. If specified in the related
Prospectus Supplement, a Reserve Fund or Credit Facility may also serve as a
Liquidity Facility.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material federal income tax
consequences of the purchase, ownership and disposition of Certificates of any
Series as of the date hereof. In connection with the issuance of each Series,
Special counsel to GreenPoint will render its opinion that this discussion of
the federal income tax consequences, as supplemented by the discussion of
federal income tax consequences in the related prospectus supplement
accompanying such Series, is accurate in all material respects. As more fully
discussed below, special counsel to GreenPoint is also of the opinion that (A)
for a Series for which an election to be treated as a "real estate mortgage
investment conduit" ("REMIC") will be made, (i) the Trust Fund will qualify as a
REMIC for federal income tax purposes, (ii) the Certificate of such Series
identified in the related prospectus supplement as "regular interests" in the
REMIC ("Regular Certificates") will be so treated for federal income tax
purposes, (iii) those Certificates of such Series identified in the related
prospectus supplement as "residual interests" in the REMIC ("Residual
Certificates") will be treated for federal income tax purposes as the sole class
of
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"residual interests" in the REMIC and (iv) those Certificates, if any,
identified a being comprised of a REMIC "regular interest: coupled with a swap
or cap contract will be treated as representing ownership of a "regular
interest" in a REMIC to the extent of the portion thereof identified as such in
the Prospectus Supplement, (B) for a Series for which no election to be treated
as a REMIC will be made and which is described as a "grantor trust" in the
Prospectus Supplement, for federal income tax purposes, the Trust Fund will be
classified as a grantor trust and not as a corporation or an association which
is taxable as a corporation, or (C) for a Series for which no election to be
treated as a REMIC will be made and which is described in the Prospectus
Supplement as an "owner trust," (i) for federal income tax purposes, the Trust
Fund will not be treated as an association, taxable mortgage pool or publicy
traded partnership taxable as a corporation and (ii) the Offered Certificates or
Notes of such Series will be treated as indebtedness for federal income tax
purposes. Except to the extent provided in a related prospectus supplement,
special counsel to GreenPoint will render no other opinions on federal income
taxes to a Trust with respect to the Certificates. Special counsel to GreenPoint
for each Series will be Orrick, Herrington & Sutcliffe LLP, and a copy of the
legal opinion of such counsel rendered in connection with any Series of
Certificates will be filed with the Commission on a Current Report on Form 8-K
upon the issuance of the related Series of Certificates. This discussion is
directed primarily to Certificateholders that hold the Certificates as "capital
assets" within the meaning of Section 1221 of the Code (although portions
thereof also may apply to Certificateholders who do not hold Certificates as
"capital assets") and it does not purport to discuss all federal income tax
consequences that may be applicable to the individual circumstances of
particular investors, some of which (such as banks, insurance companies and
foreign investors) may be subject to special treatment under the Code. Further,
the authorities on which this discussion, and the opinion referred to below, are
based are subject to change or differing interpretations, which could apply
retroactively. Prospective investors should note that no rulings have been or
will be sought from the Internal Revenue Service (the "Service") with respect to
any of the federal income tax consequences discussed below, and no assurance can
be given that the Service will not take contrary positions. Taxpayers and
preparers of tax returns (including those filed by any REMIC or other issuer)
should be aware that under applicable Treasury regulations a provider of advice
on specific issues of law is not considered an income tax return preparer unless
the advice (i) is given with respect to events that have occurred at the time
the advice is rendered and is not given with respect to the consequences of
contemplated actions, and (ii) is directly relevant to the determination of an
entry on a tax return. Accordingly, taxpayers should consult their tax advisors
and tax return preparers regarding the preparation of any item on a tax return,
even where the anticipated tax treatment has been discussed herein. In addition
to the federal income tax consequences described herein, potential investors are
advised to consider the state, local and other tax consequences, if any, of the
purchase, ownership and disposition of Certificates in a Series. See "Other Tax
Consequences." Certificateholders are urged to consult their tax advisors
concerning the federal, state, local or other tax consequences to them of the
purchase, ownership and disposition of Certificates in a Series.
The following discussion addresses securities of three general types:
(i) certificates ("REMIC Certificates") representing interests in a Trust Fund
with respect to which an election to be treated as a "real estate mortgage
investment conduit" ("REMIC") under Sections 860A through 860G (the "REMIC
Provisions") of the Code will be made, (ii) Grantor Trust Certificates
representing interests in a Trust Fund ("Grantor Trust Fund") as to which
no
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such election will be made and (iii) Owner Trust Certificates or Notes which
will be treated as indebtedness for federal income tax purposes and a to which
no REMIC election will be made.
The following discussion is based in part upon the rules governing
original issue discount that are set forth in Sections 1271-1273 and 1275 of the
Code and in the Treasury regulations issued thereunder (the "OID Regulations"),
and in part upon the REMIC Provisions and the Treasury regulations issued
thereunder (the "REMIC Regulations"). The OID Regulations do not adequately
address certain issues relevant to, and in some instances provide that they are
not applicable to, securities such as the Certificates.
The following discussion is limited in applicability to the
Certificates. For purposes of this tax discussion, references to a
"Certificateholder" or a "holder" are to the beneficial owner of a Certificate.
REMIC ELECTIONS
Under the Code, an election may be made with respect to a Trust Fund
related to any Series of Certificates to treat such Trust Fund as a "real estate
mortgage investment conduit" ("REMIC") within the meaning of Section 860D(a) of
the Code, in which case the Certificates of any Class of such Series will be
either "regular interests" in the REMIC within the meaning of Section 860G(a)(1)
of the Code or "residual interests" in the REMIC within the meaning of Section
860G(a)(2) of the Code. The Prospectus Supplement for each Series of
Certificates will indicate whether each Seller of Contracts to the related
Contract Pool intends to cause an election to be made to treat the Trust Fund as
a REMIC, and if such an election is to be made, which Certificates will be
regular interests and which will be the residual interest in the REMIC. The
discussion under the heading "--REMIC Certificates" discusses Series with
respect to which the Seller of Contracts to the related Contract Pool will cause
a REMIC election to be made and the discussion under the heading "--Non-REMIC
Trusts" discusses Series with respect to which the Seller will not cause a REMIC
election to be made.
REMIC CERTIFICATES
General. The discussion in this section applies only to a Series of
Certificates for which a REMIC election is to be made. Upon the issuance of
each Series of Certificates for which a REMIC election is to be made, Orrick,
Herrington & Sutcliffe LLP, special counsel to GreenPoint will deliver its
opinion that, with respect to each such Series of Certificates, under then
existing law and assuming that a REMIC election is made in accordance with the
requirements of the Code and compliance by the Seller, the Servicer and the
Trustee for such Series with all of the provisions of the related Agreement, the
agreement or agreements, if any, providing for a Credit Facility or a Liquidity
Facility, together with any agreement documenting the arrangement through which
a Credit Facility or a Liquidity Facility is held outside the related Trust
Fund, and agreement or agreements with any Underwriter, the Trust Fund will be a
REMIC, and the Certificates of such Series will be treated as either "regular
interests" in the REMIC ("Regular Certificates") or "residual interests" in the
REMIC ("Residual Certificates").
Orrick, Herrington & Sutcliffe LLP, special counsel to GreenPoint, has
prepared or reviewed the statements in this Prospectus under the heading
"Certain Federal Income Tax
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Consequences--REMIC Certificates," and are of the opinion that such statements
are correct in all material respects. Such statements are intended as an
explanatory discussion of the possible effects of the classification of any
Trust Fund as a REMIC for federal income tax purposes on investors generally and
of related tax matters affecting investors generally, but do not purport to
furnish information in the level of detail or with the attention to an
investor's specific tax circumstances that would be provided by an investor's
own tax advisor. Accordingly, each investor is urged to consult its own tax
advisors with regard to the tax consequences to it of investing in REMIC
Certificates.
Tax Status of REMIC Certificates. If so specified in the related
Prospectus Supplement, the Certificates of any Series, in their entirety, will
generally be considered (i) "real estate assets" within the meaning of Section
856(c)(4)(A) of the Code and (ii) assets described in Section 7701(a)(19)(C) of
the Code (assets qualifying under one or more of those sections, applying each
section separately, "qualifying assets") for a calendar quarter if at least 95%
of the assets of the related Trust Fund are qualifying assets during such
calendar quarter. In the event the percentage of the Trust Fund's assets which
are qualifying assets falls below 95% for any calendar quarter, then a
corresponding percentage of the Certificates will be treated as qualifying
assets for such calendar quarter. Any amount includible in gross income with
respect to the Certificates will be treated as "interest on obligations secured
by mortgages on real property or on interests in real property" within the
meaning of Section 856(c)(3)(B) of the Code to the extent that the Certificates
are treated as "real estate assets" within the meaning of Section 856(c)(4)(A)
of the Code. The assets of the Trust Fund will include, in addition to the
Contracts, payments on the Contracts held pending distribution, and may include,
among other assets, one or more Reserve Funds. With respect to the treatment of
Contracts as qualifying assets, (i) the Treasury Regulations under Section 856
of the Code define a "real estate asset" under Section 856(c)(4)(A) of the Code
to include a loan secured by manufactured housing that qualifies as a single
family residence under the Code, and (ii) the Treasury Regulations under Section
7701(a)(19)(C) of the Code provide that assets described in that Section include
loans secured by manufactured housing that qualifies as a single family
residence under the Code. It is unclear whether other assets of the Trust Fund
would be treated as qualifying assets under the foregoing sections of the Code.
REMIC Certificates held by a regulated investment company will not constitute
"Government Securities" within the meaning of Code Section 851(b)(4)(A)(ii).
Qualification as a REMIC. Qualification as a REMIC requires ongoing
compliance with certain conditions. The following discussion assumes that such
requirements will be satisfied by a Trust Fund so long as any REMIC Certificates
related to such Trust Fund are outstanding. Substantially all of the assets of
the REMIC must consist of "qualified mortgages" and "permitted investments" as
of the close of the third month beginning after the day on which the REMIC
issues all of its regular and residual interests (the "Startup Day") and at all
times thereafter. The term "qualified mortgage" means any obligation (including
a participation or certificate of beneficial ownership in such obligation) which
is principally secured by an interest in real property that is transferred to
the REMIC on the Startup Day in exchange for regular or residual interests in
the REMIC or is purchased by the REMIC within the three-month period beginning
on the Startup Day if such purchase is pursuant to a fixed price contract in
effect on the Startup Day. The REMIC Regulations provide that a manufactured
housing contract is principally secured by an interest in real property if the
fair market value of the real property securing the contract is at least equal
to either (i) 80% of the issue price
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(generally, the principal balance) of the contract at the time it was originated
or (ii) 80% of the adjusted issue price (the then outstanding principal balance,
with certain adjustments) of the contract at the time it is contributed to a
REMIC. The fair market value of the underlying real property is to be determined
after taking into account other liens encumbering that real property.
Alternatively, a manufactured housing contract is principally secured by an
interest in real property if substantially all of the proceeds of the contract
were used to acquire or to improve or protect an interest in real property that,
at the origination date, is the only security for the contract (other than the
personal liability of the obligor). The REMIC Regulations as well as a published
notice issued by the Internal Revenue Service (the "Service") provide that
obligations secured by interests in manufactured housing, which qualify as
"single family residences" within the meaning of Section 25(e)(10) of the Code,
are to be treated as "qualified mortgages" for qualifying a Trust Fund as a
REMIC. Under Section 25(e)(10) of the Code, the term "single family residence"
includes any manufactured home which has a minimum of 400 square feet of living
space and a minimum width in excess of 102 inches and which is of a kind
customarily used at a fixed location. GreenPoint will represent and warrant that
each of the manufactured homes securing the Contracts conveyed by it to a Trust
Fund meets this definition of a "single family residence." A qualified mortgage
also includes a "qualified replacement mortgage" that is used to replace any
"qualified mortgage" within three months of the Startup Day or to replace a
defective mortgage within two years of the Startup Day.
"Permitted investments" consist of (a) temporary investments of cash
received under qualified mortgages before distribution to holders of interests
in the REMIC ("cash-flow investments"), (b) amounts, such as a reserve fund, if
any, reasonably required to provide for full payment of expenses of the REMIC,
the principal and interest due on regular or residual interests in the event of
defaults on qualified mortgages, lower than expected returns on cash-flow
investments, prepayment interest shortfalls or certain other contingencies
("qualified reserve assets") and (c) certain property acquired as a result of
foreclosure of defaulted qualified mortgages ("foreclosure property"). A
reserve fund will not be qualified if more than 30% of the gross income from the
assets in the reserve fund is derived from the sale or other disposition of
property held for three months or less, unless such sale is necessary to prevent
a default in payment of principal or interest on Regular Certificates. In
accordance with Section 860G(a)(7) of the Code, a reserve fund must be "promptly
and appropriately" reduced as payments on contracts are received. Foreclosure
property will be a permitted investment only to the extent that such property is
not held for more than three years unless an extension of such holding period is
obtained from the Service.
The Code requires that in order to qualify as a REMIC an entity must
make reasonable arrangements designed to ensure that certain specified entities,
generally including governmental entities or other entities that are exempt from
United States tax, including the tax on unrelated business income ("Disqualified
Organizations"), do not hold the residual interest in the REMIC. Consequently,
it is expected that in the case of any Trust Fund for which a REMIC election is
made, the transfer, sale, or other disposition of a Residual Certificate to a
Disqualified Organization will be prohibited, and the ability of a Residual
Certificate to be transferred will be conditioned on the Trustee's receipt of a
certificate or other document representing that the proposed transferee is not a
Disqualified Organization. The transferor of a Residual Certificate must not,
as of the time of the transfer, have actual knowledge that such representation
is false. The Code further requires that reasonable arrangements be made to
enable a REMIC to provide
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the Service and certain other parties, including transferors of residual
interests in a REMIC, with the information needed to compute the tax imposed by
Section 860E(e)(1) of the Code if, in spite of the steps taken to prevent
Disqualified Organizations from holding residual interests, such an organization
does, in fact, acquire a residual interest. See "Restrictions on Transfer of
Residual Certificates" below.
For certain Series of Certificates, two or more separate elections may
be made to treat segregated portions of the assets of a single Trust Fund as
REMICs for federal income tax purposes. Upon the issuance of any such series of
Certificates, Orrick, Herrington & Sutcliffe LLP, special tax counsel to
GreenPoint, will have advised GreenPoint, as described above, that at the
initial issuance of the Certificates of such Series, each such segregated
portion qualifies as a REMIC for federal income tax purposes, and that the
Certificates in such Series will be treated either as Regular Certificates or
Residual Certificates of the appropriate REMIC. Solely for the purpose of
determining whether such Regular Certificates will constitute qualifying real
estate or real property assets for certain categories of financial institutions
or real estate investment trusts as described above under "--Tax Status of REMIC
Certificates," some or all of the REMICs in a multiple-tier REMIC structure may
be treated as one. See the discussion below under "--Taxation of Regular
Certificates."
If an entity electing to be treated as a REMIC fails to comply with
one or more of the ongoing requirements of the Code for REMIC status during any
taxable year, the Code provides that the entity will not be treated as a REMIC
for such year and thereafter. In this event, an entity with multiple classes of
ownership interests may be treated as a separate association taxable as a
corporation under Treasury regulations, and interests in the REMIC may be
treated as debt or equity interests therein. If the Trust Fund were treated as
a corporation, income of the Trust Fund would be subject to corporate tax in the
hands of the Trust Fund, and, therefore, only a reduced amount might be
available for distribution to Certificateholders. The Code authorizes the
Treasury Department to issue Treasury 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 a REMIC would occur
absent regulatory relief. Investors should be aware, however, that the
Conference Committee Report (the "Committee Report") to the Tax Reform Act of
1986 (the "1986 Act") indicates that the relief may be accompanied by sanctions,
such as the imposition of a corporate income tax on all or a portion of the
REMIC's income for the period of time in which the requirements for REMIC status
are not satisfied. The Agreement with respect to each REMIC will include
provisions designed to maintain the related Trust Fund's status as a REMIC. It
is not anticipated that the status of any Trust Fund as a REMIC will be
terminated.
TAXATION OF REGULAR CERTIFICATES
General. The Regular Certificates in any Series will constitute
"regular interests" in the related REMIC. Accordingly, the Regular Certificates
will generally be treated for federal income tax purposes as debt instruments
that are issued by the related Trust Fund on the date of issuance of the Regular
Certificates and not as ownership interests in the Trust Fund or the Trust
Fund's assets. Interest, original issue discount, and market discount accrued
on a Regular Certificate will be treated as ordinary income to the holder. Each
holder must use the accrual method of accounting with regard to Regular
Certificates, regardless of the method of accounting
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otherwise used by such holder with the effect that an investor may be required
to report income for federal income tax purposes despite not yet having received
a cash distribution in respect of such income. Payments of interest on REMIC
Regular Certificates may be based on a fixed rate or a variable rate as
permitted by the REMIC Regulations, or may consist of a specified portion of the
interest payments on qualified mortgages where such portion does not vary during
the period the REMIC Regular Certificate is outstanding. If a Regular
Certificate represents an interest in a REMIC that consists of a specified
portion of the interest payments on the REMIC's qualified mortgages, the stated
principal amount with respect to that Regular Certificate may be zero.
Original Issue Discount. Certain Regular Certificates may be issued
with "original issue discount" within the meaning of Code Section 1273(a). Any
holders of Regular Certificates issued with original issue discount generally
will be required to include original issue discount in income as it accrues, in
accordance with a constant interest method that takes into account the
compounding of interest, in advance of the receipt of the cash attributable to
such income. The Servicer will report annually (or more often if required) to
the Internal Revenue Service ("IRS") and to Certificateholders such information
with respect to the original issue discount accruing on the REMIC Regular
Certificates as may be required under Code Section 6049 and the regulations
thereunder. See "--Reporting Requirements" below.
Rules governing original issue discount are set forth in Code Sections
1271 through 1273 and 1275 and, to some extent, in the OID Regulations. Code
Section 1272(a)(6) provides special original issue discount rules applicable to
Regular Certificates. Regulations have not yet been proposed or adopted under
Section 1272(a)(6) of the Code. Further, application of the OID Regulations to
the Regular Certificates remains unclear in some respects because the OID
Regulations generally purport not to apply to instruments to which section
1272(a)(6) applies such as Regular Certificates, and separately because they
either do not address, or are subject to varying interpretations with regard to,
several relevant issues.
Code Section 1272(a)(6) requires that a mortgage prepayment assumption
("Prepayment Assumption") be used in computing the accrual of original issue
discount on Regular Certificates and for certain other federal income tax
purposes. The Prepayment Assumption is to be determined in the manner
prescribed in Treasury regulations. To date, no such regulations have been
promulgated. The Committee Report indicates that the regulations will provide
that the Prepayment Assumption, if any, used with respect to a particular
transaction must be the same as that used by the parties in pricing the
transaction. If so specified in the applicable Prospectus Supplement, the
Servicer will use a percentage of the prepayment assumption specified in the
applicable Prospectus Supplement in reporting original issue discount that is
consistent with this standard. However, the Servicer does not make any
representation that the Mortgage Loans will in fact prepay at a rate equal to
that prepayment assumption or at any other rate. Each investor must make its
own decision as to the appropriate prepayment assumption to be used in deciding
whether or not to purchase any of the Regular Certificates. The Prospectus
Supplement with respect to a Series of Certificates will disclose the prepayment
assumption to be used in reporting original issue discount, if any, and for
certain other federal income tax purposes.
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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". Except as discussed in the following two
paragraphs, in general, the issue price of a particular Class of Regular
Certificates offered hereunder will be the price at which a substantial amount
of Regular Certificates of that Class are first sold to the public (excluding
bond houses and brokers).
If a Regular Certificate is sold with accrued interest that relates to
a period prior to the issue date of such Regular Certificate, the amount paid
for the accrued interest will be treated instead as increasing the issue price
of the Regular Certificate. In addition, that portion of the first interest
payment in excess of interest accrued from the Closing Date to the first
Distribution Date will be treated for federal income tax reporting purposes as
includible in the stated redemption price at maturity of the Regular
Certificate, and as excludible from income when received as a payment of
interest on the first Distribution Date. The OID Regulations suggest that some
or all of this pre-issuance accrued interest "may" be treated as a separate
asset (and hence not includible in a Regular Certificate's issue price or stated
redemption price at maturity), whose cost is recovered entirely out of interest
paid on the first Distribution Date. It is unclear how such treatment would be
elected under the OID Regulations and whether an election could be made
unilaterally by a Certificateholder.
The stated redemption price at maturity of a Regular Certificate is
equal to the total of all payments to be made on such Certificate other than
"qualified stated interest." Under the OID Regulations, "qualified stated
interest" is interest that is unconditionally payable at least annually during
the entire term of the Certificate at either (i) a single fixed rate that
appropriately takes into account the length of the interval between payments or
(ii) the current values of a single "qualified floating rate" or "objective
rate" (each, a "Single Variable Rate"). A "current value" is the value of a
variable rate on any day that is no earlier than three months prior to the first
day on which that value is in effect and no later than one year following that
day. A "qualified floating rate" is a rate whose variations can reasonably be
expected to measure contemporaneous variations in the cost of newly borrowed
funds in the currency in which the Certificate is denominated. Such a rate
remains qualified even though it is multiplied by a fixed, positive multiple not
exceeding 1.35, increased or decreased by a fixed rate, or both. Certain
combinations of rates constitute a single qualified floating rate, including (i)
interest stated at a fixed rate for an initial period of less than one year
followed by a qualified floating rate if the value of the floating rate at the
closing date is intended to approximate the fixed rate, and (ii) two or more
qualified floating rates that can be expected to have appropriately the same
values throughout the term of the Certificate. A combination of such rates is
conclusively presumed to be a single floating rate if the values of all rates on
the closing date are within 0.25% of each other. A variable rate that is
subject to an interest rate cap, floor, "governor" or similar restriction on
rate adjustment may be a qualified floating rate only if such restriction is
fixed throughout the term of the instrument, or is not reasonably expected as of
the closing date to cause the yield on the debt instrument to differ
significantly from the expected yield absent the restriction. An "objective
rate" is a rate (other than a qualified floating rate) determined using a single
formula fixed for the life of the Certificate, which is based on (i) one or more
qualified floating rates (including a multiple or inverse of a qualified
floating rate), (ii) one or more rates each of which would be a qualified
floating rate for a debt instrument denominated in a foreign currency, (iii) the
yield of changes in price of one or more items of "actively traded"
personal
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property, (iv) a combination of rates described in (i), (ii) and (iii), or (v) a
rate designated by the IRS. However, a variable rate is not an objective rate
if it is reasonably expected that the average value of the rate during the first
half of the Certificate's term will differ significantly from the average value
of such rate during the final half of its term. A combination of interest
stated at a fixed rate for an initial period of less than one year followed by
an objective rate is treated as a single objective rate if the value of the
objective rate at the closing date is intended to approximate the fixed rate;
such a combination of rates is conclusively presumed to be to be a single
objective rate if the objective rate on the closing date does not differ from
the fixed rate by more than 0.25%. The qualified stated interest payable with
respect to certain variable rate debt instruments not bearing stated interest at
a Single Variable Rate generally is determined under the OID Regulations by
converting such instruments into fixed rate debt instruments. Instruments
qualifying for such treatment generally include those providing for stated
interest at (i) more than one qualified floating rates, or at (ii) a single
fixed rate and (a) one or more qualified floating rates or (b) a single
"qualified inverse floating rate" (each, a "Multiple Variable Rate"). A
qualified inverse floating rate is an objective rate equal to a fixed rate
reduced by a qualified floating rate, the variations in which can reasonably be
expected to inversely reflect contemporaneous variations in the cost of newly
borrowed funds (disregarding permissible rate caps, floors, governors and
similar restrictions such as are described above). Under these rules, some of
the payments of interest on a Certificate bearing a fixed rate of interest for
an initial period followed by a qualified floating rate of interest in
subsequent periods could be treated as included in the stated redemption price
at maturity if the initial fixed rate were to differ sufficiently from the rate
that would have been set using the formula applicable to subsequent periods.
See "Taxation of Regular Certificates--Variable Rate Certificates". Regular
Certificates offered hereby other than Certificates providing for variable rates
of interest or for the accretion of interest are not anticipated to have stated
interest other than "qualified stated interest", but if any such REMIC Regular
Certificates are so offered, appropriate disclosures will be made in the
Prospectus Supplement. Some or all of the payments on REMIC Regular
Certificates providing for the accretion of interest will be included in the
stated redemption price at maturity of such Certificates.
Under a de minimis rule in the Code, as interpreted in the OID
Regulations, original issue discount on a Regular Certificate will be considered
to be zero if such original issue discount is less than 0.25% of the stated
redemption price at maturity of the Regular Certificate multiplied by the
weighted average life of the Regular Certificate. For this purpose, the
weighted average life of the Regular Certificate is computed as the sum of the
amounts determined by multiplying the amount of each payment under the
instrument (other than a payment of qualified stated interest) by a fraction,
whose numerator is the number of complete years from the issue date until such
payment is made, and whose denominator is the stated redemption price at
maturity of such Regular Certificate. The IRS may be anticipated to take the
position that this rule should be applied taking into account the prepayment
assumption and the effect of any anticipated investment income. Under the OID
Regulations, Regular Certificates bearing only qualified stated interest except
for any "teaser" rate, interest holiday or similar provision would be treated as
subject to the de minimis rule if the greater of the deferred or foregone
interest or the other original issue discount is less than such de minimis
amount.
The OID Regulations generally would treat de minimis original issue
discount as includible in income as each principal payment is made, based on the
product of the total amount
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of such de minimis original issue discount and a fraction, whose numerator is
the amount of such principal payment and whose denominator is the stated
principal amount of the Regular Certificate. The OID Regulations also would
permit a Certificateholder to elect to accrue de minimis original issue discount
into income currently based on a constant yield method. See "Taxation of Regular
Certificates--Market Discount" and "--Premium".
Each holder of a Regular Certificate must include in gross income the
sum of the "daily portions" of original issue discount on its Regular
Certificate for each day during its taxable year on which it held such Regular
Certificate. For this purpose, in the case of an original holder of a Regular
Certificate, the daily portions of original issue discount will be determined as
follows. A calculation will first be made of the portion of the original issue
discount that accrued during each accrual period, that is, if so specified in
the applicable Prospectus Supplement, each period that begins or ends on a date
that corresponds to a Distribution Date on the Regular Certificate and begins on
the first day following the immediately preceding accrual period (beginning on
the Closing Date in the case of the first such period). For any accrual period
such portion will equal the excess, if any, of (i) the sum of (A) the present
value of all of the distributions remaining to be made on the Regular
Certificate, if any, as of the end of the accrual period and (B) the
distribution made on such Regular Certificate during the accrual period of
amounts included in the stated redemption price at maturity, over (ii) the
adjusted issue price of such Regular Certificate at the beginning of the accrual
period. The present value of the remaining payments referred to in the
preceding sentence will be calculated based on (i) the yield to maturity of the
Regular Certificate, calculated as of the settlement date, giving effect to the
Prepayment Assumption, (ii) events (including actual prepayments) that have
occurred prior to the end of the accrual period, and (iii) the prepayment
assumption. The adjusted issue price of a Regular Certificate at the beginning
of any accrual period will equal the issue price of such Certificate, increased
by the aggregate amount of original issue discount with respect to such Regular
Certificate that accrued in prior accrual periods, and reduced by the amount of
any distributions made on such Regular Certificate in prior accrual periods of
amounts included in the stated redemption price at maturity. The original issue
discount accruing during any accrual period will be allocated ratably to each
day during the period to determine the daily portion of original issue discount
for each day. With respect to an accrual period between the settlement date and
the first Distribution Date on the Regular Certificate (notwithstanding that no
distribution is scheduled to be made on such date) that is shorter than a full
accrual period, the OID Regulations permit the daily portions of original issue
discount to be determined according to any reasonable method.
A subsequent purchaser of a Regular Certificate that purchases such
Regular Certificate at a cost (not including payment for accrued qualified
stated interest) less than its remaining stated redemption price at maturity
will also be required to include in gross income, for each day on which it holds
such Regular Certificate, the daily portions of original issue discount with
respect to such Regular Certificate, but reduced, if such cost exceeds the
"adjusted issue price", by an amount equal to the product of (i) such daily
portions and (ii) a constant fraction, whose numerator is such excess and whose
denominator is the sum of the daily portions of original issue discount on such
Regular Certificate for all days on or after the day of purchase. The adjusted
issue price of a Regular Certificate on any given day is equal to the sum of the
adjusted issue price (or, in the case of the first accrual period, the issue
price) of the Regular Certificate at the beginning of the accrual period during
which such day occurs and the daily
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portions of original issue discount for all days during such accrual period
prior to such day, reduced by the aggregate amount of distributions previously
made other than distributions of qualified stated interest.
Variable Rate Certificates. Purchasers of Regular Certificates
bearing a variable rate of interest should be aware that there is uncertainty
concerning the application of Section 1272(a)(6) of the Code and the OID
Regulations to such Certificates. In the absence of other authority, the
Servicer intends to be guided by the provisions of the OID Regulations governing
variable rate debt instruments in adapting the provisions of Section 1272(a)(6)
of the Code to such Certificates for the purpose of preparing reports furnished
to Certificateholders. The effect of the application of such provisions
generally will be to cause Certificateholders holding Certificates bearing
interest at a Single Variable Rate to take into account for each period an
amount corresponding approximately to the sum of (i) the qualified stated
interest, accruing on the outstanding face amount of the Regular Certificate as
the stated interest rate for that Certificate varies from time to time and (ii)
the amount of original issue discount that would have been attributable to that
period on the basis of a constant yield to maturity for a bond issued at the
same time and issue price as the Regular Certificate, having the same face
amount and schedule of payments of principal as such Certificate, subject to the
same prepayment assumption, and bearing interest at a fixed rate equal to the
value of the applicable qualified floating rate or qualified inverse floating
rate in the case of a Certificate providing for either such rate, or equal to
the fixed rate that reflects the reasonably expected yield on the Certificate in
the case of a Certificate providing for an objective rate other than an inverse
floating rate, in each case as of the issue date. Certificateholders holding
Regular Certificates bearing interest at a Multiple Variable Rate generally will
take into account interest and original issue discount under a similar
methodology, except that the amounts of qualified stated interest and original
issue discount attributable to such a Certificate first will be determined for
an equivalent fixed rate debt instrument, the assumed fixed rates for which are
(a) for each qualified floating rate, the value of each such rate as of the
closing date (with appropriate adjustment for any differences in intervals
between interest adjustment dates), (b) for a qualified inverse floating rate,
the value of the rate as of the closing date, (c) for any other objective rate,
the fixed rate that reflects the yield that is reasonably expected for the
Certificate, and (d) for an actual fixed rate, such hypothetical fixed rate as
would result under (a) or (b) if the actual fixed rate were replaced by a
hypothetical qualified floating rate or qualified inverse floating rate such
that the fair market value of the Certificate as of the issue date would be
approximately the same as that of an otherwise identical debt instrument
providing for the hypothetical variable rate rather than the actual fixed rate.
If the interest paid or accrued with respect to a Multiple Variable Rate
Certificate during an accrual period differs from the assumed fixed interest
rate, such difference will be an adjustment (to interest or original issue
discount, as applicable) to the Certificateholder's taxable income for the
taxable period or periods to which such difference relates. Additionally,
purchasers of such Certificates should be aware that the provisions of the OID
Regulations applicable to variable rate debt instruments have been limited and
may not apply to some Regular Certificates having variable rates. If such a
Certificate is not governed by the provisions of the OID Regulations applicable
to variable rate debt instruments, it may be subject to the provisions thereof
applicable to instruments having contingent payments. The application of those
provisions to instruments such as variable rate Regular Certificates is subject
to differing interpretations. Prospective purchasers of variable rate Regular
Certificates are advised to consult their tax advisors concerning the tax
treatment of such Certificates.
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Market Discount. A Certificateholder that purchases a Regular
Certificate at a market discount, that is, at a purchase price less than the
adjusted issue price (as defined under "--Taxation of Regular Certificates--
Original Issue Discount") of such Regular Certificate generally will recognize
market discount upon receipt of each distribution of principal. In particular,
such a holder will generally be required to allocate each payment of principal
on a Regular Certificate first to accrued market discount, and to recognize
ordinary income to the extent such principal payment does not exceed the
aggregate amount of accrued market discount on such Regular Certificate not
previously included in income. Such market discount must be included in income
in addition to any original issue discount includible in income with respect to
such Regular Certificate.
A Certificateholder may elect to include market discount in income
currently as it accrues, rather than including it on a deferred basis in
accordance with the foregoing. If made, such election will apply to all market
discount bonds acquired by such Certificateholder on or after the first day of
the first taxable year to which such election applies. In addition, the OID
Regulations permit a Certificateholder to elect to accrue all interest, discount
(including de minimis market or original issue discount) and premium in income
as interest, based on a constant yield method. If such an election were made
for a Regular Certificate with market discount, the Certificateholder would be
deemed to have made an election to currently include market discount in income
with respect to all other debt instruments having market discount that such
Certificateholder acquires during the year of the election or thereafter.
Similarly, a Certificateholder that makes this election for a Certificate that
is acquired at a premium is deemed to have made an election to amortize bond
premium, as described below, with respect to all debt instruments having
amortizable bond premium that such Certificateholder owns or acquires. The
election to accrue interest, discount and premium on a constant yield method
with respect to a Certificate is irrevocable.
Under a statutory de minimis exception, market discount with respect
to a Regular Certificate will be considered to be zero for purposes of Code
Sections 1276 through 1278 if such market discount is less than 0.25% of the
stated redemption price at maturity of such Regular Certificate multiplied by
the number of complete years to maturity remaining after the date of its
purchase. In interpreting a similar de minimis rule with respect to original
issue discount on obligations payable in installments, the OID Regulations refer
to the weighted average maturity of obligations, and it is likely that the same
rule will be applied in determining whether market discount is de minimis. It
appears that de minimis market discount on a Regular Certificate would be
treated in a manner similar to original issue discount of a de minimis amount.
See "Taxation of Regular Certificates--Original Issue Discount". Such treatment
would result in discount being included in income at a slower rate than discount
would be required to be included using the method described above. However,
Treasury regulations implementing the market discount de minimis exception have
not been issued in proposed or temporary form, and the precise treatment of de
minimis market discount on obligations payable in more than one installment
therefore remains uncertain.
The 1986 Act grants authority to the Treasury Department to issue
regulations providing for the method for accruing market discount of more than a
de minimis amount on debt instruments, the principal of which is payable in more
than one installment. Until such time as regulations are issued by the Treasury
Department, certain rules described in the Committee
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Report will apply. Under those rules, the holder of a bond purchased with more
than de minimis market discount may elect to accrue such market discount either
on the basis of a constant yield method or on the basis of the appropriate
proportionate method described below. Under the proportionate method for
obligations issued with original issue discount, the amount of market discount
that accrues during a period is equal to the product of (i) the total remaining
market discount, multiplied by (ii) a fraction, the numerator of which is the
original issue discount accruing during the period and the denominator of which
is the total remaining original issue discount at the beginning of the period.
Under the proportionate method for obligations issued without original issue
discount, the amount of market discount that accrues during a period is equal to
the product of (i) the total remaining market discount, multiplied by (ii) a
fraction, the numerator of which is the amount of stated interest paid during
the accrual period and the denominator of which is the total amount of stated
interest remaining to be paid at the beginning of the period. The Prepayment
Assumption, if any, used in calculating the accrual of original issue discount
is to be used in calculating the accrual of market discount under any of the
above methods. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a Regular Certificate purchased at a discount in
the secondary market.
Further, a purchaser generally will be required to treat a portion of
any gain on sale or exchange of a 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. Such purchaser also may be required to defer a portion of its
interest deductions for the taxable year attributable to any indebtedness
incurred or continued to purchase or carry such Regular Certificate. Any such
deferred interest expense is, in general, allowed as a deduction not later than
the year in which the related market discount income is recognized. If such
holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by such holder in that taxable year or
thereafter, the interest deferral rule described above will not apply.
Premium. A Regular Certificate purchased at a cost (not including
payment for accrued qualified stated interest) greater than its remaining stated
redemption price at maturity will be considered to be purchased at a premium.
The holder of such a Regular Certificate may elect to amortize such premium
under the constant yield method. The OID Regulations also permit
Certificateholders to elect to include all interest, discount and premium in
income based on a constant yield method, further treating the Certificateholder
as having made the election to amortize premium generally, as discussed above.
The Committee Report indicates a Congressional intent that the same rules that
will apply to accrual of market discount on installment obligations will also
apply in amortizing bond premium under Code Section 171 on installment
obligations such as the Regular Certificates.
Effects of Defaults or Delinquencies. Certain Series of Certificates
may contain one or more Classes of Subordinate Certificates. In the event there
are defaults or delinquencies on Contracts in the related Trust Fund, amounts
that would otherwise be distributed on the Subordinate Certificates may instead
be distributed on the Senior Certificates. Holders of Subordinate Certificates
nevertheless will be required to report interest income with respect to such
Certificates (including original issue discount) as such income accrues without
giving effect to delays or reductions in distributions on such Subordinate
Certificates attributable to defaults
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and delinquencies on such Contracts, except to the extent that it can be
established that the undistributed amounts are not collectible. As a result, the
amount of income reported by a holder of a Subordinate Certificate in any period
could significantly exceed the amount of cash distributed to such holder in that
period. The holder will eventually be allowed a loss (or will be allowed to
report a lesser amount of income) to the extent that the aggregate amount of
distributions on the Subordinate Certificate is reduced as a result of defaults
or delinquencies on the related Contracts. However, the timing of such losses or
reductions in income is uncertain, and in some circumstances losses could be
capital losses that generally can be offset only with capital gains. Holders of
Subordinate Certificates should consult their own tax advisors on these
points.
Sales of Certificates. If a Regular Certificate is sold or exchanged,
the seller will recognize gain or loss equal to the difference, if any, between
the amount realized (net of accrued interest) and its adjusted basis in such
Regular Certificate. A seller's adjusted basis generally will equal the cost of
such Regular Certificate to the seller, increased by any original issue discount
reported by such seller with respect to such Regular Certificate and reduced
(but not below zero) by distributions received by such seller (other than
payments of qualified stated interest) and by any amortized premium. Except as
described above "--Market Discount" and with respect to the next three
paragraphs, any such gain or loss will be capital gain or loss provided the
Regular Certificate is held as a capital asset.
Gain from the disposition of a Regular Certificate that might
otherwise be capital gain will be treated as ordinary income to the extent that
such gain does not exceed the excess, if any, of (i) the amount that would have
been includible in the seller's gross income had income accrued at a rate equal
to 110% of "the applicable Federal rate" under Section 1274(d) of the Code
(generally, an average yield of United States Treasury obligations of different
ranges of maturities published monthly by the Service), determined as of the
date of purchase of such Regular Certificate, over (ii) the amount of income
actually includible in the gross income of the seller with respect to the
Regular Certificate.
Regular Certificates will be "evidences of indebtedness" within the
meaning of Section 582(c)(1) of the Code, and accordingly, gain or loss
recognized from a sale of a Regular Certificate by a bank or thrift institution
to which such section applies would be ordinary income or loss.
If GreenPoint is determined to have intended on the date of issue of
the Regular Certificates to call all or any portion of the Regular Certificates
prior to their stated maturity within the meaning of Section 1271(a)(2)(A) of
the Code, any gain realized upon a sale, exchange, retirement, or other
disposition of a Regular Certificate would be considered ordinary income to the
extent it does not exceed the unrecognized portion of the original issue
discount, if any, with respect to the Regular Certificate. The OID Regulations
provide that the intention to call rule will not be applied to mortgage-backed
securities such as the Regular Certificates. In addition, under the OID
Regulations, a mandatory sinking fund or call option is not evidence of an
intention to call.
Pass-Through of Expenses Other Than Interest. If a Trust Fund for
which a REMIC election is made is considered a "single-class REMIC" (as defined
below), a portion of
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such Trust Fund's servicing, administrative and other non-interest expenses will
be allocated as a separate item to those Regular Certificateholders that are
"pass-through interest holders" (as defined below). Such a holder would be
required to add its allocable share, if any, of such expenses to its gross
income and to treat the same amount as an item of investment expense. An
individual would generally be allowed a deduction for such an expense item for
regular tax purposes only as a miscellaneous itemized deduction subject to the
limitation under Section 67 of the Code, and may not be allowed any deduction
for such item for purposes of the alternative minimum tax. Section 67 of the
Code allows deductions for miscellaneous itemized deductions only to the extent
that in the aggregate they exceed 2% of an individual's adjusted gross income.
The Revenue Reconciliation Act of 1990 further limits the itemized deductions
allowed to certain individuals. If so specified in the related Prospectus
Supplement, the applicable Agreement will require each holder to give the Trust
Fund written notice immediately upon becoming a holder, if it is a pass-through
interest holder, or is holding a Regular Certificate on behalf of a pass-through
interest holder. The Trust Fund will report to each holder that has given the
Trust Fund such notice (and others if it is required) and to the Service, each
such holder's allocable share, if any, of the Trust Fund's noninterest expenses.
Generally, a "single-class REMIC" is defined as (i) a REMIC that would be
treated as an investment trust under Treasury regulations but for its
qualification as a REMIC or (ii) a REMIC that is substantially similar to an
investment trust but is structured with the principal purpose of avoiding the
allocation requirement imposed under Section 67 of the Code. The term "pass-
through interest holder" generally refers to individuals, entities taxed as
individuals and certain pass-through entities, but does not include real estate
investment trusts. Such investors should consult their own tax advisors
regarding consequences to them of the allocation of the Trust Fund's non-
interest expenses. In addition, the amount of itemized deductions otherwise
allowable for the taxable year of an individual whose adjusted gross income
exceeds certain thresholds will be reduced.
Taxation of Certain Foreign Investors. For purposes of this
discussion, a "Foreign Holder" is a Certificateholder who holds a Regular
Certificate and who is not (i) a citizen or resident of the United States, (ii)
a corporation or partnership organized in or under the laws of the United
States, a state (other than any partnership that is treated as not a United
States person under any Applicable Treasury regulations) thereof or the District
of Columbia or an entity taxable as such for U.S. federal income tax purposes,
(iii) an estate, the income of which is included in gross income for United
States tax purposes regardless of its source, or (iv) a trust if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States fiduciaries have the
authority to control all substantial decisions of the trust. Unless the
interest on a Regular Certificate is effectively connected with the conduct by
the Foreign Holder of a trade or business within the United States, the Foreign
Holder is not subject to federal income or withholding tax on interest (or
original issue discount, if any) on a Regular Certificate (subject to possible
backup withholding of tax, discussed below), provided the Foreign Holder is not
a controlled foreign corporation related to GreenPoint and does not own actually
or constructively 10% or more of the voting stock of GreenPoint. To qualify for
this tax exemption, the Foreign Holder will be required to provide periodically
a statement signed under penalties of perjury certifying that the Foreign Holder
meets the requirements for treatment as a Foreign Holder and providing the
Foreign Holder's name and address. The statement, which may be made on a Form
W-8 or substantially similar substitute form, generally must be provided in the
year a payment occurs or in either of the two preceding years. The statement
must be provided either directly or through a clearing organization or
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financial institution. This exemption may not apply to a Foreign Holder that
owns directly or indirectly both Regular Certificates and Residual Certificates.
If for any reason the exemption does not apply, interest paid to Foreign Holders
will be subject to U.S. withholding tax at the rate of 30% (or, if applicable, a
reduced rate provided in a tax treaty). If the interest on a Regular Certificate
is effectively connected with the conduct by a Foreign Holder of a trade or
business within the United States, then the Foreign Holder will be subject to
tax at regular graduated rates. Foreign Holders should consult their own
advisors regarding the specific tax consequences of their owning a Regular
Certificate.
Any gain recognized by a Foreign Holder upon a sale, retirement or
other taxable disposition of a Regular Certificate generally will not be subject
to United States federal income tax unless either (i) the Foreign Holder is a
non-resident alien individual who holds the Regular Certificate as a capital
asset and who is present in the United States for 183 days or more in the
taxable year of the disposition and either the gain is attributable to an office
or other fixed place of business maintained in the United States by the
individual or the individual has a "tax home" in the United States, or (ii) the
gain is effectively connected with the conduct by the Foreign Holder of a trade
or business within the United States.
A Regular Certificate will not be included in the estate of a Foreign
Holder who does not own actually or constructively 10% or more of the voting
stock of GreenPoint. Regular Certificateholders who are non-U.S. Persons and
persons related to such holders should not acquire any Residual Certificates,
and Residual Certificateholders and persons related to Residual
Certificateholders should not acquire any Regular Certificates without
consulting their tax advisors as to the possible adverse tax consequences of
doing so.
Backup Withholding. Under certain circumstances, a REMIC
Certificateholder may be subject to "backup withholding" at a 31% rate. Backup
withholding may apply to a REMIC Certificateholder who is a United States person
if the holder, among other circumstances, fails to furnish his Social Security
number or other taxpayer identification number to the Trustee. Backup
withholding may apply, under certain circumstances, to a REMIC Certificateholder
who is a foreign person if the REMIC Certificateholder fails to provide the
Trustee or the REMIC Certificateholder's securities broker with the statement
necessary to establish the exemption from federal income and withholding tax on
interest on the REMIC Certificates. Backup withholding, however, does not apply
to payments on a Certificate made to certain exempt recipients, such as
corporations and tax-exempt organizations, and to certain foreign persons. Each
non-exempt Certificateholder will be required to provide, under penalty of
perjury, a certificate on IRS Form W-9 containing his or her name, address,
correct federal taxpayer identification number and a statement that he or she is
not subject to backup withholding. REMIC Certificateholders should consult
their tax advisors for additional information concerning the potential
application of backup withholding to payments received by them with respect to a
Certificate.
Requirements. The Servicer will report annually to the Service, to
holders of record of the Regular Certificates that are not excepted from the
reporting requirements and, to the extent required by the Code, to other
interested parties, information with respect to the interest paid or accrued on
the Regular Certificates, original issue discount, if any, accruing on
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the Regular Certificates and information necessary to compute the accrual of any
market discount or the amortization of any premium on the Regular Certificates.
New Withholding Regulations. The Treasury Department has issued new
regulations (the "New Regulations") which make certain modifications to the
withholding, backup withholding and information reporting rules described above.
The New Regulations attempt to unify certification requirements and modify
reliance standards. The New Regulations will generally be effective for
payments made after December 31, 1999, subject to certain transition rules.
Prospective investors are urged to consult their own tax advisors regarding the
New Regulations.
TREATMENT OF CERTIFICATES REPRESENTING A REMIC REGULAR INTEREST COUPLED WITH A
SWAP OR CAP CONTRACT
Holders of Certificates that represent ownership of a REMIC Regular
Interest coupled with a swap or cap contract will be treated for federal income
tax purposes as owning a REMIC Regular Interest and a swap or cap contract. They
will be required to allocate the purchase price for their Certificates between
the REMIC Regular Interest and the swap or cap contract represented thereby
according to their respective fair market values on the date of acquisition of
the Certificates for purposes of computing any market discount or premium, as
well as gain or loss on disposition. In making reports to the Internal Revenue
Service, the Servicer will make such an allocation with respect to the original
issuance of the Certificates. Such allocation will bind any holder of such a
Certificate who does not properly report the use of a different allocation to
the Internal Revenue Service for purposes of determining the issue price and
amount of original issue discount for the portion of the Certificate
representing ownership of a REMIC Regular Interest. The portions of such
Certificates representing ownership of REMIC Regular Interests will be accorded
the treatment described above in "--REMIC Certificates--General--Tax Status of
REMIC Certificates" and "--REMIC Certificates--Taxation of REMIC Regular
Certificates."
Any portion of a purchaser's investment in a Certificate treated by
such purchaser as representing the right to payments from a swap or cap contract
would be treated as an interest in a notional principal contract. Any portion
of a Class A Certificate allocable to the right to payments from a swap or cap
contract and any payments with respect thereto will not qualify for any of the
treatments described in "REMIC Certificates--General--Tax Status of REMIC
Certificate. Treasury regulations issued under Section 446 of the Code (the
"Swap Regulations") specify rules for accounting for income from and recovery of
purchase price of such investment. Under the Swap Regulations, income in
respect of the right to payments from a swap or cap contract would be taken into
account for the taxable period to which it related, which generally would
approximate accrual basis accounting regardless of an investor's usual method of
tax accounting. Such income would be ordinary income.
The Swap Regulations further provide that an investor in a Certificate
would recover any purchase price allocable to the right to payments from a swap
or cap contract over the term of that right, generally by allocating it to each
period in accordance with the prices of a series of cash-settled option
contracts that reflected the specified index and notional amount (i.e., any
excess of the applicable Pass-Through Rate over the weighted average net
Mortgage Interest
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Rate and the applicable Certificate Balance, respectively) expiring in each
period. Under the Swap Regulations, straight-line or accelerated amortization
generally would be impermissible. The Swap Regulations also permit a simplified
alternative allocation methodology called the "level payment method," under
which the purchase price allocable to the right to payments from a swap or cap
contract would be allocated to each period on the basis of the principal portion
of each of a series of equal payments having a discounted present value equal to
such purchase price. There is no explicit authority with respect to the
character of such amortization deductions, although they are generally regarded
as ordinary items.
Certificateholders should be aware that the effect of allocating a
portion of their purchase price to the right to payments from a swap or cap
contract would be to increase the amount of original issue discount. It is
expected that an investor's amortization of any portion of its purchase price
allocable to the right to payments from a swap or cap contract would offset such
additional original issue discount, but the degree of offset in any given period
would depend upon the applicable amortization methodology and upon the treatment
of such amortization as an ordinary deduction, each as discussed above.
Although dependent upon the applicable discount rate, the annual amount of
offset should be relatively complete in the case of an investor amortizing
purchase price allocable to the right to payments from a swap or cap contract
under the "level payment method" described above.
On disposing of a Certificate, a holder will recognize gain or loss
separately with respect to the related regular interest and any right to
payments from a swap or cap contract. Gain or loss with respect to each asset
will be the excess of the amount realized in respect of such asset over its
adjusted basis; the amount realized will be allocated between the assets based
on their relative fair market value as of the date of disposition. The holder's
basis in its right to payments from a swap or cap contract will be any initial
purchase price allocable thereto as discussed above), reduced by amortization of
such amount allowable through the date of disposition. Gain or loss with
respect to each asset generally will be capital gain or loss, the term of which
will be based on the period such holder held the Certificate; gain or loss
attributable to the right to payments from a swap or cap contract may be
ordinary if recognized by a bank, although the matter is uncertain.
A purchaser of Certificate who is not a United States Person (as
defined in the Prospectus) and is not subject to federal income tax apart from
its ownership of a Class A Certificate should not be subject to United States
federal income or withholding tax on payments attributable to the right to
payments from a swap or cap contract, if such purchaser complies with the
identification requirements described in the Prospectus. However, the
inapplicability of federal income tax withholding to such payments is not
completely clear, and prospective investors should consult their tax advisors.
In the absence of contrary authority, income tax will not be withheld from
amounts paid in respect of the right to payment from a swap or cap contract.
See "Taxation of Certain Foreign Investors".
TAXATION OF RESIDUAL CERTIFICATES
The discussion under this heading applies only to a Series of
Certificates with respect to which a REMIC election is made and to Residual
Certificates. Such Residual Certificates will be subject to tax rules,
described below, that differ from those that would apply
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if they were treated for federal income tax purposes as direct ownership
interests in the related Trust Fund or as debt instruments issued by such Trust
Fund.
Although a REMIC is a separate entity for federal income tax purposes,
a REMIC is not generally subject to federal income tax. Rather, the taxable
income of a REMIC is taken into account by the holders of REMIC residual
interests.
In general, each original holder of a Residual Certificate will report
on its federal income tax return, as ordinary income, its share of the "daily
portion" of the taxable income of the Trust Fund for each day during the taxable
year on which such Residual Certificateholder held a Residual Certificate. The
"daily portion" of the taxable income of the Trust Fund is determined by
allocating to each day in any calendar quarter its ratable portion of the
taxable income or net loss of the Trust Fund for such quarter, and such Residual
Certificateholder's share of the "daily portion" is based on the portion of
outstanding Residual Certificates that such Residual Certificateholder owns on
such day. REMIC taxable income will be taxable to the Residual
Certificateholders without regard to the timing or amounts of cash distributions
by the REMIC. Ordinary income derived from Residual Certificates will be
"portfolio income" for purposes of the taxation of taxpayers subject to the
limitation on the deductibility of "passive losses." As residual interests, the
Residual Certificates will be subject to tax rules, described below, that differ
from those that would apply if the Residual Certificates were treated for
federal income tax purposes as direct ownership interests in the Contracts, or
as debt instruments issued by the REMIC. Under certain circumstances, a
Residual Certificateholder may be required to recognize for a given period
income substantially in excess of distributions made on the Residual
Certificates.
A subsequent Residual Certificateholder also will report on its
federal income tax return amounts representing a daily share of the taxable
income of the Trust Fund for each day that such Residual Certificateholder held
such Residual Certificate. Those daily amounts generally would equal the
amounts, described above, that would have been reported for the same days by a
holder of a Residual Certificate (an "Original Holder") that purchased such
Residual Certificate at its original issuance and held it continuously
thereafter. As discussed below, the taxable income of the Trust Fund will be
calculated based in part on the initial tax basis to the Trust Fund of its
assets, which in turn equals the sum of the issue prices of the Residual
Certificates and each Class of Regular Certificates. The legislative history of
the 1986 Act indicates that certain adjustments may be appropriate to reduce (or
increase) the income of a subsequent Residual Certificateholder that purchased
such Residual Certificate at a price greater than (or less than) the adjusted
basis (as defined below in "Distributions") such Residual Certificate would have
in the hands of an Original Holder. For the present, however, adjustments are
apparently not permitted or required.
A holder's adjusted basis in a Residual Certificate will equal the
purchase price of such Residual Certificate, increased by the amount of the
related Trust Fund's taxable income that is allocated to the holder of such
Residual Certificate, and decreased (but not below zero) by the amount of
distributions received thereon by such holder and the Trust Fund's net losses
allocated to such holder. Payments on a Residual Certificate (whether at their
scheduled times or as a result of prepayments) will generally not result in any
taxable income or loss to the holder of a Residual Certificate. If the amount
of such payment exceeds a holder's adjusted basis in its
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Residual Certificate, however, the holder will recognize gain (treated as gain
from the sale or exchange of its Residual Certificate) to the extent of such
excess. See "--Sale or Exchange" below.
Taxable Income of the Trust Fund. REMIC taxable income is generally
determined in the same manner as the taxable income of an individual using the
accrual method of accounting, except that (i) the limitation on deductibility of
investment interest expense and expenses for the production of income do not
apply, (ii) all bad loans will be deductible as business bad debts, and (iii)
the limitation on the deductibility of interest and expenses related to tax-
exempt income will apply. In general, the Trust Fund's taxable income will
reflect a netting of (i) the gross income produced by the assets of the Trust
Fund, including the stated interest and any original issue discount or market
discount income on the Contracts in the related Contract Pool (net of any
amortized premium on such Contracts), income from the investment or reinvestment
of cash flows and, if applicable, reserve assets, and amortization of any issue
premium with respect to the Regular Certificates and (ii) deductions, including
stated interest and original issue discount expense on Regular Certificates that
would be permitted if the Regular Certificates were indebtedness of the Trust
Fund, servicing fees, and other administrative expenses of the Trust Fund
(except as described below under "--Expenses Other Than Interest"). Any gain or
loss realized by the Trust Fund from the disposition of any asset is treated as
gain or loss from the sale or exchange of property that is not a capital asset.
If there is more than one Class of Regular Certificates, deductions allowed to
the Trust Fund with respect to the Regular Certificates will generally be
calculated separately with respect to each Class based on the yield of that
Class.
For purposes of determining its taxable income, the Trust Fund will
have an initial aggregate tax basis in its assets equal to the sum of the issue
prices of the Regular Certificates and the Residual Certificates. The issue
price of a Certificate of a Class (whether Regular Certificates or Residual
Certificates) that is publicly offered will be the initial offering price to the
public (excluding bond houses and brokers) at which a substantial amount of the
Certificates of that Class is sold, and if not publicly offered will be the
price paid by the first buyer of a Certificate of such class. If a Residual
Certificate has a negative value, it is not clear whether its issue price would
be considered to be zero or such negative amount for purposes of determining the
REMIC's basis in its assets. The REMIC Regulations imply that residual interest
cannot have a negative basis or a negative issue price. However, the preamble
to the REMIC Regulations indicates that, while existing tax rules do not
accommodate such concepts, the Service is considering the tax treatment of these
types of residual interests, including the proper tax treatment of a payment
made by the transferor of such a residual interest to induce the transferee to
acquire that interest. Absent regulations or administrative guidance to the
contrary, and unless the related Prospectus Supplement otherwise provides, it is
not expected that any Trust Fund as to which a REMIC election is made will treat
a Class of Residual Certificates as having a value of less than zero for
purposes of determining the basis of the related REMIC in its assets.
If a Trust Fund acquires a Contract and the principal amount of such
Contract (or revised issue price in the case of a Contract issued with original
issue discount) exceeds the Trust Fund's basis in such Contract by more than a
de minimis amount (as described above in "Taxation of Regular Certificates--
Market Discount"), such discount would generally be
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includible in the Trust Fund's income as it accrues, in advance of receipt of
the cash attributable to such income, under a constant yield method, similar to
the method for accruing original issue discount on Regular Certificates
described above in "Taxation of Regular Certificates--Original Issue Discount."
The Trust Fund's deductions for original issue discount expense with respect to
Regular Certificates also will be determined under those rules, except that the
de minimis rule that may apply to holders of Regular Certificates and the
adjustments for holders of Regular Certificates that purchase their Certificates
at a price greater than the adjusted issue price described therein will not
apply.
If the Trust Fund's basis in a Contract exceeds the remaining stated
redemption price at maturity of such a Contract, the Trust Fund will be
considered to have acquired such Contract at a premium equal to the amount of
such excess. In the event that any Contract in the Contract Pool is acquired by
the Trust Fund at a premium, the Trust Fund will be entitled to amortize such
premium on a yield-to-maturity basis. Although the matter is not free from
doubt, the Trust Fund intends to make this calculation using a reasonable
prepayment assumption.
If a Class of Regular Certificates is issued at a price in excess of
the aggregate principal amount of such Class (the excess, the "Issue Premium"),
the portion of the Issue Premium that is considered to be amortized during a
taxable year will be treated as ordinary income of the Trust Fund for such
taxable year. Although the matter is not entirely certain, it is likely that
the Issue Premium would be amortized under a constant yield method in a manner
analogous to the method of accruing original issue discount described above
under "Taxation of Regular Certificates--Original Issue Discount."
The taxable income recognized by a holder of a Residual Certificate in
any taxable year will be affected by, among other factors, the relationship
between the timing of interest, original issue discount or market discount
income, or amortization of premium with respect to the Contracts, on the one
hand, and the timing of deductions for interest (including original issue
discount) on the Regular Certificates, on the other hand. In the event that an
interest in the Contracts is acquired by a REMIC at a discount, and one or more
of such Contracts is prepaid, a holder of a Residual Certificate may recognize
taxable income without being entitled to receive a corresponding cash
distribution because (i) the prepayment may be used in whole or in part to make
distributions on Regular Certificates, and (ii) the discount on the Contracts
which is included in a REMIC's income may exceed its deduction with respect to
the distributions on those Regular Certificates. When there is more than one
class of Regular Certificates that receive payments sequentially (i.e., a fast-
pay, slow-pay structure), this mismatching of income and deductions is
particularly likely to occur in the early years following issuance of the
Regular Certificates, when distributions are being made in respect of earlier
classes of Regular Certificates to the extent that such classes are not issued
with substantial discount. If taxable income attributable to such a mismatching
is realized, in general, losses would be allowed in later years as distributions
on the later classes of Regular Certificates are made. The taxable income
recognized by a holder of a Residual Certificate also may be greater in earlier
years because the REMIC will use a constant yield in computing income from the
Contracts, while interest deductions with respect to Regular Certificates,
expressed as a percentage of the outstanding principal amount of the Regular
Certificates, may increase over time as earlier, lower-yielding Classes are
paid. The mismatching of income and deductions described in this paragraph, if
present with respect to a series of Residual Certificates, could have
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a significant adverse effect upon the holder's after-tax rate of return. In
addition, a holder of a Residual Certificate may need to have sufficient other
sources of cash to pay any federal, state, or local income taxes due as a result
of such mismatching, or such holders must have unrelated deductions against
which to offset such income, subject to the discussion of "excess inclusions"
below in "--Excess Inclusions."
A Residual Certificateholder will not be permitted to amortize the
cost of its Residual Certificate as an offset to its share of the taxable income
of the Trust Fund. However, that taxable income will not include cash received
by the Trust Fund that represents a recovery of the Trust Fund's basis in its
assets (which will include the issue price of the Residual Certificates as well
as the issue price of Regular Certificates). Such recovery of basis by the
Trust Fund will have the effect of amortization of the issue price of the
Residual Certificates over the life of the Trust Fund's assets. However, in
view of the possible acceleration of the income of holders of Residual
Certificates described above, the period of time over which such issue price is
effectively amortized may be longer than the economic life of the Residual
Certificates.
The method of taxation of Residual Certificates described above can
produce a significantly lower after-tax yield for a Residual Certificate than
would be the case if (i) Residual Certificates were taxable in the same manner
as debt instruments issued by the Trust Fund or (ii) no portion of the taxable
income on the Residual Certificates in each period were treated as "excess
inclusions" (as defined below). In certain periods, taxable income and the
resulting tax liability on a Residual Certificate are likely to exceed payments
received thereon. In addition, a substantial tax may be imposed on certain
transferors of the Residual Certificates and certain beneficial owners of the
Residual Certificates that are "pass-through" entities. Investors should
consult their tax advisors before purchasing a Residual Certificate.
Net Losses of the Trust Fund. The Trust Fund will have a net loss for
a calendar quarter if its deductions for that calendar quarter exceed its gross
income for that calendar quarter. The net loss allocable to any Residual
Certificate will not be deductible by the holder to the extent that such net
loss exceeds such holder's adjusted basis (as defined above in "--
Distributions") in such Residual Certificate at the end of the calendar quarter
in which such loss arises (or the time of disposition of the Residual
Certificate, if earlier), determined without taking into account the net loss
for such quarter. Any net loss that is not currently deductible by reason of
this limitation may be carried forward indefinitely, but may be used only to
offset taxable income of the same Trust Fund subsequently allocated to such
Residual Certificateholder. The ability of Residual Certificateholders that are
individuals or closely-held corporations to deduct net losses may be subject to
additional limitations under the Code.
Expenses Other Than Interest. Except in the limited circumstance when
the Trust Fund is considered a "single-class REMIC" (as defined above in
"Taxation of Regular Certificates--Pass-Through of Expenses Other Than
Interest"), the Trust Fund's servicing, administrative and other noninterest
expenses will be allocated entirely to the Residual Certificateholders. In the
case where the Trust Fund is considered a single-class REMIC, such expenses will
be allocated proportionately among Regular and Residual Certificateholders. See
"Taxation of Regular Certificates--Pass-Through of Expenses Other Than
Interest." In either case, such expenses will be allocated as a separate item to
those holders that are "pass-through interest holders" (as defined above in
"Taxation of Regular Certificates--Pass-Through of
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Expenses Other Than Interest"). Such a holder would be required to add its
allocable share, if any, of such expenses to its gross income and treat the same
amount as an item of investment expense. Limitations on the deductibility of
such expenses are described above in "Taxation of Regular Certificates--Pass-
Through of Expenses Other Than Interest." The related Agreement will require
each holder to give the Trust Fund written notice upon becoming a holder if it
is a pass- through interest holder, or is holding a Residual Certificate on
behalf of a pass-through interest holder. The Trust Fund will report quarterly
to each holder of a Residual Certificate during any calendar quarter that has
given the Trust Fund such notice (and others if it is required) and to the
Service annually such holder's allocable share, if any, of the Trust Fund's non-
interest expenses. Such investors should consult their tax advisors in
determining the consequences to them of the allocation of the Trust Fund's non-
interest expenses.
Prohibited Transactions; Special Taxes. Income from certain
transactions by the REMIC, 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
at a 100% rate. Prohibited transactions generally include (i) the disposition
of qualified mortgages other than pursuant to a (a) substitution for a defective
mortgage within two years or for any qualified mortgage within three months of
the specified Startup Date, (b) repurchase of a defective mortgage, (c)
foreclosure, default, or imminent default of a qualified mortgage, (d)
bankruptcy or insolvency of the REMIC or (e) a qualified (complete) liquidation
of the REMIC, (ii) the receipt of income from assets that are not the type of
mortgage loans or investments that the REMIC is permitted to hold, (iii) the
receipt of compensation for services or (iv) the receipt of gain from
disposition of cash flow investments other than pursuant to a qualified
(complete) liquidation of the REMIC. The Trust Fund will be subject to a tax
equal to 100% of the amount of any contributions of property made to the Trust
Fund after the Startup Day, except for certain cash contributions specified in
Section 860G(d) of the Code. An additional tax may be imposed on the Trust
Fund, at the highest marginal federal corporate income tax rate, on certain net
income from foreclosure property.
It is anticipated that the Trust Fund will not engage in any
prohibited transactions in which it would recognize a material amount of net
income or receive substantial contributions of property after the Startup Date.
However, if the Trust Fund is subject to the tax on prohibited transactions or
contributions, such tax would generally be borne by the Residual
Certificateholders.
Excess Inclusions. A portion of the income of the Trust Fund
allocable to a Residual Certificateholder referred to in the Code as an "excess
inclusion" will be subject to federal income tax in all events. (Excess
inclusions are defined below.) Thus, for example, an excess inclusion (i) may
not be offset by any unrelated losses or net operating loss carryovers of a
Residual Certificateholder, (ii) will be treated as "unrelated business taxable
income" within the meaning of Section 512 of the Code if the Residual
Certificateholder is a pension fund or any other organization that is subject to
tax only on its unrelated business taxable income and (iii) is not eligible for
any reduction in the rate of withholding tax in the case of a Residual
Certificateholder that is a foreign investor, as further discussed in "--Foreign
Investors" below. In addition, if a real estate investment trust, regulated
investment company, or certain pass-through entities own a Residual Certificate,
a portion of dividends paid by such entities would be
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treated as excess inclusions in the hands of its shareholders with the same
consequences as excess inclusions attributed directly to a Residual
Certificateholder.
Except as discussed in the following paragraph, with respect to any
Residual Certificateholder, the excess inclusion for any calendar quarter will
equal the excess, if any, of (i) the amount of the Trust Fund's taxable income
for the calendar quarter allocable to the Residual Certificateholder, over (ii)
the sum of the "daily accruals" (as defined below) for all days during the
calendar quarter on which the Residual Certificateholder held such Residual
Certificate. For this purpose, daily accruals with respect to a Residual
Certificateholder will be calculated by allocating to each day in such calendar
quarter its ratable portion of the product of (i) the "adjusted issue price" (as
defined below) of the Residual Certificate at the beginning of such calendar
quarter, and (ii) 120% of the "long-term Federal rate" (defined below),
calculated on the issue date of the Residual Certificate as if it were a debt
instrument and based on quarterly compounding. For this purpose, the "adjusted
issue price" of a Residual Certificate at the beginning of any calendar quarter
will equal its issue price, increased by the aggregate of the daily accruals for
all prior calendar quarters and the amount of any contributions made to the
Trust Fund with respect to the Residual Certificates after the Startup Date, and
decreased (but not below zero) by the aggregate amount of distributions made
with respect to the Residual Certificate before the beginning of such calendar
quarter. The "long-term Federal rate" is an average of current yields on
Treasury securities with a remaining term of greater than nine years, computed
and published monthly by the Service. As an exception to the general rule
described above, the Treasury has authority to issue regulations that would
treat 100% of the income accruing on a Residual Certificate as an excess
inclusion, if the Residual Certificates, in the aggregate, are considered not to
have "significant value." The REMIC Regulations, however, do not contain such a
rule.
The Small Business Act has eliminated a special rule that formerly
permitted certain financial institutions utilizing the reserve method of
accounting for bad debts pursuant to Section 593 of the Code to use net
operating losses and other allowable deductions to offset their excess
inclusions from certain REMIC residual certificates. In addition, the Small
Business Act provides three rules for determining the effect of excess
inclusions on the alternative minimum taxable income of a holder of a REMIC
residual certificate. First, alternative minimum taxable income for such a
residual holder is determined without regard to the special rule that taxable
income cannot be less than excess inclusions. Second, a residual holder's
alternative minimum taxable income for a tax year cannot be less than the excess
inclusions for the year. Third, the amount of any alternative minimum tax net
operating loss deductions must be computed without regard to any excess
inclusions.
Effect of Defaults and Delinquencies. The Residual Certificates of a
multiple-Class Series may be subordinate to one or more Classes of Regular
Certificates (for purposes of this paragraph, "Senior Certificates"), and, in
the event there are defaults or delinquencies on the Contracts in the related
Contract Pool, amounts that would otherwise be distributed on the Residual
Certificates may instead be distributed on the Senior Certificates. However,
the Trust Fund will generally be required to report income in respect of
Contracts (and deductions with respect to the Regular Certificates) without
giving effect to default and delinquencies, except to the extent it can be
established that amounts due on the Contracts are uncollectible. To the extent
the income on a delinquent or defaulted Contract is greater than the deduction
allowed in
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respect of interest on the Regular Certificate that relates to such Contract,
the Trust Fund may recognize net income without making corresponding
distributions of cash on the Residual Certificates, and holders of Residual
Certificates will be required to report their pro rata share of the net income
of the Trust Fund without regard to the timing and amount of cash distributed on
such Residual Certificates.
Tax on Transfers of Residual Certificates to Certain Organizations.
An entity will not qualify as a REMIC unless there are reasonable arrangements
designed to ensure that residual interests in such entity are not held by
"disqualified organizations" (as defined below). Restrictions on the transfer
of the Residual Certificates that are intended to meet this requirement will be
included in the related Agreement and are discussed more fully in "Restrictions
on Transfer of REMIC Residual Certificates." If, notwithstanding those
restrictions, a Residual Certificate is transferred to a "disqualified
organization," a tax would be imposed in an amount equal to the product of (i)
the present value of the total anticipated excess inclusions with respect to
such Residual Certificate for periods after the transfer and (ii) the highest
marginal federal income tax rate applicable to corporations. Under the REMIC
Regulations, the anticipated excess inclusions must be determined based on (i)
events that have occurred up to the time of the transfer and (ii) the projected
payments based on the Assumed Prepayment Rate. The REMIC Regulations also
provide that the present value of the anticipated excess inclusions is
determined by discounting the anticipated excess inclusions as of the date of
the transfer using the applicable Federal rate under Section 1274(d)(1) of the
Code for the month of the transfer that would apply to a hypothetical obligation
with a term beginning on the date of the transfer and ending on the date the
life of the REMIC is anticipated to expire (as determined under rules described
above in "--Excess Inclusions"). Such a tax would generally be imposed on the
transferor of the Residual Certificate, except that where such transfer is
through an agent for a disqualified organization, the tax would instead be
imposed on such agent. However, a transferor of a Residual Certificate (or an
agent for a disqualified organization) would in no event be liable for such tax
with respect to a transfer if the transferee furnishes to such transferor (or
such agent) an affidavit that the transferee is not a disqualified organization,
and as of the time of the transfer the transferor or the agent does not have
actual knowledge that such affidavit is false.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (i) the amount
of excess inclusions on the Residual Certificate that are allocable to the
interest in the pass-through entity held by such disqualified organization and
(ii) the highest marginal federal income tax rate imposed on corporations.
However, a pass-through entity will in no event be liable for such tax with
respect to a record holder if the record holder furnishes the pass-through
entity with an affidavit that the record holder is not a disqualified
organization, and, as of the time the record holder becomes such a holder, the
pass-through entity does not have actual knowledge that such affidavit is false.
For these purposes, the term "disqualified organization" means (i) the
United States, any State or political subdivision thereof, any possession of the
United States, any foreign government, any international organization, or any
agency or instrumentality of the foregoing (other than an instrumentality that
is a corporation if all of its activities are subject to tax and, except for the
Federal Home Loan Mortgage Corporation, a majority of its board of directors is
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not selected by an such governmental unit), (ii) an organization (other than a
cooperative described in Section 521 of the Code) which is exempt from federal
income tax (including the tax imposed by Section 511 of the Code on unrelated
business taxable income) on excess inclusions or (iii) any organization
described in Section 1381(a)(2)(C) of the Code. For these purposes, the term
"pass-through entity" means any regulated investment company, real estate
investment trust, common trust fund, partnership, trust, estate and certain
other entities described in Section 860E(e)(6) of the Code. Except as may be
provided in Treasury Regulations, any person holding an interest in a pass-
through entity as a nominee for another will, with respect to such interest, be
treated as a pass-through entity.
Sale or Exchange. If a Residual Certificate is sold or exchanged, the
seller will recognize gain or loss equal to the difference, if any, between the
amount realized and its adjusted basis in the Residual Certificate (as defined
above in "--Distributions") at the time of such sale or exchange (except that
the recognition of a loss may be limited under the "wash sale" rules described
below). In general, any such gain or loss will be capital gain or loss,
provided the Residual Certificate is held as a capital asset as defined in
Section 1221 of the Code. However, a Residual Certificate will be an "evidence
of indebtedness" within the meaning of Section 582(c)(1) of the Code, so that
gain or loss recognized from the sale of a Residual Certificate by a bank or
thrift institution to which such section applies would be ordinary income or
loss.
Section 860F(d) of the Code and the Conference Committee Report to the
1986 Act indicate that, except as provided in Treasury Regulations, the wash
sale rules of Section 1091 of the Code will apply to dispositions of Residual
Certificates where the seller of the Residual Certificate, during the period
beginning six months before the sale or disposition of the Residual Certificate
and ending six months after such sale or disposition, acquires (or enters into
any other transaction that results in the application of Section 1091 of the
Code) 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.
Noneconomic Residual Interests. Under the REMIC Regulations, a
transfer of a "noneconomic residual interest" (as defined below) to a Residual
Holder (other than a Foreign Holder, as discussed below) is disregarded for all
federal income tax purposes if a significant purpose of the transfer is to
enable the transferor to impede the assessment or collection of tax. If a
transfer of a residual interest is disregarded, the transferor would continue to
be treated as the owner of the residual interest and thus would continue to be
subject to tax on its allocable portion of the net income of the REMIC. 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
transfer (i) the present value of the expected future distributions on the
residual interest at least equals the product of the present value of the
anticipated excess inclusions and the highest corporate income tax rate in
effect for the year in which the transfer occurs and (ii) the transferor
reasonably expects that the transferee will receive distributions from the REMIC
at or after the time at which taxes accrue on the anticipated excess inclusions
in an amount sufficient to satisfy the accrued taxes. The anticipated excess
inclusions and the present value rate are determined in the same manner as set
forth above. 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
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due on its share of the taxable income of the REMIC. A safe harbor is provided
if (i) the transferor conducted, at the time of the transfer, a reasonable
investigation of the financial condition of the transferee and, as a result of
the investigation, the transferor found that the transferee had historically
paid its debts as they came due and found no significant evidence to indicate
that the transferee will not continue to pay its debts as they come due in the
future and (ii) the transferee represents to the transferor that it understands
that, as the holder of a non-economic residual interest, the transferee may
incur tax liabilities in excess of any 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 Agreement with respect to each Series of REMIC
Certificates will require the transferee of a Residual Certificate to certify to
the statements in clause (ii) of the preceding sentence as part of the affidavit
described below under "Restrictions on Transfer of REMIC Residual Certificates."
Termination. The Trust Fund related to a Series of Certificates will
terminate shortly following the retirement of Certificates in such Series. If a
Residual Certificateholder's adjusted basis in its Residual Certificate exceeds
the amount of cash distributed to such Residual Certificateholder in final
liquidation of its interest, then, although the matter is not entirely free from
doubt, it would appear that the Residual Certificateholder is entitled to a loss
equal to the amount of such excess.
Foreign Investors. Unless otherwise provided in the applicable
Prospectus Supplement, no record or beneficial ownership interest in a Residual
Certificate may be transferred to a Foreign Holder. See "Restrictions on
Transfer of REMIC Residual Certificates" below. With respect to permitted
transfers to Foreign Holders, any such Residual Certificateholders should assume
that payments made on the Residual Certificates they hold will be subject to a
30% withholding tax, or such a lesser rate as may be provided under any
applicable tax treaty, except that the rate of withholding on any payments made
on Residual Certificates that are excess inclusions will not be eligible for
reduction under any applicable tax treaties. See "--Excess Inclusions" above.
Under the REMIC Regulations, a transfer of a residual interest that has tax
avoidance potential is disregarded for all federal income tax purposes if the
transferee is a Foreign Holder. The REMIC Regulations state that a residual
interest has tax avoidance potential unless, at the time of the transfer, the
transferor reasonably expects that, for each excess inclusion, the REMIC will
distribute to the transferee residual interest holder an amount that will equal
at least 30% of the excess inclusion, and that each such amount will be
distributed at or after the time at which the excess inclusion accrues and not
later than the close of the calendar year following the calendar year of
accrual. See "--Tax on Transfers of Residual Certificates to Certain
Organizations" above for rules regarding the determination of anticipated excess
inclusions. The above rules do not apply to transfers of Residual Certificates
if the transferee's income from the Residual Certificate would be effectively
connected with a United States trade or business of the transferee. The REMIC
Regulations also provide that a transfer of a Residual Certificate from a
Foreign Holder to a United States person or to a Foreign Holder in whose hands
the income from the Residual Certificate would be effectively connected with a
United States trade or business of the transferee will be disregarded if the
transfer has the effect of allowing the transferor to avoid tax on accrued
excess inclusions.
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Mark-to-Market Rules. Treasury regulations provided that a Residual
Certificate acquired after January 3, 1995 will not be treated as a security and
therefore generally cannot be marked to market.
Additional Taxable Income of Residual Interests. Any payment received
by a holder of a Residual Certificate in connection with the acquisition of such
Residual Certificate will be taken into account in determining the income of
such holder for federal income tax purposes. Although it appears likely that
any such payment would be includible in income immediately upon its receipt or
accrual as ordinary income, the IRS might assert that such payment should be
included in income over time according to an amortization schedule or according
to some other method. Because of the uncertainty concerning the treatment of
such payments, holders of Residual Certificates should consult their tax
advisors concerning the treatment of such payments for income tax purposes.
Other Matters Relating to REMIC Certificates; Administrative Matters.
Solely for the purposes of the administrative provisions of the Code, each Trust
Fund for which a REMIC election is made will be treated as a partnership, and
the Residual Certificateholders will be treated as the partners thereof. The
Trust Fund must maintain its books on a calendar year basis and must file
federal information returns in a manner similar to a partnership for federal
income tax purposes. Certain information on such returns will be furnished to
each Residual Certificateholder. The Trust Fund also will be subject to the
procedural and administrative rules of the Code applicable to partnerships,
including rules for determining any adjustments to among other things, items of
REMIC income, gain, loss, deduction or credit by the Service in a unified
administrative proceeding. The holders of Residual Certificates will generally
be entitled to participate in audits of the Trust Fund by the Service to the
same extent as general partners in an audit of a partnership. Regular
Certificateholders will not be entitled to participate in any such audits.
Each Residual Certificateholder is required to treat items on its
return consistently with their treatment on the Trust Fund's return, unless the
Residual Certificateholder either files a statement identifying the
inconsistency or establishes that the inconsistency resulted from incorrect
information received from the Trust Fund. The Service may assert a deficiency
resulting from a failure to comply with the consistency requirement without
instituting an administrative proceeding at the Trust Fund level. The Trust
Fund does not intend to register as a tax shelter pursuant to Section 6111 of
the Code because it is not anticipated that the Trust Fund will have a net loss
for any of the first five taxable years of its existence. Any person that holds
a Residual Certificate as a nominee for another person will be required to
furnish the Trust Fund, in a manner provided in Treasury Regulations, with the
name and address of such person, and other information.
Each Residual Certificateholder, by purchasing its Residual
Certificate, (A) shall be deemed to consent to the appointment of the Servicer
as (i) the "tax matters person" (within the meaning of Section 1.860F-4(d) of
the REMIC Regulations) for the Trust Fund and (ii) attorney-in-fact and agent
for any person that is the tax matters person if the Servicer is unable to serve
as the tax matters person, and (B) agrees to execute any documents required to
give effect to (A) above.
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NON-REMIC TRUSTS
The discussion under this heading applies only to a Series with
respect to which a REMIC election is not made ("Non-REMIC Trusts"). A Non-REMIC
Trust will be described in the related Prospectus Supplemehnt as either a
grantor trust (a "Grantor Trust") or an owner trust (an "Owner Trust").
Characterization of the Trust Fund. Upon the issuance of any Series
with respect to which no REMIC election is made and which is described in the
related Prospectus Supplement as a grantor trust, Orrick, Herrington & Sutcliffe
LLP, special counsel to GreenPoint, will deliver its opinion that, with respect
to each such Series of Certificates, under then existing law and assuming
compliance by the Seller, the Servicer and the Trustee of such Series with all
of the provisions of the related Agreement, and agreement or agreements, if any,
providing for a Credit Facility or a Liquidity Facility, together with any
agreement documenting the arrangement through which a Credit Facility or a
Liquidity Facility is held outside the related Trust Fund, the agreement or
agreements with any Underwriter, for federal income tax purposes, the Trust Fund
will be classified as a grantor trust and not as a corporation or an association
which is taxable as a corporation. Accordingly, each Certificateholder in a
Grantor Trust ("Grantor Trust Certificateholder") will be treated for federal
income tax purposes as the owner of an undivided interest in the Contracts and
other assets included in the Trust Fund. As further described below, each
holder of a Certificate in a Grantor Trust (a "Grantor Trust Certificate") must
therefore report on its federal income tax return the gross income from the
portion of the Contracts that is allocable to such Grantor Trust Certificate and
may deduct its share of the expenses paid by the Trust Fund that are allocable
to such Grantor Trust Certificate, at the same time and to the same extent as
such items would be reported by such holder if it had purchased and held
directly such interest in the Contracts and received directly its share of the
payments on the Contracts and paid directly its share of the expenses paid by
the Trust Fund when those amounts are received and paid by the Trust Fund. A
Grantor Trust Certificateholder who is an individual will be allowed deductions
for such expenses only to the extent that the sum of those expenses and certain
other of the Grantor Trust Certificateholder's miscellaneous itemized deductions
exceeds 2% of such individual's adjusted gross income. In addition, the amount
of itemized deductions otherwise allowable for the taxable year of an individual
whose adjusted gross income exceeds certain thresholds will be reduced. Other
potential limitations on deductibility are described above in "REMIC
Certificates--Taxation of Regular Certificates--Pass-Through of Expenses Other
Than Interest." It appears that expenses paid by the Trust Fund, and the gross
income used to pay such expenses, should be allocated among the classes of
Grantor Trust Certificates in proportion to their respective fair market values
at issuance, but because other reasonable methods of allocation exist and the
allocation of such items has not been the subject of a controlling court
decision, regulation or Internal Revenue Service Ruling, no definitive advice
concerning the allocation of such items can be given.
Under current Service interpretations of applicable Treasury
Regulations, GreenPoint would be able to sell or otherwise dispose of any
subordinated Grantor Trust Certificates. Accordingly, GreenPoint expects to
offer subordinated Grantor Trust Certificates for sale to investors. In
general, such subordination should not affect the federal income tax treatment
of either the subordinated or senior Certificates, and holders of subordinated
classes of
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Certificates should be able to recognize any losses allocated to such class when
and if losses are realized.
To the extent that any of the Contracts comprising a Contract Pool
were originated on or after March 21, 1984 and under circumstances giving rise
to original issue discount, Certificateholders will be required to report
annually an amount of additional interest income attributable to such discount
in such Contracts prior to receipt of cash related to such discount. See the
discussion above under "REMIC Certificates--Taxation of Regular Certificates--
Original Issue Discount." Similarly, Code provisions concerning market discount
and amortizable premium will apply to the Contracts comprising a Contract Pool
to the extent that the loans were originated after July 18, 1984 and September
27, 1985, respectively. See the discussions above under "REMIC Certificates--
Taxation of Regular Certificates--Market Discount" and "REMIC Certificates--
Taxation of Regular Certificates--Premium."
Tax Status of Grantor Trust Certificates. In general, the Grantor
Trust Certificates, other than "Premium Grantor Trust Certificates" (as defined
below) will be (i) "real estate assets" within the meaning of Section
856(c)(4)(A) of the Code and (ii) assets described in Section 7701(a)(19)(C) of
the Code to the extent the Trust Fund's assets qualify under those Sections of
the Code. Any amount includible in gross income with respect to the Grantor
Trust Certificates will be treated as "interest on obligations secured by
mortgages on real property or on interests in real property" within the meaning
of Section 856(c)(3)(B) of the Code to the extent the income on the Trust Fund's
assets qualifies under that Code Section. The Internal Revenue Service has
ruled that obligations secured by permanently installed mobile home units
qualify as "real estate assets" under Section 856(c)(4)(A) of the Code. Assets
described in Section 7701(a)(19)(C) of the Code include loans secured by mobile
homes not used on a transient basis. However, whether Manufactured Homes would
be viewed as permanently installed for purposes of Section 856 of the Code would
depend on the facts and circumstances of each case, because the Internal Revenue
Service rulings on this issue do not provide facts on which taxpayers can rely
to achieve treatment as "real estate assets" no assurance can be given that the
Manufactured Homes will be so treated. In this regard, investors should note
that, unless stated otherwise in the related Prospectus Supplement, most of the
Contracts in the related Contract Pool prohibit the Obligor from permanently
attaching the related Manufactured Home to its site if it were not so attached
on the date of the Contract. Grantor Trust Certificates that represent the
right solely to interest payments on the Contracts and Grantor Trust
Certificates that are issued at prices that substantially exceed the portion of
the principal amount of the Contracts allocable to such Grantor Trust
Certificates (both types of Non- REMIC Certificates, "Premium Grantor Trust
Certificates") should qualify under the foregoing sections of the Code to the
same extent as other Certificates, but the matter is not free from doubt.
Prospective purchasers of Certificates who may be affected by the foregoing Code
provisions should consult their tax advisors regarding the status of the
Certificates under such provisions.
Taxation of Grantor Trust Certificates Under Stripped Bond Rules.
Certain classes of Grantor Trust Certificates may be subject to the stripped
bond rules of Section 1286 of the Code. In general, a Grantor Trust Certificate
will be subject to the stripped bond rules where there has been a separation of
ownership of the right to receive some or all of the principal payments on a
Contract from ownership of the right to receive some or all of the related
interest payments. Grantor Trust Certificates will constitute stripped
certificates and will be subject to
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these rules under various circumstances, including the following: (i) if any
servicing compensation is deemed to exceed a reasonable amount; (ii) if
GreenPoint or any other party retains a retained yield with respect to the
Contracts comprising a Contract pool; (iii) if two or more classes of Grantor
Trust Certificates are issued representing the right to non-pro rata percentages
of the interest or principal payments on the Contracts; or (iv) if Grantor Trust
Certificates are issued which represent the right to interest only payments or
principal only payments. Unless the Prospectus Supplement indicates otherwise,
the Grantor Trust Certificates will be subject to the "stripped bond" rules of
Section 1286 of the Code (or, if the application of those rules to a particular
Series of Grantor Trust Certificates is uncertain, the Trust Fund will take the
position that they apply). There is some uncertainty as to how that section will
be applied to securities such as the Grantor Trust Certificates. Investors
should consult their own tax advisors regarding the treatment of the Grantor
Trust Certificates under the stripped bond rules.
Although the matter is not entirely clear and alternative
characterizations could be imposed, it appears that each stripped Grantor Trust
Certificate should be considered to be a single debt instrument issued on the
day it is purchased for purposes of calculating original issue discount. Thus,
in each month the holder of a Grantor Trust Certificate (whether a cash or
accrual method taxpayer) will be required to report interest income from the
Grantor Trust Certificate equal to the income that accrues on the Grantor Trust
Certificate in such month, calculated, in accordance with the rules of the Code
relating to original issue discount, under a constant yield method. In general,
the amount of such income reported in any month would equal the product of such
holder's adjusted basis in such Grantor Trust Certificate at the beginning of
such month (see "--Sales of Certificates" below) and the yield of such Grantor
Trust Certificate to such holder. Such yield would be the monthly rate
(assuming monthly compounding) determined as of the date of purchase that, if
used in discounting the remaining payments on the portion of the Contracts that
is allocable to such Grantor Trust Certificate, would cause the present value of
those payments to equal the price at which the holder purchased the Grantor
Trust Certificate.
With respect to certain categories of debt instruments, the Code
requires the use of a reasonable prepayment assumption in accruing original
issue discount and provides a method of adjusting those accruals to account for
differences between the assumed prepayment rate and the actual rate. These
rules apply to "regular interests" in a REMIC and are described under "REMIC
Certificates--Taxation of Regular Certificates--Original Issue Discount."
Regulations could be adopted applying these rules to the Grantor Trust
Certificates. Although the matter is not free from doubt, it appears that the
Taxpayer Relief Act of 1997 has expanded the requirement of the use of a
reasonable prepayment assumption to instruments such as the Grantor Trust
Certificates. In the absence of regulations interpreting the application of
this requirement to such instruments particularly where such instruments are
subject to the Stripped Bond Rules, it is uncertain whether the assumed
prepayment rate would be determined based on conditions at the time of the first
sale of the Grantor Trust Certificates or, with respect to any holder, at the
time of purchase of the Grantor Trust Certificate by that holder. Finally, if
these rules were applied to the Grantor Trust Certificates, and the principles
used in calculating the amount of original issue discount that accrues in any
month would produce a negative amount of original issue discount, it is unclear
when such loss would be allowed.
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In the case of a Grantor Trust Certificate acquired at a price equal
to the principal amount of the Contracts allocable to such Grantor Trust
Certificate, the use of a reasonable prepayment assumption would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Certificate acquired at a discount or
premium (that is, at a price less than or greater than such principal amount,
respectively), the use of a reasonable prepayment assumption would increase or
decrease such yield, and thus accelerate or decelerate the reporting of interest
income, respectively.
If the yield used by the holder of a Grantor Trust Certificate in
calculating the amount of interest that accrues in any month is determined based
on scheduled payments on the Contracts (that is, without using a reasonable
prepayment assumption) and such Grantor Trust Certificate was acquired at a
discount or premium, then such holder generally will recognize a net amount of
ordinary income or loss if a Contract prepays in full in an amount equal to the
difference between the portion of the prepaid principal amount of the Contract
that is allocable to the Grantor Trust Certificate and the portion of the
adjusted basis of the Grantor Trust Certificate (see "--Sales of Certificates"
below) that is allocable to the Contract. In general, basis would be allocated
among the Contracts in proportion to their respective principal balances
determined immediately before such prepayment. It is not clear whether any
other adjustments would be required or permitted to take account of prepayments
of the Contracts.
Solely for purposes of reporting income on the Grantor Trust
Certificates to the Service and to certain holders, as required under the Code,
it is anticipated that, unless provided otherwise in the related Prospectus
Supplement, the yield of the Grantor Trust Certificates will be calculated based
on (i) a representative initial offering price of the Grantor Trust Certificates
to the public and (ii) a reasonable Assumed Prepayment Rate, which will be the
rate used in pricing the initial offering of the Grantor Trust Certificates.
(Such yield may differ significantly from the yield to any particular holder
that would be used in calculating the interest income of such holder.) No
representation is made that the Contracts will in fact prepay at the Assumed
Prepayment Rate or at any other rate.
Sales of Certificates. Upon the sale or exchange of a Grantor Trust
Certificate, a Grantor Trust Certificateholder will recognize gain or loss equal
to the difference between the amount realized in the sale and its aggregate
adjusted basis in the Contracts represented by the Grantor Trust Certificate.
Generally, the aggregate adjusted basis will equal the Grantor Trust
Certificateholder's cost for the Grantor Trust Certificate increased by the
amount of any previously reported gain with respect to the Grantor Trust
Certificate and decreased by the amount of any losses previously reported with
respect to the Grantor Trust Certificate and the amount of any distributions
received thereon. Except as provided above with respect to the original issue
discount and market discount rules, any such gain or loss would be capital gain
or loss if the Grantor Trust Certificate was held as a capital asset.
Foreign Investors. Generally, interest or original issue discount
paid to or accruing for the benefit of a Grantor Trust Certificateholder who is
a Foreign Holder (as defined above in "REMIC Certificates--Taxation of Regular
Certificates--Taxation of Certain Foreign Investors") will be treated as
"portfolio interest" and therefore will be exempt from the 30% withholding tax.
Such Grantor Trust Certificateholder will be entitled to receive interest
payments and original issue discount on the Grantor Trust Certificates free of
United States
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federal income tax, but only to the extent the Contracts were originated after
July 18, 1984 and provided that such Grantor Trust Certificateholder
periodically provides the Trustee (or other person who would otherwise be
required to withhold tax) with a statement certifying under penalty of perjury
that such Grantor Trust Certificateholder is not a United States person and
providing the name and address of such Grantor Trust Certificateholder. For
additional information concerning interest or original issue discount paid to a
Foreign Holder and the treatment of a sale or exchange of a Grantor Trust
Certificate by a Foreign Holder, which will generally have the same tax
consequences as the sale of a Regular Certificate, see the discussion above
under "REMIC Certificates--Taxation of Regular Certificates--Taxation of Certain
Foreign Investors" and "--New Withholding Regulations."
OWNER TRUST CERTIFICATES OR NOTES
Upon the issuance of any Series with respect to which no REMIC
election is made and which is described in the related Prospectus Supplement as
an owner trust, Orrick, Herrington & Sutcliffe LLP, special counsel to
GreenPoint, will deliver its opinion that with respect to each such Series of
Certificates or Notes, under then existing law and assuming compliance by the
Seller, the Servicer and the Trustee of such Series with all of the provisions
of the related Agreement, and agreement or agreements, if any, providing for a
Credit Facility or a Liquidity Facility, together with any agreement documenting
the arrangement through which a Credit Facility or a liquidity Facility is held
outside the related Trust Fund, and the agreement or agreements with any
Underwriter, for federal income tax purposes, (i) the Trust Fund will not be
classified as a corporation or corporation and (ii) the Owner Trust Certificates
or Notes offered by the Prospectus will be treated as indebtedness.
TREATMENT OF THE OWNER TRUST CERTIFICATES OR NOTES AS DEBT
The Transferor will express in the Agreement the intent that for
federal, state and local income and franchise tax purposes, the Owner Trust
Certificates or Notes will be debt secured by the Contracts. The Transferor,
by entering into the Agreement, and each investor, by the acceptance of a
beneficial interest in a Certificate or Note, will agree to treat the Owner
Trust Certificates or Notes as debt for federal, state and local income and
franchise tax purposes. However, the Agreement may be ambiguous in
characterizing the transfer of Contracts, and because different criteria are
used in determining the non-tax accounting treatment of the transaction, the
Transferor may treat the Agreement for certain non-tax accounting purposes as
causing a transfer of an ownership interest in the Contracts and not as creating
a debt obligation.
A basic premise of federal income tax law is that the economic
substance of a transaction generally determines its tax consequences. The form
and non-tax characterization of a transacti0n, while relevant factors, are not
conclusive evidence of its economic substance. In appropriate circumstances,
the courts have allowed taxpayers as well as the Internal Revenue Service (the
"IRS") to treat a transaction in accordance with its economic substance as
determined under federal income tax law, even though the participants in the
transaction have characterized it differently for non-tax purposes.
The determination of whether the economic substance of a transfer of
an interest in property is instead a loan secured by the transferred property
has been made by the IRS and
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the courts on the basis of numerous factors designed to determine whether the
transferor has relinquished (and the transferee has obtained) substantial
incidents of ownership in the property. Among those factors, the primary ones
examined are whether the transferee had the opportunity to gain if the property
increases in value, and has the risk of loss if the property decreases in value.
Based on its analysis of such factors, special counsel to GreenPoint is of the
opinion that, under current law, although not transaction closely comparable to
the contemplated in this Prospectus ha been the subject of any Treasury
regulation, revenue ruling or judicial decision, for federal income tax purposes
the Owner Trust Certificates or Notes will not constitute an ownership interest
in the Contracts but will properly be characterized as debt.
TREATMENT OF THE OWNER TRUST
The Agreement permits the issuance of Owner Trust Certificates or
Notes and certain other interests in the Trust, each of which may be treated for
federal income tax purposes either as debt or as equity interests in the Trust.
If all of the Owner Trust Certificates or Notes and other interests (other than
the Transferor Certificate) in the Trust were characterized as debt, the Trust
might be characterized as a security arrangement for debt collateralized by the
Contracts and issued directly by the Transferor (or other holder of the
Transferor Certificate). Under such a view, the Trust would be disregarded for
federal income tax purposes. Alternatively, if some of were characterized as
equity therein, the Trust might be characterized as a separate entity owning the
Contracts, issuing its own debt, and jointly owned by the Transferor (or other
holder of the Transferor Certificate) and any other holders of equity interests
in the Trust. However, special counsel to GreenPoint is of the opinion that,
under current law, any such entity constituted by the Trust will not be an
association, taxable mortgage pool or publicly traded partnership taxable as a
corporation.
Possible Treatment of the Trust as a Taxable Mortgage Pool. Although,
as described above, Special Counsel is of the opinion that the Certificates will
properly be treated as debt for federal income tax purposes and that the Trust
will not be treated as a taxable mortgage pool taxable as a corporation, such
opinion will not bind the IRS and thus no assurance can be given that such
treatment will prevail. If the IRS were to contend successfully that the Trust
were a taxable mortgage pool taxable as a corporation, that entity would be
subject to federal income tax at corporate tax rates on its taxable income
generated by ownership of the related Mortgage Loans. That tax could result in
reduced distributions to Certificate Owners. No distributions from the Trust
would be deductible in computing the taxable income of the corporation, except
to the extent that any Certificates were treated as debt of the corporation and
distributions to the related Certificate Owners were treated as payments of
interest thereon. In addition, distributions to Certificate Owners not related
as holding debt would be dividend income to the extent of the current and
accumulated earnings and profits of the corporation (and Certificate Owners may
not be entitled to any dividends received deduction in respect of such
income).
TREATMENT OF THE OWNER TRUST CERTIFICATES OR NOTES
Treatment of the Owner Trust Certificates or Notes as Indebtedness.
If the Owner Trust Certificates or Notes are treated as indebtedness for federal
income tax purposes, the taxation of holders of such interests generally will be
the same as that described, above, for holders of REMIC Regular Interests with
the following exceptions: Holders not otherwise
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required to use the accrual method of accounting for tax purposes would not be
required to adopt that method of accounting for the Owner Trust Certificates or
Notes. The treatment described under "REMIC Certificates --General --Tax Status
of REMIC Certificates" would not apply. Gain on the sale of Owner Trust
Certificates or Notes would not be subject to re-characterization as ordinary
income solely as a result of failure of income otherwise accrued on such Owner
Trust Certificates or Notes to have accrued at a rate exceeding 110% of the
"applicable federal rate" as described for REMIC Regular Interests in the second
paragraph of "REMIC Certificates --Taxation of Regular Certificates --Sales of
Certificates." The discussion under "REMIC Certificates --Taxation of Regular
Certificates --Pass-Through of Expenses Other Than Interest" would not apply.
See "REMIC Certificates --Taxation of REMIC Regular Certificates."
Possible Treatment of the Owner Trust Certificates or Notes as
Partnership Interests. Although, as described above, special counsel to
GreenPoint is of the opinion that the Owner Trust Certificates or Notes will
properly be treated as debt for federal income tax purposes, such opinion will
not bind the IRS and thus no assurance can be given that such treatment will
prevail. If the IRS were to contend successfully that some or all of the Owner
Trust Certificates or Notes were equity in the Trust for federal income tax
purposes, the Owner Trust Certificates or Notes could be classified as
partnership interests for such purposes. Because special counsel to GreenPoint
is of the opinion that the Owner Trust Certificates or Notes will be
characterized as debt for federal income tax purposes, no attempt will be made
to comply with any tax reporting requirements that would apply as a result of
such alternative characterizations.
If the Trust were treated as a partnership, that partnership would not
be subject to federal income tax. Rather, each item of income, gain, loss and
deduction of the partnership generated computing taxable income of the
Transferor (or the holder of the Transferor Certificate) and any Certificate or
Note Owners treated as partners in accordance with their respective partnership
interests therein. The amounts, character and timing of income reportable by
any Certificate or Note Owners treated as partners would likely differ from that
reportable by such Certificates or Note Owners had they been treated as owning
debt. In addition, if the Trust were treated in whole or in part as a
partnership, income derived from the partnership by any Certificates or Note
Owner that is a pension fund or other tax-exempt entity may be treated as
unrelated business taxable income. Also, any Certificate or Note owner that is
a Non-United States Person could be subject to withholding at the rate of 30% on
its share of the partnership's income from the Contracts. Partnership
characterization also may have adverse state and local income or franchise tax
consequences for a Certificate or Note Owner. If the Trust were treated in
whole or in part as a partnership and the number of holders of interest in the
publicly offered Owner Trust Certificates or Notes and other interests in the
Trust treated as partners equaled or exceeded 100, the Transferor may cause the
Trust to elect to be an "electing large partnership." The consequence of such
election to investors could include the determination of certain tax items at
the partnership level and the disallowance of otherwise allowable deductions.
No representation is made as to whether such election will be made.
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OTHER TAX CONSEQUENCES
No advice has been received as to local income, franchise, personal
property, or other taxation in any state or locality, or as to the tax effect of
ownership of Certificates in any state or locality. Certificateholders are
advised to consult their own tax advisors with respect to any state or local
income, franchise, personal property, or other tax consequences arising out of
their ownership of Certificates.
RESTRICTIONS ON TRANSFER OF REMIC RESIDUAL CERTIFICATES
As discussed in "Certain Federal Income Tax Consequences--Taxation of
Residual Certificates--Tax on Transfers of Residual Certificates to Certain
Organizations," in order for the Trust Fund to qualify as a REMIC, there must be
reasonable arrangements designed to ensure that the Residual Certificates are
not held by disqualified organizations. Further, transfers to "electing large
partnerships" within the meaning of Section 775 of the Code or persons that are
not United States persons raise special tax issues. Accordingly, unless the
related Prospectus Supplement provides otherwise, no record or beneficial
ownership interest in a Residual Certificate that is sold under this Prospectus
may be transferred unless, among other things, the Trustee receives (i) an
affidavit from the proposed transferee to the effect that it is not a
"disqualified organization" or electing large partnership and is not purchasing
on behalf of a disqualified organization or electing large partnership (see
"Certain Federal Income Tax Consequences--Taxation of Residual Certificates--Tax
on Transfers of Residual Certificates to Certain Organizations"), (ii) a
representation from the proposed transferee to the effect that it is a citizen
or resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, or an estate or trust whose income from sources without the
United States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States and (iii) a covenant of the proposed transferee to the
effect that the proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to such REMIC Residual Certificate.
TAX-EXEMPT INVESTORS
A qualified pension plan or other entity that is exempt from federal
income taxation pursuant to Section 501 of the Code (a "Tax-Exempt Investor")
nonetheless will be subject to federal income taxation to the extent that its
income is "unrelated business taxable income" ("UBTI") within the meaning of
Section 512 of the Code. All "excess inclusions" of a "REMIC" allocated to a
"Residual Certificate" held by a Tax-Exempt investor will be considered UBTI and
thus will be subject to federal income tax. See "Certain Federal Income Tax
Consequences--Certificates as REMIC Residual Interests--Excess Inclusions."
LEGAL INVESTMENT
The Prospectus Supplement for each Series of Certificates will specify
which, if any, of the Classes of Certificates offered thereby constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). Classes of Certificates that qualify as
"mortgage related securities" will be legal investments for persons,
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trusts, corporations, partnerships, associations, business trusts and business
entities (including depository institutions, life insurance companies 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
as, under applicable law, obligations issued by or guaranteed as to principal
and interest by the United States or any such entities. Under SMMEA, if a state
enacted legislation prior to October 4, 1991 specifically limiting the legal
investment authority of any such entities with respect to "mortgage related
securities," Certificates will constitute legal investments for entities subject
to such legislation only to the extent provided therein. Approximately twenty-
one states adopted such legislation prior to the October 4, 1991 deadline.
SMMEA also amended the legal investment authority of federally
chartered depository institutions as follows: federal savings and loan
associations and federal savings banks may invest in, sell or otherwise deal in
Certificates without limitations as to the percentage of their assets
represented thereby, federal credit unions may invest in mortgage related
securities, and national banks may purchase Certificates for their own account
without regard to the limitations generally applicable to investment securities
set forth in 12 U.S.C. Section 24 (Seventh), subject in each case to such
regulations as the applicable federal authority may prescribe. In this
connection, federal credit unions should review the National Credit Union
Administration ("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, and the NCUAs
regulation "Investment and Deposit Activities" (12 C.F.R. Part 703), which sets
forth certain restrictions on investment by federal credit unions in mortgage
related securities.
All depository institutions considering an investment in the
Certificates (whether or not the Class of Certificates under consideration for
purchase constitutes a "mortgage related security") should review the Federal
Financial Institutions Examination Council's Supervisory Policy Statement on the
Securities Activities (to the extent adopted by their respective regulators)
(the "Policy Statement"), setting forth, in relevant part, certain securities
trading and sales practices deemed unsuitable for an institution's investment
portfolio, and guidelines for (and restrictions on) investing in mortgage
derivative products, including "mortgage related securities," which are "high-
risk mortgage securities" as defined in the Policy Statement. According to the
Policy Statement, such "high-risk mortgage securities" include securities such
as certificates not entitled to distributions allocated to principal or
interest, or subordinated certificates. Under the Policy Statement, it is the
responsibility of each depository institution to determine, prior to purchase
(and at stated intervals thereafter), whether a particular mortgage derivative
product is a "high-risk mortgage security," and whether the purchase (or
retention) of such a product would be consistent with the Policy Statement.
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying."
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There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Certificates or to
purchase Certificates representing more than a specified percentage of the
investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Certificates constitute legal
investments for such investors.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), imposes certain restrictions on employee benefit or other plans
subject to ERISA and/or Section 4975 of the Code ("Plans") and on persons having
certain specified relationships to a Plan ("Parties in Interest") with respect
to such Plans, including, for this purpose, individual retirement arrangements
described in Section 408 of the Code. Certain employee benefit plans, such as
governmental plans and church plans (if no election has been made under Section
410(d) of the Code), are not subject to the requirements of ERISA, and assets of
such plans may be invested in Certificates without regard to the ERISA
considerations described below, subject to the provisions of other applicable
federal and state law. Any such plan which is qualified under Section 401(a) of
the Code and exempt from taxation under Section 501(a) of the Code is, however,
subject to the prohibited transaction rules set forth in Section 503 of the
Code.
Investments by Plans are subject to ERISA's general fiduciary
requirements, including the requirement of investment prudence and
diversification and the requirement that a Plan's investments be made in
accordance with the documents governing the Plan. A fiduciary which decides to
invest the assets of a Plan in Certificates should consider, among other
factors, the sensitivity of the investments to the rate of principal payments
(including prepayments) on the Contracts as discussed in "Prepayment and Yield
Considerations" herein.
The United States Department of Labor (the "DOL") has issued
regulations concerning the definition of what constitutes the assets of a Plan
(DOL Reg. Section 2510.3-101). Under the DOL regulations, the underlying assets
and properties of corporations, partnerships and certain other entities in which
a Plan makes an "equity" investment could be deemed for purposes of ERISA to be
assets of the investing Plan in certain circumstances. A beneficial interest in
a trust is defined as an "equity" interest under the DOL regulations. However,
the DOL regulations provide that, generally, the assets of an entity in which a
Plan makes an equity investment will not be deemed for purposes of ERISA to be
assets of such Plan if the equity interest acquired by the investing Plan is a
publicly offered security. A publicly offered security, as defined in DOL Reg.
Section 2510.3-101 is a security that is widely held, freely transferable and
either registered under the Exchange Act or sold to the Plan as part of a public
offering under the Securities Act that then becomes so registered. There can be
no assurance that any Class of Certificate will qualify for this or any other
exception under the DOL regulations.
In addition to the imposition of general fiduciary standards of
investment prudence and diversification, ERISA prohibits a broad range of
transactions involving Plan assets and Parties in Interest, and imposes
additional prohibitions where Parties in Interest are fiduciaries with respect
to such Plan. To the extent that the Contracts may be deemed Plan assets of
each Plan that purchases Certificates, an investment in the Certificates by a
Plan could result
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in a prohibited transaction under ERISA Sections 406 and 407 and be subject to
an excise tax under Section 4975 of the Code unless a statutory or
administrative exemption applies.
In Prohibited Transaction Class Exemption ("PTCE") 83-1, which amended
PTCE 81-7, the DOL exempted from ERISA's prohibited transaction rules certain
transactions relating to the operation of residential mortgage pool investment
trusts and the purchase, sale and holding of "mortgage pool pass-through
certificates" in the initial issuance of such certificates. However, PTCE 83-1
does not apply to trusts that hold Contracts.
Each Plan fiduciary who is responsible for making the investment
decisions whether to purchase or commit to purchase and to hold Certificates
must make its own determination as to the availability of any prohibited
transaction exemptions under ERISA. Each Plan fiduciary should also determine
whether, under the general fiduciary standards of investment prudence and
diversification, an investment in the 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.
Several underwriters of asset-backed securities have applied for and
obtained ERISA prohibited transaction exemptions which are in some respects
broader than PTCE 83-1 and the exceptions to the DOL regulations referred to
above. Such exemptions can only apply to securities backed by certain
receivables, loans and other obligations that are secured and, among other
conditions, are sold in an offering with respect to which such an underwriter
serves as the sole or a managing underwriter, or as a selling or placement
agent. If such an exemption might be applicable to a Series of Certificates,
the related Prospectus Supplement will refer to such possibility.
Any Plan fiduciary that proposes to cause a Plan to purchase
Certificates should consult with its counsel concerning the impact of ERISA and
the Code, the applicability of any exemption under ERISA and the potential
consequences in its specific circumstances, prior to making such investment.
Moreover, each Plan fiduciary should determine whether, under the general
fiduciary standards of investment prudence and diversification, an investment in
the 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.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
The following discussion contains summaries of certain legal aspects
of manufactured housing contracts, including Land Home and Land-in-Lieu
Contracts, which are general in nature. Because such legal aspects are governed
by applicable state law (which laws may differ substantially), the summaries
should be viewed only as an overview and therefore do not reflect the laws of
any particular state, nor do they encompass the laws of all states in which the
security for the Contracts or Land-and-Home Contracts is situated.
THE CONTRACTS (OTHER THAN LAND HOME AND LAND-IN-LIEU CONTRACTS)
General. As a result of the assignment of Contracts in a Contract Pool
to the Trustee, the related Trust Fund will succeed collectively to all of the
rights (including the right to receive payment on such Contracts), and will
assume the obligations of the obligee, under such
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Contracts. Each Contract evidences both (a) the obligation of the Obligor to
repay the loan evidenced thereby, and (b) the grant of a security interest in
either the Manufactured Home, and, in the case of a Land Home Contract or Land-
in-Lieu Contract, the real estate on which the related Manufactured Home is
located, to secure repayment of such loan. Certain aspects of both features of
the Contracts are described more fully below.
The following discussion focuses on issues relating generally to
GreenPoint's or any lender's interest in manufactured housing contracts. See
"Risk Factors--Security Interests of a Trust Fund in the Manufactured Homes"
herein for a discussion of certain issues relating to the transfer to a Trust
Fund of Contracts and the related security interests in the Manufactured Homes
comprising the related Contract Pool.
Security Interests of GreenPoint in the Manufactured. Each Contract
generally will be "chattel paper" as defined in the UCC as in effect in New York
(where GreenPoint's chief executive offices are located) and the jurisdiction in
which the related Manufactured Home was located at origination. Under the UCC
as in effect in each such jurisdiction, the sale of chattel paper is treated in
a manner similar to perfection of a security interest in chattel paper.
GreenPoint will make or cause to be made appropriate filings of UCC-1 financing
statements to give notice of the Trustee's ownership of the Contracts sold by
it. The Trustee's interest in the Contracts could be defeated if a subsequent
purchaser were able to take physical possession of the Contracts without notice
of such assignment. GreenPoint will not retitle any certificates of title that
are in the name of Bank of America, FSB or BankAmerica Housing Services, a
division of Bank of America, FSB relating to any contracts that it purchases in
the Acquisition as described under "The Seller." If so specified in the
applicable Prospectus Supplement, GreenPoint will be required under the related
Agreement to stamp or cause to be stamped each Contract sold by it to indicate
its transfer to the Trustee. To the extent the Contracts do not constitute
"chattel paper" within the meaning of the UCC as in effect in New York and the
jurisdictions in which the related Manufactured Homes were located at
origination, these steps may not be sufficient to protect the Trustee's interest
in the Contracts against the claims of GreenPoint's (or an affiliate's) or Bank
of America, FSB's creditors, as the case may be, a trustee in bankruptcy of
GreenPoint or a receiver, conservator or trustee in bankruptcy of an affiliate
thereof that sold such Contracts to GreenPoint or bank of America, FSB, as
applicable.
The Manufactured Homes securing the Contracts in a Contract Pool may
be located in all 50 states and the District of Columbia. Security interests in
manufactured homes similar to the ones securing the Contracts ("manufactured
homes") generally may be perfected either by notation of the secured party's
lien on the certificate of title or by delivery of the required documents and
payment of a fee to the state motor vehicle authority, depending on state law.
In some non-title states, perfection pursuant to the provisions of the UCC is
required. Generally, with respect to manufactured housing contracts
individually originated or purchased by GreenPoint, GreenPoint effects such
notation or delivery of the required documents and fees, and obtains possession
of the certificate of title or a lien certificate, as appropriate, under the
laws of the state in which any manufactured home securing a manufactured housing
contract is registered. If GreenPoint and its affiliates fails, due to clerical
errors or otherwise, to effect such notation or delivery, or files the security
interest under the wrong law (for example, under a motor vehicle title statute
rather than under the UCC, in a few states), GreenPoint (for itself, or as agent
of the secured lender) may not have a first-priority security interest in the
manufactured
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home securing a contract. As manufactured homes have become larger and often
have been attached to their sites without any apparent intention to move them,
courts in many states have held that manufactured homes, under certain
circumstances, may become subject to real estate title and recording laws. As a
result, a security interest in a manufactured home could be rendered subordinate
to the interests of other parties claiming an interest in the home under
applicable state real estate law. In order to perfect a security interest in a
manufactured home under real estate laws, the holder of the security interest
must file either a "fixture filing" under the provisions of the UCC or a real
estate mortgage under the real estate laws of the state where the home is
located. These filings must be made in the real estate records office of the
county where the home is located. If so specified in the related Prospectus
Supplement, most of the Contracts in any Contract Pool will contain provisions
prohibiting the Obligor from permanently attaching the Manufactured Home to its
site if it was not so attached on the date of the Contract. As long as each
Manufactured Home was not so attached on the date of the Contract and the
Obligor does not violate this agreement, a security interest in the Manufactured
Home will be governed by the certificate of title laws or the UCC, and the
notation of the security interest on the certificate of title or the filing of a
UCC financing statement will be effective to maintain the priority of
GreenPoint's security interest in the Manufactured Home. If any such
Manufactured Home does become attached after the date of the related Contract,
the related Contract provides that such attachment constitutes an "event of
default" that, if unremedied, gives rise to certain discrete remedies including
acceleration of the unpaid principal balance of the Contract plus accrued
interest and repossession of the Manufactured Home. Regardless of whether a full
recovery is obtained from an Obligor whose Manufactured Home becomes attached,
GreenPoint will represent that, at the date of the initial issuance of
Certificates in any Series, it had obtained a perfected first-priority security
interest in each of the Manufactured Homes securing the related Contracts sold
by it. Such representation, however, will not be based upon an inspection of the
site of any Manufactured Home to determine if the Manufactured Home had become
permanently attached to its site. See "Description of the Certificates--
Conveyance of Contracts" herein. GreenPoint will not be required to make fixture
filings or to file Mortgages with respect to any of the Manufactured Homes
(except in the case of Land Home and Land-in-Lieu Contracts, as described
below). Consequently, if a Manufactured Home is deemed subject to real estate
title or recording laws because the owner attaches it to its site or otherwise,
the Trustee's interest therein may be subordinated to the interests of others
that may claim an interest therein under applicable real estate laws.
In addition, a federal circuit court decision may adversely affect a
Trustee's interest in the Contract Pool related to a Series of Certificates even
if the related Contracts constitute chattel paper. In Octagon Gas Systems, Inc.
v. Rimmer, 995 F.2d 948 (10th Cir. 1993), the court's decision included language
to the effect that accounts sold by an entity which subsequently became bankrupt
remained property of the debtor's bankruptcy estate. Sales of chattel paper,
like sales of accounts, are governed by Article 9 of the UCC. If GreenPoint is
subject to the federal bankruptcy code and becomes a debtor under the federal
bankruptcy code, and a court were to follow the reasoning of the Tenth Circuit
and apply such reasoning to chattel paper, Certificateholders for such Series
could experience a delay in, or reduction of, distributions as to the Contracts
that constitute chattel paper and were sold to the related Trust Fund.
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In the absence of fraud, forgery or permanent affixation of a
manufactured home to its site by the manufactured home owner, or administrative
error by state recording officials, the notation of the lien of GreenPoint on
the certificate of title or delivery of the required documents and fees (or if
applicable, perfection under the UCC) will be sufficient to protect GreenPoint
against the rights of subsequent purchasers of a manufactured home or subsequent
lenders who take a security interest in the manufactured home. If there are any
manufactured homes as to which the security interest in favor of GreenPoint is
not perfected, such security interest would be subordinate to the claims of,
among others, subsequent purchasers for value of and holders of perfected
security interests in such manufactured homes.
In the event that the owner of a manufactured home moves it to a state
other than the state in which such manufactured home initially is registered,
under the laws of most states, the perfected security interest in the
manufactured home would continue for four months after such relocation and
thereafter until the owner registers the manufactured home in such state. If
the owner were to relocate a manufactured home to another state and were to re-
register the manufactured home in such state, and if steps are not taken to re-
perfect an existing security interest in such state, the security interest in
the manufactured home would cease to be perfected. A majority of states
generally require surrender of a certificate of title to re-register a
manufactured home. GreenPoint must therefore surrender possession if it holds
the certificate of title to such manufactured home or, in the case of
manufactured homes registered in states which provide for notation of lien,
GreenPoint would receive notice of surrender if its security interest in the
manufactured home is noted on the certificate of title. Accordingly, GreenPoint
would have the opportunity to re-perfect its security interest in the
manufactured home in the state of relocation. In states which do not require a
certificate of title for registration of a manufactured home, re-registration
could defeat the perfection. In the ordinary course of servicing manufactured
housing contracts, GreenPoint takes steps to effect such re-perfection upon
receipt of notice of re-registration or information from the obligor as to
relocation. Similarly, when an obligor under a contract sells a manufactured
home, GreenPoint must surrender possession of the certificate of title or
GreenPoint will receive notice as a result of its lien noted thereon;
accordingly, GreenPoint will have an opportunity to require satisfaction of the
related contract before release of the lien. Such protections generally would
not be available in the case of security interests in manufactured homes located
in non-title states where perfection of such security interest is achieved by
appropriate filings under the UCC (as in effect in such state). Consequently,
the security interest in the manufactured home could cease to be perfected.
Under the laws of most states, liens for repairs performed on a
manufactured home and liens for personal property taxes take priority over a
perfected security interest in the manufactured home. GreenPoint will warrant in
the Agreement with respect to each Series of Certificates that, as of the date
of initial issuance of such Series of Certificates, no Manufactured Home
relating to a Contract it sold was, to its knowledge, subject to any such lien.
However, such warranty will not be based on any lien searches or other review.
See "Description of the Certificates--Conveyance of Contracts" in the Prospectus
Supplement related to a Series of Certificates for a description of the remedies
for a breach of the representations and warranties made by GreenPoint under the
related Agreement. In addition, such liens could arise after the date of
initial issuance of the Certificates. Notice may not be given to GreenPoint,
the Servicer, the Trustee or Certificateholders in the event such a lien arises.
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Enforcement of Security Interests in Manufactured Homes. If so
specified in the applicable Prospectus Supplement, the Servicer on behalf of the
Trustee, to the extent required by the related Agreement, may take action to
enforce the Trustee's security interest with respect to Contracts in default by
repossession and resale of the Manufactured Homes securing such defaulted
Contracts. In general, as long as a manufactured home has not become subject to
the real estate law, a creditor can repossess a manufactured home by voluntary
surrender, by "self-help" repossession that is "peaceful" (i.e., without breach
of the peace) or, in the absence of voluntary surrender and the ability to
repossess without breach of the peace, by judicial process. The holder of a
manufactured housing contract generally must give the obligor a number of days'
notice prior to commencement of any repossession. The UCC and consumer
protection laws in most states place restrictions on repossession sales,
including requiring prior notice to the obligor and commercial reasonableness in
effecting such a sale. The law in most states also requires that the obligor be
given notice of any sales prior to resale of the unit so that the obligor may
redeem at or before such resale.
Under the laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from an obligor for any deficiency on repossession
and resale of the manufactured home securing such obligor's contract. However,
some states impose prohibitions or limitations on deficiency judgments, and in
many cases the defaulting obligor would have no assets with which to pay a
judgment.
Certain other statutory provisions, including federal and state
bankruptcy and insolvency laws, and general equitable principles may limit or
delay GreenPoint's ability to repossess and resell any Manufactured Home or
enforce a deficiency judgment.
LAND HOME AND LAND-IN-LIEU CONTRACTS
General. To the extent described in the applicable Prospectus
Supplement, the related Contract Pool may contain Land Home Contracts or Land-
in-Lieu Contracts. The Land Home Contracts and the Land-in-Lieu Contracts will
be secured by either first mortgages or deeds of trust, depending upon the
prevailing practice in the state in which the underlying property is located. A
mortgage creates a lien upon the real property described in the mortgage. There
are two parties to a mortgage: the mortgagor, who is the borrower, and the
mortgagee, who is the lender. In a mortgage state, the mortgagor delivers to
the mortgagee a note or bond evidencing the loan and the mortgage. Although a
deed of trust is similar to a mortgage, a deed of trust has three parties: the
borrower, a lender as beneficiary, and a third-party grantee called the trustee.
Under a deed of trust, the borrower grants the property, irrevocably until the
debt is paid, in trust, generally with a power of sale, to the trustee to secure
payment of the loan. The trustee's authority under a deed of trust and the
mortgagee's authority under a mortgage are governed by the express provisions of
the deed of trust or mortgage, applicable law, and, in some cases, with respect
to the deed of trust, the directions of the beneficiary.
Foreclosure. Foreclosure of a mortgage is generally accomplished by
judicial action. Generally, the action is initiated by the service of legal
pleadings upon all parties having an interest of record in the real property.
Delays in completion of the foreclosure occasionally may result from
difficulties in locating necessary parties defendants. When the mortgagee's
right to foreclosure is contested, the legal proceedings necessary to resolve
the issue can be time-
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consuming and expensive. After the completion of a judicial foreclosure
proceeding, the court may issue a judgment of foreclosure and appoint a receiver
or other officer to conduct the sale of the property. In some states, mortgages
may also be foreclosed by advertisement, pursuant to a power of sale provided in
the mortgage. Foreclosure of a mortgage by advertisement is essentially similar
to foreclosure of a deed of trust by non-judicial power of sale.
Foreclosure of a deed of trust is generally accomplished by a non-
judicial trustee's sale under a specific provision in the deed of trust that
authorizes the trustee to sell property to a third party upon any default by the
borrower under the terms of the note or deed of trust. In certain states, such
foreclosure also may be accomplished by judicial action in the manner provided
for foreclosure of mortgages. In some states the trustee must record a notice
of default and send a copy to the borrower-trustor and to any person who has
recorded a request for a copy of a notice of default and the notice of sale. In
addition, the trustee must provide notice in some states to any other individual
having an interest of record in the real property, including any junior
lienholders. If the deed of trust is not reinstated within any applicable cure
period, 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. In
addition, some state laws require that a copy of the notice of sale be posted on
the property and sent to all parties having an interest of record in the
property.
In some states, the borrower-trustor has the right to reinstate the
loan at any time following default until shortly before the trustee's sale. In
general, the borrower, or any other person having a junior encumbrance on the
real estate, may, during a reinstatement period, cure the default by paying the
entire amount in arrears plus the costs and expenses incurred in enforcing the
obligation. Certain state laws control the amount of foreclosure expenses and
costs, including attorneys' fees, that may be recovered by a lender.
In the case of foreclosure under either a mortgage or a deed of trust,
the sale by the receiver or other designated officer, or by the trustee, is a
public sale. However, because of the difficulty a potential buyer at the sale
would have in determining the exact status of title and because the physical
condition of the property may have deteriorated during the foreclosure
proceedings, it is not common for a third party to purchase the property at the
foreclosure sale. Rather, the lender generally purchases the property from the
trustee or receiver for an amount equal to the unpaid principal amount of the
note, accrued and unpaid interest and the expenses of foreclosure. Thereafter,
subject to the right of the borrower in some states to remain in possession
during the redemption period, the lender will assume the burdens of ownership,
including obtaining hazard insurance and making such repairs at its own expense
as are necessary to render the property suitable for sale. The lender commonly
will obtain the services of a real estate broker and pay the broker a 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 lender's
investment in the property.
Because of certain requirements of the REMIC Provisions, a Trust Fund
as to which a REMIC election has been made generally must dispose of any related
Manufactured Homes acquired pursuant to repossession, foreclosure, or similar
proceedings within three years after acquisition. Consequently, if the
Servicer, acting on behalf of the Trust, is unable to sell a Manufactured Home
in the course of its ordinary commercial practices within 33 months after its
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acquisition thereof (or a longer period as permitted by the Agreement), the
Servicer will auction such home to the highest bidder (which bidder may be the
Servicer) in an auction reasonably designed to produce a fair price. There can
be no assurance that the price for any Manufactured Home would not be
substantially lower than the unpaid principal balance of the Contract relating
thereto. In fact, manufactured homes, unlike site-built homes, generally
depreciate in value, and it has been industry experience that, upon repossession
and resale, the amount recoverable on a manufactured home securing an
installment sales contract is generally lower than the principal balance of the
contract.
Rights of Redemption. In some states, after sale pursuant to a deed
of trust or foreclosure of a mortgage, the borrower and certain foreclosed
junior lienors or other parties are given a statutory period in which to redeem
the property from the foreclosure sale. In certain other states, this right of
redemption applies only to sale following judicial foreclosure, and not sale
pursuant to a non-judicial power of sale. In most states where the right of
redemption is available, statutory redemption may occur upon payment of the
foreclosure purchase price, accrued interest and taxes. In some states the
right to redeem is an equitable right. The effect of a right of redemption is
to diminish the ability of the lender to sell the foreclosed property. The
exercise of a right of redemption would defeat the title of any purchaser at a
foreclosure sale, or of any purchaser from the lender subsequent to judicial
foreclosure or sale under a deed of trust. Consequently, the practical effect
of the redemption right is to force the lender to maintain the property and pay
the expense of ownership until the expiration of the redemption period.
Anti-Deficiency Legislation and Other Limitations on Lenders. Certain
states have imposed statutory restrictions that limit the remedies of a
beneficiary under a deed of trust or a mortgagee under a mortgage relating to a
single family residence. In some states, statutes limit the right of the
beneficiary or mortgagee to 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 borrower equal in most cases to the difference
between the amount due to the lender and the net amount realized upon the
foreclosure sale.
Some state statutes may require the beneficiary or mortgagee to
exhaust the security afforded under a deed of trust or mortgage by foreclosure
in an attempt to satisfy the full debt before bringing a personal action against
the borrower. In certain other states, the lender has the option of bringing a
personal action against the borrower on the debt without first exhausting such
security; however, in some of these states, the lender, following judgment on
such personal action, may be deemed to have elected a remedy and may be
precluded from exercising remedies with respect to the security. Consequently,
the practical effect of the election requirement, when applicable, is that
lenders will usually proceed first against the security rather than bringing a
personal action against the borrower.
Other statutory provisions may limit any deficiency judgment against
the former borrower following a foreclosure sale to the excess of the
outstanding debt over the fair market value of the property at the time of such
sale. The purpose of these statutes is to prevent a beneficiary or a mortgagee
from obtaining a large deficiency judgment against the former borrower as a
result of low or no bids at the foreclosure sale.
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In some states, exceptions to the anti-deficiency statutes are
provided for in certain instances where the value of the lender's security has
been impaired by acts or omissions of the borrower, for example, in the event of
waste of the property.
In addition to anti-deficiency and related legislation, numerous other
federal and state statutory provisions, including the federal bankruptcy laws,
the federal Soldiers' and Sailors' Civil Relief Act of 1940 and state laws
affording relief to debtors, may interfere with or affect the ability of a
secured mortgage lender to realize upon its security and/or enforce a deficiency
judgment. For example, with respect to a Land Home Contract, in a proceeding
under the federal Bankruptcy Code, the court may prevent a lender from
foreclosing on the home, and when a court determines that the value of a home is
less than the principal balance of the loan, the court may reduce the amount of
the secured indebtedness to the value of the home as it exists at the time of
the proceeding, leaving the lender as a general unsecured creditor for the
difference between that value and the amount of outstanding indebtedness. A
bankruptcy court may grant the debtor a reasonable time to cure a payment
default, reduce the monthly payments due under such mortgage loan, change the
rate of interest and/or alter the mortgage loan repayment schedule.
The Code provides priority to certain tax liens over the lien of the
mortgage or deed of trust. The laws of some states provide priority to certain
tax liens over the lien mortgage or deed of trust. Numerous federal and some
state consumer protection laws impose substantive requirements upon mortgage
lenders in connection with the origination, servicing and the enforcement of
mortgage loans. These laws include the federal Truth in Lending Act, Real
Estate Settlement Procedures Act, Equal Credit Opportunity, Fair Credit Billing
Act, Fair Credit Reporting Act, and related statutes and regulations. These
federal laws and state laws impose specific statutory liabilities upon lenders
who originate or service mortgage loans and who fail to comply with the
provisions of the law. In some cases, this liability may affect assignees of
the Contracts.
CERTAIN MATTERS RELATING TO INSOLVENCY
GreenPoint intends that each transfer of Certificates to the related
Trust Fund constitutes a sale, rather than a pledge of the Contracts to secure
indebtedness of GreenPoint. However, if GreenPoint were to become a debtor
under the federal bankruptcy code, it is possible that a creditor or trustee in
bankruptcy of GreenPoint or GreenPoint as debtor-in-possession may argue that
the sale of the Contracts by GreenPoint could be recharacterized as a borrowing
secured by a pledge of the Contracts. Such an attempt, even if unsuccessful,
could result in delays in or reductions of distributions on the Certificates.
CONSUMER PROTECTION LAWS
The so-called "Holder-in-Due-Course" rule of the Federal Trade
Commission is intended to defeat the ability of the transferor of a consumer
credit contract which is the seller of goods which gave rise to the transaction
(and certain related lenders and assignees) to transfer such contract free of
notice of claims by the obligor thereunder. The effect of this rule is to
subject the assignee of such a contract to all claims and defenses which the
obligor could assert against the seller of goods. Liability under this rule is
limited to amounts paid under such a
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contract; however, the obligor also may be able to assert the rule to set off
remaining amounts due as a defense against a claim brought by the assignee
against such obligor. Generally, this rule will apply to any Contracts conveyed
to the Trustee and to any claims made by the Servicer on behalf of the Trustee,
as GreenPoint's assignee. Numerous other federal and state consumer protection
laws impose requirements applicable to the origination and lending pursuant to
such Contracts, including the Truth in Lending Act, the Federal Trade Commission
Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Equal
Credit Opportunity Act, the Fair Debt Collection Practices Act and the Uniform
Consumer Credit Code. In the case of some of these laws, the failure to comply
with their provisions may affect the enforceability of the related Contract or
create liability for the Trust Fund.
The Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the
"Relief Act") could, under certain circumstances, cap the amount of interest
that may be charged on certain Contracts at 6% and may hinder the ability of the
Servicer to foreclose on such Contracts in a timely fashion. Under the terms of
the Relief Act, if so required by an obligor under a manufactured housing
contract who enters military service after the origination of such obligor's
contract (including an obligor who is a member of the National Guard or is in
reserve status at the time of the origination of the contract and is later
called to active duty), such obligor may not be charged interest above an annual
rate of 6% during the period of such obligor's active duty status, unless a
court orders otherwise upon application of the lender. In addition, the Relief
Act imposes limitations which would impair the ability of any lender to
foreclose on an affected contract during the obligor's period of active duty
status and within three months thereafter. It is possible that application of
the Relief Act to certain of the Contracts could have an effect, for an
indeterminate period of time, on the ability of the Servicer to collect full
amounts of interest or foreclose on such Contract, and could result in delays in
payment or losses to the holders of the Certificates. GreenPoint will not make
any representation or warranty as to whether any Contract is or could become
subject to the Relief Act.
TRANSFERS OF MANUFACTURED HOMES; ENFORCEABILITY OF RESTRICTIONS ON TRANSFER
If so specified in the related Prospectus Supplement, the Contracts
comprising any Contract Pool generally will prohibit the sale or transfer of the
related Manufactured Homes without the consent of the obligee and permit the
acceleration of the maturity of the Contracts by the obligee upon any such sale
or transfer to which GreenPoint has not consented. Under the Agreement for a
Series of Certificates (if so specified in the related Prospectus Supplement),
GreenPoint will be required to consent to any such transfer and to permit the
assumption of the related Contract if the proposed buyer meets the Servicer's
underwriting standards and enters into an assumption agreement, the Servicer
determines that permitting such assumption will not materially increase the risk
of nonpayment of the Contract and such action will not adversely affect or
jeopardize any coverage under any insurance policy required by such Agreement.
If the Servicer determines that these conditions have not been fulfilled, then
it will be required to withhold its consent to the transfer, but only to the
extent permitted under the Contract and applicable law and governmental
regulations and only to the extent that such action will not adversely affect or
jeopardize any coverage under any insurance policy required by the Agreement.
In certain cases, a delinquent Obligor may attempt to transfer a Manufactured
Home in order to avoid a repossession proceeding with respect to such
Manufactured Home.
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In the case of a transfer of a Manufactured Home after which the
obligee desires to accelerate the maturity of the related Contract, the
obligee's ability to do so will depend on the enforceability under state law of
the clause permitting acceleration on transfer. The Garn-St. Germain Depository
Institutions Act of 1982 preempts, subject to certain exceptions and conditions,
state laws prohibiting enforcement of such clauses applicable to manufactured
homes. To the extent such exceptions and conditions apply in some states, the
Servicer may be prohibited from enforcing such a clause in respect of certain
Manufactured Homes.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary
Controls Act of 1980, as amended ("Title V"), provides that, subject to the
following conditions, state usury limitations shall not apply to any loan which
is secured by a first lien on certain kinds of manufactured housing. The
Contracts related to any Series of Certificates would be covered under Title V
if, among other things, they satisfy certain conditions governing the terms of
any prepayments, late charges and deferral fees and contain a requirement of a
30-day notice period prior to instituting any action leading to repossession of
the related unit.
Title V authorized any state to reimpose limitations on interest rates
and finance charges by adopting before April 1, 1983 a law or constitutional
provision which expressly rejected application of the federal law. Fifteen
states adopted such a law prior to the April 1, 1983 deadline. In addition,
even where Title V was not so rejected, any state is authorized by the law to
adopt a provision limiting discount points or other charges on loans covered by
Title V. GreenPoint will represent, in the Agreement for a Series of
Certificates (if so specified in the related Prospectus Supplement), that the
Contracts sold by it comply with applicable usury laws.
RATINGS
It is a condition to the issuance of the Certificates of each Series
offered hereby that at the time of issuance they shall have been rated in one of
the four highest rating categories by the nationally recognized statistical
rating agency or agencies specified in the related Prospectus Supplement.
Ratings on manufactured housing contract pass-through certificates
address the likelihood of the receipt by Certificateholders of their allocable
share of principal and interest on the underlying manufactured housing contract
assets. These ratings address structural and legal aspects associated with such
certificates, the extent to which the payment stream on such underlying assets
is adequate to make payments required by such certificates and the credit
quality of the credit enhancer or guarantor, if any. Ratings on the
Certificates do not, however, constitute a statement regarding the likelihood of
principal prepayments by Obligors under the Contracts in the related Contract
Pool, the degree by which prepayments made by such Obligors might differ from
those originally anticipated or whether the yield originally anticipated by
investors of any Series of Certificates may be adversely affected as a result of
such prepayments. As a result, investors of any Series of Certificates might
suffer a lower than anticipated yield.
A rating on any or all of the Certificates of any Series by certain
other rating agencies, if assigned at all, may be lower than the rating or
ratings assigned to such Certificates
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by the rating agency or agencies specified in the related 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
agency. Each security rating should be evaluated independently of any other
security rating.
METHOD OF DISTRIBUTION
The Seller may sell Certificates of each Series to or through
underwriters (the "Underwriters") by a negotiated firm commitment underwriting
and public reoffering by the Underwriters, and also may sell and place
Certificates directly to other purchasers or through agents. The Seller intends
that Certificates be offered through such various methods from time to time and
that offerings may be made concurrently through more than one of these methods
or that an offering of a particular Series of Certificates may be made through a
combination of such methods.
The distribution of the Certificates may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If so specified in the Prospectus Supplement relating to a Series of
Certificates, the Seller or any affiliate thereof may purchase some or all of
one or more Classes of Certificates of such Series from the Underwriter or
Underwriters at a price specified in such Prospectus Supplement. Such purchaser
may thereafter from time to time offer and sell, pursuant to this Prospectus,
some or all of such Certificates so purchased directly, through one or more
Underwriters to be designated at the time of the offering of such Certificates
or through broker-dealers acting as agent and/or principal. Such offering may
be restricted in the manner specified in such Prospectus Supplement. Such
transactions may be effected at market prices prevailing at the time of sale, at
negotiated prices or at fixed prices.
In connection with the sale of the Certificates, Underwriters may
receive compensation from the Seller or from purchasers of Certificates for whom
they may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell the Certificates of a Series to or through dealers and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the Underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that participate
in the distribution of the Certificates of a Series may be deemed to be
Underwriters, and any discounts or commissions received by them from the Seller
and any profit on the resale of the Certificates by them may be deemed to be
underwriting discounts and commissions, under the Securities Act. Any such
Underwriters or agents will be identified, and any such compensation received
from the Seller will be described, in the Prospectus Supplement.
Under agreements which may be entered into by GreenPoint, Underwriters
and agents who participate in the distribution of the Certificates may be
entitled to indemnification by GreenPoint against certain liabilities, including
liabilities under the Securities Act.
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The Underwriters may, from time to time, buy and sell Certificates,
but there can be no assurance that an active secondary market will develop and
there is no assurance that any such market, if established, will continue.
USE OF PROCEEDS
If so specified in the applicable Prospectus Supplement, substantially
all of the net proceeds to be received from the sale of the Certificates will be
used by the Seller for general corporate purposes, including the payment of
expenses in connection with pooling the Contracts and issuing the
Certificates.
LEGAL MATTERS
Certain legal matters relating to the Certificates, including legal
matters relating to material federal income tax consequences concerning the
Certificates, will be passed upon for GreenPoint by Orrick, Herrington &
Sutcliffe LLP, Los Angeles, California.
EXPERTS
The consolidated financial statements of GFC as of December 31, 1997
and 1996 incorporated in this Prospectus by reference to GFC's Annual Report on
Form 10-K for the year ended December 31, 1997 have been so incorporated in
reliance on the report by PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of GFC for the year ended
December 31, 1995, incorporated in this Prospectus by reference to GFC's Annual
Report on Form 10-K for the year ended December 31, 1997, have been so
incorporated in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference in this Prospectus, and
upon the authority of said firm as experts in accounting and auditing.
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INDEX OF SIGNIFICANT DEFINITIONS
<TABLE>
<CAPTION>
Page in Prospectus
on Which Term
is Defined
------------------
<S> <C>
1986 Act.............................................................. 50
1997 Act.............................................................. 57
Acquisition........................................................... 19
adjusted issue price.............................................. 54, 66
Agreement.............................................................. 3
Bulk Sellers.......................................................... 15
capital assets........................................................ 45
cash-flow investments................................................. 48
Cede........................................................... iv, 7, 32
Certificate Account................................................... 27
Certificate Balance................................................... 4
Certificate Owners............................................. iv, 7, 32
Certificateholder................................................. 32, 46
Certificateholders.................................................... iv
Certificates........................................................... i
chattel paper......................................................... 28
Class............................................................... i, 3
clearing agency....................................................... 32
clearing corporation.................................................. 32
Code................................................................... 9
Collection Period.................................................. 4, 29
Commission............................................................ iv
Committee Report...................................................... 50
Contract............................................................... 1
Contract Files........................................................ 28
Contract Pool...................................................... ii, 1
Contract Rate.......................................................... 1
Contract Schedule..................................................... 28
contracts............................................................. 11
Contracts.......................................................... ii, 1
Credit Facility....................................................... 44
Credit Facility Provider.............................................. 44
Cut-off Date........................................................... 1
daily portion......................................................... 60
Definitive Certificates............................................... 27
disqualified organization......................................... 67, 75
Disqualified Organizations............................................ 49
Distribution Date...................................................... 4
DOL................................................................... 77
DTC............................................................ iv, 7, 32
DTC Rules............................................................. 33
Due Date.............................................................. 16
due-on-sale............................................................24
electing large partnership............................................ 75
ERISA.............................................................. 9, 77
evidences of indebtedness............................................. 58
Excess Interest................................................... 11, 30
Exchange Act......................................................... iii
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
foreclosure property.................................................. 48
Foreign Holder........................................................ 59
Fractional Interests.................................................. 38
full distributions.................................................... 31
GFC............................................................... iii, 8
Global Certificate................................................. 7, 32
Government Securities................................................. 48
Grantor Trust Fund.................................................... 46
GreenPoint Bank....................................................... 19
holder................................................................ 46
Indirect Participants................................................. 32
IRS................................................................... 50
Issue Premium......................................................... 63
Junior Certificates................................................... 41
Kelley Blue Book...................................................... 22
Land Home.............................................................. 1
Land Home Contract.................................................... 18
Land Home Contracts................................................... 17
Land-in-Lieu Contract.............................................. 1, 18
Land-in-Lieu Contracts................................................ 17
legal investments...................................................... 9
Liquidity Facility.................................................... 44
Liquidity Facility Provider........................................... 44
long-term Federal rate................................................ 66
Manufactured Home...................................................... 1
manufactured homes.................................................... 79
manufactured housing contracts........................................ 11
mezzanine............................................................. 43
Minimum Termination Amount............................................ 34
Monthly Servicing Fee................................................. 36
Mortgage.............................................................. 17
mortgage related securities........................................ 9, 75
mortgage related security............................................. 76
Multiple Variable Rate................................................ 52
NCUA.................................................................. 76
New Regulations....................................................... 60
noneconomic residual interest......................................... 68
Grantor Trust Certificates............................................ 70
notice................................................................ 38
Obligor............................................................... 16
OID Regulations....................................................... 46
Original Holder....................................................... 61
Participants.......................................................... 32
Parties in Interest................................................... 77
passive losses........................................................ 61
pass-through entity................................................... 67
pass-through interest holder.......................................... 58
pass-through interest holders......................................... 58
Pass-Through Rate.................................................. 6, 30
Percentage Interest................................................... 27
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
permitted investments................................................. 48
Plans................................................................. 77
Policy Statement...................................................... 76
Pool Principal Balance................................................ 42
Pool Scheduled Principal Balances..................................... 43
portfolio income...................................................... 61
Premium Grantor Trust Certificates.................................... 72
Prepayment Assumption................................................. 50
Prepayment Model...................................................... 25
prohibited transaction................................................ 39
PTCE.................................................................. 77
qualified liquidation................................................. 35
qualified mortgage.................................................... 48
qualified mortgages................................................... 48
qualified replacement mortgage........................................ 48
qualified reserve assets.............................................. 48
qualifying assets..................................................... 47
Rate Period........................................................... 31
real estate assets.................................................... 47
Registration Statement................................................ iv
Regular Certificates.............................................. 45, 47
regular interests................................................. 46, 50
Regular Principal..................................................... 29
Relief Act........................................................ 13, 86
REMIC............................................................ iii, 46
REMIC Certificates.................................................... 46
REMIC Provisions...................................................... 46
REMIC Regulations..................................................... 46
Repurchase Date....................................................... 34
Reserve Fund.......................................................... 43
Residual Certificates............................................. 45, 47
Residual Interest.................................................. 7, 31
residual interests.................................................... 46
Sale Agreement........................................................ 19
Scheduled Payment..................................................... 16
Seller................................................................. i
Senior Certificate Balance............................................ 42
Senior Certificates............................................... 41, 66
Series................................................................. i
Service........................................................... 45, 48
Servicer........................................................... ii, 1
single family residences.............................................. 48
Single Variable Rate.................................................. 51
single-class REMIC.................................................... 58
SMMEA.............................................................. 9, 75
Special Principal Distributions.................................... 6, 30
Spread Account........................................................ 44
staged-funding........................................................ 18
Startup Day........................................................... 48
steps up............................................................... 1
Step-Up Rate.......................................................... 16
Step-Up Rate Contracts................................................ 16
Subordinate Certificates.............................................. 41
successful Termination Auction......................................... 8
Tax-Exempt Investor................................................... 75
Termination Auction................................................... 34
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Title V............................................................... 87
Total Regular Principal Amount..................................... 4, 29
Trust Fund.......................................................... i, 3
Trustee................................................................ 3
UBTI.................................................................. 75
UCC................................................................... 12
Underwriters.......................................................... 87
Weighted Average Contract Rate..................................... 1, 18
</TABLE>
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
<TABLE>
<S> <C>
Registration fee....................................................$ 885,000.00
Printing and engraving costs........................................$ 450,000.00
Legal fees and expenses.............................................$ 350,000.00
Accounting fees and expenses........................................$ 264,000.00
Trustee's fees and expenses.........................................$ 50,000.00
Blue Sky Qualification Fees and Expenses (including Counsel Fees)...$ 20,000.00
Rating Agency Fees..................................................$ 600,000.00
Total...............................................................$4,995,000.00
- --------
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware,
as amended, under which the Registrants are incorporated, empowers a
corporation, subject to certain limitations, to indemnify its directors and
officers against the actual and reasonable expenses of defending litigation
against them in their capacities as directors and officers.
1. GreenPoint Credit Corp. Section 42 of GreenPoint Credit Corp.'s
-----------------------
By-Laws provides as follows:
Indemnification. The corporation shall indemnify and hold harmless,
---------------
to the full extent permitted by law as the same exists or may be hereafter
amended (but, in the case of any amendment, only to the extent that the
amendment permits the corporation to provide broader indemnification rights than
permitted by law prior to its amendment), any person (an "indemnitee") who is
made, or threatened to be made, a party to or is otherwise involved in any
action, suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that he or his testator or intestate is or
was a director, officer, employee or agent of the corporation or serves or
served, in any capacity, any other enterprise (including, without limitation,
service with respect to an employee benefit plan) at the request of the
corporation (whether the basis of such action, suit or proceeding is alleged
action in an official capacity as a director, officer, employee or agent or in
any other capacity) against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such indemnitee in
connection therewith; provided, however, that, except as provided below with
respect to actions, suits, or proceedings to enforce rights to indemnification,
the corporation shall indemnify any such indemnitee in
II-1
<PAGE>
connection with an action, suit or proceeding (or part thereof) initiated by
such person only if such action, suit or proceeding (or part thereof) was
authorized by the Board of Directors of the corporation. The right to
indemnification conferred in this Paragraph 42 shall include the right to be
paid by the corporation the expenses incurred in defending any such proceeding
in advance of its final disposition to the maximum extent permitted by law. The
rights to indemnification and to the advancement of expenses conferred by this
Paragraph 42 shall be contract rights and such rights shall continue as to an
indemnitee who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the indemnitee's heirs, executors and administrators.
If a claim under this Paragraph 42 is not paid in full by the
corporation within sixty (60) days after a written claim has been received by
the corporation, except in the case of a claim for an advancement of expenses,
in which case the applicable period shall be twenty (20) days, the indemnitee
may at any time thereafter bring suit against the corporation to recover the
unpaid amount of the claim. If successful in whole or in part in any such suit,
the indemnitee shall be entitled to be paid also the expenses of prosecuting or
defending such suit. In any suit brought by the indemnitee to enforce a right
to indemnification or to an advancement of expenses hereunder, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Paragraph 42 or otherwise, shall be on the
corporation.
The rights to indemnification and to the advancement of expenses
conferred in this Paragraph 42 shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the corporation's
Certificate of Incorporation, Bylaws, agreement, vote of shareholders or
directors or otherwise.
The corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the corporation to the fullest extent of
the provisions of this Paragraph 42 with respect to the indemnification and
advancement of expenses of directors and officers of the corporation.
There is directors' and officers' liability insurance presently
outstanding, which insures directors and officers of GreenPoint Credit Corp.
against claims arising out of the performance of their duties.
The Pooling Agreement for each Series of Certificates will provide
that no director, officer, employee or agent of GreenPoint Credit Corp. is
liable to any holder of Certificates or to the Trustee on behalf of the holders
of such Certificates, or to any other person, except on account of such
director's, officer's, employee's or agent's own willful misfeasance, bad faith,
gross negligence or reckless disregard of duty. The Pooling Agreement for each
Series will further provide that, with the exceptions stated above, a director,
officer, employee or agent of GreenPoint Credit Corp. is entitled to be
indemnified by the Trust Fund against all liability in connection with the
mortgage pool evidenced by such Series.
2. GreenPoint Financial Corp. Article Tenth of GreenPoint Financial
--------------------------
Corp.'s Certificate of Incorporation provides as follows:
II-2
<PAGE>
A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee") whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent or in any other capacity while serving as a Director, Officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) reasonably incurred or suffered by such indemnitee
in connection therewith; provided, however, that, except as provided in Section
C hereof with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or party thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation.
B. The right to indemnification conferred in Section A of this Article
TENTH shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a Director or Officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, services to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section or otherwise. The rights to indemnification and to the advancement
of expenses conferred in Sections A and B of this Article TENTH shall be
contract rights and such rights shall continue as to an indemnitee who has
ceased to be a Director, Officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article TENTH is not paid in
full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in
any such suit, or in a suit brought by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expenses of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Corporation
II-3
<PAGE>
shall be entitled to recover such expenses upon a final adjudication that the
indemnitee has not met any applicable standard for indemnification set forth in
the Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suite brought by the indemnitee, be a defense to such suit. In any suite
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article TENTH or otherwise shall be on the
Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article TENTH shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
Disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect
itself and any Director, Officer, employee or agent of the Corporation or
Subsidiary or Affiliate or another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article TENTH with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
II-4
<PAGE>
Item 16. Exhibits
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
- ---------------- ----------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting.
2.1 Sale Agreement. (Incorporated by reference to Exhibit 2.1 of the Form 8-K filed by
GreenPoint Financial Corp. on October 5, 1998)
3.1* Certificate of Incorporation of GreenPoint Financial.
3.2* Certificate of Incorporation of GreenPoint Credit Corp.
3.3* By-Laws of GreenPoint Financial.
3.4* By-Laws of GreenPoint Credit Corp.
4.1* Form of Pooling and Servicing Agreement.
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect to legality.
8.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect to tax matters.
12.1 Not Applicable.
15.1 Not Applicable.
23.1 Consent of Orrick, Herrington & Sutcliffe LLP (included in Exhibit 8.1 hereto).
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of KPMG Peat Marwick, LLP.
24.1** Powers of Attorney.
25.1 Not Applicable.
26.1 Not Applicable.
27.1 Not Applicable.
99.1 Not Applicable.
</TABLE>
* Filed previously.
** Powers of Attorney for GFC were filed previously. The Powers of Attorney
for GreenPoint are included in the signature pages of this Amendment No.
1.
Undertakings.
In accordance with Item 512 of Regulation S-K under the Securities Act
of 1933, as amended (the "Securities Act"), each of the undersigned registrants
hereby undertakes:
To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and (iii) to include
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement.
II-5
<PAGE>
Provided, however, that paragraphs (1)(i) and (1)(ii) of this section
do not apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the registrants pursuant to the foregoing provisions, the
registrants are aware that such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by either of the registrants of expenses incurred or paid by a director,
officer or controlling person of either of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered. Each registrant, as applicable, will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of
II-6
<PAGE>
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-7
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature below
constitutes and appoints each of Howard C. Bluver, Jeffrey Leeds and Charles P.
Richardson, or any of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and his name, place
and stead, in any and all capacities, to sign any or all amendments (including
post-effective amendments) to the Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or their or his substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ John W. Wheeler
- --------------------------- President (Principal October 15, 1998
John W. Wheeler Executive Officer) and
Director
/s/ John S. Buchanan
- ---------------------------
John S. Buchanan Senior Vice President, October 14, 1998
Treasurer (Principal
Financial and Accounting
Officer) and Director
/s/ Martin L. McNabb
- ---------------------------
Martin L. McNabb Executive Vice President October 14, 1998
and Director
/s/ Abdul H. Rajput
- ---------------------------
Abdul H. Rajput Executive Vice President October 14, 1998
and Director
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, that all of the registered securities will
meet the security rating requirement in instruction I B.5 of Form S-3 by the
time of the sale of the registered securities and that it has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of San Diego, State of
California, on October 15, 1998.
GREENPOINT CREDIT CORP.
By: /s/ John W. Wheeler
---------------------------------
Name: John W. Wheeler
Title: Director and President
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, that all of the registered securities will
meet the security rating requirement in instruction I B.5 of Form S-3 by the
time of the sale of the registered securities and that it has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on October 15, 1998.
GREENPOINT FINANCIAL CORP.
By: /s/ Thomas S. Johnson
---------------------------------
Name: Thomas S. Johnson
Title: Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons or their
respective attorneys-in-fact in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Thomas S. Johnson
------------------------- Chairman of the Board and Chief October 15, 1998
Thomas S. Johnson Executive Officer
/s/ Bharat B. Bhatt*
------------------------- Member of the Board, President and October 15, 1998
Bharat B. Bhatt Chief Operating Officer
/s/ Jeffrey Leeds*
------------------------- Executive Vice President, Finance October 15, 1998
Jeffrey Leeds (Principal Financial Officer)
/s/ Mary Beth Farrell*
------------------------- Senior Vice President and October 15, 1998
Mary Beth Farrell Comptroller
Wilfred O. Uhl*
------------------------- Director October 15, 1998
Wilfred O. Uhl
Robert M. Mclane*
------------------------- Director October 15, 1998
Robert M. McLane
Dan F. Huebner*
------------------------- Director October 15, 1998
Dan F. Huebner
------------------------- Director October __, 1998
Robert P. Quinn
</TABLE>
II-9
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Robert F. Vizza*
- -------------------------------- Director October 15, 1998
Robert F. Vizza
William M. Jackson*
- -------------------------------- Director October 15, 1998
William M. Jackson
/s/ Jules Zimmerman*
- -------------------------------- Director October 15, 1998
Jules Zimmerman
/s/ Charles B. McQuade*
- -------------------------------- Director October 15, 1998
Charles B. McQuade
/s/ Alvin N. Puryear*
- -------------------------------- Director October 15, 1998
Alvin N. Puryear
- -------------------------------- Director October __, 1998
Susan J. Kropf
- -------------------------------- Director October __, 1998
Edward C. Schmults
/s/ Howard C. Bluver
- --------------------------------
*By HOWARD C. BLUVER
Attorney-in-Fact
</TABLE>
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
- -------------- ----------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting.
2.1 Sale Agreement. (Incorporated by reference to Exhibit 2.1 of the Form 8-K filed by
GreenPoint Financial Corp. on October 5, 1998)
3.1* Certificate of Incorporation of GreenPoint Financial.
3.2* Certificate of Incorporation of GreenPoint Credit Corp.
3.3* By-Laws of GreenPoint Financial.
3.4* By-Laws of GreenPoint Credit Corp.
4.1* Form of Pooling and Servicing Agreement.
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect to legality.
8.1 Opinion of Orrick, Herrington & Sutcliffe LLP with respect to tax matters.
12.1 Not Applicable.
15.1 Not Applicable.
23.1 Consent of Orrick, Herrington & Sutcliffe LLP (included in Exhibit 8.1 hereto).
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of KPMG Peat Marwick, LLP.
24.1** Powers of Attorney.
25.1 Not Applicable.
26.1 Not Applicable.
27.1 Not Applicable.
99.1 Not Applicable.
</TABLE>
* Filed previously.
** Powers of Attorney for GFC were filed previously. The Powers of Attorney
for GreenPoint are included in the signature pages of this Amendment No.
1.
<PAGE>
Exhibit 5.1
October 19, 1998
GreenPoint Credit Corp.
90 Park Avenue
New York, New York 10016
Ladies and Gentlemen:
We have acted as counsel to GreenPoint Credit Corp. ("GreenPoint"), and
GreenPoint Financial Corp. ("GFC" and each of GreenPoint and GFC, a
"Registrant"), in connection with the preparation and filing with the Securities
and Exchange Commission (the "Commission") of the Registration Statement on Form
S-3 filed by the Registrants with the Commission (the "Registration Statement")
for the registration under the Securities Act of 1933, as amended, of its
Manufactured Housing Contract Trust Pass-Through Certificates (the
"Certificates"). The Certificates are issuable in series (each, a "Series")
under separate Pooling and Servicing Agreements (each, a "Pooling Agreement") by
and among either Registrant or both of them, in each case, as seller of
manufactured housing installment sales contracts and installment loan contracts,
GreenPoint Credit Corp., as servicer, and the trustee selected for such Series.
The Certificates of each Series are to be sold as described in the Registration
Statement and the prospectus and prospectus supplement relating to such Series.
We have examined such instruments, documents and records as we deemed relevant
and necessary as a basis for our opinion hereinafter expressed. In such
examination, we have assumed the following: (a) the authenticity of original
documents and the genuineness of all signatures; (b) the conformity to the
originals of all documents submitted to us as copies; (c) the truth, accuracy
and completeness of the information, representations and warranties contained in
the records, documents, instruments and certificates we have reviewed; and (d)
that, as to each party (other than the Registrants) to a Pooling Agreement, each
Pooling Agreement will be legal, valid and binding obligations enforceable in
accordance with their respective terms.
Based on such examination, we are of the opinion that when the issuance of
each Series of Certificates has been duly authorized by appropriate corporate
action and the Certificates of such Series have been duly executed,
authenticated and delivered in accordance with the terms of the Pooling
Agreement relating to such Series and sold in the manner described in the
Registration Statement and the prospectus and prospectus supplement relating
thereto, the Certificates of such Series will be legally issued, fully paid,
binding obligations of the trust created by each Pooling Agreement, and the
holders of the Certificates of such Series will be entitled to the benefits of
the Pooling Agreement, except as enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, fraudulent
<PAGE>
GreenPoint Credit Corp.
October 19, 1998
Page 2
conveyance, moratorium, or other laws relating to or affecting the rights of
creditors generally and general principles of equity, including concepts of
materiality, reasonableness, good faith and fair dealing, and the possible
unavailability of specific performance or injunctive relief, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever it appears in the
Registration Statement and the prospectus contained therein.
Very truly yours,
Orrick, Herrington & Sutcliffe LLP
<PAGE>
Exhibit 8.1
October 19, 1998
GreenPoint Credit Corp.
GreenPoint Financial Corp.
90 Park Avenue
New York, New York 10016
Ladies and Gentlemen:
We have acted as counsel to GreenPoint Credit Corp. ("GreenPoint"), and
GreenPoint Financial Corp. ("GFC" and each of GreenPoint and GFC, a
"Registrant"), in connection with the preparation and filing with the Securities
and Exchange Commission (the "Commission") of the Registration Statement on Form
S-3 filed by the Registrants with the Commission (the "Registration Statement")
for the registration under the Securities Act of 1933, as amended, of its
Manufactured Housing Contract Trust Pass-Through Certificates (the
"Certificates"). The Certificates are issuable in series (each, a "Series")
under separate Pooling and Servicing Agreements by and among either Registrant
or both of them, in each case, as seller of manufactured housing installment
sales contracts and installment loan contracts, GreenPoint, as servicer, and the
trustee selected for such Series. The Certificates of each Series are to be
sold as described in the Registration Statement and the prospectus and
prospectus supplement relating to such Series.
We hereby confirm that the statements set forth under the headings "Summary of
Terms--Federal Income Tax Consequences" and "Certain Federal Income Tax
Consequences" in the Prospectus, and under the headings "Terms of the Offered
Certificates--Federal Income Tax Consequences" and "Certain Federal Income Tax
Consequences" in the form of prospectus supplement, each forming a part of the
Registration Statement, which statements have been prepared by us, constitute
our opinion as to the material federal income tax consequences relating to the
Certificates and are correct in all material respects.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Orrick, Herrington & Sutcliffe LLP
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 (Amendment No. 1)
of our report dated January 20, 1998, except as to paragraph four of Note 1,
which is as of March 4, 1998, which appears on page 45 of the 1997 Annual Report
to Stockholders of GreenPoint Financial Corp., which is incorporated by
reference in GreenPoint Financial Corp.'s Annual Report on Form 10-K for the
year ended December 31, 1997. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ PricewaterhouseCoopers
New York, New York
October 15, 1998
<PAGE>
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
The Shareholders and the Board of Directors of GreenPoint Financial Corp.
We consent to incorporation by reference in Amendment No. 1 to the registration
statement on Form S-3 of GreenPoint Financial Corp. of our report dated January
19, 1996, relating to the consolidated statements of income, changes in
stockholder's equity and cash flows of GreenPoint Financial Corp. and
Subsidiaries for the year ended December 31, 1995, which report is included in
the December 31, 1997 annual report on Form 10-K of GreenPoint Financial Corp.,
and to the reference to our firm under the heading "Experts" in the registration
statement.
/s/ KPMG Peat Marwick LLP
October 14, 1998
