<PAGE>
As filed with the Securities and Exchange Commission on October 14, 1999
Registration No. 333-80437
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
Post-Effective Amendment No. 1 to
Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_______________________
GREENPOINT CREDIT, LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 33-0862379
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
10089 Willow Creek Road
San Diego, California 92131
(858) 549-4700
(Address, including zip code, and telephone number,
including area code, of each registrant's principal executive offices)
Howard C. Bluver, Esq.
GreenPoint Financial 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
GREENPOINT FINANCIAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 06-1379001
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
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 Financial 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
effective registration statement for the same offering. [_]
If this Form is a post effective amendment filed pursuant to Rule
462(e) 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
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum Amount of
Title of securities to Amount to be offering price aggregate offering registration
be registered registered per unit(1) price fee(2)(3)(4)
- ----------------------- ---------------- ----------------- --------------------- ----------------
<S> <C> <C> <C> <C>
GreenPoint $4,640,882,814.00 100% $4,640,882,814.00 $1,290,166.00
Manufactured Housing
Contract Trust Pass-
Through Certificates
Limited Guarantee of $4,640,882,814.00 100% $4,640,882,814.00 N/A
GreenPoint Financial
Corp.
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) $640,882,814.00 of securities are being carried forward from Registration
Statement No. 333-59731 and $178,166.00 of the filing fee is associated
with the securities being carried forward and was previously paid in
connection with the earlier Registration Statement.
(3) $2,780.00 was paid on June 11, 1999 with the initial filing of the
Registration Statement.
(4) $1,109,220.00 was paid on July 29, 1999 with the filing of Amendment No. 1
to the Registration Statement.
___________________________
Pursuant to Rule 429 of the Securities and Exchange Commission's Rules
and Regulations under the Securities Act of 1933, as amended, the Prospectus and
Prospectus Supplement contained in this Registration Statement also relates to
Registrant's Registration Statement No. 333-59731 as previously filed by the
Registrant on Form S-3.
ADOPTION OF REGISTRATION STATEMENT
On October 1, 1999, GreenPoint Credit Corp. changed its corporate
structure from a Delaware corporation to a Delaware limited liability company.
To accomplish this, GreenPoint Credit Corp. was merged with a newly created
affiliate company named GreenPoint Credit, LLC which is a Delaware limited
liability company. The surviving entity is named GreenPoint Credit, LLC and is
a Delaware limited liability company. GreenPoint Credit, LLC's sole member is
GreenPoint Mortgage Funding, Inc., which is a wholly owned subsidiary of
Headlands Mortgage Company, which is a wholly owned subsidiary of GreenPoint
Bank. Management of GreenPoint Credit, LLC does not believe the change in
structure will materially affect the day to day operations of its manufactured
housing business.
By filing this Post-Effective Amendment No. 1 to the Registration
Statement, GreenPoint Credit, LLC hereby expressly adopts all statements
contained in the Registration Statement as its own registration statement for
all purposes of the Securities Act of 1933 and the Securities and Exchange Act
of 1934 and represents that all of the requirements for registration by a
successor issuer contained in Rule 414 of the Securities Act of 1933 have
been met.
================================================================================
<PAGE>
Information contained in this prospectus supplement 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 be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
Subject to Completion, Dated [_____], 1999[_]
[FORM OF PROSPECTUS SUPPLEMENT]
To Prospectus Dated [ ]
$[AMOUNT]
(Approximate)
[GreenPoint Credit, LLC LOGO],
Seller and Servicer
Manufactured Housing Contract Trust
Pass-Through Certificates, Series [ ],
Issuer
- --------------------------------------------------------------------------------
Consider carefully the risk factors beginning on page S-[ ] in this prospectus
supplement and at page [ ] in the accompanying prospectus.
A certificate will represent an interest only in the trust created for that
series of certificates. A certificate will not represent an interest in or an
obligation of GreenPoint Credit, LLC or any of its affiliates.
This prospectus may be used to offer and sell a series of certificates only if
accompanied by the prospectus supplement for that series.
- --------------------------------------------------------------------------------
The securities' issuer is offering the following [] classes of
certificates:
<TABLE>
<CAPTION>
Pass- Underwriting
Principal Through Price to Discounts and Proceeds
Class Balance Rate Public Commissions to Seller
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A-1 $[ ] LIBOR+[]%
[A-2 $[ ] [ ]% ]
[A-3 $[ ] AUCTION ]
[A-IO $[ ] [ ]% ]
M $[ ] [ ]%
B-1 $[ ] [ ]%
</TABLE>
. The pass-through rates on the Class A-1, A-3, M and B-1 certificates are
capped at the weighted average of the net contract rates of the
contracts.
. For risks associated with interest only securities, including loss of your
entire investment, see "Risk Factors--Interest-Only certificates" in this
prospectus supplement.
[The required monthly payments of interest and scheduled principal are
unconditionally guaranteed to the holders of all classes of offered certificates
by [INSURER]. See "[INSURER]" and "Description of the Certificates-Certificate
Insurance Policy" in this prospectus supplement.]
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the offered certificates or determined
that this prospectus supplement or the prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
[_____], 199[_]
<PAGE>
Important Notice About Information Presented in this Prospectus Supplement
and the Accompanying Prospectus
You should rely only on the information contained in this document or
to which we have referred you to in this prospectus supplement. We have not
authorized anyone to provide you with information that is different. This
document may only be used where it is legal to sell these securities.
We provide information to you about the offered certificates in two
separate documents that progressively provide more detail:
. the accompanying prospectus, which provides general information, some
of which may not apply to your series of certificates, and
. this prospectus supplement, which describes the specific terms of your
series of certificates.
We include cross-references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents included in the accompanying prospectus provide the pages on which
these captions are located.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE S-
<S> <C>
Summary Information.................................................................. 3
Risk Factors......................................................................... 10
The Contract Pool.................................................................... 16
The Seller........................................................................... 23
GreenPoint Credit, LLC's Management's Discussion
and Analysis of Delinquency, Repossession
and Loan Loss Experience...................................................... 24
Impact of the Year 2000.............................................................. 24
[Ratio of Earnings to Fixed Charges for GFC.......................................... 25
Prepayment And Yield Considerations.................................................. 26
Weighted Average Life of the Offered Certificates.................................... 30
[Sensitivity Of The Class A-IO Certificates]......................................... 34
[Pre-Tax Yields on the Class A-IO Certificates]...................................... 35
Description Of The Certificates...................................................... 36
General.............................................................................. 36
Pass-Through Rates................................................................... 37
Conveyance of Contracts.............................................................. 38
[Conveyance of [Subsequent Contracts and]
[Pre-Funding Account]......................................................... 42
Payments on the Contracts; Certificate Account....................................... 44
Distributions........................................................................ 46
[Reserve Account].................................................................... 47
Subordination........................................................................ 48
Losses on Liquidated Contracts....................................................... 48
Example of Distributions............................................................. 49
Advances............................................................................. 50
[Limited Guarantee of GFC............................................................ 50
[Alternative Credit Enhancement...................................................... 52
Reports to Certificateholders........................................................ 52
Optional Termination and Termination Auction......................................... 53
Termination of the Agreement......................................................... 54
Collection and Other Servicing Procedures............................................ 55
Servicing Compensation; Certain Other Matters
Regarding the Servicer........................................................ 55
The trustee.......................................................................... 56
[Registration of the offered certificates............................................ 56
[Formation Of The Grantor Trust And Grantor
Trust Property]............................................................... 61
[Assignment of Class [A-2 Fixed] certificates]....................................... 62
[Servicing].......................................................................... 62
[Removal and Designation of Servicer]................................................ 63
[The Grantor Trustee]................................................................ 63
[Reporting Requirements]............................................................. 64
[Termination of the trust]........................................................... 65
Calculation of LIBOR................................................................. 65
Federal Income Tax Consequences...................................................... 65
[Grantor Trust]...................................................................... 67
ERISA Considerations................................................................. 69
General.............................................................................. 69
Senior Certificates.................................................................. 69
[The Class [A-2 Floating] certificates].............................................. 72
Class M and Class B-1 certificates................................................... 73
Fiduciary Review..................................................................... 73
Ratings.............................................................................. 74
Legal Investment..................................................................... 75
Method Of Distribution............................................................... 75
Use Of Proceeds...................................................................... 77
Legal Matters........................................................................ 77
Global Clearance, Settlement And Tax
Documentation Procedures...................................................... I-1
</TABLE>
S-2
<PAGE>
Summary Information
The following summary highlights selected information from this prospectus
supplement. It does not contain all of the information that you need to consider
in making your investment decision. To understand the terms of the offered
certificates, read carefully this entire prospectus supplement and the
accompanying prospectus.
This summary provides an overview of certain calculations, cash flows and other
information to aid your understanding and is qualified by the full description
of these calculations, cash flows and other information in this prospectus
supplement and the accompanying prospectus.
Capitalized terms used in this prospectus supplement and not otherwise defined
in this prospectus supplement have the meanings assigned in the prospectus.
What The Offered Certificates Represent
The offered certificates represent ownership of a portion of a trust. The trust
contains a contract pool, which consists of [two groups of] manufactured housing
installment sales contracts, installment loan agreements and certain other
assets, as described under "Description of the Certificates--General" in this
prospectus supplement.
The offered certificates only represent interests in the assets of the trust.
All payments to certificateholders will come only from the amounts received in
connection with those assets.
Information About The Contract Pool
The contract pool consists of approximately [ ] contracts with an aggregate
scheduled principal balance as of [ ] of approximately $[ ]. Each contract was
either originated or purchased by GreenPoint Credit, LLC.
[The contract pool consists of two contract groups. As of [ ]:
. contract group I consists of approximately [ ] fixed rate contracts with an
aggregate scheduled principal balance of approximately $[ ]; and
. Contract group II consists of approximately [ ] adjustable rate contracts
with an aggregate scheduled principal balance of approximately $[ ].
The Class I certificates represent an interest in the contracts in contract
group I and the Class II certificates represent an interest in the contracts in
group II.]
[For a further description of the contracts, see "The Contract Pool", "--Group I
Contracts" and "--Group II Contracts" in this prospectus supplement.]
The Offered Certificates
GreenPoint Credit, LLC will deposit the contracts into the trust. The trust has
been created for the purpose of issuing the Manufactured Housing Contract Trust
Pass-Through Certificates, Series 1999-[ ]. The approximate initial principal
balance, initial pass-through rate and last scheduled distribution date of each
class of the offered certificates will be as follows:
<TABLE>
<CAPTION>
Initial Initial Last Scheduled
Principal Pass-Through Distribution
Class Balance Rate Date
<S> <C> <C> <C>
A-1........ $ [ ] LIBOR+[]%
[A-2....... $ [ ] [ ]% ]
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C> <C> <C>
[A-3....... $ [ ] [ ]% ]
[A-IO...... $ [ ] [ ]% ]
M.......... $ [ ] [ ]%
B-1........ $ [ ] [ ]%
</TABLE>
____________________
. The pass-through rate on the Class A-1, A-3, M and B-1 certificates are
capped at the weighted average net contract rates of the contracts.
. [For risks associated with interest only securities, including loss of your
entire investment, see "Risk Factors-- The Yield to Maturity of the
Interest-only Certificates Will Be Limited by the Repurchase, Prepayment
and Default Experience of the Underlying Contracts" in this prospectus
supplement.]
[The trust will also issue one or more subordinate certificates. The subordinate
certificates will not be sold to the public. The subordinate certificates are
not being offered by this prospectus supplement, are subordinated to the offered
certificates and provide some limited credit support for the offered
certificates.]
The trust will also issue one or more Class R certificates. The Class R
Certificates will not be sold to the public. The Class R certificates are not
being offered by this prospectus supplement, are subordinated to the offered
certificates and provide some limited credit support for the offered
certificates.
Denominations
The offered certificates [,other than the Class A-3 certificates,] are offered
in minimum denominations of $1,000 each and multiples of $1 in excess thereof.
[The Class A-3 certificates are offered in minimum denominations of $25,000 each
and integral multiples of $25,000 in excess thereof.]
[The Certificate Insurance Policy And [Insurer]
[INSURER] will provide an insurance policy to protect certificateholders against
certain losses. In most instances, as described in more detail in this
prospectus supplement, if funds in the [group I and group II] certificate
account[s, as applicable,] are insufficient to distribute interest or scheduled
principal to the certificateholders on any distribution date, [INSURER] will
make a payment into the [respective] certificate account to cover the shortfall
under a certificate insurance policy. See "[INSURER]" and "Description of the
Certificates--Certificate Insurance Policy" in this prospectus supplement.]
[Limited Guaranty Of GFC
GreenPoint Financial Corp. will initially provide a limited guaranty against
losses that would otherwise be absorbed by the [Class B-1] certificates to the
extent set forth under "Description of the Certificates--Limited Guaranty" in
this prospectus supplement.]
[The limited guaranty is for the benefit of the Class [B-1] certificates only
and will not be use for any payments on the other certificates.]
GreenPoint Financial Corp. will be entitled to reimbursement for payments made
under the limited guaranty as described under "Description of the Certificates--
Limited Guaranty" in this prospectus supplement.]
[Alternative Credit Enhancement
In the event that alternative credit enhancement is provided in the amount, and
upon the terms and conditions, set forth under "Description of the
Certificates--Alternative Credit Enhancement," the
S-4
<PAGE>
limited guaranty shall be released and shall terminate. GreenPoint Financial
Corp. shall have no obligation to replace the alternative credit enhancement
once it has been exhausted. See "Risk Factors--Certificateholders May Bear a
Greater Risk of Loss if an Alternative Credit Enhancement is in Place and Has
Been Exhausted Since GreenPoint Financial Corp. Will Have No Obligation to
Replace the Alternative Credit Enhancement" in this prospectus supplement.]
[Swap Agreement
Pursuant to a swap agreement, on each payment date, the swap counterparty will
be entitled to receive from the grantor trust the distributions of interest on
the outstanding certificate principal balance of the Class A-2 fixed rate
certificates immediately prior to the related payment date, which are calculated
at a fixed rate of [ ]% per annum. On each payment date, the swap counterparty
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 the related payment date. The outstanding certificate principal balance
of the Class A-2 floating certificates will always equal the outstanding
certificate principal balance of the Class A-2 fixed certificates. The swap
counterparty is [ ].]
[Reserve Account
The trustee shall establish a reserve account for the benefit of the holders of
certificates. The reserve account will be funded as described under "Description
of the Certificates--Reserve Account" in this prospectus supplement. ]
[Pre-Funding Account
GreenPoint Credit, LLC will deposit an amount in the pre-funding account to
provide the trust with sufficient funds to purchase the subsequent contracts. In
no event will:
. the pre-funding account extend beyond 90 days past the date of initial
issuance of the certificates;
. amounts deposited into the pre-funding account be greater than 25% of the
balance of the certificates on the date of initial issuance of the
certificates; or
. amounts on deposit in the pre-funding account be held in anything other
than cash or invested in anything other than eligible investments as
defined under "Description of the Certificates--Payments on the Contracts;
Certificate Account" in this prospectus supplement.
See "Prepayment and Yield Considerations" and "Description of the
Certificates--Conveyance of Subsequent Contracts and Pre-Funding Account" in
this prospectus supplement.]
Distributions On The Certificates
General
Each month, the trustee, [TRUSTEE], will make distributions of interest and
principal to the holders of the certificates.
. The first distribution date with respect to the offered certificates
[,other than the Class A-3 certificates,] will be [_____] 15, 199[_].
S-5
<PAGE>
. Thereafter, distributions on the offered certificates [,other than the
Class A-3 certificates,] will be made on the 15th day of each month, or if
the 15th day is not a business day, on the next business day.
. [The first distribution date with respect to the Class A-3 certificates
will be [_____] 19, 199[_].
. Thereafter, distributions on the Class A-3 certificates will be made on the
19th day of each month, or if the 19th day is not a business day, on the
next business day.]
The obligors under the contracts will pay their interest and principal during
each month to the servicer of the contracts. Within two business days of receipt
of payments from obligors, the servicer will forward these amounts to the
trustee. On the distribution date occurring in the following month, the trustee
will distribute the amount remitted by the servicer, less fees and expenses owed
to the servicer, to the holders of the certificates, in the amount and priority
set forth in this prospectus supplement. See "Description of the
Certificates--Priority of Distributions" in this prospectus supplement.
Distributions of Interest
Certificates [,other than the Class A-1 and Class A-3 certificates,]
- -------------------------------------------------------------------
Interest Accrual. 1/12th of the related pass-through rate on the related
principal balance immediately prior to the related distribution date.
Interest period. For any distribution date, the calendar month preceding that
distribution date.
Class A-1 certificates and Class A-3 certificates
- -------------------------------------------------
Interest Accrual. The product of:
. the actual number of days during the interest period divided by 360;
and
. the applicable pass-through rate on the principal balance of the
certificate immediately prior to the related distribution date.
Interest Period. For any distribution date, the period from the preceding
distribution date, or for the first distribution date, from the closing date,
through the day prior to the related distribution date.
See "Description of the Certificates--Interest Distributions" and "Risk
Factors--Due to the Delay in Payment of Fifteen Days, the Effective Yield on
Some Classes of Certificates May Be Lower Than What Would Otherwise Be Produced
by the Applicable Pass-Through Rate of the Offered Certificates" in this
prospectus supplement.
On each distribution date, interest will be distributed to certificateholders in
the order described in "Description of the Certificates--Priority of
Distributions" in this prospectus supplement. It is possible that, on any given
distribution date, there will be insufficient payments from the contracts to
cover interest owed on the certificates. If there are insufficient payments on
the contracts[, and there is a default by [INSURER] under the certificate
insurance policy,] the outstanding classes of certificates may not receive the
full amount of accrued interest.
The classes of certificates that do not receive the full interest payment will
be entitled to receive the shortfall in interest distributions
S-6
<PAGE>
in the following month in the same priority as their distribution of current
interest. See "[INSURER]" and "Description of the Certificates--Certificate
Insurance Policy" and "Description of the Certificates--Priority of
Distributions" in this prospectus supplement.
[LIBOR. The pass-through rate for the Class A-1 certificates will be adjusted
each month, based on changes in LIBOR for one-month U.S. dollar deposits, as
described in "Description of the Certificates--Pass-Through Rates and Last
Scheduled Distribution Dates" in this prospectus supplement. ]
[Auction Rate. The pass-through rate for the Class A-3 certificates will be
adjusted each month, based on the auction procedures described in Annex II and
Annex III to this prospectus supplement.]
Distributions of Principal
General. Certificateholders will receive payments of principal corresponding to
payments of principal on the [related] contract[s] [group].
Certificates. On each distribution date, a certain portion of collections
received on the contracts will be distributed to the Class A-1 certificates,
Class A-2 certificates, Class A-3 certificates, Class M certificates and Class
B-1 certificates in the order and amounts set forth in this prospectus
supplement. See "Description of the Certificates--Priority of Distributions" in
this prospectus supplement.
It is possible that there will be insufficient payments from the contracts to
cover principal payable to you. If there is a shortfall in collections [for a
contract group] [and there is a default by [INSURER] under the certificate
insurance policy,] a holder of a certificate may not receive the full amount of
principal distributions to which it is otherwise entitled. See "[INSURER]" and
"Description of the Certificates--Certificate Insurance Policy" and "Description
of the Certificates--Priority of Distributions" in this prospectus
supplement.
Allocation Of Losses
A contract suffers a loss when the servicer determines that:
. it has received all amounts it expects to recover from that contract;
and
. amount of recovery is less than the sum of the outstanding principal
balance of the contract and the accrued and unpaid interest thereon.
[If there is a default by [INSURER] under the certificate insurance policy,
losses on the contracts in a contract group will only be allocated to the
certificates related to that contract group. ]
In the event losses on the contracts would reduce the amount available for
distribution [and there is no payment under the certificate insurance policy,]
the certificates will receive only their respective percentage interest of the
proceeds from the liquidation of the contract rather than the scheduled
principal balance thereof. See "Risk Factors--Losses on the Contracts May Reduce
the Yield on the Offered Certificates" and "Description of the
Certificates--Losses on Liquidated Contracts" in this prospectus
supplement.
Advances
The servicer will advance its own funds to cover any shortfalls in payments of
principal
S-7
<PAGE>
and interest due to the offered certificates in any month that:
. the servicer receives a payment on a contract that is less than the full
scheduled payment
. the servicer receives no payment on a contract; and
. the servicer determines that the advances will be recoverable from future
payments or collections on that contract.
However, advances will not exceed the delinquent contract payments. See
"Description of the Certificates--Advances" in this prospectus supplement.
Yield And Prepayment Considerations
The yield to maturity of each class of certificates will depend upon, among
other things:
. the price at which the certificates are purchased;
. the applicable pass-through rate; and
. the rate of principal prepayments on the related contracts.
A higher than anticipated rate of principal prepayments would reduce the
aggregate principal balance of the contracts more quickly than expected, thereby
reducing the aggregate interest payments that would otherwise be payable with
respect to the contracts. A higher rate of principal prepayments could result in
a lower than expected yield to maturity on classes of certificates purchased at
a premium. A lower than anticipated rate of principal prepayments could result
in a lower than expected yield to maturity on classes of certificates purchased
at a discount since payments of principal with respect to the contracts would
occur later than anticipated. For a discussion of special yield and prepayment
considerations applicable to the offered certificates, see "Risk Factors--The
Yield on Your Certificates Could be Limited by a Higher Than Expected Rate of
Prepayments on the Contracts Underlying the Certificates" and "Prepayment and
Yield Considerations" in this prospectus supplement.
[Book-Entry Registration
The offered certificates will be available only in book-entry form through the
facilities of DTC, Cedelbank and the Euroclear System. See "Description of the
Certificates--Registration of the Certificates" in this prospectus supplement
and Annex I to this prospectus supplement. ]
TAX STATUS
For federal income tax purposes, GreenPoint Credit, LLC will cause an election
to be made to treat the trust as a "real estate mortgage investment conduit."
Orrick, Herrington & Sutcliffe LLP, special counsel to GreenPoint Credit, LLC,
based on certain assumptions set forth in this prospectus supplement and in the
prospectus, is of the opinion that the electing portion of the trust will
qualify as a "real estate mortgage investment conduit" for federal income tax
purposes and that for such purposes the offered certificates will constitute
"regular interests" in the "real estate mortgage investment conduit" and will be
treated as debt instruments of the trust for purposes of calculating a
certificateholder's federal income tax liability. Holders of the offered
certificates that would otherwise report income under a cash method of
accounting will be required to include in income interest on the certificates,
including "original issue discount," if any, in accordance with the
S-8
<PAGE>
accrual method of accounting 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 the income. Assuming in each case that a
substantial amount of a class of certificates is sold at the price for the class
of certificates stated on the cover of this prospectus supplement, and subject
to the uncertainties concerning the determination of "original issue discount"
for variable rate certificates discussed in "Federal Income Tax Consequences--
REMIC Certificates--Taxation of Regular Certificates--Variable Rate
Certificates" in the prospectus, the offered certificates will not be issued
with "original issue discount."
For further information regarding the federal income tax consequences of
investing in the offered certificates, see "Federal Income Tax Consequences" in
this prospectus supplement and in the accompanying prospectus.
ERISA Considerations
Subject to important considerations described under "ERISA Considerations" in
this prospectus supplement and in the accompanying prospectus, the offered
certificates [,other than the Class M and Class B-1 certificates,] will be
eligible for purchase by persons investing assets of employee benefit plans or
individual retirement accounts.
[The Class M and Class B-1 certificates will not be eligible for purchase by
persons investing assets of employee benefit plans or individual retirement
accounts other than by persons investing general account assets of an insurance
company. See "ERISA Considerations--Class M and Class B-1 Certificates" in this
prospectus supplement.]
Ratings
The offered certificates are required to receive the ratings of "AAA" by
Standard & Poor's Ratings Services and "Aaa" by Moody's Investors Service, Inc.
The ratings do not address whether or not the Class A-1 certificates or the
Class A-3 certificates will receive any related net funds cap carryover amount
or the ability of the holder of the Class R certificates to purchase any
contract that has been converted to a fixed rate of interest. A rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time. See "Ratings" in this prospectus supplement.
Legal Investment
As of the date of their issuance, all of the offered certificates will be
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984. See "Legal Investment" in this prospectus supplement.
You should consult your own legal advisors in determining whether and to what
extent the offered certificates constitute legal investments for you.
S-9
<PAGE>
Risk Factors
You should carefully consider the following risk factors prior to any
decision to invest in the offered certificates. The following discussion
supplements, and does not replace or supersede, the discussion under "Risk
Factors" in the prospectus.
The Yield on the Offered Certificates Could Be Limited by a Higher Than Expected
Rate of Prepayments on the Contracts Underlying the Certificates
General Risks Associated with Higher Than Expected Prepayments
The offered certificates represent an interest in a trust containing
manufactured housing contracts. As the obligors make payments of interest and
principal on the contracts, certificateholders will receive payments. Because
the obligors are free to make those payments faster than scheduled,
certificateholders may receive distributions of principal faster than expected.
Therefore, the certificates may be paid in full earlier than the scheduled
maturity of the certificates. Interest on the certificates will no longer be
paid to certificateholders on any principal distributions paid to the holders of
certificates. There is no guarantee that certificateholders will receive
principal payments on the offered certificates at any specific rate or on
specific dates.
Payment of principal on the contracts may be in the following forms:
. Scheduled payments of principal; and
. Principal prepayments which consist of:
__ Prepayments in full of a contract;
__ Repurchases by the seller of any contracts that violate any
representations and warranties in the pooling and servicing agreement;
__ Repurchases of variable rate contracts that have been converted to a
fixed interest rate;
__ Partial prepayments on any contract; and
__ Liquidation principal, which is the principal recovered after
foreclosing on or otherwise liquidating a defaulted contract.
S-10
<PAGE>
For a complete discussion on the situations that might cause
prepayments, see "Prepayment and Yield Considerations" in the prospectus and in
this prospectus supplement.
Offered Certificates Bought at Premiums and Discounts May Receive a Lower Yield
Than Expected
Offered certificates purchased at a discount may receive a lower yield
than expected if the rate of principal payments is slower than expected. Offered
certificates purchased at a premium may receive a lower yield than you expected
if the rate of principal payments is faster than expected. See "Prepayment and
Yield Considerations" in this prospectus supplement.
Prepayments May Limit Pass-Through Rates Due to the Weighted Average Cap on
Pass-Through Rates
The pass-through rates for the offered certificates will not exceed the
weighted average of the net contract rates. Disproportionate prepayments of
contracts with net contract rates that are higher than the initial pass-through
rates for any class of offered certificates will increase the possibility that
the pass-through rate for that class of offered certificates will be adjusted to
an amount lower than the initial pass-through rate for that class of offered
certificates. There is no mechanism to compensate the holders of the related
classes of offered certificates for any reduction other than the payment, if
any, of the net funds cap carryover amount. See "Description of the
Certificates--Priority of Distributions" in this prospectus supplement.
Losses on the Contracts May Reduce the Yield on the Offered Certificates
[[INSURER] has insured the payments of principal and interest all
classes of offered certificates. However, if [INSURER] has defaulted under the
certificate insurance policy,] the yield to maturity on the offered certificates
may be reduced by losses on the contracts. See "Prepayment and Yield
Considerations," ["[INSURER]" and "Description of the Certificates--Certificate
Insurance Policy"] in this prospectus supplement.]
[Due to the Delay in Payment on the Certificates for Fifteen Days, the Yield on
Some Classes of Certificates May Be Lower
Because the payment date on the certificates is the 15th day of each
month, the yield to each holder of a certificate, will be lower than it would if
the payment date was on the first day of the month. The reason for this is
interest on the certificates will accrue from the first day of the month to the
last day of the month, but the accrued interest will not be paid until the
distribution made on the 15th day, or, if the 15th day is not a business day,
the next succeeding business day, of the following month. In addition,
distributions of principal on any distribution date will have the effect of
reducing the outstanding principal balance as of the open of business on the
first day in the month in which the related distribution occurs. Therefore,
interest on the certificates will accrue on a lower outstanding balance
beginning on the first day of the related collection period, but the
certificateholders will not receive their distribution until the 15th day of the
related collection period. See "Prepayment and Yield Considerations" in this
prospectus supplement.]
S-11
<PAGE>
[Class II A-1 Certificates and II Class A-3 Certificates may have a Lower Yield
if LIBOR is Greater than the Interest Rate Accruing on the group II contracts
The group II contracts are variable rate contracts. The group II
contracts:
. provide for periodic adjustments to their interest rates;
. will not have their first interest adjustment date until after
the date indicated by the index under which the group II
contracts are adjusted; and
. bear interest at a fixed rate set at the origination of the
group II contract until its first adjustment date.
. after the first adjustment dates, only adjust every 12 months
thereafter.
However, the Class II A-1 certificates adjust monthly based on the
LIBOR index. The LIBOR index:
. is a different index than the index with which the group II
contracts adjust; and
. may be higher or move differently than the index under which
the group II contracts are adjusted.
Because the pass-through rate on the class II A-1 certificates may be
capped by the weighted average of the interest rates on the group II contracts,
the yield to the holders of the class II A-1 certificates may be lower than a
yield based upon the LIBOR index.. Similarly, the class II A-3 certificates are
subject to adjustment monthly pursuant to the auction procedures set forth in
Annex II and Annex III. Since the pass-through rate on the Class II A-3
certificates may be capped by the weighted average of the interest rates on the
contracts, the yield to the Class II A-3 certificates may be lower than a yield
based upon the auction procedures.]
[Class I A-1 Certificates may have a Lower Yield Because if LIBOR is
Greater than the Interest Rate Accruing on the group I contracts
The group I contracts accrue interest at a fixed rate. If interest
rates, including LIBOR, increase, the rate of interest on the group I contracts
will not. As a result, the pass-through rate on the Class I A-1 certificates
will be increasing, up to its cap, while the interest rates on the related
contracts will not be increasing. Since the pass-through rate on the Class I A-1
certificates may be capped by the weighted average of the interest rates on the
contracts, the yield to the Class I A-1 certificates may be lower than a yield
based upon the LIBOR index.]
[There may not be funds to pay Holders of Certificates Amounts in
Respect of Interest Shortfalls Resulting from the Weighted Average Cap on the
Contracts
Although holders of the Class I A-1 certificates, Class II A-1
certificates and Class II A-2 certificates will be entitled to any related
interest shortfalls resulting from the weighted average caps on the contracts
from and to the limited extent of funds available therefor as provided in this
prospectus supplement, there can be no assurance that funds will be available or
sufficient for payment of any interest shortfalls resulting from the weighted
average cap on the contracts. In
S-12
<PAGE>
addition, the certificate insurance policy does not cover, and the ratings of
the Class I A-1 certificates, Class II A-1 certificates and Class II A-2
certificates do not address, the likelihood of payment of any interest
shortfalls resulting from the weighted average cap on the contracts.]
[Some Variable rate Contracts can Convert to Fixed Rates Which may reduce the
Yield to holders of Class II A-1 and Class II A-3 Certificates
Although all of the group II contracts are variable rate, the obligor
on each of the group II contracts can convert a variable rate to a fixed rate as
long as the obligor is current in payment on the obligor's contract. If an
obligor converts a contract from a variable rate to a fixed rate, the holder of
the Class R certificates is obligated to purchase the contract. The fixed rate
may be lower than the LIBOR index or the pass-through rate produced by an
auction. Since the pass-through rates on the Class II A-1 certificates and Class
II A-2 certificates may be capped by the weighted average of the interest rates
on the group II contracts, any conversion to a fixed rate of a group II contract
that has not been purchased by the holder of the Class R certificates may make
it more likely that the pass-through rates on the Class II A-1 certificates and
Class II A-2 certificates will be lower than the LIBOR index or the rate
produced by the auction procedures.]
[Upon the Occurrence of Events of Default of the Servicer Under the Pooling and
Servicing Agreement, [INSURER] Will Have the Sole Right to Exercise Any
Remedies]
[So long as [INSURER] is not in default in payment under the
certificate insurance policy, upon the occurrence of an event of default of the
servicer under the pooling and servicing agreement, neither the trustee nor the
certificateholders may exercise any remedies provided for in the pooling and
servicing agreement. [INSURER] will generally have the right to control all
remedies provided for in the pooling and servicing agreement. See "[INSURER]"
and "Description of the Certificates--Certificate Insurance Policy" in this
prospectus supplement.]
Certificateholders Must Rely on the Limited Assets of the Trust Only for Payment
on the Offered Certificates and Will Have No Recourse Against the Seller or the
Servicer if the Offered Certificates Incur Shortfalls and/or Losses.
The trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the contracts and related
assets, [two] certificate accounts [and the certificate insurance policy].
Certificateholders must rely upon payments on the contracts [and payments of
claims made under the certificate insurance policy] for payments on their
certificates. [Although the certificate insurance policy will be available for
the offered certificates to cover shortfalls in distributions of interest and
scheduled principal due thereon, if [INSURER] defaults in its obligations under
the certificate insurance policy, the trustee will depend solely on current
distributions on the contracts to make payments on the offered certificates. See
"[INSURER]" and "Description of the Certificates--Certificate Insurance Policy"
in this prospectus supplement.]
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 against
losses by any governmental agency or instrumentality, the underwriters or any of
their affiliates, GreenPoint Credit, LLC or any of 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] [the certificate
insurance policy], 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 holders of the offered
certificates[, except to the extent of the limited guarantee of GFC or any
alternative credit enhancement] [certificate insurance policy].
[Random Lot Procedures Make Timing and Amount of Distributions on the Class [A-
3] Certificates Uncertain]
[Distributions of principal on the Class [A-3] certificates will be
made in round lots of $25,000 and integral multiples thereof. Further,
distributions will be allocated to specific Class [A-3] certificates in
accordance with the then-applicable established random lot procedures of DTC,
and the then-applicable established procedures of its participating
organizations and indirect participating
S-13
<PAGE>
organizations, which may or may not be by random lot. Investors may ask
participating organizations and indirect participating organizations which
allocation procedures they use. On any distribution date on which principal is
to be distributed to the Class [A-3] certificates, one or more holders of Class
[A-3] certificates may receive no distributions of principal while other holders
of Class [A-3] certificates receive distributions.]
[The Class [B] Certificates Will Have Limited Liquidity Since They Are Not
Considered 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. This will reduce the amount of potential purchasers of the
Class [B] certificates, thus limiting the liquidity of the investment of the
holders of any Class [B] certificates.]
[Shortfalls and/or Losses on the Offered Certificates Will be Borne First by the
Class [M] and Class [B] Certificates Since They Are Subordinated in Rights to
Receive Payments]
[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 in this prospectus supplement, 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 holders of the Class [M]
certificates before they are borne by the holders of senior certificates. The
rights of the holders of Class [B] certificates to receive distributions of
available amounts in the trust fund will be subordinate, to the extent described
in this prospectus supplement, to the rights of holders of the Class [M]
certificates. Consequently, if shortfalls and/or losses arise with respect to
the certificates, they will be borne by the holders of the Class B certificates
before they are borne by the holders of Class M certificates or the holders of
the senior certificates. See "Description of the Certificates--Priority of
Distributions" in this prospectus supplement.]
S-14
<PAGE>
[The Yield to Maturity of the Interest-only Certificates Will Be Limited by the
Repurchase, Prepayment and Default Experience of the Underlying Contracts]
[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. Prospective investors
should fully consider the associated risks, including the risk that investors
may not fully recover their initial investment. In addition, investors in the
interest-only certificates should be aware that the [servicer/other party] 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. The right to repurchase or
direct a termination auction will arise after the first date that
payments of principal and/or interest are made when the aggregate principal
balance of the underlying contracts is less than 10% of the original scheduled
principal balance. See "Prepayment and Yield Considerations" in this prospectus
supplement.]
[Certificateholders May Bear a Greater Risk of Loss if an Alternative Credit
Enhancement is in Place and Has Been Exhausted Since GreenPoint Financial Corp.
Will Have No Obligation to Replace the Alternative Credit Enhancement]
[If GreenPoint Financial Corp. has replaced the limited guarantee with
an alternative credit enhancement and the alternative credit enhancement is
exhausted, GreenPoint Financial Corp. has no obligation to replace the
alternative credit enhancement. Consequently, investors may bear a greater risk
of loss on the contracts than if the limited guarantee was in place and
GreenPoint Financial Corp. was able to make payment on the limited guarantee.
See "Description of the Certificates--Alternative Credit Enhancement" in this
prospectus supplement.]
S-15
<PAGE>
We have defined certain significant terms in the "Glossary" found on page __ of
the Prospectus.
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 the conveyance. GreenPoint, as servicer, will obtain and maintain
possession of all contract documents.
[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 in this prospectus
supplement, 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 Additional Contracts and Subsequent Contracts. See
"Description of the Certificates - Conveyance of Subsequent Contracts and
Pre-Funding Account" in this prospectus supplement.]
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:
. were purchased in bulk from an unrelated third party;
. are 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;
. are amortized using the "simple interest"
amortization method; or
. have 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 those manufactured homes.
S-16
<PAGE>
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 [ ]%. 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.
S-17
<PAGE>
Set forth below are tables containing certain additional
characteristics of the contracts. Entries in the tables may not add to 100% due
to rounding.
S-18
<PAGE>
Geographical Distribution of Manufactured Homes as of Origination
<TABLE>
<CAPTION>
Aggregate
Principal
Number of Balance % of Contract Pool By
contracts Outstanding Outstanding Principal
As of As of Balance As of
State Cut-off Date Cut-off Date 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>
S-19
<PAGE>
Years of Origination of Contracts
<TABLE>
<CAPTION>
Aggregate Principal % of Contract Pool By
Number of Contracts As Balance Outstanding Outstanding Principal Balance
Year of Origination of Cut-off Date As of Cut-off Date As of Cut-off Date
- ------------------------------- ---------------------- ------------------- -----------------------------
<S> <C> <C> <C>
1999...........................
Total.......................
Distribution of Original Principal Balances of Contracts
% of Contract Pool By
Aggregate Principal Outstanding Principal
Number of Contracts As Balance Outstanding As Balance As of Cut-off
Original Contract Amount of Cut-off Date of Cut-off Date Date
- ------------------------------- ---------------------- ---------------------- ---------------------
$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>
. The greatest original contract principal balance is $[ ], which
represents [ ]% of the outstanding principal balance of the contracts
as of the Cut-off Date.
S-20
<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 of Cut-off Date of Cut-off Date Date
- -------------------------------- ---------------------- ---------------------- ---------------------
<S> <C> <C> <C>
Less than or equal to 50%.......
51-60%..........................
61-70%..........................
71-80%..........................
81-85%..........................
86-90%..........................
91-95%..........................
Total........................
</TABLE>
Distribution of contract rates
<TABLE>
<CAPTION>
% of Contract Pool By
Aggregate Principal Outstanding Principal
Number of Contracts As Balance Outstanding As Balance As of Cut-off
Ranges of Contracts by contract rate of Cut-off Date of Cut-off Date Date
- ------------------------------------ ---------------------- ---------------------- ---------------------
<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>
S-21
<PAGE>
Remaining Months to Maturity
<TABLE>
<CAPTION>
Aggregate % of Contract Pool
Principal Balance By Outstanding
Number of Contracts Outstanding As of Principal Balance
Months Remaining as of Cut-off Date As of Cut-off Date Cut-off Date As of Cut-off Date
- ------------------------------------------------- ------------------- ----------------- ------------------
<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>
S-22
<PAGE>
The Seller
The following information supplements the information in the
prospectus under the heading "The Seller."
The Seller commenced operations on September 30, 1998. See "Risk
Factors" in this prospectus supplement. 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 the related 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............................... $ [ .]
Number of Contracts Purchased.......................................... [ .]
Average Contract Size.................................................. $ [ .]
Weighted Average contract rate......................................... [ .]%
Number of Regional Offices............................................. [ .]
</TABLE>
The above table includes only contracts originated by GreenPoint or
purchased from dealers and does not include any portfolios acquired in bulk from
third parties other than from Bank of America, FSB in the Acquisition. Regional
offices include 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-23
<PAGE>
The loss and delinquency information of Bank of America, FSB, in its
capacity as servicer of its manufactured housing installment sales contracts and
installment loan agreement portfolio, has been disclosed in various filings made
by Bank of America, FSB with the Securities and Exchange Commission and the Bank
of America, FSB filings are publicly available to potential investors.
GreenPoint acquired the servicing personnel and approximately $794,958,000.00 in
manufactured housing installment sales contracts and installment loan agreements
from Bank of America, FSB in the Acquisition. See "The Acquisition" in the
prospectus. GreenPoint is now the servicer of all of the manufactured housing
installment sales contracts and installment loan agreements that had been
serviced by Bank of America, FSB. GreenPoint makes no representation or warranty
with respect to the completeness or accuracy of the loss and delinquency
information contained in any filings made by Bank of America, FSB with the
Securities and Exchange Commission or any filings made by Bank of America, FSB
with any other public entity and disclaims any liability with respect thereto.
Further, the loss and delinquency experience of Bank of America, FSB as servicer
of manufactured housing installment sales contracts and installment loan
agreements may not be reflective of the loss and delinquency experience that
GreenPoint will encounter as servicer of manufactured housing installment sales
contracts and installment loan agreements.
[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 contract rate of
the related contract and (ii) 0.50%.]
GreenPoint Credit, LLC'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
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" in this
prospectus supplement.]
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.]
S-24
<PAGE>
[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 2000 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.]
[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 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
---- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges..........]
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
S-25
<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 in this
prospectus supplement. 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 the limited publicly available 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" in this prospectus supplement] 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 the 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 the
related Payment Date. Any amounts remaining
S-26
<PAGE>
which 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. The allocations will also have the effect of 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 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 the related Class of
offered certificates that is faster than the rate actually realized, the
purchaser's actual yield to maturity will be lower than the yield so calculated
by the purchaser. See "Description of the Certificates -Distributions" in this
prospectus supplement 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 Class of offered
certificates could occur significantly earlier than the 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/other party]'s
exercise of an option call or pursuant to a successful Termination Auction. See
"Description of the Certificates - Optional Termination and Termination Auction"
in this prospectus supplement. Either of these events, if they occur, would
result in the early retirement of the then outstanding certificates.
As described in this prospectus supplement under "Description of the
Certificates - Subordination" and "Description of the Certificates -Losses on
Liquidated Contracts," to the
S-27
<PAGE>
extent that, on any 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 the Class of offered certificates for which there is a shortfall 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 in this prospectus supplement, 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 the certificates on the
related Distribution Date. 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. Further, 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 the 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 the applicable partial prepayment. As a result,
partial or full prepayments in advance of the related Due Dates for the related
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 the related 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 in this prospectus supplement 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 any prepayment interest
shortfalls.
S-28
<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 the related Due Date is received in advance of or
subsequent to the related 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 the related 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 the delinquent contracts as described in this
prospectus supplement, the result will be to reduce the effective yield to the
trust fund derived from the delinquent contracts to a yield below their contract
rates. Under certain circumstances, the yield reductions described in the
previous sentence 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.
[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" in this prospectus supplement, 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 the table for the periods covered by the
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:
. the initial aggregate principal balance of the contracts in the
pool (calculated as of the first day of the month of the sale),
. the WAC of the contracts in the pool as of the first day of the
month of the sale of the pool,
. the WAM of the contracts in the pool as of the first day of the
month of the sale of the pool,
S-29
<PAGE>
. the estimated average age of the pool as of the first day of the
month of the sale of the pool,
. the aggregate principal balance of the pool as of [ ],
. the WAC of the contracts in the pool as of [ ] and
. 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 % of the
Original Average Age Aggregate Prepayment
Month and Principal Original Original WAM at Sale Principal WAC as of Model as of
Year of Sale Balance WAC (months) (months) Balance [ ], 199[] [ ], 199[]
- -------------- ------------- ---------- ------------ ----------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
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 the related
security is repaid to the investor. The weighted average life of an offered
certificate, other than the Class A-IO certificates, is determined by:
(1) multiplying the amount of each cash distribution in reduction of
the Certificate Balance of the certificate by the number of years
from the date of issuance of the certificate to the stated
Distribution Date,
(2) adding the results, and
(3) dividing the sum by the Initial Certificate Balance of the
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
S-30
<PAGE>
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. 100% of the Prepayment Model assumes prepayment
rates of [ ]% per annum of the then unpaid principal balance of the 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 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 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 the
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
the related mortgage loans. Conversely, if prevailing interest rates rise above
the interest rates on the related 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 related
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"):
S-31
<PAGE>
(1) 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,
(2) 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" in this prospectus supplement,
(3) 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,
(4) 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,
(5) no interest shortfalls will arise in connection with
prepayment in full of the contracts,
(6) there will be no repurchases of any contracts due to a
breach in a representation or warranty with respect
thereto, and
(7) a servicing fee of [ ]% 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>
Current Principal Original Term to Remaining Term to
Pool Balance contract rate Maturity (Months) Maturity (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
S-32
<PAGE>
and the characteristics of the contents assumed in preparing the tables. Any
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 the 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 in this prospectus supplement.
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.
Percent of the Initial Class A Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
Date 0% 100% 150% 170% 200% 250% 300%
- ---- -- ---- ---- ---- ---- ---- ----
Initial Percentage............................... 100 100 100 100 100 100 100
--- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
[ ], 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-33
<PAGE>
Percent of the Initial Class M Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
Date 0% 100% 150% 170% 200% 250% 300%
- ---- -- ---- ---- ---- ---- ---- ----
Initial Percentage............................... 100 100 100 100 100 100 100
--- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
[ ], 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)
Date 0% 100% 150% 170% 200% 250% 300%
- ---- -- ---- ---- ---- ---- ---- ----
Initial Percentage............................... 100 100 100 100 100 100 100
--- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
[ ], 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>
[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 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 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" in this prospectus
supplement.]
S-34
<PAGE>
[The following 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 the certificates and the
corresponding pre-tax yields on a corporate bond equivalent basis, assuming
distributions on the contracts are made as set forth in the Agreement. The
following 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
Assumed Purchase Price 0% 50% 75% 100% 150% 200%
<S> <C> <C> <C> <C> <C> <C>
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
</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 the assumed stream of cash flows to the Closing Date
to equal the assumed purchase prices, which include accrued interest, and
converting the monthly rates to corporate bond equivalent 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 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 the 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 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-35
<PAGE>
Description Of The Certificates
The certificates will be issued pursuant to the Agreement. A form of
the 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 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, and limitations thereof, as they may be indirectly
exercised through DTC and its participating members, except as otherwise
specified in this prospectus supplement. 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 trust fund includes:
(1) the Contract Pool, including certain rights to receive
payments on the contracts on and after the Cut-off Date,
S-36
<PAGE>
(2) the amounts held from time to time in the "Certificate
Account," as described below under " - Payment on
Contracts; Certificate Account," maintained by the trustee
pursuant to the Agreement,
(3) any property which initially secured a contract and which
is acquired in the process of realizing thereon,
(4) 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
(5) the proceeds of all insurance policies described in this
prospectus supplement.
The Seller will convey the contracts to the trustee. See "The Contract
Pool" in this prospectus supplement 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 each Distribution Date beginning in [ ], 199[ ], to
the persons in whose names the certificates are registered on 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 the related Distribution Date. 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 the 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 [ ]%.]
S-37
<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 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
confirming the accuracy of the Contract Schedule delivered to the trustee. Any
contract discovered not to agree with the Contract 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. However, 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 the discrepancy. The
trustee will not review the files relating to the contracts in the Contract
Pool.
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 the related 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 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:
(1) as of the Cut-off Date, no contract is more than 59 days
delinquent;
S-38
<PAGE>
(2) no provision of the contract has been waived, altered or
modified in any respect, except by instruments or documents
identified in the related contract File;
(3) the 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;
(4) the contract is not subject to any right of rescission,
set-off, counterclaim or defense;
(5) the 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;
(6) the contract was either:
(a) 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]
(b) originated by the Seller in the ordinary course of its
business [or]
(c) 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];
(7) the 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;
(8) the contract complies with all requirements of law;
(9) the contract has not been satisfied or subordinated in whole
or in part or rescinded and the manufactured home securing
the contract has not been released from the lien of the
contract;
(10) the contract creates a valid and enforceable first-priority
security interest in favor of GreenPoint in the manufactured
home and real property securing the contract, if any;
(11) the 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 the related contract, if any;
S-39
<PAGE>
(12) the 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 owned the contracts 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 the contract to the trustee;
(13) as of the Cut-off Date, there was no default, breach,
violation or event permitting acceleration under the contract
and no event which, with notice and the expiration of any
grace or cure period, would constitute a default, breach,
violation or event permitting acceleration, except payment
delinquencies permitted by clause (1) above, the Seller has
not waived any of the foregoing;
(14) as of the Closing Date, 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 the related contract, which are or may be
liens prior to or equal with or subordinate to the lien of
the contract;
(15) the contract is a fully-amortizing loan with a [fixed]
contract rate and provides for level payments over the term
of the contract;
(16) the contract contains customary and enforceable provisions
that render the rights and remedies of the holder thereof
adequate for realization against the collateral of the
benefits of the security;
(17) the information contained in the Contract Schedule with
respect to the contract is true and correct;
(18) there is only one original of the contract;
(19) the contract did not have a loan-to-value ratio at
origination greater than 100%;
(20) 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 the related manufactured home is, to the
knowledge of the Seller free of damage and in good
repair;
(21) the contract is a "qualified mortgage" under Section
860G(a)(3) of the Code;
(22) the related manufactured home is a "manufactured home" within
the meaning of Section 5402(6) of Title 42 of the United
States 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 the contract's origination as required under Section
3(a)(41)(A)(ii) of the Exchange Act;
S-40
<PAGE>
(23) the contract is secured by a "single family residence" within the
meaning of Section 25(e)(10) of the Code;
(24) the contract has been stamped to indicate its assignment to the
trustee within 60 days of the Closing Date; and
(25) 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 the breach has been cured.
Notwithstanding the previous paragraph, the Seller will not be
required to repurchase or substitute any contract relating to a manufactured
home and real property securing the related contract, if any, located in any
jurisdiction on account of a breach of the representation and warranty described
in clause (11) 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 manufactured home
or to execute any transfer instrument relating to any 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:
(1) a court of competent jurisdiction has adjudged that, because of
the failure by the Seller to cause a notation to be made on the
related document of title, the trustee does not have a perfected
first-priority security interest in the related manufactured home
or
(2) (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 the 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 that jurisdiction and which is subject to the same laws
regarding the perfection of security interests therein applicable
to the manufactured homes located in that jurisdiction and
(B) the servicer shall not have completed all appropriate remedial
action with respect to the related manufactured home within 180
days after receipt of the written advice.
Any 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
S-41
<PAGE>
described in clause (2) above. However, the servicer is required to seek advice
with respect to the matters described in clause (2) above whenever information
comes to the attention of its counsel which causes such counsel to determine
that a holding of the type described in clause (2)(A) might exist. If any
counsel selected by the servicer informs the servicer that no holding of the
type described in clause (2)(A) exists, the 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 the receiver or
conservator of the Seller would also reject the resulting repurchase
obligation.
The repurchase obligation described in the third paragraph of this
section "Conveyance of Contracts" generally constitutes the sole remedy
available to the trustee and the certificateholders for a breach of a
representation or warranty under the Agreement with respect to the contracts.
The repurchase price for any contract will be equal to the remaining principal
balance of the 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 the contract is repurchased.
In lieu of repurchasing a contract as specified in the third paragraph
of this section "Conveyance of Contracts," during the two-year period following
the Closing Date, the Seller may, at its option, substitute an Eligible
Substitute Contract for the Replaced Contract. 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]
[The Pre-Funding Account will be used to purchase Subsequent Contracts
during 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 the related 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
S-42
<PAGE>
Date with 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:
(1) each Subsequent Contract must satisfy the representations and
warranties specified in the related subsequent transfer instrument
and the Agreement;
(2) GreenPoint will not select Subsequent Contracts in a manner that
it believes is adverse to the interests of the
certificateholders;
(3) [as of its respective Cut-off Date, each Subsequent Contract must
satisfy the following criteria:
(a) no Subsequent Contract may be more than [ ] days contractually
delinquent;
(b) the remaining stated term to maturity of each Subsequent
Contract may not exceed [ ] months;
(c) each Subsequent Contract must be underwritten in accordance
with GreenPoint's standard underwriting criteria; and
(d) no Subsequent Contract may have a loan-to-value ratio greater
than 100%;
(4) the Contract Pool following the addition of the Subsequent
Contracts must satisfy the following criteria:
(a) the weighted average contract rate must not be less than
[ ]%;
(b) the weighted average loan-to-value ratio must not be greater
than [ ]%;
(c) not less than [ ]% of the Cut-off Date Pool Principal Balance
must be attributable to loans to purchase new manufactured
homes; and
(d) at least [ ]% of the Cut-off Date Pool Principal Balance must
consist of Land-and Home contracts;
(5) 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
the Class A certificates; and
S-43
<PAGE>
(6) an independent accountant will provide a letter stating whether or
not the characteristics of the Subsequent Contracts conform to the
Characteristics described in this prospectus supplement].]
Payments on the Contracts; Certificate Account
The trustee will initially establish and maintain the Certificate
Account at 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.
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. [For as long as GreenPoint remains the servicer under the 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 collections until the related Distribution Date without an
obligation to pay interest or any other investment return thereon. It is
understood that any benefit to the servicer from this arrangement shall be
additional servicing compensation. While the 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 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.
Further, any credit enhancement described in the previous sentence, must be
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]. The
credit enhancement must also provide that the trustee may draw thereon in the
event that the servicer, fails to make any deposit or payment required under the
Agreement.]
Amounts received as late payment fees, fees in connection with checks
returned for insufficient funds, 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 as described under "--
Conveyance of Contracts" above, are required to be paid into the Certificate
Account. The amounts described in the preceding sentence will be treated as
partial principal prepayments.
S-44
<PAGE>
On the Determination Date, the servicer will determine the Available
Distribution Amount and the amounts to be distributed on the certificates on the
related Distribution Date. The "Available Distribution Amount" for any
Distribution Date is the sum of:
(1) the Monthly Advance for the related Distribution Date, as defined
below under " - Advances;" and
(2) 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:
(a) any repossession profits, of which there are expected to be a
de minimis amount, on defaulted contracts,
(b) payments on contracts that have been repurchased as a result
of a breach of a representation or warranty that are received
during or after the month of repurchase,
(c) Excess Contract Payments and any other payments not required
to be distributed to certificateholders on the related
Distribution Date,
(d) reimbursements to the servicer in the amount of expenses
incurred in connection with the liquidation of a contract, the
"Liquidation Expenses," and certain taxes and insurance
premiums advanced by the servicer in respect of manufactured
homes (as described below under "--Advances"),
(e) 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
(f) [if GreenPoint is not acting as servicer,] the Monthly
Servicing Fee.
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 the 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 (a), (b), (d), (e) and (f) of clause (2) in the second preceding
paragraph.
S-45
<PAGE>
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 the Class of certificates on
the related 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 the distribution to the accounts of its
participants in accordance with its normal procedures. Each participant will be
responsible for disbursing the distribution to the beneficial 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 beneficial owners that it
represents. All credits and disbursements with respect to book-entry
certificates are to be made by DTC and its 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:
(1) 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;
(2) 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].
(3) to the Class M certificateholders, the Class M Interest
Distribution Amount;
(4) to the Class M certificateholders, any remaining Formula Principal
Distribution Amount after distribution to the Class A
certificateholders until the Class M Certificate Balance is
reduced to zero;
(5) to the Class B-1 certificateholders, the Class B-1 Interest
Distribution Amount;
S-46
<PAGE>
(6) to the Class B-1 certificateholders, any remaining Formula
Principal Distribution Amount until the Class B-1 Certificate
Balance is reduced to zero;
(7) to the Class B-2 certificateholders, the Class B-2 Interest
Distribution Amount;
(8) to the Class B-2 certificateholders, any remaining Formula
Principal Distribution Amount until the Class B-2 Certificate
Balance is reduced to zero;
(9) to GFC an for any Enhancement Payments made under the Limited
Guarantee and not previously reimbursed; and.
(10) 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.]
[Reserve Account]
[On the Closing Date, the trustee shall establish an account, called
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 the related 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, referred to as 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 (1) through
(6) under "Distributions" above exceeds the Available Distribution Amount on the
related Distribution Date and distribute that 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.]
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 that Distribution Date, will be
withdrawn from the Reserve Account and paid to the Class R
certificateholders.]
S-47
<PAGE>
[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 certificateholders protection against losses on
Liquidated Contracts, but no assurance can be given that the Reserve Account
will be sufficient for this purpose.]
[The "Reserve Account Cap" shall be (a) 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 (b) as to any Distribution Date,
after giving effect to distributions due thereon, after none of 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 in this prospectus supplement, to the 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
certificateholders 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 in this prospectus supplement, to the
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 certificateholders
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 in this prospectus supplement, will be
accomplished by the application of the Available Distribution Amount in the
order specified under "Distributions" above.
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:
S-48
<PAGE>
(1) certain expenses incurred to liquidate the Liquidated
Contract;
(2) all accrued and unpaid interest thereon; and
(3) all Monthly Advances required to be made in respect of the
Liquidated Contract, the "Net Liquidation Proceeds," may be less
than the Scheduled Principal Balance of the Liquidated
Contract.
Under the circumstances described in the preceding sentence, 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 the Liquidated Contract, may be 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 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 1999]:
<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 13]................................................ (C) Record Date.]
[August 12]................................................ (D) Determination Date.]
[August 15]................................................ (E) (Distribution Date is the 15th day of each
month or, if the 15th 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, 1999] 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 15, 1999]. 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 [August 15, 1999] are described
under " - Payments on contracts; Certificate Account" above.
S-49
<PAGE>
(C) Distributions on [August 15, 1999] will be made to certificateholders of
record at the close of business on [August 13, 1999].
(D) On [August 12, 1999] (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 15, 1999] to certificateholders.
(E) On [August 15, 1999], the amounts determined on [August 12, 1999] 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 (a) delinquent scheduled
payments of principal and interest on the contracts that were due in the
preceding Collection Period and (b) 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"), except to the extent, in the servicer's
judgment, the 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
in this prospectus supplement 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
the 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 the
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 the Limited
Guaranty. [Such Limited Guarantee may be replaced by an Alternative Credit
Enhancement. See "Alternative Credit Enhancement" in this prospectus
supplement.] Each payment required to be made under the Limited Guarantee is
referred to as
S-50
<PAGE>
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: (1) the sum of (a) 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 the related Remittance Date and (b)
the [Class B-2] Principal Balance and an amount of principal described in the
Agreement) for the related Remittance Date and (2) 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 the related 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 the related
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 the portion thereof specified in clause (vi)
of the definition of Formula Principal Distribution Amount, for the related
Remittance Date exceeds (b) the amount distributed on the certificates on
account of principal on the related 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 certificates, and (b) the aggregate amount
of Enhancement Payments outstanding which remain unreimbursed as of the related
Remittance Date.
S-51
<PAGE>
[Alternative Credit Enhancement
If the following conditions have been satisfied:
. at GFC's option, Alternative Credit Enhancement is provided;
. 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 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 substitution of Alternative
Credit Enhancement for the Limited Guarantee 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 the Alternative Credit Enhancement, shall be transferred
to the applicable Certificate Account to make payments to the Class [B-2] and
certificateholders, as applicable. The payment described in the preceding
sentence will also be referred to as an "Enhancement Payment." GFC shall have
no oblication to replace the Alternative Credit Enhancement once it has been
exhausted. See "Risk Factors--Alternative Credit Enhancement" in this
prospectus supplement.]
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
the related Distribution Date;
. the amount of the distribution on each Class of certificates
which constitutes principal;
. the amount of the distribution on each Class of certificates
which constitutes interest;
. the remaining Certificate Balance;
. the Monthly Servicing Fee payable on the related 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;
. (1) the number of contracts that were repurchased or replaced by
a Seller in accordance with the Agreement during the prior
Collection Period, identifying the contracts, (2) the Repurchase
Price of the contracts and
S-52
<PAGE>
(3) the amount, if any, paid by the 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 the related Distribution Date, expressed in
dollars;
. the aggregate liquidation losses, less costs of liquidation,
realized by the trust fund through the Collection Period
immediately preceding the related Distribution Date, expressed as
a percentage of the Cut-off Date Pool Principal Balance;
. the amount of any Monthly Advance for the related Distribution
Date and the aggregate amount of Monthly Advances that remain
outstanding as of the Distribution Date;
. the weighted average contract rate for the Contract Pool for the
Collection Period immediately preceding the month of the related
Distribution Date; and
. 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 the calendar year as to
the aggregate of amounts reported pursuant to clauses (a) and (b) above for the
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/other party] 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 the option to
repurchase, 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 the
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,
S-53
<PAGE>
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. 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 amount referred to in this
paragraph is referred to as 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/other party] 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 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 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 (1) the requirement that the
highest bid equal or exceed the Minimum Termination Amount, and (2) 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 (1) 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] (2) the final
S-54
<PAGE>
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 (3) 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 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 the certificates due on prior Distribution Dates and
one month's interest at the applicable pass-through rates on the unpaid
Certificate Balances; provided that 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 the
contract will not be brought current. 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.
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, any fees in connection
with checks returned for insufficient funds, extension fees paid by Obligors for
the extension of scheduled payments and assumption fees for
S-55
<PAGE>
permitted assumptions of contracts by purchasers of the related manufactured
homes and real property securing the contracts, if any.
The trustee
[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 trustee under the Agreement or if the
trustee becomes insolvent. In the circumstances described in the preceding
sentence, 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.
[Registration of the offered certificates
The offered certificates will be book-entry certificates. Persons
acquiring beneficial ownership interests in the offered certificates 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 those systems, or indirectly through organizations which are
participants in those 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 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 beneficial owner of a book-entry
certificate will be entitled to receive a physical 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. Beneficial owners of certificates will not be
certificateholders as that term is used in the Agreement. Beneficial owners are
only permitted to exercise their rights indirectly through Participants and DTC.
S-56
<PAGE>
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. In turn, the Financial Intermediary's ownership of
the 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.
Beneficial 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 beneficial owners have accounts
with respect to offered certificates are similarly required to make book-entry
transfers and receive and transmit distributions on behalf of their respective
beneficial owners. Accordingly, although beneficial owners will not possess
certificates representing their respective interests in the offered
certificates, the Rules provide a mechanism by which beneficial 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, certificateholders who are not
Participants may transfer ownership of offered certificates only through
Participants and indirect participants by instructing Participants and indirect
participants to transfer offered certificates, by book-entry transfer, through
DTC for the account of the purchasers of the 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. The credits or any transactions in the
securities settled during the processing will be reported to the relevant
Euroclear or Cedel Participants on the same business day. Cash received in Cedel
or Euroclear as a result of sales of securities by or through a Cedel
Participant or Euroclear Participant to a DTC Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.
For information with respect to tax documentation procedures relating to the
certificates, see "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.
S-57
<PAGE>
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, cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by a counterparty in the 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 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, the Luxembourg Monetary
Authority, which supervises Luxembourg banks.
Cedel holds securities for its customers or "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
S-58
<PAGE>
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 or
"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 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. 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 any payments to the accounts of the applicable DTC participants in
accordance with DTC's normal procedures. Each DTC participant will be
responsible for disbursing 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 Financial Intermediary will be responsible for distributing
funds to the beneficial owners of the book-entry certificates that it
represents.
S-59
<PAGE>
Under a book-entry format, beneficial owners of the book-entry
certificates may experience some delay in their receipt of payments, since the
payments will be forwarded by the trustee to DTC, Cedel or Euroclear.
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 "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 the book-entry certificates, may
be limited due to the lack of physical certificates for the book-entry
certificates. In addition, issuance of the book-entry certificates in the book-
entry form may reduce the liquidity of the 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 Intermediaries to whose DTC
accounts the book-entry certificates of the 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 actions are taken on behalf of
Financial Intermediaries whose holdings include 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.
S-60
<PAGE>
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 the 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 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 beneficial ownership interests.
[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:
(1) the Class [A-2 Fixed] certificates issued by the trust and
all payments to the Class [A-2 Fixed] certificates
described in this prospectus supplement and proceeds of
the conversion, voluntary or involuntary, of the Class
[A-2 Fixed] certificates;
(2) 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;
(3) the rights of the Grantor Trustee under the related
Certificate Insurance Policy];
(4) the Swap Agreement and all payments received thereunder;
and
(5) 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.]
S-61
<PAGE>
[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 respective
right, title and interest in and to principal and interest due on each 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 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 Agreement ,the servicer agrees to
indemnify and hold the Grantor Trustee[, the certificate Insurer] and each Owner
of a Class [A-2 Floating] certificate
S-62
<PAGE>
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. The servicer shall
assume, with the consent of the Grantor Trustee, the defense of any claim and
pay all expenses in connection therewith, including reasonable counsel fees. The
servicer shall also 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 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 Agreement, to
remove the servicer under the Agreement upon the occurrence of following:
. certain acts of bankruptcy or insolvency on the part of the servicer;
. certain failures on the part of the servicer to perform its
obligations under the Agreement; or
. the failure to cure material breaches of the servicer's
representations in the Agreement.]
[The Agreement also provides that the certificate Insurer may
remove the servicer if delinquencies and/or losses exceed certain levels set
forth in the Agreement, referred to in this prospectus supplement as the
"Servicer Termination Event."]
[The removal of the servicer pursuant to the Agreement shall
also constitute a removal of the servicer under the Grantor Trust Agreement.]
[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
described in the preceding sentence so causing any conflict must be of a type
and nature carried on by the servicer on the date of the Grantor Trust
Agreement. Any determination permitting the resignation of the servicer is
required to be evidenced by an opinion of counsel to that 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 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 Agreement.]
[The Grantor Trustee]
S-63
<PAGE>
[[ ], 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 Agreement and with respect to the Class [A-2
Floating] certificates, the following information:]
[(1) 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;]
[(2) 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 the related Payment Date;]
[(3) based upon information furnished by the Seller, the
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;]
[(4) whether a Delinquency Trigger Event, Cumulative
Realized Loss Trigger Event and/or the Servicer Termination Event has occurred
under the Agreement;]
[(5) the Senior Enhancement Percentage;
[(6) the Overcollateralization Amount;]
[(7) 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 the related Payment Date;]
[(8) the Pass-Through Rate for the Class A-2 Floating
certificates; and]
[(9) 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 Agreement.]
S-64
<PAGE>
[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 the Owners
upon the final payment of the Class [A-2 Fixed] certificate.]]
Calculation of LIBOR
On each LIBOR Determination Date, the trustee will determine
LIBOR for the next Accrual Period for each Class of the Floating Rate
certificates.
Federal Income Tax Consequences
Orrick, Herrington & Sutcliffe LLP, special counsel to the
Seller, is of the opinion that, assuming (1) the making of appropriate elections
and (2) compliance by the Seller, the servicer and the trustee with all of the
provisions of the related Agreements:
(1) the electing portion of the trust fund will qualify, for
federal income tax purposes, as a "real estate mortgage
investment conduit" or "REMIC" within the meaning of
Sections 860A through 860G of the Code;
(2) the offered certificates, together with the Class B-2
certificates, evidence the "regular interests" in the
REMIC; and
(3) the Class R certificates is the sole class of "residual
interests" in the REMIC, respectively, each within the
meaning of the REMIC Provisions in effect on the date
hereof. Sections 860A through 860G of the Code are
referred to in this prospectus supplement as the "REMIC
Provisions."
However, continuing qualification as a REMIC requires ongoing
compliance with applicable provisions of the Code, including the REMIC
Provisions, and related Treasury regulations all of which are subject to change.
The following are the currently applicable material 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 "Federal Income Tax Consequences," and
is of the opinion that the statements in the prospectus as supplemented by the
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.
S-65
<PAGE>
The offered certificates will be Regular Certificates, as
defined in the prospectus under "Federal Income Tax Consequences--REMIC
Certificates." The offered certificates will be treated as debt instruments for
purposes of calculating a certificateholder's federal income tax liability.
Holders of offered certificates will be required to report income with respect
to the offered certificates under the accrual method of accounting, regardless
of their normal tax accounting method.
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 __%
of the Prepayment Assumption. No representation is made that the contracts will
prepay at that rate or at any other rate. See "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 the period
would be zero and such certificateholder will be permitted to offset the
negative amount only against future original issue discount, if any,
attributable to the 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 a class of certificates will be treated as holding a certificate with
amortizable bond premium will depend on the certificateholder's purchase price
and the distributions remaining to be made on the certificate at the time of its
acquisition by the certificateholder. Holders of such classes of certificates
should consult their tax advisors regarding the possibility of making an
election to amortize the premium. See "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 the 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
S-66
<PAGE>
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 the treatment as assets, any repurchase of a certificate
pursuant to the right of the servicer or the holder of the Class R certificates
to repurchase such certificate may adversely affect any REMIC that holds such
certificate if the repurchase is made under circumstances giving rise to a
Prohibited Transaction Tax. See "The Agreement--Termination" in this prospectus
supplement and "Federal Income Tax Consequences--REMIC Certificates" in the
prospectus.
For further information regarding federal income tax
consequences of investing in the offered certificates, see "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 "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 that type of 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 among its ownership interest in the various assets
of the grantor trust. In general, the allocation would be based on the relative
fair market values of the assets on the date of purchase of the [Class A-2
Floating] certificate. No representation is or will be made as to the relative
fair market values and holders of Class [A-2 Floating] certificates should
consult their tax advisors concerning the determination of the fair market
values and the taxation of the holder's interest in
S-67
<PAGE>
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.
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 "Federal Income Tax
Consequences - REMIC Elections" and "--Non-REMIC Trusts" in the prospectus.]
S-68
<PAGE>
ERISA Considerations
General
The Employee Retirement Income Security Act of 1974 or
"ERISA," as amended, and Section 4975 of the Code impose certain restrictions on
employee benefit and other "Plans" that are subject to ERISA and/or Section 4975
of the Code 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 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 or "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:
(1) 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.
(2) 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.
(3) The Senior Certificates acquired by the Plan have
received a rating at the time they were acquired that is in one of the three
highest generic rating categories from either Standard & Poor's Ratings Group or
"S&P," Duff &Phelps Credit Rating Co. or "Duff & Phelps," Moody's or Fitch,
collectively referred to as the "Exemption Rating Agencies."
S-69
<PAGE>
(4) The trustee is not an affiliate of the underwriters of
the offered certificates, 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 in this prospectus
supplement 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.
(5) The sum of all payments made to and retained by the
underwriters of the offered certificates 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 the related 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.
(6) 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 a trust pursuant to a binding
Agreement, subject to the foregoing general conditions and to certain additional
requirements. [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
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 of the offered
certificates 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, referred to in this prospectus supplement as 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.
(2) 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.
S-70
<PAGE>
(3) 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.
(4) 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.
(5) 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 Senior
Certificates, the amendment generally allows 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 offered 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 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 weighted average annual percentage 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
(ii) an independent accountant retained by the Seller must
provide the Seller with a letter, with copies provided to
the Exemption Rating Agencies rating
S-71
<PAGE>
the certificates, the underwriter of the offered
certificates 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 the permitted 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 the
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 Pre-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 Class [A-2 Floating] certificates]
[The Exemption will not apply to the purchase, holding or subsequent
resale of the Class [A-2 Floating] certificates. However, Section II of DOL
Prohibited Transaction Class Exemption or "PTCE" 75-1, regarding principal
transactions by broker-dealers should be applicable to the acquisition of the
Class [A-2 Floating] certificates, provided that the underwriter of the offered
certificates is not a fiduciary with respect to the Plan and is not a Party in
Interest, as defined in the prospectus, with respect to the Plan by reason of
being a participating employer or affiliate thereof. In addition, one or more of
the following PTCEs may be applicable to the purchase, holding or subsequent
resale of the Class [A-2 Floating] certificates by a Plan:
(1) PTCE 96-23, regarding investments determined by in-house asset
managers;
S-72
<PAGE>
(2) PTCE 95-60, regarding investments by insurance company pooled
accounts;
(3) PTCE 91-38, regarding investments by bank collective investment
funds;
(4) PTCE 90-1, regarding investments by insurance company pooled
separate accounts; or
(5) 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 or with "plan assets" of 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
the interest in Class [A-2 Fixed] certificates.
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 the Class M or Class B-1
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 the
transferee (1) is neither a Plan, a person acting on behalf of any Plan nor a
person using "plan assets" of any Plan, or (2) if the transferee is an insurance
company, it is purchasing Class M or Class B-1 certificates with funds contained
in an "insurance company general account," as that term is defined in Section
V(e) of Prohibited Transaction Class Exemption 95-60 or "PTCE 95-60," and
represents that the purchase and holding of Class M or Class B-1 certificates is
eligible for the exemptive relief available under Sections I and III of PTCE 95-
60; or (b) an opinion of counsel 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 Class M or
Class B-1 certificates 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 the trustee[, the Seller or the servicer] 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.
Fiduciary Review
In addition to the matters described above, purchasers of Class [A-2
Floating] certificates that are insurance companies should consult with their
legal advisors with respect to
S-73
<PAGE>
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, 510 U.S. 86 (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 JOHN
HANCOCK decision or federal legislation affecting insurance company general
accounts (see Section 1460 of the Small Business Job Protection Act of 1996)
affects their ability to purchase of the certificates.
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 availability of any other prohibited
transaction exemptions, and whether the conditions of any exemption will be
applicable to the certificate. Any Plan fiduciary or other person considering
whether to purchase a Senior Certificate with "plan assets" of any Plan should
consult with its own legal advisors concerning the impact of ERISA and the Code,
the applicability of the Exemption and other administrative exemptions under
ERISA, and the potential consequences to its specific circumstances, prior to
making an investment in the certificates. Moreover, each Plan fiduciary should
determine whether under the general fiduciary standards of investment procedure
and diversification an investment in the Senior Certificates is appropriate for
the Plan, taking into account the overall investment of the Plan and the
composition of the Plan's investment portfolio.
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 the offered certificates:
. address the likelihood of the receipt by the certificateholders
of their allocable share of principal and/or interest on the
underlying assets; and
. take into consideration:
- the credit quality of the related underlying assets,
- any credit support arrangements,
- structural and legal aspects associated with the offered
certificates, and
S-74
<PAGE>
- the extent to which the payment stream on such underlying
assets is adequate to make payments required by the offered
certificates.
[ ] ratings on the offered certificates do not constitute a statement:
. regarding frequency of prepayments on the underlying assets, or
. 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 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 the offered certificates by [ ].
Legal Investment
The [Senior Certificates and Class M certificates] offered hereby will
not constitute "mortgage related securities" under SMMEA until such time as the
balance of the Pre-Funding Account is reduced to zero. At the time the Pre-
Funding Account is reduced to zero, the [Senior Certificates and Class M
certificates] will constitute legal investments for certain types of investors
to the extent provided in SMMEA. Investors should consult their own legal
advisors in determining whether and to what extent the Senior Certificates
constitute legal investments for them.
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. Investors should consult their own legal
advisors in determining whether and to what extent the offered certificates
constitute legal investments for them. See "Legal Investment" in the prospectus.
Method Of Distribution
Subject to the terms and conditions of the Underwriting Agreement, the
Seller has agreed to sell, and [each of ] underwriters of the offered
certificates 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.
S-75
<PAGE>
<TABLE>
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 of the offered
certificates 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 of the
offered certificates, the Underwriting Agreement provides that, in certain
circumstances, the Underwriting Agreement may be terminated.
The Seller has been advised by the underwriters of the offered
certificates that they propose initially to offer the offered certificates to
the public at the prices set forth in this prospectus supplement, 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 of the offered certificates 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 any concessions may be changed.
The Underwriting Agreement provides that the Seller will indemnify the
underwriters of the offered certificates against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, or contribute to
payments the underwriters of the offered certificates may be required to make in
respect thereof.
The underwriters of the offered certificates will reimburse certain
expenses of the Seller.
In connection with the sale of the offered certificates, the
underwriters of the offered certificates 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 of the offered
certificates 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 of the offered certificates may bid for, and purchase, offered
certificates in the open market. The underwriters of the offered certificates
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 of the offered certificates repurchase previously
distributed offered certificates in transactions to cover their short position,
in stabilization transactions or otherwise. Finally, the underwriters of the
offered certificates 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 of the offered
S-76
<PAGE>
certificates are not required to engage in these activities and may end any of
these activities at any time.
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 of
the offered certificates by [ ].
S-77
<PAGE>
Information contained in this prospectus 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.
Consider carefully the risk factors beginning on page 4 in this prospectus and
in the related prospectus supplement at page S-9.
A certificate will represent an interest only in the trust fund created for that
series of certificates. A certificate will not represent an interest in or an
obligation of GreenPoint Credit, LLC or any of its affiliates.
This prospectus may be used to offer and sell a series of certificates only if
accompanied by the prospectus supplement for that series.
PROSPECTUS
GREENPOINT CREDIT, LLC
Seller and Servicer
Manufactured Housing Contract Trust Pass-Through Certificates
GreenPoint Credit, LLC may periodically issue
certificates representing interests in a trust fund
that consists primarily of manufactured housing
installment sales contracts and installment loan
agreements. The certificates will be issued in series,
and each series of certificates will represent
interests in a different trust fund established by
GreenPoint Credit, LLC.
Each trust fund will consist of:
. a pool of manufactured housing installment sales
contracts and installment loan agreements, described
in detail in the accompanying prospectus supplement;
. related property and interests; and
. other property as described in the accompanying
prospectus supplement.
The certificates in a series:
. may be divided into multiple classes of
certificates, and, if so specified in the related
prospectus supplement, each class may:
-- receive a different fixed or variable rate of
interest;
-- be subordinated to other classes of certificates
in that series;
-- represent interests in only certain of the assets
of the trust fund;
-- receive principal at different times; and
-- have different forms of credit enhancement.
The certificates may be offered to the public through different methods as
described in "Method of Distribution" in this prospectus.
Neither the SEC nor any state securities commission has approved or disapproved
of these certificates or determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
October 14, 1999
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the certificates in two separate
documents that progressively provide more detail:
(1) this prospectus, which provides general information, some of which may
not apply to your series of certificates; and
(2) the accompanying prospectus supplement, which describes the specific
terms of your series of certificates.
You should rely only on the information provided in this prospectus and the
accompanying prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not offering the certificates in any state where the offer
is not permitted. We do not claim the accuracy of the information in this
prospectus or the accompanying prospectus supplement as of any date other than
the dates stated on their respective covers.
We include cross-references in this prospectus and the accompanying
prospectus supplement to captions in these materials where you can find further
related discussions. The following table of contents and the table of contents
included in the accompanying prospectus supplement provide the pages on which
these captions are located.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Risk Factors............................................................... 4
The Contract Pools......................................................... 9
The Pre-Funding Account.................................................. 12
The Seller................................................................. 12
The Acquisition.......................................................... 12
Loan Originations........................................................ 12
Underwriting Practices................................................... 13
Servicing................................................................ 16
Prepayment and Yield Considerations........................................ 18
Prepayment Considerations................................................ 18
Yield Considerations..................................................... 20
Description of the Certificates............................................ 21
General.................................................................. 21
Conveyance of Contracts.................................................. 22
Payments on Contracts.................................................... 22
Distributions on Certificates............................................ 23
Global Certificates...................................................... 25
DTC's Year 2000 Efforts.................................................. 26
Optional and Mandatory Repurchase of Certificates; Optional Termination
and Termination Auction................................................. 27
Termination of the Agreement............................................. 28
Collection and Other Servicing Procedures................................ 28
Servicing Compensation and Payment of Expenses; Certain Matters Regarding
the Servicer............................................................ 29
Amendment................................................................ 31
The Trustee.............................................................. 32
Indemnification.......................................................... 33
Credit and Liquidity Enhancement........................................... 33
Subordination............................................................ 33
Reserve Funds............................................................ 35
Credit Facilities........................................................ 36
Liquidity Facilities..................................................... 36
Federal Income Tax Consequences............................................ 36
REMIC Elections.......................................................... 38
REMIC Certificates....................................................... 38
Taxation of Regular Certificates......................................... 41
Treatment of Certificates Representing a REMIC Regular Interest Coupled
with a Swap or Cap Contract............................................. 51
Taxation of Residual Certificates........................................ 52
Non-REMIC Trusts......................................................... 61
Owner Trust Certificates or Notes........................................ 64
Treatment of the Owner Trust Certificates or Notes as Debt............... 65
Treatment of the Owner Trust............................................. 65
Treatment of the Owner Trust Certificates or Notes....................... 66
Other Tax Consequences..................................................... 67
Restrictions on Transfer of REMIC Residual Certificates.................... 67
Tax-Exempt Investors....................................................... 67
Legal Investment........................................................... 68
ERISA Considerations....................................................... 69
Certain Legal Aspects of the Contracts..................................... 70
The Contracts (Other than Land Home and Land-in-Lieu Contracts).......... 70
Land Home and Land-in-Lieu Contracts..................................... 73
Certain Matters Relating to Insolvency................................... 75
Consumer Protection Laws................................................. 75
Transfers of Manufactured Homes; Enforceability of Restrictions on
Transfer................................................................ 76
Applicability of Usury Laws.............................................. 77
Ratings.................................................................... 77
Method of Distribution..................................................... 77
Use of Proceeds............................................................ 78
Legal Matters.............................................................. 78
Experts.................................................................... 78
Glossary................................................................... 79
</TABLE>
3
<PAGE>
Risk Factors
You should consider the following risk factors, in addition to the risk
factors reported in the prospectus supplement, in deciding whether to purchase
any of the certificates.
Due to Their Complexity the The offered certificates are not suitable
Offered Certificates Are Not investments for all investors. In particular,
Suitable for All Investors you should not purchase any class of offered
certificates unless you understand and are able
to bear the prepayment, credit, liquidity and
market risks associated with that class. The
offered certificates are complex securities and
it is important that you possess, either alone
or together with an investment advisor, the
expertise necessary to evaluate the information
contained in this prospectus and the
accompanying prospectus supplement in the
context of your financial situation.
The Lack of Secondary A secondary market for any series of
Markets May Limit the certificates may not develop. If a secondary
Ability to Resell market does develop, it might not continue or
Certificates it might not be sufficiently liquid to allow
you to resell any of your certificates. The
underwriters of a particular series of
certificates may decide to establish a
secondary market for that particular series of
certificates. If so, the prospectus supplement
for that series of certificates will indicate
this intention. However, no underwriter will be
obligated to do so. The certificates will not
be listed on any securities exchange.
The Lack of Physical There is a risk that the liquidity of any of
Certificates May Cause the offered certificates issued in book-entry
Difficulties in Pledging or form will be reduced in the secondary trading
Selling Your Certificates or market because many potential investors may be
Cause Delays in the Payment unwilling to purchase certificates unless they
on Your Certificates can obtain physical certificates. To the extent
transactions in certificates can be effected
only through DTC, participating organizations,
indirect participants and certain banks, the
ability of a holder of offered certificates to
pledge any offered certificate to persons or
entities that do not participate in the DTC
system, or otherwise to take actions in respect
of the offered certificates, may be limited due
to the lack of physical certificates
representing any offered certificate. This may
limit the holders of offered certificates
liquidity of investment. To the extent any
offered certificate is held in book-entry form,
the holder of the offered certificate may
experience some delay in their receipt of
distributions. Distributions will be forwarded
by the trustee to DTC and DTC will credit the
distributions to the accounts of its
participants, which will thereafter credit them
to the accounts of holder of the offered
certificate either directly or indirectly
through indirect participants. See "Description
of the Certificates--Global Certificates" in
the prospectus.
You Bear the Risk of Certain General Economic Conditions. An investment in
Defaults on the Contracts certificates may be adversely affected by,
among other things, a downturn in national,
regional or local economic conditions. An
economic downturn in any region where a number
of obligors on the contracts are located might
cause higher delinquencies, defaults and losses
on the contracts. If delinquencies, defaults or
losses on the contracts are higher than
expected, the holders of the certificates may
not recoup their investment.
4
<PAGE>
Depreciation in Value of manufactured
home. Manufactured housing generally
depreciates in value, regardless of its
location. As a result, the market value of a
manufactured home may decline faster that the
outstanding principal balance of the contract
for that manufactured home. Therefore, amounts
received upon the sale of any manufactured home
repossessed by the servicer may be less than
the outstanding amount of the contract.
Investors in the offered certificates may be
protected from losses resulting from economic
conditions or from the depreciation in the
value of a manufactured home by any of the
following:
. the amount, if any, by which the interest
collected on nondefaulted contracts during a
collection period exceeds interest
distributions due to the holders of the
offered 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, the subordination in interest of any
junior classes of certificates issued with a
class of certificates. See "Credit and
Liquidity Enhancement" in this prospectus
and the related prospectus supplement.
If losses on the contracts are not covered by
the excess interest on the contracts, a form of
credit enhancement or reserve fund or by a
junior class of certificates, the payments on
certificates will be delayed and losses will be
borne by the holders of the offered
certificates. To the extent that the offered
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" in this prospectus and
in the related prospectus supplement.
The Certificates Are Not an The offered certificates will not represent
Obligation of GreenPoint interests in or obligations of GreenPoint
Credit, LLC or GreenPoint Financial Corp. The
offered certificates will not be insured or
guaranteed by any governmental agency or
instrumentality, the underwriter of the offered
certificates or any of its affiliates,
GreenPoint Credit, LLC, GreenPoint Financial
Corp. or any of their affiliates, except in the
case of a limited guaranty or other credit
enhancement if so specified in the related
prospectus supplement. The payments by the
obligors on the contracts included in the trust
fund and any credit enhancement will be the
sole source of the payments on the
certificates. If the payments by the obligors
on the contracts are insufficient to pay the
principal or interest on the certificates,
there is no other source of payments. The
seller of the Contracts and/or the servicer
will have limited obligations. These
obligations usually include:
. the obligation under certain circumstances
to repurchase a contract if there has been a
breach of representations and warranties;
and
. advancing payments to the extent described
in the prospectus supplement on contracts
when the obligor is delinquent if the
servicer believes that the advance is
recoverable.
5
<PAGE>
Risks Relating to the Security Interests of the Trust Fund in the
Enforceability of the Manufactured Homes. If a security interest has
Contracts been effectively assigned in favor of the
trustee but is not perfected, the assignment of
the security interest to the trustee may not be
effective against creditors of GreenPoint
Credit, LLC or Bank of America, FSB, as the
case may be, or against a receiver or trustee
in bankruptcy for GreenPoint Credit, LLC or Bank
of America, FSB, as applicable.
Upon the initial issuance of the offered
certificates in any series, the seller will
convey the contracts securing the certificates
to a trust fund. The servicer of the contracts
will obtain and maintain physical possession of
the contract documents as custodian and agent
for the trustee of the trust fund. Each
contract is secured by a security interest in a
manufactured home and, in certain cases only,
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:
. Uniform Commercial Code as adopted in the
states in which the manufactured homes are
located;
. certificate of title statutes as adopted in
the states in which the manufactured homes
are located; and
. and, if applicable, the real estate laws as
adopted in the states where the manufactured
homes are located.
Under federal and state laws, a number of
factors may limit the ability of the holder of
a perfected security interest in manufactured
homes to realize upon the related 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 of GreenPoint in the
Manufactured Homes" and "Land Home and Land-in-
Lieu Contracts" in this prospectus.
. The seller of the contracts 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 has purchased from Bank of America, FSB
as described under "The Seller--The
Acquisition." 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,
LLC" 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, LLC" as secured party.
Because it is not economically feasible to
amend the certificates of title, GreenPoint
Credit, LLC will not:
. amend the certificates of title to change
the lienholder specified therein to the
trustee at the time contracts are conveyed
to a trust fund;
6
<PAGE>
. execute any transfer instrument, including,
among other instruments, UCC-3 assignments,
relating to any manufactured home in favor
of the trustee;
. deliver any certificate of title to the
trustee or make a notation on the
certificate of title of the trustee's
interest therein;
. record an assignment, except as required
under the related pooling and servicing
agreement upon the occurrence of certain
events if so specified in the related
prospectus supplement, to the trustee of the
mortgage, deed of trust or other instrument
securing any real estate.
In some states, without complying with the
foregoing, the assignment to the trustee of the
security interest in the manufactured homes, or
the mortgage, deed of trust or other instrument
securing real estate, may not be effective to
grant or perfect a security interest.
Federal and State Consumer Numerous federal and state consumer protection
Protection Laws May Prevent laws could adversely affect the interest of any
the Enforceability of the trust fund in the contracts comprising the
Contracts related contract pool. In addition, other
federal and state consumer protection laws
impose requirements on lending under contracts.
An assignee of a contract could be liable for
the failure by the original lender under the
contract to comply with the requirements on
lending. These laws could apply to any trust
fund as assignee of the related contracts.
Pursuant to the pooling and servicing agreement
related to each series of certificates,
GreenPoint Credit, LLC will represent and warrant
that each contract complies with all requirements
of law and will generally be required to
repurchase, or substitute a new contract, for any
contract that does not comply with all
requirements of law if holders of the
certificates are adversely affected by
GreenPoint's breach of representation or
warranty.
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 any series of
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 the contracts include
changes in housing needs, job transfers and
unemployment. In addition, interest on
contracts that have been subject to a partial
prepayment or a prepayment in full will cease
to accrue on the prepaid amount as of the date
of prepayment. High prepayments on the
contracts during a collection period for any
trust fund could result in high interest
shortfalls. Therefore, the amount available for
distribution to the holders of the offered
certificates on the related distribution date
could be less than the amount of principal and
interest that would normally be distributable.
This would result in losses to the holders of
the offered certificates. To the extent that
the offered 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" in this prospectus and in the
related prospectus supplement.
7
<PAGE>
Insolvency or Bankruptcy of GreenPoint Credit, LLC intends that each
GreenPoint May Affect transfer of offered certificates to the related
Payments on the Certificates trust fund constitutes a sale, rather than a
pledge of the contracts to secure indebtedness
of GreenPoint Credit, LLC 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
Credit, LLC or GreenPoint Credit, LLC as
debtor-in-possession may argue that the sale of
the contracts by GreenPoint Credit, LLC could
be recharacterized as a borrowing secured by a
pledge of the contracts. An attempt by a
creditor or a trustee in bankruptcy to
recharacterize the transfer as a borrowing,
even if unsuccessful, could result in delays in
or reductions of distributions on the offered
certificates to the holders of the
certificates. To the extent that the offered
certificates have been designated as senior or
subordinate, the most junior certificates would
be the first to bear these delays or losses.
Bankruptcy of Servicer In the event of a bankruptcy of GreenPoint
Credit, LLC, the trustee-in-bankruptcy for
GreenPoint Credit, LLC could prevent the
termination of GreenPoint Credit, LLC, as
servicer of the contracts, if no event of
default under the applicable pooling and
servicing agreement exists other than the
bankruptcy of GreenPoint Credit, LLC This
prevention could result in a delay or possibly
a reduction in payments on the offered
certificates to the holders of the certificates
to the extent GreenPoint Credit, LLC received,
but did not deposit with the trustee, contract
collections before the date of bankruptcy. To
the extent that the offered 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" in this prospectus.
Limited Operating History of GreenPoint Credit, LLC was incorporated on May
Seller and Servicer 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 this prospectus.
Accordingly, GreenPoint Credit, LLC has a
limited operating history, and no relevant
delinquency and loss experience is available.
Neither GreenPoint Credit, LLC nor any of its
affiliates were previously engaged in the
origination or servicing of manufactured
housing contracts prior to its purchase of
manufactured housing contracts from Bank of
America, FSB. Potential holders of offered
certificates are encouraged to evaluate the
risks associated with respect to the limited
operating history of GreenPoint Credit, LLC.
Limited Guarantee of GFC If the related prospectus supplement so
specifies, certain classes of offered
certificates may be entitled to the benefits of
a limited guarantee of GreenPoint Financial
Corp. which would be an unsecured obligation of
GreenPoint Financial Corp. and would not be
supported by any letter of credit or other
enhancement arrangement.
8
<PAGE>
We have defined certain significant terms in the "Glossary" on page 79 of
this prospectus.
The Contract Pools
Each Contract contained in a Contract Pool will have been either:
. originated or purchased by the Seller, in each case on an individual
basis in the ordinary course of its business and/or
. purchased from 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. If so
specified in the related prospectus supplement, the Contract Pool will include
modular homes, as described in the related prospectus supplement.
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, except in certain instances where the
trustee will obtain and maintain possession of the Contract documents relating
to Land Home Contracts and Land-in-Lieu Contracts.
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. The 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 constituting a part of, or associated
with, the manufactured home.
Each Agreement will require the servicer to maintain hazard and flood
insurance policies with respect to each manufactured home in the amounts and
manner set forth in this prospectus 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 Contracts bearing interest at a Step-Up Rate.
If a Contract Pool contains Contracts bearing interest at a Step-Up Rate, the
related prospectus supplement will specify the percentage of the Contract Pool
comprised of Step-Up Contracts, the period during which the Contract Rates for
Step-Up Contracts will be stepped up, the range of increases in the Contract
Rates for the Step-Up Contracts and the range of increases in the Scheduled
Payments for the Step-Up Contracts.
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 a scheduled 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 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 will increase on the dates on which the Contract Rates are stepped up. In
9
<PAGE>
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 may, in June, pay the Scheduled Payments due in June, July
and August. In that event, no further payment will become due on the Contract
until the September Due Date. In the case of a simple interest Contract, the
Obligor would have to instruct the servicer to apply the payment as a pay-
ahead of future Scheduled Payments; otherwise the 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.
The Scheduled Payments for each actuarial Contract, whether a fixed rate
Contract or a Contract bearing interest at a Step-Up Rate, 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
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 or not the
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 the Obligor's Contract, are applied as a partial prepayment of
principal on the Contract, unless (1) the related Obligor notifies or confirms
with the servicer that its payments are to be applied to future Scheduled
Payments in the order of the Due Dates of its payments or (2) the amount of
any 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
the simple interest Contracts in the Contract Pool.
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 the Scheduled Payments on the Contracts are due. If so specified in the
related prospectus supplement, the amounts of the Scheduled Payments on
variable rate Contracts will be adjusted, on the basis described in the
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, the Contract Pool may
contain Land Home and Land-in-Lieu Contracts. 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 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 respect to any Land
Home Contract that it originates insuring that the related manufactured home
is subject to the lien of the related mortgage. However, title policies may
not have been obtained with respect to Land Home Contracts
10
<PAGE>
acquired from Bulk Sellers and some title insurers will not insure the
manufactured home unless it is permanently attached to the land. 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 for Land-in-Lieu Contracts. See "Certain Legal Aspects of the
Contracts--Land Home and Land-in-Lieu Contracts" in this prospectus.
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 "staged-
funding" Contract unless it has been fully disbursed.
The prospectus supplement relating to each Series of Certificates will
provide information as of the Cut-off Date for the related Series with respect
to, among other things:
. the number, the aggregate principal balance, and the range of
outstanding principal balances of the Contracts comprising the related
Contract Pool;
. the Weighted Average Contract Rate of the Contracts and the distribution
of Contract Rates;
. the weighted average original and remaining terms to maturity of the
Contracts and the distribution of remaining terms to maturity;
. the average outstanding principal balance of the Contracts;
. the geographical distribution of the related manufactured homes at
origination;
. the years of origination of the Contracts;
. the distribution of original principal balances of the Contracts;
. the percentage amount of Contracts secured by new or used manufactured
homes;
. the range of and weighted average loan-to-value ratios at origination;
and
. 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
in this prospectus 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 variable rate Contracts, the related prospectus
supplement will contain a description of the basis on which the variable rates
are determined, including any maximum or minimum rates and the frequency with
which any variable 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.
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 the Bulk Seller or Bulk
Sellers, as the case may be, in connection with any such purchase.
In addition, to the extent GreenPoint's management believes additional
information concerning the related Contract Pool that is stored in the
electronic data processing system of GreenPoint to be material, the prospectus
supplement may also include the additional information.
11
<PAGE>
The Pre-Funding Account
If the Trust Fund includes a Pre-Funding Account, as defined in the related
prospectus supplement, the prospectus supplement will specify:
(1) the term or duration of the Pre-Funding Account;
(2) the percentage of the related Series that may be represented by the
Pre-Funding Account;
(3) the types of investments that Pre-Funding Accounts may be invested in;
and
(4) the conditions that must be satisfied prior to any transfer of
Additional Contracts and/or Subsequent Contracts, as described in the
prospectus supplement, including the requisite characteristics of the
Additional Contracts and/or Subsequent Contracts.
The Seller
GreenPoint is a Delaware corporation and a wholly owned subsidiary of
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, 1998, GFC and its
consolidated subsidiaries had total deposits of $11,173.1 million, total
assets of $15,015.9 million and total stockholders' equity of $1,922.6
million. As of December 31, 1998, GreenPoint had total assets of $1,437.4
million, total liabilities of $1,378.1 million and total stockholders' equity
of $59.3 million. The headquarters of both GFC and GreenPoint Bank are located
in New York, New York.
The Acquisition
GreenPoint was formed in May 1998 as a Delaware corporation for the purpose
of acquiring the 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. GreenPoint also purchased approximately
$794,958,000 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.
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. 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 a 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 and through brokers and correspondent lenders.
12
<PAGE>
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 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 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 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 the 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 proprietary credit scoring system,
developed by Bank of America, FSB in conjunction with Fair-Isaacs, implemented
in July 1997. The 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 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 delegated authority may be limited in that the person
to whom the 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
13
<PAGE>
managers or for other employees to whom authority to approve credit
applications may be delegated; rather, the authority is given commensurate
with regional manager's or other 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 each regional office by
rating the obligors on the underlying 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.
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:
. 130% of the manufacturer's invoice price, plus
. 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:
. 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
. 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:
. the lesser of 95% of the value of the real property as determined by
appraisal subject to certain limitations or 95% of the purchase price of
the land subject to certain limitations or the payoff of the encumbered
land, plus
. 130% of the manufacturer's invoice, plus
. taxes, insurance, freight charges, certain retailer installed equipment,
certain set-up costs and prepaid finance charges and closing costs, plus
. the cost of improvements to the land, subject to certain limitations.
With respect to Land/Home Contracts involving used manufactured homes,
GreenPoint's policy is to finance no more than the lesser of:
. 95% of the total sales price, or
14
<PAGE>
. the sum of 95% of the appraised value of the land and 95% of the NADA
Mobile/Manufactured Housing Appraisal Guide or "Kelly Blue Book" retail
value of the home,
. and in either case, plus taxes, insurance, certain retailer installed
equipment, certain set-up costs, prepaid finance charges and closing
costs and the cost of improvements to the land, subject to certain
limitations.
With respect to Land/Home Contracts in which the manufactured home is
already on the land, GreenPoint's policy is to finance:
. the lesser of 95% of the total sales price or 95% of the appraised value
of the land and home, plus
. taxes, fees, insurance and certain prepaid finance charges and closing
costs.
With respect to Land-in-Lieu Contracts involving new manufactured homes,
GreenPoint's policy is to finance:
. up to 140% of the manufacturer's invoice for the home depending on the
borrower's down payment, plus
. taxes, insurance, freight charges, certain retailer installed equipment,
certain set-up costs and pre-paid finance charges and closing costs,
plus
. the costs of improvements to the land, subject to certain limitations.
With respect to Land-in-Lieu Contracts involving used manufactured homes,
GreenPoint's policy is to finance no more than 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,"
. and in either case, plus
-- taxes, insurance, certain retailer installed equipment, certain set-
up costs and prepaid finance charges and closing costs, and
-- the cost of improvements to the land, subject to certain
limitations.
In June 1999, GreenPoint initiated a marketing program for new manufactured
homes in which the maximum amount financed could not exceed:
. 140% of the manufacturer's invoice price, plus
. taxes, insurance, freight charges, certain retailer installed equipment,
certain set-up costs and prepaid finance charges and closing costs.
This marketing program is offered only to applicants who score in the
highest credit score recommendation given by GreenPoint's proprietary credit
scoring system (as described in the second paragraph of this section).
GreenPoint generally 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 additional collateral. For previously owned homes, the trade-in allowance
accepted by the retailer must be consistent with the value of the owned home
determined by GreenPoint in light of current market conditions. The value of
real property pledged as additional collateral is estimated by regional
personnel, using tax assessed value, or appraisers who are familiar with the
area in which the property is located.
15
<PAGE>
Underwriting policies and marketing programs 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 and are subject to
change from time to time. Any material changes or conditions will be disclosed
in the prospectus supplement.
The volume of Contracts originated by GreenPoint, acquired by GreenPoint in
the Acquisition, or purchased from dealers on an individual basis by
GreenPoint for the periods indicated below and certain other information at
the end of the periods below are as follows:
Contracts Originated or Purchased on an Individual Basis
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
December 31, 1998 March 31, 1999
----------------- --------------
<S> <C> <C>
Principal Balance of Contracts Purchased...... $1,451,368 $715,413
Number of Contracts Purchased................. 38,010 18,597
Average Contract Size......................... $ 38.18 $ 38.47
Number of Regional Offices.................... 45 45
</TABLE>
The information in the table above includes only Contracts originated by
GreenPoint, acquired by GreenPoint in the Acquisition, or purchased from
dealers. The number of regional offices includes regional offices in the
United States originating or purchasing Contracts.
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 the sold contracts. In
addition, GreenPoint may make arrangements pursuant to which it services, or
would service, manufactured housing contracts owned by other entities. These
service 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 the contracts are not owned by GreenPoint, remitting principal and
interest payments to the owners thereof, to the extent the owners of the
serviced contracts 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 repossessed manufactured homes.
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
believes that the information relating to Bank of America, FSB prior to the
Acquisition by GreenPoint is not relevant or informative since GreenPoint, and
not Bank of America, FSB, is now servicing the contracts set forth in the
information.
16
<PAGE>
The following table shows the size of the portfolio of 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)
<TABLE>
<CAPTION>
As of As of
December 31, 1998 March 31, 1999
----------------- --------------
<S> <C> <C>
Unpaid Principal Balance of Contracts Being
Served...................................... $11,504,320 $11,718,576
Average Contract Unpaid Principal Balance.... $ 27.7 $ 28.1
Number of Contracts Being Serviced........... 415,373 417,423
</TABLE>
Delinquency and Loan Loss/Repossession Experience
The loss and delinquency information of Bank of America, FSB, in its
capacity as servicer of its manufactured housing installment sales contracts
and installment loan agreement portfolio, has been disclosed in various
filings made by Bank of America, FSB with the Securities and Exchange
Commission. These filings are publicly available to potential investors.
GreenPoint acquired the servicing personnel and approximately $794,958,000.00
in manufactured housing installment sales contracts and installment loan
agreements from Bank of America, FSB in the Acquisition. See "The Acquisition"
in this prospectus. Since October 1, 1998, GreenPoint has been the servicer of
all of the manufactured housing installment sales contracts and installment
loan agreements that had been serviced by Bank of America, FSB. GreenPoint
makes no representation or warranty with respect to the completeness or
accuracy of the loss and delinquency information contained in any filings made
by Bank of America, FSB with the Securities and Exchange Commission or any
filings made by Bank of America, FSB with any other public entity and
disclaims any liability with respect thereto. Further, the loss and
delinquency experience of Bank of America, FSB as servicer of manufactured
housing installment sales contracts and installment loan agreements may not be
reflective of the loss and delinquency experience that GreenPoint will
encounter as servicer of manufactured housing installment sales contracts and
installment loan agreements.
The following table sets forth the delinquency experience of manufactured
housing contracts serviced by GreenPoint since October 1998, other than
contracts already in repossession, as of the dates indicated:
Delinquency Experience
<TABLE>
<CAPTION>
As of As of
December 31, 1998 March 31, 1999
----------------- --------------
<S> <C> <C>
Number of Contracts Outstanding.............. 411,852 414,024
Number of Contracts Delinquent
30-59 days................................... 6,397 3,170
60-89 days................................... 1,753 1,016
90 days or more.............................. 2,372 1,920
------- -------
Total Contracts Delinquent................... 10,522 6,106
======= =======
Delinquencies as a Percentage of Contracts
Outstanding................................. 2.55% 1.47%
======= =======
</TABLE>
The information contained in the table above is based on number of days
payments are contractually past due, assuming 30-day months. Consequently, a
payment due on the first day of a month is not 30 days delinquent until the
first day of the following month.
17
<PAGE>
Since GreenPoint has only been servicing the Contracts for a limited amount
of time, the delinquency experience reflected in the table above may not
necessarily be indicative of the actual performance of the Contracts over
time.
The following table sets forth the loan loss/repossession experience of
Contracts serviced through the manufactured housing regional office system of
GreenPoint, including Contracts already in repossession, as of the dates
indicated:
Loan Loss/Repossession Experience
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended
March 31, 1999
--------------
<S> <C>
Number of Contracts Being Serviced 417,423
Aggregate Principal Balance of Contracts Being Serviced $11,718,576
Average Principal Recovery Upon Liquidation 45.26%
Contract Liquidations 1.06%
Net Losses
Dollars $ 73,593
Percentage 0.63%
Contracts in Repossession 3,399
</TABLE>
The "Average Principal Recovery Upon Liquidation" in the table above is
shown as a percentage of the outstanding principal balance of Contracts that
were liquidated during the applicable period, based on the gross amounts
recovered upon liquidation, proceeds applied to unpaid interest accrued
through the date of liquidation and after the payment of repossession and
other liquidation expenses. Deficiency recoveries received subsequent to
liquidation date are also included net of collection expenses paid to third
parties.
The "Contract Liquidations" in the table above are shown as the number of
Contracts liquidated during the period as a percentage of the total number of
Contracts being serviced as of period end.
The calculation of "Net Losses" includes unpaid interest accrued through the
date of liquidation and all repossession and other liquidation expenses and is
reduced by deficiency recoveries received subsequent to liquidation date net
of collection expenses paid to third parties.
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. 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
18
<PAGE>
prepaid in full in each year during which any related Certificates are
outstanding. The amount of prepayments on the 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 the 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 the repurchased 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. These Contract provisions are similar to "due-on-sale" clauses and
may not be enforceable in certain states. See "Certain Legal Aspects of the
Contracts--Transfers of manufactured homes; Enforceability of Restrictions on
Transfer" in this prospectus. 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, or any other party as may be designated in the related
prospectus supplement, will have the option to purchase all of the Contracts
in the related Contract Pool, at the price and under the conditions specified
in related 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 any other percentage as may be specified in the related
prospectus supplement, of its initial Pool Principal Balance. The exercise of
any option to repurchase the Contracts early 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 within ninety days following the Distribution Date as of
which the Pool Principal Balance for a Contract Pool is less than 10%, or any
other percentage as may be specified in the related prospectus supplement, of
the 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 the Certificates. In addition, if any Certificate of a Class is
subject to mandatory repurchase, the occurrence of the Repurchase Date for the
Certificate subject to mandatory repurchase will have the same effect as the
maturation of the Certificate subject to mandatory repurchase, 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; Optional Termination and Termination Auction" in this
prospectus. 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 Special Principal
Distributions or mandatory 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.
19
<PAGE>
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 the holders from their investment
in the Certificates will be adversely affected should 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 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 the
purchased Certificates that is faster (slower) than the rate actually
realized, the purchaser's actual yield to maturity will be lower than the
yield so calculated by the 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 one
month's interest to which the holders of the related Certificates are entitled
will not be distributed until the first Distribution Date after the Collection
Period in which the interest was collected.
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 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 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. The circumstances
described in the preceding sentence 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 those prepayments are made in advance of the
related Contracts' respective Due Dates during the particular Collection
Period. In that case, a non-default collection shortfall could occur because
interest that actually accrues on the related 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 the non-default
collection shortfalls are not covered by credit enhancement or advances.
20
<PAGE>
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 in this prospectus refer to sections of the form of Agreement 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 the Series. Capitalized terms used and not otherwise defined in
this prospectus 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 the Classes for that Series 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 in this prospectus 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 in this prospectus 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 the Certificate by the initial principal balance of all of the Certificates
of the same Class. Interest-only Certificates will have no Percentage
Interest. Certificates, if issued in registered form to beneficial owners of
the Certificates 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:
(1) a Contract Pool, including certain rights to receive payments on
the Contracts comprising the Contract Pool on and after the Cut-off
Date;
(2) 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;
(3) any property which initially secured a Contract and which is
acquired in the process of realizing thereon;
(4) 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;
(5) certain contractual servicing obligations of the servicer;
(6) the proceeds of all insurance policies described in this
prospectus; and
(7) 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 in the related prospectus supplement, will
be a part of the Trust Fund.
21
<PAGE>
supplement and as set forth in this prospectus 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:
. distributions of both principal and interest;
. distributions of principal only; or
. distributions of interest only.
The distributions described in the previous sentence will be made in
accordance with a formula described in the related prospectus supplement, and,
if so specified in the related prospectus supplement, the 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 the rights of the holders of
Certificates of one or more other Classes. See "Credit and Liquidity
Enhancement" in this prospectus.
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 that Class and a method of computing the amount of principal,
if any, to be distributed to the holders of the Certificates of that Class 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 the applicable Class. See "The Contract Pools" and
"--Servicing Compensation and Payment of Expenses; Certain Matters Regarding
the servicer" in this prospectus. Distributions with respect to all or a
portion of the Total Regular Principal Amount are sometimes referred to in
this prospectus 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:
. Excess Interest; or
. 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" in this prospectus. 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, the
applicable distribution 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
23
<PAGE>
supplement and as set forth in this prospectus 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:
. distributions of both principal and interest;
. distributions of principal only; or
. distributions of interest only.
The distributions described in the previous sentence will be made in
accordance with a formula described in the related prospectus supplement, and,
if so specified in the related prospectus supplement, the 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 the rights of the holders of
Certificates of one or more other Classes. See "Credit and Liquidity
Enhancement" in this prospectus.
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 that Class and a method of computing the amount of principal,
if any, to be distributed to the holders of the Certificates of that Class 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 the applicable Class. See "The Contract Pools" and
"--Servicing Compensation and Payment of Expenses; Certain Matters Regarding
the servicer" in this prospectus. Distributions with respect to all or a
portion of the Total Regular Principal Amount are sometimes referred to in
this prospectus 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:
. Excess Interest; or
. 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" in this prospectus. 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, the
applicable distribution 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
23
<PAGE>
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 the related Distribution Dates from amounts
collected on the underlying Contracts in the absence of losses or
delinquencies.
If so 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 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 the related 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 the Certificates in that 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. The
interest described in the previous sentence may be equal, subject to the
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 the related Distribution
Date, calculated at 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 the related prospectus
supplement. Variable Pass-Through Rates may vary from time to time based upon
changes in an index or other measure of certain market rates, all as more
fully described in the related prospectus supplement. In that case, the 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 the related 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 the related
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" in this prospectus.
24
<PAGE>
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 in
this prospectus 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 the Residual Interest.
Certificates evidencing a Residual Interest will not have the features
described above. Rather, if so specified in the related prospectus supplement,
Certificates evidencing a Residual Interest 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 the related prospectus supplement, any Certificates
evidencing a Residual Interest may also entitle the holders thereof to receive
additional distributions of assets of the related Trust Fund, to the extent
any 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, if 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 the related 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, 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 in this prospectus under "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 Global Certificates.
The Depository Trust Company 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 Participants and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes in
accounts of Participants, thereby eliminating the need for physical movement
of certificates. Indirect access to the DTC system is also available to the
Indirect Participants.
Unless and until Definitive Certificates are issued, beneficial owners of
the Certificates who are not Participants but desire to purchase, sell or
otherwise transfer ownership of Certificates may do so only through
Participants. In addition, beneficial owners of the Certificates will receive
all distributions of principal of, and interest on, the Certificates from the
trustee through DTC and Participants. Beneficial owners of the Certificates
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 DTC and not to
the beneficial owners of the Certificates.
Unless and until Definitive Certificates are issued, it is anticipated that
the only "certificateholder" of the Certificates will be Cede & Co., as
nominee of DTC. Beneficial owners of the Certificates will not be
certificateholders as that term is used in the Agreement. beneficial owners of
the Certificates are only permitted to exercise the rights of
certificateholders indirectly through Participants and DTC.
25
<PAGE>
If so specified in the related prospectus supplement, while the Certificates
are outstanding, 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, beneficial
owners of the Certificates who are not Participants may transfer ownership of
Certificates only through Participants by instructing its Participants to
transfer Certificates, by book-entry transfer, through DTC for the account of
the purchasers of the 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 beneficial owners of the
Certificates, or their nominees, rather than to DTC, only if:
. 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;
. the Seller, at its option, elects to terminate the book-entry system
through DTC; or
. after the occurrence of an Event of Default, beneficial owners of the
Certificates 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 beneficial owners of the Certificates is no longer in the best
interests of beneficial owners of the Certificates. See "--Servicing
Compensation and Payment of Expenses; Certain Matters Regarding the
servicer--Events of Default" below.
Upon issuance of Definitive Certificates to beneficial owners of the
Certificates, the Definitive 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. DTC will take such action with respect to any Percentage
Interests of the Certificates only at the direction of and on behalf of its
Participants to whose DTC accounts the Certificates are credited with respect
to the 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, the "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 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
26
<PAGE>
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:
. impress upon them the importance of services being Year 2000 compliance;
and
. 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 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, or other parties as designated in
the related prospectus supplement, will have the option to repurchase, upon
giving notice mailed no later than the Distribution Date next preceding the
month of the exercise of the option to repurchase, all outstanding Contracts
after the first Distribution Date on which the Pool Scheduled Principal
Balance is less than 10% or 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 the related Trust Fund may
repurchase the related Contracts will equal, after deductions of related
advances by the servicer, the greater of:
(1) the sum of:
(a) 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 (b) below, as of the final
Distribution Date; and
(b) the fair market value of the acquired property as determined by the
servicer; and
(2) the aggregate fair market value as determined by the servicer of all of
the assets of the related Trust Fund, plus
in the case of both clause (1) and (2), an amount sufficient to reimburse
certificateholders for each outstanding Class for any shortfall in interest
due thereto in respect of prior Distribution Dates and, if so specified in the
related prospectus supplement, any amounts owing to the Credit Facility
Provider. The servicer's option shall not be exercisable if there will not be
distributed to the certificateholders 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 Fund
and whether an adjustment to the Minimum Termination Amount will be made. In
no event, will losses be recognized until a liquidation of the collateral
securing any 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 Repurchase Date, the holder of the
Certificate to be repurchased 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" in this prospectus.
27
<PAGE>
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 other
percentage as may be specified in the related prospectus supplement of the
Cut-off Date Pool Principal Balance, the servicer, or other parties as
designated in the related prospectus supplement, will, in addition to the
option to repurchase the Contracts discussed above, have the option to direct
the trustee to solicit bids for a Termination Auction. Unless the servicer, or
other party as designated in the prospectus supplement, 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 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 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:
. the requirement that the highest bid equal or exceed the Minimum
Termination Amount; and
. 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)
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:
. 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
. 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.)
28
<PAGE>
Servicing Compensation and Payment of Expenses; Certain Matters Regarding the
Servicer
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 the related
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 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,
. any fees charged in connection with checks returned for non-sufficient
funds,
. 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.
29
<PAGE>
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 the 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 actual cash value or the principal
amount due from the Obligor under the related Contract. The 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. The hazard
insurance policies may provide for customary deductible amounts. Coverage
thereunder will be required to be sufficient to avoid the application of any
co-insurance provisions. The hazard insurance 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 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 the manufactured home. The 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 the
repossessed manufactured home meeting the requirements set forth above, or to
indemnify the Trust Fund against any damage to the repossessed 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 stating: (1)
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 (2) that to the best of such officer's
knowledge, the servicer has fulfilled all its obligations under the Agreement
throughout the applicable year, or, if there has been a default in the
fulfillment of any obligation, specifying each 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 other
agreements similar to the Agreement, except (1) such exceptions as such firm
believes to be immaterial and (2) such other exceptions as may be set forth in
such statement. (Sections 4.20 and 4.21.)
30
<PAGE>
Events of Default. Servicer events of default under the Agreement will
consist of, among other events:
(1) 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;
(2) 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
(3) 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
applicable, the Credit Facility Provider, or to the servicer, the trustee and
the Seller by the holders of Certificates evidencing Fractional Interests
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 the 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 the
appointment of a servicer, the trustee is obligated to act as servicer. The
trustee and the 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 the certificateholder 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 a 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 the requesting 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 the Credit Facility Provider has not been
reimbursed for all amounts due it:
(1) to cure any ambiguity;
(2) to correct or supplement any provision therein that may be inconsistent
with any other provision therein;
(3) to add to the duties or obligations of the servicer;
31
<PAGE>
(4) 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
the related Agreement, none of the trustee, the Seller or the servicer
is obligated to obtain, maintain or improve any rating assigned to the
Certificates; or
(5) to make any other provisions with respect to matters or questions
arising under the related 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, the trustee
and, if so specified in the related prospectus supplement, the Credit Facility
Provider, 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 the related
Agreement or of modifying in any manner the rights of the certificateholders;
provided, however, that no such amendment shall:
(1) 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;
(2) adversely affect in any material respect the interests of the Holders
of any Class of Certificates in a manner other than as described in
(1), without the consent of the Holders of Certificates of such Class
evidencing, as to such Class, Percentage Interests aggregating 66%; or
(3) 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:
(1) 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
the qualification of the Trust Fund or avoid any such tax or minimize
the risk of its imposition; or
(2) 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
the 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 trustee under the related Agreement or if the trustee
becomes insolvent. If the Seller removes the trustee, 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.)
32
<PAGE>
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 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 the related Agreement, or for errors in
judgment; provided, however, that such provision shall not protect the
servicer or any of its directors, officers, employees or agents 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 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 the event the servicer decides to take any other legal action, 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 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 distributions afforded by the Subordinate Certificates. If so
specified in the related prospectus supplement, this prior right will result
from one or both of the two features described in the next two succeeding
paragraphs.
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 Subordinate Certificates on any related
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 Contract collections, have been applied to
make distributions to the holders of the Subordinate 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.
33
<PAGE>
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 the related 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
Subordinate 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 the second preceding paragraph may constitute
Subordinate Certificates under the criteria described in the next preceding
paragraph, and Certificates which constitute Senior Certificates under the
criteria described in the next preceding paragraph may constitute Subordinate
Certificates under the criteria described in the second preceding paragraph.
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 splitting as
described in the previous sentence will be discussed in the applicable
prospectus supplement. The following 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 Pool Principal
Balance exceeds the Certificate Balance of the Senior Certificates. The Senior
Certificates are also given a degree of protection against loss, 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 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
34
<PAGE>
the subordination of the Subordinate 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
Certificate Balance of the Senior Certificates 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 Subordinate Certificates.
The effects of particular principal distribution formulae in this regard will
be discussed in the applicable prospectus supplement. The description of any
of the effects described in this paragraph 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 Subordinate Certificates, the rights
of one or more Classes of Subordinate Certificates to receive distributions of
principal, interest or principal and interest may be subordinated to the
rights of one or more other Classes of Subordinate Certificates to receive
distributions. Any Class of Subordinate Certificates that is entitled to
receive distributions from Contract Pool collections prior to any other Class
of Subordinate Certificates is a "mezzanine" Class of Subordinate
Certificates. The subordination of any Class of Subordinate Certificate to a
mezzanine Class of Subordinate Certificates will enhance the likelihood of
timely receipt by the holders of the mezzanine Class of Subordinate
Certificates relative to any Class of Subordinate Certificates that is
subordinate to the mezzanine Class of Subordinate Certificates. Subordinate
Certificates, including any mezzanine Classes of Subordinate 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" in
this prospectus. The effect of any subordination on any Classes of Subordinate
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 Reserve Funds 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 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 the related 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."
35
<PAGE>
Credit Facilities
The Certificates of one or more Classes may be entitled to the benefit of
one or more Credit Facilities. Each 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
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. The
related prospectus supplement will also contain certain information concerning
the "Credit Facility Provider," which information will have been provided to
the Seller by the Credit Facility Provider for use in the related 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 Liquidity Facilities, 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 the Certificates entitled to the benefit of a
Liquidity Facility 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 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
the related 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.
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:
(1) the REMIC Fund will qualify as a REMIC for federal income tax
purposes;
(2) the Certificates 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
and will be treated as debt instruments for purposes of chapter 1
of the Code (generally relating to the calculation of a
certificateholder's federal income tax liability);
36
<PAGE>
(3) 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 "residual interests" in the REMIC;
(4) the REMIC represented by the REMIC Fund will not be subject to
federal income tax as a separate entity except for:
(a) the tax on "prohibited transactions" imposed by Section 860F of
the Code,
(b) the tax on "contributions after startup date" imposed by Section
860G(d) of the Code, and
(c) the tax on "income from foreclosure property" imposed by Section
860G(c) of the Code; and
(5) those Certificates, if any, identified as 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 and the Certificates will
be treated as equity in such Trust Fund; 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:"
(1) for federal income tax purposes, the Trust Fund will not be treated
as an association, taxable mortgage pool or publicly traded
partnership taxable as a corporation; and
(2) 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 Fund 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 Orrick, Herrington & Sutcliffe LLP rendered in connection
with any Series of Certificates will be filed with the Commission on a Current
Report on Form 8-K prior to the sale 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 IRS with respect to
any of the federal income tax consequences discussed below, and no assurance
can be given that the IRS 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:
. 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
. 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 in this prospectus. In
addition to the federal income tax consequences described in this prospectus,
potential investors are advised to
37
<PAGE>
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:
(1) Certificates ("REMIC Certificates") representing interests in a REMIC
Fund with respect to which an election to be treated as a REMIC under
Sections 860A through 860G (the "REMIC Provisions") of the Code will be
made;
(2) Grantor Trust Certificates representing interests in a Trust Fund
("Grantor Trust") as to which no such election will be made; and
(3) Owner Trust Certificates or Notes which will be treated as indebtedness
for federal income tax purposes and as 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 REMIC Fund related
to any Series of Certificates to treat the REMIC 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 REMIC 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 REMIC Fund, and agreement or agreements with any underwriter, the
REMIC 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") .
38
<PAGE>
Orrick, Herrington & Sutcliffe LLP, special counsel to GreenPoint, has
prepared or reviewed the statements in this prospectus under the heading
"Federal Income Tax 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 REMIC 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:
(1) "real estate assets" within the meaning of Section 856(c)(4)(A) of the
Code; and
(2) 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 REMIC Fund are qualifying assets during
the related calendar quarter.
In the event the percentage of the REMIC 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 the
related 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 REMIC 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:
. 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
. 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.
The IRS 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 IRS 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. A Real Estate
Investment Trust ("REIT") will not be able to treat that portion of its
investment in Certificates that represents ownership of Contracts on
manufactured homes that are not treated as permanently attached as "real
estate assets" for REIT qualification purposes. In this regard, investors
should note that generally, most Contracts 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. If so specified in the related
prospectus supplement, Contracts in the related Contract Pool may permit the
Obligor to permanently attach the related manufactured home to its site even
if not attached at the date of the Contract. It is unclear whether other
assets of the REMIC 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).
39
<PAGE>
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 REMIC Fund so long as any REMIC
Certificates related to the REMIC 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:
. 80% of the issue price (generally, the principal balance) of the
contract at the time it was originated; or
. 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 IRS 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 REMIC 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 REMIC 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:
(1) temporary investments of cash received under qualified mortgages before
distribution to holders of interests in the REMIC ("cash-flow
investments");
(2) 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
(3) 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 IRS.
40
<PAGE>
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 REMIC 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 the IRS 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 REMIC Fund were treated as
a corporation, income of the REMIC Fund would be subject to corporate tax in
the hands of the REMIC 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 REMIC Fund's status
as a REMIC. It is not anticipated that the status of any REMIC 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 be
treated for purposes of calculating a certificateholder's federal income tax
liability as debt instruments that are issued by the related REMIC Fund on the
date of issuance of the Regular Certificates and not as ownership interests in
the REMIC Fund or the REMIC 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 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
41
<PAGE>
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 Service 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 Contracts 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.
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.
42
<PAGE>
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:
. a single fixed rate that appropriately takes into account the length of
the interval between payments; or
. 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:
. 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
. 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 objective financial information. For example, rates of the
following types would generally be objective rates:
(1) one or more qualified floating rates (including a multiple or inverse
of a qualified floating rate);
(2) one or more rates each of which would be a qualified floating rate for
a debt instrument denominated in a foreign currency;
(3) a yield based on changes in price of one or more items of "actively
traded" personal property;
(4) a combination of rates described in (1), (2) and (3); or
(5) 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 or if the rate is based on financial information that
is within the control of the issuer or a related party. 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:
43
<PAGE>
(1) more than one qualified floating rates; or
(2) 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 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:
(1) 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
44
<PAGE>
(b) the distribution made on such Regular Certificate during the
accrual period of amounts included in the stated redemption price
at maturity; over
(2) 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:
(1) the yield to maturity of the Regular Certificate, calculated as of the
settlement date, giving effect to the Prepayment Assumption;
(2) events (including actual prepayments) that have occurred prior to the
end of the accrual period; and
(3) 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:
. such daily portions; and
. 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 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:
. 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
45
<PAGE>
. 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:
(1) 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;
(2) for a qualified inverse floating rate, the value of the rate as of the
closing date;
(3) for any other objective rate, the fixed rate that reflects the yield
that is reasonably expected for the Certificate; and
(4) for an actual fixed rate, such hypothetical fixed rate as would result
under (1) or (2) 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 the certificateholder's taxable
income for the taxable period or periods to which such difference relates,
treated as an adjustment to interest or original issue discount, as
applicable. 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 urged to consult their
tax advisors concerning the tax treatment of such Certificates.
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
46
<PAGE>
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 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:
(1) the total remaining market discount; multiplied by
(2) 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:
(1) the total remaining market discount; multiplied by
(2) 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
47
<PAGE>
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 REMIC 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 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:
(1) 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 IRS), determined as of the date of purchase of
such Regular Certificate; over
(2) 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.
48
<PAGE>
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 REMIC Fund for which a
REMIC election is made is considered a "single-class REMIC" (as defined
below), a portion of such REMIC 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 REMIC 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 REMIC
Fund will report to each holder that has given the REMIC Fund such notice (and
others if it is required) and to the IRS, each such holder's allocable share,
if any, of the REMIC Fund's noninterest expenses. Generally, a "single-class
REMIC" is defined as:
. a REMIC that would be treated as an investment trust under Treasury
regulations but for its qualification as a REMIC; or
. 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 REMIC
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:
(1) a citizen or resident of the United States;
(2) 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;
(3) an estate, the income of which is included in gross income for United
States tax purposes regardless of its source; or
(4) 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
49
<PAGE>
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 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:
. 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
. 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 IRS, 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 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
50
<PAGE>
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, 2000, 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 IRS, 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 IRS 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
Certificates." Treasury regulations issued under Section 446 of the Code (the
"Swap Regulations") specify rules for accounting for income from and recovery
of the purchase price of such investments. 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
Contract 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.
51
<PAGE>
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 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 if they were treated for federal income tax
purposes as direct ownership interests in the related REMIC Fund or as debt
instruments issued by such REMIC 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 REMIC 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 REMIC Fund is
determined by allocating to each day in any calendar quarter its ratable
portion of the taxable income or net loss of the REMIC 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 REMIC 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 REMIC Fund will be calculated based
in part on the initial tax basis to the REMIC 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
52
<PAGE>
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
REMIC 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 REMIC 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 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 REMIC 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:
(1) the limitation on deductibility of investment interest expense and
expenses for the production of income do not apply;
(2) all bad loans will be deductible as business bad debts; and
(3) the limitation on the deductibility of interest and expenses related to
tax-exempt income will apply.
In general, the REMIC Fund's taxable income will reflect a netting of:
(1) the gross income produced by the assets of the REMIC 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
(2) deductions, including stated interest and original issue discount
expense on Regular Certificates that would be permitted if the Regular
Certificates were indebtedness of the REMIC Fund, servicing fees, and
other administrative expenses of the REMIC Fund, except as described
below under "--Expenses Other Than Interest."
Any gain or loss realized by the REMIC 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 REMIC 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 REMIC 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 IRS 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 REMIC 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.
53
<PAGE>
If a REMIC 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 REMIC 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 includible in the REMIC
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 REMIC 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 REMIC Fund's basis in a Contract exceeds the remaining stated
redemption price at maturity of such a Contract, the REMIC 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 REMIC Fund at a premium, the REMIC Fund will be entitled to amortize
such premium on a yield-to-maturity basis. Although the matter is not free
from doubt, the REMIC 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 REMIC 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:
. the prepayment may be used in whole or in part to make distributions on
Regular Certificates; and
. 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 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."
54
<PAGE>
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 REMIC Fund. However, that taxable income will not include cash received by
the REMIC Fund that represents a recovery of the REMIC 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
REMIC Fund will have the effect of amortization of the issue price of the
Residual Certificates over the life of the REMIC 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:
. Residual Certificates were taxable in the same manner as debt
instruments issued by the REMIC Fund; or
. 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 REMIC Fund. The REMIC 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 REMIC 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
REMIC Fund is considered a "single-class REMIC" as defined above in "Taxation
of Regular Certificates--Pass-Through of Expenses Other Than Interest," the
REMIC Fund's servicing, administrative and other noninterest expenses will be
allocated entirely to the Residual certificateholders. In the case where the
REMIC 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 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 REMIC
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 REMIC Fund will report quarterly to each holder of a
Residual Certificate during any calendar quarter that has given the REMIC Fund
such notice and others if it is required and to the IRS annually such holder's
allocable share, if any, of the REMIC Fund's non-interest expenses. Such
investors should consult their tax advisors in determining the consequences to
them of the allocation of the REMIC Fund's non-interest expenses.
55
<PAGE>
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:
(1) 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;
(2) the receipt of income from assets that are not the type of mortgage
loans or investments that the REMIC is permitted to hold;
(3) the receipt of compensation for services; or
(4) the receipt of gain from disposition of cash flow investments other
than pursuant to a qualified (complete) liquidation of the REMIC.
The REMIC Fund will be subject to a tax equal to 100% of the amount of any
contributions of property made to the REMIC 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 REMIC Fund, at the highest marginal
federal corporate income tax rate, on certain net income from foreclosure
property.
It is anticipated that the REMIC 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 REMIC Fund is subject to the tax on prohibited transactions or
contributions, such tax would generally be borne by the Residual
certificateholders. It is not possible to predict the amount, if any, of net
income from foreclosure property that might be received by a REMIC Fund,
because such amount will depend on the particular delinquency and foreclosure
experience of such REMIC Fund. Accordingly, no assurance can be given that the
amount of tax on such income will not be material.
Excess Inclusions. A portion of the income of the REMIC Fund allocable to a
Residual certificateholder referred to in the Code as an "excess inclusion"
(as defined below) will be subject to federal income tax in all events. Thus,
for example, an excess inclusion:
(1) may not be offset by any unrelated losses or net operating loss
carryovers of a Residual certificateholder;
(2) 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
(3) 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 treated as excess inclusions in the
hands of its shareholders with the same consequences as excess inclusions
attributed directly to a Residual certificateholder.
56
<PAGE>
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:
(1) the amount of the REMIC Fund's taxable income for the calendar quarter
allocable to the Residual certificateholder; over
(2) 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:
(1) the "adjusted issue price" (as defined below) of the Residual
Certificate at the beginning of such calendar quarter; and
(2) 120% of the "long-term Federal rate" (as 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 REMIC 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 IRS. 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 REMIC 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 uncollectable. To the extent
the income on a delinquent or defaulted Contract is greater than the deduction
allowed in respect of interest on the Regular Certificate that relates to such
Contract, the REMIC 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 REMIC 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
57
<PAGE>
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:
(1) the present value of the total anticipated excess inclusions with
respect to such Residual Certificate for periods after the transfer;
and
(2) the highest marginal federal income tax rate applicable to
corporations.
Under the REMIC Regulations, the anticipated excess inclusions must be
determined based on:
(1) events that have occurred up to the time of the transfer; and
(2) 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:
(1) 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
(2) 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:
(1) 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 not
selected by an such governmental unit);
(2) 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
(3) any organization described in Section 1381(a)(2)(C) of the Code.
58
<PAGE>
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:
(1) 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
(2) 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 due on its share
of the taxable income of the REMIC. A safe harbor is provided if:
(1) 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
(2) 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.
59
<PAGE>
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 (2) of the preceding sentence as part of the affidavit described below
under "Restrictions on Transfer of REMIC Residual Certificates."
Termination. The REMIC 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.
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 REMIC 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 REMIC
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 REMIC 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 IRS in a unified
administrative proceeding. The holders of Residual Certificates will generally
be entitled to participate in audits of the REMIC Fund by the IRS 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.
60
<PAGE>
Each Residual certificateholder is required to treat items on its return
consistently with their treatment on the REMIC 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 REMIC Fund. The IRS may assert a deficiency
resulting from a failure to comply with the consistency requirement without
instituting an administrative proceeding at the REMIC Fund level. The REMIC
Fund does not intend to register as a tax shelter pursuant to Section 6111 of
the Code because it is not anticipated that the REMIC 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 REMIC 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:
(1) shall be deemed to consent to the appointment of the servicer as:
(a) the "tax matters person" (within the meaning of Section 1.860F-4(d)
of the REMIC Regulations) for the REMIC Fund, and
(b) 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
(2) agrees to execute any documents required to give effect to (1) above.
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 supplement 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 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, 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 and the Certificates will
be treated as equity in such Trust Fund. 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
61
<PAGE>
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 IRS Ruling, no definitive advice concerning the allocation of
such items can be given.
Under current IRS 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 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:
. "real estate assets" within the meaning of Section 856(c)(4)(A) of the
Code; and
. 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 IRS 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 IRS 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. A Real Estate Investment Trust ("REIT") will not be able
to treat that portion of its investment in Certificates that represents
ownership of Contracts on manufactured homes that are not treated as
permanently attached as a "real estate asset" for REIT qualification purposes.
In this regard, investors should note that generally, most Contracts 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. If so specified
in the related prospectus supplement, Contracts in the related Contract Pool
may permit the Obligor to permanently attach the related manufactured home to
its site even if not attached at 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
62
<PAGE>
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 these rules under various circumstances, including the following:
(1) if any servicing compensation is deemed to exceed a reasonable amount;
(2) if GreenPoint or any other party retains a retained yield with respect
to the Contracts comprising a Contract pool;
(3) 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
(4) 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.
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.
63
<PAGE>
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 IRS 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:
. a representative initial offering price of the Grantor Trust
Certificates to the public; and
. 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 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 ("Notes"), under
64
<PAGE>
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 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 the agreement or agreements with any underwriter, for
federal income tax purposes:
. the Trust Fund will not be classified as a corporation or publicly
traded partnership; and
. 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 transaction, while relevant factors, are not conclusive
evidence of its economic substance. In appropriate circumstances, the courts
have allowed taxpayers as well as 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 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 no transaction closely comparable to the ones contemplated in
this prospectus has 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 Fund, each of which may be treated for
federal income tax purposes either as debt or as equity interests in the Trust
Fund. If all of the Owner Trust Certificates or Notes and other interests,
other than the Transferor Certificate, in the Trust Fund were characterized as
debt, the Trust Fund 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 Fund would
be disregarded for federal income tax purposes. Alternatively, if some of
those interests were characterized as equity interests in the Trust Fund, the
Trust Fund 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 Fund. However, special counsel to GreenPoint is of the opinion that,
under current law, any entity constituted by the Trust Fund will not be an
association, taxable mortgage pool or publicly traded partnership taxable as a
corporation.
65
<PAGE>
Possible Treatment of the Trust Fund 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 Fund 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 Fund 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 beneficial owners of
the Certificates. No distributions from the Trust Fund 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 beneficial owners of the Certificates were treated as payments of
interest thereon. In addition, distributions to beneficial owners of the
Certificates not treated as holding debt would be dividend income to the
extent of the current and accumulated earnings and profits of the corporation
and beneficial owners of the Certificates 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 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 Fund 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 Fund 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 Fund 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 Fund 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 Fund treated as partners equaled or exceeded
100, the
66
<PAGE>
Transferor may cause the Trust Fund 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.
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 "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:
(1) 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 "Federal Income Tax Consequences--Taxation of Residual
Certificates--Tax on Transfers of Residual Certificates to Certain
Organizations;"
(2) 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
(3) 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 "Federal Income Tax
Consequences--Certificates as REMIC Residual Interests--Excess Inclusions."
67
<PAGE>
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 or "SMMEA." Classes of Certificates that qualify as
"mortgage related securities" will be legal investments for persons, 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"). The Policy Statement sets 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."
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.
68
<PAGE>
ERISA Considerations
ERISA, as amended, imposes certain restrictions on employee benefit and
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" in this
prospectus.
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 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 DOL 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 their initial issuance. 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. The exemptions referred to in the previous sentence can only apply to
securities backed by
69
<PAGE>
certain receivables, loans and other obligations that are secured and, among
other conditions, are sold in an offering with respect to which the
underwriter holding the exemption 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 that possibility.
Any Plan fiduciary that proposes to cause a Plan to purchase Certificates
should consult with its legal advisors 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 the purchase of
Certificates. 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 the legal aspects discussed in
the following paragraphs 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 the Contracts, and will
assume the obligations of the obligee, under the Contracts. Each Contract
evidences both (1) the obligation of the Obligor to repay the loan evidenced
thereby, and (2) 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"
in this prospectus 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 Homes. Each Contract
generally will be "chattel paper" as defined in the UCC as in effect in
California and the jurisdiction in which the related manufactured home was
located at origination. GreenPoint's chief executive offices are located in
California. Under the UCC as in effect in California and each jurisdiction in
which the related manufactured home was located at origination, 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 the assignment to the
trustee. 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 California 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
70
<PAGE>
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. Security interests in manufactured homes similar to
the ones securing the Contracts 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 the 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 the 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 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. Under the certificate of title
laws or the UCC, 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 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. The representation described in the
previous sentence, 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" in this prospectus. 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
71
<PAGE>
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.
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, the unperfected security interest would be
subordinate to the claims of, among others, subsequent purchasers for value of
and holders of perfected security interests in the related 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 the relocation and thereafter until
the owner registers the manufactured home in the new state. If the owner were
to relocate a manufactured home to another state and were to re-register the
manufactured home in the new 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 of the certificate of
title if it holds the certificate of title to a manufactured home which has
been relocated to another state and re-registered 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 the re-
perfection discussed in this paragraph 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, 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 a
lien arises subsequent to the date of initial issuance of the Certificates.
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
72
<PAGE>
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 a repossession 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 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 the related 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-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.
73
<PAGE>
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 Fund, is unable to sell a manufactured
home in the course of its ordinary commercial practices within 33 months after
its acquisition thereof, or a longer period as permitted by the Agreement, the
servicer will auction such manufactured 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
lienholders 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
74
<PAGE>
on the debt without first exhausting the security afforded under a deed of
trust or mortgage; 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.
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 contract; however, the obligor also may be able to
assert the rule to set off remaining amounts due
75
<PAGE>
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 the
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 the Contracts thus capped 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. If so specified in the
related prospectus supplement, GreenPoint will be required under the related
Agreement for a Series of Certificates to consent to a transfer as described
in the previous sentence 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 the related 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.
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.
76
<PAGE>
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 the 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 the Certificates 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
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 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
methods.
77
<PAGE>
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 that Series from the underwriter or
underwriters at a price specified in the related prospectus supplement. The
purchaser may thereafter from time to time offer and sell, pursuant to this
prospectus, some or all of the Certificates so purchased directly, through one
or more underwriters to be designated at the time of the offering of the
Certificates or through broker-dealers acting as agent and/or principal. The
offering may be restricted in the manner specified in the related prospectus
supplement. 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 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.
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, 1998 and
1997 incorporated in this prospectus by reference to GFC's Annual Report on
Form 10-K for each of the three years ended December 31, 1998 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.
78
<PAGE>
Glossary
Below are abbreviated definitions of significant capitalized terms used in
this prospectus and in the prospectus supplement. The pooling and servicing
agreement for the related series may contain more complete definitions of the
terms used herein and in the prospectus supplement and reference should be
made to the pooling and servicing agreement for the related series for a more
complete understanding of all such terms.
"Agreement" means the pooling and servicing agreement relating to each
Series of Certificates as described in the related prospectus supplement.
"Annual Servicing Rate" means 1.00% per annum or such other amount pursuant
to the related Agreement.
"Available Distribution Amount" means, with respect to each Distribution
Date, the amount available for distribution to the certificateholders as
described in the related prospectus supplement.
"Bulk Sellers" means lenders or finance companies with whom GreenPoint may
have or may establish referral arrangements, governmental agencies or
instrumentalities or the portfolios of other entities that purchase and hold
manufactured housing contracts
"Certificate" means any of the GreenPoint Manufactured Housing Contract
Trust Pass-Through Certificates issuable in Series.
"Certificate Account" means the separate account created and initially
maintained by the trustee at an Eligible Institution pursuant to the related
Agreement for the benefit of the holders of the Certificates.
"Certificate Balance" means, for any Class as of any Distribution Date, the
initial Certificate Balance of that Class less all amounts previously
distributed to certificateholders of that Class on account of principal.
"Class" means any class of Certificates within a Series.
"Closing Date" means the date of the initial issuance of any Series of
Certificates.
"Code" means the Internal Revenue Code of 1986, as it may be modified or
amended from time to time.
"Collection Period" means, with respect to any Distribution Date, the
calendar month preceding the month of the Distribution Date.
"Contract" means any one of the manufactured housing installment sale
contracts or installment loan agreements described in any Contract Schedule.
Contracts include all related security interests and any and all rights to
receive payments which are due pursuant thereto from and after the related
Cut-off Date, but exclude any rights to receive payments which were due prior
to the related Cut-off Date.
"Contract Files" means 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.
"Contract Pool" means the pool of Contracts held in the Trust Fund for each
Series.
"Contract Rate" means, with respect to each Contract, the per annum rate of
interest borne by such Contract.
"Contract Schedule" means the schedule attached to the Agreement for any
Series of Certificates describing the Contracts to be conveyed to the Contract
Pool.
79
<PAGE>
"Credit Facility" means any letters of credit, swap agreements, interest
rate caps, surety bonds or similar credit facilities.
"Cut-off Date" means, the date specified in the related prospectus
supplement from which principal and interest payments on the related Contracts
are included in the Trust Fund for the related Series.
"Cut-off Date Pool Principal Balance" means the aggregate Scheduled
Principal Balances of the Contracts as of the Cut-off Date.
"Definitive Certificates" means Certificates that are issued in registered
form.
"Determination Date" means the third business day prior to each Distribution
Date.
"Distribution Date" means, the date payments are made to certificateholders
as provided in the related prospectus supplement.
"Due Date" means the day of the month on which each scheduled payment of
principal and interest is due on a Contract, exclusive of any days of grace.
"Eligible Institution" means 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 FDIC whose commercial paper, long-term
deposits or long-term unsecured senior debt has a rating of A-1 by S&P and P-1
by Moody's in the case of commercial paper or in one of the two highest rating
categories by S&P and Moody's 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 S&P and
Moody's.
"Eligible Investments" means, 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 A-
1 by S&P and P-1 by Moody's; money market funds acceptable to S&P and Moody's
(as evidenced by a letter from S&P and Moody's to such effect); and other
obligations acceptable to S&P and Moody's.
"Eligible Substitute Contract" means a contract that satisfies, as of the
date of its substitution, the representations and warranties specified in the
related 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 the 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.
"Excess Interest" means the amount, if any, by which the interest collected
on non-defaulted 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.
"Formula Principal Distribution Amount" means, with respect to each
Distribution Date, an amount that equals the sum of:
. the Total Regular Principal Amount for the related Distribution Date;
and
. any previously undistributed shortfalls in the distribution of the Total
Regular Principal Amount in respect of prior Distribution Dates.
80
<PAGE>
"Fractional Interests" means, as to any Certificate, the product of:
. the Percentage Interest evidenced by such Certificate; and
. the amount derived from dividing the certificate balance of the Class
represented by such Certificate by the aggregate certificate balance of
each Class.
"Global Certificate" means one or more global certificates that are
initially registered in the name of Cede & Co., as nominee of DTC, on behalf
of the beneficial owners of the Certificates.
"GFC" means GreenPoint Financial Corp. its successors and assigns.
"GreenPoint" means GreenPoint Credit, LLC its successors and assigns.
"Indirect Participants" means banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly.
"Initial Principal Balance" means the Principal Balances of a Class of
Certificates on the Closing Date as set forth under "Summary Information" in
the related prospectus supplement.
"IRS" means the Internal Revenue Service.
"Land-in Lieu Contract" or "Land Home Contract" means the Obligor owns the
real estate on which the related manufactured home is located and provides a
mortgage on the real estate in lieu of all or part of any required down
payment for its Contract. If so specified in the related prospectus
supplement, all Land-in Lieu and Land Home Contracts will have financed or re-
financed the purchase of the related manufactured home together with the real
estate on which the manufactured home is located.
"Liquidated Contract" means a defaulted Contract as to which all 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 the disposition have been received.
"Liquidation Expenses" means reimbursements to the servicer in the amount of
expenses incurred in connection with the liquidation of any Contracts.
"Liquidation Proceeds" means amounts that the servicer expects to recover
relating to a defaulted Contract.
"Liquidity Facility" means certificate purchase agreements or other
liquidity facilities.
"loan-to-value ratio" or "LTV" means, with respect to each Contract, a
fraction, expressed as a percentage, the numerator of which is all of the
amounts owing on the Contract at the time the ratio is determined and the
denominator of which is the Value.
"Minimum Termination Amount" means, 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
each respective Class and, if so specified in the related prospectus
supplement, any amounts owing to the provider of a Credit Facility.
"Monthly Servicing Fee" means, as of any Distribution Date, an amount equal
to one-twelfth of the Annual Servicing Rate of the Scheduled Principal Balance
for such Distribution Date.
"Obligor" means the obligor under a Contract.
"Offered Certificates" means the publicly offered certificates with respect
to a Series as described in the related prospectus supplement.
81
<PAGE>
"Participants" means securities brokers and dealers, banks and trust
companies and clearing corporations and may include certain other
organizations that are DTC participating organizations.
"Pass-Through Rate" means the rate of interest payable on each Certificate.
"Percentage Interest" means, as to any Certificate of any Class other than a
Class R Certificate, the percentage interest evidenced thereby in
distributions required to be made on the Certificates of such Class, such
percentage interest being equal to the percentage, for the Class R
Certificates, the percentage set forth on the face thereof, and for all other
Certificates, to be obtained by dividing:
. the original denomination of such Certificate, by
. the aggregate of the original denominations of all of the Certificates
of such Class.
"Pool Principal Balance" means, as to any Distribution Date, the aggregate
principal balances of the underlying Contracts relating to each Series.
"Pool Scheduled Principal Balance" means, with respect to any Distribution
Date, an amount that is equal to the Cut-off Date Pool Principal Balance, less
the aggregate of the Total Regular Principal Amounts for all prior
Distribution Dates.
"Prepayment Model" means the model used in the related prospectus supplement
and which is based on an assumed rate of prepayment each month of the then
unpaid principal balance of a pool of new contracts.
"Principal Balance" means, with respect to each Class of Certificates, its
balance as of the Closing Date reduced by all distributions on such Class in
respect of principal to such Class of Certificates.
"Rate Period" means the time period between Pass-Through Rate adjustments.
"REMIC Fund" means, with respect to a Series identified in the related
prospectus supplement as being subject to an election to be treated as a REMIC
for federal income tax purposes, those assets of the Trust Fund related to
that Series with respect to which an election to be treated as a REMIC will be
made, as described in the related prospectus supplement.
"Replaced Contract" means a Contract as to which the Seller has a repurchase
obligation and which, at the Seller's option, is replaced in the related Trust
Fund by an Eligible Substitute Contract.
"Repurchase Date" means the date on which any Certificate is subject to
repurchase.
"Reserve Fund" means, with respect to any Series, the spread accounts or
other reserve funds established pursuant to the related Agreement.
"Residual Interest" means a residual interest in the Trust Fund of any
Series.
"Scheduled Payment" means the scheduled payment due on the Contracts on each
monthly Due Date.
"Scheduled Principal Balance" means, with respect to each Contract and any
Distribution Date, its unpaid scheduled principal balance as of the Cut-off
Date reduced by all previous partial prepayments, all previous scheduled
principal payments, whether or not paid, and the scheduled principal payment
due on the Due Date in the Collection Period immediately preceding such
Distribution Date.
"Seller" means GreenPoint, in its capacity as originator and seller of the
Contracts.
"Senior Certificates" means certain of the Certificates of one or more
Classes of a multiple-Class Series.
"Series" means one or more series of Certificates sold from time to time
pursuant to the related prospectus supplement.
82
<PAGE>
"Step-Up Rate" means actuarial or simple interest Contracts bearing a
Contract Rate that is fixed or variable and increases in specified increments
on particular dates.
"Subordinate Certificates" means certain of the Certificates of one or more
Classes of a multiple-Class Series other than the Senior Certificates for that
Series.
"Termination Auction" the purchase at an auction of the Contracts remaining
in the Trust Fund for a particular Series as described in the related
prospectus supplement.
"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 related
Distribution Date designated in the related prospectus supplement. The
reduction described in the previous sentence 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.
"Trust Fund" means the assets of the trust fund created by GreenPoint, in
which the Certificates for the related Series represent an interest, as
described in the related prospectus supplement.
"Underwriting Agreement" means the underwriting agreement relating to each
Series of Certificates as described in the related prospectus supplement.
"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 (1) 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 (2) in the case of a
manufactured home that is already located on the land, the final appraised
value of the land and manufactured home together.
"WAC" means the Weighted Average Contract Rate of a particular pool as of
the first day of the month of the sale of the pool.
"WAM" means the weighted average remaining term to maturity of the contracts
in a particular pool as of the first day of the month of the sale of the pool.
"Weighted Average Contract Rate" means the weighted average of the Contract
Rates of the Contracts.
83
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
Item 14. Other Expenses of Issuance and Distribution.
<S> <C>
Registration fee................................................... $1,290,166.00
Printing and engraving costs....................................... $ 400,000.00
Legal fees and expenses............................................ $ 800,000.00
Accounting fees and expenses....................................... $ 320,000.00
Trustee's fees and expenses........................................ $ 40,000.00
Blue Sky Qualification Fees and Expenses (including Counsel Fees).. $ 20,000.00
Rating Agency Fees................................................. $1,200,000.00
Total.............................................................. $4,070,166.00
</TABLE>
- --------
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware,
as amended, under which GreenPoint Financial Corp. is 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.
Section 18-108 of the Limited Liability Company Act of the State of
Delaware, as amended, under which GreenPoint Credit, LLC is formed, empowers a
limited liability company to indemnify and hold harmless any member or manager
or other person from and against any and all claims and demands whatsoever.
1. GreenPoint Credit, LLC. Article IX of GreenPoint Credit, LLC's
----------------------
Limited Liability Company Agreement provides as follows:
Indemnification.
---------------
9.1 The Company shall indemnify and hold harmless 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 manager or officer of the Company 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 Company (whether
the basis of such action, suit or proceeding is alleged action in an official
capacity as a director, officer, manager, 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 amount 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 Company shall indemnify
any such indemnitee in 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 Management Committee. The right to
indemnification conferred in this Section 9 shall include the right to be paid
by the Company 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 Section 9
shall be contract rights and such rights shall continue as to an indemnitee who
has ceased to be a manager or officer, and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
9.2 If a claim under this Section 9 is not paid in full by the
corporation within sixty (60) days after a written claim has been received by
the Company, 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 Company 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 Section 9 or otherwise, shall be on the
Company.
9.3 The rights to indemnification and to the advancement of expenses
conferred in this Section 9 shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the Certificate of
Formation, this Agreement, a vote of the members or managers, or otherwise.
9.4 The Company may, to the extent authorized from time to time by
the Management Committee, grant rights to indemnification and to the advancement
of expenses to any employee or agent of the Company to the fullest extent of the
provisions of this Section 9 with respect to the indemnification and advancement
of expenses of managers and officers of the Company.
II-1
<PAGE>
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
------- ----------------------
<S> <C>
1.1 Form of Underwriting. (Incorporated by reference to exhibit 1.1 of registration
statement no. 333-59731)
2.1 Certificate of Merger of GreenPoint Credit Corp. into GreenPoint Credit, LLC.
2.2 Agreement of Merger of GreenPoint Credit Corp. into GreenPoint Credit, LLC.
3.1 Certificate of Incorporation of GreenPoint Financial Corp. (Incorporated by reference
to exhibit 3.1 of registration statement no. 333-59731)
3.2 Certificate of Incorporation of GreenPoint Credit Corp. (Incorporated by reference
to exhibit 3.2 of registration statement no. 333-59731)
3.3 By-Laws of GreenPoint Financial Corp. (Incorporated by reference to exhibit 3.3 of
registration statement no. 333-59731)
3.4 By-Laws of GreenPoint Credit Corp. (Incorporated by reference to exhibit 3.4 of
registration statement no. 333-59731)
3.5 Certificate of Formation of GreenPoint Credit, LLC.
3.6 Limited Liability Company Agreement of GreenPoint Credit, LLC.
4.1 Form of Pooling and Servicing Agreement. (Incorporated by reference to exhibit 4.1
of registration statement no. 333-59731)
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.
23.2* Consent of PricewaterhouseCoopers LLP.
24.1* Powers of Attorney for GreenPoint Financial Corp.
24.2 Powers of Attorney for GreenPoint Credit, LLC (included on signature page hereto).
25.1 Not Applicable.
26.1 Not Applicable.
27.1 Not Applicable.
99.1 Not Applicable.
</TABLE>
* Filed Previously.
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
II-5
<PAGE>
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.
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
II-6
<PAGE>
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 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 appears
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 he 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 Post-
Effective 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 Executive October 14, 1999
- ------------------------------ Officer) and Manager
John W. Wheeler
/s/ John S. Buchanan Senior Vice President, October 14, 1999
- ------------------------------ Treasurer (Principal Financial and
John S. Buchanan Accounting Officer) and Manager
/s/ Martin L. McNabb Executive Vice President October 14, 1999
- ------------------------------ and Manager
Martin L. McNabb
/s/ Abdul H. Rajput Executive Vice President October 14, 1999
- ------------------------------ and Manager
Abdul H. Rajput
</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 and has duly caused this Post-Effective
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 14, 1999.
GREENPOINT CREDIT, LLC
By: /s/ John W. Wheeler
------------------------
John W. Wheeler
Manager 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 and has duly caused this Post-Effective
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 14, 1999.
GREENPOINT FINANCIAL CORP.
By: /s/ Howard C. Bluver
---------------------------
Howard C. Bluver
Senior V.P. and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective 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/ Thomas S. Johnson
- ------------------------------
Thomas S. Johnson* Chairman of the Board and Chief October 14, 1999
Executive Officer
/s/ Bharat B. Bhatt
- ------------------------------
Bharat B. Bhatt* Member of the Board, President and October 14, 1999
Chief Operating Officer
/s/ Jeffrey Leeds
- ------------------------------
Jeffrey Leeds* Executive Vice President, Finance October 14, 1999
(Principal Financial Officer)
/s/ Mary Beth Farrell
- ------------------------------
Mary Beth Farrell* Senior Vice President and Comptroller October 14, 1999
/s/ Wilfred O. Ohl
- ------------------------------
Wilfred O. Ohl* Director October 14, 1999
/s/ Robert M. McLane
- ------------------------------
Robert M. McLane* Director October 14, 1999
/s/ Dan F. Huebner
- ------------------------------
Dan F. Huebner* Director October 14, 1999
/s/ Robert P. Quinn
- ------------------------------
Robert P. Quinn* Director October 14, 1999
/s/ Robert F. Vizza
- ------------------------------
Robert F. Vizza* Director October 14, 1999
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ William M. Jackson
- ------------------------------
William M. Jackson* Director October 14, 1999
/s/ Jules Zimmerman
- ------------------------------
Jules Zimmerman* Director October 14, 1999
/s/ Charles B. McQuade
- ------------------------------
Charles B. McQuade* Director October 14, 1999
/s/ Alvin N. Puryear
- ------------------------------
Alvin N. Puryear* Director October 14, 1999
/s/ Susan J. Kropf
- ------------------------------
Susan J. Kropf* Director October 14, 1999
/s/ Edward C. Schmultz
- ------------------------------
Edward C. Schmultz* Director October 14, 1999
/s/ Peter Paul
- ------------------------------
Peter Paul* Director October 14, 1999
</TABLE>
* Signed by Howard C. Bluver, Attorney-in-Fact.
II-10
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
- ------- --------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting. (Incorporated by reference to exhibit 1.1 of
registration statement no. 333-59731)
2.1 Certificate of Merger of GreenPoint Credit Corp. into GreenPoint
Credit, LLC.
2.2 Agreement of Merger of GreenPoint Credit Corp. into GreenPoint
Credit, LLC.
3.1 Certificate of Incorporation of GreenPoint Financial Corp.
(Incorporated by reference to exhibit 3.1 of registration statement
no. 333-59731)
3.2 Certificate of Incorporation of GreenPoint Credit Corp.
(Incorporated by reference to exhibit 3.2 of registration statement
no. 333-59731)
3.3 By-Laws of GreenPoint Financial Corp. (Incorporated by reference to
exhibit 3.3 of registration statement no. 333-59731)
3.4 By-Laws of GreenPoint Credit Corp. (Incorporated by reference to
exhibit 3.4 of registration statement no. 333-59731)
3.5 Certificate of Formation of GreenPoint Credit, LLC.
3.6 Limited Liability Company Agreement of GreenPoint Credit, LLC.
4.1 Form of Pooling and Servicing Agreement. (Incorporated by reference
to exhibit 4.1 of registration statement no. 333-59731)
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.
23.2* Consent of PricewaterhouseCoopers LLP.
24.1* Powers of Attorney for GreenPoint Financial Corp.
24.2 Powers of Attorney for GreenPoint Credit, LLC (included on signature
page hereto).
25.1 Not Applicable.
26.1 Not Applicable.
27.1 Not Applicable.
99.1 Not Applicable.
</TABLE>
* Filed Previously.
<PAGE>
Exhibit 2.1
CERTIFICATE OF MERGER
OF
GREENPOINT CREDIT CORP.
INTO
GREENPOINT CREDIT, LLC
Under Section 264 of the General Corporation Law
FIRST: The name and jurisdiction of formation and organization of each
entity to merge is a follows:
(1) GreenPoint Credit Corp.-Delaware
(2) GreenPoint Credit, LLC-Delaware
SECOND: An Agreement of Merger has been approved and executed by each of the
entities subject to the merger in the following manner:
(a) As to GreenPoint Credit Corp., by the unanimous written consent
of its board of directors followed by the unanimous written
consent of its sole shareholder, GreenPoint Mortgage Funding,
Inc.
(b) As to GreenPoint Credit, LLC, by the unanimous written consent
of the management committee followed by the consent of its sole
member, GreenPoint Mortgage Funding, Inc.
THIRD: The name of the surviving domestic limited liability company is
GreenPoint Credit, LLC.
FOURTH: The future effective date or time of the merger is as of the close of
business on September 30, 1999.
FIFTH: The Agreement of Merger is on file at the place of business of
GreenPoint Credit, LLC at 10089 Willow Creek Road, San Diego, CA
92131.
SIXTH: A copy of the Agreement of Merger will be furnished by GreenPoint
Credit, LLC, on request and without cost to any member of GreenPoint
Credit, LLC or to any person or entity holding an interest in
GreenPoint Credit Corp., the entities which are to merge pursuant to
the Agreement of Merger.
Page 1 of 2
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Certificate and
affirm the truth of the statements herein set forth, under penalty of perjury,
on this 20th day of September, 1999.
GREENPOINT CREDIT, LLC
/s/ Michael F. Najewicz
---------------------------------
Name: Michael F. Najewicz
Title: Senior Vice President and
General Counsel
<PAGE>
EXHIBIT 2.2
AGREEMENT OF MERGER
OF
GREENPOINT CREDIT CORP.
INTO
GREENPOINT CREDIT, LLC
ARTICLE I
NAMES AND CONSTITUENT AND SURVIVING ENTITIES
1.1 Constituents. The name of each constituent entity is GreenPoint
------------
Credit Corp., a Delaware Corporation, and GreenPoint Credit, LLC, a Delaware
Limited Liability Company.
1.2 Surviving. The name of the surviving entity is GreenPoint Credit, LLC,
---------
a Delaware Limited Liability Company.
ARTICLE II
MERGER
2.1 The Merger. At the Effective Date (as defined in Section 2.2),
----------
GreenPoint Credit Corp. shall be merged with and into GreenPoint Credit, LLC,
the separate existence of GreenPoint Credit Corp. shall cease, and GreenPoint
Credit, LLC shall be the surviving entity (the "Surviving Entity").
2.2 Effective Date. The merger shall become effective as of the close of
--------------
business on September 30, 1999 (the "Effective Date").
Page 1 of 3
<PAGE>
ARTICLE III
TERMS AND CONDITIONS OF PROPOSED MERGER
The terms and conditions of the proposed merger are as follows:
This Agreement shall have been approved by the board of directors of
GreenPoint Credit Corp. and by its sole shareholder,GreenPoint Mortgage
Funding,Inc.("GP FUNDING"),and all consents from third parties and government
agencies required to comsummate the merger shall be obtained.
This Agreement shall be approved by the management committee of GreenPoint
Credit, LLC and by GP Funding in its capacity as the sole member of GreenPoint,
LLC, and all consents from third parties and government agencies required to
consummate the merger shall be obtained.
ARTICLE IV
EFFECT OF MERGER
When the merger is effective, all of the rights, privileges, and powers of
GreenPoint Credit Corp. and GreenPoint Credit, LLC, and all properties, real,
personal, and mixed, and all debts due to either GreenPoint Credit Corp. or
GreenPoint Credit, LLC, as well as all other things and causes of action
belonging to each of such entities, shall be vested in the Surviving Entity and
shall thereafter be the property of the Surviving Entity as they were of each of
GreenPoint Credit Corp. and GreenPoint Credit, LLC immediately prior to the
merger, and the title to any real property vested by deed or otherwise, under
the laws of the State of Delaware, in either of such entities shall not revert
or be in any way impaired by reason of the merger; but all rights of creditors,
and all liens upon any property of either of said entities shall be preserved
unimpaired, and all debts, liabilities and duties of each of said entities shall
thenceforth attach to the Surviving Entity, and may be enforced against it to
the same extent as if said debts, liabilities, and duties had been incurred or
contracted by it.
When the merger is effective, any fictitious names previously filed by
GreenPoint Credit, LLC or GreenPoint Credit Corp. with the Secretary of State
in any state shall canceled by GreenPoint Credit, LLC, and GreenPoint Credit,
LLC shall thereafter conduct business in each such state under its official
names as filed in Delaware, "GreenPoint Credit, LLC".
When the merger is effective, GreenPoint Credit Corp. shall surrender its
shares which shall then be canceled.
Page 2 of 3
<PAGE>
ARTICLE V
CERTIFICATE OF FORMATION AND
LIMITED LIABILITY COMPANY AGREEMENT
The Certificate of Formation and Limited Liability Company Agreement of
GreenPoint Credit, LLC as in effect immediately prior to the Effective Date
shall be the Certificate of Formation and Limited Liability Company Agreement
of the Surviving Entity.
ARTICLE VI
MANNER OF CONVERTING SHARES OF
GREENPOINT CREDIT CORP.
INTO AN INTEREST IN THE SURVIVING ENTITY
The manner and basis for converting shares of GreenPoint Credit Corp.
into an interest in the Surviving Entity shall be as follows:
All shares of GreenPoint Credit Corp. outstanding on Effective Date
of the Merger, all of which are owned by GP Funding, shall be retired, and
all rights in respect thereto shall, upon such Effective Date, be converted
into and exchanged for additional interests in the Surviving Entity, such
that on and after the Effective Date, GP Funding shall be the sole member
of, and shall own 100% of the interest in, the Surviving Entity.
ARTICLE VII
TAX TREATMENT OF THE MERGER
The parties agree to treat the proposed merger as a complete liquidation of
GreenPoint Credit Corp. within the meaning of section 332 of the Internal
Revenue Code of 1986 (the "Code") or, in conjunction with the transfer by
Headlands Mortgage Company of its interest in GreenPoint Credit Corp. to
GreenPoint Mortgage Funding, Inc., as a tax free reorganization under section
368(a) of the Code.
Page 3 of 3
<PAGE>
EXHIBIT 3.5
CERTIFICATE OF FORMATION
OF
GREENPOINT CREDIT, LLC
This Certificate of Formation of GreenPoint Credit, LLC, is being duly
executed and filed by the undersigned organizer for the purpose of forming a
limited liability company pursuant to the Delaware Limited Liability Company Act
(6 Del. C. Section 18-101, et seq.).
1. The name of the limited liability company is GreenPoint Credit, LLC
(the "Company").
2. The address of the registered office of the Company in the State of
Delaware is 30 Old Rudnick Lane, Suite 100, Dover, Delaware 19901.
3. The name of the Company's registered agent at that address is Lexis
Document Services, Inc.
4. A manager of the Company shall not be personally liable to the Company
or its member for monetary damages for breach of fiduciary duty as a manager
except for liability (i) for any breach of the manager's duty of loyalty to the
Company or its members, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, or (iii) for any
transaction from which the manager derived any improper personal benefit. No
amendment to or repeal of this Article 4 shall apply to or have any effect on
the liability or alleged liability of any manager of the Company for or with
respect to any acts or omissions of such manager occurring prior to such
amendment or repeal. If the Delaware Limited Liability Company Act is amended
hereafter to expand or limit the liability of a manager, then the liability of a
manager of the Company shall be expanded to the extent required or limited to
the extent permitted by the Delaware Limited Liability Company Act, as amended.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation of GreenPoint Credit, LLC this 23rd day of June, 1999.
/s/ James M. Fantaci
---------------------------
JAMES M. FANTACI, ORGANIZER
-1-
<PAGE>
EXHIBIT 3.6
LIMITED LIABILITY COMPANY AGREEMENT
OF
GREENPOINT CREDIT, LLC
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
ARTICLE I DEFINITIONS........................................ 1
ARTICLE II FORMATION.......................................... 2
2.1 Formation.......................................... 2
2.2 Term............................................... 2
2.3 Perfection of Limited Liability Company............ 2
2.4 Name............................................... 2
2.5 Addresses of Parties............................... 2
2.6 Purpose and Powers................................. 2
2.7 Tax Treatment...................................... 2
ARTICLE III MEMBERS............................................ 2
3.1 Identity of Member................................. 2
3.2 Limited Liability.................................. 2
ARTICLE IV CAPITAL............................................ 3
4.1 Capital Contribution............................... 3
4.2 Loans and Advances................................. 3
ARTICLE V DISTRIBUTIONS...................................... 3
ARTICLE VI MANAGEMENT......................................... 3
6.1 Management Committee............................... 3
6.2 Meetings of Managers............................... 4
6.3 Regular Meetings - Notice.......................... 4
6.4 Special Meetings - Notice.......................... 4
6.5 Quorum............................................. 4
6.6 Waiver by Writing.................................. 5
6.7 Waiver by Attendance............................... 5
6.8 Vacancies.......................................... 5
6.9 Committees......................................... 5
6.10 Compensation of Managers and Committee Members..... 5
6.11 Removal of Managers................................ 5
ARTICLE VII OFFICERS........................................... 6
7.1 Elected Officers................................... 6
7.2 Removal............................................ 7
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(continued)
<C> <S> <C>
7.3 Salaries and Compensation.......................... 7
7.4 Delegation of Authority to Hire, Discharge, etc.... 7
7.5 The President...................................... 7
7.6 Vice President..................................... 7
7.7 The Secretary and Assistant Secretary.............. 8
7.8 The Treasurer and Assistant Treasurer.............. 8
7.9 Duties of Officers May Be Delegated.................. 9
ARTICLE VIII DISSOLUTION, LIQUIDATION AND TERMINATION........... 9
8.1 Dissolution........................................ 9
8.2 Liquidation and Termination........................ 9
8.3 Winding Up......................................... 9
8.4 Distribution In-Kind............................... 9
8.5 Return of Capital Contribution..................... 10
8.6 Required Filings................................... 10
ARTICLE IX INDEMNIFICATION.................................... 10
ARTICLE X MISCELLANEOUS...................................... 11
10.1 Books and Records of the Company................... 11
10.2 Bank Accounts...................................... 11
10.3 Annual Accounting Period........................... 11
10.4 Entire Agreement; Amendment........................ 11
10.5 Applicable Law..................................... 12
10.6 Section Titles..................................... 12
10.7 Terms.............................................. 12
10.8 Separability of Provisions......................... 12
10.9 Title to Company Property.......................... 12
</TABLE>
-ii-
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
GREENPOINT CREDIT, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and
entered into effective the 23rd day of June, 1999, by and among GreenPoint
Mortgage Funding, Inc. (the "Member") and GreenPoint Credit, LLC (the
"Company").
The Company was formed pursuant to the provisions of the Delaware Limited
Liability Company Act on June 23, 1999. The parties desire that this Agreement
govern the structure and management of the Company.
NOW THEREFORE, in consideration of the mutual promises of the parties, and
of good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, it is mutually agreed by and between the parties as
follows:
ARTICLE I
DEFINITIONS
The following terms have the following respective definitions (unless the
context otherwise requires). The singular shall include the plural, and the
masculine gender shall include the feminine and neuter, and conversely, as the
context requires.
"Act" means the Delaware Limited Liability Company Act, as amended, or any
successor statute thereto.
"Agreement" means this Limited Liability Company Agreement as initially
executed or as amended, modified or supplemented from time to time, as the
context requires.
"Certificate of Formation" means the Company's Certificate of Formation
filed with the Delaware Secretary of State on June 23, 1999.
"Code" means the Internal Revenue Code of 1986 as amended, or any
corresponding provisions of succeeding revenue laws.
"Fiscal Year" means the fiscal year of the Company, which shall be the 12
month period with a December 31 year-end (or such other date or period required
under the Code).
"Interest" means the entire legal and equitable ownership interest in the
Company of the Member.
"Person" means any individual, partnership, corporation, limited liability
company, association, trust or other entity.
"Regulations" means the federal tax regulations, including Temporary
Regulations, promulgated under the Code, as such Regulations may be amended from
time to time (including corresponding provisions of succeeding Regulations).
-1-
<PAGE>
ARTICLE II
FORMATION
2.1 Formation. The undersigned confirm the formation of a limited
liability company under the laws of the State of Delaware.
2.2 Term. The term of the Company shall be perpetual.
2.3 Perfection of Limited Liability Company. The Company shall do all acts
and things (including publication or periodic filings of any documents) that may
now or hereafter be required for the perfection and continued maintenance of the
Company as a limited liability company under the Act, or which are necessary or
appropriate in order to form or qualify the Company under the laws of any
jurisdiction in which the Company is doing business, owns real property, or in
which such formation or qualification is necessary in order to protect the
limited liability of the Member as a person enjoying protection from any of the
losses, debts, liabilities, damages, contracts, or other obligations of the
Company under the laws of the State of Delaware or under the laws of any other
jurisdiction.
2.4 Name. The name of the Company is GreenPoint Credit, LLC.
2.5 Addresses of Parties.
(a) Company. The registered agent and registered office of the Company
is Lexis Document Services, Inc., 30 Old Rudnick Lane, Suite 100, Dover,
Delaware 19901. The principal office of the Company shall be 10089 Willow
Creek Road, San Diego, California 92131, or such other place as the Member
shall select.
(b) Member. The address of the Member is 1100 Larkspur Landing Circle,
Suite 101, Larkspur, California 94939.
2.6 Purpose and Powers. The business and purpose of the Company shall be
to engage in any activity which may be permitted under applicable law .
2.7 Tax Treatment. The Company will constitute a disregarded entity for
federal income tax purposes.
ARTICLE III
MEMBERS
3.1 Identity of Member. The sole member of the Company is GreenPoint
Mortgage Funding, Inc.
3.2 Limited Liability. The Member shall not be liable to any creditor of
the Company whatsoever for any of the losses, debts, liabilities, damages,
contracts or other obligations of the Company. The Member is not required to
loan funds to the Company, nor is the Member required to refund any distribution
rightfully received during the solvency of the Company.
-2-
<PAGE>
Nevertheless, if a court of competent jurisdiction holds that the Member has
received a distribution in contravention of the Act, the Member shall be liable
to the Company only to the extent provided in the Act.
ARTICLE IV
CAPITAL
4.1 Capital Contribution. Within ten (10) days after the execution of this
Agreement, the Member shall have made a contribution in cash or other property
to the Company in the amount of $250,000.00.
4.2 Loans and Advances. The Member may, at any time, make or cause a loan
or advance to be made to the Company in any amount and on those terms upon which
the Member and the Company agree.
ARTICLE V
DISTRIBUTIONS
The cash flow of the Company, if any, as determined by the Company's
accountants, shall be distributable to the Member in the discretion of the
Management Committee. Any advances or loans from the Member to the Company that
are repayable from cash flow of the Company shall be repaid prior to any
distributions to the Member pursuant to this Section.
ARTICLE VI
MANAGEMENT
6.1 Management Committee.
(a) Composition of Management Committee. Management of the Company
shall be vested in a Management Committee. The Management Committee shall be
composed of one or more individuals, each of whom shall be appointed by the
Member and shall be designated as a Manager. The number of Managers shall be set
by the Member. The Member may add or remove Managers by adopting a resolution or
executing a consent setting forth the desired changes. The initial Management
Committee shall be composed of John W. Wheeler, Martin L. McNabb, Abdul H.
Rajput, and John S. Buchanan.
(b) Powers of the Management Committee. The property, affairs and
business of the Company shall be managed by and under the direction of the
Management Committee. The Management Committee shall have and is vested with all
and unlimited powers and authorities, except as may be expressly limited by law,
the Certificate of Formation or this Agreement, to do or cause to be done any
and all lawful things for and in behalf of the Company, to exercise or cause to
be exercised any or all of its powers, privileges and franchises, and to seek
the effectuation of its objects and purposes.
-3-
<PAGE>
(c) Certain Related Party Transactions. Any Manager, personally and
individually, may be a party to or may be interested in any contract or
transaction of the Company, and no Manager shall be liable in any way by
reason of such interest, provided that the fact of such interest be
disclosed or made known to the Management Committee, and provided that the
Management Committee shall authorize, approve or ratify such contract or
transaction by the vote (not counting the vote of that Manager) of a
majority of a quorum, notwithstanding the presence of that Manager at the
meeting at which such action is taken. That Manager may be counted in
determining the presence of a quorum at such meeting. This subsection
shall not be construed to impair or invalidate or in any way affect any
contract or other transaction which would otherwise be valid under the law
(common, statutory or otherwise) applicable thereto.
6.2 Meetings of Managers. All meetings of the Managers shall be held at
the principal business office of the Company unless for any particular meeting
the Managers agree and consent to the holding of the meeting elsewhere, in which
event the meeting may be held at such place agreed upon, either within or
without the State of Delaware.
Managers may participate in a meeting of the Management Committee by means
of a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other at the same time.
Participants by such means shall constitute presence in person at a meeting.
Unless otherwise restricted by the Certificate of Formation or this
Agreement, any action required or permitted to be taken at any meeting of the
Management Committee or of any committee thereof may be taken without a meeting,
if all members of the committee consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the committee.
6.3 Regular Meetings - Notice. Regular meetings of the Management
Committee may be held without notice at such time or times and place either
within or without the State of Delaware as shall from time to time be fixed by
resolution of the whole Management Committee. Any business may be transacted at
a regular meeting.
6.4 Special Meetings - Notice. Special meetings of the Management
Committee may be called by the President, or the most senior Vice President, in
title, or, if there be more than one Vice President each having an equally
senior title, by the Vice President of equally senior title who is most senior
in length of service, by giving not less than two (2) days' notice of such
meeting to each Manager, either personally or by mail, or by telegram or
facsimile, stating the time, place and purposes of any such meeting. Special
meetings shall be called by any one of such officers in like manner and on like
notice when requested in writing to do so by any one or more Managers.
"Notice" and "call" with respect to such meetings shall be deemed to be
synonymous.
6.5 Quorum. At all meetings of the Management Committee, a majority of the
Managers then in office shall, unless a greater number for any particular matter
is required by the Certificate of Formation or this Agreement, constitute a
quorum for the transaction of business, and the act of a majority of the
Managers present at any meeting at which there is a quorum,
-4-
<PAGE>
except as may be otherwise specifically provided by statute, by the Certificate
of Formation, or by this Agreement, shall be the act of the Management
Committee.
Less than a quorum may adjourn a meeting successively until a quorum is
present, and no notice of adjournment shall be required.
6.6 Waiver by Writing. Any notice provided or required to be given to the
Managers may be waived in writing by any of them, whether before, at or after
the time stated therein.
6.7 Waiver by Attendance. Attendance of a Manager at any meeting shall
constitute a waiver of notice of such meeting, except where the Manager attends
for the express purpose and so states at the opening of the meeting, of
objecting to the transaction of any business because the meeting is not lawfully
called or convened.
6.8 Vacancies. If the office of any Manager becomes vacant by reason of
death or resignation, the Member may in its discretion fill the vacancy.
6.9 Committees. The Management Committee may designate one or more
committees, each committee to consist of one or more of the Managers. The
Management Committee may designate one or more Managers as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. The Management Committee may designate as members of a
committee individuals who are not Managers.
Any such committee shall have and may exercise such powers and authority as
is delegated to it by the Management Committee. Such committee or committees
shall have such name or names as may be determined from time to time by
resolution adopted by the Management Committee.
Each committee shall keep regular minutes of its meetings and report the
same to the Management Committee when required.
6.10 Compensation of Managers and Committee Members. Managers and members
of all committees may receive such salary for their services as such, and/or
fixed sum and expenses of attendance, if any, for attendance at each regular or
special meeting of the Management Committee or other committee as may be set by
resolution of the Management Committee from time to time; provided that nothing
herein contained shall be construed to preclude any Manager or committee member
from serving the Company in any other capacity and receiving compensation
therefor.
6.11 Removal of Managers. The Member may remove any or all Managers from
office with or without cause at any time.
-5-
<PAGE>
ARTICLE VII
OFFICERS
7.1 (a) Elected Officers. The following officers of the Company shall be
elected by the Management Committee, and shall be deemed elected officers: a
President, a Vice President, a Secretary, and a Treasurer; and, if the
Management Committee desires, additional Vice Presidents, as well as one or more
Assistant Secretaries and Assistant Treasurers.
Any two (2) or more such offices, other than President and Secretary, may
be held by the same person.
An elected officer shall be deemed qualified when he enters upon the duties
of the office to which he has been elected and furnishes any bond required by
the Management Committee; but the Management Committee may also require of such
person his written acceptance and promise faithfully to discharge the duties of
such office.
(b) Election of Officers. The Management Committee shall, from time to
time,elect a President, Vice President, Secretary and Treasurer and such
additional Vice Presidents, Assistant Secretaries, and Assistant Treasurers as
it may deem advisable or necessary. The initial officers of the Company are:
<TABLE>
<CAPTION>
<S> <C>
John W. Wheeler President
Martin L. McNabb Executive Vice President
Abdul H. Rajput Executive Vice President
John S. Buchanan Senior Vice President and Treasurer
Michael F. Najewicz Senior Vice President, Corporate Secretary,
and General Counsel
</TABLE>
(c) Term of Office. Each elected officer of the corporation shall hold
his office for the term for which he was elected, or until he resigns or is
removed by the Management Committee, whichever first occurs.
(d) Appointment of Officers and Agents - Terms of Office. The
Management Committee from time to time may also appoint such other officers and
agents for the Company as it shall deem necessary or advisable. The Management
Committee may, unless prohibited by law, delegate the power to appoint other
officers and agents to the President, or his designee, or a committee. All
appointed officers and agents shall hold their respective positions at the
pleasure of the Management Committee, or at the pleasure of the President, or
his designee, or a committee, if such are empowered by the Management Committee
to remove officers and agents. All appointed officers and agents shall exercise
such powers and perform such duties as shall be determined form time to time by
the Management Committee, or a committee, or by an elected officer empowered by
the Management Committee to make such determination.
-6-
<PAGE>
7.2 Removal. Any officer or agent elected or appointed by the Management
Committee, and any employee, may be removed or discharged by the
Management Committee with or without cause.
7.3 Salaries and Compensation. Salaries and compensation of all elected
officers of the Company shall be fixed, increased or decreased by the Management
Committee, but this power, except the salary or compensation of the President,
may, unlessprohibited by law, be delegated by the Management Committee to the
President, or his designee, or a committee. Salaries and compensation of all
other appointed officers and agents, and employees of the Company may be fixed,
increased or decreased by the Management Committee, but until action is taken
with respect thereto by the Management Committee, the same may be fixed,
increased or decreased by the President, or his designee, or by such other
officer or officers as may be empowered by the Management Committee to do so.
7.4 Delegation of Authority to Hire, Discharge, etc. The Management
Committee from time to time may delegate to the President, or other officer of
the Company, authority to hire, discharge and fix and modify the duties, salary
or other compensation of employees of the Company under their jurisdiction, and
the Management Committee may delegate to such officer similar authority with
respect to obtaining and retaining for the Company the services of attorneys,
accountants and other experts.
7.5 The President. The President shall be the chief executive officer of
the Company. He shall have general and active management of the business of the
Company and shall carry into effect all directions and resolutions of the
Management Committee.
The President may execute all bonds, notes, debentures, mortgages, and
other contracts, and all other instruments for and in the name of the Company.
The President, when authorized so to do by the Management Committee, may
execute powers of attorney from, for and in the name of the Company to such
proper person or persons as he may deem fit, in order that thereby the business
of the Company be furthered or actions taken as may be deemed by him necessary
or advisable in furtherance of the interests of the Company.
The President, except as may be otherwise directed by the Management
Committee, shall attend meetings of shareholders of other corporations to
represent this Company thereat and to vote to take action with respect to the
shares of any such corporation owned by this Company in such manner as he shall
deem to be for the interest of the Company or as may be directed by the
Management Committee.
The President shall, unless the Management Committee otherwise provides, be
ex officio a member of all standing committees. The President shall have such
general (and concurrent) executive powers and duties of supervision and
management as are usually vested in the office of the chief executive of a
business entity.
The President shall have such other or further duties and authority as may
be prescribed elsewhere in this Agreement or from time to time by the Management
Committee.
7.6 Vice President. The most senior Vice President, in title, or if there
be more than one Vice President each having an equally senior title, the Vice
President of equally senior title
-7-
<PAGE>
who is most senior in length of service, shall, in the absence, disability or
inability to act of the President, perform the duties and exercise the powers of
the President. Each Vice President shall perform such other duties as the
Management Committee and/or the President shall from time to time prescribe.
7.7 The Secretary and Assistant Secretary. The Secretary shall attend all
meetings of the Management Committee and shall record or cause to be recorded
all votes taken and the minutes of all proceedings in a minute book of the
Company to be kept for that purpose. He shall perform like duties for any
committees when requested by the Management Committee or any such committee to
do so.
The Secretary shall have the principal responsibility to give, or cause to
be given, notice of all meetings of the Management Committee, but this shall not
lessen the authority of others to give such notice as is authorized elsewhere in
this Agreement.
He shall cause all books, records, lists and information, or duplicates
required to be maintained at the registered or other office of the Company to be
so maintained.
He shall perform such other duties and have such other authority as may be
prescribed elsewhere in this Agreement, or from time to time by the Management
Committee or the President.
He shall have the general duties, powers and responsibilities of a
Secretary of a business entity.
The Assistant Secretaries, in the order of their seniority in service, in
the absence, disability or inability to act of the Secretary, shall perform the
duties and exercise the powers of the Secretary, and shall perform such other
duties as the Management Committee may from time to time prescribe.
7.8 The Treasurer and Assistant Treasurer. The Treasurer, if one is
elected and if one is not elected then the President, shall have the
responsibility for the safekeeping of the funds and securities of the Company,
and shall keep or cause to be kept full and accurate accounts of receipts and
disbursements in books belonging to the Company. He shall keep, or cause to be
kept, all other books of accounts and accounting records of the Company, and
shall deposit or cause to be deposited all monies and other valuable effects in
the name and to the credit of the Company in such depositories as may be
designated by the Company.
He shall disburse, or permit to be disbursed, the funds of the Company as
may be ordered, or authorized generally, by the Management Committee and shall
render to the President and the Management Committee whenever they may require
it, an account of all his transactions as Treasurer and of those under his
jurisdiction, and of the financial condition of the Company.
He shall perform such other duties and shall have such other
responsibilities and authority as may be prescribed elsewhere in this Agreement
or from time to time by the Management Committee.
He shall have the general duties, powers and responsibilities of a
Treasurer of a business entity, and shall be the Chief Financial and Accounting
Officer of the Company.
-8-
<PAGE>
If required by the Management Committee, he shall give the Company a bond
in a sum and with one or more sureties satisfactory to the Management Committee,
for the faithful performance of the duties of his office, and for the
restoration to the Company, in the case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control which belong to the
Company.
The Assistant Treasurers, in the order of their seniority in service shall,
in the absence, disability or inability to act of the Treasurer, perform the
duties and exercise the powers of the Treasurer, and shall perform such other
duties as the Company shall from time to time prescribe.
7.9 Duties of Officers May Be Delegated. If any officer of the Company be
absent or unable to act, or for any other reason that the Management Committee
may deem sufficient, the Management Committee may delegate for the time being,
some or all of the functions, duties, powers, and responsibilities of any
officer to any other officer, or to any other agent or employee of the Company
or other responsible person, provided a majority of the whole Management
Committee concurs therein.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION
8.1 Dissolution. The Member may vote to dissolve the Company at any time.
8.2 Liquidation and Termination. Subject to any restrictions in agreements
to which the Company is a party, the Company shall be terminated after
dissolution, and the Member shall promptly liquidate and terminate the affairs
of the Company by discharging all debts and liabilities of the Company and by
distributing all assets in accordance with Section 8.3 hereof.
8.3 Winding Up. Upon a dissolution of the Company, a person approved by the
Member (the "Liquidator") shall take full account of the Company's liabilities
and property, and the Company's property shall be liquidated as promptly as is
consistent with obtaining the fair value thereof, and the proceeds therefrom, to
the extent sufficient therefor, shall be applied and distributed in the
following order of priority:
(a) First, to the creditors of the Company (including the Member if it
has made loans and advances to the Company) in payment of the unpaid liabilities
of the Company to the extent required by law or under agreements with such
creditors;
(b) Second, to the creation or funding of any reserves which the
Liquidator, in his sole and absolute discretion, deems necessary for any
anticipated, contingent or unforeseen liabilities or obligations of the Company
arising out of or in connection with the conduct of the Company's business; and
(c) Third, to the Member.
8.4 Distribution In-Kind. In the event that the Liquidator distributes the
Company's property or any part thereof in-kind, then the Member may accept the
property, subject to its liabilities, in satisfaction of its Interest in the
Company. Upon any such distribution in-kind, the
-9-
<PAGE>
Liquidator shall obtain from a duly qualified appraiser, an appraisal of the
fair market value of the property, or any portion thereof, to be distributed in-
kind and said property shall be deemed to have been sold at its assigned value,
and the property shall thereafter be distributed to the Member in accordance
with Section 8.3 hereof.
8.5 Return of Capital Contribution. Upon a liquidation of the Company, the
Member shall look solely to the assets of the Company for the return of its
capital contribution, and the Member shall not have any recourse against the
Managers therefor.
8.6 Required Filings. The Liquidator shall (and is hereby given the
authority to) publish, execute and record any documents required to effectuate
the dissolution and termination of the Company under the Act.
ARTICLE IX
INDEMNIFICATION
9.1 The Company shall indemnify and hold harmless 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 manager or officer of the Company 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 Company (whether
the basis of such action, suit or proceeding is alleged action in an official
capacity as a director, officer, manager, 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 Company
shall indemnify any such indemnitee in 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 Management Committee. The
right to indemnification conferred in this Section 9 shall include the right to
be paid by the Company 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
Section 9 shall be contract rights and such rights shall continue as to an
indemnitee who has ceased to be a manager or officer, and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
9.2 If a claim under this Section 9 is not paid in full by the corporation
within sixty (60) days after a written claim has been received by the Company,
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 Company 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 Section 9 or otherwise, shall be on the Company.
-10-
<PAGE>
9.3 The rights to indemnification and to the advancement of expenses
conferred in this Section 9 shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the Certificate of
Formation, this Agreement, a vote of the members or managers, or otherwise.
9.4 The Company may, to the extent authorized from time to time by the
Management Committee, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Company to the fullest extent of the
provisions of this Section 9 with respect to the indemnification and advancement
of expenses of managers and officers of the Company.
ARTICLE X
MISCELLANEOUS
10.1 Books and Records of the Company.
(a) The Secretary and the Treasurer shall keep or cause to be kept
books and records of the Company fairly reflecting in all material respects
the transactions with respect to the conduct of the Company's business. The
records shall include, but not be limited to, true and full information
regarding the status of the business and financial condition of the
Company, a copy of the Certificate of Formation and this Agreement and all
amendments thereto; a current list of the names and last known business,
residence, or mailing addresses of the Member and the Managers; and the
Company's federal, state, and local tax returns for the three most recent
Fiscal Years.
(b) The books and records shall be maintained in accordance with
sound accounting practices and shall be available at the Company's principal
office for examination by the Member or the Member's duly authorized
representative at any and all reasonable times during normal business hours.
10.2 Bank Accounts. All funds of the Company shall be deposited in one or
more bank accounts opened in the Company's name. The Management Committee shall
determine the institution or institutions at which the accounts will be opened
and maintained, the types of accounts, and the Persons who will have authority
with respect to the accounts and the funds therein.
10.3 Annual Accounting Period. The annual accounting period of the Company
shall be a calendar year.
10.4 Entire Agreement; Amendment. This Agreement constitutes the entire and
exclusive understanding and agreement between the parties with respect to the
subject matter of this Agreement. It supersedes all prior and contemporaneous
agreements and understandings, inducements, or conditions, express or implied,
oral or written, except as contained in this Agreement. This Agreement may not
be amended or modified except with the written consent of the Member.
-11-
<PAGE>
10.5 Applicable Law. All questions concerning the construction, validity,
and interpretation of this Agreement and the performance of the obligations
imposed by this Agreement shall be governed by the internal law, not the law of
conflicts, of the State of Delaware.
10.6 Section Titles. The headings herein are inserted as a matter of
convenience only and do not define, limit, or describe the scope of this
Agreement or the intent of the provisions hereof.
10.7 Terms. Common nouns and pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular, and plural, as the identity of the Person
may in the context require.
10.8 Separability of Provisions. Each provision of this Agreement shall be
considered separable; and if, for any reason, any provision or provisions herein
are determined to be invalid, illegal, or unenforceable, the same shall not
impair the operation of or affect any other portions of this Agreement, and this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provisions were automatically modified to the minimum extent necessary to render
them valid, legal, and enforceable. Notwithstanding the foregoing, however, no
provision shall be severed if it is clearly apparent under the circumstances
that the parties would not have entered into this Agreement without such
provision.
10.9 Title to Company Property. Except as specifically provided in this
Section, all property (whether movable or immovable, corporeal or incorporeal)
acquired by the Company shall be acquired and held by the Company in its name.
The Management Committee may direct that legal title to all or any portion of
the Company's property be acquired or held in a name other than the Company's
name. Without limiting the foregoing, the Management Committee may cause title
to be acquired and held in its name or in the names of trustees or nominees for
the Company. It is expressly understood and agreed that the manner of holding
title to the Company's property (or any part thereof) is solely for the
convenience of the Company and all of that property shall be treated as Company
property.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the date first above written.
MEMBER:
GreenPoint Mortgage Funding, Inc.
By: /s/ Andy Occhino
_________________
COMPANY:
GreenPoint Credit, LLC
By: /s/ John W.Wheeler
___________________
-12-
