<PAGE>
As filed with the Securities and Exchange Commission on June 11, 1999
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------------------
GREENPOINT CREDIT CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 13-4002891
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
GREENPOINT FINANCIAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 06-1379001
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
90 Park Avenue
New York, New York 10016
(212) 834-1000
(Address, including zip code, and telephone number,
including area code, of each registrant's principal executive offices)
Howard C. Bluver, Esq.
Greenpoint Credit Corp.
90 Park Avenue
New York, New York 10016
(212) 834-1000
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
Copies to:
Mark R. Levie, Esq.
Martin B. Howard, Esq.
Orrick, Herrington & Sutcliffe LLP
777 South Figueroa Street, Suite 3200
Los Angeles, California 90017
(213) 629-2020
<PAGE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after the effective date of this Registration
Statement
If any of the securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, check the following
box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, please check
the following box and list the registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum
Title of securities to be Amount to be offering price aggregate Amount of
registered registered per unit* offering price registration fee)
- ------------------------- ------------------ ------------------ ----------------- ---------------------
<S> <C> <C> <C> <C>
GreenPoint $10,000,000.00 100% $10,000,000.00 $2,780.00
Manufactured Housing
Contract Trust Pass-
Through Certificates
Limited Guarantee of $10,000,000.00 100% $10,000,000.00 N/A
GreenPoint Financial
Corp.
</TABLE>
*Estimated solely for the purpose of calculating the registration fee.
-----------------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
=====================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the accompanying prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there 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 CORP. LOGO],
Seller and Servicer
Manufactured Housing Contract Trust
Pass-Through Certificates, Series [ ]
The trust is offering the following [ ] classes of certificates:
<TABLE>
<CAPTION>
Underwriting
Principal Pass-Through Price to Discounts and Proceeds
Class Balance Rate Public Commissions to Seller
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A-1 $[ ] (1)(2)
[A-2 $[ ] [ ]% ]
[A-3 $[ ]$ (2)(3) ]
[A-IO $[ ] (4) ]
M $[ ] (2)
B-1 $[ ] (2)
</TABLE>
(1) The pass-through rate on this certificate will be variable based on the
London Interbank Offered Rate plus [ ]%.
(2) The pass-through rate on this certificate is capped at the weighted average
of the net contract rates on the contracts.
(3) The pass-through rate on this certificate is determined according to auction
procedures as described in Annex II of this prospectus supplement.
(4) 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" herein.]
- --------------------------------------------------------------------------------
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 Corp. 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.
- --------------------------------------------------------------------------------
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.
[Delivery of the offered certificates in book-entry form only will be made
through the Depository Trust Company, Cedelbank and the Euroclear System on or
about [ ], against payment in immediately available funds.]
[_____], 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 herein. 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. The information in this document may only be
accurate on the date of this document.
We provide information to you about the offered certificates in two separate
documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
your series of certificates, and (b) this prospectus supplement, which describes
the specific terms of your series of certificates. If the terms of your
certificates vary between this prospectus supplement and the accompanying
prospectus, you should rely on the information in this prospectus supplement.
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.
S-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SUMMARY INFORMATION......................................................... S- 3
RISK FACTORS................................................................ S-10
THE CONTRACT POOL........................................................... S-17
THE SELLER.................................................................. S-23
GreenPoint Credit Corp.'s Management's Discussion and
Analysis of Delinquency, Repossession and Loan Loss Experience............ S-24
Impact of the Year 2000..................................................... S-24
[Ratio of Earnings to Fixed Charges for GFC................................. S-25
PREPAYMENT AND YIELD CONSIDERATIONS......................................... S-26
Weighted Average Life of the Offered Certificates........................... S-30
[Sensitivity Of The Class A-IO Certificates]................................ S-34
[Pre-Tax Yields on the Class A-IO Certificates]............................. S-34
DESCRIPTION OF THE CERTIFICATES............................................. S-35
General..................................................................... S-35
Pass-Through Rates.......................................................... S-36
Conveyance of Contracts..................................................... S-37
[Conveyance of [Subsequent Contracts and]
[Pre-Funding Account]..................................................... S-40
Payments on the Contracts; Certificate Account.............................. S-41
Distributions............................................................... S-43
[Reserve Account]........................................................... S-46
Subordination............................................................... S-47
Losses on Liquidated Contracts.............................................. S-47
Example of Distributions.................................................... S-48
Advances.................................................................... S-48
[Limited Guarantee of GFC................................................... S-49
[Alternative Credit Enhancement............................................. S-50
Reports to Certificateholders............................................... S-51
Optional Termination and Termination Auction................................ S-52
Termination of the Agreement................................................ S-53
Collection and Other Servicing Procedures................................... S-53
Servicing Compensation; Certain Other Matters
Regarding the Servicer.................................................... S-54
The Trustee................................................................. S-54
[Registration of the Offered Certificates................................... S-55
[FORMATION OF THE GRANTOR TRUST AND GRANTOR TRUST PROPERTY.................. S-60
Assignment of Class [A-2 Fixed] Certificates................................ S-60
Servicing................................................................... S-61
[Removal and Designation of Servicer........................................ S-61
The Grantor Trustee......................................................... S-62
Reporting Requirements...................................................... S-62
Termination of the Trust.................................................... S-63
Calculation of LIBOR........................................................ S-63
FEDERAL INCOME TAX CONSEQUENCES............................................. S-64
[Grantor Trust]............................................................. S-66
ERISA CONSIDERATIONS........................................................ S-68
General..................................................................... S-68
Senior Certificates......................................................... S-68
[The Class [A-2 Floating] Certificates]..................................... S-71
Class M and Class B-1 Certificates.......................................... S-72
Fiduciary Review............................................................ S-72
RATINGS..................................................................... S-73
LEGAL INVESTMENT............................................................ S-73
METHOD OF DISTRIBUTION...................................................... S-74
USE OF PROCEEDS............................................................. S-75
LEGAL MATTERS............................................................... S-75
INDEX OF SIGNIFICANT DEFINITIONS............................................ S-76
ANNEX I GLOBAL CLEARANCE,
SETTLEMENT AND TAX DOCUMENTATION PROCEDURES............................... I-1
</TABLE>
i
<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
herein have the meanings assigned in the prospectus.
WHAT YOU OWN
Your certificates represent ownership of a portion of the 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 (referred to in this summary as the "contracts"), 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 you 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 $[ ]. See "The Seller-
The Acquisition" in the prospectus. Each of the remaining contracts was either
originated or purchased by GreenPoint Credit Corp.
[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 Corp. 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>
Last
Initial Initial Scheduled
Principal Pass-Through Distribution
Class Balance(1) Rate Date
<S> <C> <C> <C>
A-1.......... $ [ ] (2)(3)
[A-2......... $ [ ] [ ]% ]
[A-3......... $ [ ] (3)(4) ]
[A-IO........ $ [ ] (5) ]
</TABLE>
S-3
<PAGE>
M............ $ [ ] (3)
B-1.......... $ [ ] (3)
- ----------------
(1) Approximate, subject to a permitted variance of plus or minus 5%.
(2) [The pass-through rate on this certificate will be variable based on the
London Interbank Offered Rate plus [ ]%.]
(3) The pass-through rate on this certificate is capped at the weighted average
net contract rate of the contracts.
[(4) The pass-through rate on this certificate is determined according to
auction procedures as described in Annex II of this prospectus supplement.]
[(5) For risks associated with interest only securities, including loss of your
entire investment, see "Risk Factors-Interest Only Certificates" in this
prospectus supplement.]
[The trust will also issue one or more subordinate certificates which will not
be sold to the public. Such 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 which 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.
[The certificates whose class designation begins with a roman numeral "I"
correspond to contract group I and the certificates whose class designation
begins with a roman numeral "II" correspond to contract group II. The
certificates generally receive distributions based only on principal and
interest collected from contracts in the corresponding contract group. ]
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 herein),
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 such shortfall under a certificate
insurance policy. See "[INSURER]" and "Description of the Certificates-
Certificate Insurance Policy" in this prospectus supplement.
[LIMITED GUARANTY OF GFC]
[In order to mitigate the effect of [the subordination of the Class [B-1]
certificates and] liquidation losses and delinquencies on the contracts borne by
the [Class B-1 certificates], 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" herein. ]
[The limited guaranty is for the benefit of the Class [B-1] certificates only
and will not
S-4
<PAGE>
result in 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" herein.]
[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 limited guaranty shall be released and
shall terminate. GreenPoint Financial Corp. shall have no obligation to replace
such enhancement once it has been exhausted. See "Risk Factors-Alternative
Credit Enhancement" herein.]
[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 such payment date, which are calculated at a
fixed rate of [ ]% per annum, an will be obligated to pay to the grantor trust
an amount equal to one months' interest at the Class A-2 floating pass-through
rate on the outstanding certificate principal balance of the Class A-2 floating
certificates immediately prior to such payment date. At all times the
outstanding certificate principal balance of the Class A-2 floating certificates
will equal the outstanding certificate principal balance of the Class A-2 fixed
certificates. 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 "Reserve
Account" herein.
[PRE-FUNDING ACCOUNT]
[GreenPoint 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 contracts. Amounts deposited into the pre-funding account may
not be greater than 25% of the balance of the contracts on the date of initial
issuance of the contracts. Any amounts on deposit in the pre-funding account
must be held in cash or invested in eligible investments as defined under
"Description of the Certificates-Payments on the Contracts; Certificate Account"
in this prospectus supplement. Any such eligible investments must mature not
later than the business day preceding each subsequent transfer date. Any income
earned on amounts on deposit in the pre-funding account will be taxable to
GreenPoint. See "Prepayment and Yield Considerations" and "Description of the
Certificates-Conveyance of Subsequent Contracts and Pre-Funding Account" herein
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[ ]. Thereafter, distributions on the offered
certificates [(other than the Class A-3
S-5
<PAGE>
certificates)] will be made on the 15th day of each month, or if such 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 such 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, for each contract group,
less fees and expenses owed to the servicer, to the holders of the certificates,
related to that group, 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
With respect to each distribution date, the certificates [(other than the Class
A-1 and Class A-3 certificates)] will accrue interest at 1/12th of the related
pass-through rate on the related principal balance immediately prior to such
distribution date. The interest period for the certificates [(other than the
Class A-1 and Class A-3 certificates)] for each distribution date is the
calendar month preceding such distribution date. [With respect to each
distribution date, the Class A-1 certificates and Class A-3 certificates will
accrue interest at the product of (i) the actual number of days during the
interest period divided by 360 and (ii) the applicable pass-through rate on the
principal balance of such certificate immediately prior to such distribution
date. The interest period for the Class A-1 certificates and Class A-3
certificates for each distribution date is the period from the preceding
distribution date (or from the closing date with respect to the first
distribution date) through the day prior to such distribution date. See
"Description of the Certificates-Interest Distributions" and "Risk Factors-The
Effective Yield on the Certificates (other than the Class A-1 and Class A-3
Certificates) May Be Lower Than What Would Otherwise Be Produced by the
Applicable Pass-Through Rate and Purchase Price of Such Certificates Due to the
Delay in Payment" 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 such shortfall in interest distributions 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 certificates will
be adjusted each month, based on changes in the London Interbank Offered Rate
for one-
S-6
<PAGE>
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. You 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 herein. 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,] you may not receive the full amount of principal
distributions to which you are 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 loss is realized on a contract when the servicer determines that it has
received all amounts it expects to recover from that contract and that 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
MBIA Insurance Corporation 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 such 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
For any month, if the servicer receives a payment on a contract that is less
than the full scheduled payment or receives no payment, the servicer will
advance its own funds to cover any shortfalls in payments of principal and
interest due to the offered certificates. However, advances will not exceed the
delinquent contract payments and the servicer will only make advances if it
determines that such advances will be recoverable from future payments or
collections on that contract. 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:
S-7
<PAGE>
. 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 such 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 is Directly Related to the Rate of
Prepayments on the Contracts" 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 The Depository Trust Company, 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 Corp. 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 Corp.,
based on certain assumptions set forth herein 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 such certificates (including "original issue
discount," if any) in accordance with the 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 such
income. Assuming in each case that a substantial amount of a class of
certificates is sold at the price for such 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
S-8
<PAGE>
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 offered certificates are not suitable investments for all investors. In
particular, 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 Supplement
and the Prospectus in the context of your financial situation.
Limited Liquidity-Lack of Secondary Market May Make It Difficult for You to
Resell Your Certificates
The Underwriters intend to make a secondary market in the offered
certificates, but have no obligation to do so. Therefore, a secondary market for
the offered certificates may not develop. If a secondary market does develop, it
might not continue or it might not be sufficiently liquid to allow you to resell
any of your certificates. The offered certificates will not be listed on any
securities exchange. See "Risk Factors-1. Limited Liquidity" in the prospectus.
The Yield on Your Certificates is Directly Related to the Rate of Prepayments on
the Contracts
General
Your certificates represent an interest in a Trust containing manufactured
housing installment sales contracts and installment loan agreements (referred to
in these Risk Factors as the "contracts"). As the obligors make payments of
interest and principal on the contracts, you will receive payments. Because the
obligors are free to make those payments faster than scheduled, you may receive
distributions of principal faster than you expected. There is no guarantee that
you will receive principal payments on your certificates at any specific rate or
on specific dates.
The yield to maturity on your certificates may be directly related to the
rate at which the obligors pay principal on the contracts in the related
contract group. 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;
S-10
<PAGE>
- 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.
In general, as prevailing interest rates decline significantly below the
interest rates on the contracts in the contract pool, the rate of prepayments
increases. General economic conditions and homeowner mobility will also affect
the rate of prepayments. All of the contracts contain "due-on-sale" clauses.
Therefore, the sale of any manufactured home, which is security for one of the
contracts in the contract pool, will cause a prepayment in full on the related
contract. The rate of prepayments may affect the yield on all of the offered
certificates. See "Prepayment and Yield Considerations" in the prospectus and
this prospectus supplement.
Offered Certificates Bought at Premiums and Discounts May Receive a Lower Yield
Than Expected
If you purchase an offered certificate at a discount from its original
principal balance and the rate of principal payments is slower than you
expected, you may receive a lower yield than you expected. If you purchase an
offered certificate at a premium over its original principal balance and the
rate of principal payments is faster than you expected, you may receive a lower
yield than you expected. See "Prepayment and Yield Considerations" in this
prospectus supplement.
Prepayments May Affect Pass-Through Rates
The pass-through rates for the offered certificates may be adjusted monthly
so as not to exceed the weighted average of the net contract rates [in the
related contract group]. The net contract rate of a [group I] contract equals
the rate of interest borne by such contract minus 1.00%. [For the first seven
distribution dates, the net contract rate of a group II contract equals the rate
of interest borne by such contract minus 1.00%, and for each distribution date
thereafter, the net contract rate of a group II contract equals the rate of
interest borne by such contract minus 1.50%.] Disproportionate prepayments of
contracts with net contract rates in excess of the initial pass-through rates
for the offered certificates, as applicable, will increase the possibility that
the pass-through rate for such class of certificates will be adjusted to an
amount lower than the related initial pass-through rate. The above mentioned
prepayments may include prepayments due to liquidations and repurchases by
GreenPoint Credit Corp. as required or permitted by the pooling and servicing
agreement. There is no mechanism to compensate the holders of such classes of
offered certificates for any such reduction other than the payment, if any, of
the net funds cap carryover amount. To the extent that a large number of group
II contracts convert to a fixed rate and are repurchased by the holder of the
Class R certificates, holders of the Class II certificates may be paid out
earlier than expected due to the receipt of principal in respect of such
repurchased contracts. See "Description of the Certificates-Priority of
Distributions" in this prospectus supplement.
S-11
<PAGE>
Losses on the Contracts May Reduce the Yield on the Offered Certificates
The yield to maturity on the offered certificates will be sensitive to
losses on the contracts [in the related contract group]. [However, [INSURER] has
insured all classes of offered certificates with respect to payments of interest
and scheduled principal on such certificates and as long as [INSURER] has not
defaulted under the certificate insurance policy, investors will be protected
against any such losses. See "[INSURER]" and "Description of the Certificates-
Certificate Insurance Policy" in this prospectus supplement.]
[The Lack of Physical Certificates for Certain Certificates May Cause Delays in
Payment and Cause Difficulty in Pledging or Selling Your Certificate ]
[The offered certificates will not be issued in physical form. As a result,
you will be able to transfer your certificates only through The Depository Trust
Company, Cedelbank, the Euroclear System, participating organizations, indirect
participants and certain banks. The ability to pledge a certificate to a person
that does not participate in The Depository Trust Company, Cedelbank or the
Euroclear System may be limited because of the lack of a physical certificate.
In addition, you may experience some delay in receiving distributions on these
certificates because the trustee under the pooling and servicing agreement will
not send distributions directly to you. Instead, the trustee will send all
distributions to The Depository Trust Company, which will then credit those
distributions to the participating organizations. Those organizations will in
turn credit accounts you have either directly or indirectly through indirect
participants. Also, because investors may be unwilling to purchase securities
without delivery of a physical certificate, the offered certificates may be less
liquid in any secondary market that may develop. See "Description of the
Certificates-Registration of the Certificates" in this prospectus supplement. ]
The Effective Yield on the Certificates (other than the Class [A-1] and Class
[A-3] Certificates) May Be Lower Than What Would Otherwise Be Produced by the
Applicable Pass-Through Rate and Purchase Price of Such Certificates Due to the
Delay in Payment
The effective yield to each holder of a certificate (other than a Class [A-
1] or Class [A-3] certificate) will be below that which would otherwise be
produced by the applicable interest rate and the purchase price of such holder's
certificate because, while interest will accrue from the first day of the month
to the last day of the month, such accrued interest will not be paid until the
distribution made on the 15th day (or, if such 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 such payment occurs. Therefore, interest on the Class I
certificates (other than the Class [A-1] or Class [A-3] certificates) will
accrue on a lower outstanding balance for the related collection period. See
"Prepayment and Yield Considerations" in this prospectus supplement.
S-12
<PAGE>
[The Effective Yield on the Class A-1 Certificates and Class A-3 Certificates
May Be Lower Than What Would Otherwise Be Produced by the Index Plus the Gross
Margin (in the case of the Class [A-1] Certificates) or the Auction Procedures
(in the case of the Class [A-3] Certificates) ]
[Basis Risk ]
[Although all of the group II contracts are variable rate contracts and
therefore provide for periodic adjustments to the interest rates thereof, some
of such group II contracts will not have their first interest adjustment dates
for a period of time that is longer than would otherwise be indicated by the
index under which such contracts are adjusted. Until their respective first
adjustment dates, each group II contract will bear interest at a fixed rate set
at the origination of such loan. Even after such first adjustment dates, the
interest rates on the group II contracts will only adjust every 12 months
thereafter. Further, the Class II A-1 certificates are subject to adjustment
monthly based on the LIBOR index, which is a different index than the index with
which the group II contracts adjust. LIBOR may move differently than the index
under which the group II contracts are adjusted. Since 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, any delay in the adjustment of such
interest rates may make it more likely that the pass-through rate on the Class
II A-1 certificates will be limited by such weighted average less certain fees.
Similarly, the Class II A-2 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-2 certificates may be capped by the
weighted average of the interest rates on the contracts, any delay in the
adjustment of such interest rates may make it more likely that the pass-through
rate on the Class II A-2 certificates will be limited by such weighted average
less certain fees. ]
[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. Therefore, the likelihood that holders of the Class I A-
1 certificates will receive any carryover amounts will be reduced as interest
rates rise. ]
[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 carryover amount
from and to the limited extent of funds available therefor as provided herein,
there can be no assurance that such funds will be available or sufficient for
such purposes. In 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 carryover
amount. ]
[Conversion Risk ]
[Although all of the group II contracts are variable rate, the obligor on
each of the group II contracts can convert such variable rate to a fixed rate as
long as the obligor is current in payment on the obligor's contract (at which
point the holder of the Class R certificates is obligated to purchase such
contract). Such 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
S-13
<PAGE>
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 limited by such weighted average less certain fees.
Further, there will be no carryover amount associated with any contract that has
an interest rate converted to a fixed rate of interest. ]
[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 such agreement.
[INSURER] will generally have the right to control all such remedies. See
"[INSURER]" and "Description of the Certificates-Certificate Insurance Policy"
in this prospectus supplement. ]
Limited Assets of the Trust
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. Holders
of the offered certificates 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. ]
[Uncertainty Regarding the Timing and Amount of Distributions on the Class [A-3]
Certificates]
[Distributions of principal on the Class [A-3] certificates will be made in
round lots of $25,000 and integral multiples thereof and will be allocated to
specific Class [A-3] certificates in accordance with the then-applicable
established random lot procedures of The Depository Trust Company, and the then-
applicable established procedures of its participating organizations and
indirect participating organizations, which may or may not be by random lot.
Participating organizations of The Depository Trust Company include, securities
brokers and dealers, banks and trust companies and clearing corporations and may
include certain other organizations. Indirect participating organizations
include banks, brokers, dealers and trust companies that clear or maintain a
custodial relationship with a participating organization, either directly or
indirectly. Investors may ask such 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 such certificates may receive
no distributions of principal while other holders of such certificates receive
such distributions. ]
S-14
<PAGE>
[Mortgage Related Securities]
[The Class [B] certificates will not constitute "mortgage related
securities" for purposes of SMMEA. Accordingly, many institutions with legal
authority to invest in SMMEA securities will not be able to invest in the Class
[B] certificates, thus limiting the liquidity of the investment of the holders
of any Class [B] certificates.]
[Subordination of Class M and Class B Certificates]
[The rights of the holders of the Class [M] certificates to receive
distributions of available amounts in the trust fund will be subordinate, to the
extent described herein, to the rights of the holders of the senior
certificates. Consequently, if shortfalls and/or losses arise with respect to
the certificates, they will be borne by the 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
herein, 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.]
[Distributions of Principal]
[The yield to maturity on the Class [M] and the Class [B] certificates will
be affected by the rate at which contracts become liquidated contracts and the
severity of ensuing losses on such liquidated contracts and the timing thereof.
[For any date that payments of principal and/or interest are made on the
certificates on which the senior certificate balance has not been reduced to
zero, the holders of senior certificates (other than the holders of Class A-IO
certificates) will receive all payments of principal that are made on the
contracts.] It is not possible to predict the timing of the occurrence of the
date that payments of principal and/or interest are made on the certificates, if
any, on which the senior certificate balance will be reduced to zero or which
occurrences will be affected by the rate of voluntary prepayments in addition to
prepayments due to default and subsequent liquidation. Any such losses caused by
liquidated contracts will be borne first by the holders of the Class [M] and
Class [B] holders of certificates.
No Recourse
The offered certificates will not represent interests in or obligations of
the seller or the servicer. None of the offered certificates nor the underlying
contracts or any collections thereon will be insured or guaranteed by any
governmental agency or instrumentality, the underwriters or any of their
affiliates, GreenPoint Credit Corp. 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], 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)]. The subordinate certificates will be the
first to bear any such losses.
S-15
<PAGE>
[Interest-only Certificates]
[Because amounts distributable to the holders of interest-only certificates
consist entirely of interest, the yield to maturity of the interest-only
certificates will be extremely sensitive to the repurchase, prepayment and
default experience of the contracts and prospective investors should fully
consider the associated risks, including the risk that such investors may not
fully recover their initial investment. In addition, investors in the interest-
only certificates should be aware that the [servicer/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 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" herein.]
[Alternative Credit Enhancement]
[If GreenPoint Financial Corp. has replaced the limited guarantee with an
alternative credit enhancement and such alternative credit enhancement is
exhausted, GreenPoint Financial Corp. has no obligation to replace such
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. Any such greater risk
of loss on the contracts will be borne first by the holders of subordinate
certificates. See "Description of the Certificates-Alternative Credit
Enhancement" herein.]
S-16
<PAGE>
THE CONTRACT POOL
Each Contract was purchased or originated by GreenPoint on an individual
basis in the ordinary course of its business. A description of the general
practices of GreenPoint with respect to the origination or purchase of
manufactured housing contracts similar to the Contracts is set forth in the
Prospectus under "The Seller - Loan Originations" and "The Seller - Underwriting
Policies."
On the date of initial issuance of the Offered Certificates, the Seller will
convey to the Trust Fund the Contracts owned by it immediately prior to such
conveyance. The Contract Pool in the Trust Fund will consist of such Contracts.
GreenPoint, as Servicer, will obtain and maintain possession of all Contract
documents.
[The Agreement provides that the Additional Contracts will be purchased by
the Trust on the Closing Date and that the Subsequent Contracts will be
purchased by the Trust no later than [ ]. Although the Additional Contracts
and Subsequent Contracts sold to the Trust will have characteristics that differ
somewhat from the Initial Contracts described herein, the Company does not
expect that the characteristics of the Additional Contracts and Subsequent
Contracts will vary materially from the Initial Contracts since the Additional
Contracts and Subsequent Contracts will conform to the representations and
warranties set forth in the applicable Agreement as they relate to such
Additional Contracts and Subsequent Contracts. See "Description of the
Certificates - Conveyance of Subsequent Contracts and Pre-Funding Account"
herein.]
No manufactured housing installment sales contract or installment loan
agreement will be in excess of 100% of the value of the manufactured home. See
"The Contract Pool" in the Prospectus.
The Contracts are all [fixed rate, actuarial Contracts]. [Some of the
Contracts in the Contract Pool are secured by a lien on real estate. None of the
Contracts was (i) purchased in bulk from an unrelated third party, (ii) is
insured in whole or in part or guaranteed in whole or in part, as applicable, by
the Veterans Administration, the Federal Housing Administration or by any other
governmental entity or instrumentality, (iii) is amortized using the "simple
interest" amortization method or (iv) has a variable Contract Rate or a Contract
Rate which steps up on particular dates.]
Management of GreenPoint estimates that in excess of [ ]% of the
Manufactured Homes are used as primary residences by the Obligors under the
Contracts secured by such Manufactured Homes.
As of the Cut-off Date, the Contract Rates on the Contracts ranged from [ ]%
to [ ]%. The weighted average Contract Rate of the Contracts as of the Cut-off
Date was approximately [ ]%. As of the Cut-off Date, the Contracts had remaining
scheduled maturities of at least [ ] months but not more than [ ]months, and
original scheduled maturities of at least [ ] months but not more than [ ]
months. As of the Cut-off Date, the Contracts had a weighted average remaining
term to maturity of approximately [ ] months, and a weighted average original
term to scheduled maturity of approximately [ ] months. The average outstanding
principal
S-17
<PAGE>
balance of the Contracts as of the Cut-off Date was approximately $[ ] and the
outstanding principal balances of the Contracts as of the Cut-off Date ranged
from approximately $[ ] to $[ ]. The weighted average loan-to-value ratio for
the Contracts at origination was approximately [ ]% and the loan-to-value ratio
of the Contracts at origination ranged from [ ]% to [ ]%. "Value" is equal to
the total buyer's cost of the manufactured home or in the case of some used
homes, the NADA Mobile/Manufactured Housing Appraisal Guide (including taxes,
insurance and any prepaid finance charges or closing costs that are financed).
For Land Home and Land-in-Lieu Contracts, "Value" is equal to (i) the value of
the real property as determined by appraisal or tax assessment, plus the total
buyer's cost of the manufactured home (as indicated above), plus the cost of the
improvements to the land or (ii) in the case of a manufactured home that is
already located on the land, the final appraised value of the land and
manufactured home together. The underwriting practices of GreenPoint regarding
loan-to-value ratios of Contracts it originates or purchases are set forth in
the Prospectus under "The Seller - Loan Originations" and "The Seller -
Underwriting Policies." Manufactured homes, unlike site-built homes, generally
depreciate in value, and GreenPoint believes that, upon repossession, the market
value of a manufactured home securing a manufactured housing contract is
generally lower than the principal balance of the related manufactured housing
contract. However, because GreenPoint did not service manufactured homes prior
to the Acquisition, it has no statistical information relating to the average
percentage of principal recovered upon liquidation of certain manufactured
housing contracts. Therefore, no statistical information with respect to loss
and delinquencies can be provided. In addition, the percentage recovery of
principal on liquidation of manufactured housing contracts historically has been
adversely affected by downturns in regional or local economic conditions. These
regional or local economic conditions are often volatile, and no predictions can
be made regarding future economic loss upon liquidation.
The Contracts are secured by Manufactured Homes located in [ ] states and
the District of Columbia; approximately [ ]% of the Contracts by outstanding
principal balance as of the Cut-off Date were secured by Manufactured Homes
located in [ ], [ ]% in [ ], [ ]% in [ ], [ ]% in [ ], [ ]% in [ ], [ ]% in
[ ] and [ ]% in [ ]. No other state represented more than 5% (by outstanding
principal balance as of the Cut-off Date) of the Contracts.
Approximately [ ]% of the Contracts by outstanding principal balance as of
the Cut-off Date are secured by Manufactured Homes which were new at the time
the related Contracts were originated, and approximately [ ]% of the Contracts
by outstanding principal balance as of the Cut-off Date are secured by
Manufactured Homes which were used at the time the related Contracts were
originated.
Approximately [ ]% (by principal balance) of the Contracts are Land Home
Contracts or Land-in-Lieu Contracts. The Land Home Contracts or Land-in-Lieu
Contracts will be secured by either first mortgages or deeds of trust on the
real estate on which the Manufactured Home is located, depending upon the
prevailing practice in the state in which the underlying property is located.
See "Certain Legal Aspects of the Contracts - Land Home or Land-in-Lieu
Contracts" in the Prospectus.
The charge-off policy with respect to any particular manufactured housing
installment sales contract or installment loan agreement is determined by
GreenPoint on a case by case basis.
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<PAGE>
Set forth below is a description of certain additional characteristics of
the Contracts:
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(1)
- ----- ------------ ------------ ----------------------
<S> <C> <C> <C>
Alabama......................
Arizona......................
Arkansas.....................
California...................
Colorado.....................
Connecticut..................
Delaware.....................
District of Columbia.........
Florida......................
Georgia......................
Idaho........................
Illinois.....................
Indiana......................
Iowa.........................
Kansas.......................
Kentucky.....................
Louisiana....................
Maine........................
Maryland.....................
Massachusetts................
Michigan.....................
Minnesota....................
Mississippi..................
Missouri.....................
Montana......................
Nebraska.....................
Nevada.......................
New Hampshire................
New Jersey...................
New Mexico...................
New York.....................
North Carolina...............
North Dakota.................
Ohio.........................
Oklahoma.....................
Oregon.......................
Pennsylvania.................
South Carolina...............
South Dakota.................
Tennessee....................
Texas........................
Utah.........................
Vermont......................
Virginia.....................
Washington...................
West Virginia................
Wisconsin....................
Wyoming......................
Total......................
</TABLE>
_________
(1) Entries may not add to 100.00% due to rounding.
S-19
<PAGE>
Years of Origination of Contracts
<TABLE>
<CAPTION>
Aggregate Principal % of Contract Pool By
Number of Balance Outstanding Principal
Contracts As of Outstanding As of Balance As of Cut-off
Year of Origination Cut-off Date Cut-off Date Date(1)
- ----------------------- ---------------- ----------------- ----------------------
<S> <C> <C> <C>
1999................
Total.............
</TABLE>
_________
(1) Entries may not add to 100.00% due to rounding.
Distribution of Original Principal Balances of Contracts(1)
<TABLE>
<CAPTION>
% of Contract Pool By
Aggregate Principal Outstanding Principal
Number of Contracts Balance Outstanding Balance As of Cut-off
Original Contract Amount As of Cut-off Date As of Cut-off Date Date (2)
- ----------------------------------- ---------------------- ------------------------ --------------------------
<S> <C> <C> <C>
$0 - 5,000....................
$5,001 - 7,500................
$7,501 - 10,000...............
$10,001 - 12,500..............
$12,501 - 15,000..............
$15,001 - 17,500..............
$17,501 - 20,000..............
$20,001 - 22,500..............
$22,501 - 25,000..............
$25,001 - 27,500..............
$27,501 - 30,000..............
$30,001 - 32,500..............
$32,501 - 35,000..............
$35,001 - 40,000..............
$40,001 - 45,000..............
$45,001 - 50,000..............
$50,001 - 55,000..............
$55,001 - 60,000..............
$60,001 - 65,000..............
$65,001 - 70,000..............
$70,001 - 75,000..............
$75,001 - 80,000..............
Total.......................
</TABLE>
________
(1) The greatest original Contract principal balance is $[ ], which represents
[ ]% of the outstanding principal balance of the Contracts as of the Cut-
off Date
(2) Entries may not add to 100.00% due to rounding.
S-20
<PAGE>
Distribution of Original Loan-to-Value Ratios
<TABLE>
<CAPTION>
% of Contract Pool
Aggregate Principal By Outstanding
Number of Contracts Balance Outstanding Principal Balance As
Loan-to-Value Ratio(1) As of Cut-off Date As of Cut-off Date of Cut-off Date(2)
- ------------------------------ ------------------ --------------------------- ------------------------
<S> <C> <C> <C>
Less than or equal to 50%....
51-60%.......................
61-70%.......................
71-80%.......................
81-85%.......................
86-90%.......................
91-95%.......................
Total......................
</TABLE>
_______
(1) Rounded to the nearest 1%. The definition of "Value" is set forth under
"The Contract Pool" above. Manufactured Homes, unlike site-built homes,
generally depreciate in value, and it should generally be expected,
especially with Contracts with high loan-to-value ratios at origination,
that at any time after the origination of a Contract, the market value of
the Manufactured Home securing such Contract may be lower than the
outstanding principal balance of such Contract
(2) Entries may not add to 100.00% due to rounding.
Distribution of Contract Rates
<TABLE>
<CAPTION>
% of Contract Pool By
Aggregate Principal Outstanding Principal
Ranges of Contracts Number of Contracts Balance Outstanding Balance As of Cut-off
Contract Rate As of Cut-off Date As of Cut-off Date Date(1)
- --------------------------------- --------------------- --------------------------- ------------------------
<S> <C> <C> <C>
10.25-10.49%................
10.50-10.74%................
10.75-10.99%................
11.00-11.24%................
11.25-11.49%................
11.50-11.74%................
11.75-11.99%................
12.00-12.24%................
12.25-12.49%................
Total
</TABLE>
_________
(1) Entries may not add to 100.00% due to rounding.
S-21
<PAGE>
Remaining Months to Maturity
<TABLE>
<CAPTION>
% of Contract Pool
Aggregate Principal By Outstanding
Number of Contracts Balance Outstanding Principal Balance As
Months Remaining as of Cut-off Date As of Cut-off Date As of Cut-off Date of Cut-off Date(1)
- ---------------------------------------------------------- --------------------- -------------------- ---------------------
<S> <C> <C> <C>
Greater than 15 and less than or equal to 30.............
Greater than 31 and less than or equal to 60.............
Greater than 61 and less than or equal to 90.............
Greater than 91 and less than or equal to 120............
Greater than 121 and less than or equal to 150...........
Greater than 151 and less than or equal to 180...........
Greater than 181 and less than or equal to 210...........
Greater than 211 and less than or equal to 240...........
Greater than 241 and less than or equal to 300...........
Greater than 301 and less than or equal to 360...........
Total..................................................
</TABLE>
_____________
(1) Entries may not add to 100.00% due to rounding.
S-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"
herein. The volume of manufactured housing contracts originated by GreenPoint,
or purchased from dealers on an individual basis by GreenPoint, for the periods
indicated below and certain other information at the end of such periods are as
follows:
Contracts Originated or Purchased on an Individual Basis
(Dollars in Thousands)
[Year Ended December 31,]
<TABLE>
<CAPTION>
[ ] Quarter
ended
[ ], 1998
---------
<S> <C>
Principal Balance of Contracts Purchased(1)(2)........... $ [ .]
Number of Contracts Purchased(1)......................... [ .]
Average Contract Size(2)................................. $ [ .]
Weighted Average Contract Rate(2)........................ [ .]%
Number of Regional Offices(3)............................ [ .]
</TABLE>
_________
(1) Does not include any portfolios acquired in bulk from third parties other
than from Bank of America, FSB in the Acquisition. Includes only contracts
originated by GreenPoint or purchased from dealers.
(2) As of period end.
(3) Includes regional offices in the United States originating or purchasing
manufactured housing contracts as of the end of the time period.
The following table shows the size of the portfolio of manufactured housing
contracts serviced (including contracts already in repossession) by GreenPoint,
through the manufactured housing regional office system, as of the dates
indicated:
Size of Serviced Portfolio
(Dollars in Thousands)
[Year Ended December 31],
<TABLE>
<CAPTION>
[ ] Quarter
ended
[ ], 1998
----------
<S> <C>
Unpaid Principal Balance of Contracts Being Serviced......... $ ______
Average Contract Unpaid Principal Balance.................... $ ______
Number of Contracts Being Serviced........................... ______
</TABLE>
S-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 such
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 such 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 such Contract Rate
and (ii) 0.50%.]
GreenPoint Credit Corp.'s Management's Discussion and Analysis of Delinquency,
Repossession and Loan Loss Experience
[Management has not observed any material economic development in the
general business environment of the county or in local areas where GreenPoint
Credit Corp. originates its manufactured housing contracts which has unfavorably
affected portfolio performance in relation to delinquencies, repossessions and
loan losses during this period. However, the delinquency, loan loss and
repossession experience of manufactured housing contracts historically has been
adversely affected by a downturn in regional or local economic conditions. These
regional or local economic conditions are often volatile, and no predictions can
be made regarding future economic loss upon repossession. Information regarding
the geographic location, at origination, of the Manufactured Homes securing the
Contracts in the Contract Pool is set forth under "The Contract Pool" herein.]
Impact of the Year 2000
[The Year 2000 issue is the result of many computer programs that were
written using two digits rather than four to define an applicable year. Any of
the computer programs used by the Registrants, their suppliers or outside
service providers that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations, causing disruption of operations, including, among
other things, a temporary inability to process transactions or engage in normal
business activities.]
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 200 issue could have a material impact on
the operations of the Registrants.]
[The Registrants have also initiated formal communications with all of their
suppliers and service providers (including hardware, software, processing, voice
and data communication, facility components and services) to determine the
extent to which the Registrants are vulnerable to those third parties' failure
to remediate their respective Year 2000 issue. The Registrants are working with
each of these third parties to facilitate remediation of the Year 2000 issue and
will actively participate in testing of each system to ensure Year 2000
compliance. However, there can be no guarantee that the systems of third
parties, upon which the Registrants rely, will be timely remediated, or that a
failure to remediate by a third party would not have a materially adverse effect
on the Registrants. The Registrants will utilize both internal and external
resources for the Year 2000 project.]
[The Registrants' total Year 2000 project cost include estimated costs and
time associated with the impact of a third party's Year 2000 issue, together
with the costs of outside consultants and the purchase of replacement programs.
The total cost of the Year 2000 project is estimated to be immaterial to the
Registrants' financial statements. Such costs will be funded through operating
cash flows and expensed as incurred. The current status and costs of the project
are based on management's best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability of certain
resources, third party modification plans and other factors. However, there can
be no guarantee that these estimates will be achieved and actual results could
differ materially from those plans. Specific factors that might cause such
material differences include, but are not limited to, the availability and cost
of personnel trained in this area, the ability to locate and correct all
relevant computer codes, the failure of outside third parties to remediate their
Year 2000 issue on a timely basis, and similar uncertainties.]
[Ratio of Earnings to Fixed Charges for GFC
Set forth below are GFC's ratios of earnings to fixed charges for the past
five years. For the purposes of compiling these ratios, earnings consist of
earnings before income taxes plus fixed charges. Fixed charges consist of
interest expense and the interest portion of rent expense.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges..........]
</TABLE>
S-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 herein.
As a result, the prepayment experience of the contracts contained in any
contract pool, including the Contract Pool, might be faster or slower than the
prepayment experience of the contracts reflected in the historical data. In
addition, although management of GreenPoint is aware of limited publicly
available information relating to historical rates of prepayment on manufactured
housing contracts, management of GreenPoint believes that such information is
not necessarily indicative of the rate of prepayment that may be expected to be
exhibited by the Contracts. Nevertheless, management of GreenPoint anticipates
that a number of Contracts will be prepaid in full in each year during which the
Offered Certificates are outstanding. See "Prepayment and Yield Considerations
- - Prepayment Considerations," "Description of the Certificates - Optional and
Mandatory Repurchase; Optional Termination" and "Certain Legal Aspects of the
Contracts - Transfers of Manufactured Homes; Enforceability of Restrictions on
Transfer" in the Prospectus [and "Description of the Certificates - Optional
Termination and Termination Auction" herein] for a discussion of certain factors
that may influence prepayments, including homeowner mobility, general and
regional economic conditions, prevailing interest rates, provisions in the
Contracts prohibiting the owner from selling the Manufactured Home without the
prior consent of the holder of the related Contract, the early termination of
the Trust Fund pursuant to a successful Termination Auction and the option of
the Servicer (whether or not GreenPoint remains the Servicer) to purchase the
Contracts and any other property constituting the Trust Fund or to direct the
Trustee to solicit bids for an auction at which to sell the Contracts and any
other property constituting the Trust Fund. In addition, repurchases of
Contracts on account of certain breaches of representations and warranties as
described below under "Description of the Certificates - Conveyance of
Contracts" will have the effect of prepaying such Contracts and therefore will
affect the average life of the Certificates.
[The Class A-1 Certificates will be prepaid in part on the first Payment
date after the Pre-Funding Period (in no event later than [ ]) in the event that
any Pre-Funded Amount remains in the Pre-Funding Account on such Payment Date.
Any amounts remaining which
S-26
<PAGE>
have not been used to purchase Subsequent Contracts will be paid to the Class
A-1 Certificateholders. GreenPoint believes that substantially all of the Pre-
Funded Amount will be used to acquire the Subsequent Contracts. It is unlikely,
however, that the aggregate principal amount of Subsequent Contracts purchased
by the Trust will be identical to the Pre-Funded Amount, and that consequently,
Class A-1 Certificateholders will receive some prepayment of principal.]
The allocation of distributions to the Certificateholders in accordance with
the Agreement will have the effect of accelerating the amortization of certain
of the Classes of the Series 199[ ]-[ ] Regular Certificates and delaying the
amortization of certain other Classes of the Series 199[ ]-[ ] Regular
Certificates from the amortization that otherwise would be applicable if
distributions in respect of the Total Regular Principal Amount were made pro
rata according to the outstanding principal balances of the Series 199[ ]-[ ]
Regular Certificates. If a purchaser of Offered Certificates in a Class of
Offered Certificates purchases them at a discount and calculates its anticipated
yield to maturity based on an assumed rate of distributions of principal on such
Class of Offered Certificates that is faster than the rate actually realized,
such purchaser's actual yield to maturity will be lower than the yield so
calculated by such purchaser. See "Description of the Certificates -
Distributions" herein and "Prepayment and Yield Considerations" in the
Prospectus.
The Class A-IO Certificates, which pay interest only, are extremely
sensitive to the repurchase, prepayment and default experience of the Contracts.
If principal distributions on the Contracts occur at a rate faster than
anticipated at the time of purchase, the purchaser's actual yield to maturity
could be significantly lower than that assumed at the time of purchase. A Class
A-IO Certificateholder could, under some prepayment scenarios, fail to recoup
the original investment. See " - Sensitivity of the Class A-IO Certificates."
There can be no assurance that as to what the delinquency or repossession
experience of GreenPoint on a going forward basis will be. See "Prepayment and
Yield Considerations" in the Prospectus for a discussion of the effect
delinquencies and repossessions on the Contracts would have on the average life
of the Certificates.
The expected final scheduled payment date on the Contract with the latest
maturity is in [ ].
The last scheduled Distribution Dates for the Series 199[ ]-[ ] Regular
Certificates are set forth on the cover of this Prospectus Supplement. However,
the actual last Distribution Date for each such Class of Offered Certificates
could occur significantly earlier than such scheduled Distribution Dates. In
particular, when the Pool Scheduled Principal Balance falls below 10% of the
Cut-off Date Pool Principal Balance and certain other conditions are met, the
Trust Fund could be terminated pursuant to the [Servicer/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"
herein. Either of these events, if they occur, would result in the early
retirement of the then outstanding Certificates.
As described herein under "Description of the Certificates - Subordination"
and "Description of the Certificates - Losses on Liquidated Contracts," to the
extent that, on any
S-27
<PAGE>
Distribution Date, the Available Distribution Amount is not sufficient to permit
a full distribution of the Total Regular Principal Amount to the holders of any
Class of Offered Certificates (other than the Class A-IO Certificates), the
effect will be to cause the Offered Certificates (other than the Class A-IO
Certificates) to be amortized more slowly than they otherwise would have been
amortized, and losses on Liquidated Contracts and delinquencies on the Contracts
(if not covered by Monthly Advances) will be borne by the holders of such Class
of Offered Certificates in the manner described thereunder and as described
below.
In the event there is a sufficiently large number of delinquencies on the
Contracts in any Collection Period that were not covered by Monthly Advances as
described herein, the amounts distributed to the holders of the Offered
Certificates could be less than the amount of principal and/or interest that
otherwise would be payable on such Certificates on the related Distribution
Date. In such event, even if delinquent payments on the Contracts were
eventually recovered upon liquidation, if the amounts received do not include
interest on delinquent interest payments, the effective yield on the Contracts
would be reduced, and under certain circumstances it is possible that sufficient
Available Distribution Amounts might not be available to provide, in the case of
the Offered Certificates other than the Class A-IO Certificates, for aggregate
distributions equal to the sum of their initial outstanding Certificate Balances
plus accrued interest thereon, and in the case of the Class A-IO Certificates,
for aggregate distributions equal to the accrued interest thereon, thereby
reducing the effective yield on such Certificates.
Obligors are not required to pay interest on the Contracts after the date of
full prepayment of principal or the date of a partial prepayment of principal
(to the extent of such partial prepayment). As a result, partial or full
prepayments in advance of the related Due Dates for such Contracts in any
Collection Period will reduce the amount of interest received from the related
Obligors during such Collection Period to less than one month's interest.
However, when a partial prepayment is made on a Contract or a Contract is
prepaid in full during any Collection Period, but after the Due Date for such
Contract in such Collection Period, the effect will be to increase the amount of
interest received from the related Obligor during such Collection Period to more
than one month's interest. If a sufficient amount of partial prepayments are
made or a sufficient number of Contracts are prepaid in full in a given
Collection Period in advance of their respective Due Dates, interest received on
all of the Contracts during that Collection Period, after netting out the
Monthly Servicing Fee [if GreenPoint is not acting as Servicer] (and other
expenses of the Trust Fund), may be less than the interest payable on the Senior
and/or Subordinate Certificates on the related Distribution Date. As a result,
the Available Distribution Amount for the related Distribution Date may not be
sufficient to distribute the interest on the Offered Certificates in the full
amount set forth herein under "Description of the Certificates - Distributions"
and to make a full distribution of the Total Regular Principal Amount to the
Senior (other than the Class A-IO) and/or Subordinate Certificateholders.
Although no assurance can be given in this matter, GreenPoint does not
anticipate that the net shortfall of interest caused by partial prepayments or
prepayments in full in any Collection Period would be great enough, in the
absence of delinquencies or liquidation losses, to reduce the Available
Distribution Amount for a Distribution Date below the amount that would have
been required to be distributed to the holders of the Offered Certificates on
that Distribution Date in the absence of such prepayment interest shortfalls.
S-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 such Due Date is received in advance of or subsequent to such Due
Date, except as described above with respect to prepayments. See "The Contract
Pools" in the Prospectus. Thus, the effect of delinquent Scheduled Payments,
even if they are ultimately paid by the Obligor, will be to reduce the yields on
such Contracts below their respective Contract Rates (because interest will not
have accrued on the principal portion of any Scheduled Payment while it is
delinquent). If the Servicer does not make an advance with respect to such
delinquent Contracts as described herein, the result will be to reduce the
effective yield to the Trust Fund derived from such Contracts to a yield below
their Contract Rates. Under certain circumstances, such yield reductions could
cause the aggregate yield to the Trust Fund derived from the Contract Pool to be
insufficient to support the distribution of interest on the Offered
Certificates, after netting out other expenses of the Trust Fund.
[The table relates to [ ] sold pools for which prepayment information is
available covering a period of at least [ ] months and which had an aggregate
principal balance as of the first day of the month of sale of at least $[ ].
In evaluating whether the data contained in the table contains useful
information with respect to the expected prepayment behavior of any particular
contract pool, prospective Certificateholders should consider that GreenPoint
has not performed statistical analysis to determine whether the contracts to
which the table relates constitutes a statistically significant sample of
manufactured housing contracts for purposes of determining expected prepayment
behavior. Furthermore, no assurance can be given that the Contracts in the
Contract Pool will have characteristics similar to the contracts in any sold
pool to which the following table relates. For these reasons, and because of
the unpredictable nature of the factors described under "Weighted Average Life
of the Offered Certificates" herein, which may influence the amount of
prepayments of manufactured housing contracts, no assurance can be given that
the prepayment experience for the Contract Pool with an average age as of the
Cut-off Date similar to the average ages (as of the first day of the month of
sale) of the pools to which the table relates will exhibit prepayment behavior
similar to the behavior summarized in such table for the periods covered by such
table.
In addition to the foregoing, prospective Certificateholders should consider
that the table set forth below is limited in the periods which are covered
thereby and thus cannot reflect the effects, if any, of aging on the prepayment
behavior of manufactured housing contracts beyond the periods covered thereby.
The table below sets forth with respect to certain pools of contracts (a)
the initial aggregate principal balance of the contracts in the pool (calculated
as of the first day of the month of the sale), (b) the weighted average contract
rate ("WAC") of the contracts in the pool as of the first day of the month of
the sale of such pool, (c) the weighted average remaining term to maturity
("WAM") of the contracts in the pool as of the first day of the month of the
sale of such pool, (d) the estimated average age of the pool as of the first day
of the month of the sale of such pool, (e) the aggregate principal balance of
such pool as of [ ], (f) the WAC of the contracts in the pool as of [ ] and (g)
the percentage of the Prepayment Model (as described in "-Weighted Average Life
of the Offered Certificates" below) for the life of each pool through [ ]. The
prepayment performance of the contract pools described in the following table is
not
S-29
<PAGE>
indicative of the prepayment performance of the Contracts in the Trust Fund, and
no assurance can be given that the prepayment performance of the Contracts in
the Trust Fund will correspond with the prepayment performance of any of the
pools described below.
<TABLE>
<CAPTION>
Aggregate Estimated Percentage
Month and Original Original Average Aggregate of the
Year of Principal Original WAM Age at Sale Principal Prepayment
Sale Balance WAC (months) (months) Balance WAC(1) Model(1)
- --------- --------- -------- -------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) As of [ ], 199[ ].]
Weighted Average Life of the Offered Certificates
The following information is given solely to illustrate the effect of
prepayments of the Contracts on the weighted average life of the Offered
Certificates under the stated assumptions and is not a prediction of the
prepayment rate that might actually be experienced by the Contracts.
Weighted average life refers to the average amount of time from the date of
issuance of a security until each dollar of principal of such security is repaid
to the investor. The weighted average life of an Offered Certificate, other
than the Class A-IO Certificates, is determined by (i) multiplying the amount of
each cash distribution in reduction of the Certificate Balance of such
Certificate by the number of years from the date of issuance of such Certificate
to the stated Distribution Date, (ii) adding the results, and (iii) dividing the
sum by the Initial Certificate Balance of such Certificate. The weighted
average life of the Offered Certificates, other than the Class A-IO
Certificates, will be affected by the rate at which principal on the Contracts
is paid. Principal payments on Contracts may be in the form of scheduled
amortization or prepayments (for this purpose, the term "prepayment" includes
repayments (other than from scheduled amortization) and liquidations due to
default or other dispositions of Contracts). Prepayments on Contracts may be
measured by a prepayment standard or model. The model used in this Prospectus
Supplement ("Prepayment Model") is based on an assumed rate of prepayment each
month of the then unpaid principal balance of a pool of new contracts. 100% of
the Prepayment Model assumes prepayment rates of [ ]% per annum of the then
unpaid principal balance of such Contracts in the first month of the life of the
Contracts and an additional [ ]% per annum in each month thereafter (for
example, [ ]% per annum in the third month) until the [ ]th month. Beginning in
the [ ]th month and in each month thereafter during the life of the Contracts,
100% of the Prepayment Model assumes a constant prepayment rate of [ ]% per
annum.
As used in the following table, "0% of the Prepayment Model" assumes no
prepayments on the Contracts; "100% of the Prepayment Model" assumes the
Contracts will prepay at rates equal to 100% of the Prepayment Model assumed
prepayment rates; "150% of the 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
S-30
<PAGE>
Prepayment Model" assumes the Contracts will prepay at rates equal to 200% of
the Prepayment Model assumed prepayment rates; "250% of the Prepayment Model"
assumes the Contracts will prepay at rates equal to 250% of the Prepayment Model
assumed prepayment rates; and "300% of the Prepayment Model" assumes the
Contracts will prepay at rates equal to 300% of the Prepayment Model assumed
prepayment rates.
There is no assurance, however, that prepayments of the Contracts will
conform to any level of the Prepayment Model, and no representation is made that
the Contracts will prepay at the prepayment rates shown or any other prepayment
rate. The rate of principal payments on pools of manufactured housing contracts
is influenced by a variety of economic, geographic, social and other factors,
including the level of interest rates and the rate at which manufactured
homeowners sell their manufactured homes or default on their contracts. Other
factors affecting prepayment of such contracts include changes in obligors'
housing needs, job transfers, unemployment and obligors' net equity in the
manufactured homes. In the case of mortgage loans secured by site-built homes,
in general, if prevailing interest rates fall significantly below the interest
rates on such mortgage loans, the mortgage loans are likely to be subject to
higher prepayment rates than if prevailing interest rates remained at or above
the rates borne by such mortgage loans. Conversely, if prevailing interest rates
rise above the interest rates on such mortgage loans, the rate of prepayment
would be expected to decrease. In the case of manufactured housing contracts,
however, because the outstanding principal balances are, in general, smaller
than mortgage loan balances and the original term to maturity of each such
contract is generally shorter, the reduction or increase in the size of the
monthly payments on contracts of the same maturity and principal balance arising
from a change in the interest rate thereon is generally smaller. Consequently,
changes in prevailing interest rates may not have a similar effect, or may have
a similar effect, but to a smaller degree, on the prepayment rates on
manufactured housing contracts.
The percentages and weighted average lives in the following tables were
determined using the following assumptions (the "Structuring Assumptions") (i)
scheduled interest and principal payments on the Contracts are received in a
timely manner and prepayments are made at the indicated percentages of the
Prepayment Model set forth in the tables, (ii) the Servicer does not exercise
its right of optional termination described above but the Trust Fund is
terminated pursuant to a Termination Auction as described in "Description of the
Certificates - Optional Termination and Termination Auction" herein, (iii) the
Contracts, as of the Cut-off Date, will be grouped into [four] groups having the
additional characteristics set forth in the table entitled "Assumed Contract
Characteristics" below, (iv) the Class A-1 Certificates initially represent [ ]%
of the entire ownership interest in the Trust Fund and have a Class A Pass-
Through Rate of [ ]% per annum, the Class A-IO Certificates have a Pass-Through
Rate of [ ]% per annum, the Class M Certificates initially represent [ ]% of the
entire ownership interest in the Trust Fund and have a Class M Pass-Through Rate
of [ ]% per annum and the Class B Certificates initially represent [ ]% of the
entire ownership interest in the Trust Fund and have a Class B Pass-Through Rate
of [ ]% per annum, (v) no interest shortfalls will arise in connection with
prepayment in full of the Contracts, (vi) there will be no repurchases of any
Contracts due to a breach in a representation or warranty with respect thereto,
and (vii) a servicing fee of [ ]% 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.
S-31
<PAGE>
Assumed Contract Characteristics
<TABLE>
<CAPTION>
Remaining
Current Original Term Term to
Principal to Maturity Maturity
Pool Balance Contract Rate (Months) (Months)
---------- ------------- ----------------- -------------- -------------
<S> <C> <C> <C> <C>
1.............................
2.............................
3.............................
4.............................
Total or weighted average.....
</TABLE>
Since the tables were prepared on the basis of the Structuring Assumptions
in the preceding paragraph, there are discrepancies between the characteristics
of the actual Contracts and the characteristics of the Contracts assumed in
preparing the tables. Any such discrepancy may have an effect upon the
percentages of the Initial Certificate Balance of each Class of Offered
Certificates outstanding and weighted average lives of such Certificates set
forth in the tables. In addition, since the actual Contracts and the Trust Fund
have characteristics which differ from those assumed in preparing the tables set
forth below, the distributions of principal on the Offered Certificates may be
made earlier or later than as indicated in the tables.
It is not likely that Contracts will prepay at any constant percentage of
the Prepayment Model to maturity or that all Contracts will prepay at the same
rate. In addition, the diverse remaining terms to maturity of the Contracts
(which include recently originated Contracts) could produce slower distributions
of principal than indicated in the tables at the various percentages of the
Prepayment Model specified even if the weighted average remaining term to
maturity of the Contracts is [ ] months.
Investors are urged to make their investment decisions on a basis that
includes their determination as to anticipated prepayment rates under a variety
of the assumptions discussed herein.
Based on the Structuring Assumptions, the following tables indicate the
resulting weighted average lives of the Offered Certificates and sets forth the
percentage of the Initial Class A Certificate Balance, the Initial Class M
Certificate Balance and the Initial Class B Certificate Balance that would be
outstanding after each of the dates shown at the indicated percentages of the
Prepayment Model.
S-32
<PAGE>
Percent of the Initial Class A Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
-----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Date 0% 100% 150% 170% 200% 250% 300%
- ---- --- ---- ---- ---- ---- ---- ----
Initial Percentage.................................... 100 100 100 100 100 100 100
--- --- --- --- --- --- ---
[ ], 19[ ] (first distribution date)..................
[ ], 19[ ] (anniversary of first distribution date)...
[ ], 19[ ]............................................
[ ], 19[ ]............................................
[ ], 20[ ]............................................
[ ], 20[ ]............................................
[ ], 20[ ]............................................
[ ], 20[ ]............................................
[ ], 20[ ]............................................
[ ], 20[ ]............................................
[ ], 20[ ]............................................
[ ], 20[ ]............................................
Weighted Average Life (years)
</TABLE>
Percent of the Initial Class M Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
-----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Date 0% 100% 150% 170% 200% 250% 300%
- ---- --- ---- ---- ---- ---- ---- ----
Initial Percentage................................... 100 100 100 100 100 100 100
--- --- --- --- --- --- ---
[ ], 19[ ] (first distribution date).................
[ ], 19[ ] (anniversary of first distribution date...
[ ], 19[ ]...........................................
] ], 19[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]............................................
[ ], 20[ ]............................................
Weighted Average Life (years)........................
</TABLE>
Percent of the Initial Class B-1 Certificate Balance at the
Respective Percentages of the Prepayment Model
Prepayments (% of Prepayment Model)
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
-----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Date 0% 100% 150% 170% 200% 250% 300%
- ---- --- ---- ---- ---- ---- ---- ----
Initial Percentage................................... 100 100 100 100 100 100 100
--- --- --- --- --- --- ---
[ ], 19[ ] (first distribution date).................
[ ], 19[ ] (anniversary of first distribution date...
[ ], 19[ ]...........................................
[ ], 19[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]...........................................
[ ], 20[ ]...........................................
Weighted Average Life (years)........................
</TABLE>
S-33
<PAGE>
[Sensitivity Of The Class A-IO Certificates]
[The yield to maturity of the Class A-IO Certificates will be highly
sensitive to the principal prepayment, repurchase and default experience of the
Contracts. Investors should carefully consider the risk that a rapid rate of
principal prepayments on the Contracts or repurchases of Contracts will have an
adverse effect on the yield to investors in the Class A-IO Certificates and,
under certain scenarios, could result in the failure of such investors to
recover their initial investments. The yield to holders of the Class A-IO
Certificates would also be adversely affected in the event that the Servicer
exercises the right under the Pooling and Servicing Agreement to repurchase all
remaining Contracts in the Trust Fund and thereby effect the early termination
of the Certificates, or if there is a successful Termination Auction, as
described in "Description of the Certificates - Optional Termination and
Termination Auction" herein.]
[The following table (the "Yield Table") demonstrates the sensitivity of the
pre-tax yields on the Class A-IO Certificates to various constant rates of
prepayment by projecting the aggregate payments of interest on such Certificates
and the corresponding pre-tax yields on a corporate bond equivalent ("CBE")
basis, assuming distributions on the Contracts are made as set forth in the
Pooling and Servicing Agreement. The Yield Table is also based on the
assumption set forth above under "Description of the Certificates - Weighted
Average Life of the Offered Certificates."]
[Pre-Tax Yields on the Class A-IO Certificates]
<TABLE>
<CAPTION>
Percentage of Prepayment Assumption
------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assumed Purchase Price 0% 50% 75% 100% 150% 200%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
</TABLE>
- --------------------
[The pre-tax yields set forth in the preceding table were calculated by
determining the monthly discount rates which, when applied to the assumed
streams of cash flows to be paid on the Class A-IO Certificates, would cause the
discounted present value of such assumed stream of cash flows to the Closing
Date to equal the assumed purchase prices (which include accrued interest), and
converting such monthly rates to CBE rates. Such calculation does not take into
account the interest rates at which funds received by holders of the Class A-IO
Certificates may be reinvested and consequently does not purport to reflect the
return on any investment in the Class A-IO Certificates when such reinvestment
rates are considered.]
[It is highly unlikely that the Contracts will prepay at the same rate until
maturity or that all of the Contracts will prepay at the same rate or time. As
a result of these factors, the pre-tax yield on the Class A-IO Certificates is
likely to differ from those shown in such tables, even if all of the Contracts
prepay at the indicated percentages of the prepayment assumption. No
representation is made as to the actual rate of principal payments on the
Contracts (or the Contract Rates thereon) for any period or over the life of the
Class A-IO Certificates or as to the 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-34
<PAGE>
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement (the "Agreement"). A form of the Pooling and Servicing Agreement will
be made available to prospective investors upon request (made to the Servicer at
the address specified in the Prospectus under "Incorporation of Certain
Documents by Reference") and will be filed with the Securities and Exchange
Commission after the initial issuance of the Certificates as exhibits to a
Current Report on Form 8-K. Reference is made to the Prospectus for additional
information regarding the terms and conditions of the Agreement. The following
discussion supplements, and does not replace or supersede the discussion under
"Description of the Certificates" in the Prospectus, unless the context
otherwise provides.
Set forth below are summaries of the specific terms and provisions pursuant
to which the Certificates will be issued. The following summaries do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, the provisions of the Agreement. When particular provisions or
terms used in the Agreement are referred to, the actual provisions (including
definitions of terms) are incorporated by reference.
General
[All the Offered Certificates initially will be issuable in one or more
Global Certificates registered in the name of Cede as the nominee of DTC.
Ownership in Offered Certificates represented by such Global Certificates will
only be available in the form of book-entries on the records of DTC and
participating members thereof. All references to "holders" or
"Certificateholders," and to authorized denominations, when used with respect to
the Offered Certificates issued as Global Certificates, shall reflect the rights
of beneficial owners of the Offered Certificates ("Certificate Owners"), and
limitations thereof, as they may be indirectly exercised through DTC and its
participating members, except as otherwise specified herein. See "Description of
the Certificates - Global Certificates" in the Prospectus. See the Prospectus
under "Description of the Certificates - Global Certificates" for a description
of the circumstances in which Definitive Certificates in the future may be
issued. Any Offered Certificates issued as Definitive Certificates will be
transferable and exchangeable at the corporate trust office of the Trustee at
its Corporate Trust Department in [ ] or, if it so elects, at the office of an
agent in [New York, New York]. No service charge will be made for any
registration of exchange or transfer, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge. ]
The Offered Certificates will be issued in fully registered form only, in
denominations equal to [$1,000] or any integral multiple of [one dollar] in
excess thereof. The "Percentage Interest" of a Certificate of a Class (other
than a [Class A-IO or ]Class R Certificate) is the percentage obtained from
dividing the original denomination of such Certificate by the Initial
Certificate Balance of the Certificates of that Class.
The Trust Fund includes (i) the Contract Pool, including certain rights to
receive payments on the Contracts on and after the Cut-off Date, (ii) the
amounts held from time to time in the "Certificate Account" (as described below
under " - Payment on Contracts; Certificate
S-35
<PAGE>
Account") maintained by the Trustee pursuant to the Agreement, (iii) any
property which initially secured a Contract and which is acquired in the process
of realizing thereon, (iv) the obligations of the Seller, under certain
conditions, to repurchase Contracts sold by it with respect to which certain
representations and warranties have been breached and not cured and (v) the
proceeds of all insurance policies described herein.
The Seller will convey the Contracts to the Trustee. See "The Contract Pool"
herein and " - Conveyance of Contracts" below. The Servicer will service the
Contracts pursuant to the Agreement. The Contract documents will be held for the
benefit of the Trustee by the Servicer.
Distributions of principal, interest or both to the holders of the
Certificates will be made on the 10th day of each month, or, if such day is not
a business day, the next succeeding business day (each, a "Distribution Date")
beginning in [ ], 199[ ], to the persons in whose names the Certificates are
registered at the close of business on the last business day preceding each
Distribution Date (the "Record Date").
Pass-Through Rates
The Pass-Through Rates for the Class [ ] and Class [ ] Certificates will be
[ ] and [ ] respectively.
[The Pass-Through Rate for each of the Certificates of Class [ ] on any
Distribution Date will be adjusted so as not to exceed the weighted average of
the Net Contract Rates of the Contracts in the Contract Pool at the beginning of
the month preceding the month of such Distribution Date. The "Net Contract
Rate" of a Contract equals the rate of interest borne by such Contract minus the
Annual Servicing Rate. The "Annual Servicing Rate" is equal to [ ]%. The
weighted average Net Contract Rate of the Contract Pool as of the Cut-off Date
was approximately [ ]%.]
[The Class [ ] Pass-Through Rate on each Distribution Date will be [ ]% per
annum, subject to a maximum rate equal to the weighted average of the Net
Contract Rates on the Contracts in the Contract Pool, computed on the basis of a
360-day year of twelve 30-day months. In all but the most unusual prepayment
scenarios, it is anticipated that the Class [ ] Pass-Through Rate will remain at
the initial rate of [ ]%. However, disproportionate prepayments of Contracts
with higher Net Contract Rates will lower the weighted average Net Contract Rate
on the outstanding Contracts remaining in the Contract Pool. If a larger
principal amount of Contracts having Contract Rates equal to or higher than [ ]%
were to prepay while a proportionate principal amount of the Contracts having
Contract Rates lower than [ ]% did not prepay, to such a great extent that the
weighted average Net Contract Rate fell below the initial Class [ ] Pass-Through
Rate of [ ]%, then the Class [ ] Pass-Through Rate would automatically be
reduced to a level equal to the weighted average of the Net Contract Rates on
the Contracts remaining in the Contract Pool. Of the initial Contracts, [ ]% by
aggregate principal balance as of the Cut-off Date had Contract Rates equal to
or higher than [ ]%.]
S-36
<PAGE>
Conveyance of Contracts
On the date of initial issuance of the Certificates, the Seller will convey
to the Trustee, without recourse, all its right, title and interest in and to
the Contracts, and all rights under the standard hazard insurance policies on
the related Manufactured Homes. The conveyance of the Contracts to the Trustee
will include a conveyance of all rights to receive Scheduled Payments thereon
that were due on or after the Cut-off Date, even if received prior to the Cut-
off Date, as well as all rights to any payments received on or after the Cut-off
Date (other than late receipts of Scheduled Payments that were due prior to the
Cut-off Date). The Contracts will be described on a schedule attached to the
Agreement (the "Contract Schedule"). The Contract Schedule will include the
principal balance of each Contract as of the Cut-off Date, the amount of each
Scheduled Payment due on each Contract as of the Cut-off Date, the Contract Rate
on each Contract (determined as of the Cut-off Date) and the maturity date of
each Contract. Prior to the conveyance of the Contracts to the Trustee, the
operations department of the GreenPoint will be required to complete a review of
all of the originals of the Contracts, the certificates of title to, or other
evidence of a perfected security interest in, the Manufactured Homes, any
related mortgages and any assignments or modifications of the foregoing
(collectively, the "Contract Files") confirming the accuracy of the Contract
Schedule delivered to the Trustee. Any Contract discovered not to agree with
such schedule in a manner that is materially adverse to the interests of the
Certificateholders will be repurchased by the Seller, or replaced with another
Contract, except that if the discrepancy relates to the principal balance of a
Contract (determined as described above), the Seller may, under certain
conditions, deposit cash in the Certificate Account in an amount sufficient to
offset such discrepancy. The Trustee will not review the Contract Files.
The Servicer will hold, as custodian and agent on behalf of the Trustee, the
original Contracts and copies of documents and instruments relating to each
Contract and the security interest in the Manufactured Home, and real property,
if any, relating to each Contract. See "Risk Factors - Security Interests in
the Manufactured Homes; Transfer of Contracts and Security Interests" and
"Certain Legal Aspects of the Contracts - Security Interests in Manufactured
Homes" and "Land Home and Land-in-Lieu Contracts" in the Prospectus for
discussion of the consequences of the Servicer maintaining possession of the
original Contracts and the security interest in the related Manufactured Homes
and real property securing such Contracts, if any. In order to give notice of
the Trustee's right, title and interest in and to the Contracts, a UCC-1
financing statement identifying the Trustee as the secured party and identifying
all the Contracts as collateral will be filed in the appropriate office in the
appropriate states. The Contracts will be stamped or otherwise marked to
reflect their assignment to the Trustee. To the extent that the Contracts do
not constitute "chattel paper" within the meaning of the UCC as in effect in the
applicable jurisdictions or to the extent that the Contracts do constitute
chattel paper and a subsequent purchaser is able to take physical possession of
the Contracts without notice of such assignment, the Trustee's interest in the
Contracts could be defeated. See "Certain Legal Aspects of the Contracts" in
the Prospectus.
The Seller will make certain representations and warranties to the Trustee
with respect to each Contract sold by it, as of the Closing Date (unless
expressly stated otherwise), including the following: (a) as of the Cut-off
Date, no Contract is more than 59 days delinquent; (b) no provision of such
Contract has been waived, altered or modified in any respect, except by
S-37
<PAGE>
instruments or documents identified in the related Contract File; (c) such
Contract is a legal, valid and binding obligation of the Obligor and is
enforceable in accordance with its terms (except as may be limited by laws
affecting creditors' rights generally or by general equity principles); (d) such
Contract is not subject to any right of rescission, set-off, counterclaim or
defense; (e) such Contract is covered by hazard insurance described under
"Description of the Certificates - Servicing Compensation and Payment of
Expenses; Certain Matters Regarding the Servicer - Hazard Insurance Policies" in
the Prospectus; (f) such Contract was either (i) originated by a manufactured
housing dealer acting, to the knowledge of the Seller, in the regular course of
its business and purchased on an individual basis by the Seller in the ordinary
course of its business, [or] (ii) originated by the Seller in the ordinary
course of its business [or (iii) purchased by the Seller as part of bulk
purchases of manufactured housing contracts in connection with the Acquisition,
from other private lenders or finance companies, or from governmental agencies
or instrumentalities or from other entities]; (g) such Contract was neither
originated in nor is subject to the laws of any jurisdiction whose laws would
make the transfer of the Contract or an interest therein to the Trustee pursuant
to the Agreement or pursuant to the Certificates unlawful; (h) such Contract
complies with all requirements of law; (i) such Contract has not been satisfied
or subordinated in whole or in part or rescinded and the Manufactured Home
securing such Contract has not been released from the lien of such Contract; (j)
such Contract creates a valid and enforceable first-priority security interest
in favor of GreenPoint in the Manufactured Home and real property securing such
Contract, if any; (k) such security interest has been assigned to the Trustee,
and, after such assignment, the Trustee has a valid and perfected first-priority
security interest in the Manufactured Home and real property securing such
Contract, if any; (l) such Contract has not been sold, assigned or pledged to
any other person, and prior to the transfer of the Contracts to the Trustee, the
Seller had good and marketable title to such Contract sold by it, free and clear
of any encumbrance, equity, loan, pledge, charge, claim or security interest,
and it was the sole owner thereof and had full right to transfer such Contract
to the Trustee; (m) as of the Cut-off Date, there was no default, breach,
violation or event permitting acceleration under such Contract and no event
which, with notice and the expiration of any grace or cure period, would
constitute such a default, breach, violation or event permitting acceleration
(except payment delinquencies permitted by clause (a) above), the Seller has not
waived any of the foregoing; (n) as of the Closing Date (as defined below),
there were, to the knowledge of the Seller no liens or claims which have been
filed for work, labor or materials affecting a Manufactured Home or real
property securing such Contract, which are or may be liens prior to or equal
with or subordinate to the lien of such Contract; (o) such Contract is a fully-
amortizing loan with a [fixed] Contract Rate and provides for level payments
over the term of such Contract; (p) such Contract contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for realization against the collateral of the benefits of the
security; (q) the information contained in the Contract Schedule with respect to
such Contract is true and correct; (r) there is only one original of such
Contract; (s) such Contract did not have a loan-to-value ratio at origination
greater than 100%; (t) the related Manufactured Home is not considered or
classified as part of the real estate on which it is located under the laws of
the jurisdiction in which it is located unless it is subject to a Land-in-Lieu
or Land Home Contract and as of the Closing Date such Manufactured Home is, to
the knowledge of the Seller free of damage and in good repair; (u) such Contract
is a "qualified mortgage" under Section 860G(a)(3) of the Code; (v) the related
Manufactured Home is a "manufactured home" within the meaning of Section 5402(6)
of Title 42 of the United States
S-38
<PAGE>
Code and, as to each Contract sold by the Seller to the Trust Fund, the Seller
is an approved mortgagee as of the time of such Contract's origination as
required under Section 3(a)(41)(A)(ii) of the Exchange Act; (w) such Contract is
secured by a "single family residence" within the meaning of Section 25(e)(10)
of the Code; (x) such Contract has been stamped to indicate its assignment to
the Trustee within 60 days of the Closing Date and (y) the Contract with the
lowest Contract Rate has a Contract Rate of [ ]% and the Contract with the
highest Contract Rate has a Contract Rate of [ ]%. Under the terms of the
Agreement, and subject to the relevant Seller's option to effect a substitution
with respect to Contracts sold by it as described in the last paragraph under
this subheading, the Seller will be obligated to repurchase, at the price
described below, any Contract sold by it within 90 days after the Seller becomes
aware, or after the Seller's receipt of written notice from the Trustee or the
Servicer, of a breach of any representation or warranty of the Seller in the
Agreement that materially and adversely affects the Trust Fund's interest in any
Contract it sold thereto unless such breach has been cured.
Notwithstanding the foregoing, the Seller will not be required to repurchase
or substitute any Contract relating to a Manufactured Home and real property
securing such Contract, if any, located in any jurisdiction on account of a
breach of the representation and warranty described in clause (k) above solely
on the basis of the failure by the Seller to cause a notation to be made on any
document of title relating to any such Manufactured Home or to execute any
transfer instrument relating to any such Manufactured Home or real property, if
any (other than a notation or transfer instrument necessary to show the Seller
as lienholder or legal title holder) unless (i) a court of competent
jurisdiction has adjudged that, because of such failure, the Trustee does not
have a perfected first-priority security interest in such related Manufactured
Home or (ii)(A) the Servicer has received written advice of counsel to the
effect that a court of competent jurisdiction has held that, solely because of a
substantially similar failure on the part of a pledgor or assignor of
manufactured housing contracts (who has perfected the assignment or pledge of
such contracts), a perfected first-priority security interest was not created in
favor of the pledgee or assignee in a related manufactured home which is located
in such jurisdiction and which is subject to the same laws regarding the
perfection of security interests therein applicable to the Manufactured Homes
located in such jurisdiction and (B) the Servicer shall not have completed all
appropriate remedial action with respect to such Manufactured Home within 180
days after receipt of such written advice. Any such advice will be from counsel
selected by the Servicer on a non-discriminatory basis from among the counsel
used by the Servicer in its general business in the jurisdiction in question.
The Servicer will have no ongoing obligation to seek advice with respect to the
matters described in clause (ii) above. However, the Servicer is required to
seek advice with respect to such matters whenever information comes to the
attention of its counsel which causes such counsel to determine that a holding
of the type described in clause (ii)(A) might exist. If any counsel selected by
the Servicer informs the Servicer that no holding of the type described in
clause (ii)(A) exists, such advice will be conclusive and binding on the parties
to the Agreement pursuant to which a Trustee has an interest in any Contracts in
the applicable jurisdiction as of the applicable date. If any holding described
above which would give rise to a repurchase obligation on the part of the Seller
were to result from proceedings brought by a receiver or conservator of the
Seller, it is likely that such receiver or conservator would also reject the
resulting repurchase obligation.
The repurchase obligation described above generally constitutes the sole
remedy available to the Trustee and the Certificateholders for a breach of a
representation or warranty
S-39
<PAGE>
under the Agreement with respect to the Contracts. The repurchase price for any
Contract will be equal to the remaining principal balance of such Contract as of
the beginning of the month of repurchase, plus accrued and unpaid interest from
the Due Date with respect to which the Obligor last made a payment to the Due
Date occurring in the Collection Period during which such Contract is
repurchased.
In lieu of repurchasing a Contract as specified above, during the two-year
period following the date of the initial issuance of the Certificates (the
"Closing Date"), the Seller may, at its option, substitute an Eligible
Substitute Contract (as defined below) for the Contract that it is otherwise
obligated to repurchase (referred to herein as the "Replaced Contract"). An
"Eligible Substitute Contract" is a Contract that satisfies, as of the date of
its substitution, the representations and warranties specified in the Agreement,
has a Scheduled Principal Balance that is not greater than the Scheduled
Principal Balance of the Replaced Contract as of the beginning of the month in
which such substitution takes place, has a Contract Rate that is at least equal
to the Contract Rate of the Replaced Contract, has a remaining term to scheduled
maturity that is not greater than the remaining term to scheduled maturity of
the Replaced Contract and has not been delinquent for more than 31 days as to
any Scheduled Payment due in the twelve months prior to its substitution. The
Seller will be required to deposit in the Certificate Account cash in the
amount, if any, by which the Scheduled Principal Balance of the Replaced
Contract as of the beginning of the month in which substitution takes place
exceeds the Scheduled Principal Balance of the Contract it sold being
substituted as of the beginning of the month.
[Conveyance of [Subsequent Contracts and] [Pre-Funding Account]
[An account (the "Pre-Funding Account") will be established by the Trustee
and funded by GreenPoint on the Closing Date to provide the Trust with
sufficient funds to purchase Subsequent Contracts. The amount deposited in the
Pre-Funding Account (as reduced from time-to-time, the "Pre-Funded Amount") will
initially equal the difference between [$ ] and the aggregate principal balance
as of the Cut-off Date of the Initial Contracts and Additional Contracts. The
Pre-Funding Account will be used to purchase Subsequent Contracts during the
period from the Closing Date until the earliest of (i) the date on which the
amount on deposit in the Pre-Funding Account is less than [$ ], (ii) [$ ] or
(iii) the date on which an Event of Termination occurs under the Agreement (the
"Pre-Funding Period"). The Pre-Funded Amount will be reduced during the Pre-
Funding Period by the amount used to purchase Subsequent Contracts in accordance
with the Agreement. [The Pre-Funding Account will be part of the Trust but not
part of the REMIC.] Any reimbursement income earned on amount on deposit in the
Pre-Funding Account will be taxable to GreenPoint.]
[Under the Agreement, following the initial issuance of the Certificates,
the Trust will be obligated to purchase Subsequent Contracts from GreenPoint
during the Pre-Funding Period, subject to the availability thereof. Each
Subsequent Contract will have been underwritten in accordance with the Company's
standard underwriting criteria. Subsequent Contracts will be transferred to the
Trust pursuant to subsequent transfer instruments between GreenPoint and the
Trust. In connection with the purchase of Subsequent Contracts on such dates of
transfer (the "Subsequent Transfer Dates"), the Trust will be required to pay to
GreenPoint from amounts on deposit in the Pre-Funding Account a cash purchase
price of 100% of the principal balance thereof. GreenPoint will designate the
Subsequent Transfer Date as the Cut-off Date with
S-40
<PAGE>
respect to the related Subsequent Transfer Date will not include accrued
interest on the related Subsequent Contracts in the Trust will increase by an
amount equal to the aggregate principal balance of the Contracts so purchased
and the amount in the Pre-Funding Account will decrease accordingly. Any Pre-
Funded Amount remaining after the purchase of Subsequent Contracts will be
applied on the first Payment Date on or after the last day of the Pre-Funding
Period to prepay principal on the [Class A-1 Certificates].
Any conveyance of Subsequent Contracts on a Subsequent Transfer Date is
subject to certain conditions including, but not limited to: (a) each Subsequent
Contract must satisfy the representations and warranties specified in the
related subsequent transfer instrument and the Agreement; (b) GreenPoint will
not select Subsequent Contracts in a manner that it believes is adverse to the
interests of the Certificateholders; [(c) as of its respective Cut-off Date,
each Subsequent Contract must satisfy the following criteria: (i) no Subsequent
Contract may be more than [ ] days contractually delinquent; (ii) the remaining
stated term to maturity of each Subsequent Contract may not exceed [ ] months;
(iii) each Subsequent Contract must be underwritten in accordance with
GreenPoint's standard underwriting criteria; and (iv) no Subsequent Contract may
have a loan-to-value ratio greater than 100%; (d) the Contract Pool following
the addition of the Subsequent Contracts must satisfy the following criteria:
(i) the weighted average Contract Rate must not be less than [ ]%; (ii) the
weighted average loan-to-value ratio must not be greater than [ ]%; (iii) not
less than [ ]% of the Cut-off Date Pool Principal Balance must be attributable
to loans to purchase new Manufactured Homes; and (v) at least [ ]% of the Cut-
off Date Pool Principal Balance must consist of Land-and Home Contracts; (e) as
a result of the purchase of the Subsequent Contracts, the Class A Certificates
will not receive from [Rating Agencies] a lower credit rating than the rating
assigned at the initial issuance of such Class A Certificates; and (f) an
independent accountant will provide a letter stating whether or not the
characteristics of the Subsequent Contracts conform to the Characteristics
described herein].]
Payments on the Contracts; Certificate Account
The Trustee will initially establish and maintain an account (the
"Certificate Account") at a depository institution organized under the laws of
the United States or any state, the deposits of which are insured to the full
extent permitted by law by the Federal Deposit Insurance Corporation (the
"FDIC") whose commercial paper, long-term deposits or long-term unsecured senior
debt has a rating of [ ] by [ ][and [ ] by [ ] (if rated by [ ])] in the case of
commercial paper or in one of the two highest rating categories by [ ] [and] [ ]
(if rated by [ ])] in the case of long-term deposits or long-term unsecured
senior debt, and which is subject to examination by federal or state authorities
or a depository institution otherwise acceptable to [ ] and [ ] (an "Eligible
Institution"). The funds in the Certificate Account are required to be invested
by the Trustee in common trust funds, collective investment trusts or Eligible
Investments that will mature not later than the business day preceding the
applicable Distribution Date. "Eligible Investments" include, among other
investments, obligations of the United States or of any agency thereof backed by
the full faith and credit of the United States; certificates of deposit, time
deposits and bankers' acceptances sold by eligible financial institutions;
commercial paper rated [ ] by [ ] [and [ ] by [ ] (if rated by [ ])]; money
market funds acceptable
S-41
<PAGE>
to [ ] [and [ ]] (as evidenced by a letter from [ ] [and [ ]] to such effect);
and other obligations acceptable to [ ] [and [ ]].
All payments in respect of principal and interest on the Contracts received
[during any Collection Period] by the Servicer (exclusive of Scheduled Payments
due prior to the Cut-off Date), including Liquidation Proceeds (net of
Liquidation Expenses, as defined below), are required to be paid into the
Certificate Account not later than the second business day following receipt
thereof. [Notwithstanding the foregoing, for as long as GreenPoint remains the
Servicer under the Pooling and Servicing Agreement and GreenPoint maintains a
short-term rating of at least [ ] from [the rating agency], which is currently
the case, the Servicer need not deposit collections into the Certificate Account
within two business days of receipt but may use for its own benefit all such
collections until the related Distribution Date without an obligation to pay
interest or any other investment return thereon, it being understood that any
benefit to the Servicer from this arrangement shall be additional servicing
compensation. While such rating is maintained, on or prior to each Distribution
Date, the Servicer will deposit in the Certificate Account amounts which are to
be included in the funds available for the related Distribution Date. [Amounts
deposited in the Certificate Account may be invested in Permitted Investments
(as described in the Pooling and Servicing Agreement) maturing no later than the
related Distribution Date.]]
[At any time that the short-term rating of the Servicer does not satisfy the
rating requirements specified above, the Servicer may continue to hold
collections prior to distribution as described above so long as it causes to be
maintained an irrevocable letter of credit or surety bond or other credit
enhancement instrument in form and substance satisfactory to the rating agency,
issued by a depository institution or insurance company having a rating on its
short-term obligations of at least [ ] and long-term obligations of at least [ ]
by [the rating agency] or other ratings if approved by [the rating agency] and
providing that the Trustee may draw thereon in the event that the Servicer,
fails to make any deposit or payment required under the Pooling and Servicing
Agreement.]
Amounts received as late payment fees, 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 (which amounts will be
treated as partial principal prepayments), as described under "-Conveyance of
Contracts" above, are required to be paid into the Certificate Account.
On the third business day prior to each Distribution Date (the
"Determination Date"), the Servicer will determine the Available Distribution
Amount and the amounts to be distributed on the Certificates on such
Distribution Date. The "Available Distribution Amount" for any Distribution Date
is the sum of (a) the Monthly Advance for such Distribution Date (as defined
below under "-Advances") and (b) the amount in the Certificate Account on the
close of business on the last day of the immediately preceding Collection
Period, less the sum of (i) any repossession profits (of which there are
expected to be a de minimis amount) on defaulted
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Contracts, (ii) 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, (iii) Excess Contract Payments (as defined below) and any
other payments not required to be distributed to Certificateholders on the
related Distribution Date, (iv) reimbursements to the Servicer in the amount of
expenses incurred in connection with the liquidation of a Contract ("Liquidation
Expenses") and certain taxes and insurance premiums advanced by the Servicer in
respect of Manufactured Homes (as described below under " - Advances"), (v)
reimbursements to the Servicer for Nonrecoverable Advances in respect of
Contracts and Monthly Advances to the extent permitted by the Agreement (as
described below under " - Advances") and (vi) [if GreenPoint is not acting as
Servicer,] the Monthly Servicing Fee (as hereinafter defined).
An "Excess Contract Payment" is a payment received on a Contract that is in
excess of the Scheduled Payment (or, generally, an integral multiple thereof) on
such Contract, is not a partial principal prepayment or prepayment in full and
is not part of any Liquidation Proceeds. Excess Contract Payments will be held
by the Trustee in the Certificate Account and may be applied as described under
" - Advances" below.
The Trustee or its paying agent will withdraw funds from the Certificate
Account on each Distribution Date (but only to the extent of the related
Available Distribution Amount) to make payments to Certificateholders as
specified under "- Distributions" below. From time to time, as provided in the
Agreement, the Servicer will also withdraw funds from the Certificate Account to
make payments to it the Seller as permitted by the Agreement and described in
subclauses (i), (ii), (iv), (v) and (vi) of clause (b) in the second preceding
paragraph.
Distributions
Distributions to the holders of the Series 199[ ]-[ ] Regular Certificates
will be applied first to the holders of the Senior Certificates, second to the
holders of the Class M Certificates and then to the holders of the Class B
Certificates. The Available Distribution Amount for each Distribution Date will
be applied in the amounts and the order of priority set forth below.
Distributions of principal and interest to holders of each Class of
Certificates[, other than the Class A-IO Certificates,] will be made on each
Distribution Date in an amount equal to their respective Percentage Interests
multiplied by the aggregate amount distributed to such Class of Certificates on
such Distribution Date. [Interest will be calculated on the Class A-IO
Certificates on the basis of a "Notional Principal Amount" [equal to the Pool
Scheduled Principal Balance]. Reference to the Notional Principal Amount of the
Class A-IO Certificates is solely for convenience in certain calculations and
does not represent the right to receive any distribution allocable to
principal.] Interest on each Class of the Series 199[ ]-[ ] Regular Certificates
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months.
Each distribution with respect to book-entry certificates will be paid to
DTC, which will credit the amount of such distribution to the accounts of its
participants in accordance with its normal procedures. Each participant will be
responsible for disbursing such distribution to the Certificate Owners that it
represents and to each indirect participating brokerage firm (a "brokerage firm"
or "indirect participating firm") for which it acts as agent. Each brokerage
firm will be responsible for disbursing funds to the Certificate Owners that it
represents. All such
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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:
to the Class A Certificateholders, the Class A Interest Distribution
Amount, payment to be distributed among the Class A-1 and Class A-IO
Certificates pro rata, based on entitlement;
to the Class A-1 Certificateholders, the Formula Principal Distribution
Amount until the Class A Certificate Balance is reduced to zero [and on the [ ]
Payment Date any amounts remaining in the Pre-Funded Account].
to the Class M Certificateholders, the Class M Interest Distribution
Amount;
to the Class M Certificateholders, any remaining Formula Principal
Distribution Amount after distribution under clause (ii) above until the Class M
Certificate Balance is reduced to zero;
to the Class B-1 Certificateholders, the Class B-1 Interest
Distribution Amount;
to the Class B-1 Certificateholders, any remaining Formula Principal
Distribution Amount until the Class B-1 Certificate Balance is reduced to zero;
to the Class B-2 Certificateholders, the Class B-2 Interest
Distribution Amount;
to the Class B-2 Certificateholders, any remaining Formula Principal
Distribution Amount until the Class B-2 Certificate Balance is reduced to zero;
to GFC an for any Enhancement Payments made under the Limited Guarantee
and not previously reimbursed; and.
to the Class R Certificateholders, any remaining Available Distribution
Amount.
[The Class A-IO Certificates are interest-only and are not entitled to
receive distributions of principal, but the Notional Principal Amount decreases
as the Certificate Balance of all Senior Certificates is reduced.]
Definitions. As to any Distribution Date, the "Class A Interest
Distribution Amount" is equal to the sum of (i) one month's interest at the
Class A Pass-Through Rate on the Class A Certificate Balance or Notional
Principal Amount, as the case any be, and (ii) any previously undistributed
shortfalls in interest due to the Class A Certificateholders in respect of prior
Distribution Dates; the "Class M Interest Distribution Amount" is equal to the
sum of (i)
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one month's interest at the Class M Pass-Through Rate on the Class M Certificate
Balance and (ii) any previously undistributed shortfalls in interest due to the
Class M Certificateholders in respect of prior Distribution Dates; the "Class B-
1 Interest Distribution Amount" is equal to the sum of (i) one month's interest
at the Class B-1 Pass-Through Rate on the Class B-1 Certificate Balance and (ii)
any previously undistributed shortfalls in interest due to the Class B
Certificateholders in respect of prior Distribution Dates; and the "Class B-2
Interest Distribution Amount" is equal to the sum of (i) one month's interest at
the Class B-2 Pass-Through Rate on the Class B-2 Certificate Balance and (ii)
any previously undistributed shortfalls in interest due to the Class B
Certificateholders in respect of prior Distribution Dates. Any shortfall in
interest due to Certificateholders will, to the extent legally permissible, bear
interest at the related Class A-1, Class A-IO, Class M, Class B-1 Pass-Through
Rate and Class B-2 Pass-Through.
The "Formula Principal Distribution Amount" in respect of a Distribution
Date equals the sum of (a) the Total Regular Principal Amount for such
Distribution Date and (b) any previously undistributed shortfalls in the
distribution of the Total Regular Principal Amount in respect of prior
Distribution Dates.
The "Total Regular Principal Amount" on each Distribution Date is the sum of
(i) the Scheduled Principal Reduction Amount (defined below) for such
Distribution Date, (ii) the Scheduled Principal Balance (defined below) of each
Contract which, during the related Collection Period, was purchased by the
Seller on account of certain breaches of representations and warranties made by
it in the Agreement, (iii) all partial prepayments received during such related
Collection Period, (iv) the Scheduled Principal Balance of each Contract that
was prepaid in full during such related Collection Period and (v) the Scheduled
Principal Balance of each Contract that became a Liquidated Contract (defined
below) during such related Collection Period.
The "Scheduled Principal Balance" of a Contract for any Distribution Date is
its principal balance as of the Due Date in the Collection Period immediately
preceding such Distribution Date, after giving effect to all previous partial
prepayments, all previous scheduled principal payments (whether or not paid) and
the scheduled principal payment due on such Due Date, but without giving effect
to any adjustment due to bankruptcy or similar proceedings. The "Scheduled
Principal Reduction Amount" for any Distribution Date is an approximate
calculation (performed on an aggregate basis rather than on a Contract-by-
Contract basis) of the scheduled payments of principal due during the related
Collection Period. Both of these terms are more fully described herein under
"-Distributions" above.
The "Pool Scheduled Principal Balance" for any Distribution Date is equal to
the Cut-off Date Pool Principal Balance less the aggregate of the Total Regular
Principal Amounts for all prior Distribution Dates.
In general, a "Liquidated Contract" is a defaulted Contract as to which all
amounts that the Servicer expects to recover relating to such Contract
("Liquidation Proceeds") have been received. A Liquidated Contract includes any
defaulted Contract in respect of which the related Manufactured Home has been
realized upon and disposed of and the proceeds of such disposition have been
received.
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The "Certificate Balance" for any Class as of any Distribution Date is the
Initial Certificate Balance of that Class less all amounts previously
distributed to Certificateholders of that Class on account of principal. In no
event shall the aggregate distributions of principal to the holders of the
Senior and Subordinate Certificates exceed the Initial Senior Certificate
Balance and the Initial Subordinate Certificate Balance, respectively.
[Reserve Account]
[On the Closing Date, the Trustee shall establish an account (the "Reserve
Account") for the benefit of the Certificateholders. The Reserve Account shall
have an initial balance of [$ ] [zero] on the Closing Date. Commencing on the
Distribution Date which is the earlier of (a) the Distribution Date in [ ] and
(b) the first Distribution Date on which the percentage equivalent of a
fraction, the numerator of which is the Pool Scheduled Principal Balance (after
giving effect to distribution with respect to principal) for such Distribution
Date and the denominator of which is the Cut-off Date Pool Principal Balance, is
less than or equal to [ ]%, the Trustee shall make a deposit into the Reserve
Account up to the Reserve Account Cap. On each Distribution Date, the Trustee
will withdraw from the Reserve Account an amount (the "Reserve Account Draw
Amount") equal to the lesser of (a) the amount then on deposit in the Reserve
Account and (b) the amount by which the aggregate of amounts due to
Certificateholders in clauses (i) through (vi) under "Distributions" above
exceeds the Available Distribution Amount on such Distribution Date and
distribute such amount, together with the Available Distribution Amount.]
[Funds in the Reserve Account will be invested in Eligible Investments as
directed by the Trustee, and the net investment earnings, if any, will be paid
to the Class R Certificateholders. "Eligible Investments" means one or more
common trust funds, collective investment trusts or money market funds
acceptable to [the rating agency] (as evidenced by a letter from [the rating
agency] to such effect or, if no such trusts or funds are acceptable to [the
rating agency] any other obligations acceptable to [the rating agency].]
On any Distribution Date, any funds on deposit in the Reserve Account in
excess of the Reserve Account Cap (after giving effect to any Reserve Account
Draw Amount paid to the Certificateholders on such date) will be withdrawn from
the Reserve Account and paid to the Class R Certificateholders.]
[Amounts paid to the Class R Certificateholders pursuant to the two
immediately preceding paragraphs will not be available to offset shortfalls in
distributions to holders of other Classes of Certificates.] [The Reserve Account
is intended to enhance the likelihood of regular receipt by the holders of the
Series 199[ ]-[ ] Regular Certificates of the full amount of the distributions
due them and to afford such holders protection against losses on Liquidated
Contracts, but no assurance can be given that the Reserve Account will be
sufficient for such purpose.]
[The "Reserve Account Cap" shall be (i) as to any Distribution Date (after
giving effect to distributions due thereon) after the Closing Date and until
none of the Offered Certificates remain outstanding, $[ ] (which is [ ]% of the
Cut-off Date Pool Principal Balance) and (ii) as to any Distribution Date (after
giving effect to distributions due thereon) after none of
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the Offered Certificates remain outstanding, the lesser of the then outstanding
Class B-[ ] Certificate Balance and $[ ] (which is [ ]% of the Cut-off Date Pool
Principal Balance).]
Subordination
The rights of the holders of the Subordinate Certificates to receive
distributions of available amounts in the Trust Fund will be subordinate, to the
extent described herein, to such rights of the holders of the Senior
Certificates. This subordination is intended to enhance the likelihood of
regular receipt by the holders of the Senior Certificates of the full amount of
interest and principal distributable thereon and to afford such holders
protection against losses on Liquidated Contracts.
Similarly, the rights of the holders of the Class B Certificates to receive
distributions due them from available amounts in the Trust Fund will be
subordinated, to the extent described herein, to such rights of the holders of
the Class M Certificates. Subject to the subordination of the Subordinate
Certificates to the Senior Certificates, this subordination of the Class B
Certificates to the Class M Certificates is intended to enhance the likelihood
of regular receipt by the holders of the Class M Certificates of the full amount
of the distributions due them and to afford such holders protection against
losses on Liquidated Contracts.
The protection afforded to the holders of Senior Certificates by means of
the subordination of the Subordinate Certificates and to the Class M
Certificateholders by the subordination of the Class B Certificates (in each
case, to the extent described herein) will be accomplished by the application of
the Available Distribution Amount in the order specified under "Distributions"
above. Accordingly, in the event that the Available Distribution Amount on any
Distribution Date is not sufficient to permit the distribution of the amount of
interest and the specified portion of the Formula Principal Distribution Amount
due to the holders of any Class of Certificates, the subordination is intended
to protect such Certificateholders by the right of such Certificateholders to
receive distributions of the Available Distribution Amount in respect of
interest and the Formula Principal Distribution Amount that would otherwise have
been distributable to the Certificateholders of any Class subordinate in
priority of distribution to such Class, until any shortfall in distributions to
the holders of the related senior Class or Classes of Certificates in respect
thereof has been satisfied, to the extent described herein.
Losses on Liquidated Contracts
As described above, the Total Regular Principal Amount distributable to the
holders of the Series 199[ ]-[ ] Regular Certificates on each Distribution Date
includes the Scheduled Principal Balance of each Contract that became a
Liquidated Contract during the immediately preceding Collection Period. The
Liquidation Proceeds, net of (i) certain expenses incurred to liquidate such
Liquidated Contract, (ii) all accrued and unpaid interest thereon and (iii) all
Monthly Advances required to be made in respect of such Liquidated Contract (the
"Net Liquidation Proceeds"), may be less than the Scheduled Principal Balance of
such Liquidated Contract. Under such circumstances, the loss on the Liquidated
Contract during a Collection Period, in the amount of the deficiency between the
Net Liquidation Proceeds and the Scheduled Principal Balance of such Liquidated
Contract, may be covered to the extent of the amount (the
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"Excess Interest"), if any, by which the interest collected on nondefaulted
Contracts during the same Collection Period exceeds interest distributions due
to holders of the Series 199[ ]-[ ] Regular Certificates and the Monthly
Servicing Fee.
The effect of any losses on Liquidated Contracts during a Collection Period
in excess of the aggregate of Excess Interest generally will be to cause
shortfalls, losses or both with respect to the Certificates, which shortfalls or
losses will be borne by the Class B Certificateholders, the Class M
Certificateholders and the Class A Certificateholders, in that order.
Example of Distributions
The following chart sets forth an example of the flow of funds on the
Certificates for the Distribution Date occurring in [August 1999]:
[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).]
(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.
(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 (i) delinquent scheduled
payments of principal and interest on the Contracts that were due in the
preceding Collection Period and (ii) the amount, if any, by which scheduled
distributions of principal and interest due on the Series 199[ ]-[ ] Regular
Certificates exceeds the amount specified in clause (b) of the definition of
Available Distribution Amount (as set forth above under " - Payments on
Contracts; Certificate Account"),
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except to the extent, in the Servicer's judgment, such advance would not be
recoverable from related late payments, Liquidation Proceeds or otherwise (a
"Nonrecoverable Advance").
The aggregate amount of any additional advances made by the Servicer that
have not been reimbursed to the Servicer as described below is referred to
herein as the "Outstanding Amount Advanced." The Servicer may apply any Excess
Contract Payments in the Certificate Account (rather than its own funds) to make
all or a portion of a Monthly Advance, but must replace such Excess Contract
Payments to the extent required to make scheduled payments on the related
Contracts. In addition, upon the determination that a Nonrecoverable Advance has
been made in respect of a Contract, the Servicer will reimburse itself (but only
to the extent of the Outstanding Amount Advanced) out of funds in the
Certificate Account for the delinquent Scheduled Payments on such Contract or
out of any other funds in the Certificate Account.
In making Monthly Advances, the Servicer will be attempting to maintain a
regular flow of scheduled interest and principal to the Series 199[ ]-[ ]
Regular Certificateholders rather than to guarantee or insure against losses.
The Servicer will also be obligated to make advances, to the extent
recoverable out of Liquidation Proceeds or otherwise, in respect of certain
taxes and insurance premiums not paid by an Obligor on a timely basis. Funds so
advanced are reimbursable to the Servicer as provided in the Agreement.
[Limited Guarantee of GFC
In order to mitigate the effect of [the subordination of the Class [B-2]
Certificates and] liquidation losses and delinquencies on the Contracts borne by
the [Class B-2 Certificates], GFC will initially provide a guarantee (the
"Limited Guarantee.") against losses that would otherwise be absorbed by the
[Class B-2 Certificates]. [Such Limited Guarantee may be replaced by an
Alternative Credit Enhancement. See "Alternative Credit Enhancement" herein.]
Each payment required to be made under the Limited Guarantee is referred to as
an "Enhancement Payment." Prior to the Remittance Date with respect to the
[Class B-2 Certificates] (the "Initial [Class B-2] Principal Remittance Date")
on which the [Class B-1] Principal Balance is reduced to zero, the Enhancement
Payment will equal the amount, if any, by which (a) the sum of (i) the [Class B-
2] Formula Distribution Amount (which will be equal to interest accrued during
the related Interest Period on the [Class B-2] Principal Balance and an amount
of principal described in the Agreement) for such Remittance Date and (ii) the
[Class B-2] Principal Balance and an amount of principal described in the
Agreement) for such Remittance Date and (ii) the [Class B-2] Principal
Liquidation Loss Amount, if any, exceeds (b) the amount (other than the
Enhancement Payment) that will otherwise be distributed on the [Class B-2
Certificates] on such Remittance Date (the "[Class B-2] Distribution Amount.").
On each Remittance Date on or after the Initial [Class B-2] Principal Remittance
Date, the Enhancement Payment will equal the amount, if any, by which the [Class
B-2] Formula Distribution Amount (which will include both interest and
principal) exceeds the [Class B-2] Distribution Amount for such Remittance Date.
[The "[Class B-2] Principal Liquidation Loss Amount." for any Remittance
Date will equal the amount, if any, by which (a) the Formula Principal
Distribution Amount (exclusive of
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the portion thereof specified in clause (vi) of the definition of Formula
Principal Distribution Amount) for such Remittance Date exceeds (b) the amount
distributed on the Certificates on account of principal on such Remittance Date.
The [Class B-2] Principal Liquidation Loss Amount represents future principal
payments on the Contracts that, because of the subordination of the [Class B-2]
Certificates and liquidation losses on the Contracts, will not be paid to the
[Class B-2] Certificate holders from the assets of the Trust Fund but may be
paid in the form of an Enhancement Payment.]
[In the event, that on a particular Remittance Date, the [Class B-2]
Distribution Amount in the Certificate Account plus any amounts actually paid
under the Limited Guarantee are not sufficient to make a full distribution of
interest to [the Class B-2 Certificateholder], the amount of the deficiency will
be carried forward as an amount that [the Class B-2 Certificateholders] are
entitled to receive on the next Remittance Date.]
The Limited Guarantee will be an unsecured general obligation of GFC and
will not be supported by any letter of credit or other enhancement arrangement.
The Limited Guarantee is for the benefit of [the Class B-2 Certificates]
only and will not result in any payments on the other Certificates.
As reimbursement to GFC for Enhancement Payments made by GFC pursuant to
the Limited Guarantee, GFC will be entitled to receive on each Remittance Date
an amount equal to the lesser of (a) the Available Distribution Amount, less the
portion of the Available Distribution Amount distributed on the Certificates
(other than the Class R Certificate), and (b) the aggregate amount of
Enhancement Payments outstanding which remain unreimbursed as of such Remittance
Date.
[Alternative Credit Enhancement
In the event that, at GFC's option, Alternative Credit Enhancement (as
defined herein) is provided and, upon prior written notice to the Rating
Agencies, the Rating Agencies shall have notified GFC, the Servicer and the
Trustee in writing, that substitution of such Alternative Credit Enhancement for
the Limited Guarantee will not result in the downgrade or withdrawal of the then
current rating of any class of the Certificates, and upon the delivery by GFC to
the Trustee of an opinion of counsel, acceptable to the Trustee, that such
action would not cause the Trust to fail to qualify as a REMIC, the Limited
Guarantee shall be released and shall terminate. The Alternative Credit
Enhancement may consist of cash or securities deposited by GFC or any other
person in a segregated escrow, trust or collateral account or a letter of
credit, certificate insurance policy or surety bond provided by a third party
(an "Alternative Credit Enhancement."). On each Remittance Date after delivery
of the Alternative Credit Enhancement, an amount, equal to the lesser of the
amount which would have been payable under the Limited Guarantee and the amount
available under such Alternative Credit Enhancement, shall be transferred from
such account to the applicable Certificate Account to make payments to the Class
[B-2] and Certificateholders, as applicable (the "Enhancement Payment"). GFC
shall have no obligation to replace such enhancement once it has been exhausted.
See "Risk Factors-Alternative Credit Enhancement" herein.]
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Reports to Certificateholders
The Trustee will include with each distribution to a Certificateholder a
statement as of the related Distribution Date setting forth, among other things:
the aggregate amount distributed on each Class of Certificates on such
Distribution Date;
the amount of such distribution on each Class of Certificates which
constitutes principal;
the amount of such distribution on each Class of Certificates which
constitutes interest;
the remaining Certificate Balance;
the Monthly Servicing Fee payable on such Distribution Date and the
amount of any other fees payable out of the Trust Fund;
the number of and aggregate unpaid principal balance of Contracts with
payments delinquent 31 to 59, 60 to 89, and 90 or more days, respectively;
the number of Contracts that were repurchased or replaced by a Seller
in accordance with the Agreement during the prior Collection Period,
identifying such Contracts and (i) the Repurchase Price of such Contracts and
(ii) the amount, if any, paid by such Seller due to the differences, if any,
between the remaining principal balances of the replaced Contracts and the
Eligible Substitute Contracts;
the aggregate principal balances of all Contracts that are not
Liquidated Contracts and in respect of which the related Manufactured Homes
have been repossessed or foreclosed upon;
the aggregate liquidation losses (less costs of liquidation) realized
by the Trust Fund through the Collection Period immediately preceding such
Distribution Date, expressed in dollars;
the aggregate liquidation losses (less costs of liquidation) realized
by the Trust Fund through the Collection Period immediately preceding such
Distribution Date, expressed as a percentage of the Cut-off Date Pool
Principal Balance;
the amount of any Monthly Advance for such Distribution Date and the
aggregate amount of Monthly Advances that remain outstanding as of such
Distribution Date;
the weighted average Contract Rate for the Contract Pool for the
Collection Period immediately preceding the month of such Distribution Date;
and
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the number of Manufactured Homes currently held by the Servicer due to
repossessions and the aggregate principal balance of the related defaulted
Contracts.
In addition, within a reasonable period of time after the end of each
calendar year, the Trustee will furnish a report to each holder of a Series
199[ ]-[ ] Regular Certificate of record at any time during such calendar year
as to the aggregate of amounts reported pursuant to clauses (a) and (b) above
for such calendar year.
Optional Termination and Termination Auction
The Agreement provides that on any Distribution Date after the Distribution
Date on which the Pool Scheduled Principal Balance is less than 10% of the Cut-
off Date Pool Principal Balance, the [Servicer/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 such option, all outstanding
Contracts at a price equal to the greater of (a) the sum of (x) 100% of the
Scheduled Principal Balance of each Contract (other than any Contract as to
which the related Manufactured Home has been acquired and not yet disposed of
and whose fair market value is included pursuant to clause (y) below) as of the
final Distribution Date, and (y) the fair market value of such acquired property
(as determined by the Servicer), and (b) the aggregate fair market value (as
determined by the Servicer) of all of the assets of the Trust Fund, plus, in the
case of both clause (a) and (b), an amount sufficient to reimburse
Certificateholders for any shortfall in interest due thereto in respect of prior
Distribution Dates. Notwithstanding the foregoing, the Servicer's option shall
not be exercisable if there will not be distributed to the Class A
Certificateholders an amount equal to the Class A Certificate Balance together
with any shortfall in interest due to the Class A Certificateholders in respect
of prior Distribution Dates and one month's interest on the Class A Certificate
Balance [or the Notional Principal Amount, as the case may be,] at the Class A
Pass-Through Rate, to the Class M Certificateholders an amount equal to the
Class M Certificate Balance together with any shortfall in interest due to the
Class M Certificateholders in respect of prior Distribution Dates and one
month's interest on the Class M Certificate Balance at the Class M Pass-Through
Rate, to the Class B-1 Certificateholders an amount equal to the Class B-1
Certificate Balance together with any shortfall in interest due to the Class B-1
Certificateholders in respect of prior Distribution Dates and one month's
interest on the Class B-1 Certificate Balance at the Class B-1 Pass-Through Rate
and to the to the Class B-2 Certificateholders an amount equal to the Class B-2
Certificate Balance together with any shortfall in interest due to the Class B-2
Certificateholders in respect of prior Distribution Dates and one (the "Minimum
Termination Amount").
On any Distribution Date after the Distribution Date on which the Pool
Scheduled Principal Balance is less than 10% of the Cut-off Date Pool Principal
Balance, the [Servicer/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 such a Termination Auction within 90 days of the Distribution Date on
which the Pool Scheduled Principal Balance is less than 10% of the Cut-off Date
Pool Principal Balance, unless the Servicer has exercised the repurchase option
described above. The Servicer shall give notice mailed no later than [ ] days
preceding the date on which the Termination Auction is to occur. The Trustee
will solicit each Certificateholder, the Seller
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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 (i) the
requirement that the highest bid equal or exceed the Minimum Termination Amount,
and (ii) the requirement that at least one bid be tendered by an active
participant in the asset-backed securities or manufactured housing contract
market that is not affiliated with GFC. If the foregoing requirements are
satisfied, the successful bidder or bidders shall deposit the aggregate purchase
price for the Contracts in the Certificate Account. If the foregoing
requirements are not satisfied, the purchase shall not occur and distributions
will continue to be made on the Certificates. Any sale and consequent
termination of the Trust Fund as a result of a Termination Auction must
constitute a "qualified liquidation" of the Trust Fund under Section 860F of the
Code.
Termination of the Agreement
The Agreement will terminate upon the last action required to be taken by
the Trustee on the final Distribution Date following the earlier of (i) the
purchase by the Servicer of all Contracts and all property acquired in respect
of any Contract remaining in the Trust Fund as described above under " -
Optional Termination and Termination Auction"[,/or] (ii) the final payment or
other liquidation (or any advance with respect thereto) of the last Contract
remaining in the Trust Fund or the disposition of all property acquired upon
repossession of any Manufactured Home [or (iii) the sale in a Termination
Auction of all Contracts and all other property acquired in respect of any
Contract remaining in the Trust Fund as described above under " - Optional
Termination and Termination Auction"].
Upon presentation and surrender of the Series 199[ ]-[ ] Regular
Certificates, the Trustee shall cause to be distributed, to the extent of funds
available, to such Certificateholders on the final Distribution Date in
proportion to their respective Percentage Interests an amount equal to the
respective unpaid Certificate Balances of the Series 199[ ]-[ ] Regular
Certificates, together with any unpaid interest on such Certificates due on
prior Distribution Dates and one month's interest at the applicable pass-through
rates on such unpaid Certificate Balances; provided that such funds will be
distributed in the applicable order of priority specified under " -
Distributions" above. If the Agreement is then being terminated, any amount
which remains on deposit in the Certificate Account (other than amounts retained
to meet claims) after distribution to the holders of the Series 199[ ]-[ ]
Regular Certificates will be distributed to the Class R Certificateholders.
Collection and Other Servicing Procedures
The Servicer will administer, service and make collections on the Contracts,
exercising the degree of care that the Servicer exercises with respect to
similar contracts serviced by the Servicer.
Subject to the requirements of applicable law, the Servicer will be required
to commence repossession and other realization procedures with respect to any
defaulted Contract promptly after the Servicer determines that such Contract
will not be brought current. The
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Servicer may rescind, cancel or make material modifications of the terms of a
Contract (including modifying the amounts and Due Dates of Scheduled Payments)
in connection with a default or imminent default thereunder.
Servicing Compensation; Certain Other Matters Regarding the Servicer
For its servicing of the Contracts, the Servicer will be entitled to receive
a monthly servicing fee equal to the product of one-twelfth of [ ]% and the Pool
Scheduled Principal Balance for the related Distribution Date (the "Monthly
Servicing Fee"), whether or not the related Scheduled Payments on the Contracts
are received. The Available Distribution Amount will be net of the Monthly
Servicing Fee. See " - Payments on the Contracts; Certificate Account" above.
[For so long as the Servicer is entitled to delay deposits to the Certificate
Account until on or prior to the Distribution Date, any earnings on the amounts
retained by the Servicer will constitute additional servicing compensation.]
As part of its servicing fees, the Servicer will also be entitled to retain,
as compensation for the additional services provided in connection therewith,
any fees for late payments made by Obligors, 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 permitted assumptions of
Contracts by purchasers of the related Manufactured Homes and real property
securing such Contracts, if any.
The Trustee
[ ] (the "Trustee") has its corporate trust offices at [ ]. The Trustee may
resign at any time, in which event the Seller[s] will be obligated to appoint a
successor Trustee. The Seller[s] may also remove the Trustee if the Trustee
ceases to be eligible to continue as such under the Agreement or if the Trustee
becomes insolvent. In such circumstances, the Seller[s] will also be obligated
to appoint a successor Trustee. Any resignation or removal of the Trustee and
appointment of a successor Trustee will not become effective until acceptance of
the appointment by the successor Trustee.
The Agreement requires the Trustee to maintain, at its own expense, an
office or agency in New York City or [ ] where Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Trustee and the certificate registrar in respect of the Certificates
pursuant to the Agreement may be served.
The Trustee, or any of its affiliates, in its individual or any other
capacity, may become the owner or pledgee of Certificates with the same rights
as it would have if it were not Trustee.
The Trustee will also act as paying agent, certificate registrar and
authenticating agent under the Agreement.
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[Registration of the Offered Certificates
The Offered Certificates will be book-entry Certificates (the "Book-Entry
Certificates"). Persons acquiring beneficial ownership interests in the Offered
Certificates ("Certificate Owners") will hold their Offered Certificates through
DTC in the United States, or Cedel Bank, societe anonyme ("Cedel") or Euroclear
System ("Euroclear") in Europe if they are participants of such systems, or
indirectly through organizations which are participants in such systems. The
Book-Entry Certificates will be issued in one or more certificates which equal
the aggregate principal balance of the Offered Certificates and will initially
be registered in the name of Cede & Co., the nominee of DTC. Cedel and
Euroclear will hold omnibus positions on behalf of their participants through
customers' securities accounts in Cedel's and Euroclear's names on the books of
their respective depositaries which in turn will hold such positions in
customers' securities accounts in the depositaries' names on the books of DTC.
Citibank will act as depositary for Cedel and The Chase Manhattan Bank will act
as depositary for Euroclear (in such capacities, individually the "Relevant
Depositary" and collectively the "European Depositaries"). Except as described
below, no person acquiring a Book-Entry Certificate (each, a "Beneficial Owner")
will be entitled to receive a physical certificate representing such Certificate
(a "Definitive Certificate"). Unless and until Definitive Certificates are
issued, it is anticipated that the only "Certificateholder" of the Offered
Certificates will be Cede & Co., as nominee of DTC. Certificate Owners will not
be Certificateholders as that term is used in the Agreement. Certificate Owners
are only permitted to exercise their rights indirectly through Participants and
DTC.
The beneficial owner's ownership of a Book-Entry Certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or other
financial intermediary (each, a "Financial Intermediary") that maintains the
beneficial owner's account for such purpose. In turn, the Financial
Intermediary's ownership of such Book-Entry Certificate will be recorded in the
records of DTC (or of a participating firm that acts as agent for the Financial
Intermediary, whose interest will in turn be recorded on the records of DTC, if
the beneficial owner's Financial Intermediary is not a DTC participant and on
the records of Cedel or Euroclear, as appropriate).
Certificate Owners will receive all distributions of principal of and
interest on the Offered Certificates from the Trustee through DTC and DTC
participants. While the Offered Certificates are outstanding (except under the
circumstances described below), under the rules, regulations and procedures
creating and affecting DTC and its operations (the "Rules"), DTC is required to
make book-entry transfers among Participants on whose behalf it acts with
respect to the Offered Certificates and is required to receive and transmit
distributions of principal of, and interest on, the Offered Certificates.
Participants and indirect participants with whom Certificate Owners have
accounts with respect to Offered Certificates are similarly required to make
book-entry transfers and receive and transmit such distributions on behalf of
their respective Certificate Owners. Accordingly, although Certificate Owners
will not possess certificates representing their respective interests in the
Offered Certificates, the Rules provide a mechanism by which Certificate Owners
will receive distributions and will be able to transfer their interest.
Certificateholders will not receive or be entitled to receive certificates
representing their respective interests in the Offered Certificates, except
under the limited circumstances described below. Unless and until Definitive
Certificates are issued,
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Certificateholders who are not Participants may transfer ownership of Offered
Certificates only through Participants and indirect participants by instructing
such Participants and indirect participants to transfer Offered Certificates, by
book-entry transfer, through DTC for the account of the purchasers of such
Offered Certificates, which account is maintained with their respective
Participants. Under the Rules and in accordance with DTC's normal procedures,
transfers of ownership of Offered Certificates will be executed through DTC and
the accounts of the respective Participants at DTC will be debited and credited.
Similarly, the Participants and indirect participants will make debits or
credits, as the case may be, on their records on behalf of the selling and
purchasing Certificateholders.
Because of time zone differences, credits of securities received in Cedel or
Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day following
the DTC settlement date. Such credits or any transactions in such securities
settled during such processing will be reported to the relevant Euroclear or
Cedel Participants on such business day. Cash received in Cedel or Euroclear as
a result of sales of securities by or through a Cedel Participant (as defined
below) or Euroclear Participant (as defined below) to a DTC Participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedel or Euroclear cash account only as of the business day following
settlement in DTC. For information with respect to tax documentation procedures
relating to the Certificates, see "Federal Income Tax Consequences-REMIC
Certificates-Taxation of Regular Certificates-Taxation of Certain Foreign
Investors" and "-Backup Withholding" in the Prospectus and "Global Clearance,
Settlement and Tax Documentation Procedures-Certain U.S. Federal Income Tax
Documentation Requirements" in Annex I hereto.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by the Relevant Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by a counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to the
Relevant Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver instructions
directly to the European Depositaries.
DTC, which is a New York-chartered limited purpose trust company, performs
services for its participants, some of which (and/or their representatives) own
DTC. In accordance with its normal procedures, DTC is expected to record the
positions held by each DTC participant in the Book-Entry Certificates, whether
held for its own account or as a
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nominee for another person. In general, beneficial ownership of Book-Entry
Certificates will be subject to the Rules, as in effect from time to time.
Cedel Bank, societe anonyme, 67 Bd Grande-Duchesse Charlotte, L-1331
Luxembourg, was incorporated in 1970 as a limited company under Luxembourg law.
Cedel is owned by banks, securities dealers and financial institutions, and
currently has about 100 shareholders, including U.S. financial institutions or
their subsidiaries. No single entity may own more than five percent of Cedel's
stock.
Cedel is registered as a bank in Luxembourg, and as such is subject to
regulation by the Institute Monetaire Luxembourgeois, "IML", the Luxembourg
Monetary Authority, which supervises Luxembourg banks.
Cedel holds securities for its customers ("Cedel Participants") and
facilitates the clearance and settlement of securities transactions by
electronic book-entry transfers between their accounts. Cedel provides various
services, including safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. Cedel
also deals with domestic securities markets in several countries through
established depository and custodial relationships. Cedel has established an
electronic bridge with Morgan Guaranty Trust as the Euroclear Operator in
Brussels to facilitate settlement of trades between systems. Cedel currently
accepts over 70,000 securities issues on its books.
Cedel's customers are world-wide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Cedel's United States customers are limited to securities
brokers and dealers and banks. Currently, Cedel has approximately 3,000
customers located in over 60 countries, including all major European countries,
Canada, and the United States. Indirect access to Cedel is available to other
institutions which clear through or maintain a custodial relationship with an
account holder of Cedel.
Euroclear was created in 1968 to hold securities for its participants
("Euroclear Participants") and to clear and settle transactions between
Euroclear Participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may be settled in any of 29 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York (the "Euroclear Operator"), under
contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a
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Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a tangible basis with
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions on the Book-Entry Certificates will be made on each
Distribution Date by the Trustee to DTC. DTC will be responsible for crediting
the amount of such payments to the accounts of the applicable DTC participants
in accordance with DTC's normal procedures. Each DTC participant will be
responsible for disbursing such payments to the beneficial owners of the Book-
Entry Certificates that it represents and to each Financial Intermediary for
which it acts as agent. Each such Financial Intermediary will be responsible for
distributing funds to the beneficial owners of the Book-Entry Certificates that
it represents.
Under a book-entry format, beneficial owners of the Book-Entry Certificates
may experience some delay in their receipt of payments, since such payments will
be forwarded by the Trustee to Cede. Distributions with respect to Certificates
held through Cedel or Euroclear will be credited to the cash accounts of Cedel
Participants or Euroclear Participants in accordance with the relevant system's
rules and procedures, to the extent received by the Relevant Depositary. Such
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. See "Federal Income Tax Consequences-
REMIC Certificates-C. Taxation of Regular Certificates-9. Taxation of Certain
Foreign Investors" and "-10. Backup Withholding" in the Prospectus. Because DTC
can only act on behalf of Financial Intermediaries, the ability of a beneficial
owner to pledge Book-Entry Certificates to persons or entities that do not
participate in the Depository system, or otherwise take actions in respect of
such Book-Entry Certificates, may be limited due to the lack of physical
certificates for such Book-Entry Certificates. In addition, issuance of the
Book-Entry Certificates in the book-entry form may reduce the liquidity of such
Certificates in the secondary market since certain potential investors may be
unwilling to purchase Certificates for which they cannot obtain physical
certificates.
Monthly and annual reports on the Trust will be provided to Cede, as nominee
of DTC, and may be made available by Cede to beneficial owners upon request, in
accordance with the rules, regulations and procedures creating and affecting the
Depository, and to the Financial
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Intermediaries to whose DTC accounts the Book-Entry Certificates of such
beneficial owners are credited.
DTC has advised the Trustee that, unless and until Definitive Certificates
are issued, DTC will take any action permitted to be taken by the holders of the
Book-Entry Certificates under the Agreement only at the direction of one or more
Financial Intermediaries to whose DTC accounts the Book-Entry Certificates are
credited, to the extent that such actions are taken on behalf of Financial
Intermediaries whose holdings include such Book-Entry Certificates. Cedel or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a Certificateholder under the Agreement on behalf of a Cedel
Participant or Euroclear Participant only in accordance with its relevant rules
and procedures and subject to the ability of the Relevant Depository to effect
such actions on its behalf through DTC. DTC may take actions, at the direction
of the related Participants, with respect to some Offered Certificates which
conflict with actions taken with respect to other Offered Certificates.
Definitive Certificates will be issued to beneficial owners of the Book-
Entry Certificates, or their nominees, rather than to DTC, only if (a) DTC or
GreenPoint advises the Trustee in writing that DTC is no longer willing,
qualified or able to discharge properly its responsibilities as nominee and
depository with respect to the Book-Entry Certificates and GreenPoint or the
Trustee is unable to locate a qualified successor, (b) GreenPoint, at its sole
option, with the consent of the Trustee, elects to terminate a book-entry system
through DTC or (c) after the occurrence of an event of default under the
Agreement, beneficial owners having Percentage Interests aggregating not less
than 51% of the Book-Entry Certificates advise the Trustee and DTC through the
Financial Intermediaries and the DTC participants in writing that the
continuation of a book-entry system through DTC (or a successor thereto) is no
longer in the best interests of beneficial owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all beneficial
owners of the occurrence of such event and the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the global certificate or
certificates representing the Book-Entry Certificates and instructions for re-
registration, the Trustee will issue Definitive Certificates, and thereafter the
Trustee will recognize the holders of such Definitive Certificates as
Certificateholders under the Agreement.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures in
order to facilitate transfer of Offered Certificates among participants of DTC,
Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
Neither the Seller or the Servicer nor the Trustee will have any
responsibility for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Book-Entry Certificates held by
Cede & Co., as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
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[FORMATION OF THE GRANTOR TRUST AND GRANTOR TRUST PROPERTY
Manufactured Housing Grantor Trust 199[ ]-[ ] will be created and
established pursuant to the Grantor Trust Agreement. [GreenPoint] will deposit
into the Grantor Trust without recourse $[ ] of Class [A-2 Fixed] Certificates
issued by the Trust, and the Grantor Trust will issue the Class [A-2 Floating]
Certificates.
The property of the Grantor Trust will include (a) the Class [A-2 Fixed]
Certificates issued by the Trust and all payments therein and proceeds of the
conversion, voluntary or involuntary of such Certificates, (b) such amounts as
may be held by the Grantor Trustee in the Grantor Trust Account and any other
accounts held by the Grantor Trustee for the benefit of the Owners of the Class
[A-2] Floating Certificates [and the Certificate Insurer, (c) the rights of the
Grantor Trustee under the related Certificate Insurance Policy], (d) the Swap
Agreement and all payments received thereunder and (e) proceeds of all of the
foregoing (including, but not by way of limitation, cash proceeds, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payments of any and every kind and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing) to pay the Class [A-2 Floating] Certificates
and to make payments to the Swap Counterparty as specified in the Grantor Trust
Agreement.
Prior to its formation the Grantor Trust will have had no assets or
obligations. Upon formation, the Grantor Trust will not engage in any business
activity other than acquiring, holding and collecting payments on the Class [A-2
Fixed] Certificates, receiving and making payments under the Swap Agreement,
issuing the Class [A-2 Floating] Certificates and distributing payments thereon.
The Grantor Trust will not acquire any receivables or assets other than the
Class [A-2 Fixed] Certificates, the Swap Agreement and the rights appurtenant
thereto and will not have any need for additional capital resources. To the
extent that payments are made on the Class [A-2 Fixed] Certificates, and
payments are received by the Grantor Trustee as required under the Swap
Agreement [or corresponding amounts are received from the Certificate Insurer],
the Grantor Trust will have sufficient liquidity to make interest distributions
on the [Class A-2 Floating] Certificates. Principal distributions on the [Class
A-2 Floating] Certificates are not insured by the Certificate Insurance Policy
issued with respect to the Class [A-2 Floating] Certificates[, although the
principal distributions on the [Class A-2 Fixed] Certificates are insured by the
Certificate Insurance Policy related to the Trust]. As the Grantor Trust does
not have any operating history and will not engage in a business activity other
than as described above, there has not been included any historical or pro forma
ratio of earnings to fixed charges with respect to the Grantor Trust.
In addition to the provisions of the Grantor Trust Agreement summarized
elsewhere in this Prospectus Supplement, there is set forth below a summary of
certain other provisions of the Grantor Trust Agreement.
Assignment of Class [A-2 Fixed] Certificates
[Pursuant to the Grantor Trust Agreement, [GreenPoint] on the Closing Date
will transfer, assign, set over and otherwise convey without recourse to the
Grantor Trustee in trust all of its respective right, title and interest in and
to the Class [A-2 Fixed] Certificates and all its
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respective right, title and interest in and to principal and interest due on
each such Class [A-2 Fixed] Certificate (together with the Swap Agreement, the
amounts on deposit in the Grantor Trust Account [and the related Certificate
Insurance Policy], the "Grantor Trust Estate"). Purely as a protective measure
and not to be construed as contrary to the parties' intent that the transfer on
the Closing Date is a sale, [GreenPoint] has been deemed to have granted to the
Grantor Trustee a security interest in the Grantor Trust Estate in the event
that the transfer of the Grantor Trust Estate is deemed to be a loan and not a
sale.
In connection with the transfer and assignment of the Class A-2 Fixed
Certificates on the Closing Date, [GreenPoint] will deliver to the Grantor
Trustee without recourse the Class A-2 Fixed Certificates.
Servicing
Under the terms of the Pooling and Servicing Agreement, the Servicer will be
required to pay all "out of pocket" costs and expenses incurred in the
performance of its servicing obligations under the Grantor Trust Agreement.]
Under the terms of the Pooling and Servicing Agreement, the Servicer agrees
to indemnify and hold the Grantor Trustee[, the Certificate Insurer] and each
Owner of a Class [A-2 Floating] Certificate harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Grantor Trustee, the Certificate
Insurer and any Owner of a Class [A-2 Floating] Certificate may sustain in any
way related to the failure of the Servicer to perform its duties. The Servicer
shall immediately notify the Grantor Trustee[, the Certificate Insurer] and each
Owner if a claim is made by a third party with respect to the Grantor Trust
Agreement, and the Servicer shall assume (with the consent of the Grantor
Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Grantor Trustee[, the Certificate Insurer] and/or Owner in respect of such
claim.]
[Removal and Designation of Servicer
The [Certificate Insurer or the] Owners[, with the consent of the
Certificate Insurer,] will have the right pursuant to the Pooling and Servicing
Agreement, to remove the Servicer under the Pooling and Servicing Agreement upon
the occurrence of: (a) certain acts of bankruptcy or insolvency on the part of
the Servicer; (b) certain failures on the part of the Servicer to perform its
obligations under the Pooling and Servicing Agreement; or (c) the failure to
cure material breaches of the Servicer's representations in the Pooling and
Servicing Agreement.]
[The Pooling and Servicing Agreement also provides that the Certificate
Insurer may remove the Servicer if delinquencies and/or losses exceed certain
levels set forth in the Pooling and Servicing Agreement (the "Servicer
Termination Event").]
The removal of the Servicer pursuant to the Pooling and Servicing Agreement
shall also constitute a removal of the Servicer under the Grantor Trust
Agreement.
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The Servicer is not permitted to resign from the obligations and duties
imposed on it under the Grantor Trust Agreement except upon determination that
its duties thereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried
on by it, the other activities of the Servicer so causing such conflict being of
a type and nature carried on by the Servicer on the date of the Grantor Trust
Agreement. Any such determination permitting the resignation of the Servicer is
required to be evidenced by an opinion of counsel to such effect which shall be
delivered to the Grantor Trustee [and the Certificate Insurer] by the Servicer
at its expense [(provided that if the Certificate Insurer and such Owners of the
Class [A-2 Floating] Certificates cannot agree as to the acceptability of such
successor Servicer, the decision of the Certificate Insurer shall control).]
The successor servicer appointed pursuant to the Pooling and Servicing
Agreement shall become the successor servicer under the Grantor Trust Agreement.
No removal or resignation of the Servicer will become effective until the
Trustee or a successor servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with the Pooling and Servicing
Agreement.
The Grantor Trustee
[ ], having its principal corporate trust office at [ ] will be named as
Grantor Trustee under the Grantor Trust Agreement.
Reporting Requirements
On each Payment Date the Grantor Trustee is required to report in writing to
each Owner of a Class [A-2 Floating] Certificate, each Rating Agency and the
Certificate Insurer the same information with respect to the manufactured
housing installment contracts required to be reported by the Trustee as
described in the Pooling and Servicing Agreement and with respect to the Class
[A-2 Floating] Certificates, the following information:
[(i) the amount of the distribution with respect to the each Class A-2
Floating Certificates (based on a Certificate in the original principal amount
of $1,000);]
[(ii) the principal amount and the Planned Principal Balance, if any, of the
Class [A-2 Floating] Certificates (based on a Certificate in the original
principal amount of $1,000) which will be outstanding after giving effect to any
payment of principal on such Payment Date;]
[(iii) based upon information furnished by the Seller such information as
may be required by Section 6049(d)(7)(C) of the Code and the regulations
promulgated thereunder to assist the Owners in computing their market discount;]
[(iv) whether a Delinquency Trigger Event, Cumulative Realized Loss Trigger
Event and/or the Servicer Termination Event has occurred under the Pooling and
Servicing Agreement;]
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[(v) the Senior Enhancement Percentage;
(vi) the Overcollateralization Amount;]
[(vii) the amount of any Applied Realized Loss Amount, Realized Loss
Amortization Amount and Unpaid Realized Loss Amount for the Subordinate
Certificates as of the close of such Payment Date;]
[(viii) the Pass-Through Rate for the Class A-2 Floating Certificates; and]
[(ix) the amount of any Insured Payment included in the distribution to
Owners of Class A-2 Floating Trust Certificates.]
[Certain obligations of the Grantor Trustee to provide information to the
Owners are conditioned upon such information being received from the Servicer.]
[In addition, on each Payment Date the Grantor Trustee will be required to
distribute to each Owner [and the Certificate Insurer], together with the
information described above, the same information distributed to Owners by the
Trustee under the Pooling and Servicing Agreement.]
Termination of the Trust
The Grantor Trust Agreement provides that the Grantor Trust will terminate
upon the payment to the Owners of all Class [A-2 Floating] Certificates from
amounts [other than those available under the related Certificate Insurance
Policy] of all amounts required to be paid to such Owners upon the final payment
of the Class [A-2 Fixed] Certificate.]
Calculation of LIBOR
On each LIBOR Determination Date (as defined below), the Trustee will
determine LIBOR for the next Accrual Period for each Class of the Floating Rate
Certificates.
["LIBOR" means, as of any LIBOR Determination Date, the rate for deposits in
United States dollars for a period equal to the relevant Accrual Period
(commencing on the first day of such Accrual Period) which appears in the
Telerate Page 3750 as of 11:00 a.m., London time, on such date. If such rate
does not appear on Telerate Page 3750, the rate for that day will be determined
on the basis of the rates at which deposits in United States dollars are offered
by the Reference Banks at approximately 11:00 a.m., London time, on that day to
prime banks in the London interbank market for a period equal to the relevant
Accrual Period (commencing on the first day of such Accrual Period). The Trustee
will request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two such quotations are provided,
the rate for that day will be the arithmetic mean of the quotations. If fewer
than two quotations are provided as requested, the rate for that day will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by
the Servicer, at approximately 11:00 a.m., New York City time, on that day for
loans in United States dollars to leading European banks for
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a period equal to the relevant Accrual Period (commencing on the first day of
such Accrual Period).]
["LIBOR Determination Date" means, with respect to any Accrual Period, the
first London business day preceding the commencement of such Accrual Period. For
purposes of determining LIBOR, a "London business day" is any day on which
dealings in deposits of United States dollars are transacted in the London
interbank market.]
["Telerate Page 3750" means the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices) and "Reference
Banks" means leading banks selected by the Trustee and engaged in transactions
in Eurodollar deposits in the international Eurocurrency market.]
FEDERAL INCOME TAX CONSEQUENCES
Orrick, Herrington & Sutcliffe LLP, special counsel to the Seller, is of the
opinion that, assuming (i) the making of appropriate elections and (ii)
compliance by the Seller, the Servicer and the Trustee with all of the
provisions of the related Agreements, (a) the electing portion of the Trust Fund
will qualify, for federal income tax purposes, as a real estate mortgage
investment conduit" (a "REMIC") within the meaning of Sections 860A through 860G
of the Code (the "REMIC Provisions"), and (b) the Offered Certificates, together
with the Class B-2 Certificates, evidence the "regular interests" in such REMIC
and (c) the Class R Certificates is the sole class of "residual interests" in
such REMIC, respectively, each within the meaning of the REMIC Provisions in
effect on the date hereof. 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 such statements in the Prospectus as supplemented by such
statements in this Prospectus Supplement are correct in all material respects.
Such statements are intended as an explanatory discussion of the possible
effects of the classification of the Trust Fund as a REMIC for federal income
tax purposes on investors generally and of related tax matters affecting
investors generally, but do not purport to furnish information in the level of
detail or with the attention to an investor's specific tax circumstances that
would be provided by an investor's own tax advisor. Accordingly, each investor
is urged to consult its own tax advisors with regard to the tax consequences to
it of investing in the Offered Certificates.
The Offered Certificates will be Regular Certificates (as defined in the
Prospectus under "Federal Income Tax Consequences-REMIC Certificates"). As
such, 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
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with respect to such 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 such
period would be zero and such Certificateholder will be permitted to offset such
negative amount only against future original issue discount (if any)
attributable to such Certificates.
In certain circumstances OID Regulations permit the holder of a debt
instrument to recognize original issue discount under a method that differs from
that used by the issuer. Accordingly, it is possible that the holder of a
Certificate may be able to select a method for recognizing original issue
discount that differs from that used by the REMIC administrator in preparing
reports to the Certificateholders and the IRS.
Certain classes of the Offered Certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
such a class of Certificates will be treated as holding a certificate with
amortizable bond premium will depend on such Certificateholder's purchase price
and the distributions remaining to be made on such Certificate at the time of
its acquisition by such Certificateholder. Holders of such classes of
Certificates should consult their tax advisors regarding the possibility of
making an election to amortize such premium. See "Federal Income Tax
Consequences-REMIC Certificates-Taxation of Regular Certificates" and "-Premium"
in the Prospectus.
The Offered Certificates will be treated as assets described in Section
7701(a)(19)(C) of the Code and "real estate assets" under Section 856(c)(4)(A)
of the Code generally in the same proportion that the assets of the Trust Fund
would be so treated. In addition, interest on the Offered Certificates will be
treated as "interest on obligations secured by mortgages on real property" under
Section 856(c)(3)(B) of the Code generally to the extent that such Offered
Certificates are treated as "real estate assets" under Section 856(c)(4)(A) of
the Code. Moreover, the Offered Certificates (other than the Residual
Certificates) will be "qualified mortgages" within the meaning of Section
860G(a)(3) of the Code if transferred to another REMIC on its startup day in
exchange for a regular or residual interest therein. However, prospective
investors in Offered Certificates that will be generally treated as assets
described in Section 860G(a)(3) of the Code should note that, notwithstanding
such treatment, any repurchase of such a Certificate pursuant to the right of
the Master Servicer or the Company
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to repurchase such Offered Certificates may adversely affect any REMIC that
holds such Offered Certificates if such repurchase is made under circumstances
giving rise to a Prohibited Transaction Tax. See "The Pooling and Servicing
Agreement-Termination" herein 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 such an investment. The Certificates may not be a suitable investment for
individuals, trusts or estates and certain "pass-thru entities," the beneficial
owners of which are individuals, trusts or estates. The Class [A-2 Floating]
Certificates may not be a suitable investment for real estate investment trusts
or REMICs. Moreover, other special rules may apply to certain investors,
including dealers in securities, dealers in notional principal contracts, and
persons holding the Class [A-2 Floating] Certificates or any of the assets in
the Grantor Trust as part of a straddle.
The interest in the Swap Agreement will not constitute a "real estate asset"
within the meaning of Section 856(c)(4)(A) of the Code if held by a real estate
investment trust, a "qualified mortgage" or "permitted investment" within the
meaning of Sections 860G(a)(3) and 860G(a)(5) of the Code, respectively, if held
by a REMIC, nor an asset described in Section 7701(a)(19)(c)(xi) if held by a
domestic building and loan association. Further, the income received under the
Swap Agreement will not constitute income described in Section 856(c)(3)(B) for
a real estate investment trust.
A purchaser of Class [A-2 Floating] Certificates will be required to
allocate its purchase price among its ownership interest in the various assets
of the grantor trust. In general, such allocation would be based on the relative
fair market values of such assets on the date of purchase of the [Class A-2
Floating] Certificate. No representation is or will be made as to such relative
fair market values and holders of Class [A-2 Floating] Certificates should
consult their tax advisors concerning the determination of such fair market
values and the taxation of the holder's interest in the Swap Agreement, the tax
treatment of which is generally governed by the provisions of the Code and
Treasury regulations relating to notional principal contracts and possibly those
relating to straddles.
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Each holder of a Class [A-2 Floating] Certificate must report on its federal
income tax return ordinary income equal to its share of the interest payable
with respect to the Class A-2 Fixed Certificates and a proportionate share of
the net amounts payable to the Grantor Trust under the Swap Agreement, and may
deduct the portion of the expenses incurred by the Grantor Trust that is
allocable to such Certificate (including net payments under the Swap Agreement),
at the same time and to the same extent as such items would be reported by such
holder if it had purchased and held directly the assets held by the Grantor
Trust and incurred directly its share of expenses incurred by the grantor trust.
A holder of Class [A-2 Floating] Certificates that is an individual, estate or
trust should consult its tax advisers concerning possible limitations on the
deductibility of expenses of the grantor trust. See "Federal Income Tax
Consequences - REMIC Elections" and "-Non-REMIC Trusts" in the Prospectus
regarding such limitations.]
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ERISA CONSIDERATIONS
General
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code impose certain restrictions on employee benefit and
other plans that are subject to ERISA and/or Section 4975 of the Code ("Plans")
and on persons who are fiduciaries with respect to such Plans. See "ERISA
Considerations" in the Prospectus.
Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the applicability of the Exemption
(defined below) and other administrative exemptions under ERISA, and the
potential consequences in their specific circumstances, prior to making an
investment in the Offered Certificates. Moreover, each Plan fiduciary should
determine whether under the general fiduciary standards of investment prudence
and diversification an investment in the Offered Certificates is appropriate for
the Plan, taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
Senior Certificates
The Department of Labor ("DOL") has granted to [ ] administrative exemptions
[ ] (collectively, the "Exemption")) from certain of the prohibited transaction
rules of ERISA. The Exemption exempts from the prohibitions of Sections 406(a)
and 407(a) of ERISA, and the related excise tax provisions of Section 4975 of
the Code, the purchase, holding and resale by Plans of pass-through certificates
representing interests in trusts that hold assets consisting primarily of
certain receivables, loans and other obligations that are secured and meet the
general conditions summarized below. The receivables covered by the Exemption
include manufactured housing installment sales contracts and installment loan
agreements secured by manufactured homes such as the Contracts.
Among the general conditions which must be satisfied for the Exemption to
apply to the acquisition, holding and resale by a Plan of the Senior
Certificates are the following:
(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 of such acquisition that is in one of the three highest generic rating
categories from either Standard & Poor's Ratings Group ("S&P"), Duff & Phelps
Credit Rating Co. ("Duff & Phelps"), Moody's or Fitch (the "Exemption Rating
Agencies").
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(4) The Trustee is not an affiliate of the Underwriters, GreenPoint, the
obligor under any Alternative Credit Enhancement, any Obligor with respect to
Contracts included in the Trust Fund constituting more than 5% of the aggregate
unamortized principal balance of the assets in the Trust Fund, or any affiliate
of such parties. (Such parties, and the Trustee and its affiliates, are
sometimes referred to herein collectively as the "Restricted Group"). As of the
date hereof, no Obligor with respect to Contracts included in the Trust Fund is
an Obligor with respect to Contracts constituting more than 5% of the aggregate
unamortized principal balance of the assets of the Trust Fund.
(5) The sum of all payments made to and retained by the Underwriters in
connection with the distribution of the Senior Certificates represents not more
than reasonable compensation for underwriting the Senior Certificates. The sum
of all payments made to and retained by the Seller pursuant to the sale of the
Contracts to the Trust Fund represents not more than the fair market value of
such Contracts. The sum of all payments made to and retained by GreenPoint,
represents not more than reasonable compensation for GreenPoint's services under
the Agreement and reimbursement of GreenPoint's reasonable expenses in
connection therewith.
(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 such a trust pursuant to a binding pooling and
servicing agreement, subject to the foregoing general conditions and to certain
additional requirements. [The Seller believes that the Exemption will apply to
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 and a Plan when the person who has
discretionary authority or renders investment advice with respect to the
investment of the Plan's assets in the Senior Certificates (the "Fiduciary") is
(a) an obligor with respect to 5% or less of the fair market value of Contracts
in the Trust Fund or (b) an affiliate of any such person, subject to the general
conditions summarized above and to the following additional requirements:
(1) No member of the Restricted Group is a sponsor of the Plan.
(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.
(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.
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(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 (the "Average Interest Rate") for all of the
Contracts in the Trust at the end of the Pre-Funding Period must not be more
than 100 basis points lower than the Average Interest Rate for the Contracts
which were transferred to the Trust on the Closing Date.
(5) Either:
(i) the characteristics of the Subsequent Contracts must be monitored by
an insurer or other credit support provider which is independent of the
Seller; or
(ii) an independent accountant retained by the Seller must provide the
Seller with a letter (with copies provided to the Exemption Rating Agencies
rating the Certificates, the Underwriter and the Trustee) stating whether or
not the characteristics of the Subsequent Contracts conform to the
characteristics
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described in the Prospectus Supplement and/or Agreement. In preparing such
letter, the independent accountant must use the same type of procedures as
were applicable to the Contracts which were transferred to the Trust as of
the Closing Date.
(6) The Pre-Funding Period must end no later than three months or 90 days
after the Closing Date or earlier in certain circumstances if the Pre-Funding
Account falls below the minimum level specified in the Agreement or an event of
default occurs.
(7) Amounts transferred to the Pre-Funding Account and any capitalized
interest account used in connection with the pre-funding may be invested only in
cash or in investments which are permitted by the Exemption Rating Agencies
rating the Certificates, and such 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 such obligations are backed by the
full faith and credit of the United States); or
(ii) have been rated (or the obligor has been rated) in one of the three
highest generic rating categories by one of the Exemption Rating Agencies.
(8) The Prospectus or Prospectus Supplement must describe the duration of
the 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 ("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 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: (i) PTCE 96-23, regarding investments
determined by in-house asset managers, (ii) PTCE 95-60, regarding investments by
insurance company pooled accounts; (iii) PTCE 91-38, regarding investments by
bank collective investment funds; (iv) PTCE 90-1, regarding investments by
insurance company pooled separate accounts; or (v) PTCE 84-14, regarding
transactions negotiated by qualified professional asset managers. To the extent
that the acquisition of a Class [A-2 Floating] Certificate by or with "plan
assets" of a Plan is deemed for purposes of ERISA to be a purchase
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of an interest in the Class [A-2 Fixed] Certificates, the Exemption should be
applicable to the purchase, holding or subsequent resale of such interest.
Class M and Class B-1 Certificates
A Plan fiduciary or other person investing "plan assets" of any Plan will
not be permitted to purchase or hold the Class M and Class B-1 Certificates,
unless such person delivers to the Trustee the certificate or opinion referred
to below, as such actions may give rise to a non-exempt prohibited transaction
under ERISA or Section 4975 of the Code. See "ERISA Considerations" in the
Prospectus. Because the Class M and Class B-1 Certificates do not meet the
requirements of the Exemption, it does not provide exemptive relief for the
purchase or holding of such Certificates with "plan assets" of any Plan.
In addition, no transfer of a Class M or Class B-1 Certificate shall be
registered unless the prospective transferee provides the Trustee[, the Seller
and the Servicer] with (a) a certification to the effect that such transferee
(1) is neither a Plan, a person acting on behalf of any Plan nor a person using
"plan assets" of any Plan, or (2) if such transferee is an insurance company, it
is purchasing such Certificates with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and represents that the
purchase and holding of such Certificate is eligible for the exemptive relief
available under Sections I and III of PTCE 95-60; or (b) an opinion of counsel
(a "Benefit Plan Opinion") satisfactory to the Trustee[, the Seller and the
Servicer,] and upon which the Trustee[, the Seller and the Servicer] shall be
entitled to rely, to the effect that the purchase or holding of such Class M or
Class B-1 Certificate by the prospective transferee will not result in any non-
exempt prohibited transaction under ERISA or Section 4975 of the Code and will
not subject the Trustee[, the Seller or the Servicer] to any obligation in
addition to those undertaken by such entities in the Agreement, which opinion of
counsel shall not be an expense of the Trustee[, the Seller or the Servicer].
Owners of the Class M or Class B-1 Certificates will be deemed to have made one
of the certifications in clauses (a)(1) and (a)(2) above.
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 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
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such 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 such 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 pass-through certificates address the
likelihood of the receipt by the related certificateholders of their allocable
share of principal and/or interest on the underlying assets. [ ] ratings take
into consideration the credit quality of the related underlying assets, any
credit support arrangements, structural and legal aspects associated with such
certificates, and the extent to which the payment stream on such underlying
assets is adequate to make payments required by such certificates. [ ] ratings
on such certificates do not, however, constitute a statement regarding frequency
of prepayments on the underlying assets or as to whether yield may be adversely
affected as a result thereof. An explanation of the significance of such ratings
may be obtained from [ ], [ ], New York, New York [ ], telephone [( )-].
The Seller has not requested a rating on the Offered Certificates by any
rating agency other than [ ]. However, there can be no assurance as to whether
any other rating agency will rate any or all of the Offered Certificates, or if
it did, what rating would be assigned to the Offered Certificates by any such
other rating agency. A rating on any or all of the Offered Certificates by
certain other rating agencies, if assigned at all, may be lower than the rating
assigned to such Certificates by [ ].
LEGAL INVESTMENT
The [Senior and Class M Certificates] offered hereby will not constitute
"mortgage related securities" under the Secondary Mortgage Market Enhancement
Act of 1984, as amended ("SMMEA") until such time as the balance of the Pre-
Funding Account is reduced to zero. At such time, the [Senior and Class M
Certificates] will constitute legal investments for certain types of investors
to the extent provided in SMMEA. Such institutions should consult their own
legal advisors in determining whether and to what extent the Senior Certificates
constitute legal investments for such investors.
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Because the Class B-1 Certificates will not, at the time of issuance, be
rated in one of the two highest rating categories of Moody's and Fitch, the
Class B-1 Certificates will not constitute "mortgage related securities" for
purposes of SMMEA. Accordingly, many institutions with legal authority to invest
in more highly rated securities based on first mortgage loans may not be legally
authorized to invest in the Class B-1 Certificates. No representation is made as
to any regulatory requirements or considerations (including without limitation
regulatory capital or permissible investment requirements) applicable to the
purchase of the Class B-1 Certificates by banks, savings and loan associations
or other financial institutions. Such institutions should consult their own
legal advisors in determining whether and to what extent the Offered
Certificates constitute legal investments for such investors. See "Legal
Investment" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions of the Underwriting Agreement dated [ ,
19 ] (the "Underwriting Agreement"), the Seller has agreed to sell, and [each of
] (the "Underwriters") has agreed to purchase from the Seller[s], the respective
principal amounts of the Offered Certificates set forth below its name in the
table below.
Underwriters
------------
Principal Amount of
- -------------------
Class A-1 Certificates................................... $
[Class A-IO Certificates.................................. $ ]
Class M Certificates...................................... $
Class B-1 Certificates.................................... $
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Offered
Certificates offered hereby if any Offered Certificates are purchased. In the
event of default by an Underwriter, the Underwriting Agreement provides that, in
certain circumstances, the Underwriting Agreement may be terminated.
The Seller has been advised by the Underwriters that they propose initially
to offer the Offered Certificates to the public at the prices set forth herein,
and to certain dealers at such prices less the initial concession not in excess
of [ %] of the Class A-1 Certificate Balance, [ %] of the Class A-IO offering
price, [ %] of the Class M Certificate Balance and [ %] of the Class B-1
Certificate Balance. The Underwriters may allow dealers, and such dealers may
allow, a concession not in excess of [ %] of the Class A-1 Certificate Balance,
[[ %] of the Class A-IO offering price,] [ %] of the Class M Certificate Balance
and [ %] of the Class B-1 Certificate Balance. After the initial public offering
of the Offered Certificates, the public offering prices and such concessions may
be changed.
The Underwriting Agreement provides that the Seller will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriters
may be required to make in respect thereof.
The Underwriters will reimburse certain expenses of the Seller.
S-74
<PAGE>
In connection with the sale of the Offered Certificates, the Underwriters
and other persons participating in the sale may engage in transactions that
stabilize, maintain or otherwise affect the price of the Offered Certificates.
Specifically, the Underwriters may over-allot in connection with the sale,
creating a short position in the Offered Certificates for their own account. To
cover over-allotments or to stabilize the price of the Offered Certificates, the
Underwriters may bid for, and purchase, Offered Certificates in the open market.
The Underwriters may also impose a penalty bid whereby they may reclaim selling
concessions allowed to an underwriter or a dealer for distributing the Offered
Certificates, if the Underwriters repurchase previously distributed Offered
Certificates in transactions to cover their short position, in stabilization
transactions or otherwise. Finally, the Underwriters may bid for, and purchase,
Offered Certificates in market making transactions. These activities may
stabilize or maintain the market price of the Offered Certificates above market
levels that may otherwise prevail. The Underwriters are not required to engage
in these activities and may end any of these activities at any time.
USE OF PROCEEDS
[Substantially all of the net proceeds to be received from the sale of the
Offered Certificates will be used by the Seller for general corporate purposes,
including the purchase of the Contracts and the payment of other expenses
connected with pooling the Contracts and issuing the Offered Certificates.]
LEGAL MATTERS
Certain legal matters relating to the Offered Certificates, including legal
matters relating to material federal income tax consequences concerning the
Offered Certificates, will be passed upon for the Seller by Orrick, Herrington &
Sutcliffe LLP, Los Angeles, California and for the Underwriters by [ ].
S-75
<PAGE>
INDEX OF SIGNIFICANT DEFINITIONS
<TABLE>
<S> <C>
Additional Contracts...................................... 7
Agreement................................................. 6, 44
Alternative Credit Enhancement............................ 16, 59
Annual Servicing Rate..................................... 45
approximate............................................... ii
Available Distribution Amount............................. 9, 51
Average Interest Rate..................................... 79
Beneficial Owner.......................................... 64
Benefit Plan Opinion...................................... 82
Book-Entry Certificates................................... 64
CBE....................................................... 42
Cede...................................................... 18
Cedel..................................................... 64
Cedel Participants........................................ 66
Certain legal matters relating............................ 85
Certificate Account....................................... 44, 50
Certificate Balance....................................... 12, 55
Certificate Owners........................................18, 44, 64
Certificateholder......................................... 64
Certificateholders........................................ ii, 18
Certificates.............................................. ii, iv
Class A Certificates...................................... ii, iv
Class A Interest Distribution Amount...................... 10, 53
Class B Certificates...................................... iv
Class B Interest Distribution Amount...................... 10
Class B-1 Interest Distribution Amount.................... 54
Class B-2 Distribution Amount............................. 58
Class B-2 Interest Distribution Amount.................... 54
Class B-2 Principal Liquidation Loss Amount............... 58
Class M Certificates...................................... iv
Class M Interest Distribution Amount...................... 10, 53
Class R Certificates...................................... iv
Closing Date.............................................. 49
Code...................................................... 20
Collection Period......................................... 6
Contract Files............................................ 46
Contract Pool............................................. ii
Contract Schedule......................................... 46
Contracts................................................. ii, 7
Cooperative............................................... 66
Definitive Certificate.................................... 64
Determination Date........................................ 51
Distribution Date......................................... iii, 45
DOL....................................................... 77
</TABLE>
S-76
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<TABLE>
<S> <C>
DTC......................................................... 18, 1
Due Date.................................................... 7
Duff & Phelps............................................... 77
Eligible Institution........................................ 50
Eligible Investments........................................ 50, 55
Eligible Substitute Contract................................ 49
Enhancement Payment......................................... 58, 59
ERISA....................................................... 77
Euroclear................................................... 64
Euroclear Operator.......................................... 66
Euroclear Participants...................................... 66
European Depositaries....................................... 64
Excess Contract Payment..................................... 52
Excess Interest............................................. 14, 57
Exemption................................................... 77
Exemption Rating Agencies................................... 77
FDIC........................................................ 50
Fiduciary................................................... 78
Financial Intermediary...................................... 64
First Distribution Date..................................... 6
Formula Principal Distribution Amount....................... 11, 54
GFC......................................................... iii
Global Securities........................................... 1
Grantor Trust............................................... ii
Grantor Trust Agreement..................................... iii
Grantor Trust Estate........................................ 70
Grantor Trustee............................................. iii
GreenPoint.................................................. ii, 5
IML......................................................... 66
Initial Class [B-2] Principal Remittance Date............... 58
Initial Pass-Through Rate................................... 23
Land Home Contracts......................................... 8
Land-in-Lieu Contracts...................................... 8
Legal Investment............................................ 21
LIBOR....................................................... 72
LIBOR Determination Date.................................... 73
Limited Guarantee.......................................... iii, 15, 58
Liquidated Contract......................................... 12, 54
Liquidation Expenses........................................ 52
Liquidation Proceeds........................................ 12, 54
London business day......................................... 73
manufactured home........................................... 47
Manufactured Home........................................... 7
Minimum Termination Amount.................................. 61
Monthly Advance............................................. 16, 57
Monthly Servicing Fee....................................... 63
</TABLE>
S-77
<PAGE>
<TABLE>
<S> <C>
mortgage related securities................................ 20
Net Contract Rate.......................................... 23, 45
Net Liquidation Proceeds................................... 14, 56
Nonrecoverable Advance..................................... 58
Notional Principal Amount.................................. 9
Offered Certificates....................................... ii
OID........................................................ 19
Outstanding Amount Advanced................................ 58
pass-thru entities......................................... 75
Percentage Interest........................................ 8
Plans...................................................... 77
Pool Scheduled Principal Balance........................... 12, 54
Pre-Funded Amount.......................................... 49
Pre-Funding Account........................................ 49
Pre-Funding Period......................................... 49
prepayment................................................. 38
Prepayment Model........................................... 38
Prospectus................................................. ii
PTCE....................................................... 81
PTCE 95-60................................................. 82
qualified liquidation...................................... 62
qualified mortgage......................................... 47
Record Date................................................ 45
Reference Banks............................................ 73
regular interests.......................................... iii, 19, 73, 75
Relevant Depositary........................................ 64
REMIC...................................................... iii, 73
REMIC Provisions........................................... 73
Replaced Contract.......................................... 49
Reserve Account............................................ 12, 55
Reserve Account Cap........................................ 55
Reserve Account Draw Amount................................ 12, 55
residual interest.......................................... 19
residual interests......................................... 73
Restricted Group........................................... 78
Rules...................................................... 64
S&P........................................................ 77
Scheduled Principal Balance................................ 11, 54
Scheduled Principal Reduction Amount....................... 54
Securities Act............................................. 5
Seller..................................................... ii
Senior Certificate Balance................................. 12
Senior Certificates........................................ ii, iv
Series 199[ ]-[ ] Regular Certificates..................... iv
Series 199[ ]-[ ] Residual Certificates.................... iv
Servicer................................................... 5
</TABLE>
S-78
<PAGE>
<TABLE>
<S> <C>
Servicer Termination Event................................. 70
single family residence.................................... 48
SMMEA...................................................... 20, 83
Structuring Assumptions.................................... 39
Subordinate Certificate Balance............................ 12
Subordinate Certificates................................... ii, iv
Subsequent Contracts....................................... 7
Subsequent Transfer Dates.................................. 49
successful Termination Auction............................. 18
Swap Agreement............................................. ii
Swap Counterparty.......................................... ii
Telerate Page 3750......................................... 73
Terms and Conditions....................................... 67
Total Regular Principal Amount............................. 11, 54
Trust Fund................................................. ii, 8
Trustee.................................................... 5, 63
U.S. Person................................................ 5
Underwriters............................................... iii, 83
Underwriting Agreement..................................... 83
Value...................................................... 25
WAC........................................................ 37
WAM........................................................ 37
Yield Table................................................ 42
</TABLE>
S-79
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered GreenPoint
Manufactured Housing Contract Trust V Senior/Subordinate Pass-Through
Certificates, Series 1998-2 (the "Global Securities") will be available only in
book-entry form. Investors in the Global Securities may hold such Global
Securities through any of The Depository Trust Company ("DTC"), Cedel or
Euroclear. The Global Securities will be tradable as home market instruments
in both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with conventional
eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedel and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions noting on their behalf as direct
and indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable conventional eurobonds, except that there
will be no temporary global security and no "lock-up" or restricted period.
Investors securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" restricted period. Global Securities
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<PAGE>
will be credited to the securities custody accounts on the settlement date
against payment same-day funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior
manufactured housing contract pass-through certificates issues in same-day
funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. Cedel or Euroclear
will instruct the respective Depositary, as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date, on the basis of the actual number of days in such
accrual period and a year assumed to consist of 360 days. For transactions
settling on the 31st of the month, payment will include interest accrued to and
excluding the first day of the following month. Payment will then be made by the
respective Depositary of the DTC Participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The securities credit will appear the next day (European
time) and the cash debt will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Cedel or Euroclear cash debt
will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available to
the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day,
I-2
<PAGE>
assuming they cleared the overdraft when the Global Securities were credited to
their accounts. However, interest on the Global Securities would accrue from the
value date. Therefore, in many cases the investment income on the Global
Securities earned during that one-day period may substantially reduce or offset
the amount of such overdraft charges, although this result will depend on each
Cedel Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective European Depositary for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC Participants a cross-market
transaction will settle no differently than a trade between two DTC
Participants.
Trading between Cedel or Euroclear Seller and DTC Purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to Cedel Participants or Euroclear Participants through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases Cedel or Euroclear will instruct the respective Depositary, as
appropriate, to deliver the Global Securities to the DTC Participant's account
against payment. Payment will include interest accrued on the Global Securities
from and including the last coupon payment to and excluding the settlement date
on the basis of either the actual number of days in such accrual period and a
year assumed to consist of 360 days or a 360-day year of twelve 30-day months,
as applicable to the related class of Global Securities. For transactions
settling on the 31st of the month, payment will include interest accrued to and
excluding the first day of the following month. The payment will then be
reflected in the account of the Cedel Participant or Euroclear Participant the
following day, and receipt of the cash proceeds in the Cedel Participant's or
Euroclear Participant's account would be back-valued to the value date (which
would be the preceding day, when settlement occurred in New York). Should the
Cedel Participant or Euroclear Participant have a line of credit with its
respective clearing system and elect to be in debt in anticipation of receipt of
the sale proceeds in its account, the back-valuation will extinguish any
overdraft incurred over that one-day period. If settlement is not completed on
the intended value date (i.e., the trade fails), receipt of the cash proceeds in
the Cedel Participant's or Euroclear Participant's account would instead be
valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
I-3
<PAGE>
borrowing the Global Securities in the U.S. from a DTC Participant no later
than one day prior to settlement, which would give the Global Securities
sufficient time to be reflected in their Cedel or Euroclear account in order to
settle the sale side of the trade; or
staggering the value dates for the buy and sell sides of the trade so that
the value date for the purchase from the DTC Participant is at least one day
prior to the value date for the sale to the Cedel Participant or Euroclear
Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless, under currently applicable laws, (i) each clearing system, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes one
of the following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are Certificate Owners residing in a country
that has a tax treaty with the United States can obtain an exemption or reduced
tax rate (depending on the treaty terms) by filing Form 1001 (Ownership,
Exemption or Reduced Rate Certificate). If the treaty provides only for a
reduced rate, withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the Certificate Owner or
his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and Form 1001 are
I-4
<PAGE>
effective for three calendar years and Form 4224 is effective for one calendar
year. The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary does not deal with all aspects
of U.S. Federal income tax withholding that may be relevant to foreign holders
of the Global Securities. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of the
Global Securities. Further, the U.S. Treasury Department has recently finalized
new regulations that will revise some aspects of the current system for
withholding on amounts paid to foreign persons. Under these regulations,
interest or OID paid to a nonresident alien would continue to be exempt from
U.S. withholding taxes (including backup withholding) provided that the holder
complies with the new certification procedures.
I-5
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there 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.
PROSPECTUS
GREENPOINT CREDIT CORP.,
SELLER AND SERVICER
MANUFACTURED HOUSING CONTRACT TRUST PASS-THROUGH CERTIFICATES
- ---------------------------
Consider carefully the
risk factors beginning on
page 5 in this prospectus
and in the related
prospectus supplement at
page [ ].
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 Corp.
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.
- ---------------------------
GreenPoint Credit Corp. may periodically issue certificates representing
interests in a trust 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 established by GreenPoint Credit Corp.
Each trust 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:
. will represent an interest in a trust and will be paid only from the assets
of that trust; and
. may be divided into multiple classes of certificates, and, if so, 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;
- - 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
or these certificates or determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
June 11, 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: (a) this prospectus, which
provides general information, some of which may not apply to your series of
certificates and (b) the accompanying prospectus supplement, which described the
specific terms of your series of certificates.
If the terms of a particular series of certificates vary between this
prospectus and the accompanying prospectus supplement, you should rely on the
information in the prospectus supplement.
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.
You can find a listing of the pages where capitalized terms used in this
prospectus are defined under the caption "Index of Significant Definitions"
beginning on page [ ].
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RISK FACTORS............................................................................................... 4
THE CONTRACT POOLS......................................................................................... 11
The Pre-Funding Account............................................................................... 14
THE SELLER................................................................................................. 15
The Acquisition....................................................................................... 15
Loan Originations..................................................................................... 15
Underwriting Practices................................................................................ 15
Servicing............................................................................................. 19
PREPAYMENT AND YIELD CONSIDERATIONS........................................................................ 22
Prepayment Considerations............................................................................. 22
Yield Considerations.................................................................................. 24
DESCRIPTION OF THE CERTIFICATES............................................................................ 25
General............................................................................................... 25
Conveyance of Contracts............................................................................... 26
Payments on Contracts................................................................................. 27
Distributions on Certificates......................................................................... 27
Global Certificates................................................................................... 30
DTC's Year 2000 Efforts............................................................................... 32
Optional and Mandatory Repurchase of Certificates; Optional Termination and Termination Auction....... 33
Termination of the Agreement.......................................................................... 34
Collection and Other Servicing Procedures............................................................. 35
Servicing Compensation and Payment of Expenses; Certain Matters Regarding the Servicer................ 35
Amendment............................................................................................. 38
The Trustee........................................................................................... 39
Indemnification....................................................................................... 39
CREDIT AND LIQUIDITY ENHANCEMENT........................................................................... 40
Subordination......................................................................................... 40
Reserve Funds......................................................................................... 42
Credit Facilities..................................................................................... 43
Liquidity Facilities.................................................................................. 44
FEDERAL INCOME TAX CONSEQUENCES............................................................................ 44
REMIC Elections....................................................................................... 46
REMIC Certificates.................................................................................... 46
Taxation of Regular Certificates...................................................................... 50
Treatment of Certificates Representing a REMIC Regular Interest Coupled with a Swap or Cap Contract... 60
Taxation of Residual Certificates..................................................................... 61
Non-REMIC Trusts...................................................................................... 71
Owner Trust Certificates or Notes..................................................................... 76
Treatment of the Owner Trust Certificates or Notes as Debt............................................ 76
Treatment of the Owner Trust.......................................................................... 77
Treatment of the Owner Trust Certificates or Notes.................................................... 77
OTHER TAX CONSEQUENCES..................................................................................... 78
RESTRICTIONS ON TRANSFER OF REMIC RESIDUAL CERTIFICATES.................................................... 79
TAX-EXEMPT INVESTORS....................................................................................... 79
LEGAL INVESTMENT........................................................................................... 79
ERISA CONSIDERATIONS....................................................................................... 81
CERTAIN LEGAL ASPECTS OF THE CONTRACTS..................................................................... 82
The Contracts (Other than Land Home and Land-in-Lieu Contracts)....................................... 82
Land Home and Land-in-Lieu Contracts.................................................................. 86
Certain Matters Relating to Insolvency................................................................ 89
Consumer Protection Laws.............................................................................. 89
Transfers of Manufactured Homes; Enforceability of Restrictions on Transfer........................... 90
Applicability of Usury Laws........................................................................... 91
RATINGS.................................................................................................... 91
METHOD OF DISTRIBUTION..................................................................................... 92
USE OF PROCEEDS............................................................................................ 93
LEGAL MATTERS.............................................................................................. 93
EXPERTS.................................................................................................... 93
INDEX OF SIGNIFICANT DEFINITIONS........................................................................... 94
</TABLE>
3
OPt
<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.
<TABLE>
<S> <C>
Limited Liquidity There can be no assurance that a secondary market will develop
for the offered certificates or, if it does develop, that it
will provide the holders of the offered certificates with
liquidity of investment or that it will remain for the term of
such certificates.
Book-entry Form To the extent any certificates are held in book-entry form,
the issuance of such certificates in book-entry form may
reduce the liquidity of such certificates in the secondary
trading market since investors may be unwilling to purchase
certificates for which they cannot obtain physical
certificates. See "Description of the Certificates--Global
Certificates" herein.
Economic Conditions An investment in certificates may be affected by, among other
things, a downturn in national, regional or local economic
conditions. The geographic location of the manufactured homes
in any contract pool at origination of the related
manufactured housing installment sales contract and/or
installment loan contract (hereinafter generally referred to
as a "contract" or "manufactured housing contract") will be
set forth in the related prospectus supplement under "The
Contract Pool." Regional and local economic conditions are
often volatile and, historically, regional and local economic
conditions, as well as national economic conditions, have
affected the delinquency, loan loss and repossession
experience of contracts. Sufficiently high delinquencies and
liquidation losses on the contracts in any contract pool will
have the effect of reducing, and possibly eliminating, the
protection against loss afforded by any credit enhancement
supporting any class of the related certificates. If such
protection is eliminated with respect to a class of
certificates, the holders of such certificates will bear all
risk of loss on the related contracts and will have to rely on
the value of the related manufactured homes for recovery of
the outstanding principal of and unpaid interest on any
defaulted contracts in the related contract pool. See "Credit
and Liquidity Enhancement" herein and the related prospectus
supplement.
Losses and Credit Risk Manufactured housing generally depreciates in value,
regardless of its location. Thus, holders of the offered
certificates should expect that, as a general matter, the
market value of any manufactured home will be lower than the
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outstanding balance of the related contract. To the extent
that the servicer of the contracts is required to repossess
manufactured homes because of owner defaults under the
contracts, liquidation losses will likely occur. The primary
protection of holders of the offered certificates against
these liquidation losses comes from three sources: first, 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, as to the holders of classes of
senior certificates, the subordination in interest of the
junior classes of certificates. 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 can vary from contract
pool to contract pool, and will be reduced if interest-only
certificates are issued. If the liquidation losses exceed 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 any credit facility or reserve fund, the
payments on certificates will be delayed and losses are likely
to occur that will be borne by the holders of the 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" herein and in the related prospectus supplement.
No Recourse The offered certificates will not represent interests in or
obligations of GreenPoint Credit Corp. or GreenPoint Financial
Corp. or, if so specified in the related prospectus
supplement, any of its affiliates. 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
Corp., 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). Except as otherwise specified in the related
prospectus supplement, the collections on the contracts will
constitute the only source of funds for payment on the offered
certificates. Therefore, any delays or losses on the
contracts that occur will be borne by the holders of the
offered certificates and such holders will have no recourse
against GreenPoint Credit Corp., GreenPoint Financial Corp. or
any of their affiliates (except in the case of a limited
guaranty or other
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credit enhancement if so specified in the related prospectus
supplement). 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
Security Interests of the On the date of initial issuance of the offered certificates in
Trust Fund in the any series, the seller will convey the related contracts to
Manufactured Homes the related trust fund. GreenPoint Credit Corp., as servicer,
(or such other party as designated in the related prospectus
supplement) will obtain and maintain physical possession of
the contract documents as custodian and agent for the related
trustee. Each contract is secured by a security interest in a
manufactured home and, in the case of land home contracts or
land-in-lieu contracts (both as defined herein), the real
estate on which the related manufactured home is located.
Perfection of security interests in the manufactured homes and
enforcement of rights to realize upon the value of the
manufactured homes as collateral for the contracts are subject
to a number of federal and state laws, including the Uniform
Commercial Code as adopted in the states in which the
manufactured homes are located and such states' certificate of
title statutes, and, in the case of land home contracts or
land-in-lieu contracts, their real estate laws. Under such
federal and state laws, a number of factors may limit the
ability of a holder of a perfected security interest in
manufactured homes to realize upon such manufactured homes or
may limit the amount realized to less than the amount due
under the related contract. See "Certain Legal Aspects of the
Contracts--Security Interests of Greenpoint in the
Manufactured Homes" and "Land Home and Land-in-Lieu Contracts"
herein.
GreenPoint will not retitle any certificates of title that are
in the name of Bank of America, FSB or BankAmerica Housing
Services, a division of Bank of America, FSB relating to any
contracts that it 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 Corp."
as the lienholder and the UCC financing statements, where
applicable, will show "Bank of America, FSB," "BankAmerica
Housing Services, a division of Bank of America, FSB" or
"GreenPoint Credit Corp." as secured party. Because it is not
economically feasible to amend the certificates of title,
GreenPoint Credit Corp. will not amend the certificates of
title to change the lienholder specified therein to the
relevant Trustee at the time
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contracts are conveyed to a trust fund, and will not execute any
transfer instrument (including, among other instruments, UCC-3
assignments) relating to any manufactured home in favor of the
relevant trustee or deliver any certificate of title to such trustee
or note thereon such trustee's interest. Similarly, GreenPoint Credit
Corp. will not 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 each land
home or land-in-lieu contract. In some states, in the absence of such an
amendment, notation, execution, delivery or recordation of assignment,
the assignment to the trustee of the security interest in the manufactured
homes, or the mortgage, deed of trust or other instrument securing a land
home contract, may not be effective or such security interest may not be
perfected. If any otherwise effectively assigned security interest in
favor of the trustee is not perfected, such assignment of the security
interest to the trustee may not be effective against creditors of
GreenPoint Credit Corp. or Bank of America, FSB, as the case may be,
which continues to be specified as lienholder on any certificate of title
or as secured party on any UCC filing, or against a receiver or trustee
in bankruptcy for GreenPoint Credit Corp. or Bank of America, FSB, as
applicable. Pursuant to the related pooling and servicing agreement,
GreenPoint will (i) represent and warrant that each contract complies
with all requirements of law and (ii) provide certain warranties relating
to the validity, perfection and priority of the security interest in each
manufactured home securing a contract. A breach by GreenPoint Credit Corp.
of any such warrant that materially and adversely affects the related
trust fund's interest in a contract will create an obligation on GreenPoint
Credit Corp. to repurchase, or at its option substitute another contract for,
such contract, unless such breach is cured within the time period specified
in the related pooling and servicing agreement. If GreenPoint Credit Corp.
does not honor such repurchase or substitute obligation in respect of a
contract, the trustee may not have a perfected first-priority security
interest in the related manufactured home or, if applicable, the related
real property. Therefore, payments on the offered certificates may be
delayed. If losses occur, they 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.
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Federal and State Consumer Numerous federal and state consumer protection laws could
Protection Laws adversely affect the interest of any trust fund in the
contracts comprising the related contract pool. For example,
as described herein under "Certain Legal Aspects of the
Contracts--Consumer Protection Laws," the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended, could, under
certain circumstances, cap the amount of interest that may be
charged on certain contracts at 6% per annum and may hinder
the ability of the servicer of the contracts to foreclose on
such contracts in a timely fashion. In addition, other
federal and state consumer protection laws impose requirements
on lending under installment sales contracts and installment
loan agreements such as the contracts, and the failure by the
lender or seller of goods to comply with such requirements
could give rise to liabilities of assignees for amounts due
under such agreements and the right of set-off against claims
by such assignees. These laws could apply to any trust fund
as assignee of the related contracts. Pursuant to the pooling
and servicing agreement related to each series of
certificates, GreenPoint Credit Corp. will represent and
warrant that each contract complies with all requirements of
law. To the extent described in the applicable prospectus
supplement under "Description of Certificates--Conveyance of
Contracts," a breach of any such representation or warranty
that materially and adversely affects the related trust fund's
interest in a contract will create an obligation by GreenPoint
Credit Corp. (or such other parties designated in the related
prospectus supplement) to repurchase, or at its option
substitute another contract for, such contract, unless such
breach is cured within the time period specified in the
related pooling and servicing agreement. GreenPoint Credit
Corp. will not have any obligation to repurchase any contract
because of limitations imposed under the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended, however.
Therefore, payments on the offered certificates may be
delayed. If losses occur, they 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.
Prepayment Considerations The prepayment experience on the contracts underlying any
series of certificates (including prepayments due to
liquidations of defaulted contracts) will affect the average
life and the maturity of such certificates. Prepayments on
the contracts in any contract pool may be influenced by a
variety of economic, geographic, social and other factors,
including repossessions, aging, seasonality and interest
rates. Other factors affecting prepayment on such contracts
include changes in housing
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needs, job transfers and unemployment. In addition, in the
event a partial prepayment is made on a contract, or a contract
is prepaid in full, interest on such contract to the extent of such
prepayment will cease to accrue as of the date of prepayment.
If, with respect to any trust fund, such prepayments and related
interest shortfalls were sufficiently high during a collection
period, the amount available for distribution to the holders
of the offered certificates for the related distribution date
could be less than the amount of principal and interest that
would be distributable to the related holders of the offered
certificates in the absence of such shortfalls which would
result in losses to the holders of such 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" herein and in the related prospectus
supplement.
Difficulty in Pledging To the extent transactions in certificates can be effected
only through DTC, participating organizations, indirect
participants and certain banks, the ability of a holder of
offered certificates to pledge any such certificate to persons
or entities that do not participate in the DTC system, or
otherwise to take actions in respect of such Certificates, may
be limited due to the lack of physical certificates
representing any such certificate. This may limit the holders
of offered certificates liquidity of investment. See
"Description of the Certificates--Global Certificates" herein.
Potential Delays in Receipt To the extent any offered certificate is held in book-entry
of Distributions form, the holder of such certificate may experience some delay
in their receipt of distributions. Distributions will be
forwarded by the trustee to DTC and DTC will credit such
distributions to the accounts of its participants (as
described herein), which will thereafter credit them to the
accounts of holder of such certificate either directly or
indirectly through indirect participants. See "Description of
the Certificates--Global Certificates" herein.
Insolvency or Bankruptcy GreenPoint Credit Corp. intends that each transfer of offered
of GreenPoint certificates to the related trust fund constitutes a sale,
rather than a pledge of the contracts to secure indebtedness
of GreenPoint Credit Corp. 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 Corp. or GreenPoint Credit Corp. as
debtor-in-possession may argue that the sale of the contracts
by GreenPoint Credit Corp. could be recharacterized as a
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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 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 Corp., the
trustee-in-bankruptcy for GreenPoint Credit Corp. could
prevent the termination of GreenPoint Credit Corp., 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 Corp. Such restriction
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 Corp. 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" herein.
Limited Operating History GreenPoint Credit Corp. was incorporated on May 8, 1998 for
of Seller and Servicer the purpose of acquiring the manufactured housing contract
business from Bank of America, FSB as described under "The
Seller--The Acquisition" herein. Accordingly, GreenPoint
Credit Corp. has a limited operating history, and no relevant
delinquency and loss experience is available. Neither
GreenPoint Credit Corp. 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 Corp.
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.
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THE CONTRACT POOLS
Each Contract contained in a Contract Pool will have been either (i)
originated or purchased by the Seller, in each case on an individual basis in
the ordinary course of its business and/or (ii) purchased by GreenPoint in bulk
from other lenders or finance companies (including from Bank of America, FSB in
the Acquisition (as defined herein)), from other lenders or finance companies
(including Bank of America, FSB or any of its affiliates) with whom GreenPoint
may have or may establish referral arrangements, from governmental agencies or
instrumentalities or from the portfolios of other entities that purchase and
hold manufactured housing contracts ("Bulk Sellers"), all as more particularly
specified in the related prospectus supplement. Each Contract will be secured
by a new or used Manufactured Home and, in the case of a Land Home or Land-in-
Lieu Contract, by real property upon which the Manufactured Home is located. If
so specified in the related prospectus supplement, the Contracts will not be
insured by any governmental agency or instrumentality. However, if so specified
in the related prospectus supplement, some or all of the Contracts and
collections thereon will, subject to the conditions described below, be
partially insured by the Federal Housing Administration or partially guaranteed
by the Veterans Administration. 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. Such statutes would also require the Manufactured Homes to be
transportable in one or more sections, built on a permanent chassis and designed
to be used as dwellings, with or without permanent foundations, when connected
to the required utilities. The statutes also would require that the security
interest in any Manufactured Home include the plumbing, heating, air
conditioning and electrical systems relating to such Manufactured Home.
Each Agreement will require the Servicer to maintain hazard and flood
insurance policies with respect to each Manufactured Home in the amounts and
manner set forth herein under "Description of the Certificates--Servicing
Compensation and Payment of Expenses; Certain Matters Regarding the Servicer--
Hazard Insurance Policies." Generally, no other insurance will be required with
respect to the Manufactured Homes, the Contracts or any Contract Pool.
Each Contract Pool may contain actuarial or simple interest Contracts (as
further described below) bearing a Contract Rate that is fixed or variable or
increases in specified increments on particular dates (a "Step-Up Rate"). The
rate at which the Contracts in a particular Contract Pool bear interest will be
further described in the applicable prospectus
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supplement. If so specified in the applicable prospectus supplement, each
Contract will provide for payments on scheduled monthly due dates (each, a "Due
Date"). The day of each month constituting the Due Date will vary from Contract
to Contract. Unless the Contracts bear interest at a variable rate, the
scheduled payment due on each monthly Due Date (the "Scheduled Payment") will be
specified in the Contract. The Scheduled Payments for fixed-rate Contracts will
be constant assuming no prepayments. If so specified in the applicable
prospectus supplement, the Scheduled Payments for Contracts bearing interest at
a Step-Up Rate ("Step-Up Rate Contracts") will increase on the dates on which
the Contract Rates are stepped up. In addition, if so specified in the related
prospectus supplement, the Contracts may be prepaid in full or in part at any
time.
If so specified in the applicable prospectus supplement, Scheduled Payments
whether for actuarial or simple interest Contracts, may be paid prior to their
Due Dates, whether in, or in months prior to, the months of their Due Dates.
Thus, the obligor under a Contract (each, an "Obligor") may, in June, pay the
Scheduled Payments due in June, July and August. In that event, no further
payment will become due on such Contract until the September Due Date. In the
case of a simple interest Contract, the Obligor would have to instruct the
Servicer to apply such payment as a pay-ahead of future Scheduled Payments;
otherwise such payment would be applied as a partial principal prepayment.
There is no limit to the number of Scheduled Payments that may be paid ahead in
this manner. The effect of paid-ahead Scheduled Payments will be different for
actuarial Contracts than for simple interest Contracts, as further described
below.
The Scheduled Payments for each actuarial Contract (whether a fixed rate
Contract or a Step-Up Rate Contract) will fully amortize the principal balance
of the Contract over its term. The portion of each Scheduled Payment allocable
to principal is equal to the total amount thereof less the portion allocable to
interest. The portion of each Scheduled Payment due in a particular month that
is allocable to interest is a precomputed amount equal to one month's interest
(determined on the basis of a thirty-day month and a 360-day calendar year,
except in the state of Kansas where it is determined on the basis of a 365/366-
day calendar year and actual days elapsed) on the principal balance of the
Contract, which principal balance is determined by reducing the initial
principal balance by the principal portion of all Scheduled Payments that were
due in prior months (whether or not such Scheduled Payments were timely made)
and all prior partial principal prepayments. Thus, each Scheduled Payment will
be applied to interest and to principal in accordance with a precomputed
allocation, whether such Scheduled Payments are received in advance of or
subsequent to their Due Dates. If so specified in the applicable prospectus
supplement, all payments received in a Collection Period on an actuarial
Contract in excess of the related Obligor's Scheduled Payment (other than
payments not allocated to principal and interest (such as late payment charges)
or payments sufficient to pay in full the outstanding principal balance of and
all accrued and unpaid interest on such Contract) are applied as a partial
prepayment of principal on the Contract, unless (i) the related Obligor notifies
or confirms with the Servicer that such payments are to be applied to future
Scheduled Payments in the order of the Due Dates of such payments or (ii) the
amount of such excess payment is approximately equal (subject to a variance of
plus or minus 10%) to the amount of a future Scheduled Payment.
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If simple interest Contracts are to be included in the related Contract
Pool, the related prospectus supplement will describe the characteristics of
such simple interest Contracts.
If so specified in the related prospectus supplement, the Scheduled
Payments on variable rate Contracts will be allocated between principal and
interest as described above for actuarial Contracts based upon the Contract Rate
in effect when such Scheduled Payments are due. If so specified in the related
prospectus supplement, the amounts of such Scheduled Payments will be adjusted,
on the basis described in such prospectus supplement, whenever the related
variable rate is adjusted.
If so specified in the applicable prospectus supplement, the related
Contract Pool may contain Contracts which combine certain features of actuarial
and simple interest Contracts.
If specified in the related prospectus supplement, certain Contracts ("Land
Home Contracts" and "Land-in-Lieu Contracts") will also be secured by liens on
the real estate on which the related Manufactured Homes are located. If so
specified in the related prospectus supplement, all Land Home Contracts will
have financed or re-financed the purchase of the related Manufactured Home
together with the real estate on which the Manufactured Home is located. In
certain jurisdictions, a lender cannot obtain separate evidence of its lien on
the Manufactured Home securing a Land Home Contract and its lien on the property
on which the Manufactured Home is located. In those jurisdictions, the only
evidence of liens on the Manufactured Homes securing Land Home Contracts will be
the deeds of trust, mortgages or similar security instruments (in each case, a
"Mortgage") on the real estate on which the Manufactured Homes are located. It
is a policy of GreenPoint, to obtain title insurance policies, where available,
with respect to any such Land Home Contract that it originates insuring that the
related Manufactured Home is subject to the lien of the related Mortgage,
although title policies may not have been obtained with respect to Land Home
Contracts acquired from Bulk Sellers and some title insurers will not insure the
Manufactured Home unless it is permanently attached to the land. Where the real
estate on which the related Manufactured Home is located is owned by the related
Obligor, the Obligor may provide a Mortgage on the real estate in lieu of all or
part of any required down payment for any such Contract. Any such Contract is
referred to herein as a "Land-in-Lieu Contract" rather than a "Land Home
Contract." Generally, separate evidences of liens on Manufactured Homes and the
real property securing Land-in-Lieu Contracts are obtained. However, no title
insurance is obtained in respect of such Contracts. See "Certain Legal Aspects
of the Contracts--Land Home and Land-in-Lieu Contracts" herein.
A Contract Pool may include "staged-funding" Contracts which provide
multiple disbursements to an Obligor to finance the purchase of a Manufactured
Home or the acquisition or improvement of the real estate on which the
Manufactured Home will be located. The Obligor pays only the interest on the
disbursed amount of the loan (or an additional origination fee which is
financed, in lieu of interest) until the final disbursement, and, following the
final disbursement, pays both interest and principal. If so specified in the
related prospectus supplement, no Contract Pool will contain a "staged-funding"
Contract unless such "staged-funding" Contract has been fully disbursed.
The prospectus supplement relating to each Series of Certificates will
provide information as of the Cut-off Date for such Series with respect to,
among other things, (i) the
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number, the aggregate principal balance, and the range of outstanding principal
balances of the Contracts comprising the related Contract Pool; (ii) the
weighted average of the Contract Rates ("Weighted Average Contract Rate") of the
Contracts and the distribution of Contract Rates; (iii) the weighted average
original and remaining terms to maturity of the Contracts and the distribution
of remaining terms to maturity; (iv) the average outstanding principal balance
of the Contracts; (v) the geographical distribution of the related Manufactured
Homes at origination; (vi) the years of origination of the Contracts; (vii) the
distribution of original principal balances of the Contracts; (viii) the
percentage amount of Contracts secured by new or used Manufactured Homes; (ix)
the range of and weighted average loan-to-value ratios at origination; and (x)
the month and year in which the final scheduled payment date for the Contract
with the latest maturity is scheduled to occur. Additionally, no more than a
maximum of 5% of the Contracts (measured by aggregate principal balance of the
assets in the Contract Pool), as described herein and the related prospectus
supplement, as of the Cut-off Date, may deviate from the characteristics of the
assets in the Contract Pool as of the Cut-off Date. If a Contract Pool contains
Step-Up Rate Contracts, the related prospectus supplement will specify the
percentage of the Contract Pool comprised of such Contracts, the period during
which the Contract Rates for such Contracts will be stepped up, the range of
increases in such Contract Rates and the range of increases in the Scheduled
Payments for such Contracts. If a Contract Pool contains variable rate
Contracts, the related prospectus supplement will contain a description of the
basis on which such rates are determined, including any maximum or minimum rates
and the frequency with which any such rate adjusts. The prospectus supplement
relating to a Series of Certificates also will contain certain information about
Contracts in the related Trust Fund that are Land Home Contracts, Land-in-Lieu
Contracts or Contracts that are partially guaranteed by the Veterans
Administration or partially insured by the Federal Housing Administration.
To the extent any Contracts in a Contract Pool were purchased by GreenPoint
from one or more Bulk Sellers, the applicable prospectus supplement will contain
a description of certain practices observed by such seller or sellers, as the
case may be, in connection with any such purchase.
In addition, to the extent GreenPoint's management believes such
information to be material, any prospectus supplement may also include
additional information concerning the related Contract Pool that is stored in
the electronic data processing system of GreenPoint.
The Pre-Funding Account
If the Trust Fund includes a Pre-Funding Account, as defined in the related
prospectus supplement, such prospectus supplement will specify (i) the term or
duration of the Pre-Funding Account; (ii) the percentage of the related Series
that may be represented by the Pre-Funding Account; (iii) the types of
investments that Pre-Funding Accounts may be invested in, and (iv) the
conditions that must be satisfied prior to any transfer of Additional Contracts
and/or Subsequent Contracts, as described in such prospectus supplement,
including the requisite characteristics of such Additional Contracts and/or
Subsequent Contracts.
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THE SELLER
GreenPoint is a Delaware corporation and a wholly owned subsidiary of
GreenPoint Bank ("GreenPoint Bank"), a New York state chartered bank.
GreenPoint Bank is a wholly owned subsidiary of GFC, a publicly traded
corporation whose shares are traded on the New York stock exchange. As of
December 31, 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"). 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 such financing
available to its customers, the retailer would apply for retailer approval.
Upon satisfactory results of GreenPoint's investigation of the retailer's
creditworthiness and general business reputation, GreenPoint and the retailer
would enter into a retailer agreement. GreenPoint also originates manufactured
housing contracts and installment loan agreements directly with customers and
through brokers and correspondent lenders.
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
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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 (described below)
generated for that application. In general, the maximum debt-to-income ratio
for each application that is approved by the credit scoring system ranged from
70 percent to 53 percent, based on GreenPoint's estimate of the applicant's
after-tax income. Although GreenPoint has guidelines for some of these
criteria, GreenPoint's management does not believe that an applicant's inability
to satisfy some of these guidelines warrants denial of credit in all cases. For
example, if an applicant fails to meet a guideline by a certain margin for one
of the criteria mentioned above, the applicant generally must exceed the
threshold for one or more other criteria by a compensating margin for such
applicant's credit application to be approved. In addition, in special cases,
credit applications are approved even if certain of the criteria are not met.
For these reasons, management of GreenPoint believe that the ultimate decision
whether to approve or reject a credit application should be made by regional
office personnel. To assist personnel in evaluating credit applications,
GreenPoint utilizes a 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
16
<PAGE>
make these credit decisions has to be either a regional manager or another
regional office employee to whom the authority to approve credit applications
has been delegated. Any such delegated authority may be limited in that the
person to whom such authority was delegated may not have been authorized to
approve credit applications for contracts with initial principal amounts above
certain specified levels. The qualifications of all regional office personnel
authorized to approve or reject credit applications are reviewed and approved by
GreenPoint's senior management. Generally, both the retailer service manager and
the credit manager in each regional office (in addition to the regional manager)
have authority to approve credit applications. However, each regional office may
at various times have additional, or in some cases fewer, personnel authorized
to approve or reject credit applications. GreenPoint has no set qualifications
for regional managers or for other employees to whom authority to approve credit
applications may be delegated; rather, such authority is given commensurate with
such manager's or employee's experience.
It is the policy of GreenPoint that each credit application be approved or
rejected within one to seven days after receipt. Thus, there is less time for
credit investigation than is the case, for example, with loans for site-built
homes. Although GreenPoint's management believes that the one to seven-day
period for approval or rejection of each credit application is consistent with
industry practice, no assurance can be given that any credit application that
was approved in one to seven days would have been approved if a longer period
had been provided for credit investigation.
The credit review and approval practices of each regional office are
subject to internal reviews and audits that, through sampling, examine the
nature of the verification of credit histories, residence histories, employment
histories and debt-to-income ratios of the applicants and evaluate the credit
risks associated with the contracts purchased through such regional offices by
rating the obligors on such contracts according to their credit histories,
employment histories and debt-to-income ratios. Selection of underwriting files
for review is generally made by the personnel performing the examination,
without prior knowledge on the part of regional office personnel of the files to
be selected for review. However, GreenPoint has no requirement that any
specific random selection procedures be followed and no assurance can be given
that the files reviewed in any examination process are representative of the
contract originations in the related regional office.
With respect to new and used manufactured homes, Green Point's policy is to
finance no more than 95% of the total buyer's cost of any manufactured home
(including taxes and insurance premiums) plus 100% of the costs attributable to
prepaid finance charges and closing costs that are financed. In the case of new
manufactured homes, the maximum amount financed cannot exceed (i) 130% of the
manufacturer's invoice price plus (ii) taxes, insurance, freight charges,
certain retailer installed equipment, certain set-up costs and certain prepaid
finance charges and closing costs. For used manufactured homes, the amount
financed cannot exceed (i) the lesser of 95% of the total sales price or 95% of
the retail value, as specified in the NADA Mobile/Manufactured Housing Appraisal
Guide or the "Kelly Blue Book" plus (ii) taxes, insurance, certain retailer
installed equipment, certain set-up costs and certain prepaid finance charges
and closing costs.
17
<PAGE>
With respect to Land/Home Contracts involving new manufactured homes,
GreenPoint's policy is to finance no more than (i) the lesser of 95% of the
value of the real property as determined by appraisal 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 (ii) 130% of the
manufacturer's invoice plus (iii) taxes, insurance, freight charges, certain
retailer installed equipment, certain set-up costs and prepaid finance charges
and closing costs plus (iv) the cost of improvements to the land, subject to
certain limitations. With respect to Land/Home Contracts involving used
manufactured homes, GreenPoint's policy is to finance no more than the lesser of
(a) 95% of the total sales price or (b) 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 (i)
the lesser of 95% of the total sales price or 95% of the appraised value of the
land and home plus (ii) 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 (i) up to 140% of the manufacturer's invoice
for the home depending on the borrower's down payment plus (ii) taxes,
insurance, freight charges, certain retailer installed equipment, certain set-up
costs and pre-paid finance charges and closing costs plus (iii) the costs of
improvements to the land, subject to certain limitations. With respect to Land-
in-Lieu Contracts involving used manufactured homes, GreenPoint's policy is to
finance no more than the lesser of (a) 95% of the total sales price or (b) 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 (i) taxes,
insurance, certain retailer installed equipment, certain set-up costs and
prepaid finance charges and closing costs and (ii) the cost of improvements to
the land, subject to certain limitations.
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 such home
determined by GreenPoint in light of current market conditions. The value of
real property pledged as additional collateral is estimated by regional
personnel (using tax assessed value) or appraisers who are familiar with the
area in which the property is located.
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 such
periods are as follows:
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<PAGE>
Contracts Originated or Purchased on an Individual Basis(1)
(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(2).................. 45 45
</TABLE>
__________
(1) Includes only Contracts originated by GreenPoint, acquired by GreenPoint in
the Acquisition, or purchased from dealers.
(2) 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 such contracts. In addition,
GreenPoint may make arrangements pursuant to which it services, or would
service, manufactured housing contracts owned by other entities. Such contracts
were not originated, and would not be purchased, by GreenPoint. Servicing
responsibilities include collecting principal and interest payments, taxes,
insurance premiums and other payments from obligors and, when such contracts are
not owned by GreenPoint, remitting principal and interest payments to the owners
thereof, to the extent such owners are entitled thereto. Collection procedures
include repossession and resale of manufactured homes securing defaulted
contracts (and foreclosure if land is involved) and, if deemed advisable by
GreenPoint, entering into workout arrangements with obligors under certain
defaulted contracts. Although decisions as to whether to repossess any
manufactured home are made on an individual basis, GreenPoint's general policy
is to institute repossession procedures promptly after regional office personnel
determine that it is unlikely that a defaulted contract will be brought current,
and thereafter to diligently pursue the resale of such manufactured homes.
Certain historical data relating to the delinquency and repossession
experience of the contracts serviced by Bank of America, FSB prior to the
Acquisition by GreenPoint is available. However, GreenPoint's management
likewise believes that such information is not relevant or informative since
GreenPoint, and not Bank of America, FSB, is now servicing such contracts.
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:
19
<PAGE>
Size of Serviced Portfolio(1)
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of As of
----- -----
December 31, 1998 March 31, 1999
----------------- --------------
<S> <C> <C>
Unpaid Principal Balance of Contracts Being $11,504,320 $11,718,576
Served........................................
Average Contract Unpaid Principal Balance...... $ 27.7 $ 28.1
Number of Contracts Being Serviced............. 415,373 417,423
</TABLE>
__________
(1) Includes Contracts already in repossession.
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 and such
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 such 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(1)............. 411,852 414,024
Number of Contracts Delinquent(2)
</TABLE>
20
<PAGE>
<TABLE>
<S> <C> <C>
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(3)............................... 2.55% 1.47%
======== ========
</TABLE>
__________
(1) Excludes contracts already in repossession.
(2) 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. Excludes
contracts already in repossession.
(3) By number of contracts.
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:
21
<PAGE>
Loan Loss/Repossession Experience
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended
--------------------
March 31, 1999
--------------------
<S> <C>
Number of Contracts Being Serviced(1) 417,423
Aggregate Principal Balance of Contracts Being Serviced(1) $11,718,576
Average Principal Recovery Upon Liquidation(2) 45.26%
Contract Liquidations(3) 1.06%
Net Losses(4)
Dollars $ 73,593
Percentage 0.63%
Contracts in Repossession(1) 3,399
</TABLE>
- ----------
(1) As of period end.
(2) 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.
(3) Number of Contracts liquidated during the period as a percentage of the
total number of Contracts being serviced as of period end.
(4) The calculation of net loss 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.
(5) The aggregate net loss amount as a percentage of the principal balance of
Contracts being serviced as of period end.
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,
22
<PAGE>
GreenPoint's management is aware of limited publicly available information
relating to historical rates of prepayment on manufactured housing contracts.
However, GreenPoint's management believes that neither the prepayment experience
of other pools of manufactured housing contracts nor the historical rates of
prepayment for any other manufactured housing contracts will necessarily be
indicative of the rate of prepayment that may be expected to be exhibited by the
Contracts in any other Contract Pool. Nevertheless, GreenPoint's management
anticipates that a number of Contracts will be prepaid in full in each year
during which any related Certificates are outstanding. The amount of
prepayments on such Contracts (including prepayments due to liquidations of
defaulted Contracts) during any particular year may be influenced by a variety
of economic, geographic, social and other factors, including repossessions,
aging, seasonality, interest rates and the rate at which manufactured homeowners
sell their manufactured homes. Other factors affecting prepayments on such
Contracts include changes in Obligors' housing needs, job transfers,
unemployment and Obligors' net equity in manufactured homes. Because of the
depreciating nature of manufactured housing, which limits the possibilities for
refinancing, and because the terms of manufactured housing contracts are
generally shorter than the terms for mortgage loans secured by site-built homes
(and changes in interest rates have a correspondingly smaller effect on the
monthly payments on manufactured housing contracts as opposed to mortgage loans
secured by site-built homes), changes in interest rates may play a smaller role
in prepayment behavior of manufactured housing contracts than they do in the
prepayment behavior of loans secured by mortgages on site-built homes.
Conversely, local economic conditions and certain of the other factors mentioned
above are likely to play a larger role in the prepayment behavior of
manufactured housing contracts than they do in the prepayment behavior of loans
secured by mortgages on site-built homes.
Repurchases of Contracts on account of certain breaches of representations
and warranties as described in the applicable prospectus supplement also will
have the effect of prepaying such Contracts and therefore will affect the
average life of and yield on the Certificates. See "Description of the
Certificates--Conveyance of Contracts." In addition, most of the Contracts
contain provisions that prohibit the related owner from selling the Manufactured
Home without the prior consent of the holder of the related Contract. Such
provisions are similar to "due-on-sale" clauses and may not be enforceable in
certain states. See "Certain Legal Aspects of the Contracts--Transfers of
Manufactured Homes; Enforceability of Restrictions on Transfer" herein. The
Servicer's policy is to permit most sales of Manufactured Homes where the
proposed buyer meets the Servicer's then current underwriting standards and
enters into an assumption agreement.
To the extent provided in the related prospectus supplement, the Servicer
under each Agreement, or such other parties 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
such prospectus supplement, when the aggregate Pool Principal Balance (as
defined in the related prospectus supplement) of the Contract Pool has been
reduced to 10% (or such other percentage as may be specified in the related
prospectus supplement) of its initial Pool Principal Balance. The exercise of
any such option will affect the average life of and yield on the related
Certificates. To the extent provided in the related prospectus supplement, the
Trustee for the related Trust Fund shall solicit bids for the purchase of the
Contracts remaining in the Trust Fund at a Termination Auction (as defined
herein) within ninety days following the Distribution Date as of which the Pool
Principal Balance for a Contract Pool is less than 10% (or
23
<PAGE>
such other percentage as may be specified in the related prospectus supplement)
of such Contract Pool's Cut-off Date Pool Principal Balance. The sale and
consequent termination of the related Trust Fund pursuant to a Termination
Auction will affect the average life and yield on the related Certificates.
The average life and maturity of the Certificates of any Class will also be
affected by the amount and timing of any Special Principal Distributions to the
holders of such Certificates. In addition, if any Certificate of a Class is
subject to mandatory repurchase, the occurrence of the Repurchase Date (as
hereinafter defined) for such Certificate will have the same effect as the
maturation of such Certificate (with the repurchase price being equivalent to
the amount due at maturity). See "Description of the Certificates--
Distributions on Certificates" and "Description of the Certificates--Optional
and Mandatory Repurchase of Certificates; Optional Termination and Termination
Auction" herein. The prospectus supplement relating to any Class that is
entitled to Special Principal Distributions or is subject to mandatory
repurchase will contain a description of the conditions under which such
distributions or repurchases will take place and a description of some of the
factors that might affect the rate of Special Principal Distributions or the
timing of any Repurchase Dates.
Information regarding the "Prepayment Model" (to be defined in the related
prospectus supplement) or any other rate of assumed prepayment, as applicable,
will be set forth in the prospectus supplement applicable to the relevant Class
or Classes of Certificates offered hereby.
Yield Considerations
To the extent that any credit enhancement or any advancing obligation of
the Servicer described in the related prospectus supplement is insufficient to
protect the holders of any Class of Certificates from losses or delinquencies on
the related Contract Pool, the yield to such holders from their investment in
such Certificates will be adversely affected should such losses or delinquencies
occur. In the absence of losses or delinquencies which are not covered by
credit enhancement or advances, respectively, on a Distribution Date, the
effective yield on the Certificates will depend upon, among other things, the
price at which the Certificates are purchased, the rate at which the Contracts
for the related Trust Fund liquidate or are prepaid and the amount and timing of
any Special Principal Distributions. If a purchaser of Certificates purchases
them at a discount (premium) and calculates its anticipated yield to maturity
based on an assumed rate of distributions of principal on such Certificates that
is faster (slower) than the rate actually realized, such purchaser's actual
yield to maturity will be lower than the yield so calculated by such purchaser.
Losses which are covered by credit enhancement, but on later than anticipated
Distribution Dates, will have the same effect on anticipated yield as
prepayments that are made later than anticipated, as just described, depending
on whether the Certificates were purchased at a discount or premium.
The yield to holders of any Class of Certificates may be below that
otherwise produced by the applicable Pass-Through Rate because, while, in the
absence of losses or delinquencies, one month's interest on the related
Contracts will be collected during each Collection Period, the portion of such
interest to which the holders of such Certificates are entitled will not be
distributed until the first Distribution Date after such Collection Period.
24
<PAGE>
If a Certificate is subject to mandatory repurchase, the yield to the
Repurchase Date will be affected by, among other things, the applicable
repurchase price, the ability of any Liquidity Facility Provider (as hereinafter
defined) to distribute the repurchase price and the date, if any, on which the
Repurchase Date occurs. If, in connection with a mandatory repurchase, the
repurchase price for a Certificate is equal to its Percentage Interest (as
hereinafter defined) of the then current Certificate Balance, and the
Certificate is purchased at a discount, and the purchaser calculates its
anticipated yield to the Repurchase Date based on an assumed Repurchase Date
that is earlier than the actual Repurchase Date, then such purchaser's actual
yield to maturity will be lower than it would have been if a repurchase occurred
on the assumed date.
The payment features of the Contracts comprising any Contract Pool (as
described above under "The Contract Pools") may, under certain extraordinary
circumstances, cause the amounts collected thereon during particular Collection
Periods to be insufficient to fund all distributions of principal and interest
to the holders of some or all of the Certificates of the related Series, even in
the absence of losses or delinquencies. Such circumstances could occur if a
sufficiently large number of partial or full prepayments, as a percentage of the
then outstanding Pool Principal Balance of the related Contract Pool, are
received on Contracts in a particular Collection Period, if such prepayments are
made in advance of such Contracts' respective Due Dates during such Collection
Period. In such case, a non-default collection shortfall could occur because
interest that actually accrues on such Contracts is less than interest that
would have accrued if the payments were paid on the Contracts' respective Due
Dates. A non-default collection shortfall could adversely affect the yield to
holders of any Class of Certificates to the extent such shortfalls are not
covered by credit enhancement or advances.
DESCRIPTION OF THE CERTIFICATES
Each Series of Certificates will be issued pursuant to a separate
Agreement. The following summaries describe only the material provisions
expected to be common to each Agreement and the related Certificates.
GreenPoint recommends that the investor read all of the provisions of the
related Agreement and the description set forth in the related prospectus
supplement. Section references contained herein refer to sections of the form
of Agreement filed as an exhibit to the Registration Statement. The prospectus
supplement for each Series will describe the specific material provisions of the
Agreement relating to such Series. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to them in the form of Agreement
filed as an exhibit to the Registration Statement.
General
The Certificates may be issued in one or more Classes. If the Certificates
of a Series are issued in more than one Class, the Certificates of all or less
than all of such Classes may be sold pursuant to this prospectus, and there may
be separate prospectus supplements relating to one or more of such Classes so
sold. Any reference herein to the prospectus supplement relating to a Series
comprised of more than one Class should be understood as a reference to each of
the prospectus supplements relating to the Classes sold hereunder. Any
reference herein to the Certificates of a Class should be understood to refer to
the Certificates of a Class within a Series, the Certificates of a subclass
within a Series or all of the Certificates of a single-Class Series, as the
context may require.
25
<PAGE>
The Certificates will be issued in the denominations specified in the
related prospectus supplement. (Section 6.02.) The "Percentage Interest" of a
Certificate is the percentage obtained from dividing the original denomination
of such Certificate by the initial principal balance of all of the Certificates
of such Class. Interest-only Certificates will have no Percentage Interest.
Certificates, if issued in registered form ("Definitive Certificates") to
Certificate Owners or nominees thereof, will be transferable and exchangeable at
the corporate trust office of the Trustee or, if it so elects, at the office of
an agent in New York, New York. (Sections 6.02 and 9.11.) No service charge
will be made for any registration of exchange or transfer, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge. (Section 6.02.)
The Certificates of each Series will evidence an interest, as specified in
the related prospectus supplement, in a Trust Fund. Each Trust Fund will
include (i) a Contract Pool, including certain rights to receive payments on the
Contracts comprising such Contract Pool on and after the Cut-off Date, (ii) the
amounts held from time to time in the "Certificate Account" (as described in the
applicable prospectus supplement under "--Payment on Contracts; Certificate
Account") maintained by the Trustee pursuant to the Agreement, (iii) any
property which initially secured a Contract and which is acquired in the process
of realizing thereon, (iv) the obligations of GreenPoint, under certain
conditions, to repurchase Contracts sold by it with respect to which certain
representations and warranties have been breached and not cured, (v) certain
contractual servicing obligations of the Servicer, (vi) the proceeds of all
insurance policies described herein and (vii) if applicable, one or more forms
of credit support. If so specified in the related prospectus supplement, a
limited guarantee of GFC may exist and, if so specified therein, will be a part
of the Trust Fund. GreenPoint will convey the Contracts to the Trustee. See
"The Contract Pools" herein and "--Conveyance of Contracts" below. GreenPoint,
as Servicer, will service the Contracts pursuant to the Agreement. If so
specified in the related prospectus supplement, the Contract documents will be
held for the benefit of the Trustee by the Servicer.
Conveyance of Contracts
On the date of initial issuance of the Certificates of a Series, GreenPoint
will sell to the Trustee, without recourse, all of its right, title and interest
in and to the Contracts sold by it, and all rights under the standard hazard
insurance policies on the related Manufactured Homes. The conveyance of the
Contracts to the Trustee will include a conveyance of all rights to receive
Scheduled Payments thereon that were due on or after the Cut-off Date, even if
received prior to the Cut-off Date, as well as all rights to any payments
received on or after the Cut-off Date other than late receipts of Scheduled
Payments that were due prior to the Cut-off Date. The Contracts will be
described on a schedule attached to the Agreement (the "Contract Schedule").
The Contract Schedule will include the principal balance of each Contract as of
the Cut-off Date, the amount of each Scheduled Payment due on each Contract as
of the Cut-off Date, the Contract Rate on each Contract (determined as of the
Cut-off Date) and the maturity date of each Contract. GreenPoint will be
required to complete a review of all of the originals of the Contracts, the
certificates of title to, or other evidence of a perfected security interest in,
the Manufactured Homes, any related Mortgages, if any, and any assignments or
modifications of the foregoing (collectively, the "Contract Files") confirming
the accuracy of the Contract Schedule delivered to the Trustee within the time
period set forth in the related Agreement. Any
26
<PAGE>
Contract discovered not to agree with such schedule in a manner that is
materially adverse to the interests of the Certificateholders will be
repurchased by GreenPoint, or replaced with another Contract, except that if the
discrepancy relates to the principal balance of a Contract (determined as
described above), GreenPoint may, under certain conditions, deposit cash in the
Certificate Account in an amount sufficient to offset such discrepancy. The
Trustee will not review the Contract Files. (Section 2.01.)
If so provided in the related prospectus supplement, the Servicer will
hold, as custodian and agent on behalf of the Trustee, the original Contracts
and copies of documents and instruments relating to each Contract and the
security interest in the Manufactured Home, and real property, if any, relating
to each Contract. In order to give notice of the Trustee's right, title and
interest in and to the Contracts, a UCC-1 financing statement identifying the
Trustee as the secured party and identifying all the Contracts as collateral
will be filed in the appropriate office in the appropriate states. The
Contracts will be stamped or otherwise marked to reflect their assignment to the
Trustee. To the extent that the Contracts do not constitute "chattel paper"
within the meaning of the UCC as in effect in the applicable jurisdictions or to
the extent that the Contracts do constitute chattel paper and a subsequent
purchaser is able to take physical possession of the Contracts without notice of
such assignment, the Trustee's interest in the Contracts could be defeated. See
"Certain Legal Aspects of the Contracts--Security Interests of GreenPoint in the
Manufactured Homes" and "Land Home and Land-in-Lieu Contracts" herein.
GreenPoint will make certain representations and warranties to the Trustee
with respect to each Contract sold by it. The applicable prospectus supplement
will describe the representations and warranties made by GreenPoint in
connection with the Contracts conveyed to the related Trust Fund, the terms
pursuant to which GreenPoint will be obligated to repurchase, at the price
specified therein, any Contract sold by it if any such representation and
warranty has been breached (unless such breach has been cured or otherwise is
not required to be cured), and the terms pursuant to which GreenPoint may remedy
any such breach. (Section 3.05.)
Payments on Contracts
The applicable prospectus supplement will specify the arrangements pursuant
to which Contract collections are held pending distribution to
Certificateholders. (Section 4.05.) Certain Contract collections will be
applied to pay the Servicer's servicing compensation and to reimburse it for
certain expenses, as set forth in each prospectus supplement and as set forth
herein under "--Servicing Compensation and Payment of Expenses; Certain Matters
Regarding the Servicer" below.
Distributions on Certificates
The Certificates of any Class will entitle the holders thereof to
distributions, on the Distribution Dates specified in the related prospectus
supplement, from amounts collected on the underlying Contracts. The
Certificates of a Class may entitle the holders thereof to (a) distributions of
both principal and interest, (b) distributions of principal only, or (c)
distributions of interest only. Such distributions will be made in accordance
with a formula described in the related prospectus supplement, and, if so
specified in such prospectus supplement, such distributions will be applied
first to interest, if any, and second to principal, if any. To the extent
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specified in the related prospectus supplement, the rights of the holders of the
Certificates of one or more Classes of a multiple Class Series to receive
distributions of principal or of interest or of both from amounts collected on
the Contracts may be subordinate to such rights of the holders of Certificates
of one or more other Classes. See "Credit and Liquidity Enhancement" herein.
Distributions of Principal. If the Certificates of a Class entitle the
holders thereof to distributions of principal, the related prospectus supplement
will specify an initial aggregate Certificate Balance for the Certificates of
such Class and a method of computing the amount of principal, if any, to be
distributed to the holders of such Certificates on each Distribution Date. If
so specified in the related prospectus supplement, principal distributions for
the Certificates of a Class will be computed on the basis of a formula which, on
each Distribution Date, allocates all or a portion of the Total Regular
Principal Amount relating to such Distribution Date to the Certificates of such
Class. The "Total Regular Principal Amount" is the total amount by which the
aggregate outstanding principal balance of the Contracts in the related Contract
Pool is reduced during one or more collection periods prior to such Distribution
Date designated in such prospectus supplement (each, a "Collection Period").
Such reduction may occur as a result of actuarially predetermined scheduled
principal reductions, receipt of principal prepayments, liquidation of
Contracts, repurchases of Contracts under certain conditions, losses on
Contracts, the failure of a third party credit support provider, if any, to make
a required payment, or a combination of any of the foregoing events. See "The
Contract Pools" and "--Servicing Compensation and Payment of Expenses; Certain
Matters Regarding the Servicer" herein. Distributions with respect to all or a
portion of the Total Regular Principal Amount are sometimes referred to herein
as distributions of "Regular Principal." The Total Regular Principal Amount with
respect to any Contract Pool and any Distribution Date may be estimated in a
manner specified in the related prospectus supplement.
If, due to liquidation losses or other circumstances adversely affecting
the collections on the underlying Contract Pool, the Contract collections
available on any Distribution Date to make distributions of Regular Principal to
the holders of the Certificates of a Class are less than the portion of the
Total Regular Principal Amount allocable to such Class, the deficiency may be
made up from (i) the amount ("Excess Interest"), if any, by which the interest
collected on nondefaulted Contracts during the same Collection Period exceeds
the interest distribution due to the holders of the Certificates for the related
Series and, if so specified in the related prospectus supplement and if
GreenPoint is acting as Servicer, the Monthly Servicing Fee (as defined
hereinafter and in the related prospectus supplement), or (ii) funds available
from one or more forms of credit support referred to below, but only to the
extent, if any, specified in the applicable prospectus supplement. See "Credit
and Liquidity Enhancement" herein. If specified in the applicable prospectus
supplement, the Certificate Balance of the Certificates of a Class will be
reduced on each Distribution Date by the full amount of the portion of the Total
Regular Principal Amount allocable to such Class even if, due to deficient
Contract collections, a full distribution thereof is not made.
The applicable distribution formula for each Class of a multiple-Class
Series may allocate the Total Regular Principal Amount among the various Classes
on a pro rata, sequential or other basis, as specified in the related prospectus
supplement. If specified in the related prospectus supplement, any such formula
may entitle the holders of Certificates of a particular Class to receive on
certain Distribution Dates, distributions of Regular Principal from particular
sources
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of funds (e.g., one or more of the forms of credit support referred to below)
upon the occurrence of certain losses or delinquencies, even if the holders of
the Certificates of such Class would not have been entitled to receive principal
distributions on such Distribution Dates from amounts collected on the
underlying Contracts in the absence of such losses or delinquencies.
If specified in the applicable prospectus supplement, the Certificates of a
Class may entitle the holders thereof to Special Principal Distributions on
particular Distribution Dates that are unrelated to the Total Regular Principal
Amount for any such Distribution Date ("Special Principal Distributions").
Special Principal Distributions may be made, under the circumstances set forth
in the applicable prospectus supplement, from interest collected on the
underlying Contract Pool, from funds available from one or more forms of credit
support or from any other source specified in such prospectus supplement. The
Certificates of a Class having an initial Certificate Balance may entitle the
holders thereof to distributions of Regular Principal only, to distributions of
Regular Principal and to Special Principal Distributions or to Special Principal
Distributions only. However, if so specified in the related prospectus
supplement, the Certificates of a Class will not entitle the holders thereof to
aggregate principal distributions in excess of the initial Certificate Balance
for such Class.
Distributions of Interest. The distribution formula for a Class of
Certificates having an initial Certificate Balance may, but need not, also
specify a method of computing the interest, if any, to be distributed on
specified Distribution Dates (which may include all or less than all of the
Distribution Dates) to the holders of the Certificates of such Class. Such
interest may be equal, subject to such adjustments as may be described in the
related prospectus supplement, to a specified number of days' interest on the
applicable Certificate Balance (before giving effect to any reduction thereof on
such Distribution Date), calculated at a rate (the "Pass-Through Rate")
specified in the related prospectus supplement. The Pass-Through Rate may be
fixed or variable, and, if specified in the related prospectus supplement, may
shift from a variable rate to a fixed rate under the conditions specified in
such prospectus supplement. Variable Pass-Through Rates may vary from time to
time based upon changes in an index or other measure of certain market rates,
all as more fully described in the related prospectus supplement. In that case,
the time period between Pass-Through Rate adjustments (each, a "Rate Period")
and the specific basis on which the Pass-Through Rate for each Rate Period will
be determined (including the particular market rates and measures thereof
relevant for determining the Pass-Through Rate for each Rate Period) may remain
constant or may change from time to time at the election of the Servicer or
otherwise, all as specified in the related prospectus supplement. Variable
Pass-Through Rates may also vary from time to time, in the manner specified in
the related prospectus supplement, based upon changes in the weighted average of
the Contract Rates of the Contracts in the related Contract Pool or on any other
basis. To the extent set forth in the related prospectus supplement, variable
Pass-Through Rates may also have floor rates and/or ceiling rates which may be
fixed or subject to adjustment as set forth in such prospectus supplement. In
addition, a variable Pass-Through Rate may be converted to a fixed Pass-Through
Rate at the election of the Seller or upon the occurrence of certain conditions.
In that event, the related prospectus supplement will set forth the conditions
under which the variable Pass-Through Rate may be converted to a fixed Pass-
Through Rate.
Rather than entitling the holders thereof to receive distributions of
interest based upon a Pass-Through Rate, the distribution formula for the
Certificates of a Class may entitle the holders
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thereof to distributions of interest on specified Distribution Dates
(which may include all or less than all of the Distribution Dates) equal, in the
case of any such Distribution Date, to all or a portion (which portion will be
determined as described in the related prospectus supplement) of the interest
payable on the related Contracts during one or more Collection Periods occurring
prior to such Distribution Date. Classes of Certificates that do not entitle the
holders thereof to receive distributions of principal may nevertheless entitle
such holders to receive interest distributions calculated on this basis.
If, due to liquidation losses or other circumstances adversely affecting
the collections on the underlying Contract Pool, the Contract collections
available to make distributions of interest to the holders of the Certificates
of a Class are less than the amount of interest computed as described above, the
deficiency may be made up from other sources, but only to the extent, if any,
specified in the applicable prospectus supplement. See "Credit and Liquidity
Enhancement" herein.
Each prospectus supplement will contain information relating to the full
amounts of principal and interest required to be distributed to the holders of
the related Class or Classes of Certificates, to the extent there are sufficient
Contract collections available therefor (sometimes referred to herein as "full
distributions"), from amounts paid or payable on the underlying Contracts.
Residual Interests. If specified in the related prospectus supplement, a
Class of Certificates sold hereunder may evidence a residual interest in the
related Trust Fund (the "Residual Interest"). Certificates evidencing a
Residual Interest will not have the features described above. Rather, if so
specified in such prospectus supplement, such Certificates will entitle the
holders thereof to receive distributions from amounts collected on the Contracts
which would not be needed to make distributions to the holders of other
interests in the Trust Fund (or to pay expenses of the Trust Fund) in the
absence of liquidation losses or other events resulting in deficient Contract
collections. In addition, if specified in such prospectus supplement, any such
Certificates may also entitle the holders thereof to receive additional
distributions of assets of the related Trust Fund, to the extent any such assets
remain after being applied to make distributions to the holders of other
interests in the Trust Fund (or to pay expenses of the Trust Fund). Further, is
so specified in the related prospectus supplement, any amounts due to the
holders of a Residual Interest with respect to any Series may be subordinated to
amounts due to holders of Certificates of another Series to the extent described
in such prospectus supplement. The Certificates evidencing a Residual Interest
may entitle the holders thereof to distributions at various times throughout the
life of the related Trust Fund or only upon termination of the Trust Fund, all
as more fully set forth in the related prospectus supplement. If an election is
made to treat the related Trust Fund as a REMIC (as hereinafter defined), the
holders of a Residual Interest in such Trust Fund will be subject to federal
income taxation with respect to their ownership of such Residual Interest as
described herein under "Federal Income Tax Consequences--REMIC Certificates--
Taxation of Residual Certificates."
Global Certificates
If so specified in the applicable prospectus supplement, the Certificates
of a Series, or of one or more Classes within a Series, will be issuable in the
form of one or more global
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certificates (each, a "Global Certificate") that are initially registered in the
name of Cede & Co. ("Cede"), as nominee of The Depository Trust Company ("DTC"),
on behalf of the beneficial owners (the "Certificate Owners") of the
Certificates. DTC is a limited-purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC accepts securities for deposit from its participating
organizations ("Participants") and facilitates the clearance and settlement of
securities transactions between Participants in such securities through
electronic book-entry changes in accounts of Participants, thereby eliminating
the need for physical movement of certificates. Participants include securities
brokers and dealers, banks and trust companies and clearing corporations and may
include certain other organizations. Indirect access to the DTC system is also
available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants").
Certificate Owners who are not Participants but desire to purchase, sell or
otherwise transfer ownership of Certificates may do so only through Participants
(unless and until Definitive Certificates are issued). In addition, Certificate
Owners will receive all distributions of principal of, and interest on, the
Certificates from the Trustee through DTC and Participants. Certificate Owners
will not receive or be entitled to receive certificates representing their
respective interests in the Certificates, except under the limited circumstances
described below. In addition, if some or all of the Certificates of a Series
are issued in the form of one or more Global Certificates, certain monthly and
annual reports prepared by the Servicer under the related Agreement will be sent
on behalf of the related Trust Fund to Cede and not to the Certificate Owners.
Unless and until Definitive Certificates are issued, it is anticipated that
the only "Certificateholder" of the Certificates will be Cede, as nominee of
DTC. Certificate Owners will not be Certificateholders as that term is used in
the Agreement. Certificate Owners are only permitted to exercise the rights of
Certificateholders indirectly through Participants and DTC.
If so specified in the related prospectus supplement, while the
Certificates are outstanding (except under the circumstances described below),
under the rules, regulations and procedures creating and affecting DTC and its
operations (the "DTC Rules"), Participants are required to make book-entry
transfers through DTC's facilities with respect to the Certificates, and DTC as
the sole holder of the Certificates is required to receive and transmit
distributions of principal of, and interest on, the Certificates. Unless and
until Definitive Certificates are issued, Certificate Owners who are not
Participants may transfer ownership of Certificates only through Participants by
instructing such Participants to transfer Certificates, by book-entry transfer,
through DTC for the account of the purchasers of such Certificates, which
account is maintained with their respective Participants. Under the DTC Rules
and in accordance with DTC's normal procedures, transfers of ownership of
Certificates will be executed through DTC, and the accounts of the respective
Participants at DTC will be debited and credited.
Definitive Certificates will be issued to Certificate Owners, or their
nominees, rather than to DTC, only if (i) the Servicer advises the Trustee in
writing that DTC is no longer willing or qualified to discharge properly its
responsibilities as nominee and depository with respect to the
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Certificates and the Servicer or the Trustee is unable to locate a qualified
successor, (ii) the Seller, at its option, elects to terminate the book-entry
system through DTC, or (iii) after the occurrence of an Event of Default (See
"--Servicing Compensation and Payment of Expenses; Certain Matters Regarding the
Servicer--Events of Default" below), Certificate Owners having a majority in
Percentage Interests of each Class of the Certificates advise the Trustee and
DTC through the Participants, in writing, that the continuation of a book-entry
system through DTC (or a successor thereto) to the exclusion of any physical
certificates being issued to Certificate Owners is no longer in the best
interests of Certificate Owners. Upon issuance of Definitive Certificates to
Certificate Owners, such Certificates will be transferable directly (and not
exclusively on a book-entry basis), and registered holders will deal directly
with the Trustee with respect to transfers, notices and distributions.
Except as otherwise specified in the related prospectus supplement, unless
and until Definitive Certificates are issued, DTC will take any action permitted
to be taken by a Certificateholder under the Agreement only at the direction of
one or more Participants to whose DTC accounts the Certificates are credited and
will take such action with respect to any Percentage Interests of the
Certificates only at the direction of and on behalf of such Participants with
respect to such Percentage Interests of the Certificates. DTC may take actions,
at the direction of the related Participants, with respect to some Certificates
which conflict with actions taken with respect to other Certificates.
DTC's Year 2000 Efforts
DTC management is aware that some computer applications, systems, and the
like for processing data ("Systems") that are dependent upon calendar dates,
including dates before, on, and after January 1, 2000, may encounter "Year 2000
problems." DTC has informed its Participants and other members of the financial
community (the "Industry") that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payment of distributions
(including principal and income payments) to securityholders, book-entry
deliveries, and settlement of trades within DTC ("DTC Services"), continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes
a testing phase, which is expected to be completed within appropriate time
frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC license software and hardware, and
third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed the Industry that it is contacting (and will
continue to contact) third party vendors from whom DTC acquires services to: (i)
impress upon them the importance of such services being Year 2000 compliance;
and (ii) determine the extent of their efforts for Year 2000 remediation (and,
as appropriate, testing) for their services. In addition, DTC is in the process
of developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
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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 such 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 such option, all outstanding Contracts after the first
Distribution Date on which the Pool Scheduled Principal Balance (as defined
hereinafter) is less than 10% (or such other percentage as may be specified in
the related prospectus supplement) of the initial Pool Principal Balance on the
Cut-off Date. The price at which the Servicer for such Trust Fund may
repurchase the related Contracts will equal, after deductions of related
advances by the Servicer, the greater of (a) the sum of (x) 100% of the Pool
Scheduled Principal Balance of each Contract (other than any Contract as to
which the related Manufactured Home has been acquired and not yet disposed of
and whose fair market value is included pursuant to clause (y) below) as of the
final Distribution Date, and (y) the fair market value of such acquired property
(as determined by the Servicer) and (b) the aggregate fair market value (as
determined by the Servicer) of all of the assets of such Trust Fund, plus, in
the case of both clause (a) and (b), an amount sufficient to reimburse
Certificateholders for each outstanding Class for any shortfall in interest due
thereto in respect of prior Distribution Dates and, if so specified in the
related prospectus supplement, any amounts owing to the Credit Facility
Provider. Notwithstanding the foregoing, the Servicer's option shall not be
exercisable if there will not be distributed to the Certificateholders for each
outstanding Class an amount equal to the aggregate Certificate Balance for each
outstanding Class together with any shortfall in interest due to such
Certificateholders in respect of prior Distribution Dates and one month's
interest on the aggregate Certificate Balance for each outstanding Class at the
respective Pass-Through Rates for such Classes and, if so specified in the
related prospectus supplement, any amounts owing to the Credit Facility Provider
(the "Minimum Termination Amount"). The related prospectus supplement will
specify whether losses suffered on the Contracts in the normal course will be
allocated to the holders of Certificates when realized or upon the termination
of the related Trust and whether an adjustment to the Minimum Termination Amount
will be made. In no event, will losses be recognized until a liquidation of the
collateral securing any such defaulted Contract has been liquidated. See
"Description of the Certificates--Optional Termination" in the related
prospectus supplement. (Section 10.01.)
Mandatory Repurchase. Some or all of the Certificates of a Class may be
subject to repurchase by or on behalf of the Seller at the option of the holders
thereof and/or at the option of the Seller, but only to the extent, at the
prices, on the dates and under the conditions specified in the related
prospectus supplement. In addition, some or all of the Certificates of a Class
may be subject to mandatory repurchase by or on behalf of the Seller to the
extent, at the prices, on the dates and under the conditions specified in the
related prospectus supplement. On the date on which any Certificate is subject
to repurchase (the "Repurchase Date") the holder thereof will cease to be
entitled to any benefit of the Certificate or the related Agreement and will be
entitled only to receive from the Trustee the repurchase price of the
Certificate upon surrender thereof at the office or agency designated by the
Trustee. To the extent specified in the related prospectus supplement, the
funds necessary to distribute the repurchase price of any Certificate subject to
mandatory or optional repurchase as described therein will be provided under a
certificate
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purchase agreement or other Liquidity Facility as described in "Credit and
Liquidity Enhancement" herein.
Optional or Mandatory Termination Auction. If specified in the applicable
prospectus supplement, on any Distribution Date after the Distribution Date on
which the Pool Scheduled Principal Balance is less than 10% (or such other
percentage as may be specified in the related prospectus supplement) of the Cut-
off Date Pool Principal Balance, the Servicer, or such 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 the purchase at an auction (the "Termination
Auction") of the Contracts remaining in the Trust Fund. Unless the Servicer, or
such 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 such other percentage
as may be specified in the related prospectus supplement) of the Cut-off Date
Pool Principal Balance, the Servicer shall, to the extent specified in the
related prospectus supplement, be obligated to direct the Trustee to conduct
such a Termination Auction. In any Termination Auction, the Servicer shall give
notice as specified in the applicable prospectus supplement before the date on
which the Termination Auction is to occur. The Trustee will solicit each
Certificateholder, the Seller and one or more active participants in the asset-
backed securities or manufactured housing contract market that are not
affiliated with GreenPoint to make a bid to purchase the Contracts at the
Termination Auction. The Trustee will sell all the Contracts to the highest
bidder, subject, among other things, to (i) the requirement that the highest bid
equal or exceed the Minimum Termination Amount, and (ii) the requirement that at
least one bid be tendered by an active participant in the asset-backed
securities or manufactured housing contract market that is not affiliated with
GreenPoint. If the foregoing requirements are satisfied, the successful bidder
or bidders shall deposit the aggregate purchase price for the Contracts in the
Certificate Account. If the foregoing requirements are not satisfied, the
purchase shall not occur and distributions will continue to be made on the
Certificates. Any sale and consequent termination of the Trust Fund as a result
of a Termination Auction must constitute a "qualified liquidation" of the Trust
Fund under Section 860F of the Code. (Section 10.1)
Termination of the Agreement
The Agreement will terminate upon the last action required to be taken by
the Trustee on the final Distribution Date following the earlier of (i) the
purchase or sale of all Contracts and all property acquired in respect of any
Contract remaining in the Trust Fund as described above under "--Optional and
Mandatory Repurchase of Certificates; Termination Auction" or (ii) the final
payment or other liquidation (or any advance with respect thereto) of the last
Contract remaining in the relevant Trust Fund (including the disposition of all
property acquired upon repossession of any Manufactured Home). (Section 10.01.)
In the event of the termination of any Agreement, the holders of
Certificates of any Class of the related Series will be entitled to receive,
upon presentation and surrender of their Certificates at the office or agency
designated by the Trustee, a final distribution in an amount computed as
described in the related prospectus supplement.
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Collection and Other Servicing Procedures
Except as otherwise provided in the related Agreement, the Servicer may
rescind, cancel or make material modifications of the terms of a Contract
(including modifying the amounts and Due Dates of Scheduled Payments) in
connection with a default or imminent default thereunder. However, if so
specified in the related prospectus supplement and unless required by the
applicable law or to bring Contracts into conformity with the representations
and warranties contained in the Agreement, the Servicer may not rescind, cancel
or materially modify any Contract unless the Servicer obtains an opinion of
counsel to the effect that such action will not have certain adverse federal
income tax consequences. (Section 4.07.)
Servicing Compensation and Payment of Expenses; Certain Matters Regarding the
Servicer
The monthly servicing fee (the "Monthly Servicing Fee") and any additional
servicing compensation with respect to the Contracts underlying a Series of
Certificates will be specified in the applicable prospectus supplement.
(Section 1.01.) If so specified in the related prospectus supplement, if
GreenPoint is acting as Servicer, GreenPoint may subordinate the Monthly
Servicing Fee for a Series with respect to all, or a portion of, the amounts due
to the related Certificateholders on the terms and conditions set forth in such
prospectus supplement.
The Monthly Servicing Fee provides compensation for customary manufactured
housing contract third-party servicing activities to be performed by the
Servicer for the Trust Fund and for additional administrative services performed
by the Servicer on behalf of the Trust Fund. Customary servicing activities
include collecting and recording payments, communicating with Obligors,
investigating payment delinquencies, providing billing and tax records to
Obligors and maintaining internal records with respect to each Contract.
Administrative services performed by the Servicer on behalf of the Trust Fund
include calculating distributions to Certificateholders and providing related
data processing and reporting services for Certificateholders and on behalf of
the Trustee. If so specified in the applicable prospectus supplement, expenses
incurred in connection with servicing the Contracts and paid by the Servicer
from its Monthly Servicing Fee include, without limitation, payment of fees and
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
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permitted assumptions of Contracts by purchasers of the related Manufactured
Homes. (Sections 4.15 and 5.03.) To the extent specified in the related
prospectus supplement, the Servicer will also be entitled to use payments of
principal and interest (including Liquidation Proceeds net of Liquidation
Expenses) for its own benefit, without an obligation to pay interest or any
other investment return thereon, until the related Distribution Date.
If so specified in the applicable prospectus supplement, any person with
which the Servicer is merged or consolidated, or any corporation resulting from
any merger, conversion or consolidation to which the Servicer is a party, or any
person succeeding to the business of the Servicer, will be the successor to the
Servicer under the Agreement, so long as such successor has a net worth of at
least $50 million and has serviced at least $100 million of manufactured housing
contracts for at least one year. The Servicer may assign its rights and
delegate its duties under the Agreement (whereupon it will no longer be liable
for the obligations of the Servicer under the Agreement), provided that, among
other conditions, any rating assigned to the Certificates will not be reduced
because of such assignment and delegation. (Sections 7.04, 7.06 and 7.07.)
Hazard Insurance Policies. If so specified in the related prospectus
supplement, the Servicer will be obligated to cause to be maintained one or more
hazard insurance policies with respect to each Manufactured Home in an amount at
least equal to the lesser of its actual cash value or the principal amount due
from the Obligor under the related Contract. Such hazard insurance policies
will, at a minimum, provide fire and extended coverage on terms and conditions
customary in manufactured housing hazard insurance policies. If a Manufactured
Home is located within a federally designated flood area, the Servicer will, to
the extent required by applicable law or regulation, also be obligated to cause
flood insurance to be maintained in an amount equal to the lesser of the amounts
described above or the maximum amount available for such Manufactured Home under
the federal flood insurance programs. Such policies may provide for customary
deductible amounts. Coverage thereunder will be required to be sufficient to
avoid the application of any co-insurance provisions. Such policies will be
required to contain a standard loss payee clause in favor of the Servicer and
its successors and assigns. In general, the Servicer will not be obligated to
cause to be obtained and maintained hazard insurance policies that provide
earthquake coverage. If earthquake coverage is required with respect to
Contracts in a particular Trust Fund, that fact will be disclosed in the related
prospectus supplement.
If so specified in the related prospectus supplement, all amounts collected
by the Servicer under a hazard or flood insurance policy will be applied either
to the restoration or repair of the Manufactured Home or against the remaining
principal balance of the related Contract upon repossession of the Manufactured
Home, after reimbursing the Servicer for amounts previously advanced by it for
such purposes. The Servicer may satisfy its obligation to maintain hazard and
flood insurance policies with respect to each Manufactured Home by maintaining a
blanket policy insuring against hazard and flood losses on the related Obligor's
interest in such Manufactured Home. Such blanket policy may contain a
deductible clause, in which case the Servicer will be required to make payments
to the related Trust Fund in the amount of any deductible amounts in connection
with insurance claims on repossessed Manufactured Homes.
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If so specified in the related prospectus supplement, if the Servicer
repossesses a Manufactured Home on behalf of the Trustee, the Servicer is
required to either maintain a Hazard Insurance Policy with respect to such
Manufactured Home meeting the requirements set forth above, or to indemnify the
Trust Fund against any damage to such Manufactured Home prior to resale or other
disposition. (Section 4.09.)
Evidence as to Compliance. If so specified in the related prospectus
supplement, the Servicer will be required to deliver to the Trustee each year an
officer's certificate executed by an officer of the Servicer (i) stating that a
review of the activities of the Servicer during the preceding calendar year and
of performance under the Agreement has been made under the supervision of such
officer, and (ii) stating that to the best of such officer's knowledge, the
Servicer has fulfilled all its obligations under the Agreement throughout such
year, or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. Such officer's certificate will be accompanied by a statement of a
firm of independent public accountants to the effect that, on the basis of an
examination of certain documents and records relating to servicing of the
Contracts under the Agreement (or, at the Servicer's option, the Contracts and
other contracts being serviced by the Servicer under agreements similar to the
Agreement), conducted in accordance with generally accepted auditing standards,
the Servicer's servicing has been conducted in compliance with the provisions of
the Agreement (or such agreements), except (i) such exceptions as such firm
believes to be immaterial and (ii) such other exceptions as may be set forth in
such statement. (Sections 4.20 and 4.21.)
Events of Default. Servicer events of default under the Agreement will
consist of, among other events, (i) any failure by the Servicer to make any
deposit or payment required of it under the Agreement which continues unremedied
for five days after the giving of written notice, (ii) any failure by the
Servicer duly to observe or perform in any material respect any of its other
covenants or agreements in the Agreement which continues unremedied for 30 days
after the giving of written notice of such failure, and (iii) certain events of
insolvency, readjustment of debt, marshaling of assets and liabilities or other
similar proceedings regarding the Servicer. If so specified in the related
prospectus supplement, "notice" as used in this paragraph means notice to the
Servicer by the Trustee, the Seller or, if applicable, the Credit Facility
Provider, or to the Servicer, the Trustee and the Seller by the holders of
Certificates evidencing interests ("Fractional Interests") in the outstanding
principal balance of outstanding Certificates that, in the aggregate, equal at
least 25% of the principal balance of all outstanding Certificates (excluding
Certificates held by the Seller or any of its affiliates). (Section 8.01.)
Rights Upon Event of Default. If so specified in the related prospectus
supplement so long as an event of default remains unremedied, the Trustee may
(but only with the consent of the Credit Facility Provider (if any) if the
Credit Facility has not expired or if the Credit Facility has expired or been
terminated and such Credit Facility Provider has not been reimbursed for all
amounts due it), and at the written direction of the holders of Certificates
evidencing Fractional Interests aggregating not less than 51% shall, terminate
all of the rights and obligations of the Servicer under the Agreement and in and
to the related Contracts, whereupon (subject to applicable law regarding the
Trustee's ability to make monthly advances) the Trustee or a successor Servicer
under the Agreement will succeed to all the responsibilities, duties and
liabilities of the Servicer under the Agreement and will be entitled to similar
compensation
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arrangements. If the Trustee is obligated to succeed the Servicer but is
unwilling or unable so to act, it may appoint or petition a court of competent
jurisdiction for the appointment of a Servicer. Pending such appointment, the
Trustee is obligated to act in such capacity. The Trustee and such successor
Servicer may agree upon the servicing compensation to be paid, which in no event
may be greater than a monthly amount specified in the Agreement. (Sections 7.07
and 8.01.)
If so specified in the related prospectus supplement, no Certificateholder
will have any right under the Agreement to institute any proceeding with respect
to the Agreement unless such holder previously has given to the Trustee written
notice of default and unless the holders of Certificates evidencing Fractional
Interests aggregating not less than 25% have requested the Trustee in writing to
institute such proceeding in its own name as Trustee and have offered to the
Trustee reasonable indemnity and the Trustee for 60 days has neglected or
refused to institute any such proceeding. The Trustee will be under no
obligation to take any action or institute, conduct or defend any litigation
under the Agreement at the request, order or direction of any of the holders of
Certificates, unless such Certificateholders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which the Trustee may incur. (Sections 8.01 and 11.08.)
Amendment
If so specified in the related prospectus supplement, the Agreement may be
amended by the Seller, the Servicer and the Trustee without the consent of the
Certificateholders (but only with the consent of the Credit Facility Provider
(if any) if the Credit Facility has not expired or if the Credit Facility has
expired or been terminated and such Credit Facility Provider has not been
reimbursed for all amounts due it), (i) to cure any ambiguity, (ii) to correct
or supplement any provision therein that may be inconsistent with any other
provision therein, (iii) to add to the duties or obligations of the Servicer,
(iv) to obtain a rating from a nationally recognized rating agency or to
maintain or improve the ratings of any Class of the Certificates then given by
any rating agency (it being understood that, after obtaining the rating of the
Certificates from the rating agencies specified in such Agreement, none of the
Trustee, the Seller or the Servicer is obligated to obtain, maintain or improve
any rating assigned to the Certificates), or (v) to make any other provisions
with respect to matters or questions arising under such Agreement, provided that
such action will not, as evidenced by an opinion of counsel, adversely affect in
any material respect the interests of the Certificateholders. The Agreement may
also be amended, by the Seller, the Servicer, 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 such Agreement or of modifying in any
manner the rights of the Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
any distributions on any Certificate, without the consent of the Holder of such
Certificate as the case may be, (ii) adversely affect in any material respect
the interests of the Holders of any Class of Certificates in a manner other than
as described in (i), without the consent of the Holders of Certificates of such
Class evidencing, as to such Class, Percentage Interests aggregating 66% or
(iii) reduce the aforesaid percentage of Certificates the holders of which are
required to consent to any such amendment, without the consent of the holders of
all Certificates then outstanding, and no such amendment shall adversely affect
the status of the Trust Fund as a REMIC.
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If so specified in the applicable prospectus supplement, the Agreement may
also be amended from time to time, without the consent of any
Certificateholders, by the Seller, the Trustee and the Servicer to modify,
eliminate or add to the provisions of the Agreement to (i) maintain the
qualification of the Trust Fund as a REMIC under the Code or avoid, or minimize
the risk of, the imposition of any tax on the Trust Fund under the Code that
would be a claim against the Trust Fund assets, provided that an opinion of
counsel is delivered to the Trustee to the effect that such action is necessary
or appropriate to maintain such qualification or avoid any such tax or minimize
the risk of its imposition, or (ii) prevent the Trust Fund from entering into
any "prohibited transaction" as defined in Section 860F of the Code, provided
that an opinion of counsel is delivered to the Trustee to the effect that such
action is necessary or appropriate to prevent the Trust Fund from entering into
such prohibited transaction. (Section 11.01.)
The Agreement may otherwise be subject to amendment without the consent of
any Certificateholders and, under certain circumstances, without the consent of
the Trustee, if and to the extent specified in the related prospectus
supplement.
The Trustee
The Trustee with respect to a Series will be identified in the applicable
prospectus supplement. If so specified therein, the Trustee may resign at any
time, in which event the Seller will be obligated to appoint a successor
Trustee. The Seller may also remove the Trustee if the Trustee ceases to be
eligible to continue as such under the related Agreement or if the Trustee
becomes insolvent. In such circumstances, the Seller will also be obligated to
appoint a successor Trustee. Any resignation or removal of the Trustee and
appointment of a successor Trustee will not become effective until acceptance of
the appointment by the successor Trustee. (Section 9.07.)
If so specified in the related prospectus supplement, the Agreement for any
Series will require the Trustee to maintain, at its own expense, an office or
agency in New York City where the Certificates for such Series may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trustee and the Certificate Registrar in respect of such
Certificates pursuant to the related Agreement may be served.
If so specified in the related prospectus supplement, the Trustee, or any
of its affiliates, in its individual or any other capacity, may become the owner
or pledgee of the Certificates of any Series with the same rights as it would
have if it were not Trustee.
If so specified in the related prospectus supplement, the Trustee will act
as Paying Agent, Certificate Registrar and Authenticating Agent for the related
Series of Certificates.
Indemnification
If so specified in the applicable prospectus supplement, each Agreement
will provide that neither the Servicer nor any of its directors, officers,
employees or agents will be under any liability to the Trustee or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to such Agreement, or for errors in judgment;
provided, however, that such provision shall not protect the Servicer or any
such person against
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any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence. The Servicer shall not be under any obligation to
appear in, prosecute or defend any legal action which arises under an Agreement
(other than in connection with the enforcement of any Contract in accordance
with the Agreement) and which in its opinion may involve it in any expenses or
liability; provided, however, that the Servicer may in its discretion undertake
any such other legal action which it may deem necessary or desirable in respect
of the Agreement and the rights and duties of the parties thereto. In such
event, the legal expenses and costs of such other legal action and any liability
resulting therefrom shall be expenses, costs and liabilities payable from the
Trust Fund and the Servicer shall be entitled to be reimbursed therefor from
amounts collected on the Contracts. (Section 7.05.)
CREDIT AND LIQUIDITY ENHANCEMENT
To the extent specified in the related prospectus supplement, a Class of
Certificates may be entitled to the benefit of one or more of the following
forms of credit and liquidity enhancement:
Subordination
The Certificates of one or more Classes of a multiple-Class Series (the
"Senior Certificates") may afford the holders thereof a right to receive
distributions of principal or of interest or of both on each Distribution Date
from amounts collected on the related Contract Pool that is prior to the right
to receive such distributions afforded by the Certificates of the other Class or
Classes (the "Junior Certificates" or "Subordinate Certificates"). If so
specified in the related prospectus supplement, this prior right will result
from one or both of the following two features:
The Senior Certificates will entitle the holders thereof to receive on some
or all Distribution Dates, prior to any distribution of principal or of interest
or of both (as specified in the related prospectus supplement) being made to the
holders of the Junior Certificates on any such Distribution Date, a full
distribution of principal or of interest or of both principal and interest (as
specified in the related prospectus supplement) from amounts collected on the
Contracts during the related Collection Period(s). To the extent that Contract
collections during the related Collection Period(s) would, in the absence of
liquidation losses or other circumstances adversely affecting such Contract
collections, have been applied to make distributions to the holders of the
Junior Certificates, this feature will enhance the likelihood of timely receipt
by the holders of the Senior Certificates of full distributions of principal or
of interest or of both in accordance with the applicable distribution formula.
The distribution formula for the Senior Certificates (other than interest-
only Certificates) will entitle the holders thereof to receive, on some or all
Distribution Dates, all or a disproportionate share of the Total Regular
Principal Amount until the Certificate Balance of the Senior Certificates has
been reduced to zero. See "Description of Certificates--Distributions on
Certificates--Distributions of Principal" above. This feature, in effect, will
provide the holders of the Senior Certificates (other than holders of interest-
only Certificates) with a prior right to receive the principal collected on the
Contracts until the Certificate Balance of the Senior Certificates has been
reduced to zero. The degree of priority will depend on the share of the
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Total Regular Principal Amount to which the holders of the Senior Certificates
(other than holders of interest-only Certificates) are entitled on particular
Distribution Dates. If the holders of the Senior Certificates (other than
holders of interest-only Certificates) are entitled to receive all of the Total
Regular Principal Amount on each Distribution Date (to the extent of the
Contract collections available to make distributions of Regular Principal on
such Distribution Date), then the holders of the Senior Certificates (other than
holders of interest-only Certificates) will, in effect, have a right to receive
all principal collected on the Contracts that is absolutely prior to the right
of the holders of the Junior Certificates to receive any principal collected on
the Contracts. If, however, the holders of the Senior Certificates (other than
holders of interest-only Certificates) are entitled to receive only a
disproportionate share of the Total Regular Principal Amount, or are entitled to
receive all or a disproportionate share of the Total Regular Principal Amount
only on certain Distribution Dates, then the prior right of the holders of the
Senior Certificates (other than holders of interest-only Certificates) to
receive distributions of principal collected on the Contracts will, to that
extent, be limited. The prior right to receive distributions of principal
collections described above will enhance the likelihood that the holders of the
Senior Certificates (other than holders of interest-only Certificates) will
ultimately receive distributions of principal in an aggregate amount equal to
the initial Certificate Balance of the Senior Certificates. It will not,
however, enhance the likelihood of timely receipt by the holders of the Senior
Certificates of full distributions of the amounts to which they would have been
entitled in the absence of liquidation losses or other circumstances adversely
affecting Contract collections.
If specified in the related prospectus supplement, the features described
above may be characteristic of different Classes within a multiple-Class Series.
Thus, Certificates which constitute Senior Certificates under the criteria
described in paragraph 1 above may constitute Junior Certificates under the
criteria described in paragraph 2 above, and Certificates which constitute
Senior Certificates under the criteria described in paragraph 2 above may
constitute Junior Certificates under the criteria described in paragraph 1
above. In general, the splitting of the features described above among two
separate Classes of a multiple-Class Series will undercut the protection against
loss afforded by each of such features. The particular effects of any such
splitting will be discussed in the applicable prospectus supplement. The
following discussion is based on the assumption that the features described
above will not be characteristic of different Classes within a multiple-Class
Series.
The degree of protection against loss provided to the holders of the Senior
Certificates at any time by either of the subordination features described above
will be determined primarily by the degree to which the aggregate principal
balance of the underlying Contracts (the "Pool Principal Balance") exceeds the
Certificate Balance of the Senior Certificates (and to a lesser extent, if the
holders of the Senior Certificates also have a prior right to receive interest,
by the degree to which the interest payable on the Contracts, net of the
portions thereof used to pay the servicing fee of the Servicer (if such
servicing fee is payable prior to distributions of interest to the holders of
the Senior Certificates) and other expenses of the Trust Fund, exceeds the
interest distributable to the holders of the Senior Certificates). The relative
levels of the Certificate Balance of the Senior Certificates (the "Senior
Certificate Balance") and the related Pool Principal Balance, and hence the
degree of protection against loss afforded by the subordination features
described above, may change over time depending on, among other things, the
formula by which principal is distributed to the holders of the Senior
Certificates and the level of liquidation losses on the underlying Contracts.
Generally, if the holders of Senior Certificates
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(other than holders of interest-only Certificates) receive a disproportionate
share of the Total Regular Principal Amount on any Distribution Date, the effect
will be to increase, as a relative matter, the degree by which the Pool
Principal Balance exceeds the Certificate Balance of the Senior Certificates,
thus increasing the degree of protection against loss afforded by the
subordination of the Junior Certificates. In addition, Special Principal
Distributions to the holders of the Senior Certificates from sources other than
principal collections on the underlying Contracts generally will increase the
degree of protection against loss above the protection that would have been
provided if such distributions were not made (because the Senior Certificate
Balance will be reduced without a reduction in the Pool Principal Balance). On
the other hand, if, due to liquidation losses or other circumstances adversely
affecting Contract collections, the holders of Senior Certificates (other than
holders of interest-only Certificates) receive less than their proportionate
share of the Total Regular Principal Amount, the effect will be to decrease, as
a relative matter, the degree to which the Pool Principal Balance exceeds the
Certificate Balance of the Senior Certificates, thus decreasing the degree of
protection against loss afforded by the subordination of the Junior
Certificates. The effects of particular principal distribution formulae in this
regard will be discussed in the applicable prospectus supplement. The
description of any such effects in a particular prospectus supplement may relate
the Certificate Balances of the Senior Certificates to Pool Principal Balances
which are estimated or adjusted as described therein. Such Pool Principal
Balances may sometimes be referred to in a prospectus supplement as "Pool
Scheduled Principal Balances."
Where there is more than one Class of Junior Certificates, the rights of
one or more of such Classes of Junior Certificates to receive distributions of
principal, interest or principal and interest may be subordinated to the rights
of one or more other Classes of Junior Certificates to receive such
distributions. Any Class of Junior Certificates that is entitled to receive
such distributions from Contract Pool collections prior to any other Class of
Junior Certificates is a "mezzanine" Class of Junior Certificates. The
subordination of any Class of Junior Certificate to a mezzanine Class of Junior
Certificates will enhance the likelihood of timely receipt by the holders of
such mezzanine Class of Junior Certificates relative to any Class of Junior
Certificates that is subordinate to such mezzanine Class of Junior Certificates.
Junior Certificates, including any mezzanine Classes of Junior Certificates, may
only be sold hereunder if rated in one of the four highest rating categories of
a nationally recognized statistical rating organization. (See "Rating" herein).
The effect of any subordination on any Classes of Junior Certificates sold
hereunder will be discussed in the applicable prospectus supplement.
Reserve Funds
The Certificates of one or more Classes may be entitled to the benefit of
one or more spread accounts or other reserve funds (each, a "Reserve Fund")
which, to the extent specified in the related prospectus supplement, will cover
shortfalls created when collections on the related Contract Pool that are
available to make distributions to the holders of such Certificates are not
sufficient to fund full distributions of principal, interest or principal and
interest to such Certificateholders. Any Reserve Fund may be available to cover
all or a portion of such shortfalls and may be available to cover any
shortfalls, no matter what the cause, or only shortfalls due to certain causes
(e.g., liquidation losses only or delinquencies only), all as specified in the
related prospectus supplement. In addition, to the extent specified in the
related prospectus supplement, a Reserve Fund may be used to make distributions
of interest or Regular
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Principal to the holders of a Class of Certificates on particular Distribution
Dates upon the occurrence of certain losses, delinquencies or other events, even
if such Certificateholders would not have been entitled to any such
distributions on such Distribution Dates in the absence of losses, delinquencies
or other events. A Reserve Fund may also be used to fund Special Principal
Distributions under the circumstances set forth in the related prospectus
supplement. The related prospectus supplement will specify whether any Reserve
Fund will be established as part of the Trust Fund or held outside of the Trust
Fund by a collateral agent or similar third party (who may be the Trustee acting
in a different capacity) and will contain a description of any arrangement
pursuant to which the Reserve Fund is held outside of the Trust Fund.
The method of funding any Reserve Fund, and the required levels of funding,
if any, as well as the circumstances under which amounts on deposit in any
Reserve Fund may be distributed to persons other than Certificateholders, will
be described in the applicable prospectus supplement. To the extent that a
Reserve Fund may be funded in whole or in part from some or all of the interest
collected on the Contracts in excess of the interest needed to make
distributions to the holders of one or more Classes of Certificates, such
Reserve Fund may be referred to in the applicable prospectus supplement as a
"Spread Account."
Credit Facilities
The Certificates of one or more Classes may be entitled to the benefit of
one or more letters of credit, swap agreements, interest rate caps, surety bonds
or similar credit facilities (each, a "Credit Facility"). Each such Credit
Facility may be in an amount greater than, equal to or less than the Certificate
Balance of the Certificates of each Class entitled to the benefits thereof, and
may be subject to reduction or be limited as to duration, all as described in
the applicable prospectus supplement. To the extent specified in the related
prospectus supplement, amounts realized under a Credit Facility supporting the
Certificates of any Class may be used for the same purposes as amounts on
deposit in Reserve Funds. See "--Reserve Funds" above. A Credit Facility may
be held by a Trustee as part of the related Trust Fund or may be held by a
collateral agent or other third party (who may be the Trustee acting in a
different capacity). The related prospectus supplement will contain a
description of the material terms of any Credit Facility and any arrangement
pursuant to which the Credit Facility is held outside of the Trust Fund. Such
prospectus supplement will also contain certain information concerning the
provider of the Credit Facility (the "Credit Facility Provider"), which
information will have been provided to the Seller by the Credit Facility
Provider for use in such prospectus supplement. GreenPoint or an affiliate
thereof may be a Credit Facility Provider.
If specified in the applicable prospectus supplement, a Credit Facility,
rather than supporting distributions of particular amounts to the holders of
Certificates of particular Classes, may, instead, support certain collections on
the related Contract Pool. These collections may be of all or a portion of
amounts due on Contracts in liquidation, all or a portion of the scheduled
monthly payments due on the Contracts or of other amounts. The extent to which
any such collections are supported by a Credit Facility which functions in this
manner will be described in the applicable prospectus supplement.
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Liquidity Facilities
The Certificates of one or more Classes may be entitled to the benefit of
one or more certificate purchase agreements or other liquidity facilities (each,
a "Liquidity Facility"), pursuant to which the provider of such Liquidity
Facility (the "Liquidity Facility Provider") will provide funds to be used to
purchase some or all of such Certificates on the Repurchase Dates applicable
thereto. If so specified in the applicable prospectus supplement, a Liquidity
Facility will be held outside of the Trust Fund by a third party (which may be
the Trustee acting in another capacity). The related prospectus supplement will
contain a description of the material terms of any such Liquidity Facility and
any arrangement pursuant to which it is held outside of the Trust Fund, and will
contain certain information concerning the Liquidity Facility Provider, which
information will have been provided to the Seller by the Liquidity Facility
Provider for use in such prospectus supplement. GreenPoint or an affiliate
thereof may be a Liquidity Facility Provider. If specified in the related
prospectus supplement, a Reserve Fund or Credit Facility may also serve as a
Liquidity Facility.
FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material federal income tax
consequences of the purchase, ownership and disposition of Certificates of any
Series as of the date hereof. In connection with the issuance of each Series,
Special counsel to GreenPoint will render its opinion that this discussion of
the federal income tax consequences, as supplemented by the discussion of
federal income tax consequences in the related prospectus supplement
accompanying such Series, is accurate in all material respects. As more fully
discussed below, special counsel to GreenPoint is also of the opinion that (A)
for a Series for which an election to be treated as a "real estate mortgage
investment conduit" ("REMIC") will be made, (i) the Trust Fund will qualify as a
REMIC for federal income tax purposes, (ii) the 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), (iii) those Certificates of such Series identified in the
related prospectus supplement as "residual interests" in the REMIC ("Residual
Certificates") will be treated for federal income tax purposes as the sole class
of "residual interests" in the REMIC, (iv) the REMIC represented by the Trust
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 (v) those Certificates, if any, identified a
being comprised of a REMIC "regular interest" coupled with a swap or cap
contract will be treated as representing ownership of a "regular interest" in a
REMIC to the extent of the portion thereof identified as such in the prospectus
supplement, (B) for a Series for which no election to be treated as a REMIC will
be made and which is described as a "grantor trust" in the prospectus
supplement, for federal income tax purposes, the Trust Fund will be classified
as a grantor trust and not as a corporation or an association which is taxable
as a corporation and the Certificates will be treated as equity in such trust,
or (C) for a Series for which no election to be treated as a REMIC will be made
and which is described in the prospectus supplement as an "owner trust," (i) for
federal income tax purposes, the Trust Fund will not be treated as an
association, taxable mortgage pool
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or publicly traded partnership taxable as a corporation and (ii) the Offered
Certificates or Notes of such Series will be treated as indebtedness for federal
income tax purposes. Except to the extent provided in a related prospectus
supplement, special counsel to GreenPoint will render no other opinions on
federal income taxes to a Trust with respect to the Certificates. Special
counsel to GreenPoint for each Series will be Orrick, Herrington & Sutcliffe
LLP, and a copy of the legal opinion of such counsel rendered in connection with
any Series of Certificates will be filed with the Commission on a Current Report
on Form 8-K 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 Internal Revenue Service (the "Service") with respect to
any of the federal income tax consequences discussed below, and no assurance can
be given that the Service will not take contrary positions. Taxpayers and
preparers of tax returns (including those filed by any REMIC or other issuer)
should be aware that under applicable Treasury regulations a provider of advice
on specific issues of law is not considered an income tax return preparer unless
the advice (i) is given with respect to events that have occurred at the time
the advice is rendered and is not given with respect to the consequences of
contemplated actions, and (ii) is directly relevant to the determination of an
entry on a tax return. Accordingly, taxpayers should consult their tax advisors
and tax return preparers regarding the preparation of any item on a tax return,
even where the anticipated tax treatment has been discussed herein. In addition
to the federal income tax consequences described herein, potential investors are
advised to consider the state, local and other tax consequences, if any, of the
purchase, ownership and disposition of Certificates in a Series. See "Other Tax
Consequences." Certificateholders are urged to consult their tax advisors
concerning the federal, state, local or other tax consequences to them of the
purchase, ownership and disposition of Certificates in a Series.
The following discussion addresses securities of three general types: (i)
certificates ("REMIC Certificates") representing interests in a Trust Fund with
respect to which an election to be treated as a "real estate mortgage investment
conduit" ("REMIC") under Sections 860A through 860G (the "REMIC Provisions") of
the Code will be made, (ii) Grantor Trust Certificates representing interests in
a Trust Fund ("Grantor Trust Fund") as to which no such election will be made
and (iii) 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.
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The following discussion is limited in applicability to the Certificates.
For purposes of this tax discussion, references to a "Certificateholder" or a
"holder" are to the beneficial owner of a Certificate.
REMIC Elections
Under the Code, an election may be made with respect to a Trust Fund
related to any Series of Certificates to treat such Trust Fund as a "real estate
mortgage investment conduit" ("REMIC") within the meaning of Section 860D(a) of
the Code, in which case the Certificates of any Class of such Series will be
either "regular interests" in the REMIC within the meaning of Section 860G(a)(1)
of the Code or "residual interests" in the REMIC within the meaning of Section
860G(a)(2) of the Code. The prospectus supplement for each Series of
Certificates will indicate whether each Seller of Contracts to the related
Contract Pool intends to cause an election to be made to treat the Trust Fund as
a REMIC, and if such an election is to be made, which Certificates will be
regular interests and which will be the residual interest in the REMIC. The
discussion under the heading "--REMIC Certificates" discusses Series with
respect to which the Seller of Contracts to the related Contract Pool will cause
a REMIC election to be made and the discussion under the heading "--Non-REMIC
Trusts" discusses Series with respect to which the Seller will not cause a REMIC
election to be made.
REMIC Certificates
General. The discussion in this section applies only to a Series of
Certificates for which a REMIC election is to be made. Upon the issuance of
each Series of Certificates for which a REMIC election is to be made, Orrick,
Herrington & Sutcliffe LLP, special counsel to GreenPoint will deliver its
opinion that, with respect to each such Series of Certificates, under then
existing law and assuming that a REMIC election is made in accordance with the
requirements of the Code and compliance by the Seller, the Servicer and the
Trustee for such Series with all of the provisions of the related Agreement, the
agreement or agreements, if any, providing for a Credit Facility or a Liquidity
Facility, together with any agreement documenting the arrangement through which
a Credit Facility or a Liquidity Facility is held outside the related Trust
Fund, and agreement or agreements with any Underwriter, the Trust Fund will be a
REMIC, and the Certificates of such Series will be treated as either "regular
interests" in the REMIC ("Regular Certificates") or "residual interests" in the
REMIC ("Residual Certificates") .
Orrick, Herrington & Sutcliffe LLP, special counsel to GreenPoint, has
prepared or reviewed the statements in this prospectus under the heading
"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 Trust Fund as a REMIC for federal income tax purposes on
investors generally and of related tax matters affecting investors generally,
but do not purport to furnish information in the level of detail or with the
attention to an investor's specific tax circumstances that would be provided by
an investor's own tax advisor. Accordingly, each investor is urged to consult
its own tax advisors with regard to the tax consequences to it of investing in
REMIC Certificates.
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Tax Status of REMIC Certificates. If so specified in the related
prospectus supplement, the Certificates of any Series, in their entirety, will
generally be considered (i) "real estate assets" within the meaning of Section
856(c)(4)(A) of the Code and (ii) assets described in Section 7701(a)(19)(C) of
the Code (assets qualifying under one or more of those sections, applying each
section separately, "qualifying assets") for a calendar quarter if at least 95%
of the assets of the related Trust Fund are qualifying assets during such
calendar quarter. In the event the percentage of the Trust Fund's assets which
are qualifying assets falls below 95% for any calendar quarter, then a
corresponding percentage of the Certificates will be treated as qualifying
assets for such calendar quarter. Any amount includible in gross income with
respect to the Certificates will be treated as "interest on obligations secured
by mortgages on real property or on interests in real property" within the
meaning of Section 856(c)(3)(B) of the Code to the extent that the Certificates
are treated as "real estate assets" within the meaning of Section 856(c)(4)(A)
of the Code. The assets of the Trust Fund will include, in addition to the
Contracts, payments on the Contracts held pending distribution, and may include,
among other assets, one or more Reserve Funds. With respect to the treatment of
Contracts as qualifying assets, (i) the Treasury Regulations under Section 856
of the Code define a "real estate asset" under Section 856(c)(4)(A) of the Code
to include a loan secured by manufactured housing that qualifies as a single
family residence under the Code, and (ii) the Treasury Regulations under Section
7701(a)(19)(C) of the Code provide that assets described in that Section include
loans secured by manufactured housing that qualifies as a single family
residence under the Code. The Internal Revenue Service has ruled that
obligations secured by permanently installed mobile home units qualify as "real
estate assets" under Section 856(c)(4)(A) of the Code. Assets described in
Section 7701(a)(19)(C) of the Code include loans secured by mobile homes not
used on a transient basis. However, whether Manufactured Homes would be viewed
as permanently installed for purposes of Section 856 of the Code would depend on
the facts and circumstances of each case, because the Internal Revenue Service
rulings on this issue do not provide facts on which taxpayers can rely to
achieve treatment as "real estate assets". No assurance can be given that the
Manufactured Homes will be so treated. 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 Trust Fund would be treated as qualifying assets under the foregoing
sections of the Code. REMIC Certificates held by a regulated investment company
will not constitute "Government Securities" within the meaning of Code Section
851(b)(4)(A)(ii).
Qualification as a REMIC. Qualification as a REMIC requires ongoing
compliance with certain conditions. The following discussion assumes that such
requirements will be satisfied by a Trust Fund so long as any REMIC Certificates
related to such Trust Fund are outstanding. Substantially all of the assets of
the REMIC must consist of "qualified mortgages" and "permitted investments" as
of the close of the third month beginning after the day on which the REMIC
issues all of its regular and residual interests (the "Startup Day") and at all
times thereafter. The term "qualified mortgage" means any obligation (including
a participation or
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certificate of beneficial ownership in such obligation) which is principally
secured by an interest in real property that is transferred to the REMIC on the
Startup Day in exchange for regular or residual interests in the REMIC or is
purchased by the REMIC within the three-month period beginning on the Startup
Day if such purchase is pursuant to a fixed price contract in effect on the
Startup Day. The REMIC Regulations provide that a manufactured housing contract
is principally secured by an interest in real property if the fair market value
of the real property securing the contract is at least equal to either (i) 80%
of the issue price (generally, the principal balance) of the contract at the
time it was originated or (ii) 80% of the adjusted issue price (the then
outstanding principal balance, with certain adjustments) of the contract at the
time it is contributed to a REMIC. The fair market value of the underlying real
property is to be determined after taking into account other liens encumbering
that real property. Alternatively, a manufactured housing contract is
principally secured by an interest in real property if substantially all of the
proceeds of the contract were used to acquire or to improve or protect an
interest in real property that, at the origination date, is the only security
for the contract (other than the personal liability of the obligor). The REMIC
Regulations as well as a published notice issued by the Internal Revenue Service
(the "Service") provide that obligations secured by interests in manufactured
housing, which qualify as "single family residences" within the meaning of
Section 25(e)(10) of the Code, are to be treated as "qualified mortgages" for
qualifying a Trust Fund as a REMIC. Under Section 25(e)(10) of the Code, the
term "single family residence" includes any manufactured home which has a
minimum of 400 square feet of living space and a minimum width in excess of 102
inches and which is of a kind customarily used at a fixed location. GreenPoint
will represent and warrant that each of the manufactured homes securing the
Contracts conveyed by it to a Trust Fund meets this definition of a "single
family residence." A qualified mortgage also includes a "qualified replacement
mortgage" that is used to replace any "qualified mortgage" within three months
of the Startup Day or to replace a defective mortgage within two years of the
Startup Day.
"Permitted investments" consist of (a) temporary investments of cash
received under qualified mortgages before distribution to holders of interests
in the REMIC ("cash-flow investments"), (b) amounts, such as a reserve fund, if
any, reasonably required to provide for full payment of expenses of the REMIC,
the principal and interest due on regular or residual interests in the event of
defaults on qualified mortgages, lower than expected returns on cash-flow
investments, prepayment interest shortfalls or certain other contingencies
("qualified reserve assets") and (c) certain property acquired as a result of
foreclosure of defaulted qualified mortgages ("foreclosure property"). A
reserve fund will not be qualified if more than 30% of the gross income from the
assets in the reserve fund is derived from the sale or other disposition of
property held for three months or less, unless such sale is necessary to prevent
a default in payment of principal or interest on Regular Certificates. In
accordance with Section 860G(a)(7) of the Code, a reserve fund must be "promptly
and appropriately" reduced as payments on contracts are received. Foreclosure
property will be a permitted investment only to the extent that such property is
not held for more than three years unless an extension of such holding period is
obtained from the Service.
The Code requires that in order to qualify as a REMIC an entity must make
reasonable arrangements designed to ensure that certain specified entities,
generally including governmental entities or other entities that are exempt from
United States tax, including the tax on unrelated business income ("Disqualified
Organizations"), do not hold the residual interest in the REMIC.
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Consequently, it is expected that in the case of any Trust Fund for which a
REMIC election is made, the transfer, sale, or other disposition of a Residual
Certificate to a Disqualified Organization will be prohibited, and the ability
of a Residual Certificate to be transferred will be conditioned on the Trustee's
receipt of a certificate or other document representing that the proposed
transferee is not a Disqualified Organization. The transferor of a Residual
Certificate must not, as of the time of the transfer, have actual knowledge that
such representation is false. The Code further requires that reasonable
arrangements be made to enable a REMIC to provide the Service and certain other
parties, including transferors of residual interests in a REMIC, with the
information needed to compute the tax imposed by Section 860E(e)(1) of the Code
if, in spite of the steps taken to prevent Disqualified Organizations from
holding residual interests, such an organization does, in fact, acquire a
residual interest. See "Restrictions on Transfer of Residual Certificates"
below.
For certain Series of Certificates, two or more separate elections may be
made to treat segregated portions of the assets of a single Trust Fund as REMICs
for federal income tax purposes. Upon the issuance of any such series of
Certificates, Orrick, Herrington & Sutcliffe LLP, special tax counsel to
GreenPoint, will have advised GreenPoint, as described above, that at the
initial issuance of the Certificates of such Series, each such segregated
portion qualifies as a REMIC for federal income tax purposes, and that the
Certificates in such Series will be treated either as Regular Certificates or
Residual Certificates of the appropriate REMIC. Solely for the purpose of
determining whether such Regular Certificates will constitute qualifying real
estate or real property assets for certain categories of financial institutions
or real estate investment trusts as described above under "--Tax Status of REMIC
Certificates," some or all of the REMICs in a multiple-tier REMIC structure may
be treated as one. See the discussion below under "--Taxation of Regular
Certificates."
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for REMIC status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In this event, an entity with multiple classes of
ownership interests may be treated as a separate association taxable as a
corporation under Treasury regulations, and interests in the REMIC may be
treated as debt or equity interests therein. If the Trust Fund were treated as
a corporation, income of the Trust Fund would be subject to corporate tax in the
hands of the Trust Fund, and, therefore, only a reduced amount might be
available for distribution to Certificateholders. The Code authorizes the
Treasury Department to issue Treasury regulations that address situations where
failure to meet one or more of the requirements for REMIC status occurs
inadvertently and in good faith, and disqualification of a REMIC would occur
absent regulatory relief. Investors should be aware, however, that the
Conference Committee Report (the "Committee Report") to the Tax Reform Act of
1986 (the "1986 Act") indicates that the relief may be accompanied by sanctions,
such as the imposition of a corporate income tax on all or a portion of the
REMIC's income for the period of time in which the requirements for REMIC status
are not satisfied. The Agreement with respect to each REMIC will include
provisions designed to maintain the related Trust Fund's status as a REMIC. It
is not anticipated that the status of any Trust Fund as a REMIC will be
terminated.
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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 Trust Fund on the
date of issuance of the Regular Certificates and not as ownership interests in
the Trust Fund or the Trust Fund's assets. Interest, original issue discount,
and market discount accrued on a Regular Certificate will be treated as ordinary
income to the holder. Each holder must use the accrual method of accounting
with regard to Regular Certificates, regardless of the method of accounting
otherwise used by such holder with the effect that an investor may be required
to report income for federal income tax purposes despite not yet having received
a cash distribution in respect of such income. Payments of interest on REMIC
Regular Certificates may be based on a fixed rate or a variable rate as
permitted by the REMIC Regulations, or may consist of a specified portion of the
interest payments on qualified mortgages where such portion does not vary during
the period the REMIC Regular Certificate is outstanding. If a Regular
Certificate represents an interest in a REMIC that consists of a specified
portion of the interest payments on the REMIC's qualified mortgages, the stated
principal amount with respect to that Regular Certificate may be zero.
Original Issue Discount. Certain Regular Certificates may be issued with
"original issue discount" within the meaning of Code Section 1273(a). Any
holders of Regular Certificates issued with original issue discount generally
will be required to include original issue discount in income as it accrues, in
accordance with a constant interest method that takes into account the
compounding of interest, in advance of the receipt of the cash attributable to
such income. The Servicer will report annually (or more often if required) to
the Internal Revenue Service ("IRS") and to Certificateholders such information
with respect to the original issue discount accruing on the REMIC Regular
Certificates as may be required under Code Section 6049 and the regulations
thereunder. See "--Reporting Requirements" below.
Rules governing original issue discount are set forth in Code Sections 1271
through 1273 and 1275 and, to some extent, in the OID Regulations. Code Section
1272(a)(6) provides special original issue discount rules applicable to Regular
Certificates. Regulations have not yet been proposed or adopted under Section
1272(a)(6) of the Code. Further, application of the OID Regulations to the
Regular Certificates remains unclear in some respects because the OID
Regulations generally purport not to apply to instruments to which section
1272(a)(6) applies such as Regular Certificates, and separately because they
either do not address, or are subject to varying interpretations with regard to,
several relevant issues.
Code Section 1272(a)(6) requires that a mortgage prepayment assumption
("Prepayment Assumption") be used in computing the accrual of original issue
discount on Regular Certificates and for certain other federal income tax
purposes. The Prepayment Assumption is to be determined in the manner
prescribed in Treasury regulations. To date, no such regulations have been
promulgated. The Committee Report indicates that the regulations will provide
that the Prepayment Assumption, if any, used with respect to a particular
transaction must be the same as that used by the parties in pricing the
transaction. If so specified in the applicable prospectus supplement, the
Servicer will use a percentage of the prepayment assumption specified in the
applicable prospectus supplement in reporting original issue discount that is
consistent with this
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standard. However, the Servicer does not make any representation that the
Mortgage Loans will in fact prepay at a rate equal to that prepayment assumption
or at any other rate. Each investor must make its own decision as to the
appropriate prepayment assumption to be used in deciding whether or not to
purchase any of the Regular Certificates. The prospectus supplement with respect
to a Series of Certificates will disclose the prepayment assumption to be used
in reporting original issue discount, if any, and for certain other federal
income tax purposes.
The total amount of original issue discount on a Regular Certificate is the
excess of the "stated redemption price at maturity" of the Regular Certificate
over its "issue price". Except as discussed in the following two paragraphs, in
general, the issue price of a particular Class of Regular Certificates offered
hereunder will be the price at which a substantial amount of Regular
Certificates of that Class are first sold to the public (excluding bond houses
and brokers).
If a Regular Certificate is sold with accrued interest that relates to a
period prior to the issue date of such Regular Certificate, the amount paid for
the accrued interest will be treated instead as increasing the issue price of
the Regular Certificate. In addition, that portion of the first interest
payment in excess of interest accrued from the Closing Date to the first
Distribution Date will be treated for federal income tax reporting purposes as
includible in the stated redemption price at maturity of the Regular
Certificate, and as excludible from income when received as a payment of
interest on the first Distribution Date. The OID Regulations suggest that some
or all of this pre-issuance accrued interest "may" be treated as a separate
asset (and hence not includible in a Regular Certificate's issue price or stated
redemption price at maturity), whose cost is recovered entirely out of interest
paid on the first Distribution Date. It is unclear how such treatment would be
elected under the OID Regulations and whether an election could be made
unilaterally by a Certificateholder.
The stated redemption price at maturity of a Regular Certificate is equal
to the total of all payments to be made on such Certificate other than
"qualified stated interest." Under the OID Regulations, "qualified stated
interest" is interest that is unconditionally payable at least annually during
the entire term of the Certificate at either (i) a single fixed rate that
appropriately takes into account the length of the interval between payments or
(ii) the current values of a single "qualified floating rate" or "objective
rate" (each, a "Single Variable Rate"). A "current value" is the value of a
variable rate on any day that is no earlier than three months prior to the first
day on which that value is in effect and no later than one year following that
day. A "qualified floating rate" is a rate whose variations can reasonably be
expected to measure contemporaneous variations in the cost of newly borrowed
funds in the currency in which the Certificate is denominated. Such a rate
remains qualified even though it is multiplied by a fixed, positive multiple not
exceeding 1.35, increased or decreased by a fixed rate, or both. Certain
combinations of rates constitute a single qualified floating rate, including (i)
interest stated at a fixed rate for an initial period of less than one year
followed by a qualified floating rate if the value of the floating rate at the
closing date is intended to approximate the fixed rate, and (ii) two or more
qualified floating rates that can be expected to have appropriately the same
values throughout the term of the Certificate. A combination of such rates is
conclusively presumed to be a single floating rate if the values of all rates on
the closing date are within 0.25% of each other. A variable rate that is
subject to an interest rate cap, floor, "governor" or similar restriction on
rate adjustment may be a qualified floating rate only if such restriction is
fixed throughout the term of the instrument, or is not reasonably expected as of
the closing date to
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cause the yield on the debt instrument to differ significantly from the expected
yield absent the restriction. An "objective rate" is a rate (other than a
qualified floating rate) determined using a single formula fixed for the life of
the Certificate, which is based on (i) one or more qualified floating rates
(including a multiple or inverse of a qualified floating rate), (ii) one or more
rates each of which would be a qualified floating rate for a debt instrument
denominated in a foreign currency, (iii) the yield of changes in price of one or
more items of "actively traded" personal property, (iv) a combination of rates
described in (i), (ii) and (iii), or (v) a rate designated by the IRS. However,
a variable rate is not an objective rate if it is reasonably expected that the
average value of the rate during the first half of the Certificate's term will
differ significantly from the average value of such rate during the final half
of its term. A combination of interest stated at a fixed rate for an initial
period of less than one year followed by an objective rate is treated as a
single objective rate if the value of the objective rate at the closing date is
intended to approximate the fixed rate; such a combination of rates is
conclusively presumed to be to be a single objective rate if the objective rate
on the closing date does not differ from the fixed rate by more than 0.25%. The
qualified stated interest payable with respect to certain variable rate debt
instruments not bearing stated interest at a Single Variable Rate generally is
determined under the OID Regulations by converting such instruments into fixed
rate debt instruments. Instruments qualifying for such treatment generally
include those providing for stated interest at (i) more than one qualified
floating rates, or at (ii) a single fixed rate and (a) one or more qualified
floating rates or (b) a single "qualified inverse floating rate" (each, a
"Multiple Variable Rate"). A qualified inverse floating rate is an objective
rate equal to a fixed rate reduced by a qualified floating rate, the variations
in which can reasonably be expected to inversely reflect contemporaneous
variations in the cost of newly borrowed funds (disregarding permissible rate
caps, floors, governors and similar restrictions such as are described above).
Under these rules, some of the payments of interest on a Certificate bearing a
fixed rate of interest for an initial period followed by a qualified floating
rate of interest in subsequent periods could be treated as included in the
stated redemption price at maturity if the initial fixed rate were to differ
sufficiently from the rate that would have been set using the formula applicable
to subsequent periods. See "Taxation of Regular Certificates--Variable Rate
Certificates". Regular Certificates offered hereby other than Certificates
providing for variable rates of interest or for the accretion of interest are
not anticipated to have stated interest other than "qualified stated interest",
but if any such REMIC Regular Certificates are so offered, appropriate
disclosures will be made in the prospectus supplement. Some or all of the
payments on REMIC Regular Certificates providing for the accretion of interest
will be included in the stated redemption price at maturity of such
Certificates.
Under a de minimis rule in the Code, as interpreted in the OID Regulations,
original issue discount on a Regular Certificate will be considered to be zero
if such original issue discount is less than 0.25% of the stated redemption
price at maturity of the Regular Certificate multiplied by the weighted average
life of the Regular Certificate. For this purpose, the weighted average life of
the Regular Certificate is computed as the sum of the amounts determined by
multiplying the amount of each payment under the instrument (other than a
payment of qualified stated interest) by a fraction, whose numerator is the
number of complete years from the issue date until such payment is made, and
whose denominator is the stated redemption price at maturity of such Regular
Certificate. The IRS may be anticipated to take the position that this rule
should be applied taking into account the prepayment assumption and the effect
of any anticipated investment income. Under the OID Regulations, Regular
Certificates bearing only qualified
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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 (i) the sum of (A) the present value
of all of the distributions remaining to be made on the Regular Certificate, if
any, as of the end of the accrual period and (B) the distribution made on such
Regular Certificate during the accrual period of amounts included in the stated
redemption price at maturity, over (ii) the adjusted issue price of such Regular
Certificate at the beginning of the accrual period. The present value of the
remaining payments referred to in the preceding sentence will be calculated
based on (i) the yield to maturity of the Regular Certificate, calculated as of
the settlement date, giving effect to the Prepayment Assumption, (ii) events
(including actual prepayments) that have occurred prior to the end of the
accrual period, and (iii) the prepayment assumption. The adjusted issue price
of a Regular Certificate at the beginning of any accrual period will equal the
issue price of such Certificate, increased by the aggregate amount of original
issue discount with respect to such Regular Certificate that accrued in prior
accrual periods, and reduced by the amount of any distributions made on such
Regular Certificate in prior accrual periods of amounts included in the stated
redemption price at maturity. The original issue discount accruing during any
accrual period will be allocated ratably to each day during the period to
determine the daily portion of original issue discount for each day. With
respect to an accrual period between the settlement date and the first
Distribution Date on the Regular Certificate (notwithstanding that no
distribution is scheduled to be made on such date) that is shorter than a full
accrual period, the OID Regulations permit the daily portions of original issue
discount to be determined according to any reasonable method.
A subsequent purchaser of a Regular Certificate that purchases such Regular
Certificate at a cost (not including payment for accrued qualified stated
interest) less than its remaining stated redemption price at maturity will also
be required to include in gross income, for each day on which it holds such
Regular Certificate, the daily portions of original issue discount with respect
to such Regular Certificate, but reduced, if such cost exceeds the "adjusted
issue price", by an amount equal to the product of (i) such daily portions and
(ii) a constant fraction, whose
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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 (i) the qualified stated interest,
accruing on the outstanding face amount of the Regular Certificate as the stated
interest rate for that Certificate varies from time to time and (ii) the amount
of original issue discount that would have been attributable to that period on
the basis of a constant yield to maturity for a bond issued at the same time and
issue price as the Regular Certificate, having the same face amount and schedule
of payments of principal as such Certificate, subject to the same prepayment
assumption, and bearing interest at a fixed rate equal to the value of the
applicable qualified floating rate or qualified inverse floating rate in the
case of a Certificate providing for either such rate, or equal to the fixed rate
that reflects the reasonably expected yield on the Certificate in the case of a
Certificate providing for an objective rate other than an inverse floating rate,
in each case as of the issue date. Certificateholders holding Regular
Certificates bearing interest at a Multiple Variable Rate generally will take
into account interest and original issue discount under a similar methodology,
except that the amounts of qualified stated interest and original issue discount
attributable to such a Certificate first will be determined for an equivalent
fixed rate debt instrument, the assumed fixed rates for which are (a) for each
qualified floating rate, the value of each such rate as of the closing date
(with appropriate adjustment for any differences in intervals between interest
adjustment dates), (b) for a qualified inverse floating rate, the value of the
rate as of the closing date, (c) for any other objective rate, the fixed rate
that reflects the yield that is reasonably expected for the Certificate, and (d)
for an actual fixed rate, such hypothetical fixed rate as would result under (a)
or (b) if the actual fixed rate were replaced by a hypothetical qualified
floating rate or qualified inverse floating rate such that the fair market value
of the Certificate as of the issue date would be approximately the same as that
of an otherwise identical debt instrument providing for the hypothetical
variable rate rather than the actual fixed rate. If the interest paid or
accrued with respect to a Multiple Variable Rate Certificate during an accrual
period differs from the assumed fixed interest rate, such difference will be an
adjustment (to interest or original issue discount, as applicable to 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.
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Market Discount. A Certificateholder that purchases a Regular Certificate
at a market discount, that is, at a purchase price less than the adjusted issue
price (as defined under "--Taxation of Regular Certificates--Original Issue
Discount") of such Regular Certificate generally will recognize market discount
upon receipt of each distribution of principal. In particular, such a holder
will generally be required to allocate each payment of principal on a Regular
Certificate first to accrued market discount, and to recognize ordinary income
to the extent such principal payment does not exceed the aggregate amount of
accrued market discount on such Regular Certificate not previously included in
income. Such market discount must be included in income in addition to any
original issue discount includible in income with respect to such Regular
Certificate.
A Certificateholder may elect to include market discount in income
currently as it accrues, rather than including it on a deferred basis in
accordance with the foregoing. If made, such election will apply to all market
discount bonds acquired by such Certificateholder on or after the first day of
the first taxable year to which such election applies. In addition, the OID
Regulations permit a Certificateholder to elect to accrue all interest, discount
(including de minimis market or original issue discount) and premium in income
as interest, based on a constant yield method. If such an election were made
for a Regular Certificate with market discount, the Certificateholder would be
deemed to have made an election to currently include market discount in income
with respect to all other debt instruments having market discount that such
Certificateholder acquires during the year of the election or thereafter.
Similarly, a Certificateholder that makes this election for a Certificate that
is acquired at a premium is deemed to have made an election to amortize bond
premium, as described below, with respect to all debt instruments having
amortizable bond premium that such Certificateholder owns or acquires. The
election to accrue interest, discount and premium on a constant yield method
with respect to a Certificate is irrevocable.
Under a statutory de minimis exception, market discount with respect to a
Regular Certificate will be considered to be zero for purposes of Code Sections
1276 through 1278 if such market discount is less than 0.25% of the stated
redemption price at maturity of such Regular Certificate multiplied by the
number of complete years to maturity remaining after the date of its purchase.
In interpreting a similar de minimis rule with respect to original issue
discount on obligations payable in installments, the OID Regulations refer to
the weighted average maturity of obligations, and it is likely that the same
rule will be applied in determining whether market discount is de minimis. It
appears that de minimis market discount on a Regular Certificate would be
treated in a manner similar to original issue discount of a de minimis amount.
See "Taxation of Regular Certificates--Original Issue Discount". Such treatment
would result in discount being included in income at a slower rate than discount
would be required to be included using the method described above. However,
Treasury regulations implementing the market discount de minimis exception have
not been issued in proposed or temporary form, and the precise treatment of de
minimis market discount on obligations payable in more than one installment
therefore remains uncertain.
The 1986 Act grants authority to the Treasury Department to issue
regulations providing for the method for accruing market discount of more than a
de minimis amount on debt instruments, the principal of which is payable in more
than one installment. Until such time as regulations are issued by the Treasury
Department, certain rules described in the Committee
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Report will apply. Under those rules, the holder of a bond purchased with more
than de minimis market discount may elect to accrue such market discount either
on the basis of a constant yield method or on the basis of the appropriate
proportionate method described below. Under the proportionate method for
obligations issued with original issue discount, the amount of market discount
that accrues during a period is equal to the product of (i) the total remaining
market discount, multiplied by (ii) a fraction, the numerator of which is the
original issue discount accruing during the period and the denominator of which
is the total remaining original issue discount at the beginning of the period.
Under the proportionate method for obligations issued without original issue
discount, the amount of market discount that accrues during a period is equal to
the product of (i) the total remaining market discount, multiplied by (ii) a
fraction, the numerator of which is the amount of stated interest paid during
the accrual period and the denominator of which is the total amount of stated
interest remaining to be paid at the beginning of the period. The Prepayment
Assumption, if any, used in calculating the accrual of original issue discount
is to be used in calculating the accrual of market discount under any of the
above methods. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a Regular Certificate purchased at a discount in
the secondary market.
Further, a purchaser generally will be required to treat a portion of any
gain on sale or exchange of a Regular Certificate as ordinary income to the
extent of the market discount accrued to the date of disposition under one of
the foregoing methods, less any accrued market discount previously reported as
ordinary income. Such purchaser also may be required to defer a portion of its
interest deductions for the taxable year attributable to any indebtedness
incurred or continued to purchase or carry such Regular Certificate. Any such
deferred interest expense is, in general, allowed as a deduction not later than
the year in which the related market discount income is recognized. If such
holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by such holder in that taxable year or
thereafter, the interest deferral rule described above will not apply.
Premium. A Regular Certificate purchased at a cost (not including payment
for accrued qualified stated interest) greater than its remaining stated
redemption price at maturity will be considered to be purchased at a premium.
The holder of such a Regular Certificate may elect to amortize such premium
under the constant yield method. The OID Regulations also permit
Certificateholders to elect to include all interest, discount and premium in
income based on a constant yield method, further treating the Certificateholder
as having made the election to amortize premium generally, as discussed above.
The Committee Report indicates a Congressional intent that the same rules that
will apply to accrual of market discount on installment obligations will also
apply in amortizing bond premium under Code Section 171 on installment
obligations such as the Regular Certificates.
Effects of Defaults or Delinquencies. Certain Series of Certificates may
contain one or more Classes of Subordinate Certificates. In the event there are
defaults or delinquencies on Contracts in the related Trust Fund, amounts that
would otherwise be distributed on the Subordinate Certificates may instead be
distributed on the Senior Certificates. Holders of Subordinate Certificates
nevertheless will be required to report interest income with respect to such
Certificates (including original issue discount) as such income accrues without
giving effect to delays or reductions in distributions on such Subordinate
Certificates attributable to defaults
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and delinquencies on such Contracts, except to the extent that it can be
established that the undistributed amounts are not collectible. As a result, the
amount of income reported by a holder of a Subordinate Certificate in any period
could significantly exceed the amount of cash distributed to such holder in that
period. The holder will eventually be allowed a loss (or will be allowed to
report a lesser amount of income) to the extent that the aggregate amount of
distributions on the Subordinate Certificate is reduced as a result of defaults
or delinquencies on the related Contracts. However, the timing of such losses or
reductions in income is uncertain, and in some circumstances losses could be
capital losses that generally can be offset only with capital gains. Holders of
Subordinate Certificates should consult their own tax advisors on these points.
Sales of Certificates. If a Regular Certificate is sold or exchanged, the
seller will recognize gain or loss equal to the difference, if any, between the
amount realized (net of accrued interest) and its adjusted basis in such Regular
Certificate. A seller's adjusted basis generally will equal the cost of such
Regular Certificate to the seller, increased by any original issue discount
reported by such seller with respect to such Regular Certificate and reduced
(but not below zero) by distributions received by such seller (other than
payments of qualified stated interest) and by any amortized premium. Except as
described above "--Market Discount" and with respect to the next three
paragraphs, any such gain or loss will be capital gain or loss provided the
Regular Certificate is held as a capital asset.
Gain from the disposition of a Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent that such gain
does not exceed the excess, if any, of (i) the amount that would have been
includible in the seller's gross income had income accrued at a rate equal to
110% of "the applicable Federal rate" under Section 1274(d) of the Code
(generally, an average yield of United States Treasury obligations of different
ranges of maturities published monthly by the Service), determined as of the
date of purchase of such Regular Certificate, over (ii) the amount of income
actually includible in the gross income of the seller with respect to the
Regular Certificate.
Regular Certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, and accordingly, gain or loss recognized from
a sale of a Regular Certificate by a bank or thrift institution to which such
section applies would be ordinary income or loss.
If GreenPoint is determined to have intended on the date of issue of the
Regular Certificates to call all or any portion of the Regular Certificates
prior to their stated maturity within the meaning of Section 1271(a)(2)(A) of
the Code, any gain realized upon a sale, exchange, retirement, or other
disposition of a Regular Certificate would be considered ordinary income to the
extent it does not exceed the unrecognized portion of the original issue
discount, if any, with respect to the Regular Certificate. The OID Regulations
provide that the intention to call rule will not be applied to mortgage-backed
securities such as the Regular Certificates. In addition, under the OID
Regulations, a mandatory sinking fund or call option is not evidence of an
intention to call.
Pass-Through of Expenses Other Than Interest. If a Trust Fund for which a
REMIC election is made is considered a "single-class REMIC" (as defined below),
a portion of such
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Trust Fund's servicing, administrative and other non-interest expenses will be
allocated as a separate item to those Regular Certificateholders that are "pass-
through interest holders" (as defined below). Such a holder would be required to
add its allocable share, if any, of such expenses to its gross income and to
treat the same amount as an item of investment expense. An individual would
generally be allowed a deduction for such an expense item for regular tax
purposes only as a miscellaneous itemized deduction subject to the limitation
under Section 67 of the Code, and may not be allowed any deduction for such item
for purposes of the alternative minimum tax. Section 67 of the Code allows
deductions for miscellaneous itemized deductions only to the extent that in the
aggregate they exceed 2% of an individual's adjusted gross income. The Revenue
Reconciliation Act of 1990 further limits the itemized deductions allowed to
certain individuals. If so specified in the related prospectus supplement, the
applicable Agreement will require each holder to give the Trust Fund written
notice immediately upon becoming a holder, if it is a pass-through interest
holder, or is holding a Regular Certificate on behalf of a pass-through interest
holder. The Trust Fund will report to each holder that has given the Trust Fund
such notice (and others if it is required) and to the Service, each such
holder's allocable share, if any, of the Trust Fund's noninterest expenses.
Generally, a "single-class REMIC" is defined as (i) a REMIC that would be
treated as an investment trust under Treasury regulations but for its
qualification as a REMIC or (ii) a REMIC that is substantially similar to an
investment trust but is structured with the principal purpose of avoiding the
allocation requirement imposed under Section 67 of the Code. The term "pass-
through interest holder" generally refers to individuals, entities taxed as
individuals and certain pass-through entities, but does not include real estate
investment trusts. Such investors should consult their own tax advisors
regarding consequences to them of the allocation of the Trust Fund's non-
interest expenses. In addition, the amount of itemized deductions otherwise
allowable for the taxable year of an individual whose adjusted gross income
exceeds certain thresholds will be reduced.
Taxation of Certain Foreign Investors. For purposes of this discussion, a
"Foreign Holder" is a Certificateholder who holds a Regular Certificate and who
is not (i) a citizen or resident of the United States, (ii) a corporation or
partnership organized in or under the laws of the United States, a state (other
than any partnership that is treated as not a United States person under any
Applicable Treasury regulations) thereof or the District of Columbia or an
entity taxable as such for U.S. federal income tax purposes, (iii) an estate,
the income of which is included in gross income for United States tax purposes
regardless of its source, or (iv) a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States fiduciaries have the authority to control all
substantial decisions of the trust. Unless the interest on a Regular
Certificate is effectively connected with the conduct by the Foreign Holder of a
trade or business within the United States, the Foreign Holder is not subject to
federal income or withholding tax on interest (or original issue discount, if
any) on a Regular Certificate (subject to possible backup withholding of tax,
discussed below), provided the Foreign Holder is not a controlled foreign
corporation related to GreenPoint and does not own actually or constructively
10% or more of the voting stock of GreenPoint. To qualify for this tax
exemption, the Foreign Holder will be required to provide periodically a
statement signed under penalties of perjury certifying that the Foreign Holder
meets the requirements for treatment as a Foreign Holder and providing the
Foreign Holder's name and address. The statement, which may be made on a Form
W-8 or substantially similar substitute form, generally must be provided in the
year a payment occurs or in either of the two preceding years. The statement
must be provided either directly or through a clearing organization or
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financial institution. This exemption may not apply to a Foreign Holder that
owns directly or indirectly both Regular Certificates and Residual Certificates.
If for any reason the exemption does not apply, interest paid to Foreign Holders
will be subject to U.S. withholding tax at the rate of 30% (or, if applicable, a
reduced rate provided in a tax treaty). If the interest on a Regular Certificate
is effectively connected with the conduct by a Foreign Holder of a trade or
business within the United States, then the Foreign Holder will be subject to
tax at regular graduated rates. Foreign Holders should consult their own
advisors regarding the specific tax consequences of their owning a Regular
Certificate.
Any gain recognized by a Foreign Holder upon a sale, retirement or other
taxable disposition of a Regular Certificate generally will not be subject to
United States federal income tax unless either (i) the Foreign Holder is a non-
resident alien individual who holds the Regular Certificate as a capital asset
and who is present in the United States for 183 days or more in the taxable year
of the disposition and either the gain is attributable to an office or other
fixed place of business maintained in the United States by the individual or the
individual has a "tax home" in the United States, or (ii) the gain is
effectively connected with the conduct by the Foreign Holder of a trade or
business within the United States.
A Regular Certificate will not be included in the estate of a Foreign
Holder who does not own actually or constructively 10% or more of the voting
stock of GreenPoint. Regular Certificateholders who are non-U.S. Persons and
persons related to such holders should not acquire any Residual Certificates,
and Residual Certificateholders and persons related to Residual
Certificateholders should not acquire any Regular Certificates without
consulting their tax advisors as to the possible adverse tax consequences of
doing so.
Backup Withholding. Under certain circumstances, a REMIC Certificateholder
may be subject to "backup withholding" at a 31% rate. Backup withholding may
apply to a REMIC Certificateholder who is a United States person if the holder,
among other circumstances, fails to furnish his Social Security number or other
taxpayer identification number to the Trustee. Backup withholding may apply,
under certain circumstances, to a REMIC Certificateholder who is a foreign
person if the REMIC Certificateholder fails to provide the Trustee or the REMIC
Certificateholder's securities broker with the statement necessary to establish
the exemption from federal income and withholding tax on interest on the REMIC
Certificates. Backup withholding, however, does not apply to payments on a
Certificate made to certain exempt recipients, such as corporations and tax-
exempt organizations, and to certain foreign persons. Each non-exempt
Certificateholder will be required to provide, under penalty of perjury, a
certificate on IRS Form W-9 containing his or her name, address, correct federal
taxpayer identification number and a statement that he or she is not subject to
backup withholding. REMIC Certificateholders should consult their tax advisors
for additional information concerning the potential application of backup
withholding to payments received by them with respect to a Certificate.
Requirements. The Servicer will report annually to the Service, to holders
of record of the Regular Certificates that are not excepted from the reporting
requirements and, to the extent required by the Code, to other interested
parties, information with respect to the interest paid or accrued on the Regular
Certificates, original issue discount, if any, accruing on the Regular
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Certificates and information necessary to compute the accrual of any market
discount or the amortization of any premium on the Regular Certificates.
New Withholding Regulations. The Treasury Department has issued new
regulations (the "New Regulations") which make certain modifications to the
withholding, backup withholding and information reporting rules described above.
The New Regulations attempt to unify certification requirements and modify
reliance standards. The New Regulations will generally be effective for
payments made after December 31, 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
Internal Revenue Service, the Servicer will make such an allocation with respect
to the original issuance of the Certificates. Such allocation will bind any
holder of such a Certificate who does not properly report the use of a different
allocation to the Internal Revenue Service for purposes of determining the issue
price and amount of original issue discount for the portion of the Certificate
representing ownership of a REMIC Regular Interest. The portions of such
Certificates representing ownership of REMIC Regular Interests will be accorded
the treatment described above in "--REMIC Certificates--General--Tax Status of
REMIC Certificates" and "--REMIC Certificates--Taxation of REMIC Regular
Certificates."
Any portion of a purchaser's investment in a Certificate treated by such
purchaser as representing the right to payments from a swap or cap contract
would be treated as an interest in a notional principal contract. Any portion
of a Class A Certificate allocable to the right to payments from a swap or cap
contract and any payments with respect thereto will not qualify for any of the
treatments described in "REMIC Certificates--General--Tax Status of REMIC
Certificate. Treasury regulations issued under Section 446 of the Code (the
"Swap Regulations") specify rules for accounting for income from and recovery of
purchase price of such investment. Under the Swap Regulations, income in
respect of the right to payments from a swap or cap contract would be taken into
account for the taxable period to which it related, which generally would
approximate accrual basis accounting regardless of an investor's usual method of
tax accounting. Such income would be ordinary income.
The Swap Regulations further provide that an investor in a Certificate
would recover any purchase price allocable to the right to payments from a swap
or cap contract over the term of that right, generally by allocating it to each
period in accordance with the prices of a series of cash-settled option
contracts that reflected the specified index and notional amount (i.e., any
excess of the applicable Pass-Through Rate over the weighted average net
Mortgage Interest Rate and the applicable Certificate Balance, respectively)
expiring in each period. Under the
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Swap Regulations, straight-line or accelerated amortization generally would be
impermissible. The Swap Regulations also permit a simplified alternative
allocation methodology called the "level payment method," under which the
purchase price allocable to the right to payments from a swap or cap contract
would be allocated to each period on the basis of the principal portion of each
of a series of equal payments having a discounted present value equal to such
purchase price. There is no explicit authority with respect to the character of
such amortization deductions, although they are generally regarded as ordinary
items.
Certificateholders should be aware that the effect of allocating a portion
of their purchase price to the right to payments from a swap or cap contract
would be to increase the amount of original issue discount. It is expected that
an investor's amortization of any portion of its purchase price allocable to the
right to payments from a swap or cap contract would offset such additional
original issue discount, but the degree of offset in any given period would
depend upon the applicable amortization methodology and upon the treatment of
such amortization as an ordinary deduction, each as discussed above. Although
dependent upon the applicable discount rate, the annual amount of offset should
be relatively complete in the case of an investor amortizing purchase price
allocable to the right to payments from a swap or cap contract under the "level
payment method" described above.
On disposing of a Certificate, a holder will recognize gain or loss
separately with respect to the related regular interest and any right to
payments from a swap or cap contract. Gain or loss with respect to each asset
will be the excess of the amount realized in respect of such asset over its
adjusted basis; the amount realized will be allocated between the assets based
on their relative fair market value as of the date of disposition. The holder's
basis in its right to payments from a swap or cap contract will be any initial
purchase price allocable thereto as discussed above), reduced by amortization of
such amount allowable through the date of disposition. Gain or loss with
respect to each asset generally will be capital gain or loss, the term of which
will be based on the period such holder held the Certificate; gain or loss
attributable to the right to payments from a swap or cap contract may be
ordinary if recognized by a bank, although the matter is uncertain.
A purchaser of Certificate who is not a United States Person (as defined in
the prospectus) and is not subject to federal income tax apart from its
ownership of a Class A Certificate should not be subject to United States
federal income or withholding tax on payments attributable to the right to
payments from a swap or cap contract, if such purchaser complies with the
identification requirements described in the prospectus. However, the
inapplicability of federal income tax withholding to such payments is not
completely clear, and prospective investors should consult their tax advisors.
In the absence of contrary authority, income tax will not be withheld from
amounts paid in respect of the right to payment from a swap or cap contract.
See "Taxation of Certain Foreign Investors".
Taxation of Residual Certificates
The discussion under this heading applies only to a Series of Certificates
with respect to which a REMIC election is made and to Residual Certificates.
Such Residual Certificates will be subject to tax rules, described below, that
differ from those that would apply if they were treated
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for federal income tax purposes as direct ownership interests in the related
Trust Fund or as debt instruments issued by such Trust Fund.
Although a REMIC is a separate entity for federal income tax purposes, a
REMIC is not generally subject to federal income tax. Rather, the taxable
income of a REMIC is taken into account by the holders of REMIC residual
interests.
In general, each original holder of a Residual Certificate will report on
its federal income tax return, as ordinary income, its share of the "daily
portion" of the taxable income of the Trust Fund for each day during the taxable
year on which such Residual Certificateholder held a Residual Certificate. The
"daily portion" of the taxable income of the Trust Fund is determined by
allocating to each day in any calendar quarter its ratable portion of the
taxable income or net loss of the Trust Fund for such quarter, and such Residual
Certificateholder's share of the "daily portion" is based on the portion of
outstanding Residual Certificates that such Residual Certificateholder owns on
such day. REMIC taxable income will be taxable to the Residual
Certificateholders without regard to the timing or amounts of cash distributions
by the REMIC. Ordinary income derived from Residual Certificates will be
"portfolio income" for purposes of the taxation of taxpayers subject to the
limitation on the deductibility of "passive losses." As residual interests, the
Residual Certificates will be subject to tax rules, described below, that differ
from those that would apply if the Residual Certificates were treated for
federal income tax purposes as direct ownership interests in the Contracts, or
as debt instruments issued by the REMIC. Under certain circumstances, a
Residual Certificateholder may be required to recognize for a given period
income substantially in excess of distributions made on the Residual
Certificates.
A subsequent Residual Certificateholder also will report on its federal
income tax return amounts representing a daily share of the taxable income of
the Trust Fund for each day that such Residual Certificateholder held such
Residual Certificate. Those daily amounts generally would equal the amounts,
described above, that would have been reported for the same days by a holder of
a Residual Certificate (an "Original Holder") that purchased such Residual
Certificate at its original issuance and held it continuously thereafter. As
discussed below, the taxable income of the Trust Fund will be calculated based
in part on the initial tax basis to the Trust Fund of its assets, which in turn
equals the sum of the issue prices of the Residual Certificates and each Class
of Regular Certificates. The legislative history of the 1986 Act indicates that
certain adjustments may be appropriate to reduce (or increase) the income of a
subsequent Residual Certificateholder that purchased such Residual Certificate
at a price greater than (or less than) the adjusted basis (as defined below in
"Distributions") such Residual Certificate would have in the hands of an
Original Holder. For the present, however, adjustments are apparently not
permitted or required.
A holder's adjusted basis in a Residual Certificate will equal the purchase
price of such Residual Certificate, increased by the amount of the related Trust
Fund's taxable income that is allocated to the holder of such Residual
Certificate, and decreased (but not below zero) by the amount of distributions
received thereon by such holder and the Trust Fund's net losses allocated to
such holder. Payments on a Residual Certificate (whether at their scheduled
times or as a result of prepayments) will generally not result in any taxable
income or loss to the holder of a Residual Certificate. If the amount of such
payment exceeds a holder's adjusted basis in its
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Residual Certificate, however, the holder will recognize gain (treated as gain
from the sale or exchange of its Residual Certificate) to the extent of such
excess. See "--Sale or Exchange" below.
Taxable Income of the Trust Fund. REMIC taxable income is generally
determined in the same manner as the taxable income of an individual using the
accrual method of accounting, except that (i) the limitation on deductibility of
investment interest expense and expenses for the production of income do not
apply, (ii) all bad loans will be deductible as business bad debts, and (iii)
the limitation on the deductibility of interest and expenses related to tax-
exempt income will apply. In general, the Trust Fund's taxable income will
reflect a netting of (i) the gross income produced by the assets of the Trust
Fund, including the stated interest and any original issue discount or market
discount income on the Contracts in the related Contract Pool (net of any
amortized premium on such Contracts), income from the investment or reinvestment
of cash flows and, if applicable, reserve assets, and amortization of any issue
premium with respect to the Regular Certificates and (ii) deductions, including
stated interest and original issue discount expense on Regular Certificates that
would be permitted if the Regular Certificates were indebtedness of the Trust
Fund, servicing fees, and other administrative expenses of the Trust Fund
(except as described below under "--Expenses Other Than Interest"). Any gain or
loss realized by the Trust Fund from the disposition of any asset is treated as
gain or loss from the sale or exchange of property that is not a capital asset.
If there is more than one Class of Regular Certificates, deductions allowed to
the Trust Fund with respect to the Regular Certificates will generally be
calculated separately with respect to each Class based on the yield of that
Class.
For purposes of determining its taxable income, the Trust Fund will have an
initial aggregate tax basis in its assets equal to the sum of the issue prices
of the Regular Certificates and the Residual Certificates. The issue price of a
Certificate of a Class (whether Regular Certificates or Residual Certificates)
that is publicly offered will be the initial offering price to the public
(excluding bond houses and brokers) at which a substantial amount of the
Certificates of that Class is sold, and if not publicly offered will be the
price paid by the first buyer of a Certificate of such class. If a Residual
Certificate has a negative value, it is not clear whether its issue price would
be considered to be zero or such negative amount for purposes of determining the
REMIC's basis in its assets. The REMIC Regulations imply that residual interest
cannot have a negative basis or a negative issue price. However, the preamble
to the REMIC Regulations indicates that, while existing tax rules do not
accommodate such concepts, the Service is considering the tax treatment of these
types of residual interests, including the proper tax treatment of a payment
made by the transferor of such a residual interest to induce the transferee to
acquire that interest. Absent regulations or administrative guidance to the
contrary, and unless the related prospectus supplement otherwise provides, it is
not expected that any Trust Fund as to which a REMIC election is made will treat
a Class of Residual Certificates as having a value of less than zero for
purposes of determining the basis of the related REMIC in its assets.
If a Trust Fund acquires a Contract and the principal amount of such
Contract (or revised issue price in the case of a Contract issued with original
issue discount) exceeds the Trust Fund's basis in such Contract by more than a
de minimis amount (as described above in "Taxation of Regular Certificates--
Market Discount"), such discount would generally be includible in the Trust
Fund's income as it accrues, in advance of receipt of the cash attributable to
such income, under a constant yield method, similar to the method for accruing
original issue discount on
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Regular Certificates described above in "Taxation of Regular Certificates--
Original Issue Discount." The Trust Fund's deductions for original issue
discount expense with respect to Regular Certificates also will be determined
under those rules, except that the de minimis rule that may apply to holders of
Regular Certificates and the adjustments for holders of Regular Certificates
that purchase their Certificates at a price greater than the adjusted issue
price described therein will not apply.
If the Trust Fund's basis in a Contract exceeds the remaining stated
redemption price at maturity of such a Contract, the Trust Fund will be
considered to have acquired such Contract at a premium equal to the amount of
such excess. In the event that any Contract in the Contract Pool is acquired by
the Trust Fund at a premium, the Trust Fund will be entitled to amortize such
premium on a yield-to-maturity basis. Although the matter is not free from
doubt, the Trust Fund intends to make this calculation using a reasonable
prepayment assumption.
If a Class of Regular Certificates is issued at a price in excess of the
aggregate principal amount of such Class (the excess, the "Issue Premium"), the
portion of the Issue Premium that is considered to be amortized during a taxable
year will be treated as ordinary income of the Trust Fund for such taxable year.
Although the matter is not entirely certain, it is likely that the Issue Premium
would be amortized under a constant yield method in a manner analogous to the
method of accruing original issue discount described above under "Taxation of
Regular Certificates--Original Issue Discount."
The taxable income recognized by a holder of a Residual Certificate in any
taxable year will be affected by, among other factors, the relationship between
the timing of interest, original issue discount or market discount income, or
amortization of premium with respect to the Contracts, on the one hand, and the
timing of deductions for interest (including original issue discount) on the
Regular Certificates, on the other hand. In the event that an interest in the
Contracts is acquired by a REMIC at a discount, and one or more of such
Contracts is prepaid, a holder of a Residual Certificate may recognize taxable
income without being entitled to receive a corresponding cash distribution
because (i) the prepayment may be used in whole or in part to make distributions
on Regular Certificates, and (ii) the discount on the Contracts which is
included in a REMIC's income may exceed its deduction with respect to the
distributions on those Regular Certificates. When there is more than one class
of Regular Certificates that receive payments sequentially (i.e., a fast-pay,
slow-pay structure), this mismatching of income and deductions is particularly
likely to occur in the early years following issuance of the Regular
Certificates, when distributions are being made in respect of earlier classes of
Regular Certificates to the extent that such classes are not issued with
substantial discount. If taxable income attributable to such a mismatching is
realized, in general, losses would be allowed in later years as distributions on
the later classes of Regular Certificates are made. The taxable income
recognized by a holder of a Residual Certificate also may be greater in earlier
years because the REMIC will use a constant yield in computing income from the
Contracts, while interest deductions with respect to Regular Certificates,
expressed as a percentage of the outstanding principal amount of the Regular
Certificates, may increase over time as earlier, lower-yielding Classes are
paid. The mismatching of income and deductions described in this paragraph, if
present with respect to a series of Residual Certificates, could have 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
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income taxes due as a result of such mismatching, or such holders must have
unrelated deductions against which to offset such income, subject to the
discussion of "excess inclusions" below in "--Excess Inclusions."
A Residual Certificateholder will not be permitted to amortize the cost of
its Residual Certificate as an offset to its share of the taxable income of the
Trust Fund. However, that taxable income will not include cash received by the
Trust Fund that represents a recovery of the Trust Fund's basis in its assets
(which will include the issue price of the Residual Certificates as well as the
issue price of Regular Certificates). Such recovery of basis by the Trust Fund
will have the effect of amortization of the issue price of the Residual
Certificates over the life of the Trust Fund's assets. However, in view of the
possible acceleration of the income of holders of Residual Certificates
described above, the period of time over which such issue price is effectively
amortized may be longer than the economic life of the Residual Certificates.
The method of taxation of Residual Certificates described above can produce
a significantly lower after-tax yield for a Residual Certificate than would be
the case if (i) Residual Certificates were taxable in the same manner as debt
instruments issued by the Trust Fund or (ii) no portion of the taxable income on
the Residual Certificates in each period were treated as "excess inclusions" (as
defined below). In certain periods, taxable income and the resulting tax
liability on a Residual Certificate are likely to exceed payments received
thereon. In addition, a substantial tax may be imposed on certain transferors
of the Residual Certificates and certain beneficial owners of the Residual
Certificates that are "pass-through" entities. Investors should consult their
tax advisors before purchasing a Residual Certificate.
Net Losses of the Trust Fund. The Trust Fund will have a net loss for a
calendar quarter if its deductions for that calendar quarter exceed its gross
income for that calendar quarter. The net loss allocable to any Residual
Certificate will not be deductible by the holder to the extent that such net
loss exceeds such holder's adjusted basis (as defined above in "--
Distributions") in such Residual Certificate at the end of the calendar quarter
in which such loss arises (or the time of disposition of the Residual
Certificate, if earlier), determined without taking into account the net loss
for such quarter. Any net loss that is not currently deductible by reason of
this limitation may be carried forward indefinitely, but may be used only to
offset taxable income of the same Trust Fund subsequently allocated to such
Residual Certificateholder. The ability of Residual Certificateholders that are
individuals or closely-held corporations to deduct net losses may be subject to
additional limitations under the Code.
Expenses Other Than Interest. Except in the limited circumstance when the
Trust Fund is considered a "single-class REMIC" (as defined above in "Taxation
of Regular Certificates--Pass-Through of Expenses Other Than Interest"), the
Trust Fund's servicing, administrative and other noninterest expenses will be
allocated entirely to the Residual Certificateholders. In the case where the
Trust Fund is considered a single-class REMIC, such expenses will be allocated
proportionately among Regular and Residual Certificateholders. See "Taxation of
Regular Certificates--Pass-Through of Expenses Other Than Interest." In either
case, such expenses will be allocated as a separate item to those holders that
are "pass-through interest holders" (as defined above in "Taxation of Regular
Certificates--Pass-Through of 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
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deductibility of such expenses are described above in "Taxation of Regular
Certificates--Pass-Through of Expenses Other Than Interest." The related
Agreement will require each holder to give the Trust Fund written notice upon
becoming a holder if it is a pass- through interest holder, or is holding a
Residual Certificate on behalf of a pass-through interest holder. The Trust Fund
will report quarterly to each holder of a Residual Certificate during any
calendar quarter that has given the Trust Fund such notice (and others if it is
required) and to the Service annually such holder's allocable share, if any, of
the Trust Fund's non-interest expenses. Such investors should consult their tax
advisors in determining the consequences to them of the allocation of the Trust
Fund's non-interest expenses.
Prohibited Transactions; Special Taxes. Income from certain transactions
by the REMIC, called prohibited transactions, will not be part of the
calculation of income or loss includible in the federal income tax returns of
Residual Certificateholders, but rather will be taxed directly to the REMIC at a
100% rate. Prohibited transactions generally include (i) the disposition of
qualified mortgages other than pursuant to a (a) substitution for a defective
mortgage within two years or for any qualified mortgage within three months of
the specified Startup Date, (b) repurchase of a defective mortgage, (c)
foreclosure, default, or imminent default of a qualified mortgage, (d)
bankruptcy or insolvency of the REMIC or (e) a qualified (complete) liquidation
of the REMIC, (ii) the receipt of income from assets that are not the type of
mortgage loans or investments that the REMIC is permitted to hold, (iii) the
receipt of compensation for services or (iv) the receipt of gain from
disposition of cash flow investments other than pursuant to a qualified
(complete) liquidation of the REMIC. The Trust Fund will be subject to a tax
equal to 100% of the amount of any contributions of property made to the Trust
Fund after the Startup Day, except for certain cash contributions specified in
Section 860G(d) of the Code. An additional tax may be imposed on the Trust
Fund, at the highest marginal federal corporate income tax rate, on certain net
income from foreclosure property.
It is anticipated that the Trust Fund will not engage in any prohibited
transactions in which it would recognize a material amount of net income or
receive substantial contributions of property after the Startup Date. However,
if the Trust Fund is subject to the tax on prohibited transactions or
contributions, such tax would generally be borne by the Residual
Certificateholders. It is not possible to predict the amount, if any, of net
income from foreclosure property that might be received by a Trust Fund, because
such amount will depend on the particular delinquency and foreclosure experience
of such Trust 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 Trust Fund allocable to
a Residual Certificateholder referred to in the Code as an "excess inclusion"
will be subject to federal income tax in all events. (Excess inclusions are
defined below.) Thus, for example, an excess inclusion (i) may not be offset by
any unrelated losses or net operating loss carryovers of a Residual
Certificateholder, (ii) will be treated as "unrelated business taxable income"
within the meaning of Section 512 of the Code if the Residual Certificateholder
is a pension fund or any other organization that is subject to tax only on its
unrelated business taxable income and (iii) is not eligible for any reduction in
the rate of withholding tax in the case of a Residual Certificateholder that is
a foreign investor, as further discussed in "--Foreign Investors" below. In
addition, if a real estate investment trust, regulated investment company, or
certain pass-through entities own a Residual Certificate, a portion of dividends
paid by such entities would be
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treated as excess inclusions in the hands of its shareholders with the same
consequences as excess inclusions attributed directly to a Residual
Certificateholder.
Except as discussed in the following paragraph, with respect to any
Residual Certificateholder, the excess inclusion for any calendar quarter will
equal the excess, if any, of (i) the amount of the Trust Fund's taxable income
for the calendar quarter allocable to the Residual Certificateholder, over (ii)
the sum of the "daily accruals" (as defined below) for all days during the
calendar quarter on which the Residual Certificateholder held such Residual
Certificate. For this purpose, daily accruals with respect to a Residual
Certificateholder will be calculated by allocating to each day in such calendar
quarter its ratable portion of the product of (i) the "adjusted issue price" (as
defined below) of the Residual Certificate at the beginning of such calendar
quarter, and (ii) 120% of the "long-term Federal rate" (defined below),
calculated on the issue date of the Residual Certificate as if it were a debt
instrument and based on quarterly compounding. For this purpose, the "adjusted
issue price" of a Residual Certificate at the beginning of any calendar quarter
will equal its issue price, increased by the aggregate of the daily accruals for
all prior calendar quarters and the amount of any contributions made to the
Trust Fund with respect to the Residual Certificates after the Startup Date, and
decreased (but not below zero) by the aggregate amount of distributions made
with respect to the Residual Certificate before the beginning of such calendar
quarter. The "long-term Federal rate" is an average of current yields on
Treasury securities with a remaining term of greater than nine years, computed
and published monthly by the Service. As an exception to the general rule
described above, the Treasury has authority to issue regulations that would
treat 100% of the income accruing on a Residual Certificate as an excess
inclusion, if the Residual Certificates, in the aggregate, are considered not to
have "significant value." The REMIC Regulations, however, do not contain such a
rule.
The Small Business Act has eliminated a special rule that formerly
permitted certain financial institutions utilizing the reserve method of
accounting for bad debts pursuant to Section 593 of the Code to use net
operating losses and other allowable deductions to offset their excess
inclusions from certain REMIC residual certificates. In addition, the Small
Business Act provides three rules for determining the effect of excess
inclusions on the alternative minimum taxable income of a holder of a REMIC
residual certificate. First, alternative minimum taxable income for such a
residual holder is determined without regard to the special rule that taxable
income cannot be less than excess inclusions. Second, a residual holder's
alternative minimum taxable income for a tax year cannot be less than the excess
inclusions for the year. Third, the amount of any alternative minimum tax net
operating loss deductions must be computed without regard to any excess
inclusions.
Effect of Defaults and Delinquencies. The Residual Certificates of a
multiple-Class Series may be subordinate to one or more Classes of Regular
Certificates (for purposes of this paragraph, "Senior Certificates"), and, in
the event there are defaults or delinquencies on the Contracts in the related
Contract Pool, amounts that would otherwise be distributed on the Residual
Certificates may instead be distributed on the Senior Certificates. However,
the Trust Fund will generally be required to report income in respect of
Contracts (and deductions with respect to the Regular Certificates) without
giving effect to default and delinquencies, except to the extent it can be
established that amounts due on the Contracts are uncollectible. To the extent
the income on a delinquent or defaulted Contract is greater than the deduction
allowed in
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respect of interest on the Regular Certificate that relates to such Contract,
the Trust Fund may recognize net income without making corresponding
distributions of cash on the Residual Certificates, and holders of Residual
Certificates will be required to report their pro rata share of the net income
of the Trust Fund without regard to the timing and amount of cash distributed on
such Residual Certificates.
Tax on Transfers of Residual Certificates to Certain Organizations. An
entity will not qualify as a REMIC unless there are reasonable arrangements
designed to ensure that residual interests in such entity are not held by
"disqualified organizations" (as defined below). Restrictions on the transfer
of the Residual Certificates that are intended to meet this requirement will be
included in the related Agreement and are discussed more fully in "Restrictions
on Transfer of REMIC Residual Certificates." If, notwithstanding those
restrictions, a Residual Certificate is transferred to a "disqualified
organization," a tax would be imposed in an amount equal to the product of (i)
the present value of the total anticipated excess inclusions with respect to
such Residual Certificate for periods after the transfer and (ii) the highest
marginal federal income tax rate applicable to corporations. Under the REMIC
Regulations, the anticipated excess inclusions must be determined based on (i)
events that have occurred up to the time of the transfer and (ii) the projected
payments based on the Assumed Prepayment Rate. The REMIC Regulations also
provide that the present value of the anticipated excess inclusions is
determined by discounting the anticipated excess inclusions as of the date of
the transfer using the applicable Federal rate under Section 1274(d)(1) of the
Code for the month of the transfer that would apply to a hypothetical obligation
with a term beginning on the date of the transfer and ending on the date the
life of the REMIC is anticipated to expire (as determined under rules described
above in "--Excess Inclusions"). Such a tax would generally be imposed on the
transferor of the Residual Certificate, except that where such transfer is
through an agent for a disqualified organization, the tax would instead be
imposed on such agent. However, a transferor of a Residual Certificate (or an
agent for a disqualified organization) would in no event be liable for such tax
with respect to a transfer if the transferee furnishes to such transferor (or
such agent) an affidavit that the transferee is not a disqualified organization,
and as of the time of the transfer the transferor or the agent does not have
actual knowledge that such affidavit is false.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (i) the amount
of excess inclusions on the Residual Certificate that are allocable to the
interest in the pass-through entity held by such disqualified organization and
(ii) the highest marginal federal income tax rate imposed on corporations.
However, a pass-through entity will in no event be liable for such tax with
respect to a record holder if the record holder furnishes the pass-through
entity with an affidavit that the record holder is not a disqualified
organization, and, as of the time the record holder becomes such a holder, the
pass-through entity does not have actual knowledge that such affidavit is false.
For these purposes, the term "disqualified organization" means (i) the
United States, any State or political subdivision thereof, any possession of the
United States, any foreign government, any international organization, or any
agency or instrumentality of the foregoing (other than an instrumentality that
is a corporation if all of its activities are subject to tax and, except for the
Federal Home Loan Mortgage Corporation, a majority of its board of directors is
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not selected by an such governmental unit), (ii) an organization (other than a
cooperative described in Section 521 of the Code) which is exempt from federal
income tax (including the tax imposed by Section 511 of the Code on unrelated
business taxable income) on excess inclusions or (iii) any organization
described in Section 1381(a)(2)(C) of the Code. For these purposes, the term
"pass-through entity" means any regulated investment company, real estate
investment trust, common trust fund, partnership, trust, estate and certain
other entities described in Section 860E(e)(6) of the Code. Except as may be
provided in Treasury Regulations, any person holding an interest in a pass-
through entity as a nominee for another will, with respect to such interest, be
treated as a pass-through entity.
Sale or Exchange. If a Residual Certificate is sold or exchanged, the
seller will recognize gain or loss equal to the difference, if any, between the
amount realized and its adjusted basis in the Residual Certificate (as defined
above in "--Distributions") at the time of such sale or exchange (except that
the recognition of a loss may be limited under the "wash sale" rules described
below). In general, any such gain or loss will be capital gain or loss,
provided the Residual Certificate is held as a capital asset as defined in
Section 1221 of the Code. However, a Residual Certificate will be an "evidence
of indebtedness" within the meaning of Section 582(c)(1) of the Code, so that
gain or loss recognized from the sale of a Residual Certificate by a bank or
thrift institution to which such section applies would be ordinary income or
loss.
Section 860F(d) of the Code and the Conference Committee Report to the 1986
Act indicate that, except as provided in Treasury Regulations, the wash sale
rules of Section 1091 of the Code will apply to dispositions of Residual
Certificates where the seller of the Residual Certificate, during the period
beginning six months before the sale or disposition of the Residual Certificate
and ending six months after such sale or disposition, acquires (or enters into
any other transaction that results in the application of Section 1091 of the
Code) any residual interest in any REMIC or any interest in a "taxable mortgage
pool" (such as a non-REMIC owner trust) that is economically comparable to a
Residual Certificate.
Noneconomic Residual Interests. Under the REMIC Regulations, a transfer of
a "noneconomic residual interest" (as defined below) to a Residual Holder (other
than a Foreign Holder, as discussed below) is disregarded for all federal income
tax purposes if a significant purpose of the transfer is to enable the
transferor to impede the assessment or collection of tax. If a transfer of a
residual interest is disregarded, the transferor would continue to be treated as
the owner of the residual interest and thus would continue to be subject to tax
on its allocable portion of the net income of the REMIC. A residual interest in
a REMIC (including a residual interest with a positive value at issuance) is a
"noneconomic residual interest" unless, at the time of transfer (i) the present
value of the expected future distributions on the residual interest at least
equals the product of the present value of the anticipated excess inclusions and
the highest corporate income tax rate in effect for the year in which the
transfer occurs and (ii) the transferor reasonably expects that the transferee
will receive distributions from the REMIC at or after the time at which taxes
accrue on the anticipated excess inclusions in an amount sufficient to satisfy
the accrued taxes. The anticipated excess inclusions and the present value rate
are determined in the same manner as set forth above. The REMIC Regulations
explain that a significant purpose to impede the assessment or collection of tax
exists if the transferor at the time of the transfer either knew or should have
known that the transferee would be unwilling or unable to pay taxes due on its
share of the taxable income of the REMIC. A safe harbor is provided if (i) the
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transferor conducted, at the time of the transfer, a reasonable investigation of
the financial condition of the transferee and, as a result of the investigation,
the transferor found that the transferee had historically paid its debts as they
came due and found no significant evidence to indicate that the transferee will
not continue to pay its debts as they come due in the future and (ii) the
transferee represents to the transferor that it understands that, as the holder
of a non-economic residual interest, the transferee may incur tax liabilities in
excess of any cash flows generated by the interest and that the transferee
intends to pay taxes associated with holding the residual interest as they
become due. The Agreement with respect to each Series of REMIC Certificates will
require the transferee of a Residual Certificate to certify to the statements in
clause (ii) of the preceding sentence as part of the affidavit described below
under "Restrictions on Transfer of REMIC Residual Certificates."
Termination. The Trust Fund related to a Series of Certificates will
terminate shortly following the retirement of Certificates in such Series. If a
Residual Certificateholder's adjusted basis in its Residual Certificate exceeds
the amount of cash distributed to such Residual Certificateholder in final
liquidation of its interest, then, although the matter is not entirely free from
doubt, it would appear that the Residual Certificateholder is entitled to a loss
equal to the amount of such excess.
Foreign Investors. Unless otherwise provided in the applicable prospectus
supplement, no record or beneficial ownership interest in a Residual Certificate
may be transferred to a Foreign Holder. See "Restrictions on Transfer of REMIC
Residual Certificates" below. With respect to permitted transfers to Foreign
Holders, any such Residual Certificateholders should assume that payments made
on the Residual Certificates they hold will be subject to a 30% withholding tax,
or such a lesser rate as may be provided under any applicable tax treaty, except
that the rate of withholding on any payments made on Residual Certificates that
are excess inclusions will not be eligible for reduction under any applicable
tax treaties. See "--Excess Inclusions" above. Under the REMIC Regulations, a
transfer of a residual interest that has tax avoidance potential is disregarded
for all federal income tax purposes if the transferee is a Foreign Holder. The
REMIC Regulations state that a residual interest has tax avoidance potential
unless, at the time of the transfer, the transferor reasonably expects that, for
each excess inclusion, the REMIC will distribute to the transferee residual
interest holder an amount that will equal at least 30% of the excess inclusion,
and that each such amount will be distributed at or after the time at which the
excess inclusion accrues and not later than the close of the calendar year
following the calendar year of accrual. See "--Tax on Transfers of Residual
Certificates to Certain Organizations" above for rules regarding the
determination of anticipated excess inclusions. The above rules do not apply to
transfers of Residual Certificates if the transferee's income from the Residual
Certificate would be effectively connected with a United States trade or
business of the transferee. The REMIC Regulations also provide that a transfer
of a Residual Certificate from a Foreign Holder to a United States person or to
a Foreign Holder in whose hands the income from the Residual Certificate would
be effectively connected with a United States trade or business of the
transferee will be disregarded if the transfer has the effect of allowing the
transferor to avoid tax on accrued excess inclusions.
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.
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Additional Taxable Income of Residual Interests. Any payment received by a
holder of a Residual Certificate in connection with the acquisition of such
Residual Certificate will be taken into account in determining the income of
such holder for federal income tax purposes. Although it appears likely that
any such payment would be includible in income immediately upon its receipt or
accrual as ordinary income, the IRS might assert that such payment should be
included in income over time according to an amortization schedule or according
to some other method. Because of the uncertainty concerning the treatment of
such payments, holders of Residual Certificates should consult their tax
advisors concerning the treatment of such payments for income tax purposes.
Other Matters Relating to REMIC Certificates; Administrative Matters.
Solely for the purposes of the administrative provisions of the Code, each Trust
Fund for which a REMIC election is made will be treated as a partnership, and
the Residual Certificateholders will be treated as the partners thereof. The
Trust Fund must maintain its books on a calendar year basis and must file
federal information returns in a manner similar to a partnership for federal
income tax purposes. Certain information on such returns will be furnished to
each Residual Certificateholder. The Trust Fund also will be subject to the
procedural and administrative rules of the Code applicable to partnerships,
including rules for determining any adjustments to among other things, items of
REMIC income, gain, loss, deduction or credit by the Service in a unified
administrative proceeding. The holders of Residual Certificates will generally
be entitled to participate in audits of the Trust Fund by the Service to the
same extent as general partners in an audit of a partnership. Regular
Certificateholders will not be entitled to participate in any such audits.
Each Residual Certificateholder is required to treat items on its return
consistently with their treatment on the Trust Fund's return, unless the
Residual Certificateholder either files a statement identifying the
inconsistency or establishes that the inconsistency resulted from incorrect
information received from the Trust Fund. The Service may assert a deficiency
resulting from a failure to comply with the consistency requirement without
instituting an administrative proceeding at the Trust Fund level. The Trust
Fund does not intend to register as a tax shelter pursuant to Section 6111 of
the Code because it is not anticipated that the Trust Fund will have a net loss
for any of the first five taxable years of its existence. Any person that holds
a Residual Certificate as a nominee for another person will be required to
furnish the Trust Fund, in a manner provided in Treasury Regulations, with the
name and address of such person, and other information.
Each Residual Certificateholder, by purchasing its Residual Certificate,
(A) shall be deemed to consent to the appointment of the Servicer as (i) the
"tax matters person" (within the meaning of Section 1.860F-4(d) of the REMIC
Regulations) for the Trust Fund and (ii) attorney-in-fact and agent for any
person that is the tax matters person if the Servicer is unable to serve as the
tax matters person, and (B) agrees to execute any documents required to give
effect to (A) above.
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
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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 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. Accordingly, each Certificateholder in a Grantor Trust ("Grantor
Trust Certificateholder") will be treated for federal income tax purposes as the
owner of an undivided interest in the Contracts and other assets included in the
Trust Fund. As further described below, each holder of a Certificate in a
Grantor Trust (a "Grantor Trust Certificate") must therefore report on its
federal income tax return the gross income from the portion of the Contracts
that is allocable to such Grantor Trust Certificate and may deduct its share of
the expenses paid by the Trust Fund that are allocable to such Grantor Trust
Certificate, at the same time and to the same extent as such items would be
reported by such holder if it had purchased and held directly such interest in
the Contracts and received directly its share of the payments on the Contracts
and paid directly its share of the expenses paid by the Trust Fund when those
amounts are received and paid by the Trust Fund. A Grantor Trust
Certificateholder who is an individual will be allowed deductions for such
expenses only to the extent that the sum of those expenses and certain other of
the Grantor Trust Certificateholder's miscellaneous itemized deductions exceeds
2% of such individual's adjusted gross income. In addition, the amount of
itemized deductions otherwise allowable for the taxable year of an individual
whose adjusted gross income exceeds certain thresholds will be reduced. Other
potential limitations on deductibility are described above in "REMIC
Certificates--Taxation of Regular Certificates--Pass-Through of Expenses Other
Than Interest." It appears that expenses paid by the Trust Fund, and the gross
income used to pay such expenses, should be allocated among the classes of
Grantor Trust Certificates in proportion to their respective fair market values
at issuance, but because other reasonable methods of allocation exist and the
allocation of such items has not been the subject of a controlling court
decision, regulation or Internal Revenue Service Ruling, no definitive advice
concerning the allocation of such items can be given.
Under current Service interpretations of applicable Treasury Regulations,
GreenPoint would be able to sell or otherwise dispose of any subordinated
Grantor Trust Certificates. Accordingly, GreenPoint expects to offer
subordinated Grantor Trust Certificates for sale to investors. In general, such
subordination should not affect the federal income tax treatment of either the
subordinated or senior Certificates, and holders of subordinated classes of
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,
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Certificateholders will be required to report annually an amount of additional
interest income attributable to such discount in such Contracts prior to receipt
of cash related to such discount. See the discussion above under "REMIC
Certificates--Taxation of Regular Certificates--Original Issue Discount."
Similarly, Code provisions concerning market discount and amortizable premium
will apply to the Contracts comprising a Contract Pool to the extent that the
loans were originated after July 18, 1984 and September 27, 1985, respectively.
See the discussions above under "REMIC Certificates--Taxation of Regular
Certificates--Market Discount" and "REMIC Certificates--Taxation of Regular
Certificates--Premium."
Tax Status of Grantor Trust Certificates. In general, the Grantor Trust
Certificates, other than "Premium Grantor Trust Certificates" (as defined below)
will be (i) "real estate assets" within the meaning of Section 856(c)(4)(A) of
the Code and (ii) assets described in Section 7701(a)(19)(C) of the Code to the
extent the Trust Fund's assets qualify under those Sections of the Code. Any
amount includible in gross income with respect to the Grantor Trust Certificates
will be treated as "interest on obligations secured by mortgages on real
property or on interests in real property" within the meaning of Section
856(c)(3)(B) of the Code to the extent the income on the Trust Fund's assets
qualifies under that Code Section. The Internal Revenue Service has ruled that
obligations secured by permanently installed mobile home units qualify as "real
estate assets" under Section 856(c)(4)(A) of the Code. Assets described in
Section 7701(a)(19)(C) of the Code include loans secured by mobile homes not
used on a transient basis. However, whether Manufactured Homes would be viewed
as permanently installed for purposes of Section 856 of the Code would depend on
the facts and circumstances of each case, because the Internal Revenue Service
rulings on this issue do not provide facts on which taxpayers can rely to
achieve treatment as "real estate assets". No assurance can be given that the
Manufactured Homes will be so treated. 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 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: (i) if any servicing compensation is
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deemed to exceed a reasonable amount; (ii) if GreenPoint or any other party
retains a retained yield with respect to the Contracts comprising a Contract
pool; (iii) if two or more classes of Grantor Trust Certificates are issued
representing the right to non-pro rata percentages of the interest or principal
payments on the Contracts; or (iv) if Grantor Trust Certificates are issued
which represent the right to interest only payments or principal only payments.
Unless the prospectus supplement indicates otherwise, the Grantor Trust
Certificates will be subject to the "stripped bond" rules of Section 1286 of the
Code (or, if the application of those rules to a particular Series of Grantor
Trust Certificates is uncertain, the Trust Fund will take the position that they
apply). There is some uncertainty as to how that section will be applied to
securities such as the Grantor Trust Certificates. Investors should consult
their own tax advisors regarding the treatment of the Grantor Trust Certificates
under the stripped bond rules.
Although the matter is not entirely clear and alternative characterizations
could be imposed, it appears that each stripped Grantor Trust Certificate should
be considered to be a single debt instrument issued on the day it is purchased
for purposes of calculating original issue discount. Thus, in each month the
holder of a Grantor Trust Certificate (whether a cash or accrual method
taxpayer) will be required to report interest income from the Grantor Trust
Certificate equal to the income that accrues on the Grantor Trust Certificate in
such month, calculated, in accordance with the rules of the Code relating to
original issue discount, under a constant yield method. In general, the amount
of such income reported in any month would equal the product of such holder's
adjusted basis in such Grantor Trust Certificate at the beginning of such month
(see "--Sales of Certificates" below) and the yield of such Grantor Trust
Certificate to such holder. Such yield would be the monthly rate (assuming
monthly compounding) determined as of the date of purchase that, if used in
discounting the remaining payments on the portion of the Contracts that is
allocable to such Grantor Trust Certificate, would cause the present value of
those payments to equal the price at which the holder purchased the Grantor
Trust Certificate.
With respect to certain categories of debt instruments, the Code requires
the use of a reasonable prepayment assumption in accruing original issue
discount and provides a method of adjusting those accruals to account for
differences between the assumed prepayment rate and the actual rate. These
rules apply to "regular interests" in a REMIC and are described under "REMIC
Certificates--Taxation of Regular Certificates--Original Issue Discount."
Regulations could be adopted applying these rules to the Grantor Trust
Certificates. Although the matter is not free from doubt, it appears that the
Taxpayer Relief Act of 1997 has expanded the requirement of the use of a
reasonable prepayment assumption to instruments such as the Grantor Trust
Certificates. In the absence of regulations interpreting the application of
this requirement to such instruments particularly where such instruments are
subject to the Stripped Bond Rules, it is uncertain whether the assumed
prepayment rate would be determined based on conditions at the time of the first
sale of the Grantor Trust Certificates or, with respect to any holder, at the
time of purchase of the Grantor Trust Certificate by that holder. Finally, if
these rules were applied to the Grantor Trust Certificates, and the principles
used in calculating the amount of original issue discount that accrues in any
month would produce a negative amount of original issue discount, it is unclear
when such loss would be allowed.
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
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assumption would not have any significant effect on the yield used in
calculating accruals of interest income. In the case, however, of a Grantor
Trust Certificate acquired at a discount or premium (that is, at a price less
than or greater than such principal amount, respectively), the use of a
reasonable prepayment assumption would increase or decrease such yield, and thus
accelerate or decelerate the reporting of interest income, respectively.
If the yield used by the holder of a Grantor Trust Certificate in
calculating the amount of interest that accrues in any month is determined based
on scheduled payments on the Contracts (that is, without using a reasonable
prepayment assumption) and such Grantor Trust Certificate was acquired at a
discount or premium, then such holder generally will recognize a net amount of
ordinary income or loss if a Contract prepays in full in an amount equal to the
difference between the portion of the prepaid principal amount of the Contract
that is allocable to the Grantor Trust Certificate and the portion of the
adjusted basis of the Grantor Trust Certificate (see "--Sales of Certificates"
below) that is allocable to the Contract. In general, basis would be allocated
among the Contracts in proportion to their respective principal balances
determined immediately before such prepayment. It is not clear whether any
other adjustments would be required or permitted to take account of prepayments
of the Contracts.
Solely for purposes of reporting income on the Grantor Trust Certificates
to the Service and to certain holders, as required under the Code, it is
anticipated that, unless provided otherwise in the related prospectus
supplement, the yield of the Grantor Trust Certificates will be calculated based
on (i) a representative initial offering price of the Grantor Trust Certificates
to the public and (ii) a reasonable Assumed Prepayment Rate, which will be the
rate used in pricing the initial offering of the Grantor Trust Certificates.
(Such yield may differ significantly from the yield to any particular holder
that would be used in calculating the interest income of such holder.) No
representation is made that the Contracts will in fact prepay at the Assumed
Prepayment Rate or at any other rate.
Sales of Certificates. Upon the sale or exchange of a Grantor Trust
Certificate, a Grantor Trust Certificateholder will recognize gain or loss equal
to the difference between the amount realized in the sale and its aggregate
adjusted basis in the Contracts represented by the Grantor Trust Certificate.
Generally, the aggregate adjusted basis will equal the Grantor Trust
Certificateholder's cost for the Grantor Trust Certificate increased by the
amount of any previously reported gain with respect to the Grantor Trust
Certificate and decreased by the amount of any losses previously reported with
respect to the Grantor Trust Certificate and the amount of any distributions
received thereon. Except as provided above with respect to the original issue
discount and market discount rules, any such gain or loss would be capital gain
or loss if the Grantor Trust Certificate was held as a capital asset.
Foreign Investors. Generally, interest or original issue discount paid to
or accruing for the benefit of a Grantor Trust Certificateholder who is a
Foreign Holder (as defined above in "REMIC Certificates--Taxation of Regular
Certificates--Taxation of Certain Foreign Investors") will be treated as
"portfolio interest" and therefore will be exempt from the 30% withholding tax.
Such Grantor Trust Certificateholder will be entitled to receive interest
payments and original issue discount on the Grantor Trust Certificates free of
United States 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
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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 then existing law and assuming compliance by the Seller,
the Servicer and the Trustee of such Series with all of the provisions of the
related Agreement, and agreement or agreements, if any, providing for a Credit
Facility or a Liquidity Facility, together with any agreement documenting the
arrangement through which a Credit Facility or a Liquidity Facility is held
outside the related Trust Fund, and the agreement or agreements with any
Underwriter, for federal income tax purposes, (i) the Trust Fund will not be
classified as a corporation or publicly traded partnership and (ii) the Owner
Trust Certificates or Notes offered by the prospectus will be treated as
indebtedness.
Treatment of the Owner Trust Certificates or Notes as Debt
The Transferor will express in the Agreement the intent that for federal,
state and local income and franchise tax purposes, the Owner Trust Certificates
or Notes will be debt secured by the Contracts. The Transferor, by entering
into the Agreement, and each investor, by the acceptance of a beneficial
interest in a Certificate or Note, will agree to treat the Owner Trust
Certificates or Notes as debt for federal, state and local income and franchise
tax purposes. However, the Agreement may be ambiguous in characterizing the
transfer of Contracts, and because different criteria are used in determining
the non-tax accounting treatment of the transaction, the Transferor may treat
the Agreement for certain non-tax accounting purposes as causing a transfer of
an ownership interest in the Contracts and not as creating a debt obligation.
A basic premise of federal income tax law is that the economic substance of
a transaction generally determines its tax consequences. The form and non-tax
characterization of a transaction, while relevant factors, are not conclusive
evidence of its economic substance. In appropriate circumstances, the courts
have allowed taxpayers as well as the Internal Revenue Service (the "IRS") to
treat a transaction in accordance with its economic substance as determined
under federal income tax law, even though the participants in the transaction
have characterized it differently for non-tax purposes.
The determination of whether the economic substance of a transfer of an
interest in property is instead a loan secured by the transferred property has
been made by the IRS and 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.
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Among those factors, the primary ones examined are whether the transferee had
the opportunity to gain if the property increases in value, and has the risk of
loss if the property decreases in value. Based on its analysis of such factors,
special counsel to GreenPoint is of the opinion that, under current law,
although not transaction closely comparable to the contemplated in this
prospectus 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, each of which may be treated for federal
income tax purposes either as debt or as equity interests in the Trust. If all
of the Owner Trust Certificates or Notes and other interests (other than the
Transferor Certificate) in the Trust were characterized as debt, the Trust might
be characterized as a security arrangement for debt collateralized by the
Contracts and issued directly by the Transferor (or other holder of the
Transferor Certificate). Under such a view, the Trust would be disregarded for
federal income tax purposes. Alternatively, if some of were characterized as
equity therein, the Trust might be characterized as a separate entity owning the
Contracts, issuing its own debt, and jointly owned by the Transferor (or other
holder of the Transferor Certificate) and any other holders of equity interests
in the Trust. However, special counsel to GreenPoint is of the opinion that,
under current law, any such entity constituted by the Trust will not be an
association, taxable mortgage pool or publicly traded partnership taxable as a
corporation.
Possible Treatment of the Trust as a Taxable Mortgage Pool. Although, as
described above, Special Counsel is of the opinion that the Certificates will
properly be treated as debt for federal income tax purposes and that the Trust
will not be treated as a taxable mortgage pool taxable as a corporation, such
opinion will not bind the IRS and thus no assurance can be given that such
treatment will prevail. If the IRS were to contend successfully that the Trust
were a taxable mortgage pool taxable as a corporation, that entity would be
subject to federal income tax at corporate tax rates on its taxable income
generated by ownership of the related Mortgage Loans. That tax could result in
reduced distributions to Certificate Owners. No distributions from the Trust
would be deductible in computing the taxable income of the corporation, except
to the extent that any Certificates were treated as debt of the corporation and
distributions to the related Certificate Owners were treated as payments of
interest thereon. In addition, distributions to Certificate Owners not related
as holding debt would be dividend income to the extent of the current and
accumulated earnings and profits of the corporation (and Certificate Owners may
not be entitled to any dividends received deduction in respect of such income).
Treatment of the Owner Trust Certificates or Notes
Treatment of the Owner Trust Certificates or Notes as Indebtedness. If the
Owner Trust Certificates or Notes are treated as indebtedness for federal income
tax purposes, the taxation of holders of such interests generally will be the
same as that described, above, for holders of REMIC Regular Interests with the
following exceptions: Holders not otherwise 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
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Certificates--General--Tax Status of REMIC Certificates" would not apply. Gain
on the sale of Owner Trust Certificates or Notes would not be subject to re-
characterization as ordinary income solely as a result of failure of income
otherwise accrued on such Owner Trust Certificates or Notes to have accrued at a
rate exceeding 110% of the "applicable federal rate" as described for REMIC
Regular Interests in the second paragraph of "REMIC Certificates--Taxation of
Regular Certificates--Sales of Certificates." The discussion under "REMIC
Certificates--Taxation of Regular Certificates--Pass-Through of Expenses Other
Than Interest" would not apply. See "REMIC Certificates--Taxation of REMIC
Regular Certificates."
Possible Treatment of the Owner Trust Certificates or Notes as Partnership
Interests. Although, as described above, special counsel to GreenPoint is of
the opinion that the Owner Trust Certificates or Notes will properly be treated
as debt for federal income tax purposes, such opinion will not bind the IRS and
thus no assurance can be given that such treatment will prevail. If the IRS
were to contend successfully that some or all of the Owner Trust Certificates or
Notes were equity in the Trust for federal income tax purposes, the Owner Trust
Certificates or Notes could be classified as partnership interests for such
purposes. Because special counsel to GreenPoint is of the opinion that the
Owner Trust Certificates or Notes will be characterized as debt for federal
income tax purposes, no attempt will be made to comply with any tax reporting
requirements that would apply as a result of such alternative characterizations.
If the Trust were treated as a partnership, that partnership would not be
subject to federal income tax. Rather, each item of income, gain, loss and
deduction of the partnership generated computing taxable income of the
Transferor (or the holder of the Transferor Certificate) and any Certificate or
Note Owners treated as partners in accordance with their respective partnership
interests therein. The amounts, character and timing of income reportable by
any Certificate or Note Owners treated as partners would likely differ from that
reportable by such Certificates or Note Owners had they been treated as owning
debt. In addition, if the Trust were treated in whole or in part as a
partnership, income derived from the partnership by any Certificates or Note
Owner that is a pension fund or other tax-exempt entity may be treated as
unrelated business taxable income. Also, any Certificate or Note owner that is
a Non-United States Person could be subject to withholding at the rate of 30% on
its share of the partnership's income from the Contracts. Partnership
characterization also may have adverse state and local income or franchise tax
consequences for a Certificate or Note Owner. If the Trust were treated in
whole or in part as a partnership and the number of holders of interest in the
publicly offered Owner Trust Certificates or Notes and other interests in the
Trust treated as partners equaled or exceeded 100, the Transferor may cause the
Trust to elect to be an "electing large partnership." The consequence of such
election to investors could include the determination of certain tax items at
the partnership level and the disallowance of otherwise allowable deductions.
No representation is made as to whether such election will be made.
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.
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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 (i) an
affidavit from the proposed transferee to the effect that it is not a
"disqualified organization" or electing large partnership and is not purchasing
on behalf of a disqualified organization or electing large partnership (see
"Federal Income Tax Consequences--Taxation of Residual Certificates--Tax on
Transfers of Residual Certificates to Certain Organizations"), (ii) a
representation from the proposed transferee to the effect that it is a citizen
or resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, or an estate or trust whose income from sources without the
United States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States and (iii) a covenant of the proposed transferee to the
effect that the proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to such REMIC Residual Certificate.
TAX-EXEMPT INVESTORS
A qualified pension plan or other entity that is exempt from federal income
taxation pursuant to Section 501 of the Code (a "Tax-Exempt Investor")
nonetheless will be subject to federal income taxation to the extent that its
income is "unrelated business taxable income" ("UBTI") within the meaning of
Section 512 of the Code. All "excess inclusions" of a "REMIC" allocated to a
"Residual Certificate" held by a Tax-Exempt investor will be considered UBTI and
thus will be subject to federal income tax. See "Federal Income Tax
Consequences--Certificates as REMIC Residual Interests--Excess Inclusions."
LEGAL INVESTMENT
The prospectus supplement for each Series of Certificates will specify
which, if any, of the Classes of Certificates offered thereby constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). Classes of Certificates that qualify as
"mortgage related securities" will be legal investments for persons, 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
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such legislation only to the extent provided therein. Approximately twenty-one
states adopted such legislation prior to the October 4, 1991 deadline.
SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in Certificates
without limitations as to the percentage of their assets represented thereby,
federal credit unions may invest in mortgage related securities, and national
banks may purchase Certificates for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
Section 24 (Seventh), subject in each case to such regulations as the applicable
federal authority may prescribe. In this connection, federal credit unions
should review the National Credit Union Administration ("NCUA") Letter to Credit
Unions No. 96, as modified by Letter to Credit Unions No. 108, which includes
guidelines to assist federal credit unions in making investment decisions for
mortgage related securities, and the NCUAs regulation "Investment and Deposit
Activities" (12 C.F.R. Part 703), which sets forth certain restrictions on
investment by federal credit unions in mortgage related securities.
All depository institutions considering an investment in the Certificates
(whether or not the Class of Certificates under consideration for purchase
constitutes a "mortgage related security") should review the Federal Financial
Institutions Examination Council's Supervisory Policy Statement on the
Securities Activities (to the extent adopted by their respective regulators)
(the "Policy Statement"), setting forth, in relevant part, certain securities
trading and sales practices deemed unsuitable for an institution's investment
portfolio, and guidelines for (and restrictions on) investing in mortgage
derivative products, including "mortgage related securities," which are "high-
risk mortgage securities" as defined in the Policy Statement. According to the
Policy Statement, such "high-risk mortgage securities" include securities such
as certificates not entitled to distributions allocated to principal or
interest, or subordinated certificates. Under the Policy Statement, it is the
responsibility of each depository institution to determine, prior to purchase
(and at stated intervals thereafter), whether a particular mortgage derivative
product is a "high-risk mortgage security," and whether the purchase (or
retention) of such a product would be consistent with the Policy Statement.
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying."
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.
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ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
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" herein.
The United States Department of Labor (the "DOL") has issued regulations
concerning the definition of what constitutes the assets of a Plan (DOL Reg.
Section 2510.3-101). Under the DOL regulations, the underlying assets and
properties of corporations, partnerships and certain other entities in which a
Plan makes an "equity" investment could be deemed for purposes of ERISA to be
assets of the investing Plan in certain circumstances. A beneficial interest in
a trust is defined as an "equity" interest under the DOL regulations. However,
the DOL regulations provide that, generally, the assets of an entity in which a
Plan makes an equity investment will not be deemed for purposes of ERISA to be
assets of such Plan if the equity interest acquired by the investing Plan is a
publicly offered security. A publicly offered security, as defined in DOL Reg.
Section 2510.3-101 is a security that is widely held, freely transferable and
either registered under the Exchange Act or sold to the Plan as part of a public
offering under the Securities Act that then becomes so registered. There can be
no assurance that any Class of Certificate will qualify for this or any other
exception under the DOL regulations.
In addition to the imposition of general fiduciary standards of investment
prudence and diversification, ERISA prohibits a broad range of transactions
involving "plan assets" and Parties in Interest, and imposes additional
prohibitions where Parties in Interest are fiduciaries with respect to such
Plan. To the extent that the Contracts may be deemed "plan assets" of each Plan
that purchases Certificates, an investment in the Certificates by a Plan could
result 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
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of "mortgage pool pass-through certificates" in the initial issuance of such
certificates. However, PTCE 83-1 does not apply to trusts that hold Contracts.
Each Plan fiduciary who is responsible for making the investment decisions
whether to purchase or commit to purchase and to hold Certificates must make its
own determination as to the availability of any prohibited transaction
exemptions under ERISA. Each Plan fiduciary should also determine whether,
under the general fiduciary standards of investment prudence and
diversification, an investment in the Certificates is appropriate for the Plan,
taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
Several underwriters of asset-backed securities have applied for and
obtained ERISA prohibited transaction exemptions which are in some respects
broader than PTCE 83-1 and the exceptions to the DOL regulations referred to
above. Such exemptions can only apply to securities backed by certain
receivables, loans and other obligations that are secured and, among other
conditions, are sold in an offering with respect to which such an underwriter
serves as the sole or a managing underwriter, or as a selling or placement
agent. If such an exemption might be applicable to a Series of Certificates,
the related prospectus supplement will refer to such possibility.
Any Plan fiduciary that proposes to cause a Plan to purchase Certificates
should consult with its 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 such investment.
Moreover, each Plan fiduciary should determine whether, under the general
fiduciary standards of investment prudence and diversification, an investment in
the Certificates is appropriate for the Plan, taking into account the overall
investment policy of the Plan and the composition of the Plan's investment
portfolio.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
The following discussion contains summaries of certain legal aspects of
manufactured housing contracts, including Land Home and Land-in-Lieu Contracts,
which are general in nature. Because such legal aspects are governed by
applicable state law (which laws may differ substantially), the summaries should
be viewed only as an overview and therefore do not reflect the laws of any
particular state, nor do they encompass the laws of all states in which the
security for the Contracts or Land-and-Home Contracts is situated.
The Contracts (Other than Land Home and Land-in-Lieu Contracts)
General. As a result of the assignment of Contracts in a Contract Pool to
the Trustee, the related Trust Fund will succeed collectively to all of the
rights (including the right to receive payment on such Contracts), and will
assume the obligations of the obligee, under such Contracts. Each Contract
evidences both (a) the obligation of the Obligor to repay the loan evidenced
thereby, and (b) the grant of a security interest in either the Manufactured
Home, and, in the case of a Land Home Contract or Land-in-Lieu Contract, the
real estate on which the related Manufactured Home is located, to secure
repayment of such loan. Certain aspects of both features of the Contracts are
described more fully below.
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The following discussion focuses on issues relating generally to
GreenPoint's or any lender's interest in manufactured housing contracts. See
"Risk Factors--Security Interests of a Trust Fund in the Manufactured Homes"
herein for a discussion of certain issues relating to the transfer to a Trust
Fund of Contracts and the related security interests in the Manufactured Homes
comprising the related Contract Pool.
Security Interests of GreenPoint in the Manufactured Homes. Each Contract
generally will be "chattel paper" as defined in the UCC as in effect in
California (where GreenPoint's chief executive offices are located) and the
jurisdiction in which the related Manufactured Home was located at origination.
Under the UCC as in effect in each such jurisdiction, the sale of chattel paper
is treated in a manner similar to perfection of a security interest in chattel
paper. GreenPoint will make or cause to be made appropriate filings of UCC-1
financing statements to give notice of the Trustee's ownership of the Contracts
sold by it. The Trustee's interest in the Contracts could be defeated if a
subsequent purchaser were able to take physical possession of the Contracts
without notice of such assignment. GreenPoint will not retitle any certificates
of title that are in the name of Bank of America, FSB or BankAmerica Housing
Services, a division of Bank of America, FSB relating to any contracts that it
purchases in the Acquisition as described under "The Seller." If so specified in
the applicable prospectus supplement, GreenPoint will be required under the
related Agreement to stamp or cause to be stamped each Contract sold by it to
indicate its transfer to the Trustee. To the extent the Contracts do not
constitute "chattel paper" within the meaning of the UCC as in effect in
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 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 ("manufactured homes") generally may be
perfected either by notation of the secured party's lien on the certificate of
title or by delivery of the required documents and payment of a fee to the state
motor vehicle authority, depending on state law. In some non-title states,
perfection pursuant to the provisions of the UCC is required. Generally, with
respect to manufactured housing contracts individually originated or purchased
by GreenPoint, GreenPoint effects such notation or delivery of the required
documents and fees, and obtains possession of the certificate of title or a lien
certificate, as appropriate, under the laws of the state in which any
manufactured home securing a manufactured housing contract is registered. If
GreenPoint and its affiliates fails, due to clerical errors or otherwise, to
effect such notation or delivery, or files the security interest under the wrong
law (for example, under a motor vehicle title statute rather than under the UCC,
in a few states), GreenPoint (for itself, or as agent of the secured lender) may
not have a first-priority security interest in the manufactured 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
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must file either a "fixture filing" under the provisions of the UCC or a real
estate mortgage under the real estate laws of the state where the home is
located. These filings must be made in the real estate records office of the
county where the home is located. If so specified in the related prospectus
supplement, most of the Contracts in any Contract Pool will contain provisions
prohibiting the Obligor from permanently attaching the Manufactured Home to its
site if it was not so attached on the date of the Contract. As long as each
Manufactured Home was not so attached on the date of the Contract and the
Obligor does not violate this agreement, a security interest in the Manufactured
Home will be governed by the certificate of title laws or the UCC, and the
notation of the security interest on the certificate of title or the filing of a
UCC financing statement will be effective to maintain the priority of
GreenPoint's security interest in the Manufactured Home. If any such
Manufactured Home does become attached after the date of the related Contract,
the related Contract provides that such attachment constitutes an "event of
default" that, if unremedied, gives rise to certain discrete remedies including
acceleration of the unpaid principal balance of the Contract plus accrued
interest and repossession of the Manufactured Home. Regardless of whether a full
recovery is obtained from an Obligor whose Manufactured Home becomes attached,
GreenPoint will represent that, at the date of the initial issuance of
Certificates in any Series, it had obtained a perfected first-priority security
interest in each of the Manufactured Homes securing the related Contracts sold
by it. Such representation, however, will not be based upon an inspection of the
site of any Manufactured Home to determine if the Manufactured Home had become
permanently attached to its site. See "Description of the Certificates--
Conveyance of Contracts" herein. GreenPoint will not be required to make fixture
filings or to file Mortgages with respect to any of the Manufactured Homes
(except in the case of Land Home and Land-in-Lieu Contracts, as described
below). Consequently, if a Manufactured Home is deemed subject to real estate
title or recording laws because the owner attaches it to its site or otherwise,
the Trustee's interest therein may be subordinated to the interests of others
that may claim an interest therein under applicable real estate laws.
In addition, a federal circuit court decision may adversely affect a
Trustee's interest in the Contract Pool related to a Series of Certificates even
if the related Contracts constitute chattel paper. In Octagon Gas Systems, Inc.
v. Rimmer, 995 F.2d 948 (10th Cir. 1993), the court's decision included language
to the effect that accounts sold by an entity which subsequently became bankrupt
remained property of the debtor's bankruptcy estate. Sales of chattel paper,
like sales of accounts, are governed by Article 9 of the UCC. If GreenPoint is
subject to the federal bankruptcy code and becomes a debtor under the federal
bankruptcy code, and a court were to follow the reasoning of the Tenth Circuit
and apply such reasoning to chattel paper, Certificateholders for such Series
could experience a delay in, or reduction of, distributions as to the Contracts
that constitute chattel paper and were sold to the related Trust Fund.
In the absence of fraud, forgery or permanent affixation of a manufactured
home to its site by the manufactured home owner, or administrative error by
state recording officials, the notation of the lien of GreenPoint on the
certificate of title or delivery of the required documents and fees (or if
applicable, perfection under the UCC) will be sufficient to protect GreenPoint
against the rights of subsequent purchasers of a manufactured home or subsequent
lenders who take a security interest in the manufactured home. If there are any
manufactured homes as to which the security interest in favor of GreenPoint is
not perfected, such security interest would
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be subordinate to the claims of, among others, subsequent purchasers for value
of and holders of perfected security interests in such manufactured homes.
In the event that the owner of a manufactured home moves it to a state
other than the state in which such manufactured home initially is registered,
under the laws of most states, the perfected security interest in the
manufactured home would continue for four months after such relocation and
thereafter until the owner registers the manufactured home in such state. If
the owner were to relocate a manufactured home to another state and were to re-
register the manufactured home in such state, and if steps are not taken to re-
perfect an existing security interest in such state, the security interest in
the manufactured home would cease to be perfected. A majority of states
generally require surrender of a certificate of title to re-register a
manufactured home. GreenPoint must therefore surrender possession if it holds
the certificate of title to such manufactured home or, in the case of
manufactured homes registered in states which provide for notation of lien,
GreenPoint would receive notice of surrender if its security interest in the
manufactured home is noted on the certificate of title. Accordingly, GreenPoint
would have the opportunity to re-perfect its security interest in the
manufactured home in the state of relocation. In states which do not require a
certificate of title for registration of a manufactured home, re-registration
could defeat the perfection. In the ordinary course of servicing manufactured
housing contracts, GreenPoint takes steps to effect such re-perfection upon
receipt of notice of re-registration or information from the obligor as to
relocation. Similarly, when an obligor under a contract sells a manufactured
home, GreenPoint must surrender possession of the certificate of title or
GreenPoint will receive notice as a result of its lien noted thereon;
accordingly, GreenPoint will have an opportunity to require satisfaction of the
related contract before release of the lien. Such protections generally would
not be available in the case of security interests in manufactured homes located
in non-title states where perfection of such security interest is achieved by
appropriate filings under the UCC (as in effect in such state). Consequently,
the security interest in the manufactured home could cease to be perfected.
Under the laws of most states, liens for repairs performed on a
manufactured home and liens for personal property taxes take priority over a
perfected security interest in the manufactured home. GreenPoint will warrant
in the Agreement with respect to each Series of Certificates that, as of the
date of initial issuance of such Series of Certificates, no Manufactured Home
relating to a Contract it sold was, to its knowledge, subject to any such lien.
However, such warranty will not be based on any lien searches or other review.
See "Description of the Certificates--Conveyance of Contracts" in the prospectus
supplement related to a Series of Certificates for a description of the remedies
for a breach of the representations and warranties made by GreenPoint under the
related Agreement. In addition, such liens could arise after the date of
initial issuance of the Certificates. Notice may not be given to GreenPoint,
the Servicer, the Trustee or Certificateholders in the event such a lien arises.
Enforcement of Security Interests in Manufactured Homes. If so specified
in the applicable prospectus supplement, the Servicer on behalf of the Trustee,
to the extent required by the related Agreement, may take action to enforce the
Trustee's security interest with respect to Contracts in default by repossession
and resale of the Manufactured Homes securing such defaulted Contracts. In
general, as long as a manufactured home has not become subject to the real
estate law, a creditor can repossess a manufactured home by voluntary surrender,
by "self-help" repossession that is "peaceful" (i.e., without breach of the
peace) or, in the absence of
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voluntary surrender and the ability to repossess without breach of the peace, by
judicial process. The holder of a manufactured housing contract generally must
give the obligor a number of days' notice prior to commencement of any
repossession. The UCC and consumer protection laws in most states place
restrictions on repossession sales, including requiring prior notice to the
obligor and commercial reasonableness in effecting such a sale. The law in most
states also requires that the obligor be given notice of any sales prior to
resale of the unit so that the obligor may redeem at or before such resale.
Under the laws applicable in most states, a creditor is entitled to obtain
a deficiency judgment from an obligor for any deficiency on repossession and
resale of the manufactured home securing such obligor's contract. However, some
states impose prohibitions or limitations on deficiency judgments, and in many
cases the defaulting obligor would have no assets with which to pay a judgment.
Certain other statutory provisions, including federal and state bankruptcy
and insolvency laws, and general equitable principles may limit or delay
GreenPoint's ability to repossess and resell any Manufactured Home or enforce a
deficiency judgment.
Land Home and Land-in-Lieu Contracts
General. To the extent described in the applicable prospectus supplement,
the related Contract Pool may contain Land Home Contracts or Land-in-Lieu
Contracts. The Land Home Contracts and the Land-in-Lieu Contracts will be
secured by either first mortgages or deeds of trust, depending upon the
prevailing practice in the state in which the underlying property is located. A
mortgage creates a lien upon the real property described in the mortgage. There
are two parties to a mortgage: the mortgagor, who is the borrower, and the
mortgagee, who is the lender. In a mortgage state, the mortgagor delivers to
the mortgagee a note or bond evidencing the loan and the mortgage. Although a
deed of trust is similar to a mortgage, a deed of trust has three parties: the
borrower, a lender as beneficiary, and a third-party grantee called the trustee.
Under a deed of trust, the borrower grants the property, irrevocably until the
debt is paid, in trust, generally with a power of sale, to the trustee to secure
payment of the loan. The trustee's authority under a deed of trust and the
mortgagee's authority under a mortgage are governed by the express provisions of
the deed of trust or mortgage, applicable law, and, in some cases, with respect
to the deed of trust, the directions of the beneficiary.
Foreclosure. Foreclosure of a mortgage is generally accomplished by
judicial action. Generally, the action is initiated by the service of legal
pleadings upon all parties having an interest of record in the real property.
Delays in completion of the foreclosure occasionally may result from
difficulties in locating necessary parties defendants. When the mortgagee's
right to foreclosure is contested, the legal proceedings necessary to resolve
the issue can be time-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.
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Foreclosure of a deed of trust is generally accomplished by a non-judicial
trustee's sale under a specific provision in the deed of trust that authorizes
the trustee to sell property to a third party upon any default by the borrower
under the terms of the note or deed of trust. In certain states, such
foreclosure also may be accomplished by judicial action in the manner provided
for foreclosure of mortgages. In some states the trustee must record a notice
of default and send a copy to the borrower-trustor and to any person who has
recorded a request for a copy of a notice of default and the notice of sale. In
addition, the trustee must provide notice in some states to any other individual
having an interest of record in the real property, including any junior
lienholders. If the deed of trust is not reinstated within any applicable cure
period, a notice of sale must be posted in a public place and, in most states,
published for a specified period of time in one or more newspapers. In
addition, some state laws require that a copy of the notice of sale be posted on
the property and sent to all parties having an interest of record in the
property.
In some states, the borrower-trustor has the right to reinstate the loan at
any time following default until shortly before the trustee's sale. In general,
the borrower, or any other person having a junior encumbrance on the real
estate, may, during a reinstatement period, cure the default by paying the
entire amount in arrears plus the costs and expenses incurred in enforcing the
obligation. Certain state laws control the amount of foreclosure expenses and
costs, including attorneys' fees, that may be recovered by a lender.
In the case of foreclosure under either a mortgage or a deed of trust, the
sale by the receiver or other designated officer, or by the trustee, is a public
sale. However, because of the difficulty a potential buyer at the sale would
have in determining the exact status of title and because the physical condition
of the property may have deteriorated during the foreclosure proceedings, it is
not common for a third party to purchase the property at the foreclosure sale.
Rather, the lender generally purchases the property from the trustee or receiver
for an amount equal to the unpaid principal amount of the note, accrued and
unpaid interest and the expenses of foreclosure. Thereafter, subject to the
right of the borrower in some states to remain in possession during the
redemption period, the lender will assume the burdens of ownership, including
obtaining hazard insurance and making such repairs at its own expense as are
necessary to render the property suitable for sale. The lender commonly will
obtain the services of a real estate broker and pay the broker a commission in
connection with the sale of the property. Depending upon market conditions, the
ultimate proceeds of the sale of the property may not equal the lender's
investment in the property.
Because of certain requirements of the REMIC Provisions, a Trust Fund as to
which a REMIC election has been made generally must dispose of any related
Manufactured Homes acquired pursuant to repossession, foreclosure, or similar
proceedings within three years after acquisition. Consequently, if the
Servicer, acting on behalf of the Trust, is unable to sell a Manufactured Home
in the course of its ordinary commercial practices within 33 months after its
acquisition thereof (or a longer period as permitted by the Agreement), the
Servicer will auction such home to the highest bidder (which bidder may be the
Servicer) in an auction reasonably designed to produce a fair price. There can
be no assurance that the price for any Manufactured Home would not be
substantially lower than the unpaid principal balance of the Contract relating
thereto. In fact, manufactured homes, unlike site-built homes, generally
depreciate in value, and it has been industry experience that, upon repossession
and resale, the amount recoverable on a
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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 on the debt without first exhausting such security;
however, in some of these states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and may be precluded
from exercising remedies with respect to the security. Consequently, the
practical effect of the election requirement, when applicable, is that lenders
will usually proceed first against the security rather than bringing a personal
action against the borrower.
Other statutory provisions may limit any deficiency judgment against the
former borrower following a foreclosure sale to the excess of the outstanding
debt over the fair market value of the property at the time of such sale. The
purpose of these statutes is to prevent a beneficiary or a mortgagee from
obtaining a large deficiency judgment against the former borrower as a result of
low or no bids at the foreclosure sale.
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
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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 as a defense against a claim
brought by the assignee against such obligor. Generally, this rule will apply
to any Contracts conveyed to the Trustee and to any claims made by the Servicer
on behalf of the Trustee, as GreenPoint's assignee. Numerous other federal and
state consumer protection laws impose requirements applicable to the origination
and lending pursuant to such Contracts, including the Truth in Lending Act, the
Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Equal Credit Opportunity Act, the Fair Debt Collection
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Practices Act and the Uniform Consumer Credit Code. In the case of some of
these laws, the failure to comply with their provisions may affect the
enforceability of the related Contract or create liability for the Trust Fund.
The Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the
"Relief Act") could, under certain circumstances, cap the amount of interest
that may be charged on certain Contracts at 6% and may hinder the ability of the
Servicer to foreclose on such Contracts in a timely fashion. Under the terms of
the Relief Act, if so required by an obligor under a manufactured housing
contract who enters military service after the origination of such obligor's
contract (including an obligor who is a member of the National Guard or is in
reserve status at the time of the origination of the contract and is later
called to active duty), such obligor may not be charged interest above an annual
rate of 6% during the period of such obligor's active duty status, unless a
court orders otherwise upon application of the lender. In addition, the Relief
Act imposes limitations which would impair the ability of any lender to
foreclose on an affected contract during the obligor's period of active duty
status and within three months thereafter. It is possible that application of
the Relief Act to certain of the Contracts could have an effect, for an
indeterminate period of time, on the ability of the Servicer to collect full
amounts of interest or foreclose on such Contract, and could result in delays in
payment or losses to the holders of the Certificates. GreenPoint will not make
any representation or warranty as to whether any Contract is or could become
subject to the Relief Act.
Transfers of Manufactured Homes; Enforceability of Restrictions on Transfer
If so specified in the related prospectus supplement, the Contracts
comprising any Contract Pool generally will prohibit the sale or transfer of the
related Manufactured Homes without the consent of the obligee and permit the
acceleration of the maturity of the Contracts by the obligee upon any such sale
or transfer to which GreenPoint has not consented. Under the Agreement for a
Series of Certificates (if so specified in the related prospectus supplement),
GreenPoint will be required to consent to any such transfer and to permit the
assumption of the related Contract if the proposed buyer meets the Servicer's
underwriting standards and enters into an assumption agreement, the Servicer
determines that permitting such assumption will not materially increase the risk
of nonpayment of the Contract and such action will not adversely affect or
jeopardize any coverage under any insurance policy required by such Agreement.
If the Servicer determines that these conditions have not been fulfilled, then
it will be required to withhold its consent to the transfer, but only to the
extent permitted under the Contract and applicable law and governmental
regulations and only to the extent that such action will not adversely affect or
jeopardize any coverage under any insurance policy required by the Agreement.
In certain cases, a delinquent Obligor may attempt to transfer a Manufactured
Home in order to avoid a repossession proceeding with respect to such
Manufactured Home.
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.
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Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary Controls
Act of 1980, as amended ("Title V"), provides that, subject to the following
conditions, state usury limitations shall not apply to any loan which is secured
by a first lien on certain kinds of manufactured housing. The Contracts related
to any Series of Certificates would be covered under Title V if, among other
things, they satisfy certain conditions governing the terms of any prepayments,
late charges and deferral fees and contain a requirement of a 30-day notice
period prior to instituting any action leading to repossession of the related
unit.
Title V authorized any state to reimpose limitations on interest rates and
finance charges by adopting before April 1, 1983 a law or constitutional
provision which expressly rejected application of the federal law. Fifteen
states adopted such a law prior to the April 1, 1983 deadline. In addition,
even where Title V was not so rejected, any state is authorized by the law to
adopt a provision limiting discount points or other charges on loans covered by
Title V. GreenPoint will represent, in the Agreement for a Series of
Certificates (if so specified in the related prospectus supplement), that the
Contracts sold by it comply with applicable usury laws.
RATINGS
It is a condition to the issuance of the Certificates of each Series
offered hereby that at the time of issuance they shall have been rated in one of
the four highest rating categories by the nationally recognized statistical
rating agency or agencies specified in the related prospectus supplement.
Ratings on manufactured housing contract pass-through certificates address
the likelihood of the receipt by Certificateholders of their allocable share of
principal and interest on the underlying manufactured housing contract assets.
These ratings address structural and legal aspects associated with such
certificates, the extent to which the payment stream on such underlying assets
is adequate to make payments required by such certificates and the credit
quality of the credit enhancer or guarantor, if any. Ratings on the
Certificates do not, however, constitute a statement regarding the likelihood of
principal prepayments by Obligors under the Contracts in the related Contract
Pool, the degree by which prepayments made by such Obligors might differ from
those originally anticipated or whether the yield originally anticipated by
investors of any Series of Certificates may be adversely affected as a result of
such prepayments. As a result, investors of any Series of Certificates might
suffer a lower than anticipated yield.
A rating on any or all of the Certificates of any Series by certain other
rating agencies, if assigned at all, may be lower than the rating or ratings
assigned to such Certificates 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.
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METHOD OF DISTRIBUTION
The Seller may sell Certificates of each Series to or through underwriters
(the "Underwriters") by a negotiated firm commitment underwriting and public
reoffering by the Underwriters, and also may sell and place Certificates
directly to other purchasers or through agents. The Seller intends that
Certificates be offered through such various methods from time to time and that
offerings may be made concurrently through more than one of these methods or
that an offering of a particular Series of Certificates may be made through a
combination of such methods.
The distribution of the Certificates may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If so specified in the prospectus supplement relating to a Series of
Certificates, the Seller or any affiliate thereof may purchase some or all of
one or more Classes of Certificates of such Series from the Underwriter or
Underwriters at a price specified in such prospectus supplement. Such purchaser
may thereafter from time to time offer and sell, pursuant to this prospectus,
some or all of such Certificates so purchased directly, through one or more
Underwriters to be designated at the time of the offering of such Certificates
or through broker-dealers acting as agent and/or principal. Such offering may
be restricted in the manner specified in such prospectus supplement. Such
transactions may be effected at market prices prevailing at the time of sale, at
negotiated prices or at fixed prices.
In connection with the sale of the Certificates, Underwriters may receive
compensation from the Seller or from purchasers of Certificates for whom they
may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell the Certificates of a Series to or through dealers and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the Underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that participate
in the distribution of the Certificates of a Series may be deemed to be
Underwriters, and any discounts or commissions received by them from the Seller
and any profit on the resale of the Certificates by them may be deemed to be
underwriting discounts and commissions, under the Securities Act. Any such
Underwriters or agents will be identified, and any such compensation received
from the Seller will be described, in the prospectus supplement.
Under agreements which may be entered into by GreenPoint, Underwriters and
agents who participate in the distribution of the Certificates may be entitled
to indemnification by GreenPoint against certain liabilities, including
liabilities under the Securities Act.
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.
92
<PAGE>
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.
93
<PAGE>
INDEX OF SIGNIFICANT DEFINITIONS
<TABLE>
<CAPTION>
Page in prospectus Page in prospectus
on Which Term on Which Term
is Defined is Defined
<S> <C> <C> <C>
1986 Act............................. 37 NCUA................................. 59
Acquisition.......................... 14 New Regulations...................... 45
Agreement............................ 2 Non-REMIC Trusts..................... 53
Bulk Sellers......................... 12 Notes................................ 56
Cede................................. iii Obligor.............................. 12
Certificate Account.................. 20 OID Regulations...................... 34
Certificate Balance.................. 3 Original Holder...................... 46
Certificate Owners................... iii Participants......................... 24
Certificateholders................... iii Parties in Interest.................. 60
Certificates......................... i Pass-Through Rate.................... 5
Class................................ i Percentage Interest.................. 20
Code................................. 7 Plans................................ 60
Collection Period.................... 3 Policy Statement..................... 59
Commission........................... iii Pool Principal Balance............... 31
Committee Report..................... 37 Pool Scheduled Principal Balances.... 32
Contract............................. 1 Premium Grantor Trust Certificates... 54
Contract Files....................... 21 Prepayment Assumption................ 38
Contract Pool........................ i Prepayment Model..................... 19
Contract Rate........................ 1 PTCE................................. 60
Contract Schedule.................... 21 Rate Period.......................... 23
Contracts............................ i Registration Statement............... iii
Credit Facility...................... 33 Regular Certificates................. 34
Credit Facility Provider............. 33 Regular Principal.................... 4
Cut-off Date......................... 1 REIT................................. 36
Definitive Certificates.............. 20 Relief Act........................... 10
Disqualified Organizations........... 37 REMIC................................ ii
Distribution Date.................... 3 REMIC Certificates................... 34
DOL.................................. 60 REMIC Provisions..................... 34
DTC.................................. iii REMIC Regulations.................... 35
DTC Rules............................ 24 Repurchase Date...................... 26
DTC Services......................... 25 Reserve Fund......................... 32
Due Date............................. 12 Residual Certificates................ 34
ERISA................................ 7 Residual Interest.................... 5
Excess Interest...................... 9 Sale Agreement....................... 14
Exchange Act......................... ii Scheduled Payment.................... 12
Foreign Holder....................... 43 Senior Certificate Balance........... 32
Fractional Interests................. 28 Senior Certificates.................. 31
GFC.................................. ii Series............................... i
Global Certificate................... 6 Service.............................. 34
Government Securities................ 36 Servicer............................. i
Grantor Trust Fund................... 34 Single Variable Rate................. 39
GreenPoint........................... i SMMEA................................ 59
GreenPoint Bank...................... 14 Special Principal Distributions...... 4
Holder-in-Due-Course................. 66 Spread Account....................... 33
Indirect Participants................ 24 Startup Day.......................... 36
Industry............................. 25 Step-Up Rate......................... 12
IRS.................................. 38 Step-Up Rate Contracts............... 12
Issue Premium........................ 48 Subordinate Certificates............. 31
Junior Certificates.................. 31 successful Termination Auction....... 7
Kelly Blue Book...................... 16 Swap Regulations..................... 45
Land Home............................ 1 Systems.............................. 25
Land Home Contract................... 13 Tax-Exempt Investor.................. 59
Land Home Contracts.................. 13 Termination Auction.................. 26
Land-in-Lieu Contract................ 1 Title V.............................. 67
Land-in-Lieu Contracts............... 13 Total Regular Principal Amount....... 3
Liquidity Facility................... 33 Trust Fund........................... i
Liquidity Facility Provider.......... 33 Trustee.............................. 2
Manufactured Home.................... 1 UBTI................................. 59
Minimum Termination Amount........... 26 UCC.................................. 9
Monthly Servicing Fee................ 27 Underwriters......................... 68
Mortgage............................. 13 Weighted Average Contract Rate....... 1
Multiple Variable Rate............... 39
</TABLE>
94
<PAGE>
$[ ]
(Approximate)
LOGO
Seller and Servicer
Manufactured Housing Contract Trust
Pass-Through Certificates, Series [ ]-[ ]
PROSPECTUS SUPPLEMENT
[_____], [__]
[UNDERWRITER]
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with different information.
We are not offering the Offered Certificates in any state where the offer is
not permitted.
We do not claim the accuracy of the information in this prospectus
supplement and the accompanying prospectus as of any date other than the dates
stated on their respective covers.
Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters of the Offered Certificates and with respect to their unsold
allotments or subscriptions. In addition, for ninety days from the date of this
prospectus supplement, all dealers selling the Offered Certificates will deliver
a prospectus supplement and prospectus.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
Registration fee......................................$2,780.00
Printing and engraving costs..............................$[ ]
Legal fees and expenses...................................$[ ]
Accounting fees and expenses..............................$[ ]
Trustee's fees and expenses...............................$[ ]
Blue Sky Qualification Fees and Expenses
(including Counsel Fees).................................$[ ]
Rating Agency Fees........................................$[ ]
Total.....................................................$[ ]
________
* To be filed by amendment.
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware,
as amended, under which the Registrants are incorporated, empowers a
corporation, subject to certain limitations, to indemnify its directors and
officers against the actual and reasonable expenses of defending litigation
against them in their capacities as directors and officers.
1. GreenPoint Credit Corp. Section 42 of GreenPoint Credit Corp.'s
-----------------------
By-Laws provides as follows:
Indemnification. The corporation shall indemnify and hold harmless,
---------------
to the full extent permitted by law as the same exists or may be hereafter
amended (but, in the case of any amendment, only to the extent that the
amendment permits the corporation to provide broader indemnification rights than
permitted by law prior to its amendment), any person (an "indemnitee") who is
made, or threatened to be made, a party to or is otherwise involved in any
action, suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that he or his testator or intestate is or
was a director, officer, employee or agent of the corporation or serves or
served, in any capacity, any other enterprise (including, without limitation,
service with respect to an employee benefit plan) at the request of the
corporation (whether the basis of such action, suit or proceeding is alleged
action in an official capacity as a director, officer, employee or agent or in
any other capacity) against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such indemnitee in
connection therewith; provided, however, that, except as provided below with
respect to actions, suits, or proceedings
II-1
<PAGE>
to enforce rights to indemnification, the corporation 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 Board of Directors of the corporation. The right
to indemnification conferred in this Paragraph 42 shall include the right to be
paid by the corporation the expenses incurred in defending any such proceeding
in advance of its final disposition to the maximum extent permitted by law. The
rights to indemnification and to the advancement of expenses conferred by this
Paragraph 42 shall be contract rights and such rights shall continue as to an
indemnitee who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the indemnitee's heirs, executors and administrators.
If a claim under this Paragraph 42 is not paid in full by the
corporation within sixty (60) days after a written claim has been received by
the corporation, except in the case of a claim for an advancement of expenses,
in which case the applicable period shall be twenty (20) days, the indemnitee
may at any time thereafter bring suit against the corporation to recover the
unpaid amount of the claim. If successful in whole or in part in any such suit,
the indemnitee shall be entitled to be paid also the expenses of prosecuting or
defending such suit. In any suit brought by the indemnitee to enforce a right
to indemnification or to an advancement of expenses hereunder, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Paragraph 42 or otherwise, shall be on the
corporation.
The rights to indemnification and to the advancement of expenses
conferred in this Paragraph 42 shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the corporation's
Certificate of Incorporation, Bylaws, agreement, vote of shareholders or
directors or otherwise.
The corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the corporation to the fullest extent of
the provisions of this Paragraph 42 with respect to the indemnification and
advancement of expenses of directors and officers of the corporation.
There is directors' and officers' liability insurance presently
outstanding, which insures directors and officers of GreenPoint Credit Corp.
against claims arising out of the performance of their duties.
The Pooling Agreement for each Series of Certificates will provide
that no director, officer, employee or agent of GreenPoint Credit Corp. is
liable to any holder of Certificates or to the Trustee on behalf of the holders
of such Certificates, or to any other person, except on account of such
director's, officer's, employee's or agent's own willful misfeasance, bad faith,
gross negligence or reckless disregard of duty. The Pooling Agreement for each
Series will further provide that, with the exceptions stated above, a director,
officer, employee or agent of GreenPoint Credit Corp. is entitled to be
indemnified by the Trust Fund against all liability in connection with the
mortgage pool evidenced by such Series.
2. GreenPoint Financial Corp. Article Tenth of GreenPoint Financial
--------------------------
Corp.'s Certificate of Incorporation provides as follows:
II-2
<PAGE>
A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee") whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent or in any other capacity while serving as a Director, Officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) reasonably incurred or suffered by such indemnitee
in connection therewith; provided, however, that, except as provided in Section
C hereof with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or party thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation.
B. The right to indemnification conferred in Section A of this Article
TENTH shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a Director or Officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, services to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section or otherwise. The rights to indemnification and to the advancement
of expenses conferred in Sections A and B of this Article TENTH shall be
contract rights and such rights shall continue as to an indemnitee who has
ceased to be a Director, Officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article TENTH is not paid in
full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in
any such suit, or in a suit brought by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expenses of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Corporation
II-3
<PAGE>
shall be entitled to recover such expenses upon a final adjudication that the
indemnitee has not met any applicable standard for indemnification set forth in
the Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suite brought by the indemnitee, be a defense to such suit. In any suite
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article TENTH or otherwise shall be on the
Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article TENTH shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
Disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect
itself and any Director, Officer, employee or agent of the Corporation or
Subsidiary or Affiliate or another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article TENTH with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
II-4
<PAGE>
Item 16. Exhibits
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
--------------- ------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting. (Incorporated by reference to exhibit 1.1 of registration
statement no. 333-59731)
2.1 Not Applicable.
3.1 Certificate of Incorporation of GreenPoint Financial. (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. (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)
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 (included in Exhibit 8.1 hereto).
23.2 Consent of PricewaterhouseCoopers LLP.
24.1 Powers of Attorney. (Included on the Signature Pages hereto)
25.1 Not Applicable.
26.1 Not Applicable.
27.1 Not Applicable.
99.1 Not Applicable.
</TABLE>
Undertakings.
In accordance with Item 512 of Regulation S-K under the Securities Act
of 1933, as amended (the "Securities Act"), each of the undersigned registrants
hereby undertakes:
To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement: (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and (iii) to include any
II-5
<PAGE>
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 either
of the registrants of expenses incurred or paid by a director, officer or
controlling
II-6
<PAGE>
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
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 June 11, 1999
- ------------------------------
John W. Wheeler Officer) and Director
/s/ John S. Buchanan Senior Vice President, June 11, 1999
- ------------------------------
John S. Buchanan Treasurer (Principal Financial and
Accounting Officer) and Director
/s/ Martin L. McNabb Executive Vice President June 11, 1999
- ------------------------------
Martin L. McNabb and Director
/s/ Abdul H. Rajput Executive Vice President June 11, 1999
- ------------------------------
Abdul H. Rajput and Director
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this 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 June 11, 1999.
GREENPOINT CREDIT CORP.
By: /s/ John W. Wheeler
------------------------------
John W. Wheeler
Director and President
II-8
<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, 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
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 June 11, 1999
Executive Officer
/s/ Bharat B. Bhatt
- ------------------------------
Bharat B. Bhatt Member of the Board, President June 11, 1999
and Chief Operating Officer
/s/ Jeffrey Leeds
- ------------------------------
Jeffrey Leeds Executive Vice President, Finance June 11, 1999
(Principal Financial Officer)
/s/ Mary Beth Farrell
- ------------------------------
Mary Beth Farrell Senior Vice President and June 11, 1999
Comptroller
/s/ Wilfred O. Ohl
- ------------------------------
Wilfred O. Ohl Director June 11, 1999
/s/ Robert M. McLane
- ------------------------------
Robert M. McLane Director June 11, 1999
/s/ Dan F. Huebner
- ------------------------------
Dan F. Huebner Director June 11, 1999
/s/ Robert P. Quinn
- ------------------------------
Robert P. Quinn Director June 11, 1999
/s/ Robert F. Vizza
- ------------------------------
Robert F. Vizza Director June 11, 1999
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ William M. Jackson
- ------------------------------
William M. Jackson Director June 11, 1999
/s/ Jules Zimmerman
- ------------------------------
Jules Zimmerman Director June 11, 1999
/s/ Charles B. McQuade
- ------------------------------
Charles B. McQuade Director June 11, 1999
/s/ Alvin N. Puryear
- ------------------------------
Alvin N. Puryear Director June 11, 1999
/s/ Susan J. Kropf
- ------------------------------
Susan J. Kropf Director June 11, 1999
/s/ Edward C. Schmultz
- ------------------------------
Edward C. Schmultz Director June 11, 1999
/s/ Peter Paul
- ------------------------------
Peter Paul Director June 11, 1999
</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 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 June 11, 1999.
GREENPOINT FINANCIAL CORP.
By: /s/ Thomas S. Johnson
---------------------------------
Thomas S. Johnson
Chairman of the Board
and Chief Executive Officer
II-10
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
- ------------------- -----------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting. (Incorporated by reference to exhibit 1.1 of registration
statement no. 333-59731)
2.1 Not Applicable.
3.1 Certificate of Incorporation of GreenPoint Financial. (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. (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)
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 (included in Exhibit 8.1 hereto).
23.2 Consent of PricewaterhouseCoopers LLP.
24.1 Powers of Attorney. (Included on the Signature Pages hereto)
25.1 Not Applicable.
26.1 Not Applicable.
27.1 Not Applicable.
99.1 Not Applicable.
</TABLE>
<PAGE>
Exhibit 5.1
June 11, 1999
GreenPoint Credit Corp.
90 Park Avenue
New York, New York 10016
Ladies and Gentlemen:
We have acted as counsel to GreenPoint Credit Corp. ("GreenPoint"),
and GreenPoint Financial Corp. ("GFC" and each of GreenPoint and GFC, a
"Registrant"), in connection with the preparation and filing with the Securities
and Exchange Commission (the "Commission") of the Registration Statement on Form
S-3 filed by the Registrants with the Commission (the "Registration Statement")
for the registration under the Securities Act of 1933, as amended, of its
Manufactured Housing Contract Trust Pass-Through Certificates (the
"Certificates"). The Certificates are issuable in series (each, a "Series")
under separate Pooling and Servicing Agreements (each, a "Pooling Agreement") by
and among either Registrant or both of them, in the case of GreenPoint, as
seller of manufactured housing installment sales contracts and installment loan
contracts, and as servicer, in the case of GFC, as Guarantor, as applicable, and
the trustee selected for such Series. The Certificates of each Series are to be
sold as described in the Registration Statement and the prospectus and
prospectus supplement relating to such Series.
We have examined such instruments, documents and records as we deemed
relevant and necessary as a basis for our opinion hereinafter expressed. In such
examination, we have assumed the following: (a) the authenticity of original
documents and the genuineness of all signatures; (b) the conformity to the
originals of all documents submitted to us as copies; (c) the truth, accuracy
and completeness of the information, representations and warranties contained in
the records, documents, instruments and certificates we have reviewed; and (d)
that, as to each party (other than the Registrants) to a Pooling Agreement, each
Pooling Agreement will be legal, valid and binding obligations enforceable in
accordance with their respective terms.
Based on such examination, we are of the opinion that when the
Certificates of each Series have been duly executed, authenticated and delivered
in accordance with the terms of the Pooling Agreement relating to such Series
and sold in the manner described in the Registration Statement and the
prospectus and prospectus supplement relating thereto, the Certificates of such
Series will be legally issued, fully paid, non-assessable and binding
obligations of the trust created by each Pooling Agreement, and the holders of
the Certificates of such Series will be entitled to the benefits of the Pooling
Agreement, except as enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance,
moratorium, or other laws relating to or affecting the rights of
<PAGE>
GreenPoint Credit Corp.
June 11, 1999
Page 2
creditors generally and general principles of equity, including concepts of
materiality, reasonableness, good faith and fair dealing, and the possible
unavailability of specific performance or injunctive relief, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever it appears in the
Registration Statement and the prospectus contained therein.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe LLP
Orrick, Herrington & Sutcliffe LLP
<PAGE>
Exhibit 8.1
June 11, 1999
GreenPoint Credit Corp.
GreenPoint Financial Corp.
90 Park Avenue
New York, New York 10016
Ladies and Gentlemen:
We have acted as counsel to GreenPoint Credit Corp. ("GreenPoint"),
and GreenPoint Financial Corp. ("GFC" and each of GreenPoint and GFC, a
"Registrant"), in connection with the preparation and filing with the Securities
and Exchange Commission (the "Commission") of the Registration Statement on Form
S-3 filed by the Registrants with the Commission (the "Registration Statement")
for the registration under the Securities Act of 1933, as amended, of its
Manufactured Housing Contract Trust Pass-Through Certificates (the
"Certificates"). The Certificates are issuable in series (each, a "Series")
under separate Pooling and Servicing Agreements by and among either Registrant
or both of them, in each case, as seller of manufactured housing installment
sales contracts and installment loan contracts, GreenPoint, as servicer, and the
trustee selected for such Series. The Certificates of each Series are to be
sold as described in the Registration Statement and the prospectus and
prospectus supplement relating to such Series.
We have advised the Registrants with respect to certain federal income
tax aspects of the issuance of the Certificates, issuable in Series
(collectively, the "Securities"). Such advice conforms to the description of
selected federal income tax consequences to holders of the Securities that
appears under the heading "Federal Income Tax Consequences" in the Prospectus.
Such description does not purport to discuss all possible income tax
ramifications of the proposed issuance, but with respect to those tax
consequences which are discussed in our opinion the description is accurate in
all material respects. Further, we hereby confirm and adopt our opinions under
the heading "Federal Income Tax Consequences" that (A) for a Series for which an
election to be treated as a "real estate mortgage investment conduit" ("REMIC")
will be made, (i) the Trust Fund will qualify as a REMIC for federal income tax
purposes, (ii) the Certificates of such Series identified in the related
prospectus supplement as "regular interests" in the REMIC 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), (iii) those Certificates of
such Series identified in the related prospectus supplement as "residual
interests" in the REMIC will be treated for federal income tax purposes as the
sole class of "residual interests" in the REMIC, (iv) the REMIC represented by
the Trust 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 (v) those
<PAGE>
GreenPoint Credit Corp.
GreenPoint Financial Corp.
June 11, 1999
Page 2
Certificates, if any, identified a being comprised of a REMIC "regular interest"
coupled with a swap or cap contract will be treated as representing ownership of
a "regular interest" in a REMIC to the extent of the portion thereof identified
as such in the Prospectus Supplement, (B) for a Series for which no election to
be treated as a REMIC will be made and which is described as a "grantor trust"
in the Prospectus Supplement, for federal income tax purposes, the Trust Fund
will be classified as a grantor trust and not as a corporation or an association
which is taxable as a corporation and the Certificates will be treated as equity
in such trust, or (C) for a Series for which no election to be treated as a
REMIC will be made and which is described in the Prospectus Supplement as an
"owner trust," (i) for federal income tax purposes, the Trust Fund will not be
treated as an association, taxable mortgage pool or publicly traded partnership
taxable as a corporation and (ii) the Offered Certificates or Notes of such
Series will be treated as indebtedness for federal income tax purposes. All
capitalized terms used herein that are not otherwise defined have the meanings
as set forth in the Prospectus.
This opinion letter is based on the facts and circumstances set forth
in the Prospectus and in the other documents reviewed by us. Our opinion as to
the matters set forth herein could change with respect to a particular Series
of Securities as a result of changes in facts and circumstances, changes in the
terms of the documents reviewed by us, or changes in the law subsequent to the
date hereof. As the Registration Statement contemplates Series of Securities
with numerous different characteristics, the particular characteristics of each
Series of Securities must be considered in determining the applicability of this
opinion to a particular Series of Securities.
We hereby consent to the filing of this opinion letter as an exhibit
to the Registration Statement and to the use of our name wherever appearing in
the Registration Statement and the Prospectus contained therein. In giving such
consent, we do not admit that we are "experts" within the meaning of the term as
used in the Act or the rules and regulations of the Commission issued
thereunder, with respect to any part of the Registration Statement, including
this opinion letter as an exhibit or otherwise.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe LLP
Orrick, Herrington & Sutcliffe LLP
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
January 21, 1999 relating to the consolidated financial statements, which
appears in the 1998 Annual Report to Shareholders, which is incorporated by
reference in GreenPoint Financial Corp.'s Annual Report on Form 10-K for
the year ended December 31, 1998. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
/s/ PricewaterhouseCoopers
New York, New York
June 10, 1999
